INTERNATIONAL FAST FOOD CORP, SB-2/A, 1998-09-09

INTERNATIONAL FAST FOOD CORP
SB-2/A, 1998-09-09
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As filed with the Securities and Exchange Commission on September 9, 1998
Registration No. 333-62315

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

----------------
AMENDMENT NO. 1
to
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------

INTERNATIONAL FAST FOOD CORPORATION
(Exact Name of Registrant as Specified in its Charter)
----------------
<TABLE>
<CAPTION>
<S> <C> <C>
Florida 5812 65-0302338
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
----------------
1000 Lincoln Road, Suite 200
Miami Beach, Florida 33139
(305) 531-5800
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Office)
----------------
Mitchell Rubinson
Chairman of the Board and Chief Executive Officer
International Fast Food Corporation
1000 Lincoln Road, Suite 200
Miami Beach, Florida 33139
(305) 531-5800
(Name, Address, Including Zip Code, and Telephone Number, Including Area
Code, of Agent for Service)
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Copies of Communications to:
Gary Epstein, Esq.
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Telephone: (305) 579-0500
Facsimile: (305) 579-0717
----------------

Approximate date of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.[X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]

----------------
<TABLE>
<CAPTION>

CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------------
Proposed Maximum
Title of Each Class of Amount to be Offering Price Proposed Maximum Amount of
Securities to be Registered Registered Per Security(3) Aggregate Offering Registration Fee
Price(3) (4)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value(1). 48,957,143 (2) $ .74 $ 39,016,886 $ 11,511
- ------------------------------------------------------------------------------------------------------------------------------------

(1) Includes shares of Common Stock issuable upon conversion of $27,536,000
aggregate stated principal amount at maturity of 11% Convertible Senior
Subordinated Discount Notes due 2007 to be sold by certain selling
shareholders and shares of Common Stock currently outstanding to be sold by
certain selling shareholders.

(2) Includes an additional 9,120,000 shares of Common Stock which are included
in this Amendment No. 1 to form SB-2 Registration Statement.

(3) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) based on the last reported trade as published by the NASD
OTC Bulletin Board (the "OTC BB") on September 4, 1998.

(4) Includes $9,520 paid by wire transfer on August 27, 1998, the date of
filing this Registration Statement, for 39,837,143 shares of Common Stock.

----------------

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
</TABLE>
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been fild with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.

PRELIMINARY PROSPECTUS, DATED SEPTEMBER 9, 1998
SUBJECT TO COMPLETION

INTERNATIONAL FAST FOOD CORPORATION
48,957,143 Shares of Common Stock

--------------------

This Prospectus is being used in connection with the offering (the
"Offering") from time to time of up to 48,957,143 shares (the "Shares") of
common stock, $0.01 par value per share (the "Common Stock"), of International
Fast Food Corporation, a Florida corporation (the "Company"), by certain
shareholders of the Company (the "Selling Shareholders"). See "Selling
Shareholders."

The Company has been advised by the Selling Shareholders that the
Shares may be offered by the Selling Shareholders from time to time on terms to
be determined at the time of sale, in transactions in the over-the-counter
market, in negotiated transactions, or by a combination of these methods, at
fixed prices that may be changed, at market prices prevailing at the time of the
sale, at prices related to such market prices or at negotiated prices. The
Selling Shareholders may effect such transactions by selling the Shares to or
through securities broker-dealers or other agents, and such broker-dealers or
other agents may receive compensation in the form of discounts, concessions or
commissions from the Selling Shareholders and/or purchasers of the Common Stock
for whom such broker-dealers may act as agent or to whom they sell as principal,
or both (which compensation as to a particular broker-dealer might be in excess
of customary commissions). See "Plan of Distribution." The Selling Shareholders
and any brokers, dealers or agents through whom sales of Common Stock are made
may be deemed "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), and any profits realized by them on the sale
of Common Stock may be considered to be underwriting compensation. Neither the
Company nor the Selling Shareholders can presently estimate the amount of
commissions or discounts, if any, that will be paid by the Selling Shareholders
in connection with their sale of the Shares from time to time.

The Company is not selling any of the shares of Common Stock offered
hereby and will not receive any of the proceeds from the sales of Common Stock
by the Selling Shareholders. The Company has agreed to bear all of the expenses
in connection with the registration and sale of the Shares offered hereby by the
Selling Shareholders (other than underwriting discounts and selling
commissions). The Company has also agreed to indemnify the Selling Shareholders
against certain liabilities, including liabilities under the Securities Act.

The Common Stock is listed on the NASD OTC Bulletin Board under the
symbol "IFFC."

Information concerning the Selling Shareholders may change from time to
time and will be set forth in supplements to this Prospectus.

--------------------

THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH
DEGREE OF RISK AND SHOULD NOT BE PURCHASED BY INVESTORS
WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE INVESTMENTS.
SEE "RISK FACTORS" COMMENCING ON PAGE 11.

-------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-------------------------

The date of this Prospectus is September 9, 1998

<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND
SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL
DATA, INCLUDING THE FINANCIAL STATEMENTS AND THE NOTES THERETO APPEARING
ELSEWHERE IN THIS PROSPECTUS. UNLESS THE CONTEXT OTHERWISE REQUIRES, REFERENCES
TO THE "COMPANY" SHALL MEAN INTERNATIONAL FAST FOOD CORPORATION, A FLORIDA
CORPORATION ("IFFC"), AND ITS PRINCIPAL SUBSIDIARIES, INTERNATIONAL FAST FOOD
POLSKA SP.ZO.O. ("IFFP") AND KROLEWSKA PIZZA SP.ZO.O. ("KP"), BOTH OF WHICH ARE
LIMITED LIABILITY COMPANIES IN POLAND, AND ALL OF THE SUBSIDIARIES THEREOF,
INCLUDING KP'S WHOLLY OWNED SUBSIDIARY PIZZA KING POLSKA SP.ZO.O. ("PKP"), A
POLISH LIMITED LIABILITY COMPANY.

The Company

The Company, which was incorporated in December 1991 as a Florida
corporation, has (subject to certain exceptions) the exclusive rights to develop
franchised Burger King restaurants and Domino's Pizza stores in the Republic of
Poland. The Company, which has operated restaurants in Poland since 1992,
currently operates ten Burger King restaurants and ten Domino's stores. The
Burger King restaurants and the majority of the Domino's stores are similar to
their respective U.S. versions and are developed to the strict corporate
standards set out in the respective development agreements and franchise
agreements. The Company's principal executive office is located at 1000 Lincoln
Road, Suite 200, Miami Beach, Florida 33139, and its telephone number is (305)
531-5800.

Burger King Division

IFFC operates its Burger King division through IFFP, the Company's
majority owned (86.5%) Polish subsidiary, and its wholly owned Polish limited
liability corporations, IFF Polska-Kolmer and IFF-DX Management. IFFP receives
operational support from Burger King Corporation ("BKC") through BKC's
London-based office in areas including site selection and construction review,
operating systems and controls, marketing, sourcing of food and equipment,
distribution and training, and other operational matters.

Through IFFP, the Company currently operates ten Burger King
restaurants. The restaurants, which operate under individual franchise
agreements, are traditional free standing and/or attached drive-through
restaurants with dine-in seating capacity ranging from 60 to 120 people. The
typical store size is approximately 2,800 square feet and located near and in
residential areas and/or adjacent to a service station site. Currently all
Burger King restaurants in Poland are operated by IFFP. There are no
non-affiliated franchisees.

The Company's Burger King restaurants offer hamburgers, cheeseburgers,
french fries and soft drinks, and the Company anticipates that its future Burger
King restaurants will offer other food items. The Company typically offers a
Burger King meal for the dollar equivalent of approximately between $1.50 to
$2.85, depending upon the menu items selected. The Company believes, to the
extent a comparison is possible, that the prices it charges for meals are
comparable to the prices charged by the Company's American-style fast food
competitors in Poland.

By October 1994, IFFC had opened eight Burger King restaurants in urban
locations, including five in Warsaw, and had created an organizational
infrastructure to manage future growth. During 1994, however, a dispute emerged
between IFFC, IFFP and BKC regarding BKC's logistical development support and
other matters, which resulted in litigation between the parties commencing in
March 1995. During the period from the beginning of the dispute with BKC in 1994
until its settlement, the Company curtailed its Burger King restaurant expansion
and did not execute additional leases for new restaurant sites. In March 1997,
IFFC, IFFP and BKC settled the litigation and, pursuant to the settlement, BKC
and the Company entered into a new ten year development agreement.

Polish nationals, whom the Company believes have generally shown a high
degree of acceptance of American brand names, have been receptive to IFFP's
existing Burger King restaurants. The following table sets forth certain
information with respect to the performance of the Company's Burger King
restaurants:

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<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1997
---- ----
<S> <C> <C>
Number of Restaurants........................ 8 8
Sales (in thousands)......................... $5,351 $5,383
Growth over Prior Period..................... 14.1% .60%
Average Check Size........................... $2.20 $2.18
</TABLE>

New BKC Agreement and Standard Franchise Agreement. Under the new
10-year development agreement with BKC (the "New BKC Agreement"), IFFP is
required to open 45 Burger King restaurants prior to September 30,
2007. As of August 31, 1998, the Company had opened two new Burger King
restaurants pursuant to such agreement. Pursuant to the New BKC Agreement, IFFP
is required to pay BKC a $1.0 million development fee unless IFFP is in
compliance with the development schedule by September 30, 1999 and has achieved
gross sales of $11.0 million for the preceding 12 months. If the development
schedule has been achieved but gross sales are less than $11.0 million but
greater than $9.0 million, the development fee will be $250,000.

For each restaurant opened, IFFP is obligated to pay BKC an initial fee
of up to $40,000 for franchise agreements with a term of 20 years and $25,000
for franchise agreements with a term of ten years. Each such fee is payable not
later than 20 days prior to the restaurant's opening. Each franchised restaurant
must also pay a percentage of its gross sales, irrespective of profitability, as
a royalty for the use of the Burger King system and Burger King trademarks. The
annual royalty fee is 5% of gross sales. The restaurants must also contribute a
monthly advertising and promotion fee of 6% of gross sales to be used for
advertising, sales promotion, and public relations. However, BKC has agreed to
reduce the royalty fee to 2% through September 30, 1998, 3% through September
30, 2000 and 4% thereafter. Additionally, pursuant to the New BKC Agreement, if
the Company exceeds its obligations under the restaurant developement schedule,
the royalty fee will be further reduced to 2% for the period from October 1,
1998 through September 30, 2000 and to 3% thereafter. Payment of all amounts due
to BKC pursuant to the franchise agreements is guaranteed by the Company.

BKC may terminate rights granted to IFFP under the New BKC Agreement,
including franchise approvals for restaurants not yet opened, for a variety of
possible defaults by IFFP, including, among others, failure to open restaurants
in accordance with the development schedule; failure to obtain BKC site approval
prior to the commencement of each restaurant's construction; and failure to meet
various operational, financial, and legal requirements, including the
maintenance of IFFP's net worth at $7.5 million beginning on June 1, 1999. Upon
termination of the New BKC Agreement, whether resulting from default or
expiration of its term, BKC has the right to license third parties to develop
and operate Burger King restaurants in Poland, or to do so itself.

New Co-Development Agreements. The Company intends to develop a
majority of the new Burger King restaurants in conjunction with oil companies
which are presently expanding throughout Poland. In July 1997, IFFP executed
letters of intent with Dupont-Conoco and British Petroleum ("BP") for the
co-development of Burger King restaurants and service stations throughout
Poland. In connection with the execution of such letters of intent,
Dupont-Conoco and BP will each provide IFFP with multiple packages of between 5
and 10 development sites each. The letters, although not binding, state that
these sites will be available to IFFP to lease for a specific term plus option
periods at IFFP's discretion subject to Burger King approval. The Company has
currently executed leases for one and four locations with Dupont-Conoco and BP,
respectively. Rental terms will be based on a minimum monthly rental fee and/or
a percentage of sales.

In September 1997, IFFP entered into an agreement with Statoil to
develop up to 22 Burger King restaurants on Statoil service station properties
in Poland. IFFP, in coordination with BKC, is presently evaluating various
Statoil sites to determine which are feasible for the development of Burger King
restaurants and has executed three leases for sites in Pabiance, Olsztyn and
Raciborz, Poland.

The agreements and the letters of intent provide for the Initial
development of approximately 50 Burger King restaurant locations, plus
additional locations in the future. However, there can be no assurance that the
remainder of the transactions contemplated by such agreements and letters of
intent will be consummated. The Company is in various stages of evaluating
and

4
<PAGE>

developing these sites, 35 of which have received BKC approval. Presently, the
Company has executed eight leases with the oil companies. In addition, the
Company is currently negotiating with other international oil companies for the
development of Burger King restaurants throughout Poland.

Burger King Restaurant System. The Burger King restaurant system is one
of the world's largest restaurant systems, with approximately 9,800 restaurants
currently located in the United States and 55 foreign countries and territories
around the world, including extensive company-owned and franchised operations in
Europe. IFFC has no other affiliation or relationship with BKC other than as
provided for in the New BKC Agreement. All Burger King restaurants are required
to be operated in accordance with BKC standards. Most Burger King restaurants
offer a substantially similar core menu, featuring flame-broiled hamburgers,
cheeseburgers, french fries, and soft drinks. Other menu items may include
salads, pastries, chicken sandwiches, fish sandwiches, ice cream sundaes,
shakes and breakfast menu items. The Company's restaurant's menu has
historically been more limited than the menus of the United States and many
European Burger King franchises. Sandwich menu items account for the most
significant amount of system-wide sales. Prices for the menu items are
determined by the Company and, accordingly, may vary from other Burger King
restaurants in other countries.

The Company currently estimates the cost of opening a restaurant to be
approximately $450,000 to $1,000,000, including the construction of the
restaurant, road and leasehold improvements, the initial franchise fee,
furniture, fixtures, and equipment, opening inventories and staff training
(excluding the cost of land). Such estimates, however, vary depending on the
size and condition of a proposed restaurant and the extent of leasehold
improvements required.

Burger King Restaurant Development. The Company's restaurant
development strategy is to lease prominent sites in major Polish metropolitan
areas adjacent to service stations on major thoroughfares. The Company continues
to explore opportunities with others for the development of Burger King
restaurants throughout Poland. The Company considers restaurant location to be
critical to its success and devotes significant efforts to locating and
evaluating potential sites. The site selection process involves an evaluation of
a variety of factors, including demographics (such as population density);
specific site characteristics (such as visibility, accessibility and traffic
volume); proximity to activity centers (such as office or retail shopping
districts and hotel and office complexes); and potential competition in the
area. Company personnel inspect and approve a proposed site for each restaurant
and a detailed site package is prepared for BKC review and approval prior to the
execution of a lease. All sites are subject to the approval of BKC. The opening
of restaurants is contingent upon, among other things, locating satisfactory
sites, negotiating acceptable leases or similar rights to a site, completing any
necessary construction, and securing required government permits and approvals.

Domino's Division

On July 18, 1997, the Company acquired all of the outstanding shares of
KP and PKP for nominal consideration and assumption of all liabilities,
including the liabilities of KP to the Company under a $500,000 promissory note.
KP and PKP control the exclusive development rights and franchises,
respectively, for Domino's pizza stores in Poland pursuant to a new Master
Franchise Agreement (the "New Domino's Agreement") with Domino's Pizza
International, Inc. ("DPI"), a wholly-owned subsidiary of Domino's Pizza, Inc.
("Domino's"), which was executed in August 1997. KP has also entered into a
commissary agreement with DPI (the "Commissary Agreement") pursuant to which KP
has been granted the exclusive right to open and operate one or more
commissaries for all Domino's stores in Poland for the term of the New Domino's
Agreement and any renewal term.

Through PKP, the Company operates ten Domino's stores, all of which are
located in Warsaw. These stores, which operate under individual franchise
agreements, feature carry-out services and delivery services to all customers
who can be reached in approximately 30 minutes. The stores also provide limited
customer seating. The typical Domino's store size is approximately 1,000 square
feet and located in a residential area with a high base of telephone
installations. One such store shares space with an existing Burger King
restaurant.

5
<PAGE>

the number of toppings selected. The Company believes, to the extent a
comparison is possible, that the prices it charges for meals is comparable to
the prices charged by the Company's American-style fast food competitors in
Poland.

Polish nationals have also been highly receptive to the Domino's Pizza
concept. The following table sets forth certain information with respect to the
performance of the Company's Domino's stores:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1997
---- ----
<S> <C> <C>
Number of Stores............................. 3 5
Sales (in thousands)......................... $1,029 $1,203
Growth over Prior Period..................... 19.5% 6.2%
Average Check Size........................... $ 5.70 $6.14
</TABLE>

New Domino's Agreement and Standard Franchise Agreement. The
relationship between the Company and Domino's is governed principally by the New
Domino's Agreement and the individual Domino's store standard franchise
agreements. Pursuant to the New Domino's Agreement, the Company has the
exclusive right to develop, operate and franchise Domino's stores in Poland, and
KP is required to open 46 Domino's stores prior to December 31, 2003. As of
August 31, 1998, the Company had opened six new Domino's stores pursuant to such
Agreement.

With respect to each operating Domino's store, KP is required to pay an
initial franchise fee and a monthly royalty fee equal to a percentage of each
store's gross sales, net of taxes, irrespective of profitability. KP's royalty
payments to DPI are payable in U.S. currency, or at DPI's option, in local
currency. Although DPI may elect to accept payment in alternative currencies if
payment in U.S. currency is prohibited by applicable law, DPI may terminate the
New Domino's Agreement if KP is unable to pay DPI in U.S. currency for a period
of one year. Pursuant to the New Domino's Agreement, Domino's received $300,000
as a non-refundable development fee and the Company invested $2.0 million in KP.

Prior to the opening of each Domino's store, KP is required to pay
Domino's a franchise fee and, as master franchisor, is required to enter into a
standard franchise agreement with each franchisee (whether or not affiliated
with the Company) (a "Franchisee") who will be operating a Domino's store. Each
Franchisee and each Domino's store location is subject to the approval of
Domino's, which approval may not be unreasonably withheld. The standard
franchise agreement for a Domino's store has a ten-year term with a ten-year
renewal option. During such periods the Franchisee is permitted to use the
Domino's system in an exclusive area, free of competition from other
Franchisees. With respect to each of its operating Domino's stores, a Franchisee
is required to pay KP an initial franchise fee and a monthly royalty fee, as
well as an advertising fee based on a percentage of the gross sales of each
Domino's store, net of taxes, irrespective of profitability. The financial terms
of the standard franchise agreement may be renewed at the expiration of the
term. A Franchisee's rights under a standard franchise agreement may not be
transferred without the consent of KP and Domino's. PKP is currently the only
Domino's franchisee in Poland. There are no non-affiliated franchisees.

Domino's Commissary. In conjunction with its exclusive right to develop
and franchise Domino's stores in Poland, the New Domino's Agreement grants the
Company the exclusive right to develop and operate the commissaries from which
all Franchisees in Poland will purchase food and supplies. Domino's provides the
Company, on an ongoing basis, all information and materials necessary to make
the Company familiar with the methods used to operate and manage a Domino's
commissary.

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Domino's Store System. Domino's is one of the world's largest pizza
delivery companies, with approximately 6,000 stores in over 60 countries. All
Domino's stores are required to be operated in accordance with Domino's
standards. Domino's stores feature carry-out services and delivery services to
all customers located within prescribed service areas and offer a substantially
similar core menu including various types of pizza and soft drinks. Other menu
items include salads, sandwiches and breadsticks. Pizza accounts for the most
significant amount of systemwide sales. Prices for Domino's menu items are
determined by the various operators of Domino's stores and, accordingly, may
vary throughout the Domino's store system. The Company has no affiliation or
relationship with Domino's other than as provided for in the New Domino's
Agreement.

The Company's initial Domino's stores are in existing buildings and
range from 1,000 square feet to 2,500 square feet, depending upon whether only
delivery and pick-up services are offered or counter service with limited
seating for customers is also available. In the future, the Company intends to
focus its efforts on the development of traditional Domino's stores which
provide primarily delivery and pick-up services and Domino's stores developed by
the Company should range in size from 900 to 1200 square feet. The Company
estimates the cost of opening a Domino's store to be between $125,000 and
$200,000, including leasehold improvements, furniture, fixtures, equipment, the
initial franchise fee and opening inventories (but excluding the cost of land).
Such estimates may vary depending on the size and condition of a proposed
Domino's store and the extent of leasehold improvements required.

Domino's Store Development. To date, the Company has concentrated its
efforts on the development of Domino's stores in Warsaw, and expects to complete
its development in such location by the end of 1998, when it intends to focus
most of its future Domino's store development efforts in other Polish cities.
The Company considers a Domino's store location to be critical to its prospects
and devotes significant efforts to the investigation and evaluation of potential
leases and sites. The Company believes that the Domino's store concept may be
successful in a wide variety of areas within a city. Accordingly, the site
selection process involves an evaluation of a variety of factors, including
demographics (such as population density); specific site characteristics (such
as visibility, accessibility and traffic volume); proximity to activity centers
(such as office or retail shopping districts and apartment, hotel and office
complexes); potential competition in the area; construction or renovation costs;
and lease terms and conditions. Because traditional Domino's stores provide
delivery and pick-up services only, the Company has sought and seeks to place
Domino's stores in metropolitan areas with adequate levels of telephone
ownership. Company personnel inspect and approve a proposed site for each
Domino's store prior to the execution of a standard franchise agreement and
store lease. All sites are subject to the approval of Domino's.

Doing Business in Poland

Area and Population. Poland is one of the largest countries in Europe
with a total land area of approximately 312,000 square kilometers. It shares
land borders with Germany, the Czech Republic, Slovakia, Ukraine, Belorussia,
Lithuania and the Russian Federation. Its population, which was estimated at
approximately 39 million (as of June 30, 1998), makes it one of the most
populous countries in Europe. Poland's population density was approximately 119
persons per square kilometer in 1998, with approximately 61% of the population
living in urban areas. Poland has an extensive network of roads, railways and
canals, and has four major ports on the Baltic sea.

Economic Overview. Since the fall of the Communist government in 1989,
Poland has embarked on a program of economic reforms, based on a transition to a
market economy and private ownership. Eight years into its transition to a
market economy, Poland has become the first former centrally planned economy in
Central and Eastern Europe to end its recession and return to growth. Poland's
transition-induced recession bottomed out in the second quarter of 1991, and by
1992, the downward trend in the economy was reversed. After a significant
decline in GDP in real terms, a sharp rise in

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unemployment in 1990 and 1991 and an acceleration in inflation in 1990, Poland
returned to growth, with positive and increasing rates of GDP growth for the
years 1992 to 1997.

As a result of the economic reforms carried out during the 1990's,
Poland currency meets certain (but not all) of the fiscal criteria applicable
for participation in European Monetary Union ("EMU"). Poland is also a member of
the Partnership for Peace initiative of the North Atlantic Treaty Organization
("NATO") and Poland received in July 1997 an invitation to become a full member
of NATO (subject to satisfaction of certain conditions).

Recent Economic Performance of Poland. In 1997, unofficial preliminary
estimates of the Central Statistical Office indicated that GDP grew by 6.9% in
real terms, following increasing real growth rates based on International
Monetary Fund estimates in 1994, 1995, 1996 and 1997 of 3.8%, 5.2%, 7.0% and
7.0%, respectively. Although inflation has generally declined since prices were
liberalized in the beginning of 1990, the rate of inflation in Poland is still
high compared to Western Europe or the United States. The 1998 State budget
includes an assumed rate of inflation for 1998 of 8.6%.

Foreign Investment Law and Government Regulation in Poland. The Polish
Law of June 14, 1990 on companies with foreign participation (the "Foreign
Investment Law") sets forth the legal requirements governing foreign investment
in Poland. The Foreign Investment Law states that, unless provided otherwise,
the Polish Commercial Code of 1934 (the "Commercial Code") is the commercial law
generally applicable to domestic business. The Commercial Code governs corporate
and partnership formation, governance and activity, and is generally similar to
corresponding regulations of countries in the European Economic Union ("EU").

Restaurant operations are subject to a number of national and local
laws and regulations, primarily related to sanitation. All imported food
products are subject to specific sanitary requirements. Restaurants are subject
to national regulations relating to health and sanitation standards, generally
implemented, administered and enforced at the local level. All properties are
subject to local zoning, building code and land-use regulations. In general,
necessary approvals and permits for restaurant operations are granted without
undue delay, and are typically granted within 14 days of application therefor.

United States-Poland Treaty. On March 21, 1990, the President of the
United States and the Prime Minister of Poland signed a treaty concerning
business and economic relations, which was ratified by both countries. The
ratification instruments were exchanged in Warsaw on July 7, 1994 and the treaty
became effective as of August 6, 1994. The aim of the treaty is to encourage and
facilitate United States investments in Poland by providing internationally
recognized protections and standards. The treaty sets certain minimum standards;
in some cases, Polish legislation more favorable than that required by the
treaty has been enacted.

Polish Currency. The only legal currency in Poland is the zloty. On
January 1, 1995, the National Bank of Poland introduced a new denomination for
its currency unit. The new zlotys are equivalent to 10,000 old zlotys. Old
zlotys remained legal tender until December 31, 1996, after which date they
became exchangeable only at certain banks. All references in this document to
zlotys are to new zlotys. The value of the zloty is determined pursuant to a
system based on a basket of currencies, as well as all other economic and
political factors that effect the value of currencies generally. As of June 30,
1998 and August 15, 1998, the exchange rate was 3.509 and 3.499 zlotys per
dollar, respectively.

8
<PAGE>

<TABLE>
<CAPTION>
The Offering

<S> <C>
Securities Offered(1)............................................ 49,957,143 shares

Common Stock Outstanding(2)...................................... 44,776,143 shares

Common Stock outstanding after Conversion of
11% Convertible Senior Subordinated Discount Notes(3)....... 84,613,286 shares

Trading Symbol of Common Stock................................... "IFFC"

Plan of Distribution............................................. All of the shares offered hereby may be sold
from time to time by the Selling Shareholders.
The Company will not receive any of the proceeds
from the sale of the Shares. The Shares may be
offered from time to time in one or more
transactions at market prices prevailing at the
time of the sale, at prices related to such
prevailing market prices, or at negotiated
prices. The Company is paying all of the
expenses in connection with the preparation of
this Prospectus and the related Registration
Statement, estimated at $55,000. See "Selling
Shareholders" and "Plan of Distribution."

Risk Factors..................................................... This offering involves a high degree of risk.
See "Risk Factors."

</TABLE>

- -------------------------

(1) Because the Selling Shareholders may sell all, some or none of their
Shares, no actual estimate can be made of the aggregate number of Shares
that are offered hereby.
(2) As of August 31, 1998 and does not include 43,117,178 shares of Common
Stock reserved for issuance consisting of: (i) 324,235 shares of Common
Stock reserved for issuance upon conversion of $2,756,000 in principal
amount of the 9% subordinated convertible debentures (conversion price of
$8.50 per share); (ii) 1,115,000 shares of Common Stock reserved for
issuance upon conversion of shares of the Company's Series A Convertible
Preferred Stock (conversion price of $3.00 per share); (iii) 290,800 shares
of Common Stock reserved for issuance upon exercise of outstanding warrants
(exercisable at $7.00 per share); (iv) 1,070,000 shares of Common Stock
reserved for issuance upon the exercise of outstanding options under the
Company's Stock Option Plan and Directors Stock Option Plan (collectively,
the "Plans") at exercise prices ranging from $.40 to $.81 per share; (v)
930,000 shares of Common Stock reserved for the grant of options pursuant
to the Plans; (vi) 50,000 shares of Common Stock reserved for issuance upon
exercise of warrants (exercise price of $.2831 per share) and (vii)
39,337,143 shares of Common stock reserved for issuance upon conversion of
$27,536,000 in aggregate stated principal amount of maturity of the 11%
convertible senior subordinated discount notes (conversion price of $.70
per share). The Company may issue additional convertible securities,
options, warrants and shares of Common Stock in the future.
(3) Assumes conversion of all outstanding 11% Convertible Senior Subordinated
Discount Notes.

9
<PAGE>
Summary Consolidated Financial Information(1)

The following Summary Consolidated Financial Information as of and for
the year ended December 31, 1997 is derived from the Company's Consolidated
Financial Statements, which statements have been audited by Arthur Andersen LLP,
independent certified public accountants, as indicated in their report included
elsewhere herein. The following Summary Consolidated Financial Information as of
and for the year ended December 31, 1996 is derived from the Company's
Consolidated Financial Statements, which have been audited by Moore Stephens
Lovelace, P.L., independent certified public accountants, as indicated in their
report included elsewhere herein. The Summary Consolidated Financial Information
as of and for the six months ended June 30, 1998 and June 30, 1997 has not been
audited but, in the opinion of management, contain all adjustments (consisting
of normal recurring adjustments) necessary for a fair statement of the results
for interim periods. The results of operations for the six months ended June 30,
1998 are not necessarily indicative of the results of operations that may be
expected for the year ended December 31, 1998, or for any future periods.

The only currency that may be used in Poland is the zloty. As of June
30, 1998, the exchange rate was 3.51 zlotys per U.S. dollar. For purposes of the
Summary Consolidated Financial Information provided below, monetary assets and
liabilities are translated from the zloty to U.S. dollars at the period end
exchange rate. Non-monetary assets, liabilities, and related expenses, primarily
furniture, equipment, leasehold improvements and related depreciation and
amortization, are translated using historical exchange rates. Income and expense
accounts, excluding depreciation and amortization and all other references
except as otherwise stated, are translated at an annual weighted average
exchange rate.
<TABLE>
<CAPTION>
Statement of Operations Data: Unaudited
Years Ended December 31, Six months Ended June 30,
--------------------------------- -------------------------------
1996 1997 1997 1998
----------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
Net revenues....................... $ 5,486,178 $ 6,083,011 $2,804,037 $3,723,796
Food and packaging costs........... 2,286,261 2,476,775 1,119,022 1,451,366
Gross profit....................... 3,199,917 3,606,236 1,685,015 2,272,430
Operating expenses................. 3,336,133 3,784,714 1,641,662 2,256,811
General and administrative
expenses........................ 1,551,129 1,963,233 714,886 1,142,406
Other income (expenses)............ (538,087) 543,794 951,054 (902,177)
Diluted net income (loss).......... (1,996,112) (1,252,850) 402,020(2) (1,961,486)
Diluted income (loss) per share.... (.37) (.05) .03 (.05)
Weighted average number of
common shares outstanding....... 5,967,325 26,246,885 17,453,364 44,653,118

Balance Sheet Data: June 30, 1998
--------------
Working capital................................................................................. $14,931,928
Total assets.................................................................................... 30,062,601
Total liabilities............................................................................... 28,215,780
Shareholders' equity............................................................................ 799,005
</TABLE>

- -----------------------
(1) The Summary Consolidated Financial Information of IFFC includes the results
of operations and other data of IFFP, but not of KP, for all periods
presented. KP was acquired on July 18, 1997, subsequent to the completion
of IFFC's Form 10-QSB for the period ended June 30, 1997.
(2) Includes a one-time gain of $1,327,070 from the settlement of litigation
with BKC.

<PAGE>
RISK FACTORS

THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE
OF RISK. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS, TOGETHER WITH THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, IN
EVALUATING AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS. This Prospectus
contains various "forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, which represent the Company's expectations or
beliefs concerning future events, including, without limitation, to the
following: the future growth of the Company's business; the ability of the
Company to improve levels of profitability; the sufficiency of cash flow
provided by its operations, investing and financing activities; changes in the
financial condition of the Company, and the economic, business and political
conditions in Poland; the demand for the Company's products and services; the
failure to consummate joint ventures or other strategic associations with third
parties or lessors; the failure to obtain suitable restaurant sites; changes in
the level of operating expenses and revenues; changes in the present and future
level of competition; and the Company's future liquidity and capital resource
needs. The Company cautions that these statements are further qualified by
important factors that may cause the actual results, performance or activities
of the Company, or industry results, to differ materially from those expressed
or implied in the forward-looking statements, including, without limitation, the
following risk factors.

LIMITED REVENUES; HISTORICAL AND PROBABLE FUTURE LOSSES. The Company
incurred net losses of $1,252,850, or $.05 per basic and diluted share of Common
Stock, and $1,996,112, or $.37 per basic and diluted share of Common Stock, for
the years ended December 31, 1997 and December 31, 1996, respectively, and net
losses of $1,961,486, or $.05 per basic and diluted share, for the six months
ended June 30, 1998. The Company anticipates that it will continue to incur
losses until, at the earliest, the Company establishes a number of restaurants
and stores generating sufficient revenues to offset its operating costs and the
costs of its proposed continuing expansion. For the six months ended June 30,
1998 and June 30, 1997, the Company incurred net losses of $1,961,486 and a net
income of $402,020, respectively. During the six months ended June 30, 1997, the
Company recognized a non-recurring gain of $1,327,070, or $.10 per basic and
diluted share of Common Stock, in connection with the settlement of litigation
with BKC. There can be no assurance that the Company will be able to
successfully establish a sufficient number of restaurants and stores to generate
meaningful revenues or achieve profitable operations in any of its restaurants
and stores or the Company as a whole. Except for the Company's fiscal quarter
ended March 31, 1997, in which the Company recognized a one-time gain
attributable to the settlement of its litigation with BKC, revenues from
operations have not been sufficient to offset operating expenses and corporate
overhead and, as a result, the Company has incurred losses. The Company has
taken steps to reduce its food costs and its general and administrative
expenses; however, there can be no assurance that it will be able to do so
effectively or that any such reductions will be sufficient to achieve profitable
operations.

COMPLIANCE WITH THE NEW BKC AGREEMENT AND NEW DOMINO'S AGREEMENT. The
Company's material commitments for capital expenditures relate to the
restaurants and stores that it must open and operate in order to comply with the
provisions of the New BKC Agreement and the New Domino's Agreement
(collectively, the "New Agreements"). Pursuant to the New BKC Agreement, the
Company is required to develop and be franchised to operate 45 Burger King
restaurants in Poland by September 30, 2007. Pursuant to the New Domino's
Agreement, the Company is required to develop and be franchised to operate 46
Domino's stores in Poland by December 31, 2003. As of August 31, 1998, the
Company had opened two Burger King restaurants and six Domino's stores pursuant
to such agreements.

Pursuant to the New BKC Agreement, IFFP must pay BKC $1.0 million as a
development fee by September 30, 1999. IFFP is not obligated to pay the
development fee if IFFP is in compliance with the development schedule by
September 30, 1999 and has achieved gross sales of $11.0 million for the 12
months ended September 30, 1999. If the development schedule has been achieved
but gross sales are less than $11.0 million but greater than $9.0 million, the
development fee will be reduced to $250,000. If the development fee is payable
due to failure to achieve the performance targets set forth above, IFFP, at its
option, may either pay the development fee or provide BKC with the written and
binding undertaking of Mitchell Rubinson that the Rubinson Group will completely
divest itself of any interest in IFFP and the Burger King restaurants opened or
operated by IFFP in Poland within six months of the date that the development
fee
11

<PAGE>

payment is due. Pursuant to the New BKC Agreement, the "Rubinson Group" has been
defined to include any entity of which Mr. Rubinson directly or indirectly owns
an aggregate interest of 10% or more of the legal or beneficial equity interest
and any parent, subsidiary or affiliate thereof. BKC may also terminate rights
granted to IFFP under the New BKC Agreement, including franchise approvals for
restaurants not yet opened, for a variety of possible defaults by IFFP,
including, among others, failure to open restaurants in accordance with the
schedule set forth in the agreement; failure to obtain BKC site approval prior
to the commencement of each restaurant's construction; and failure to meet
various operational, financial, and legal requirements set forth in the
agreement, including the maintenance of IFFP's net worth at $7.5 million
beginning on June 1, 1999. Upon termination of the New BKC Agreement, whether
resulting from default or expiration of its terms, BKC has the right to license
others to develop and operate Burger King restaurants in Poland, or to do so
itself.

Pursuant to the New Domino's Agreement, the Company was required to
invest a minimum of $2.0 million in KP and is required to maintain sufficient
capital to meet its obligations thereunder. KP's royalty payments to DPI are
payable in United States currency, or at DPI's option, in local currency.
Although DPI may elect to accept payment in alternative currencies if payment in
United States currency is prohibited by applicable law, DPI may terminate the
New Domino's Agreement if KP is unable to pay DPI in United States currency for
a period of one year. Domino's may terminate rights granted to KP under the New
Domino's Agreement, including franchise approvals for stores not yet opened, for
a variety of possible defaults by KP, including, among others, failure to open
Domino's stores in accordance with the schedule set forth in such agreement;
failure to obtain Domino's site approval prior to the commencement of each
Domino's store's construction; failure to obtain Domino's approval of any
non-affiliated Franchisee; and failure to meet various operational, financial,
and legal requirements set forth in the New Domino's Agreement and the standard
franchise agreements. Upon termination of the New Domino's Agreement, whether
resulting from default or expiration of its terms, Domino's has the right to
license others to develop and operate Domino's stores in Poland, or to do so
itself. If KP fails to meet its development schedule during the initial term of
the New Domino's Agreement or any successor development term, KP would lose its
rights to develop and franchise additional Domino's stores, but would be
entitled to continue to act as a master franchiser and a franchisee with respect
to all franchise agreements theretofore granted and executed. Under certain
other circumstances of default, Domino's has the right to terminate the New
Domino's Agreement and force the sale of, at the then current market value, all
of KP's rights and interests as a master franchiser of Domino's stores and all
of the assets of each Domino's store controlled by KP.

There can be no assurance that the Company will not be in default under
either of the New Agreements, or that such a default will not adversely affect
the Company. There can be no assurance that the Company will be able to open and
operate restaurants and stores in accordance with the specified schedules. In
the event that the Company is unable to open restaurants and stores in
accordance with the provisions of either of the New Agreements, the Company is
likely to seek a modification or extension of such agreement. There can be no
assurance that BKC or Domino's will agree to any such modification or extension.
In addition, the Company's ability to open individual restaurants and stores
pursuant to the New Agreements is dependent upon the Company's ability to obtain
a franchise agreement with the respective franchisor for each restaurant or
store. Franchise approvals are determined on an individual restaurant or store
basis and are contingent upon the Company's ability to satisfy certain
operational, financial and legal requirements. BKC or Domino's may terminate any
franchise agreement upon the occurrence of certain events. Any delay in
receiving, or denial of, approval of a proposed franchise, termination of a
franchise agreement, or termination of either of the New Agreements for any
reason would have a material adverse effect on the Company.

PROPOSED EXPANSION AND PLAN OF OPERATION. The Company currently
operates ten Burger King restaurants and ten Domino's stores in Poland and,
pursuant to the New Agreements, is required to open and operate an additional 43
Burger King Development Units by September 30, 2007, and an additional 40
Domino's stores by December 31, 2003. The Company has limited experience in
developing and operating a business of such magnitude, and numerous risks,
expenses, problems, and difficulties may be encountered in expanding operations.
There can be no assurance that the proposed expansion contemplated under the New
Agreements will not have an adverse effect on the Company. In addition, the
Company's plan of operation and prospects are dependent upon, among other
things, achieving higher market acceptance in Poland for the Burger King
restaurant and the Domino's store concepts, the availability of suitable
restaurant sites, timely development and construction of restaurants, the hiring
and retention of skilled management and personnel, the ability of the Company to
successfully manage growth (including monitoring restaurants, controlling costs,
and maintaining effective quality controls), and the availability of adequate
financing. The Company has limited experience in

12
<PAGE>

effectuating expansion to the degree contemplated by the New Agreements. The
lack of success or closing of any restaurants or stores developed by the Company
(and in the case of the closing of a restaurant or store, any continuing lease
obligations or the resulting loss of the Company's construction and development
costs) may have a material adverse effect upon the Company. There can be no
assurance that the Company will be able to successfully implement its proposed
expansion and plan of operation or that unanticipated expenses, problems or
difficulties will not result in material delays in its implementation.

THE COMPANY'S NEED FOR FINANCING. As of the date hereof, the Company
estimates the cost of opening a Burger King restaurant and a Domino's store
(including costs of construction and improvements, furniture, fixtures,
equipment and opening inventories) to be approximately $450,000 to $1.0 million,
and $125,000 to $200,000, respectively. The implementation of the Company's
expansion plans as required by the New Agreements will require resources
substantially greater than amounts currently available to the Company. The
development of additional restaurants and stores is contingent upon the
Company's ability to generate cash from operations and/or secure additional debt
or equity financing. The Company intends to pursue the proposed development by
utilizing various credit facilities and cash flow from operations. The Company
may also acquire additional funds through public or private offerings of its
debt and equity securities. Certain of the Shares which may be sold by the
Selling Shareholders hereunder may be acquired through the conversion of 11%
convertible senior subordinated discount notes due 2007 (the "Convertible
Notes"). The indenture pursuant to which the Convertible Notes were issued (the
"11% Indenture") contains significant restriction on the Company's ability to
incur indebtedness. If the Company does not secure adequate financing through
additional debt or equity financing, or generate significant amounts of cash
from operations, the Company may be required to curtail or cease its activities.
There can be no assurance that any additional financing will be available to the
Company on acceptable terms, or at all.

ADVERSE CONSEQUENCES OF FINANCIAL LEVERAGE. As of June 30, 1998, the
Company had approximately $28.2 million aggregate amount of liabilities
outstanding. The ability of IFFC and its subsidiaries to incur additional
indebtedness is restricted by the 11% Indenture. The 11% Indenture also contains
certain restrictions on IFFC and its subsidiaries which limit their operating
and financial flexibility, including the ability to incur liens, dispose of
assets, engage in mergers, make certain restricted payments or engage in
transactions with affiliates. The ability of the Company to make scheduled
payments under its present and future indebtedness will depend on, among other
things, the future operating performance of the Company and the Company's
ability to refinance its indebtedness when necessary. Each of these factors is
to a large extent subject to economic, competitive, regulatory and other factors
beyond the Company's control, in particular, those prevailing in Poland. In
addition, any future borrowings are also likely to be subject to covenants which
limit the Company's operating and financial flexibility.

HOLDING COMPANY STRUCTURE; LIMITATIONS ON ACCESS TO CASH FLOW OF
OPERATING COMPANIES. IFFC is a holding company with no business operations of
its own. All of the operations of IFFC are conducted through its subsidiaries,
which are separate and distinct legal entities and have no obligation,
contingent or otherwise, to make investments in, or meet working capital needs
or other liabilities of, IFFC. In addition, the operating companies have
generated negative cash flow, and the Company expects that the operating
companies will continue to generate negative cash flow from operations in the
foreseeable future. As a result, the Company does not expect that it will be
able to generate any significant cash flow from the operating companies at any
time in the foreseeable future.

LIMITED TRADING MARKET FOR THE COMPANY'S COMMON STOCK; VOLATILITY OF
AND DECLINES IN PRICE. In 1996, the Company's Common Stock was deleted from the
Nasdaq National Market and has traded on the NASD OTC Bulletin Board (the "OTC
BB") since that time. As a result, an investor may find it more difficult to
dispose of, or to obtain accurate quotations as to the market value of, the
Common Stock. Consequently, such a limited trading market may have an adverse
effect on the marketability of the Common Stock, and, in turn, negatively affect
the value of the Common Stock. In addition, the trading price of the Common
Stock could be subject to wide fluctuations in response to variations in the
Company's operating results, announcements by the Company or others,
developments affecting the Company, and other events or factors. The stock
market has experienced extreme price and volume fluctuations in recent years.
These fluctuations have had a substantial effect on the market prices for many
companies, often unrelated to the operating performance of such companies, and
may adversely affect the market prices of the Common Stock. The Common Stock
traded between $.91 and $.27 per share during the 52-week period ended June 30,
1998. The closing price for the Common Stock, as last reported on the NASD OTC
Bulletin Board on August 31, 1998 was $.79.

13
<PAGE>

If shares of Common Stock are traded, they may trade at a discount from
the price paid for such shares, depending upon prevailing interest rates, the
market for similar securities and other factors. No assurance can be given that
a holder of Common Stock will be able to sell the Common Stock in the future or
that such sale will be at a price equal to or higher than the price paid for
such Common Stock. No assurance can be given as to the liquidity of any trading
market for the Common Stock. The liquidity of any market for the Common Stock
will depend upon the number of holders of Common Stock, the interest of
securities dealers in making a market in the Common Stock, if any, and other
factors.

PENNY STOCK REGULATIONS. Sales of the Common Stock, subject to certain
exceptions, must conform to the rules promulgated by the Securities and Exchange
Commission (the "SEC") relating to sales of penny stocks. The SEC has adopted
regulations which define a "penny stock" to be any equity security that has a
market price (as defined) of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction, of a disclosure schedule
prepared by the SEC relating to the penny stock market. The broker-dealer also
must disclose the compensation payable to both the broker-dealer and the
registered representative, current quotations for the securities, and
information on the limited market in penny stocks. In addition, the
broker-dealer must obtain a written acknowledgement from the customer that such
disclosure information was provided and must retain such acknowledgement for at
least three years. Further, monthly statements must be sent to the customer
disclosing current price information for the penny stock held in the account.
The foregoing rules may materially adversely affect the liquidity for the market
of the Company's securities. Such rules may also affect the ability of
broker-dealers to sell the Company's securities and may impede the ability of
holders of the Company's securities to sell such securities in the secondary
market.

VOTING CONTROL AND CHANGE IN CONTROL MATTERS. Mitchell Rubinson and his
wife beneficially own approximately 68% of the outstanding Common Stock
(assuming that outstanding convertible securities, warrants and options held by
others are not converted or exercised) and, thus, effectively may have the
ability to elect the majority of the Board and control the affairs of the
Company. In addition, Marilyn Rubinson, Mitchell Rubinson's mother, beneficially
owns approximately 11% of the outstanding Common Stock.

The Company must pay a development fee to BKC pursuant to the New BKC
Agreement, unless it is in compliance with the required development schedules by
September 30, 1999. If the Company is not in compliance as of September 30,
1999, it at its option, may either pay the development fee or provide BKC with
with the written and binding undertaking of Mitchell Rubinson that the Rubinson
Group will completely divest itself of any interest in IFFP and the Burger King
restaurants opened or operated by IFFP in Poland within six months of the date
that the development fee payment is due but not paid. Pursuant to the New BKC
Agreement, the "Rubinson Group" has been defined to include any entity of which
Mr. Rubinson, who is the Chief Executive Officer of the Company, directly or
indirectly owns an aggregate interest of 10% or more of the legal or beneficial
equity interest and any parent, subsidiary or affiliate thereof. Such
divestiture of the Rubinson Group or Mitchell Rubinson could result in a change
in control of the Company under the terms or the indenture governing the 11%
convertible senior subordinated discount notes (the "Convertible Notes"). If a
change in control is deemed to have occurred, the Company would be required to
commence an offer to repurchase the Convertible Notes within 30 days of such
change in control at a purchase price equal to 101% of the accreted value of
such notes.

RESTRICTION ON PAYMENT OF DIVIDENDS UNDER FLORIDA LAW. Florida law
provides that no distribution may be made to shareholders if, after giving
effect to such distribution, (i) the corporation would be unable to pay its
debts as they become due in the usual course of business, or (ii) the
corporation's total assets would be less than the sum of its total liabilities
plus (unless the articles of incorporation provide otherwise) the amount that
would be needed in a dissolution to satisfy the preferential rights of
shareholders whose preferential rights are senior to those receiving the
distribution. The Board of Directors is empowered to base its evaluation of
whether a distribution is permitted under the statute either on (i) financial
statements that are prepared on a basis of accounting principles and practices
that are reasonable under the circumstances or (ii) fair valuation or other
method that is reasonable in the circumstances. Accordingly, the payment of
dividends on the Common Stock will be subject to the statutory insolvency test.
Additionally, the indenture governing the Convertible Notes significantly
restricts the Company's ability to pay dividens on its outstanding securities.
IFFC anticipates that, for the foreseeable future, it will not pay any cash
dividends. In addition, the Company has in the past failed to pay the dividends
on its outstanding Series A Convertible Preferred Stock. A condition of the
payment of dividends on the Common Stock is the payment of the dividends, in
arrears, owing to the holders of the Series A Convertible Preferred Stock. There
is no assurance that the Company will be able to pay any future dividends on
either the Series A Convertible Preferred Stock or the Common Stock.

FUTURE SALES OF STOCK BY SHAREHOLDERS. In the event that the shares of
Common Stock which are not currently salable become salable by means of
registration, eligibility for sale under Rule 144 or otherwise and the holders
of such securities elect to sell such securities in the over-the-counter market,
there is likely to be a negative effect on the market price of the Company's
securities and on the ability of the Company to obtain additional equity
financing. The issuance of Common Stock upon conversion of the Convertible Notes
will increase float and may depress the trading price. After conversion of the
Convertible Notes, the Selling Shareholders may sell the Shares at a time when
increased float has a negative effect on trading price.

DEPENDENCE ON THIRD PARTY SUPPLIERS. The Company is substantially
dependent upon third parties for its equipment, food products and other
supplies. Although the Company is not required to purchase supplies from any
particular suppliers pursuant to the New Agreements, all supplies must be of a
quality and conform to specifications acceptable to the franchisor. The Company
believes that there are adequate sources of supply in Poland, Western Europe and
the United States. The Company currently obtains substantially all of its
supplies and food products from Polish

14
<PAGE>

sources. The Company currently obtains its equipment and paper products
primarily from franchisor-approved sources in the United States and Europe.
Although the Company believes, based upon its current arrangements with
suppliers, that it will be able to continue to obtain equipment and inventories
of food products and other supplies in sufficient quantities and of satisfactory
quality, the unavailability of such equipment or supplies from third-party
manufacturers and suppliers would have a material adverse effect on the Company.
Moreover, the Company is subject to the risks inherent in dependence on foreign
sources of supply, shipping delays, fluctuations in foreign currency exchange
rates, Value Added Tax ("VAT") and excise tax, custom duties and other trade
restrictions, any of which could adversely affect the Company's ability to
obtain equipment and supplies on a satisfactory basis. Failure to obtain
restaurant equipment, food products and other supplies on a timely basis may
have a material adverse effect on the Company.

COMPETITION. The Company faces competition from a number of other major
American fast food franchisors and/or franchisees (including but not limited to
McDonald's, Pizza Hut, Kentucky Fried Chicken and Taco Bell), which have
commenced development or are evaluating the possible development of restaurants
and stores in Poland. The Company also encounters competition from a broad range
of existing Polish restaurants and food service establishments, including local
quick-service restaurants and restaurants offering American-style fast food.
These restaurants offer products that are familiar to Polish consumers and have
achieved broad market acceptance. Additionally, it can be expected that, in the
event of perceived increasing market acceptance of American-style fast food,
there will also be a corresponding increase in the number of market entrants
offering such products, including additional United States franchisors and
Polish or other companies seeking to imitate the American-style fast food
concept.

Under the New BKC Agreement, BKC has reserved the right to open
restaurants on United States military establishments and in certain hotel chains
with which BKC has, or may in the future have, a multi-territory agreement
encompassing Poland. The Company has the right of first refusal with respect to
potential Burger King sites in airports, train stations, hospitals and other
hotels. Many of the Company's competitors and potential competitors,
particularly the major U. S. fast-food companies, possess significantly
greater financial, marketing, personnel and other resources than the Company.
There can be no assurance that the Company will be able to compete successfully.

TRADEMARKS. The Company is authorized to use such trademarks, service
marks and other marks as BKC may authorize from time to time for use in
connection with its Burger King restaurants (collectively, the "Burger King
Marks"). BKC has received trademark approval in Poland for certain Burger King
Marks (the "Burger King" logo, the words "Burger King" and the word "Whopper").
The Company is also authorized to use such trademarks, service marks and such
other marks as Domino's may authorize from time to time for use in connection
with the Domino's stores. Domino's has received trademark approval in Poland for
certain marks, including the "Domino's" logo and the words "Domino's Pizza" (the
"Domino's Marks"). If any other trademarks are not approved or if another entity
appropriates one or more of the marks, the Company could be materially adversely
affected. Neither BKC nor Domino's has made any warranty or representation that
the Burger King Marks or the Domino's Marks will be available to the Company on
an exclusive basis or at all. Any events or conditions that affect such marks
may have a material adverse effect on the Company.

DEPENDENCE UPON KEY AND OTHER PERSONNEL. The success of the Company is
largely dependent on the efforts of certain key personnel, including Mitchell
Rubinson, IFFC's Chairman of the Board and Chief Executive Officer, Michael
Welch, IFFC's President and Chief Operating Officer, and James F. Martin, IFFC's
Chief Financial Officer. All of the above mentioned personnel have employment
contracts with the Company. The loss of the services of Mr. Rubinson, Mr. Welch,
or Mr. Martin may have a material adverse effect on the Company. Additionally,
in order to satisfy the terms of the New Agreements and to implement its plan of
operation, the Company is dependent upon its ability to hire and retain
qualified financial, marketing, and restaurant and store management personnel
and its ability to hire and train restaurant and store managers and hourly
employees from the local labor pool who will be able to operate the Company's
restaurants and stores in conformity with the required standards of service and
efficiency. There is no assurance that the Company will be able to continue to
meet its needs with respect to hiring and employing qualified employees in the
future.

SHARES OF COMMON STOCK ELIGIBLE FOR FUTURE SALES. As of August 31,
1998, the Company had 44,776,143 shares of Common Stock outstanding and
43,117,178 share of Common Stock reserved for issuance consisting of: (i)
324,235 shares of Common Stock reserved for issuance upon conversion of
$2,756,000 in principal amount of the 9% subordinated convertible debentures
(conversion price of $8.50 per share); (ii) 1,115,000 shares of Common Stock
reserved for issuance upon conversion of shares of the Company's Series A
Convertible Preferred Stock (conversion price of $3.00

15
<PAGE>

per share); (iii) 290,800 shares of Common Stock reserved for issuance upon
exercise of outstanding warrants (exercisable at $7.00 per share); (iv)
1,070,000 shares of Common Stock reserved for issuance upon the exercise of
outstanding options under the Company's Stock Option Plan and Directors Stock
Option Plan (collectively, the "Plans") at exercise prices ranging from $.40 to
$.81 per share; (v) 930,000 shares of Common Stock reserved for the grant of
options pursuant to the Plans; (vi) 50,000 shares of Common Stock reserved for
issuance upon exercise of warrants (exercise price of $.2831 per share) and
(vii) 39,337,143 shares of Common stock reserved for issuance upon conversion of
$27,536,000 in aggregate stated principal amount of maturity of the 11%
convertible senior subordinated discount notes (conversion price of $.70 per
share). The Company may issue additional convertible securities, options,
warrants and shares of Common Stock in the future.

The Company cannot predict the impact, if any, that future sales of
Common Stock, the conversion of convertible securities, the exercise of options
or warrants, the resale of the shares of Common Stock issued upon such
conversions or exercises or the sale of restricted securities will have on the
market price of the Common Stock prevailing from time to time, although it is
likely that sales of a large number of securities could depress the market
price. The Company also cannot predict the effect, if any, that such convertible
securities, options, warrants and shares available for sale might have on the
ability of the Company to obtain additional financing or the terms and
conditions thereof.

RISKS RELATED TO OPERATIONS IN POLAND

OPERATIONS IN POLAND. The Company is subject to numerous factors
relating to conducting business in a foreign country, any of which could have a
significant impact on the Company's operations and exacerbate the risks inherent
in the expansion of the Company's business. There can be no assurance that
developments in Poland will not have a material adverse effect on the Company.

POTENTIAL POLITICAL AND ECONOMIC INSTABILITY IN POLAND. Poland, which
until 1989 had a communist form of government, has been undergoing fundamental
political and economic change. Capitalism and free enterprise have only recently
been introduced in Poland and, consequently, Poland lacks a well-established
framework for dealing with private enterprise. Laws and regulations are
sometimes adopted without widespread notification, which can delay full
knowledge of their scope and impact, and the enforcement and administration
thereof are often inconsistent and without precedents. Any political or economic
instability, including popular unrest, or any governmental policies that make
Poland less hospitable to privately owned or foreign companies, including
expropriation, confiscatory taxation, foreign exchange restrictions or
nationalization, could have a material adverse effect on the Company.

POLISH TAXATION. The Company's Polish subsidiaries are subject to
Polish corporate income tax, which is currently 36% of taxable income. In 1999
and 2000, this rate will be reduced to 34% and 32%, respectively. Dividends paid
to the Company by its Polish subsidiaries are subject to Polish withholding tax,
which is currently limited to 5% pursuant to a bilateral tax treaty between
Poland and the United States, if the recipient of such dividends is a United
States corporation holding not less than 10% of the subsidiaries' voting stock.
Although the Company expects to receive a credit against its United States
federal income tax liability for any Polish corporate tax or dividend
withholding tax, there can be no assurance that such credit will be respected by
United States taxing authorities. Additionally, all employers must pay payroll
taxes for social security and unemployment funds, presently aggregating 48% of
the wages paid to employees, before withholding for personal income tax. All
goods and services, including imported goods and services, are subject to a VAT
and excise tax, based on the value of such items. With respect to imports, the
imputed value of such items is equal to the customs' value plus any customs
duties. The VAT basic rate is 22%, but in the case of certain products, it is
reduced to 7% or entirely. Under the VAT system, credit is given for VAT paid
against VAT collected. Any increase in levels of Polish taxation could have a
material adverse effect on the Company.

CUSTOMS DUTIES AND TRADE RESTRICTIONS. The Company's equipment import
operations are subject to customs duties on goods imported into Poland currently
ranging from 15% to 20% for furniture, fixtures and equipment. Customs duties,
however, are not levied on non-monetary, in-kind contributions to capital,
provided that such contributions constitute "fixed assets" and are not disposed
of during the three-year period following customs clearance. Although the
Company has and intends to contribute as capital substantially all of its Polish
subsidiaries' furniture, fixtures and equipment, there can be no assurance that
such equipment will ultimately qualify as "fixed assets" for purposes of this
exclusion. At certain times, temporary restrictions, including import license
requirements and import quotas, have been

16
<PAGE>

placed on the importation into Poland of certain categories of food products.
The Company believes that it will be able to continue to secure local supplies
of food, satisfy license requirements, and/or obtain products with respect to
which quotas exist so that it will be able to operate its business; however, the
unavailability of certain food products or the imposition of more severe import
restrictions could adversely affect the Company. Any imposition or significant
increases in the level of customs duties, import quotas or other trade
restrictions could have a material adverse effect on the Company.

GOVERNMENT REGULATION. The Company's restaurant operations are subject
to Polish laws and regulations primarily relating to foreign investment and
numerous national and local laws and regulations. In particular, the Company is
subject to laws and regulations primarily relating to sanitary requirements for
imported meat and other food products. Restaurant operations are also subject to
health, sanitation, employment and safety standards imposed by local authorities
and local zoning, building code and land-use regulations. There can be no
assurance that the Company will be able to comply with any such laws or
regulations or that amendments to existing laws and regulations or new laws and
regulations will not be enacted in the future that could require the Company to
alter methods of operations at costs that could be substantial. Failure to
comply with such laws or regulations could have a material adverse effect on the
Company.

FOREIGN CURRENCY AND FOREIGN EXCHANGE REGULATION. The Polish economy
has been characterized by high rates of inflation and a gradual devaluation of
the Polish currency against the dollar and European currencies. The Polish
government has adopted policies that slowed the annual rate of inflation from
approximately 250% in 1990 to approximately 13.2% in 1997. The only legal
currency in Poland is the zloty and the year-end exchange rate for the zloty was
2.468, 2.873 and 3.514 zlotys in 1995, 1996 and 1997, respectively. As of June
30, 1998, the exchange rate was 3.509 zlotys per dollar. There can be no
assurance that further devaluation of the zloty will not have a material adverse
effect on the Company's operations in Poland. The Company and its subsidiaries
will require substantial amounts of United States dollars and/or other European
currencies. The Company is required to pay royalty and franchise fees for both
Burger King and Domino's in U.S. dollars. Additionally, the Company purchases
certain supplies outside of Poland, which require payment in European or United
States currencies. Because the Company's subsidiaries' revenues from operations
are or will be in zlotys, the Company's subsidiaries' are subject to the risk
that the value of the zloty will decline against such currencies. In addition,
the Company's results of operation as reported in United States dollars may be
significantly affected by fluctuation in the value of the zloty in relation to
the United States dollar. The Company maintains substantially all of its funds
in United States dollar denominated accounts and securities, in part, to protect
such funds from declines in the value of the Polish zloty, and to ensure the
accessibility to United States or European currencies. The Company does not
currently engage or intend to engage in hedging. However, if circumstances
change, the Company may seek to limit its exposure to the risk of currency
fluctuations by engaging in hedging or other transactions, which transactions
could expose the Company to substantial risk of loss. The Company has yet to
formulate a strategy to protect the Company against currency fluctuations. There
can be no assurance that the Company will successfully manage its exposure to
currency fluctuations or that such fluctuations will not have a material adverse
effect on the Company.

RISKS ASSOCIATED WITH INVESTMENTS IN POLAND AND EMERGING MARKETS.
Political, economic, social and other developments in Poland may in the future
have a material adverse effect on the Company's business. In particular, changes
in laws or regulations (or in the interpretation of existing laws or
regulations), whether caused by change in the government of Poland or otherwise,
could materially adversely affect the Company's operations and business.
Currently, there are no foreign exchange controls on the repatriation of capital
and dividends from Poland that would be applicable to the payment of dividends
on the Common Stock, but there can be no assurance that foreign exchange control
restrictions, taxes or limitations will not be imposed or increased in the
future with regard to such payments. Due to the many formalities required for
compliance with laws in Poland and the rapid changes that Polish laws have
undergone in the 1990s, the Company may from time to time have violated, may be
violating and may in the future violate, certain legal requirements, including
provisions of labor, foreign exchange, customs, tax and corporate laws. The
Company believes that any such violations have not had a material adverse effect
upon the Company's business, results of operation or financial condition, but
there can be no assurance that this will continue to be the case.

Poland is generally considered by international investors to be an
emerging market. In general, investing in the securities of issuers with
substantial operations in markets such as Poland involves a higher degree of
risk than investing in the securities of issuers with substantial operations in
the United States, the countries of the European Economic Union ("EEC") or other
similar jurisdictions. There can be no assurance that political, economic,
social or other developments in other emerging markets will not have an adverse
effect on the market value and liquidity of the Common Stock.

DOWNTURN IN RUSSIAN ECONOMY. The Russian economy has recently
experienced a significant downturn and the value of the ruble has dropped
substantially against major currencies. There can be no assurances that the
financial crisis in Russia will not affect Poland or the Polish economy.
Additionally, if there is a negative effect on the Polish economy, there can be
no assurances that the Company will not be materially adversely affected.

17
<PAGE>
DILUTION

Certain of the Shares which may be sold hereunder will be acquired by
the Selling Shareholders upon conversion of the 11% convertible senior
subordinated discount notes (the "Convertible Notes"). The Convertible Notes are
convertible into shares of Common Stock at any time after November 5, 1998. As
of June 30, 1998, the net tangible book value of the Common Stock was $(.24) per
share. If holders of the Convertible Notes convert their Convertible Notes into
Common Stock at a time when the net tangible book value is less than the
conversion price, such holders will experience dilution. The issuance of
significant additional amounts of Common Stock upon conversion, or as dividends,
may have an adverse effect on the price of the Common Stock, and may dilute the
equity ownership of existing shareholders.

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION

General

Management's Discussion and Analysis or Plan of Operation contains
various "forward looking statements" within the meaning of the Securities Act of
1933 and the Securities And Exchange Act of 1934, which represents the Company's
expectations or beliefs concerning future events including without limitation
the following: fluctuations in the Polish economy; the company's continued
ability to open restaurants and stores; ability of the Company to obtain
financing on terms and conditions that are favorable; ability of the Company to
improve levels of profitability and sufficiency of cash provided by operations,
investing and financing activities. The Company cautions that these statements
are further qualified by important factors that could cause actual results to
differ materially from those contained in the forward looking statements,
including without limitations, general economic and political conditions in
Poland, the demand for the Company's products and services, changes in the level
of operating expense and the present and future level of competition. Results
actually achieved may differ materially from expected results included in these
statements. For additional information, see "Risk Factors" above.

As of December 31, 1997 and June 30, 1998, the Company had working
capital of approximately $17,509,290 and $14,931,928 and Cash and Cash
Equivalents of $18,642,335, and $11,018,674 respectively. The Company's working
capital and cash position were significantly improved by the settlement of the
certain litigation with Burger King Corporation ("BKC") in March 1997 coupled
with recent debt consolidation, the Company's merger with Litigation Funding,
Inc., and the placement of the Convertible Notes. Although IFFC believes that it
has sufficient funds to finance its present plan of operations through January
31, 1999, the Company cannot reasonably estimate how long it will be able to
satisfy its cash requirements. The capital requirements relating to
implementation of the New BKC Agreement and the New Domino's Agreement are
significant. Based upon current assumptions, IFFC will seek to implement its
business plan utilizing its Cash and Cash Equivalents, and cash generated from
restaurant and store operations. In order to satisfy the capital requirements of
the New BKC Agreement and the New Domino's Agreement, IFFC will require
resources substantially greater than the amounts it presently has or amounts
that can be generated from its restaurant and store operations. There can be no
assurance that IFFC will be able to obtain additional financing or that
additional financing will be available on acceptable terms to fund future
commitments for capital expenditures.

IFFC currently operates ten Burger King restaurants and ten Domino's
stores in Poland. IFFC has incurred losses and anticipates that it will continue
to incur losses until, at the earliest, it establishes a number of restaurants
and stores generating sufficient revenues to offset its operating costs and the
costs of its proposed continuing expansion. There can be no assurance that IFFC
will ever achieve profitability or be able to successfully establish a
sufficient number of restaurants to achieve profitability.

Burger King. IFFC currently operates its Burger King restaurant
business in Poland through its Polish subsidiary, IFFP, and its wholly-owned
Polish limited liability corporations, IFF Polska-Kolmer Sp.zo.o. and IFF-DX
Management Sp.zo.o. IFFC operates its Domino's Pizza business in Poland through
its two wholly-owned Polish subsidiaries, Krolewska Pizza, Sp.zo.o. ("KP") and
Pizza King Polska, Sp.zo.o. ("PKP"). Unless the context indicates otherwise,
references herein to IFFC include all of its operating subsidiaries.

On March 17, 1995, IFFC and IFFP (collectively, the "IFFC Affiliates"),
filed suit against BKC in the Eleventh Judicial Circuit Court of the State of
Florida (the "BKC Litigation"). The IFFC Affiliates alleged, among other things,
that BKC breached certain of its express and implied obligations under the old
BKC development agreement and the existing franchise agreements (the "Franchise
Agreements") pertaining to IFFP's nine Burger King restaurants. The IFFC
Affiliates further alleged that in connection with BKC's sale of certain of its
rights pursuant to the old BKC development agreement and the Franchise
Agreements, BKC failed to timely deliver to the IFFC Affiliates a complete and
accurate franchise offering circular in accordance with rules promulgated by the
Federal Trade Commission. The IFFC Affiliates also alleged that BKC committed
certain acts which constitute fraud and/or deceptive and unfair business
practices. The IFFC Affiliates asked the court to, among other things, award
them compensatory damages of not less than $15.0 million punitive damages and
certain costs and expenses.

19
<PAGE>

In order to secure additional funds to finance the BKC Litigation, IFFC
entered into two agreements specifically designed to assist it in financing the
BKC Litigation. First, in January 1996, the IFFC Affiliates entered into an
agreement to Assign Litigation Proceeds (the "Funding Agreement") with
Litigation Funding, Inc. ("Funding"). This agreement was later amended in July
1996. Mitchell Rubinson, the Chairman of the Board and Chief Executive Officer
of IFFC was also the Chairman of the Board, Chief Executive Officer and
President and the principal shareholder of Funding. Pursuant to the amended
Funding Agreement, Funding agreed to pay on behalf of the Company up to $750,001
(the "Amount") for all expenses (including attorneys' fees, court costs and
other related expenses, but not judgments or amounts paid in settlement)
actually incurred by or on behalf of the Company in connection with
investigating, defending, prosecuting, settling or appealing the BKC Litigation
and any and all claims or counterclaims of BKC against IFFC and/or IFFP. In
consideration of the Amount, IFFC and IFFP each assigned to Funding a portion of
any and all proceeds that they received from or in connection with the BKC
Litigation or any related claim, demand, appeal, right and/or cause of action of
the IFFC Affiliates.

On March 11, 1997, BKC, IFFC, IFFP and Mitchell Rubinson, individually
and on behalf of Funding, entered into a settlement agreement (the "Settlement
Agreement"). In connection with the execution of the Settlement Agreement, IFFC
and BKC entered into the New BKC Agreement and nine new franchise agreements.
BKC paid to the Company $5.0 million (less $21,865 of royalties owed by IFFP to
BKC for February 1997). In addition, BKC forgave $499,768 representing all
monies owed to BKC by IFFP and IFFC through January 31, 1997. Under the terms of
the Settlement Agreement, a portion of such proceeds, not to exceed $2.0 million
was to be used to satisfy the legal fees and costs of IFFC and IFFP incurred in
connection with the BKC Litigation, including IFFC's and IFFP's obligation under
the agreement between IFFC, IFFP and Funding. Pursuant to such agreement,
Funding received a payment (including interest) in the amount of $1,028,521 in
connection with the Settlement Agreement. The remaining $3.0 million was used by
IFFC and IFFP for the development of additional BKC restaurants in Poland or
working capital for IFFP pursuant to the New BKC Agreement. All parties to the
litigation stipulated to dismissal of the litigation and executed mutual
releases.

On July 14, 1997, IFFC and IFFC Acquisition, Inc., a wholly-owned
subsidiary of the Company ("Acquisition Sub") entered into a Merger Agreement
with Funding and Mitchell and Edda Rubinson, the sole shareholders of Funding.
Under the terms of the agreement, Funding was merged with and into Acquisition
Sub. The 25,909,211 shares of Common Stock of the Company received by the
Funding shareholders pursuant to such merger was determined by dividing the
$3,021,014 value assigned to Funding by the book value per share ($.1166) of the
Company's Common Stock as of June 30, 1997, before reduction for the liquidation
preference applicable to the outstanding shares of Preferred Stock.

Domino's. In July 1997, the Company purchased KP and it wholly owned
subsidiary, PKP, for nominal consideration and assumption of all liabilities,
including the liabilities of KP to the Company under a $500,000 promissory note.
KP currently owns the exclusive master franchise rights and commissary rights
and PKP owns the individual store franchises for Dominos pizza stores in Poland.
The acquisition was accounted for under the purchase method of accounting, and
the net assets acquired are included in the Company's consolidated balance sheet
based upon their estimated fair values at the date of acquisition. Results of
operations of KP are included in the Company's consolidated statement of
operations subsequent to the date of acquisition. The excess of the net assets
acquired over the purchase price is accounted for as a reduction of furniture,
equipment and leasehold improvements.

Proforma Actual
----------------------------------- -------------------
Year Ended December 31, Six Months
1997 1996 Ended June 30, 1998
-------------- -------------- -------------------
<S> <C> <C> <C>
Total Revenues........................ $ 673,191 $ 6,376,534 $ 3,723,796
Net loss.............................. $(1,384,323) $(2,564,233) $(1,961,486)
Basic and diluted net loss per share.. $ (.05) $ (.43) $ (.05)
</TABLE>

20
<PAGE>

Results Of Operations

Six Months Ended June 30, 1998 vs. Six Months Ended June 30, 1997.
During the six months ended June 30, 1998, KP and PKP generated $933,824 of
store sales from their nine Domino's Stores and incurred Food and Packaging
Costs of $331,099, Payroll and Related Costs of $203,650, Occupancy and Other
Operating Expenses of $339,212 and Depreciation and Amortization of $98,179. As
a percentage of sales, Food and Packaging Costs were 35.5%, Payroll and Related
Costs were 21.8%, Occupancy and Other Operating Expenses were 36.3% and
Depreciation and Amortization were 10.5%. Because the acquisition of KP and PKP
were accounted for as a purchase, no amounts are included in the accompanying
financial statements for the six months ended June 30, 1997.

For the six months ended June 30, 1998 and June 30, 1997, IFFC
generated Restaurant Sales of $3,689,022 and $2,752,559, respectively, which
includes sales of $933,824 for the Domino's Stores in 1998. In United States
dollar and Polish zloty terms, IFFC's Burger King Restaurant Sales increased by
approximately .10% and 12.5%, respectively, for the six months ended June 30,
1998 as compared to the six months ended June 30, 1997. The increase is
primarily attributable to the increase in the average check price per
transaction resulting from the Company's menu price increase implemented in
January 1998.

During the six months ended June 30, 1998, IFFC incurred Food and
Packaging Costs of $1,451,366, Payroll and Related Costs of $671,347, Occupancy
and Other Operating Expenses of $1,065,085 and Depreciation and Amortization
Expense of $520,379.

Food and Packaging Costs applicable to Burger King restaurants for the
six months ended June 30, 1998 and 1997 were 40.6% and 40.7% of Restaurant
Sales, respectively. The .01% decrease as a percentage of Restaurant Sales is
primarily attributable to improved product sourcing, coupled with an increase in
Restaurant Sales.

Payroll and Related Costs applicable to Burger King restaurants for the
six months ended June 30, 1998 and 1997 were 17.0% and 16.0% of Restaurant
Sales, respectively. The 1.0% increase as a percentage of Restaurant Sales
increased primarily as a result of an increase in managerial salaries at the
restaurant level in order to keep pace with the labor market.

Occupancy and Other Operating Expenses applicable to Burger King
restaurants for the six months ended June 30, 1998 and 1997 were 26.4% and 27.8%
of Restaurant Sales, respectively. The 1.4% decrease as a percentage of
Restaurant Sales is primarily attributable to the decrease in royalties payable
to Burger King Corporation in accordance with the New BKC Agreement.

Depreciation and Amortization Expense applicable to Burger King
restaurants as a percentage of Restaurant Sales was 15.3% and 15.9% in the six
months ended June 30, 1998 and 1997, respectively. The .6% decrease as a
percentage of restaurant sales is primarily attributable to an increase in
Restaurant Sales coupled with the fully depreciated status of certain assets
still in use.

General and Administrative Expenses for the six months ended June 30,
1998 (which includes $123,582 applicable to KP and PKP) and 1997 were 30.1% and
26.0% of Restaurant Sales, respectively. The 5.1% increase as a percentage of
Restaurant Sales is primarily attributable to the addition of PKP, new hires and
increased salaries and related benefits. For the six months ended June 30, 1998,
General and Administrative Expenses were comprised of executive and office staff
salaries and benefits ("Salary Expense") $466,766; legal and professional fees,
office rent, travel, telephone and other corporate expenses ("Corporate Overhead
Expense") $600,411, and depreciation and amortization $75,230. For the six
months ended June 30, 1997, General and Administrative Expense included Salary
Expenses of $248,681; Corporate Overhead Expenses of $418,226, and depreciation
and amortization of $47,979.

21
<PAGE>

For the six months ended June 30, 1998 and 1997 Interest and Other
Income was comprised as follows:
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------------------
1998 1997
---- ----
<S> <C> <C>
Interest income (expense)............... $539,969 $ 70,193
Management fee.......................... -- 9,580
All other, net.......................... (23,003) (156,756)
-------- --------
Total ......................... $516,966 $(76,983)
======== ========
</TABLE>
All other, net includes various non-recurring charges and credits not
specifically related to operating activity.

Interest Expense is comprised as follows:
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------------------
1998 1997
---- ----
<S> <C> <C>
Interest Expense on 9% Subordinated
Convertible Debentures.................... $124,020 $124,020
Interest Expense on Note Payable to
Litigation Funding........................ -- 43,671
Interest Expense on 8% Convertible
Promissory Notes.......................... -- 16,178
Amortization of Debt Issuance Costs............ 140,278 16,628
Accretion of discount on 11% Convertible
Senior Subordinated Discount Notes........ 1,101,136 --
Interest Expense on Bank Facilities............ 49,108 72,674
---------- ---------
Total................................. $1,414,542 $273,171
========== =========
</TABLE>

Interest Expense exceeded Interest and Other Income by $897,576 and
$350,154 for the six months ended June 30, 1998 and 1997, respectively. The
primary reason for the increase for the six month period ended June 30, 1998, is
due to the accretion of the Convertible Notes and the related amortization of
debt issuance costs.

IFFC's interest expense on bank facilities was $49,108 and $72,674 for
the six months ended June 30, 1998 and 1997, respectively. The $23,566 decrease
is attributable to IFFC's lower average level of borrowings under bank credit
facilities during the six months ended June 30, 1998, coupled with lower
interest rates.

During the six months ended June 30, 1997, IFFC recorded a
non-recurring gain of $1,327,070, or $.11 per share of IFFC's Common Stock in
connection with the settlement of the BKC Litigation. As a result of the
foregoing, for the six months ended June 30, 1998, IFFC generated a net loss of
$(1,961,486) or $(.05) per share of IFFC's Common Stock compared to net income
of $402,020, or $.02 per share of IFFC's Common Stock for the six months ended
June 30, 1997.

IFFC anticipates that it will continue to incur certain expenses in
connection with its disputes with the Polish Fiscal Authorities. See "Business -
Legal Proceedings."

Year-Ended December 31, 1997 vs. Year-Ended December 31, 1996. During
the period from acquisition in July through December 31, 1997, KP and PKP
generated $612,757 of store sales from their four Domino's Stores and incurred
Food and Packaging Costs of $220,328, Payroll and Related Costs of $155,135,
Occupancy and Other Operating Expenses of $259,150 and Depreciation and
Amortization of $107,171. As a percentage of sales, Food and Packaging Costs
were 36.0%, Payroll and Related Costs were 25.3%, Occupancy and Other Operating
Expenses were 42.3% and Depreciation and Amortization were 17.5%. Because the
acquisition was accounted for as a purchase, no amounts are included in the
accompanying financial statements for the year ended December 31, 1996.

22
<PAGE>

For the year ended December 31, 1997 and December 31, 1996, IFFC
generated Sales of $6,083,011 and $5,486,178, respectively which includes sales
of $612,757 for the Domino's Stores in 1997. Excluding the sales from Domino's
Stores in 1997 and miscellaneous revenue from both years, Burger King restaurant
sales increased by 0.6% in United States dollar terms and 22.3% in Polish zloty
terms, for the year ended December 31, 1997 as compared to the year ended
December 31, 1996. The increase is primarily attributable to improved marketing
and general improvements in the Polish economy.

During the year ended December 31, 1997, IFFC incurred Food and
Packaging Costs of $2,256,447, Payroll and Related Costs of $912,147, Occupancy
and Other Operating Expenses of $1,569,744 and Depreciation and Amortization
Expense of $781,367.

Food and Packaging Costs applicable to Burger King restaurants for the
year ended December 31, 1997 and 1996 were 41.9% and 42.7% of Restaurant Sales
(exclusive of miscellaneous revenue), respectively. The 0.8% decrease as a
percentage of Restaurant Sales is primarily attributable to improved product
sourcing, the implementation of tighter cost controls, a decrease in custom
duties and import tax on paper goods coupled with an increase in Restaurant
Sales.

Payroll and Related Costs applicable to Burger King restaurants for the
year ended December 31, 1997 and 1996 were 16.9% and 15.2% of Restaurant Sales
(exclusive of miscellaneous revenue), respectively. The 1.7% increase as a
percentage of Restaurant Sales increased primarily as a result of an increase in
the minimum wage rate and related benefits in Poland effective January 1, 1997,
coupled with increased wages for managers and assistant managers.

Occupancy and Other Operating Expenses applicable to Burger King
restaurants for the year ended December 31, 1997 and 1996 were 29.2% and 28.7%
of Restaurant Sales (exclusive of miscellaneous revenue), respectively. The 0.5%
increase as a percentage of Restaurant Sales is primarily attributable to an
increase in advertising expense, and repairs and maintenance.

Depreciation and Amortization Expense applicable to Burger King
restaurants as a percentage of Restaurant Sales (exclusive of miscellaneous
revenue) was 14.5% and 18.4% in the year ended December 31, 1997 and 1996,
respectively. The 3.9% decrease as a percentage of restaurant sales is primarily
attributable to the fully depreciated status of certain assets still in use.

General and Administrative Expenses for the year ended December 31,1997
(which include $96,384 applicable to KP and PKP) and 1996 were 32.3% and 28.3%
of Sales, respectively. The 4.0% increase as a percentage of Sales is primarily
attributable to increased office rent, legal and accounting services, and an
approximate $250,000 increase in the provision for disputes with Polish Fiscal
Authorities. See "Business - Legal Proceedings." Excluding the $96,384 of
General and Administrative expenses applicable to KP and PKP and the
non-recurring provision of $250,000, General and Administrative expenses
applicable to Burger King restaurants were 30.0% and 29.0% for the year ended
December 31, 1997. General and Administrative Expenses were comprised of
executive and office staff salaries and benefits ("Salary Expense") of $612,225;
legal and professional fees, office rent, travel, telephone and other corporate
expenses (including 250,000 non-recurring provision) ("Corporate Overhead
Expense") of $1,250,151, and depreciation and amortization of $100,857. For the
year ended December 31, 1996, General and Administrative Expense included Salary
Expenses of $709,188; Corporate overhead expenses of $685,067, and depreciation
and amortization of $156,874.

For the year ended December 31, 1997, IFFC generated a net loss of
$(1,252,850) or $(.05) per share of IFFC's Common Stock compared to a net loss
of $(1,996,112), or $(.37) per share of IFFC's Common Stock for the year ended
December 31, 1996. During the year ended December 31, 1997, IFFC recognized a
non-recurring gain of $1,327,070 or $.05 per share of IFFC's Common Stock in
connection with the settlement of the BKC Litigation.

IFFC anticipates that it will continue to incur certain expenses in
connection with its disputes with the Polish Fiscal Authorities. See "Business -
Legal Proceedings" for a description of such matters.

<PAGE>

For the year ended December 31, 1997 and 1996 Interest and Other Income
was comprised as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------
1997 1996
---------- -----------
<S> <C> <C>
Interest income............................ $ 263,714 $ 51,949
Management fee............................. 18,190 21,173
Forgiveness of indebtedness................ 329,465 -
All other, net............................. (134,316) 25,014
--------- ----------
Total...................................... $ 477,053 $ 98,136
========= ==========
</TABLE>

All other, net includes various non-recurring charges and credits not
specifically related to operating activity. Interest Expense is comprised as
follows:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------
1997 1996
--------- ----------
<S> <C> <C>
Interest Expense on Subordinated Convertible Debentures........... $ 248,040 $ 248,040
Interest Expense on Note Payable to Litigation Funding............ 73,767 -
Interest Expense on 8% Convertible Promissory Notes............... 16,178 -
Amortization of Debt Issuance Costs............................... 74,304 33,256
Accretion of discount on 11% Convertible Senior Subordinated
Discount Notes............................................... 354,588 -
Interest Expense on Bank Facilities............................... 178,721 165,265
--------- ---------
Total $ 945,598 $ 446,561
========= =========
</TABLE>

Interest Expense exceeded Interest and Other Income by $468,545 and
$348,425 for the year ended December 31, 1997 and 1996, respectively.

IFFC's interest expense on bank facilities was $178,721 and $165,625
for the year ended December 31, 1997 and 1996, respectively. The $13,456
increase is attributable to higher borrowings under bank credit facilities
during the current year.

Liquidity and Capital Resources

IFFC's material commitments for capital expenditures in its restaurant
and store business relate to the provisions of the New BKC Agreement and the New
Domino's Agreement. On March 14, 1997, the New BKC Agreement was entered into
between BKC and IFFC, which was then assigned by IFFC to IFFP on March 14, 1997;
IFFC continues to remain liable for the obligations contained in the New BKC
Agreement. Pursuant to the New BKC Agreement, IFFC has been granted the
exclusive right until September 30, 2007 to develop and be franchised to operate
Burger King restaurants in Poland with certain exceptions discussed below.
Pursuant to the New BKC Agreement, IFFC is required to open 45 restaurants
during the term of the agreement. Pursuant to the New BKC Agreement, IFFC is to
open three restaurants through September 30, 1998, four restaurants in each year
beginning October 1, 1998 and ending September 30, 2001 and five restaurants in
each year beginning October 1, 2001 and ending September 30, 2007. As of August
15, 1998, IFFC had opened one Burger King restaurants pursuant to such schedule
and is scheduled to open two additional restaurants in late August and in early
September of this year. Additionally, pursuant to the New BKC Agreement, IFFC's
subsidiary, IFFP, must maintain a net worth of $7.5 million beginning on June 1,
1999. For additional information regarding the New BKC Agreement, see "Business
- -- Burger King Division -- New BKC Agreement and Standard Franchise Agreements."

On August 28, 1997, KP entered into the New Domino's Agreement granting
KP the exclusive right to develop and operate and to sub-license Domino's Pizza
stores and to operate a commissary for the Domino's system and the use of the
Domino's and related marks in the operation of stores in Poland. As a condition
to the New Domino's Agreement, IFFC contributed $2.0 million to KP. IFFC also
agreed that any additional capital required above such amount will also be

24
<PAGE>

dedicated to KP as needed to permit KP to meet its development quotas. The term
of the New Domino's Agreement will expire on December 31, 2003, and if KP is in
compliance with all material provisions of the New Domino's Agreement, it may be
extended for an additional 10 years in accordance with certain minimum
development quotas which KP and Domino's may agree upon by execution of an
amendment to the New Domino's Agreement. For additional information regarding
the New Domino's Agreement, see "Business -- Domino's Division -- New Domino's
Agreement and Standard Franchise Agreements."

On November 5, 1997, the Company sold $27,536,000 in aggregate stated
value at maturity of Convertible Notes in a private offering. At June 30, 1998,
the notes are comprised as follows:
<TABLE>
<CAPTION>
<S> <C>
Face amount of notes at maturity $ 27,536,000
Unamortized discount to be accreted as interest expense and added to (6,080,184)
the original principal balance of the notes over a period of three years ------------
Balance at June 30, 1998 $ 21,455,816
============
</TABLE>
The Company received net proceeds of approximately $17.7 million after
reduction of the face of the Convertible Notes for unamortized discount of
$7,535,908 and placement costs in the amount of $2.3 million. In addition to the
placement costs incurred, the Company also issued to the placement agent 500,000
shares of Common Stock which were valued at $150,000. For additional information
regarding the Convertible Notes, see "Description of Securities - Convertible
Notes."

To date, IFFC's business operations have been principally financed by
proceeds from public offerings of IFFC's equity and debt securities, private
offerings of equity and debt securities, proceeds from various bank credit
facilities, proceeds from the sale of certain equity securities, the proceeds
from the settlement of the BKC Litigation, and proceeds from the sale of the
Convertible Notes.

The June 15, 1996, December 15, 1996, and June 15, 1997 dividend
payments with respect to the Series A 6% Convertible Preferred Stock were not
declared or made on their respective due dates. As of December 31, 1996,
$229,440 of preferred dividends were in arrears. On December 15, 1997, the
Company issued 549,865 shares of Common Stock valued at $401,401 in payment of
the dividends in arrears as of that date. At June 30, 1998, no dividends were in
arrears.

In June 1996, after considering various alternatives, including the
market price for the Company's Common Stock, its trading volume and various time
constraints, the Board authorized the issuance of 2.2 million shares of the
Company's Common Stock for a total purchase price of $110,000 to Mitchell
Rubinson and his wife Edda. The Company used the proceeds from the sale of the
shares for payment of interest on the Company's 9% subordinated convertible
debentures (the "Debentures").

In September 1996, the Company had additional working capital needs and
had incurred additional expenses in connection with the BKC Litigation. The
Board of Directors of IFFC authorized the sale of 2.5 million shares of Common
Stock at $.10 per share. Marilyn Rubinson, Jaime Rubinson and Kim Rubinson, the
mother and daughters, respectively, of Mitchell Rubinson, the Company's Chief
Executive Officer, purchased 250,000 shares each or a total of 750,000 shares in
the offering.

In November 1996, the Company had additional working capital needs. The
Board of Directors of IFFC authorized the sale of 500,000 shares of Common Stock
at $.10 per share. Jaime Rubinson purchased 250,000 shares and Kim Rubinson
purchased 250,000 shares. In December 1996, IFFC had outstanding an interest
payment of approximately $125,000 in connection with the Debentures and
additional working capital needs. After considering various alternatives and
factors, the Board of IFFC authorized the sale of 1.5 million shares of Common
Stock of IFFC to Marilyn Rubinson, at $.10 per share.

In January 1997, Mr. Rubinson and Edda Rubinson (his wife), Marilyn
Rubinson, Jaime Rubinson and Kim Rubinson purchased $100,000, $300,000, $50,000
and $50,000 aggregate principal amount of convertible promissory

25
<PAGE>

notes, respectively. The notes bore interest at 8% per annum and were to mature
on January 13, 1999. The notes were converted into shares of the Company's
Common Stock at $.10 per share. The proceeds from the sale of the notes were
used to fund the cost and expenses in connection with the Company's litigation
against BKC and general working capital. In June 1997 the $500,000 principal
amount of the convertible promissory notes was converted into 5 million shares
of Common Stock.

On March 14, 1997, IFFC issued a promissory note in the original
principal amount of $2,198,494 to Funding as partial payment of amounts due to
Funding in connection with the settlement of the BKC Litigation. On July 14,
1997, IFFC and Acquisition Sub entered into a Merger Agreement with Funding and
Mitchell and Edda Rubinson, the sole shareholders of Funding. Under the terms of
the Agreement, Funding was merged with and into Acquisition Sub. The 25,909,211
shares of Common Stock of the Company received by the Funding shareholders was
determined by dividing the $3,021,014 value assigned to Funding by the book
value per share ($.1166) of the Company's Common Stock as of June 30, 1997,
before reduction for the liquidation preference applicable to the outstanding
shares of Preferred Stock. The value assigned to Funding represents (i) the
$2,198,494 plus accrued interest owed to Funding by the Company pursuant to a
promissory note and (ii) $750,000 which represents 75% of the value attributable
to the New BKC Agreement. Funding was entitled to receive 75% of the litigation
proceeds, as defined, under its prior agreements with the Company.

As of June 30, 1998 and August 11, 1998, the Company had $1,609,673 and
$1,106,398, respectively, in Polish bank accounts with substantially all of such
funds held as United States dollar denominated deposits. Substantially all of
the Company's remaining cash including the net proceeds of the private placement
is held in United States dollar accounts in United States Banks.

IFFC has also financed its operations through the use of credit
facilities, which credit facilities are described below. On September 30, 1996,
PKP entered into a revolving credit facility with American Bank of Poland S.A
("AmerBank") totaling 100,000 zlotys (approximately $28,490 at June 30, 1998
exchange rates). The credit facility was renewed on May 27, 1998 and matures on
June 1, 1999. The credit facility bears interest at a floating rate. The note is
secured by the guarantee of IFFC. As of June 30, 1998, and August 11, 1998, the
outstanding balance on the credit facility was approximately $2,113 and $12,288,
respectively.

On February 16, 1996, IFFP entered into a $300,000 line of credit with
AmerBank, the proceeds of which may be used to finance IFFP's business
operations. Pursuant to the line of credit, IFFC could make draws on the line of
credit until June 30, 1996. IFFP is required to make interest payments on the
outstanding principal amount of the credit facility at AmerBank's prime rate.
IFFP is also obligated to pay AmerBank a 1% per annum commission on the daily
average unutilized principal balance of the credit facility. Interest and
commission expenses are payable monthly. The outstanding principal balance of
the loan is payable in three quarterly installments of $100,000 commencing on
March 31, 1998. The credit facility is secured by: (i) a promissory note of IFFP
and (ii) a guarantee of IFFC. The balance of the credit facility was paid in
full on September 9, 1997.

On May 19, 1997, IFFC entered into a $999,000 credit facility with
Totalbank which is collateralized by $999,990 of certificates of deposit. The
credit facility bears interest at 6.5% per annum and matured on May 19, 1998. On
May 18, 1998, the credit facility was renewed for three months under the same
terms and conditions.

On August 12, 1997, the Company executed two credit agreements with
AmerBank. The first credit facility was in the amount of $950,000. The purpose
of this facility was to consolidate existing debt owed to AmerBank totaling
$300,000 with existing debt owed to Bank Handlowy of $650,000. Pursuant to the
terms of the new loan, interest is payable monthly at the prevailing one month
LIBOR rate plus 2.75%. Commencing in March 1998, the loan is to be repaid in
monthly installments of $32,000 for twenty nine months with a balloon payment of
$22,000 due at maturity (August 12, 2000). The loan is secured by all existing
restaurant assets and the guarantee of IFFC. The balance of this credit facility
as of June 30, 1998 and August 14, 1998 was $822,000 and $790,000, respectively.

On April 2, 1998, PKP entered into a $300,000 development loan with
AmerBank for the development of its Domino's stores. Borrowings under this
credit facility may be made until December 26, 1998 and are secured by: (i)
fixed assets of each new restaurant financed; and (ii) a guarantee of IFFC. The
loan is required to be repaid in ten equal quarterly installments of $30,000
starting on December 26, 1998 with a final payment due at maturity (March 26,
2001). Interest is

26
<PAGE>

paid monthly at the prevailing one month LIBOR rate plus 3 1/8%. This rate
approximates 8.75% as of August 12, 1998. According to the terms of the
agreement, the proceeds of the loan could be used to finance up to 50% of the
costs of furnishing and commencing operation of Domino's stores operated by PKP.
As of June 30, 1998 and August 10, 1998, approximately $167,769 and $202,276 was
outstanding on the facility.

On June 19, 1998, IFFP entered into a development loan in the principal
amount of $1.3 million with AmerBank. The purpose of this loan is to provide
partial credit for the development of new Burger King restaurants. Borrowings
under this credit facility are to be made until June 18, 2000 and are secured
by: (i) fixed assets of each new restaurant financed; and (ii) a guarantee of
IFFC. The loan is scheduled to be repaid in thirty-five equal installments of
$36,111, starting in June 2000, with a final payment of $36,115 due at maturity,
which is May 18, 2003. Interest is to be paid monthly at the prevailing one
month LIBOR rate plus 2.5%. According to the terms of the agreement, the
proceeds of the loan are to be used to finance up to fifty percent (50%) of the
costs of furnishing and commencing operation of Burger King restaurants operated
by IFFP. As of June 30, 1998 and August 10, 1998, $102,098 and $440,534 was
outstanding on this credit facility.

On December 28, 1995, IFFC increased its equity interest in IFFP from
80% to 85% by purchasing from the minority shareholder 5% (25% of the minority
holdings) of the outstanding capital stock of IFFP in exchange for a $500,000
non-interest bearing obligation due in full on December 28, 1996. The obligation
was paid in full in June 1997.

Impact of Inflation and Currency Fluctuations

The official currency in Poland is the zloty. The value of the zloty is
pegged pursuant to a system based on a basket of currencies, as well as all
other economic and political factors that effect the value of currencies
generally. The accounts of IFFC's Polish subsidiaries are maintained using the
Polish zloty. At June 30, 1998, the exchange rate was 3.51 zlotys per dollar.

IFFC's restaurant and store operations are conducted in Poland. The
Polish economy has historically been characterized by high rates of inflation
and devaluation of the Polish zloty against the dollar and European currencies.
However, in the years ended December 31, 1996 and 1997, the rates of inflation
and devaluation improved. For the years ended December 31, 1993, 1994, 1995,
1996, and 1997 the annual inflation rate in Poland was 35%, 32%, 21.6%, 19.5%,
and 13.2% respectively, and as of December 31, 1993, 1994, 1995, 1996, and 1997
the exchange rate was 2.134, 2.437, 2.468, 2.872, and 3.514 zlotys per dollar,
respectively. Payment of interest and principal on the Debentures, the
Convertible Notes and payment of franchise fees to BKC and DPI for each
restaurant and store opened are in United States currency. Additionally, IFFC is
dependent on certain sources of supply which require payment in European or
United States currencies. Because IFFC's revenues from operations will be in
zlotys, IFFC is subject to the risk of currency fluctuations. IFFC has and
intends to maintain substantially all of its unutilized funds in United States
or Western European currency denominated securities and/or European Currency
Units. There can be no assurance that IFFC will successfully manage its exposure
to currency fluctuations or that such fluctuations will not have a material
adverse effect on IFFC. Thus far, IFFC's revenues have been used to fund
restaurant operations and IFFC's expansion. As a result, such revenues have been
relatively insulated from inflationary conditions in Poland. There can be no
assurance that inflationary conditions in Poland will not have an adverse effect
on IFFC in the future.

Year 2000 Computer Issue

The SEC has issued Staff Legal Bulletin No. 5 stating that public
operating companies should consider whether there will be any anticipated costs,
problems and uncertainties associated with the Year 2000 issue, which affects
many existing computer programs that use only two digits to identify a year in
the date field. The Company anticipates that its business operations will
electronically interact with third parties very minimally, if at all, and the
issues raised by Staff Legal Bulletin No. 5 are not applicable in any material
way to the Company's business or operations. The Company and its operating
systems are currently Year 2000 compliant and the Company intends that any
computer systems that the Company may purchase or lease that are incident to the
Company's business will have already addressed the Year 2000 issue. However, the
Company has not fully assessed the impact of the Year 2000 issue on third
parties with whom the Company has material relationships. The Company is
currently formulating a contingency plan to address the Year 2000 issue with
respect to its material third party relationships.

27
<PAGE>

Recent Accounting Pronouncements

The Company capitalizes start-up costs associated with opening new
restaurant locations. Upon commencement of revenue producing activities at a
restaurant location, the related capitalized start-up costs are amortized over
one year. As of June 30, 1998 the Company had recorded approximately $465,000 of
start-up costs which are included in prepaid expenses in the accompanying
consolidated condensed balance sheet. Amortization expense for the six months
ended June 30, 1998 and 1997 was $36,000 and none, respectively.

On April 3, 1998 the American Institute of Certified Public Accountants
issued Statement Of Position 98-5 ("SOP 98-5"), "Reporting on the Costs of
Start-Up Activities." SOP 98-5 provides guidance on the financial reporting of
start-up costs and organization costs. It requires costs of start-up activities
and organization costs to be expensed as incurred. SOP 98-5 is effective for
financial statements for fiscal years beginning after December 15, 1998. The
impact of the initial application SOP 98-5 will be reported as a cumulative
effect of a change in accounting principle. The Company intends to implement SOP
98-5 on January 1, 1999. As of June 30, 1998, the Company had capitalized
approximately $350,000 of start-up costs that would be expensed under SOP 95-8.

In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." Comprehensive income includes net income and several
other items that current accounting standards require to be recognized outside
of net income. The Company does not have any material comprehensive income items
reported outside its statement of operations for the six month periods ended
June 30, 1998 and 1997. Therefore, the Company's net income for the six month
periods ended June 30, 1998 and 1997 equals its comprehensive income for the
same time periods.

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," was also issued by the FASB in June 1997. This statement
establishes standards for reporting information about operating segments in
annual financial statements and requires reporting of selected information about
operating segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. The Company will adopt SFAS 131 effective
December 31, 1998.

SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," is effective for fiscal years ending after June 15, 1999. This
statement established accounting and reporting standards that require that every
derivative instrument be recorded in the balance sheet as either an asset or a
liability at its fair value. The Company has adopted SFAS 133 for the three
months ended June 30, 1998. The adoption of this statement did not have an
impact on the Company's consolidated financial position since the Company does
not presently have any derivative or hedging-type investment as defined in SFAS
133.

28
<PAGE>
BUSINESS

General

The Company has, subject to certain exceptions, the exclusive right to
develop franchised Burger King restaurants and Domino's Pizza stores in the
Republic of Poland. The Company currently operates ten Burger King restaurants
and ten Domino's stores. The Burger King restaurants and the majority of the
Domino's stores are similar to their respective U.S. versions and are developed
to the strict corporate standards set out in the respective development
agreements and franchise agreements.

The Company was incorporated in December 1991 as a Florida corporation
to develop franchised Burger King restaurants in Poland. In May 1992, IFFC
completed its initial public offering of approximately 1.5 million shares of
Common Stock priced at $5 per share. In July 1997, the Company purchased 100% of
KP and its wholly owned subsidiary, PKP, which controlled the exclusive
development rights and franchises of Domino's pizza stores in Poland. The
Company paid nominal consideration for KP and PKP and assumed all of their
liabilities, including the liability of KP to the Company under a $500,000
promissory note. In September 1998, the Company purchased from Agros
Investments, S.A., a Polish Company, the remaining 15% of the outstanding shares
of IFFP for $1.5 million.

Burger King Division

IFFC operates its Burger King division through International Fast Food
Polska, Sp.zo.o., the Company's Polish subsidiary ("IFFP"), and its wholly owned
Polish limited liability corporations, IFF Polska-Kolmer and IFF-DX Management.
IFFP receives operational support from Burger King Corporation ("BKC") through
BKC's London-based office in areas including site selection and construction
review, operating systems and controls, marketing, sourcing of food and
equipment, distribution and training, and other operational matters.

Through IFFP, the Company currently operates ten Burger King
restaurants. The restaurants, which operate under individual franchise
agreements, are traditional free standing and/or attached drive-through
restaurants with dine-in seating capacity ranging from 60 to 120 people. The
typical store size is approximately 2,800 square feet and located near and in
metropolitan areas and/or adjacent to a service station site. Currently all
Burger King restaurants in Poland are operated by IFFP. There are no
non-affiliated franchisees.

The Company's Burger King restaurants offer hamburgers, cheeseburgers,
french fries and soft drinks, and the Company anticipates that its future Burger
King restaurants will offer other food items. The Company typically offers a
Burger King meal for the zloty equivalent of approximately between $1.50 to
$2.85, depending upon the menu items selected. The Company believes, to the
extent a comparison is possible, that the prices it charges for meals are
comparable to the prices charged by the Company's American-style fast food
competitors in Poland.

By October 1994, IFFC had opened eight Burger King restaurants in urban
locations, including five in Warsaw, and had created an organizational
infrastructure to manage future growth. During 1994, however, a dispute emerged
between IFFC, IFFP and BKC regarding BKC's logistical development support and
other matters which resulted in litigation between the parties commencing in
March 1995. During the period from the beginning of the dispute with BKC in 1994
until its settlement, the Company curtailed its Burger King restaurant expansion
and did not execute additional leases for new restaurant sites. In March 1997,
IFFC, IFFP and BKC settled the litigation and, pursuant to the settlement, BKC
and the Company entered into a new ten year development agreement.

The Company's Burger King operations are managed by Joanna Makowska,
who began her career with the Company in 1992. Pursuant to the requirements of
the New BKC Agreement, Ms. Makowska is Director of Operations of the Burger King
restaurants. Ms. Makowska is supported in Poland by a team of 201 full-time and
116 part-time employees as of June 30, 1998. In addition both Michael Welch and
Leon Blumenthal have been approved by BKC as managing directors and are
responsible for the development of restaurants pursuant to the New BKC
Agreement.

29
<PAGE>

New BKC Agreement and Standard Franchise Agreement. Under the new
ten-year development agreement with BKC (the "New BKC Agreement"), IFFP is
required to open 45 "Development Units" prior to September 30, 2007. Each
traditional restaurant or drive-through restaurant constitutes one Development
Unit and each kiosk constitutes a quarter of a Development Unit. The schedule
for IFFP's opening of the Development Units are as follows:
<TABLE>
<CAPTION>
Number of
Development Units
To Be Opened
Time Period During Time Period
--------------------------------------------- ------------------
<S> <C>
From the present through September 30, 1998 3
October 1, 1998 through September 30, 1999 4
October 1, 1999 through September 30, 2000 4
October 1, 2000 through September 30, 2001 4
October 1, 2001 through September 30, 2002 5
October 1, 2002 through September 30, 2003 5
October 1, 2003 through September 30, 2004 5
October 1, 2004 through September 30, 2005 5
October 1, 2005 through September 30, 2006 5
October 1, 2006 through September 30, 2007 5
------------------
Total units to be opened by September 30, 2007 45
</TABLE>

As of August 31, 1998, the Company had opened two Burger King
restaurants pursuant to the New Burger King Agreement. One additional Burger
King restaurant is expected to open in early September of this year. There is no
assurance, however, that the Company will be able to fulfill its remaining
commitments pursuant to the BKC Development Agreement.

Pursuant to the New BKC Agreement, IFFP is required to pay BKC a $1.0
million development fee unless IFFP is in compliance with the development
schedule by September 30, 1999 and has achieved gross sales of $11.0 million for
the preceding 12 months. If the development schedule has been achieved but gross
sales are less than $11.0 million but greater than $9.0 million, the development
fee will be $250,000. If the development fee is payable due to failure to
achieve the performance targets described above, IFFP, at its option, may either
pay the development fee or provide BKC with the written and binding undertaking
of Mitchell Rubinson that the Rubinson Group will completely divest itself of
any interest in IFFP and the Burger King restaurants opened or operated by IFFP
in Poland within six months of the date that the development fee payment is due
but not paid. Pursuant to the New BKC Agreement, the "Rubinson Group" has been
defined to include any entity of which Mr. Rubinson, who is the Chief Executive
Officer of the Company, directly or indirectly owns an aggregate interest of 10%
or more of the legal or beneficial equity interest and any parent, subsidiary or
affiliate thereof. Such divestiture of the Rubinson Group or Mitchell Rubinson
could result in a change in control of the Company under the terms of the
indenture governing the 11% convertible senior subordinated discount notes (the
"Convertible Notes"). If a change in control is deemed to have occurred, the
Company would be required to commence an offer to repurchase the Convertible
Notes within 30 days of such change in control at a purchase price equal to 101%
of the accreted value of such notes. Mr. Rubinson has personally guaranteed
payment of the development fee.

For each restaurant opened, IFFP is obligated to pay BKC an initial fee
of up to $40,000 for franchise agreements with a term of 20 years and $25,000
for franchise agreements with a term of ten years. Each such fee is payable not
later than 20 days prior to the restaurant's opening. Each franchised restaurant
must also pay a percentage of the restaurant's gross sales, irrespective of
profitability, as a royalty for the use of the Burger King system and Burger
King trademarks. The annual royalty fee is 5% of gross sales. The restaurants
must also contribute a monthly advertising and promotion fee of 6% of gross
sales, to be used for advertising, sales promotion, and public relations.
However, BKC has agreed to reduce the royalty fee to 2% through September 30,
1998, 3% through September 30, 2000 and 4% thereafter. Additionally, pursuant to
the New BKC Agreement, if the Company exceeds its obligations under the
restaurant development schedule, the royalty fee will be further reduced to 2%
for the period from October 1, 1998 through

30
<PAGE>

September 30, 2000 and to 3% thereafter. Payment of all amounts due
to BKC pursuant to the franchise agreements is guaranteed by the Company.

Specifically excluded from the scope of the New BKC Agreement are
restaurants on United States military establishments. BKC has also reserved the
right to open restaurants in hotel chains with which it has, or may in the
future have, a multi-territory agreement encompassing Poland. With respect to
restaurants in airports, train stations, hospitals and other hotels, IFFP has
the right of first refusal with the owners of such sites. If IFFP is unable to
reach a mutually acceptable agreement with such owners, BKC or its affiliates or
designated third parties may initiate negotiations for such sites. IFFP and the
Rubinson Group are restricted from engaging in the fast food hamburger
restaurant business, without the prior written consent of BKC, which consent may
not be withheld so long as IFFC and the franchises operating Burger King
restaurants by designation of IFFC are adequately funded.

Subject to certain exceptions, as long as IFFC is a principal of IFFP,
BKC has the right to review and consent to equity issuances by IFFC. Such
consent is not to be unreasonably withheld, provided that IFFC has complied with
all reasonable conditions established by BKC in connection with the proposed
sale or issuance of applicable equity securities by IFFC.

The Company has obtained all required BKC, government and regulatory
approvals and permits for its first ten restaurants.

New Co-Development Agreements. The Company intends to develop a
majority of the new Burger King restaurants in conjunction with oil companies
which are presently expanding throughout Poland. In July 1997, IFFP executed
letters of intent with Dupont-Conoco and British Petroleum ("BP") for the
co-development of Burger King restaurants and service stations throughout
Poland. In connection with the execution of such letters of intent,
Dupont-Conoco and BP will each provide IFFP with multiple packages of between
five and 10 development sites per package. The letters, although not binding,
state that these sites will be available to IFFP to lease for a specific term
plus option periods at IFFP's discretion subject to Burger King approval. IFFP
anticipates these locations will open in 1998 and beyond. Rental terms will be
based on a minimum monthly rental fee and/or a percentage of sales.

In September 1997, IFFP entered into an agreement with Statoil Polska
("Statoil") to develop up to 22 Burger King restaurants on Statoil service
station properties in Poland. IFFP, in coordination with BKC, has executed three
leases with Statoil and is presently evaluating various additional sites to
determine which are feasible for the development of Burger King restaurants.

On January 30, 1998, IFFP entered into three 20-year lease agreements
with BP to construct three Burger King restaurants in the cities of Torun, Tychy
and Warsaw, Poland. All three sites will be free standing drive-through
restaurants built adjacent to BP gas stations. Under the terms of the respective
lease agreements, the Company's annual rental payments for each lease is
calculated at 5.0% of its net sales or $30,000 ("minimum rent"), whichever is
greater. The minimum annual rent payment is adjusted each year to represent 75%
of the previous year's total rent paid. Each lease contains two 10-year options,
exercisable by IFFP at its sole and absolute discretion, to renew under the same
terms and conditions as the underlying lease. Each lease grants IFFP right of
first refusal on the right to purchase the property from BP. The restaurant in
Torun was opened in August 1998 and the Company expects to open the other two
restaurants in the fourth quarter of 1998.

On March 31, 1998, the Company commenced construction on its first
development site with Dupont-Conoco. The site is adjacent to an existing Conoco
Jet petrol station. The new restaurant is located in the town of Mikolow, which
is

31
<PAGE>

in the southern region of Poland. The restaurant is a standard Burger King
design with drive through facilities and has 60 interior seats and 20 exterior
seats, along with an outdoor playground. The total costs associated with the
restaurant were approximately $840,000, which costs included the construction of
the restaurant building, as well as road and leasehold improvements, furniture,
equipment, franchise fees and other pre-opening costs. The lease is for a term
of 20 years and annual lease payments are 2.25% of net sales with no minimum.
The restaurant opened on July 10, 1998.

On April 30, 1998, IFFP entered into a 20-year sublease agreement with
BP for purposes of constructing a Burger King restaurant in Plonsk, Poland
adjacent to a BP gas station. Under the terms of the sublease agreement, the
Company's annual rental payment is $30,000 ("minimum rent") or 5.0% of its net
sales, whichever is greater. The minimum rent payment is adjusted each year to
represent 75% of the previous year's total rent paid. The lease contains two
10-year options, exercisable by IFFP at its sole and absolute discretion, to
renew under the same terms and conditions. Each lease grants IFFP the right of
first refusal to purchase the property from BP. The Company expects to open the
restaurant in September 1998.

On July 1, 1998, IFFP entered into a 20-year lease with Statoil for
purposes of constructing a Burger King restaurant in Pabianice, Poland, adjacent
to a Statoil gas station. Under the terms of the lease agreement, IFFP's annual
rental payment is $36,000 ("minimum rent") or 4.0% of its net sales, whichever
is greater. The minimum rent payment is adjusted quarterly to the Polish
inflation index. The lease contains a 10-year option, exercisable by IFFP at its
sole and absolute discretion, to renew under the same terms and conditions as
the underlying lease. The Company expects to open this Burger King restaurant in
the fourth quarter of 1998.

Additionally, on July 21, 1998, IFFP entered into two 20-year lease
agreements with Statoil for purposes of constructing Burger King restaurants in
Olsztyn and Racilborz, Poland. Under the terms of each lease agreement, the
Company's annual rental payment is $36,000 ("minimum rent") or 4.0% of its net
sales, whichever is greater. The minimum rent payment is adjusted quarterly to
the Polish inflation index. Both leases contain a ten year option, exercisable
by IFFP at its sole and absolute discretion, to renew under the same terms and
conditions as the underlying leases. The Company expects to open these Burger
King restaurants in the fourth quarter of 1998.

The agreements and the letters of intent provide for the initial
development of approximately 50 Burger King restaurant locations, plus
additional locations in the future. However, there can be no assurance that the
remainder of the transactions contemplated by such agreements and letters of
intent will be consummated. The Company is in various stages of evaluating and
developing these sites, 35 of which have received BKC approval. Presently, the
Company has executed eight leases with the oil companies. In addition, the
Company is currently negotiating with other international oil companies for the
development of Burger King restaurants throughout Poland.

BKC has developed a restaurant format and operating system, which
includes a recognized design, decor and color scheme for restaurant buildings;
kitchen and dining room equipment and layout; service format; quality and
uniformity of products and services offered; procedures for inventory and
management control; and the Burger King marks, which include such trademarks,
services marks and other marks as BKC may authorize from time to time for use in
connection with Burger King restaurants. All Burger King restaurants are
required to be operated in accordance with BKC standards. Most Burger King
restaurants offer a substantially similar core menu, featuring flame-broiled
hamburgers, cheeseburgers, french fries, and soft drinks. Other menu items may
include salads, pastries, chicken sandwiches, fish sandwiches, ice cream
sundaes, shakes and breakfast menu items. The Company's restaurant's menu
has historically been more limited than the menus of the United States and many
European Burger King franchises. Sandwich menu items account for the most
significant amount of system-wide sales. Prices for the menu items are
determined by the Company and, accordingly, may vary from other Burger King
restaurants in other countries.

The standard floor plan consists of a kitchen/preparation area and
ordering counter and customer seating area, which must comply with specified BKC
standards, is relatively flexible and can be located in an existing building or
a specially constructed free-standing building with varying floor

32
<PAGE>

plans and configurations. The Company currently estimates that once space has
been leased and made available to the Company, approximately 120 days are
required to complete construction, obtain necessary licenses and approvals and
open a restaurant. The Company currently estimates the cost of opening a
restaurant to be approximately $450,000 to $1,000,000, including the
construction and improvements, the initial franchise fee, furniture, fixtures,
and equipment, opening inventories and staff training (this amount excludes the
cost of land). Such estimates, however, vary depending on the size and condition
of a proposed restaurant and the extent of leasehold improvements required.

Burger King Restaurant Development. The Company's restaurant
development strategy is to lease prominent traditional restaurant sites in major
Polish metropolitan areas adjacent to gas stations on major
thoroughfares. The Company continues to explore opportunities with
others for the development of Burger King restaurants throughout Poland. The
Company considers restaurant location to be critical to its success and devotes
significant efforts to locating and evaluating potential sites. The site
selection process involves an evaluation of a variety of factors, including
demographics (such as population density); specific site characteristics (such
as visibility, accessibility and traffic volume); proximity to activity centers
(such as office or retail shopping districts and hotel and office complexes);
and potential competition in the area. Company personnel inspect and approve a
proposed site for each restaurant and a detailed site package is prepared for
BKC review and approval prior to the execution of a lease. All sites are subject
to the approval of BKC. The opening of restaurants is contingent upon, among
other things, locating satisfactory sites, negotiating acceptable leases or
similar rights to a site, completing any necessary construction, and securing
required government permits and approvals.

Advertising and Promotion. IFFP's franchise agreements with BKC provide
that each franchised restaurant must spend 6% of its gross sales on advertising,
sales promotion, and public relations. The Company contributes these funds into
a self-administered marketing fund. All expenditures are based on a marketing
plan created jointly by the Company and BKC, except for local store marketing
programs. In addition, the fund reimburses the Company up to a certain amount
for its marketing manager. As the number of the Company's Burger King
restaurants increases, the Company believes that the increased advertising funds
will provide the financial resources necessary to conduct a fully integrated
marketing effort using all advertising media.

Sources of Supply. IFFP is substantially dependent upon BKC-approved
suppliers for all of its food products and other supplies. Pursuant to the New
BKC Agreement and the standard franchise agreements, all of these supplies must
be of a quality and conform to specifications acceptable to BKC. Additionally,
IFFP currently obtains its restaurant furniture and fixture, prefabricated
kitchen equipment and point of sale equipment in Poland and obtains other
equipment and paper products from BKC-approved sources in the United States and
Europe.

IFFP has established BKC-approved lines of supply for all major
ingredients used in its menu with substantially all of its inventory needs
sourced in Poland and employs a BKC-approved quality inspector who monitors the
quality of the supplies obtained from third-party vendors. The Company believes
local sourcing is important because it avoids expensive import duties and taxes.
IFFP has entered into multi-year supply contracts with its major suppliers of
soft drinks, buns, meat patties and condiment supplies. In addition, IFFP has
entered into a long term agreement for the distribution of its supplies to each
of its restaurants throughout Poland. The distributor has been the Company's
comprehensive logistics and distribution coordinator since 1994, providing state
of the art inventory and cost controls to complement IFFP's point of sale
system, which electronically disseminates information on a daily basis, controls
inventory levels and maintains promotional, marketing and food preference
information. Shipments of food and supplies are delivered directly to the Burger
King restaurants. IFFP maintains approximately a seven to 30-day inventory of
food products and supplies for its Burger King restaurants.

Restaurant Operations and Personnel. The Company operates its
restaurants under uniform standards set forth in BKC's confidential operating
manual, including specifications relating to food quality and preparation,
design and decor and day-to-day operations. IFFP utilizes BKC training
techniques and manuals and solicits the assistance and counsel of BKC personnel.
IFFP is responsible, at its expense, for the translation of BKC manuals into
Polish and pays BKC for certain support services relating to employee training
in BKC facilities in Europe and the U.S. In addition, IFFP operates two
BKC-approved training facilities in Poland. IFFP maintains financial, accounting
and management controls for its restaurants through the use of centralized
accounting systems, detailed budgets and computerized management information
systems.

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<PAGE>

The Company's President, Senior Vice President, Chief Financial
Officer, Director of Operations and all key personnel reside in Poland. As of
June 30, 1998, IFFP employed 201 full-time and 116 part-time employees. IFFP's
restaurant managers are responsible for supervising the day-to-day operations of
the restaurants, including food preparation, customer relations, restaurant
maintenance, inventory and cost control and personnel relations. In addition,
restaurant managers are responsible for selecting and training new crew
personnel, who undergo on-the-job training.

Trademarks. IFFC is authorized to use such trademarks, service marks
and such other marks as BKC may authorize from time to time for use in
connection with Burger King restaurants (collectively, the "Burger King Marks").
BKC has applied for and received trademark registrations in Poland for the
"Burger King" logo, the words "Burger King" and the word "Whopper." Under the
terms of the New BKC Agreement and the individual franchise agreements, IFFC is
required to assist in the defense of any action relating to the right to use or
the validity of the Burger King Marks and to cooperate in the prosecution of any
action to prevent the infringement, imitation, illegal use or misuse of the
Burger King Marks or the Burger King system. BKC is obligated to bear the legal
expenses and costs incidental to IFFC's participation in any such action.
However, BKC has made no warranty or representation that the Burger King Marks
will be available to IFFC on an exclusive basis or at all.

Domino's Division

On July 18, 1997, the Company acquired all of the outstanding shares of
Krolewska Pizza Sp.zo.o. ("KP") and Pizza King Polska, Sp.zo.o.("PKP"), for
nominal consideration and assumption of all liabilities, including the
liabilities of KP to the Company under a $500,000 promissory note. KP and PKP
control the exclusive development rights and franchises, respectively, for
Domino's pizza stores in Poland pursuant to a new Master Franchise Agreement
(the "New Domino's Agreement") with Domino's Pizza International, Inc. ("DPI"),
a wholly-owned subsidiary of Domino's Pizza, Inc. ("Domino's"), which was
executed in August 1997. KP has also entered into a commissary agreement with
DPI (the "Commissary Agreement") pursuant to which KP has been granted the
exclusive right to open and operate one or more commissaries for all Domino's
stores in Poland for the term of the New Domino's Agreement and any renewal
term.

The Company's Domino's stores offer various types of pizza, soft
drinks, salads, sandwiches, breadsticks and ice cream, and the Company
anticipates that its future Domino's stores will offer other food items. The
Company typically offers pizzas for the zloty equivalent of approximately
between $4.23 to $9.00, depending upon the size of the pizza and the number of
toppings selected. The Company believes, to the extent a comparison is possible,
that the prices it charges for meals is comparable to the prices charged by the
Company's American-style fast food competitors in Poland.

The Company's Domino's operations are managed by Andrzej Janus, who
began his career with PKP in 1993 as a manager of a Domino's store. In 1994, Mr.
Janus was promoted to District Manager where he supervised all managers and
assistant managers of PKP's Domino's stores in Poland. The New Domino's
Agreement requires KP to designate a full-time general manager, acceptable to
DPI, to be responsible for the Domino's stores to be developed pursuant to the
agreement. On August 28, 1997, KP designated and DPI approved Andrzej Janus as
its General Manager. Mr. Janus is supported by a team of 159 full-time and 79
part-time employees as of June 30, 1998.

New Domino's Agreement and Standard Franchise Agreement. The
relationship between the Company and Domino's is governed principally by the New
Domino's Agreement and the individual Domino's store standard franchise
agreements. Pursuant to the New Domino's Agreement, the Company has the
exclusive right to develop, operate and franchise Domino's stores in Poland, and
KP is required to open an additional 40 Domino's stores prior to December 31,
2003. Pursuant to the New Domino's Agreement, the schedule for KP's opening of
new Domino's stores is as follows:

34
<PAGE>
<TABLE>
<CAPTION>

Number of Stores
To Be Opened
Time Period During Time Period
------------------------------------------------ ------------------
<S> <C>
August 1, 1997 through December 31, 1997 1
January 1, 1998 through December 31, 1998 5
January 1, 1999 through December 31, 1999 6
January 1, 2000 through December 31, 2000 7
January 1, 2001 through December 31, 2001 8
January 1, 2002 through December 31, 2002 9
January 1, 2003 through December 31, 2003 10
--
Total stores to be opened by December 31, 2003 46
</TABLE>

As of August 31, 1998, the Company had opened six Domino's stores
pursuant to the New Domino's Agreement. Although the Company has satisfied its
development requirements for 1998, there is no assurance that the Company will
be able to fulfill its remaining commitments under to the New Domino's
Agreement.

Under the terms of the New Domino's Agreement, Domino's is required to
provide, on an ongoing basis, all information and materials necessary to make KP
familiar with the Domino's system and the methods used to operate and manage
Domino's stores and commissaries, including, without limitation, plans and
specifications for Domino's stores and commissaries, site selection criteria,
advertising and marketing plans, methods and procedures for the preparation,
serving and delivery of food and beverages and management control systems. Such
information is to be provided by DPI to the Company in the form of the Domino's
Operations Manual, memoranda or through consultations with Domino's experienced
staff members.

Domino's has reserved the right to review and audit certain of KP's
operations, financial and tax accounting reports, statements and returns.
Domino's may terminate rights granted to KP under the New Domino's Agreement,
including franchise approvals for stores not yet opened, for a variety of
possible defaults by KP, including, among others, failure to open Domino's
stores in accordance with the schedule set forth in such agreement; failure to
obtain Domino's site approval prior to the commencement of each Domino's store's
construction; failure to obtain Domino's approval of any non-affiliated
franchisee; and failure to meet various operational, financial, and legal
requirements set forth in the agreement and the standard franchise agreements.
Upon termination of the New Domino's Agreement, whether resulting from default
or expiration of its terms, Domino's has the right to license others to develop
and operate Domino's stores in Poland, or to do so itself. If KP fails to meet
its development schedule during the initial term of the agreement or any
successor development term, KP would lose its rights to develop and franchise
additional Domino's stores, but would be entitled to continue to act as a master
franchiser and a franchisee with respect to all franchise agreements theretofore
granted and executed. Under certain other circumstances of default, Domino's has
the right to terminate the New Domino's Agreement and force the sale of, at the
then current market value, all of KP's rights and interests as a master
franchiser of Domino's stores and all of the assets of each Domino's store
controlled by KP.

To purchase KP's rights and interests as a master franchisor, within
ten days of termination of the New Domino's Agreement, Domino's is required to
request an appraisal of all of KP's rights and interests as a master franchiser
and is entitled to full access to all of KP's books and records. If KP and
Domino's are unable to agree upon the fair market value of KP's rights and
interests as a master franchiser within 30 days of Domino's request for
appraisal, the fair market value is determined by an appraiser, which appraiser
is selected according to a prescribed method and within 20 days after the
expiration of the 30 days. The appraiser is required to submit an appraisal
report within 60 days of his or her appointment

35
<PAGE>

and Domino's then has the option within 30 days of such submission to purchase
all of KP's rights and interests as a master franchiser at the fair market value
stated in the appraisal report. If Domino's exercises its option to purchase
KP's rights and interests as a master franchisor, Domino's will also have the
option for 30 days from the date of the termination of the New Domino's
Agreement to give notice of appraisal, review KP's books and records, and
purchase, at fair market value, all of the assets of each Domino's store
controlled by KP. Fair market value of the assets of each Domino's store is
determined through a process similar to that described above.

Prior to the opening of each Domino's store, KP is required to pay
Domino's a franchise fee and, as master franchisor, is required to enter into a
standard franchise agreement with each franchisee (whether or not affiliated
with the Company) (a "Franchisee") who will be operating a Domino's store. Each
Franchisee and each Domino's store location is subject to the approval of
Domino's, which approval may not be unreasonably withheld. The standard
franchise agreement for a Domino's store has a ten-year term with a ten-year
renewal option. During such periods the Franchisee is permitted to use the
Domino's system in an exclusive area, free of competition from other
Franchisees. With respect to each of its operating Domino's stores, a Franchisee
is required to pay KP an initial franchise fee and a monthly royalty fee, as
well as an advertising fee based on a percentage of the gross sales of each
Domino's store, net of taxes, irrespective of profitability. The financial terms
of the standard franchise agreement may be renewed at the expiration of the term
if the Franchisee executes Domino's then current standard franchise agreement. A
Franchisee's rights under a standard franchise agreement may not be transferred
without the consent of KP and Domino's. PKP is currently the only Domino's store
Franchisee in Poland. There are no non-affiliated Franchisees.

Each Franchisee must comply strictly with the Domino's system, and the
standards, specifications and procedures comprising such system may be changed
from time to time. Each Domino's store must be constructed, equipped, furnished
and operated at the cost and expense of the Franchisee in accordance with
Domino's specifications. Each Domino's store is required to offer for sale only
those pizza and beverage products authorized by Domino's. In addition, each
Domino's store is obligated to offer delivery services to all customers within a
prescribed delivery area, which delivery area is restricted to allow a delivery
order to be satisfied within 30 minutes. All of the food products and other
supplies used in Domino's stores must be of a quality that conforms to Domino's
specifications. Compliance with requirements as to signage, equipment, menu,
service, hygiene, hours of operation, data and voice communications and the like
is similarly prescribed. Domino's and KP each reserve the right to enter each
Domino's store, conduct inspection activities, and require prompt correction of
any features that deviate from the requirements of the relevant standard
franchise agreement. Similarly, KP has the right to review and audit each
Franchisee's operations, financial and tax accounting statements, reports and
returns. KP is obligated to use its best efforts to ensure that each
non-affiliated franchisee complies with its franchise agreement and local laws
and regulations.

Under the terms of the standard franchise agreement, each Franchisee is
entitled to receive from KP, on an ongoing basis, all information and materials
necessary to make the Franchisee familiar with the Domino's system and the
methods used to operate and manage Domino's stores. Domino's and KP require
extensive training of Domino's store personnel. All Franchisees, or their
designees, must successfully complete KP's Domino's store manager training
program and any additional training programs required by Domino's or KP. Each
Franchisee must implement a training program for store employees in accordance
with training standards and procedures prescribed by Domino's and KP and must
staff each Domino's store at all times with a sufficient number of trained
employees.

The standard franchise agreement provides that a Franchisee may not
have any interest in, be employed by, advise or assist any other business that
is the same as or similar to a Domino's store during the term of the agreement
and, for a period of one year after termination or expiration of the franchise
agreement, may not have any interest in, be employed by, advise or assist any
other business that is the same as or similar to a Domino's store within ten
miles of the Domino's store it had operated.

KP may terminate the franchise agreement for any Domino's store for,
among other things, failure to pay amounts due with respect to that Domino's
store, failure to operate the Domino's store in accordance with prescribed
operating standards, and persistent breaches. Upon termination, the Franchisee's
rights to use the Domino's trademarks and Domino's store system terminate, and
KP becomes entitled to assume the Franchisee's leasehold interest and purchase
the Domino's store at the fair market value thereof.

36
<PAGE>

Domino's Commissary. In conjunction with its exclusive right to develop
and franchise Domino's stores in Poland, the New Domino's Agreement grants the
Company the exclusive right to develop and operate the commissaries from which
all Franchisees in Poland will purchase food and supplies. Domino's has provided
and has agreed to provide the Company, on an ongoing basis, all information and
materials necessary to make the Company familiar with the methods used to
operate and manage a Domino's commissary.

In January 1995, KP commenced operations of the full-service commissary
in approximately 1,500 square feet of the Jana Pawla Domino's store. The Company
expects to open a new commissary in the first quarter of 1999, which will
service approximately 60 Domino's stores. The Company will relocate its existing
commissary equipment to the new facility and estimates the costs of opening a
new facility to be approximately $640,000, including leasehold improvements,
equipment, delivery trucks, dough trays and furniture and fixtures. The Company
has the right to develop additional commissaries as needed. The Company intends
to conduct all of its purchasing, distribution and main food supply operations
from the new commissary.

Domino's has developed a store format and operating system, which
system includes a recognized design, decor and color scheme for store buildings;
kitchen equipment and layout; service format; quality and uniformity of products
and services offered; procedures for inventory and management control; and a
delivery system. Domino's stores may incorporate varying floor plans and
configurations and may be located in a specially constructed freestanding
building or in existing buildings.

The Company's initial Domino's stores are in existing buildings and
range from 1,000 square feet to 2,500 square feet, depending upon whether only
delivery and pick-up services are offered or counter service with limited
seating for customers is also available. In the future, the Company intends to
focus its efforts on the development of traditional Domino's stores which
provide primarily delivery and pick-up services. Domino's stores developed by
the Company should range in size from 900 to 1200 square feet. The Company
estimates that once the space has been leased and made available to the Company,
approximately 30 to 90 days are required to renovate, equip, furnish and obtain
necessary licenses and approvals to open a Domino's store. The Company estimates
the cost of opening a Domino's store to be between $125,000 and $200,000,
including leasehold improvements, furniture, fixtures, equipment, the initial
franchise fee and opening inventories (but excluding the cost of land). Such
estimates may vary depending on the size and condition of a proposed Domino's
store and the extent of leasehold improvements required.

Domino's Store Development. To date, the Company has concentrated its
efforts on the development of Domino's stores in Warsaw, Poland and expects to
complete its development in Warsaw by the end of 1998, when it intends to focus
most of its future Domino's store development efforts on other Polish cities.
The Company considers a Domino's store location to be critical to its prospects
and devotes significant efforts to the investigation and evaluation of potential
leases and sites. The Company believes that the Domino's store concept may be
successful in a wide variety of areas within a city. Accordingly, the site
selection process involves an evaluation of a variety of factors, including
demographics (such as population density); specific site characteristics (such
as visibility, accessibility and traffic volume); proximity to activity centers
(such as office or retail shopping districts and apartment, hotel and office
complexes); potential competition in the area; construction or renovation costs;
and lease terms and conditions. Because traditional Domino's stores provide
delivery and pick-up services only, the Company has sought and seeks to place
Domino's stores in metropolitan areas with adequate levels of telephone
ownership. Company personnel inspect and approve a proposed site for each
Domino's store prior to the execution of a standard franchise agreement and
store lease.

Advertising and Promotion. The Domino's standard franchise agreement
provides that each Franchisee will contribute a monthly advertising and
promotion fee equal to 4% of its gross sales to a fund self-administered by each

37
<PAGE>

Franchisee to be used for advertising, sales promotion and public relations.
Each Franchisee is responsible for using the proceeds of the advertising fund to
develop and implement advertising and promotional plans, materials and
activities on behalf of the Domino's stores in Poland, which plans, materials
and activities are subject to Domino's approval. Non-affiliated franchisees will
be permitted to conduct their own advertising and promotion subject to the
Company's and Domino's approval. Domino's is required to provide certain
advertising and promotional assistance to the Company. The Company believes that
certain marketing methods that have proven successful for Domino's are adaptable
to the Polish market. Most marketing efforts by currently operating Domino's
stores in continental Europe have been carried out on a local store basis,
through newspaper coupons, flyers and similar media. As the number of the
Company's Domino's stores increases, the Company believes that the increased
advertising funds will provide the financial resources necessary to conduct a
fully intregrated marketing effort using all advertising media.

Sources of Supply. The Company is substantially dependent upon third
parties for all of its capital equipment (including furniture, fixtures and
equipment), food products, and other supplies. Pursuant to the New Domino's
Agreement and the Standard Franchise Agreements, all of these supplies must be
of a quality and conform to specifications acceptable to Domino's. The Company
currently obtains substantially all of its supplies and food products, including
cheese, soft drinks, cold cuts and paper products from Polish sources and
maintains approximately a seven to 30 day inventory of food products and
supplies for its Domino's stores. The Company currently obtains its store
furniture and fixtures from sources in Poland and obtains its restaurant
equipment, flour and tomato sauce primarily from Domino's approved sources in
the United States and Europe. The Company currently has no written, long-term
supply agreements. Shipments of food and supplies are delivered directly to the
commissary or Domino's stores.

Store Operations and Personnel. The Company operates its Domino's
stores under uniform standards set forth in Domino's confidential Operations
Manual, including specifications relating to food quality and preparation,
design and decor and day-to-day operations. The Company's operations are similar
to those of other Domino's stores. The Company hires Domino's store managers who
are responsible for supervising the day-to-day operations of the Domino's
stores, including food preparation, customer relations, store maintenance, cost
control and personnel relations. In addition, Domino's store managers are
responsible for selecting and training new employees, who undergo on-the-job
training. As of June 30, 1998, the Company's Domino's division had 159 full-time
and 79 part-time employees.

To date, the Company believes that it has successfully attracted and
trained local managers and other employees. The Company operates its own
Domino's approved training facility in Poland, with assistance from Domino's.
The Company maintains financial, accounting and management controls for its
Domino's stores through the use of centralized accounting systems, detailed
budgets and computerized management information systems.

Trademarks. The Company is authorized to use such trademarks, service
marks and such other marks as Domino's may authorize from time to time for use
in connection with Domino's stores. Domino's has received trademark approval In
Poland for certain marks including the "Domino's" logo and the words "Domino's
Pizza."

Economic and Business Conditions in Poland

In the late 1980s, the Polish economy was dominated by the state sector
and exhibited high inflation, administratively controlled prices, recession,
increasing levels of external debt and multiple reschedulings of official and
commercial debt, a large State budget deficit, a restrictive foreign exchange
regime and a significant proportion of trade

38
<PAGE>

denominated in non-convertible currencies. On January 1, 1990, the first
post-communist government introduced the "Economic Transformation Program" (also
known as the "Balcerowicz Plan" after the first post-communist Minister of
Finance). The radical economic reform program was designed to stabilize the
economy and promote structural reforms. Key elements included the ending of
state subsidies to state enterprises and eliminating administrative controls of
most prices. After a significant decline in GDP in real terms, a sharp rise in
unemployment in 1990 and 1991 and an acceleration in inflation in 1990, Poland
returned to growth, with positive and increasing rates of GDP growth for the
years 1992 to 1997.

Currently, the private sector accounts for approximately 70% of GDP and
more than 60% of employment and the Polish economy is generally characterized by
lower rates of inflation, prices that are almost completely freed from
administrative control, sustained growth, liberalized rules on foreign exchange
transactions and a generally rising level of foreign exchange reserves.

The economic recovery in Poland since 1992 has benefited most sectors
of the economy. Unemployment which peaked in 1994 at 16% dropped to 13% in 1997.
Real wages have grown during the last four years increasing 21% in 1997.
Domestic demand has been driven by an increase in investment and private
consumption and exports have increased, particularly since 1994. In addition,
Poland also benefits from increasing productivity. A significant portion of the
growing domestic demand, however, has been met through imports, resulting in a
growing trade deficit.

The composition of Poland's trade has changed dramatically since the
1980's, when trade with other countries belonging to the Council of Mutual
Economic Assistance, an economic and trade organization sponsored by the former
Soviet Union and including most of the former communist block ("COMECON"),
accounted for nearly 50% of Poland's total trade. By 1997, the European Economic
Union ("EU") accounted for approximately 70% of Poland's total trade, with
Germany having become Poland's dominant trading partner. Although the
composition of Poland's exports by category has remained broadly unchanged,
there has been a major shift in the quality of exported manufactured goods to
meet the expected standard of more competitive western markets.

Poland's government has run a budget deficit throughout the 1990's,
although since 1993 the deficit has remained below the annually set target, as
well as below 3% of GDP. In recent years, the financing of the budget deficit
has been secured mainly through the issuance of treasury securities on the
domestic market with very limited recourse to external sources, and has been
characterized by increasingly longer average maturities. Budgetary discipline
has been maintained by cuts in areas such as defense, health care and education.

In zloty terms, total public indebtedness at the end of 1997 grew to
$185.4 billion; however; treated as a percentage of GDP, total public
indebtedness declined from 87% at the end of 1993 to 51% at the end of 1997. In
1996, Poland settled its outstanding reciprocal obligations with Russia. In
addition, since the early 1980's, Poland concluded a number of rescheduling
agreements with the Paris Club, which groups creditors with state guarantees,
and the London Club, a mutual insurance association for ship owners, which
roughly cut in half Poland's foreign debt. In May 1997, Poland repurchased $1.69
billion of Brady Bonds issued in connection with its London Club debt
rescheduling, reducing the outstanding amount of such indebtedness by over 20%.

During the period of reform since 1992, successive governments have
supported structural transformation of the economy directed at reforming
state-owned enterprises, selling certain state-owned assets, modernizing the
banking system and creating a modern capital market. The process of structural
reform is ongoing and not all stated government goals have been achieved, In
particular, the goal of selling state-owned assets through privatization began
slowly and is only partially complete. Major privatizations conducted in 1997
include Bank Handlowy w Warszawie S.A., one of Poland's largest banks, and KGHM
Polska Miedz S.A., which is Poland's largest mining company.

In June 1994, the Council of Ministers and Parliament approved Poland's
first medium-term economic program for the years 1994 to 1997. The program is
embodied in a document prepared by the former Minister of Finance, Grzegorz
Kolodko, called the "Strategy for Poland." The Strategy for Poland constitutes
official government policy although it does not have the force of law.

39
<PAGE>

The Strategy for Poland identifies several key systemic challenges
facing the Polish economy in the medium term, including reform of the social
security system, reform of laws governing wage negotiations and labor relations
especially with respect to employees of state-owned enterprises, acceleration of
the privatization process, further reform of the financial sector with
particular attention to the recapitalization of certain banks, reduction of
unemployment and further reductions in inflation.

In 1995, Poland formally acceded to the obligations under Article VIII
of the International Monetary Fund (the "IMF") Articles of Agreement providing
for full current account convertibility of the zloty. In 1996, Poland was
accepted for full membership in the Organization for Economic Cooperation and
Development (the "OECD"). In December 1991, Poland was accepted as an associate
member of the EU. In 1994, Poland also submitted a formal application for full
membership in the EEC. Given the country's relative political and economic
stability, it is expected that Poland will be among the first Central or Eastern
European countries to be admitted in the next phase of EU expansion.

Recent Economic Performance of Poland

Gross Domestic Total. In 1997, unofficial preliminary estimates of the
Central Statistical Office indicated that GDP grew by 6.9% in real terms,
following increasing real growth rates based on IMF estimates in 1994, 1995,
1996 and 1997 of 3.8%, 5.2%, 6.0% and 7.0%, respectively.

Inflation. Although inflation has generally declined since prices were
liberalized in the beginning of 1990, the rate of inflation in Poland is still
high compared to Western Europe or the United States. The 1998 State budget
includes an assumed rate of inflation for 1998 of 8.6%. The annual increase in
the consumer price index ("CPI") has been continuously but gradually declining
from a rate of almost 250% in 1990 to 13.2% in 1997. This decline has occurred
together with increases in real GDP and decreasing unemployment. Similarly, the
annual increase in the producer price index ("PPI") decreased from approximately
293% in 1990 to 10.8% in 1997. The following table sets forth the annual rates
of consumer price inflation and producer price inflation as measured by
percentage changes on an end-of-year to end-of-year basis for the years 1993 to
1997.

Inflation: Annual Consumer and Producer Prices

1993(1) 1994 1995 1996 1997
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Consumer Prices (CPI).......................... 37.6% 29.5% 21.6% 18.5% 13.2%

Producer Prices (PPI).......................... 35.9% 27.9% 18.9% 10.5% 10.8%
</TABLE>

- -------------------------
(1) 1993 figures include VAT with a maximum rate of 22%.

Source: Central Statistical Office.

Employment and Wages. Before 1989, unemployment was not officially
recognized in Poland and over-employment was evident in many enterprises. By the
end of the first quarter of 1994, registered unemployment had reached 16.7% of
the labor force but by the end of that year it had decreased for the first time
since 1990 to 16.0% of the labor force. At December 31, 1996 and 1997,
registered unemployment was 13.6% of the labor force and 10.5% of the labor
force, respectively.

All employees, Polish and foreign, must be paid in zlotys. Foreign
employees require work permits from local authorities, which are typically not
difficult to obtain for executive or managerial employees, and are typically
obtained in

40
<PAGE>

due course. Employers are required to pay a minimum wage. All wages are subject
to payroll taxes payable by the employer, and income tax payable by the
employee.

Foreign Direct Investment. Subject to certain restrictions, the Polish
Foreign Investment Law generally allows for full repatriation of capital
dividends and profits by foreign investors. In general, foreign investors are
not required to obtain any special permits to invest in Polish companies.

Foreign Exchange Controls. The convertibility of the zloty is regulated
by the Foreign Exchange Law of December 2, 1994 (the "Foreign Exchange Law").
The Foreign Exchange Law consolidates all existing foreign exchange rules and
regulations, extends full convertibility of the zloty to all types of current
account transactions, clarifies the status of foreign exchange banks, provides
for use of the zloty in foreign trade transactions and includes the special
drawing rights at the IMF ("SDRs") and the European Currency Unit ("ECU") within
its definition of foreign currency.

Foreign Investment Law and Government Regulation in Poland

General. The Polish Law of June 14, 1990 on companies with foreign
participation (the "Foreign Investment Law") sets forth the legal requirements
governing foreign investment in Poland. The Foreign Investment Law states that,
unless provided otherwise, the Polish Commercial Code of 1934 (the "Commercial
Code") is the commercial law generally applicable to domestic business. The
Commercial Code governs corporate and partnership formation, governance and
activity, and is generally similar to corresponding regulations of countries in
the EU.

Under the relevant portions of the Foreign Investment Law, a foreign
investor may establish a limited liability company (roughly analogous to a
closely held corporation in the United States), in which it will hold 100% of
the shares; establish a limited liability company, with the equity jointly
contributed by it and other foreign and/or Polish parties; or enter business in
Poland through acquisition of stock of an existing Polish limited liability
company. The Foreign Investment Law also governs foreign investment in "joint
stock companies," which are roughly analogous to publicly held corporations in
the United States. Because IFFC anticipates that its business in Poland will be
conducted solely through one or more of its wholly owned limited liability
companies for the foreseeable future, the following discussion addresses only
limited liability companies.

The Foreign Investment Law defines the range of economic activities in
which a limited liability company with foreign participation (a "CFP") may
engage to include "participation in revenues from the operation of enterprises
in the territory of the Republic of Poland." The Foreign Investment Law imposes
authorization requirements and limits on the participation of CFP's in a limited
number of sectors of the economy. IFFC's development and operation of
restaurants is not included in one of those enumerated sectors, and do not
require special licensing. Moreover, access to raw materials and supplies in the
domestic market is afforded without distinction as to cooperatives and state
enterprises on the one hand, and private business entities, including a CFP, on
the other. All private business entities have equal access to raw materials and
labor and are treated equally for tax purposes. A CFP is free to set prices for
its products and services.

A CFP must comply with certain formal requirements preceding the
commencement of revenue producing activities, which formal requirements have
been complied with by IFFC's subsidiaries. The Founding Act of a CFP
(essentially equivalent to articles of incorporation and bylaws in the case of a
CFP that is a 100% owned subsidiary) must be prepared and executed before a
notary public (who is a lawyer and who reviews the Founding Act as to its
compliance with applicable law) in the form of a Notarial Deed. The CFP must
then be registered by the District Court responsible for the conduct of the
Commercial Register. The registration process for a newly formed CFP generally
takes from one to three months. The CFP commences its legal existence upon
registration. The CFP must then register with the Local Statistical Office to
obtain a National Economy Code Number ("REGON") and register with the Treasury
Office to obtain a Tax Indemnification Number ("NIP"). Without a REGON and a
NIP, a CFP may not complete mandatory registration with the local Fiscal Office
and Social Security Office, and may not open bank accounts or proceed with
customs clearance. These formal requirements are identical to those required for
a domestic Polish limited liability company without foreign participation.

Contribution to Capital. Other than pursuant to provisions of the
Commercial Code generally applicable to all limited liability companies, there
is no minimum level of investment required of a CFP. The minimum capital
required for

41
<PAGE>

establishment of any limited liability company is 4,000 zlotys (approximately
$1,139 at June 30, 1998 exchange rates), which must be made in Polish currency
obtained from the sale of convertible currency (including United States or West
European funds) to a foreign exchange bank, or, to the extent designated in the
CFP's Founding Act, through in-kind, nonmonetary contributions that are
transferred from abroad or purchased with Polish currency obtained from the sale
of convertible currency to a foreign exchange bank. To the extent designated in
the CFP's Founding Act, fixed assets may constitute in-kind, non-monetary
contributions to equity.

Taxation. A CFP is subject to the same taxes, and general tax
reductions, as domestic Polish companies without foreign participation since tax
exemptions specifically reserved for foreign investors or companies with foreign
participation were no longer available after January 1, 1994, and such tax
exemptions can only be utilized if the right to such exemptions was acquired
prior to January 1, 1994. A CFP is subject to corporate income tax, VAT, which
is known in Poland as the "Tax on Goods and Services," and excise tax and,
depending on the nature of its business activities, may also be subject to real
estate tax, local tax, and stamp duty. The corporate income tax rate was 38% of
taxable income until December 31, 1997 and is currently 36%. The rate is
generally calculated by the extent to which revenues exceed expenses, including
operating losses, which may be carried forward for three years. The shareholder
of a limited liability company is liable for any income taxes not paid by the
company.

Goods and services (with certain exceptions not relating to CFP),
including imported goods and services, are subject to a VAT tax. Certain
commodities like liquors and automobiles are subject to excise tax, based on the
value of such items. With respect to imports, the value of such items is equal
to the customs' value plus any customs' duties. The VAT basic rate is 22%, but
in the case of certain products, it is reduced to 7% or eliminated entirely.
Under the VAT system, credit is given for VAT paid against VAT collected.

A CFP's employees are subject to a personal income tax, and a CFP is
required to make contributions for employees' health and pension insurance,
commonly referred to as the social security fund. Currently, an employer must
remit to the social security fund, the unemployment fund and the Fund of
Guaranteed Employees' Payments 45%, 3% and 0.2%, respectively, of the amount of
wages paid to an employee before withholding for personal income tax. Both
Polish and foreign employees are governed by the same social security, health,
pension, and unemployment insurance provisions.

Currently, dividends are taxed at the rate of 20%. However, Poland has
executed a bilateral tax agreement with the United States, pursuant to which the
tax on dividends of corporations in which at least 10% of the voting stock is
held by a United States corporation may not exceed 5%. Thus, though current
regulations would otherwise provide for a 20% tax on dividends, taxes on
dividends paid by a CFP which is a subsidiary of IFFC will be at the rate of 5%.

Customs Duties and Import Restrictions. Customs duties on imported
goods are regulated by the Customs Law of 1989 (as amended). The tariff is
coordinated and integrated with international regulations and the provisions of
the General Agreement on Tariffs and Trade ("GATT"). IFFC's operations may be
subject to various levels of customs duties on certain types of items imported
into Poland. Customs duties and other similar fees, however, are not levied on
non-monetary, in-kind contributions to capital, provided that such contributions
constitute "fixed assets" and are not disposed of during the three-year period
following customs clearance. Although IFFC has contributed as capital
substantially all of its subsidiaries' furniture, fixtures and equipment, there
can be no assurance that such equipment will ultimately qualify as "fixed
assets" for purposes of this exclusion.

On February 4, 1994, the Parliament passed a law imposing
countervailing duties on certain agricultural and food products imported from
abroad, which law became effective as of April 14, 1994. The law is intended to
protect local producers by increasing the cost of importation of certain
agricultural and food products, such as meat, milk, wheat flour, processed
tomatoes, vegetable oil, pork, poultry and dairy products, through the
imposition of countervailing duties up to a level comparable to the local prices
of such products as determined by the Minister of Agriculture. In January 1997,
a new custom law was enacted with the initial plan to make it effective on July
1, 1997. This effective date, however, was postponed by the Polish Parliament to
January 1, 1998. The new customs law is consistent with the EEC's customs
regulations. IFFC currently purchases most of its products in Poland and
accordingly these duties presently have minimal impact on IFFC's costs.

42
<PAGE>

Central European Free Trade Association. The Central European Free
Trade Association ("CEFTA") was established on December 21, 1992, and became
effective on March 1, 1993. The purpose of CEFTA was to increase trade between
Eastern and Central European countries including Poland, Czech Republic,
Slovakia, and Hungary. Originally the CEFTA agreement called for a free-trade
zone by the year 2001. However, in August 1995, the foreign ministers met and
agreed to amend the original agreement. The amendment shortened the time period
for reducing customs duties and taxes on certain categories (of goods). As of
January 1996, customs duties on approximately one third of all agricultural
products traded between the CEFTA have been eliminated. Included in this
category for 1996 were citrus fruits, coffee, tea, rice, bread, flour, fish and
corn. As of January 1, 1998, customs duties and taxes on all agricultural
products traded between the CEFTA were eliminated.

Polish Currency and Foreign Exchange. As of January 1, 1995, the
National Bank of Poland introduced a new denomination of its currency unit which
is named a "zloty" (a "zloty"). New zlotys are equivalent to 10,000 old zlotys
("old zlotys"). Old zlotys remained legal tender until December 31, 1996, after
which date they have been exchangeable at certain banks. The only currency that
may be used in Poland is the zloty. The value of the zloty is determined
pursuant to a system based on a basket of currencies, as well as all other
economic and political factors that effect the value of currencies generally.

Domestic persons and CFPs are entitled to hold foreign currency
acquired through the conduct of an economic activity in their own accounts.
Foreign currency may only be converted into zlotys by selling the foreign
currency to a foreign exchange bank. Proceeds from economic activities in Poland
must be maintained in zloty denominated accounts, but may be converted into hard
currencies for certain purposes as discussed below. Typically, the transfer of
foreign currency abroad requires a foreign exchange permit, but no permit is
required for the repatriation to foreign investors in hard currency of up to
100% of the profits of a CFP. On January 1, 1995, the new Polish Foreign
Exchange Law became effective. The expressed objectives of the new law are (i)
to apply uniform standards to all Foreign Exchange Banks operating in Poland,
(ii) to create a legal framework for market valuation of the Polish currency,
and (iii) to move toward full convertibility of the zloty. The new law is also
designed to permit greater freedom on certain foreign trade transactions
accounted for in Polish currency. Similarly, foreign investors may repatriate in
foreign currency all proceeds of the sale or liquidation of equity interests in
the CFP, all proceeds of the liquidation of a CFP, and compensation resulting
from expropriation or similar government acts. The zloty is also tradable and
exchangeable into foreign currency for the purpose of purchasing goods and
services abroad. On June 30, 1998 the exchange rate was 3.51 zlotys per dollar
as published in The Wall Street Journal. Foreign exchange banks are required to
sell foreign currency to domestic persons, including a CFP, when such currency
is needed for repatriation as set forth above, and to satisfy foreign currency
obligations to foreign persons resulting from the purchase of goods and certain
services. Foreign employees may repatriate their after-tax earnings in hard
currencies without having to obtain an individual foreign exchange permit.

Reporting and Audit. The balance sheet and profit and loss statements
of a CFP must be prepared in accordance with Polish accounting principles and in
compliance with the requirements of the Commercial Code. As Poland becomes more
integrated with the EEC, it is anticipated that its financial reporting
requirements will become substantially similar to generally accepted accounting
principles in the EEC, which are generally similar to those in the United
States. For financial reporting purposes in the United States, IFFC prepares
their financial statements in accordance with U.S. generally accepted accounting
principles.

Leases and Purchase of Land. A CFP may lease real property from private
parties without substantial restrictions. The acquisition of real property is
regulated by the Acquisition of Real Property Estate by Foreign Persons Act of
24 March 1920. Because IFFC does not presently intend to acquire real property
in Poland, these statutes are not described herein.

Governmental Regulation of Restaurant Operations. Restaurant operations
are subject to a number of national and local laws and regulations, primarily
related to sanitation. All imported food products are subject to specific
sanitary requirements. Restaurants are subject to national regulations relating
to health and sanitation standards, generally implemented, administered and
enforced at the local level. All properties are subject to local zoning,
building code and land-use regulations. In general, necessary approvals and
permits for restaurant operations are granted without undue delay, and are
typically granted within 14 days of application therefor.

43
<PAGE>

Trademark Protection. Under Polish law, the registrant of a trademark
in Poland acquires the exclusive right to use the trademark in commerce for
goods and services covered by the registration. If the trademark is infringed,
the registrant is entitled to demand injunctive relief, monetary damages, and
seizure of infringing items. In general, the first applicant is entitled to the
registration of a trademark from the date the application is filed with the
Patent Office. Foreign nationals generally have the same rights as Polish
citizens with regard to trademarks.

United States Income Taxes

In general, income of the Company's Polish subsidiaries will not be
subject to United States federal income tax until it is distributed to the
Company. When distributed, it will be includable in the Company's gross income
to the extent it is paid out of a subsidiary's earnings and profits. The
Company, however, may claim a foreign tax credit against its United States tax
liability for Polish corporate income tax paid by the subsidiary and for Polish
tax withheld from the dividend, subject to limitations. Because Polish corporate
income tax, which is currently 36% of taxable income, exceeds the current
maximum United States corporate income tax rate, the Company does not anticipate
that significant United States Federal income tax will be payable on the income
of its Polish subsidiaries. In certain circumstances, a portion of a Polish
subsidiary's income may be included in the Company's gross income before it is
distributed, although a foreign tax credit for Polish corporate income tax paid
by the subsidiary would be available to the Company as if the income actually
had been distributed.

Competition

The Company operates in a highly competitive environment. In addition
to facing competition from a number of American-style fast-food franchisors
and/or their franchisees, including McDonald's, Pizza Hut, Kentucky Fried
Chicken, and Taco Bell, the Company also encounters competition from a broad
range of existing Polish restaurants and food service establishments, including
local quick-service restaurants, offering American-style fast food. These
restaurants sell products that are familiar to Polish consumers and that have
achieved broad market acceptance. Additionally, it can be expected that, in the
event of perceived initial market acceptance of American-style fast food
concepts, there will be a rapidly increasing number of market entrants offering
such products, including additional American franchisors and Polish or other
companies seeking to imitate the American-style fast-food concepts. IFFC
believes that it competes on the basis of price, service and food quality.

Under the New BKC Agreement, BKC has reserved the right to open
restaurants on United States military establishments and in certain hotel chains
with which BKC has, or may in the future have, a multi-territory agreement
encompassing Poland. The Company has the right of first refusal with respect to
potential Burger King sites in airports, train stations, hospitals and other
hotels. Many of the Company's competitors and potential competitors,
particularly the major U.S. fast-food franchisors, possess significantly greater
financial, marketing, personnel and other resources than the Company. There can
be no assurance that the Company will be able to compete successfully.

Employees of the Company

As of June 30, 1998, the Company had approximately 562 employees,
including 365 full-time and 197 part-time employees. The success of the Company
is dependent, in part, upon its ability to hire and retain additional qualified
personnel. The Company continues to recruit personnel for its operations in
Poland. The Company utilizes local employees to staff its restaurants. Such
employees are not represented by labor unions. Substantially all of the
Company's management and employees reside in Poland and speak Polish.
Substantially all of the Company's management team in Poland is also able to
communicate in English. Messrs. Rubinson, Welch, Martin, Scattergood and
Blumenthal are not fluent in Polish. All members of

44
<PAGE>

the Company's senior management team have obtained the requisite Polish work
permits and the President, Chief Financial Officer, Director of Operations and
Director of Development reside in Poland.

Legal Proceedings

As of July 1995, IFFP likely became subject to penalties for failure to
comply with an amended tax law requiring the use of cash registers with certain
calculating and recording capabilities and which are approved for use by the
Polish Fiscal Authorities. As a penalty for noncompliance, Polish tax
authorities may disallow certain value added tax deductions for July and August
1995. Additionally, penalties and interest may be imposed on these disallowed
deductions. IFFP believes that its potential exposure is approximately $400,000,
which amount was accounted for in its 1997 financial statements. IFFP has
requested a final determination by the Polish Minister of Finance. The Company
is unable to predict the timing and nature of the Minister's ruling. Although
IFFP's NCR Cash Register System was a modern system, it could not be modified.
IFFP has replaced the system with a new Siemen's system which complies with
Polish regulations.

The Company is not a party to any other litigation or governmental
proceedings that management believes would result in any judgments or fines that
would have a material adverse effect on the Company.

Properties

Offices of the Company. The Company maintains its executive offices in
approximately 2,500 square feet of leased office space at 1000 Lincoln Road,
Suite 200, Miami Beach, Florida 33139. Annual lease payments under the lease are
approximately $32,200. IFFC currently subleases approximately 800 square feet
for an annual fee of $14,697. IFFC has exercised its second of three two-year
renewal options under the lease, which expires in December 1998.

On May 16, 1997, IFFP executed a lease for 4,000 square feet of office
space located at UL. Wazchocka 1/3, Seg M.F., 03-934, Warsaw, Poland. This lease
was terminated as of July 31, 1998 in order for the Company to relocate to more
spacious offices. On April 29, 1998, IFFP executed a lease for approximately
4,680 square feet of space located at 16 Jagiellonska St., Warsaw, Poland. The
annual rental payment is approximately $112,000 (at June 30, 1998 exchange
rates), including common area charges. The agreement is for a five-year term.
The Company has the right of first refusal in leasing the premises for
subsequent annual periods, provided that the lessor is notified of the Company's
intention to continue leasing the premises no later than six months before the
expiration of the initial term. The Company relocated to such offices in July
1998.

Thus far, the Company has not incurred nor does it anticipate incurring
any material costs or expenses associated with compliance with the environmental
laws of the United States or Poland.

Burger King Stores. The following table sets forth, as of June 30,
1998, the name, location, opening date and lease or sublease expiration date
(including all renewal options) for each of the Company's Burger King
restaurants:

45
<PAGE>
<TABLE>
<CAPTION>
Lease
Name Location Opening Date Expiration
-------------- -------------------- --------------------- -----------------
<S> <C> <C> <C>
Galaxy Warsaw, Poland April 1993 (1)
Kolmer Warsaw, Poland May 1993 (1)
Dantex Warsaw, Poland July 1993 (1)
Salus Warsaw, Poland December 1993 January 2009
Lublin Lublin, Poland March 1994(2) January 2014
Parnas Warsaw, Poland March 1994 January 2009
Kielce Kielce, Poland May 1994 May 2013
Katowice Katowice, Poland October 1994 November 2003
Mikolow Mikolow, Poland July 1998 November 2017
Torun Torun, Poland August 1998 January 2018
Czechowice Czechowice, Poland September 1998(3) November 2038
Plonsk Plonsk, Poland September 1998(3) April 2018
Pabianice Pabianice, Poland October 1998 (3) June 2018
Raciborz Raciborz, Poland October 1998 (3) July 2018
Olsztyn Olsztyn, Poland November 1998 (3) July 2018
Tychy Tychy, Poland December 1998(3) January 2018
Stara Milonsna Warsaw, Poland December 1998(3) January 2018
</TABLE>

- -----------------------
(1) Indicates lease is for an unlimited period of time, but may be terminated
upon three months notice by the lessor, subject to certain conditions.
(2) Of the 245 square meters under lease, 20 square meters are under lease only
until January 1999.
(3) Expected opening.

Domino's Stores. The following table sets forth, as of June 30, 1998,
the name, location, opening date and lease or sublease expiration date
(including all renewal options) for each of the Company's Domino's Stores:
<TABLE>
<CAPTION>
Lease
Name Location Opening Date Expiration
-------------- -------------------- --------------------- -----------------
<S> <C> <C> <C>
Parnas Warsaw, Poland March 1994 January 2009
Grojecka Warsaw, Poland May 1994 (1)
Jana Pawla Warsaw, Poland August 1994 March 2004(2)(3)
Bona Warsaw, Poland July 1997 (1)
Wolska Warsaw, Poland December 1997 (1)
Iganska Warsaw, Poland March 1998 (1)(4)
Bemowo Warsaw, Poland March 1998 January 2008
Modlinska Warsaw, Poland April 1998 February 2008
Bielany Warsaw, Poland June 1998 (1)
Ursynow Warsaw, Poland July 1998 (1)
</TABLE>

- -----------------------

(1) Indicates lease is for an unlimited period of time, but may be terminated
upon three months notice by the lessor, subject to certain conditions
and/or payments to lessee.
(2) Includes corporate office space.
(3) Includes commissary.
(4) Includes training facility.

<PAGE>

MANAGEMENT

Executive Officers and Directors
<TABLE>
<CAPTION>

The executive officers and directors of the Company are as follows:

Name Age Position with the Company
- ----------------------------------------------- ------- -----------------------------------------------------
<S> <C> <C>
Mitchell Rubinson(1)(2)(3)................ 51 Chairman of the Board and Chief Executive Officer
Michael T. Welch.......................... 46 President, Chief Operating Officer and Director
James F. Martin, C.P.A.................... 38 Vice President, Chief Financial Officer, Treasurer
and Director
Mark Rabinowitz, M.D.(1)(2)(3)............ 50 Director
Larry H. Schatz, Esq.(1)(2)(3)............ 52 Vice Chairman of the Board

</TABLE>
- --------------------------

(1) Member of the Audit Committee.
(2) Member of the Stock Option Committee.
(3) Member of the Nomination Committee.

Mitchell Rubinson has served as the Chairman of the Board and Chief
Executive Officer of the Company since its incorporation in December 1991 and
served as President from December 1991 to June 1998. Mr. Rubinson has served as
the Chairman of the Board, Chief Executive Officer and President of Capital
Brands from March 1988 to April 1996, and was the Treasurer of Capital Brands
from March 1992 to April 1993. Mr. Rubinson has served as the Chairman of the
Board, Chief Executive Officer and President of QPQ Corporation from July 1993
to May 1997.

Michael T. Welch has served as President and Chief Operating Officer,
and a director of IFFC since June 1998. Prior to joining the Company, Mr. Welch
served as Vice President of Operations at Checkers Drive-In Restaurants Inc. and
was with that company since June 1994. From April 1987 to May 1994, Mr. Welch
was president of W-S Acquisition Corporation, a franchisee of Wendy's
International. Mr. Welch also spent six years as Senior Vice President of
Franchise Operations with Wendy's International and has over 25 years experience
in the restaurant industry.

James F. Martin, C.P.A., has served as Vice President, Chief Financial
Officer, Treasurer and Director of the Company since May 1997 and, as Director
of Finance for the Company's Polish subsidiaries from November 1993 through
February 1995. Mr. Martin served as Chief Financial Officer of QPQ Corporation
from October 1996 to May 1997. From May 1995 through September 1996, Mr. Martin
was a 50% owner in an information systems and software consulting company
located in South Florida. Additionally, Mr. Martin has nine years of commercial
banking experience and is a Certified Public Accountant.

Mark Rabinowitz, M.D. has served as a director of the Company since
January 1996. Since 1983, Dr. Rabinowitz' principal occupations have been
serving as a medical doctor for and the Vice President of Jose E. Gilbert and
Mark Rabinowitz M.D.S., P.A. and serving as a medical doctor and the President
of Women's Centre for Health, Inc. Dr. Rabinowitz served as a director of QPQ
Corporation from January 1996 to May 1997.

Larry H. Schatz, Esq. has served as Vice Chairman of the Board of the
Company since July 1997. Mr. Schatz has served as "of counsel" for the law firm
of Grubman Indursky & Schindler P.C. from January 1996. From 1991 through 1995
Mr. Schatz worked as an attorney in private practice.

Additional Senior Officers of the Company

Leon Blumenthal has served as the Senior Vice President and Director of
Operations of the Burger King and Domino's divisions since June 1998 and served
as the Senior Vice President and Chief Operating Officer of the Company and
Managing Director and President of the Polish subsidiaries from March 1995 to
June 1998. Mr. Blumenthal served as

47
<PAGE>

General Manager of Hanna Holding Fast Foods ("Hanna Holding") from January 1991
to March 1994. As General Manager of Hanna Holding, Mr. Blumenthal was
responsible for the operation of 20 Burger King restaurants in Denmark, Sweden
and Norway. From 1986 to 1990, Mr. Blumenthal owned and operated two franchised
restaurants of C&M Foods, Inc., d/b/a Bojangles Chicken & Biscuits in Lilburn,
Georgia. From 1966 to 1982, Mr. Blumenthal held various management positions
with Burger King Corporation and its franchisees.

Ian Scattergood has served as Director of Development of the Company
since March 1998. Prior to joining the Company, Mr. Scattergood served as
Director of Development for Burger King Corporation in its European, Middle
Eastern and African territories from December 1996 to September 1997. From March
1987 to November 1996, Mr. Scattergood held various management positions with
Burger King Corporation. Mr. Scattergood has over ten years experience in the
restaurant industry.

Compensation of Directors

The Company's directors hold office until the next annual meeting of
shareholders or until their successors have been duly elected and qualified. The
Company does not pay directors' fees, but reimburses all directors for their
expenses in connection with their activities as directors of the Company.
Directors of the Company who are also employees of the Company will not receive
additional compensation for their services as directors. Mr. Schatz receives
$25,000 per annum for serving as Vice Chairman of the Board. In connection with
the issuance of the CSS Notes, the Company obtained, and is the beneficiary of,
a $27 million key man life insurance policy on the life of Mr. Rubinson.

Meetings and Committees of the Board of Directors

During the Company's fiscal year ended December 31, 1997, the Company's
Board took action 13 times by unanimous written consent and had two meetings.
All directors attended at least 75% of the meetings of the Board of Directors.

Mitchell Rubinson, Mark Rabinowitz and Larry Schatz currently
constitute the members of the Board's Audit, Stock Option and Nomination
Committees, which were formed in 1998. The Audit Committee reviews the records
and affairs of the Company and their financial condition, reviews with
management and the independent auditors the systems of internal control, and
monitors the Company's adherence in accounting and financial reporting to
generally accepted accounting principles. The Stock Option Committee is
responsible for the grant of options under the Company's 1993 Stock Option Plan
and 1993 Directors Stock Option Plan. The Nomination Committee is charged with
making recommendations to the full Board for the selection of director nominees.
There is no formal procedure for the submission of shareholder recommendations.

Executive Compensation

The following table sets forth, for the fiscal years ended December 31,
1995, 1996 and 1997, the aggregate compensation paid by the Company to Mitchell
Rubinson, the Company's Chief Executive Officer. None of the Company's other
executive officers' total annual salary and bonus for the year ended December
31, 1997 was $100,000 or more.

48
<PAGE>
<TABLE>
<CAPTION>

Annual Compensation (1) Long Term Compensation
---------------------------------------- --------------------------------------
Awards Payouts
---------------------- --------------
Other Annual Securities Underlying All Other
Name and Principal Position Fiscal Year Salary Compensation Options/SARs (#) Compensation
- --------------------------------- ----------- --------- ---------------- ---------------------- --------------
<S> <C> <C> <C> <C> <C>
Mitchell Rubinson, 1997 $192,163 $14,216(5) 0 0
Chief Executive Officer 1996 $181,093 $12,993(4) 0 0
1995 $159,976 $15,223(3) 0 0
</TABLE>

- ----------------
(1) The columns for "Bonus," "Restricted Stock Awards" and "LTIP Payouts" have
been omitted because there is no compensation required to be reported in
such columns.
(2) See "Aggregated Fiscal Year-End Options Value Table" for additional
information concerning options granted. The Company has not granted any
stock appreciation rights ("SARs").
(3) Represents an automobile allowance of $12,000 and medical insurance
premiums of $3,223.
(4) Represents an automobile allowance of $12,000 and medical insurance
premiums of $993.
(5) Represents an automobile allowance of $12,000 and medical insurance
premiums of $2,216.

Employment Agreements

On November 7, 1996, IFFC amended its employment agreement with Mr.
Rubinson, Chairman of the Board and Chief Executive Officer of the Company,
extending his employment term until December 31, 1999. The amended agreement
also provides for a minimum annual salary of $183,012.50 during the first year,
subject to a 10% annual increase for each of the remaining two years.
Additionally, Mr. Rubinson is entitled to receive an annual incentive bonus in
the amount of 2.5% of IFFC's net income, after tax. Pursuant to his employment
agreement, Mr. Rubinson is required to devote such portion of his business time
to IFFC as may be reasonably required by IFFC's Board. Mr. Rubinson is entitled
to four weeks of paid vacation during the first year of the initial term and six
weeks of paid vacation during any subsequent year of his employment with IFFC.
For each day of vacation that Mr. Rubinson elects not to take, pursuant to the
employment agreement, IFFC will pay him an amount of money equal to the quotient
of his then annual salary divided by 260. Mr. Rubinson's employment agreement
requires that he not compete or engage in any business competitive with IFFC's
business for the term of the agreement and for one year thereafter. Mr. Rubinson
is also entitled to certain fringe benefits, including an automobile allowance.
Mr. Rubinson's employment agreement provides for certain payments in the event
his employment is terminated by reason of his death or disability and a
severance payment of twice the minimum annual salary then in effect plus the
incentive bonus paid in the prior year, in the event his employment is
terminated by IFFC without cause. Mr. Rubinson's employment agreement does not
provide for a severance payment in the event his employment is terminated for
cause.

IFFC's employment agreement with James F. Martin, effective July 1,
1997, provides that he will serve as Chief Financial Officer of IFFC, for an
initial term of three years, which IFFC may extend for up to two additional
years. His annual salary for the first year is $85,000. Pursuant to his
employment agreement, Mr. Martin is required to devote his full business time,
attention and best efforts to the performance of his duties under the employment
agreement. Mr. Martin is entitled to three weeks of paid vacation during any
year of employment and an automobile allowance of $400 per month. However, Mr.
Martin is responsible for all associated expenses relating to such automobile,
including, without limitation, insurance, gas and repairs. Mr. Martin is
eligible to receive stock option grants under IFFC's stock option plans in the
discretion of IFFC's Board or Stock Option Committee. IFFC has granted Mr.
Martin stock options to acquire 100,000 shares of IFFC's Common Stock at an
exercise price of $.40 per share and stock options to acquire 100,000 shares of
IFFC's Common Stock at an exercise price of $.81 per share, such options to be
exercisable in whole or in part and cumulatively as follows, provided in each
case that Mr. Martin is an employee of IFFC on the date of exercise: (i) 20% one
year after the effective date of the employment agreement; (ii) 60% two years
after the effective date of the employment agreement; and (iii) 100% three years
after the effective date of the employment agreement. Mr. Martin also receives a
housing allowance while he is living in Poland. Mr. Martin's employment
agreement provides for a payment of $20,000 in the event his employment is
terminated by reason of his death or disability and a severance payment in the
event Mr. Martin's employment is terminated without cause, to be calculated as
follows: (i) if such termination occurs between July 1, 1997 and June 30, 1998,
a $20,000 severance amount; (ii) July 1, 1998 and June 30, 1999, a $15,000
severance amount; and (iii) July 1, 1999 through June 30, 2000, a $10,000
severance amount. Mr. Martin's employment agreement does not provide for a
severance payment in the event his employment is terminated for cause. Mr.
Martin's employment agreement

49
<PAGE>

requires that he not compete or engage in any business competitive with IFFC's
business for the term of the agreement and for a period of two years thereafter.

IFFC and IFFP executed an employment agreement with Leon Blumenthal,
effective July 1, 1997, for an initial term of three years, which IFFC may
extend for up to an additional two years. His annual salary for the first year
is $100,000. Additionally, under the terms of the employment agreement, Mr.
Blumenthal shall be eligible to receive stock option grants under IFFC's stock
option plans in the discretion of IFFC's Board or Stock Option Committee. IFFC
granted Mr. Blumenthal stock options to acquire 100,000 shares of IFFC's Common
Stock at an exercise price of $.40 per share, such options to be exercisable in
whole or in part and cumulatively according to the following schedule: (i) 20%
one year after the effective date of the employment agreement; (ii) 60% two
years after the effective date of the employment agreement; and (iii) 100% three
years after the effective date of the employment agreement. Mr. Blumenthal is
entitled to certain fringe benefits, including an automobile to use in
connection with the performance of his duties under the agreement. Mr.
Blumenthal shall be entitled to three weeks of paid vacation during his
employment. Mr. Blumenthal's employment agreement provides for a payment of
$25,000 in the event his employment is terminated by reason of his death or
disability and, in the event his employment is terminated without cause, Mr.
Blumenthal is entitled to a severance payment as follows: if the termination
occurs (i) on or prior to July 1, 1998, the severance amount will be $25,000;
(ii) after July 1, 1998 but on or prior to July 1, 1999, the severance amount
will be $20,000; and (iii) after July 1, 1999, the severance amount will be
$15,000. Mr. Blumenthal's employment agreement does not provide for a severance
payment in the event his employment is terminated for cause. Mr. Blumenthal's
employment agreement requires that he not compete or engage in any business
competitive with IFFC's business for the term of the agreement and for two years
thereafter.

IFFC executed an employment agreement with Michael Welch, effective
June 15, 1998, which provides that he will serve as IFFC's President and Chief
Operating Officer for an initial term of three years, which IFFC may extend for
up to an additional two years. His annual salary for the first year is $165,000.
Additionally, under the terms of the employment agreement, Mr. Welch shall be
eligible to receive stock option grants under IFFC's stock option plans in the
discretion of IFFC's Board or Stock Option Committee. IFFC granted Mr. Welch
stock options to acquire 250,000 shares of IFFC's Common Stock at an exercise
price of $.71 per share, which are exercisable in whole or in part and
cumulatively according to the following schedule: (i) 20% one year after the
effective date of the employment agreement; (ii) 60% two years after the
employment agreement; and (iii) 100% three years after the effective date of the
employment agreement. In addition to salary, Mr. Welch is entitled to certain
fringe benefits, including an automobile to use in connection with the
performance of his duties under the agreement and an housing allowance of $2,500
per month. The housing benefits will terminate when Mr. Welch's family relocates
to Poland. Mr. Welch's employment agreement provides for a payment of $50,000 in
the event that his employment is terminated by reason of death or disability
and, in the event his employment is terminated without cause, Mr. Welch is
entitled to a severance payment as follows: if termination occurs (i) on or
prior to December 14, 1998, the severance amount will be $25,000; (ii) after
December 14, 1998, but on or prior to June 14, 1999, the severance amount will
be $50,000; and (iii) after June 15, 1999, the severance amount will be $75,000.
Mr. Welch's employment agreement does not provide for a severance payment in the
event his employment is terminated for cause. Additionally, the employment
agreement requires that Mr. Welch not compete or engage in any business
competitive with IFFC's business for the term of the agreement and for a period
of two years thereafter.

IFFC executed an employment agreement with Ian Scattergood, effective
March 1, 1998, which provides that he will serve as the Director of Development
for IFFP, the Company's majority owned Polish subsidiary, for an initial term of
one year which IFFC may extend for up to two years. His annual salary for the
first year is $105,000 plus a certain performance bonus. Mr. Scattergood is to
receive an automobile allowance of $500 per month and a housing allowance of
$1,500 per month. Additionally, under the terms of the employment agreement, Mr.
Scattergood shall be eligible to receive stock option grants under the Company's
stock option plans in the discretion of the Company's Board or Stock Option
Committee. The Company granted Mr. Scattergood a stock option to acquire 100,000
shares of the Company's Common Stock at an exercise price of $.40 per share,
such options to be exercisable in whole or in part and cumulatively according to
the following schedule: (i) 20% one year after the effective date of the
employment agreement; (ii) 60% two years after the effective date of the
employment agreement; (iii) 100% three years after the effective date of the
employment agreement. Mr. Scattergood shall be entitled to three weeks of paid
vacation during each year of his employment. Mr. Scattergood's employment
agreement provides for a payment of $20,000 in the event his employment is
terminated by reason of his death or disability and, in the event his employment
is terminated without cause, Mr. Scattergood is entitled to a severance payment
if the termination occurs on or prior to February 28, 1999, in an amount

50
<PAGE>

equal to $20,000. Mr. Scattergood's employment agreement does not provide for a
severance payment in the event his employment is terminated for cause. Mr.
Scattergood's employment agreement requires that he not compete or engage in any
business competitive with the Company for the term of the agreement and for two
years thereafter.

Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/
SAR Values

The following table sets forth certain information concerning
unexercised stock options held by the Chief Executive Officer as of December 31,
1997. No stock options were exercised by the Chief Executive Officer during the
year ended December 31, 1997. No SARs were granted or are outstanding.
<TABLE>
<CAPTION>

Number of Securities Underlying Value of Unexercised
Unexercised Options/SARs at In-the-Money Options/SARs at
December 31, 1997(#) December 31, 1997($)(1)
-------------------------------- -------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------- -------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
Mitchell Rubinson...................... 150,000 0 $3,000 $0
</TABLE>

- -----------------------
(1) The closing bid quotation for the Company's Common Stock as reported by the
National Association of Securities Dealers on December 31, 1997 was $.42.

Option Repricings

Since the Company's inception, the Company has issued, pursuant to the
terms of the 1993 Stock Option Plan and 1993 Directors Stock Option Plan, a
number of stock options to directors, executive officers and key employees. As
of July 1, 1997 the exercise price of each of the stock options granted by the
Company was above the fair market value of the Common Stock underlying such
stock options. In an effort to provide the holders of the stock options
additional incentive to use their best efforts on behalf of the Company, as of
July 1, 1997 each of the stock option agreements between the Company and the
then-current option holders, including Mitchell Rubinson, was amended to reduce
the exercise price stated therein to the fair market value of the underlying
Common Stock on such date, which was $.40 per share.

51
<PAGE>
PRINCIPAL SHAREHOLDERS

The following table sets forth, as of August 31, 1998, the number of
shares of Common Stock of the company which were owned beneficially by (i) each
person who is known by the Company to own beneficially more than 5% of its
Common Stock, (ii) each director of the Company, (iii) the Chief Executive
Officer, the President and the Chief Financial Officer of the Company and (iv)
all directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
Percentage of
Name and Address of Amount and Nature of Outstanding Shares
Beneficial Owner(1)(2) Beneficial Ownership Owned
- --------------------------------------------- ---------------------- --------------------
<S> <C> <C>
Mitchell Rubinson................................ 30,559,211(3) 68.0%
Edda Rubinson.................................... 30,409,211(4) 67.9%
Marilyn Rubinson................................. 4,810,797(5) 10.7%
Joel Hirschhorn.................................. 2,370,000 5.3%
Dr. Mark Rabinowitz.............................. 136,197(6) *
James F. Martin.................................. 206,000(7) *
Larry H. Schatz, Esq............................. 50,000(8) *
Michael T. Welch................................. 250,000(9) *
All directors and executive officers as
a group (five persons)........................... 31,201,408 68.6%
</TABLE>

- -------------------------

Less than 1%
(1) The address of each of the listed beneficial owners identified is c/o
1000 Lincoln Road, Suite 200, Miami Beach, Florida 33139.
(2) Under Rule 13d-3 of the Securities Exchange Act of 1934 (the "Exchange
Act"), certain shares may be deemed to be beneficially owned by more than
one person (if, for example, persons share the power to vote or the power
to dispose of the shares). In addition, shares are deemed to be
beneficially owned by a person if the person has the right to acquire the
shares (for example, upon exercise of an option) within 60 days of the date
as of which the information is provided. In computing the percentage
ownership of any person, the amount of shares outstanding is deemed to
include the amount of shares beneficially owned by such person (and only
such person) by reason of these acquisition rights. As a result, the
percentage of outstanding shares of any person as shown in this table does
not necessarily reflect the person's actual ownership or voting power with
respect to the number of shares of Common Stock actually outstanding as of
the Record Date.
(3) Includes 30,409,211 shares held jointly with his wife, Edda Rubinson, and
options to purchase 150,000 shares of Common Stock granted to Mr. Rubinson
pursuant to the Company's 1993 Stock Option Plan that are immediately
exercisable at an exercise price of $.40 per share.
(4) These shares are held jointly with Mitchell Rubinson, Edda Rubinson's
husband.
(5) Includes 37,666 shares of Common Stock that would be acquired upon the
conversion of 1,130 shares of Series A Convertible Preferred Stock. Marilyn
Rubinson is Mitchell Rubinson's mother. Mitchell Rubinson disclaims
beneficial ownership of the shares of Common and Preferred Stock held by
his mother.
(6) Includes options to purchase 50,000 shares of Common Stock granted to Dr.
Rabinowitz that are immediately exercisable at an exercise price of $.40
per share.
(7) Includes options to purchase 100,000 shares of Common Stock granted to Mr.
Martin pursuant to an employment agreement that vest over a three year
period beginning in July 1998 at an exercise price of $.40 per share and
options to purchase 100,000 shares of Common Stock granted to Mr. Martin
that vest over a three year period beginning in July 1998 at an exercise
price of $.81 per share.
(8) Includes options to purchase 50,000 shares of Common Stock granted to Mr.
Schatz that are exercisable at any time prior to July 2001 at an exercise
price of $.40 per share.
(9) Includes options to purchase 250,000 shares of Common Stock granted to Mr.
Welch pursuant to an employment agreement that vest over a three year
period beginning in June 1999 at an exercise price of $.71 per share.

<PAGE>
SELLING SHAREHOLDERS

The shares of Common Stock covered by this Prospectus are offered by
the Selling Shareholders identified in the table below. The Company has
registered the Shares under the Securities Act of 1933, as amended (the
"Securities Act"), for sale by certain of the Selling Shareholders pursuant to a
registration rights agreement (the "Registration Rights Agreement") entered into
by the Company and the Selling Shareholders. The Company has been advised by the
Selling Shareholders that none of them have ever held a position or office, or
had any material relationship with, the Company, except that (i) BT Alex. Brown
Incorporated acted as placement agent in the 1997 private placement of the
Convertible Notes, for which it received a placement fee equal to 6% of the
gross proceeds and a management fee equal to 500,000 shares of IFFC Common
Stock; (ii) both Joel Hirschhorn and Marilyn Rubinson own beneficialy more than
5% of the Company's outstanding Common Stock; and (iii) Marilyn Rubinson is
Mitchell Rubinson's mother and Jamie and Kim Rubinson are Mitchell Rubinson's
daughters. It is unknown if, when, or in what amounts a Selling Shareholder may
offer the Shares for sale. There is no assurance that the Selling Shareholders
will sell any or all of the shares offered hereby. Because the Selling
Shareholders may offer all or some of the shares pursuant to the Offering, and
because there are currently no agreements, arrangements or understandings with
respect to the sale of any of the shares that will be held by the Selling
Shareholders after completion of the Offering, no estimate can be given as to
the amount of the shares that will be held by the Selling Shareholders after
completion of the Offering.

The following table sets forth certain information with respect to the
ownership of the Common Stock by the Selling Shareholders as of August 31, 1998,
assuming full conversion of all outstanding Convertible Notes:
<TABLE>
<CAPTION>

Ownership of Shares Ownership of Shares
of Common Stock Number of of Common Stock
Prior to Offering Shares After Offering(2)
Name and Address -------------------------- Offered ------------------------
of Selling Shareholder Shares Percentage Hereby(1) Shares Percentage
- -------------------------------------------- ------------ ------------ ----------- -------- ------------
<S> <C> <C> <C> <C> <C>
Northstar High Total Return Fund (3) 20,928,571 24.9% 20,928,571 0 *
(Northstar Investment Management)
Northstar High Total Return Fund II (3) 2,500,000 3.0% 2,500,000 0 *
(Northstar Investment Management)
Northstar Balance Sheet Opportunities Fund (3) 2,142,857 2.6% 2,142,857 0 *
(Northstar Investment Management)
Legg Mason High Yield Portfolio (3) 9,834,285 11.7% 9,834,285 0 *
BancAmerica Securities, Inc. (3) 3,931,428 4.7% 3,931,428 0 *
BT Alex. Brown Incorporated 500,000 0.6% 500,000 0 *
Joel Hirschhorn 2,370,000 2.8% 2,370,000 0 *
Marilyn Rubinson 4,750,000 5.7% 4,750,000 0 *
Kim Rubinson 1,000,000 1.2% 1,000,000 0 *
Jamie Rubinson 1,000,000 1.2% 1,000,000 0 *

</TABLE>

- -------------------------

* Less than 1%.

(1) Because the Selling Shareholders may sell all, some or none of their
Shares, no actual estimate can be made of the aggregate number of Shares
that are to be offered hereby or the number or percentage of Shares that
the Selling Shareholders will own upon completion of the Offering to which
this Prospectus relates.
(2) Assumes all Shares registered hereunder have been sold.

(3) Reflects shares acquired upon the conversion of currently outstanding
Convertible Notes, which are being registered pursuant to the Registration
Rights Agreement.

<PAGE>
CERTAIN TRANSACTIONS

In June 1996, after considering various alternatives, including the
market price for IFFC's Common Stock, its trading volume, various time
constraints, and the unavailability of funds from other sources, the
disinterested Directors of IFFC authorized the issuance of 2.2 million shares of
IFFC's Common Stock for a total purchase price of $110,000 to Mitchell Rubinson
and his wife. IFFC used the proceeds from the sale of such shares for payment of
interest on its 9% subordinated convertible debentures (the "Debentures").

In September 1996, IFFC had additional working capital needs, and had
incurred additional expenses in connection with the BKC litigation. After
considering various alternatives, including the market price for IFFC's Common
Stock, its trading volume, various time constraints, and the unavailability of
funds from other sources, the disinterested Directors of IFFC authorized the
sale of 2.5 million shares of Common Stock at $.10 per share. Marilyn Rubinson,
Jaime Rubinson and Kim Rubinson, the mother and daughters of Mitchell Rubinson,
purchased 250,000 shares each or a total of 750,000 shares of the offering. In
November 1996, IFFC had additional working capital needs. After considering
various alternatives, including the market price for IFFC's Common Stock, its
trading volume, various time constraints, and the unavailability of funds from
other sources, the disinterested Directors of IFFC authorized the sale of
500,000 shares of Common Stock at $.10 per share. Jaime Rubinson purchased
250,000 shares and Kim Rubinson purchased 250,000 shares.

In December 1996, IFFC had outstanding an interest payment of
approximately $125,000 in connection with the Debentures and additional working
capital needs. After considering various alternatives, including the market
price for IFFC's Common Stock, its trading volume, various time constraints, and
the unavailability of funds from other sources, the disinterested Directors of
IFFC authorized the sale of 1.5 million shares of Common Stock of IFFC to
Marilyn Rubinson at $.10 per share.

In January 1997, after considering various alternatives, including the
market price for IFFC's Common Stock, its trading volume, various time
constraints, and the unavailability of funds from other sources, the
disinterested Directors of IFFC authorized the sale of $100,000, $300,000,
$50,000 and $50,000 aggregate principal amount of convertible promissory notes
to Mitchell Rubinson and his wife Edda, Marilyn Rubinson, his mother, Jaime
Rubinson and Kim Rubinson, his daughters, respectively. The notes bore interest
at 8% per annum and were to mature on January 13, 1999. The notes were
convertible into shares of IFFC's Common Stock at $.10 per share. The proceeds
from the sale of the notes were used to fund the cost and expenses in connection
with the Company's litigation against BKC and general working capital. In June
1997, the $500,000 aggregate principal amount of the convertible promissory
notes was converted into 5 million shares of Common Stock.

On March 14, 1997, IFFC issued a promissory note in the original
principal amount of $2,198,494 to Funding as partial payment of amounts due to
Funding in connection with the settlement of the BKC litigation. The note bore
interest at prime plus 1%, was payable in full on December 31, 1998, and was
prepayable in whole or in part at anytime, without penalty. On July 14, 1997,
IFFC and a newly formed subsidiary entered into a Merger Agreement with Funding
and Mitchell and Edda Rubinson, the sole shareholders of Funding. Under the
terms of this agreement, Funding was merged with and into the subsidiary, and
25,909,211 shares of IFFC's Common Stock were issued to such shareholders of
Funding. The exchange ratio was based on a valuation by the disinterested
Directors of the amount owed to Funding under the prior litigation financing
agreements between IFFC, IFFP and Funding and the value of Funding's rights to
proceeds of the settlement with BKC. The promissory note previously issued to
Funding was assumed by IFFC by virtue of the merger with Funding.

All of the foregoing transactions were authorized by the disinterested
directors of IFFC.

54
<PAGE>
DESCRIPTION OF SECURITIES

Common and Preferred Stock

The authorized capital stock of IFFC is 101,000,000 shares, consisting
of 100,000,000 shares of Common Stock, par value $.01 per share, and 1,000,000
shares of Preferred Stock, par value $.01 per share. As of August 15, 1998, IFFC
had 44,776,143 shares of Common Stock issued and outstanding and had 43,117,178
shares of Common Stock reserved for issuance consisting of: (i) 324,235 shares
of Common Stock reserved for issuance upon conversion of $2,756,000 in principal
amount of the Debentures (conversion price of $8.50 per share); (ii) 1,115,000
shares of Common Stock reserved for issuance upon conversion of shares of the
Company's Series A Preferred Stock (conversion price of $3.00 per share); (iii)
290,800 shares of Common Stock reserved for issuance upon exercise of
outstanding warrants (exercisable at $7 per share); (iv) 1,070,000 shares of
Common Stock reserved for issuance upon the exercise of outstanding options
under the Company's Stock Option Plan and Directors Stock Option Plan
(collectively, the "Plans") at exercise prices ranging from $.40 to $.81 per
share; (v) 930,000 shares of Common Stock reserved for the grant of options
pursuant to the Plans; (vi) 50,000 shares of Common Stock reserved for issuance
upon exercise of warrants (exercise price of $.2831 per share) and (vii)
39,337,143 shares of Common stock reserved for issuance upon conversion of
$27,536,000 in aggregate stated principal amount of maturity of Convertible
Notes (conversion price of $.70 per share). The Company may issue additional
convertible securities, options, warrants and shares of Common Stock in the
future.

Common Stock

The holders of Common Stock are entitled to one vote for each share
held of record on all matters to be voted on by shareholders. There is no
cumulative voting with respect to the election of directors and, as a result,
the holders of more than 50% of the shares voted for the election of directors
can elect all of the directors. The holders of Common Stock are entitled to
receive dividends when, as and if declared by the Board out of funds legally
available therefor. In the event of liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to share ratably in all
assets remaining available for distribution to them after payment of liabilities
and after provision has been made for each class of Preferred Stock, including
the Series A Convertible Preferred Stock. Holders of shares of Common Stock, as
such, have no conversion, preemptive or other subscription rights, and there are
no redemption provisions applicable to the Common Stock. All of the outstanding
shares of Common Stock are fully paid and nonassessable.

Preferred Stock

The Company's Articles of Incorporation authorize the issuance of
1,000,000 shares of "blank check" preferred stock with such designation, rights
and preferences as may be determined from time to time by the Board.
Accordingly, the Board of the Company is authorized, without action by the
stockholders, to issue preferred stock from time to time with such dividend,
liquidation, conversion, voting and any other rights and restrictions as they
may determine.

Series A Convertible Preferred Stock. On October 26, 1994, IFFC's Board
of Directors approved the issuance of up to 83,920 shares of the Series A
Convertible Preferred Stock to be issued in connection with an exchange offer
(the "Exchange Offer") by IFFC. Pursuant to the Exchange Offer, IFFC issued
83,920 shares of the Series A Preferred Stock, par value of $.01 per share (the
"Series A Preferred Stock"), with a liquidation preference value of $100 per
share, plus all accrued but unpaid dividends. Holders of shares of Series A
Preferred Stock are entitled to receive cumulative dividends at the annual rate
of 6% ($6.00 per share) from the issuance date. Such dividends are payable
semi-annually on December 15 and June 15 of each year, whether or not declared
by the Board . The dividend rate will be computed on the basis of a 360-day year
of twelve 30-day months. All dividends payable by IFFC may, at the option of
IFFC, be paid through the issuance of shares of IFFC's Common Stock, cash or any
combination thereof. For the purpose of paying dividends in Common Stock, the
Common Stock will be valued at the average closing price of the Common Stock
during the thirty consecutive full business days preceding IFFC's announcement
of such dividends. Dividends payable for a portion of a dividend payment period
will be computed on a pro rata basis. Accrued and unpaid dividends will not bear
interest. Holders of the Series A Preferred Stock have no preemptive rights.

55
<PAGE>

Upon any liquidation, dissolution or winding up of IFFC, no
distribution will be permitted to be made to (i) holders of stock ranking junior
(either as to dividends or upon liquidation, dissolution or windup) to the
Series A Preferred Stock unless, prior thereto, the holders of the Series A
Preferred Stock shall have received $100 per share, plus an amount equal to
unpaid dividends thereon if any, including accrued dividends, whether or not
declared, to the date of such payment, or (ii) the holders of stock ranking in
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all other such parity stock in proportion to the
total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.

The holders of the Series A Preferred Stock have no voting rights
except as may be set forth in IFFC's Articles of Incorporation and pursuant to
applicable Florida law. Each share of Series A Preferred Stock is convertible at
any time into shares of Common Stock at a conversion price of $3.00 per share,
subject to adjustment in certain circumstances (the "Conversion Price");
provided, however, that if shares of Series A Preferred Stock are called for
redemption by IFFC, conversion rights with respect to such shares will expire at
the close of business on the date fixed for redemption, unless IFFC defaults in
making the payment due upon redemption. In order to exercise the conversion
privilege, the holder of a share of Series A Preferred Stock shall surrender the
certificate representing such share at the office of any transfer agent for the
Common Stock and shall give written notice to IFFC at said office that such
holder elects to convert the same, specifying the name or names and
denominations in which such holder wishes the certificate or certificates for
the Common Stock to be issued. IFFC is not required to issue fractional shares
upon conversion of the Series A Preferred Stock and, in lieu thereof, will pay a
cash adjustment based upon the market price (as defined) of the Common Stock on
the last trading day prior to the date of conversion.

The number of shares of Common Stock issuable upon the conversion of
shares of Series A Preferred Stock is subject to adjustment under certain
circumstances, including (a) the distribution of additional shares of Common
Stock to all holders of Common Stock; (b) the subdivision of shares of Common
Stock; (c) a combination of shares of Common Stock into a smaller number of
shares of Common Stock; (d) the issuance of any securities in a reclassification
of the Common Stock; (e) the issuance of rights, options or warrants to the
holders of Common Stock entitling them to subscribe for or purchase Common Stock
at less than the conversion price of the shares of Common Stock; and (f) the
distribution to all holders of Common Stock of any shares of the Company's
capital stock (other than Common Stock) or evidence of its indebtedness, assets
(other than certain cash dividends or dividends payable in Common Stock) or
certain rights, options or warrants (and the subsequent redemption or exchange
thereof). The holders of Series A Preferred Stock will not be protected from
dilution resulting from issuances of Common Stock at less than the conversion
price or issuances of additional shares of Preferred Stock. Any and all
adjustments to the number of shares of Common Stock issuable upon conversion of
shares of Series A Preferred Stock by reason of any of the foregoing will not be
made until they result in a cumulative change in the conversion price of at
least one percent.

Shares of the Series A Preferred Stock may, at the option of IFFC, be
redeemed by IFFC at any time, provided that the closing market price for the
Common Stock exceeds 150% of the then-effective Conversion Price of the Series A
Preferred Stock for a period of ten consecutive trading days prior to the
announcement of such redemption. If IFFC should determine to redeem shares of
the Series A Preferred Stock, such shares are redeemable at IFFC's election in
whole or in part at any time or from time to time, out of funds legally
available for such redemption, at a redemption price of $100 per share, plus
accrued but unpaid dividends through the redemption date.

Debentures

In December 1992 and January 1993, IFFC received net proceeds of
approximately $9.7 million from the sale of approximately $11.4 million
principal amount of Debentures issued pursuant to the terms of an Indenture (the
"9% Indenture") between IFFC and Continental Stock Transfer & Trust Company, as
trustee (the "Trustee"). Thereafter, in January 1994, IFFC offered to exchange
for each $1,000 in principal amount of the Debentures validity tendered, one
Unit consisting of 160 newly issued shares of Common Stock and warrants to
purchase 100 shares of Common Stock at an exercise price of $7.00 per share. See
"Exchange Warrants" below for additional information on the warrants. As a
result, only approximately $2.8 million in principal amount of the debentures
remain outstanding.

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<PAGE>

The description of the Debentures and the terms of the 9% Indenture
provided in this Prospectus is of a summary nature, does not purport to be
complete and is qualified in its entirety by reference to the 9% Indenture and
form of 9% Debenture. The aggregate principal amount of the Debentures permitted
by the 9% Indenture is $12.5 million. Interest on the Debentures has accrued
from the date of issuance and is payable semi-annually on June 15 and December
15 of each year at a rate of 9% per annum, until payment of principal has been
made or duly provided for, to the persons who are registered holders of
Debentures at the close of business on the June 1 or December 1 next preceding
the interest payment date. Interest is computed on the basis of a 360-day year
of twelve 30-day months. Payment of the full amount of principal will be made on
December 15, 2007, unless the Debentures are redeemed or converted earlier in
accordance with the provisions of the 9% Indenture.

To the extent provided in the 9% Indenture, the indebtedness, including
interest and any premiums payable upon redemption, evidenced by the Debentures,
is subordinate and subject in right of payment to the prior payment when due in
full of all Senior Indebtedness. "Senior Indebtedness" is defined by the 9%
Indenture to include, unless the terms respecting the particular indebtedness or
obligation otherwise provide, any indebtedness of IFFC, thereafter existing for
borrowed money or incurred by IFFC or any subsidiary of IFFC in connection with
the acquisition of any business, properties, or assets (including any properties
or assets acquired in the ordinary course of business) and certain types of
lease obligations. The 9% Indenture contains no provision restricting the
incurrence of additional debt or the issuance of additional securities.

The Debentures will be redeemable through the operation of a sinking
fund beginning on December 15, 1998, and on December 15 in each year thereafter
to and including December 15, 2006, upon not less than 15 days' notice mailed to
each holder of Debentures to be redeemed at a sinking fund redemption price
equal to 100% of the principal amount thereof plus accrued interest to the date
fixed for redemption (subject to the right of holders of record on the relevant
record date to receive interest due on an interest payment date that is prior to
the date fixed for redemption). Prior to December 15 of each of the years from
December 15, 1998 to 2006, inclusive, the Company will pay to the trustee, for a
sinking fund payment, cash sufficient to redeem on such date fixed for
redemption, 10% of the aggregate principal amount of the issued Debentures
annually, sufficient to retire 90% of the issued Debentures prior to maturity,
provided that Debentures converted pursuant to the 9% Indenture or reacquired or
redeemed by the Company (other than Debentures redeemed through the sinking
fund) may be used, at the principal amount thereof, to reduce the amount of any
sinking fund payment. Cash payments for the sinking fund are to be applied to
redeem Debentures.

The Debentures are convertible at their principal amount into Common
Stock of IFFC until maturity or redemption (including redemption through the
sinking fund), at the conversion price of $8.50 per share, except that the right
to convert Debentures which are called for redemption terminates on the date
fixed for redemption. Such conversion price is subject to adjustment upon the
occurrence of certain events. The Debenture holders will not be protected from
dilution resulting from issuances of Common Stock at less than the conversion
price. The Debentures may be redeemed at the option of IFFC, in whole or in
part, at any time upon at least 30 days notice to the Debenture holders at their
last registered addresses at certain redemption prices set forth in the 9%
Indenture. The Debentures will be redeemable through the operation of a sinking
fund beginning on December 15, 1998, and on December 15th in each year
thereafter to and including December 15, 2006, upon not less than 15 days notice
mailed to each holder of Debentures to be redeemed at the holder's registered
address, at a sinking fund redemption price equal to 100% of the principal
amount thereof plus accrued interest to the date fixed for redemption (subject
to the right of holders on the relevant record date to receive interest due on
an interest payment date that is prior to the date fixed for redemption).

The 9% Indenture provides that if an Event of Default specified therein
shall have happened and be continuing either the Trustee or the holders of 25%
in aggregate principal amount of the Debentures then outstanding may declare the
principal of all such Debentures to be due and payable; provided, however, that
if any and all defaults (other than the non-payment of principal and interest on
Debentures then outstanding) shall have been remedied, the holders of a majority
in aggregate principal amount of Debentures then outstanding may waive such
defaults and rescind and annul such declaration and its consequences. Events of
Default are defined in the 9% Indenture as being: (i) default for ten days in
payment of any interest installment; (ii) default in payment of principal and
premium, if any, when due and payable; (iii) default in the deposit of any
sinking fund payment when and as due; (iv) default for 60 days after written
notice to IFFC by the Trustee or to IFFC and the Trustee by the holders of 25%
in principal amount of the outstanding Debentures, in the performance of any
other covenant or agreement in the 9% Indenture; (v) a default under any bond,
debenture, note or other evidence of indebtedness for money borrowed by IFFC or
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any indebtedness for money borrowed
by IFFC, which default shall constitute a failure to pay any portion of interest
or principal when due after any applicable grace period or shall have resulted
in such indebtedness becoming or being declared due and payable without such
indebtedness having been discharged or such acceleration having been rescinded
or annulled; and (vi) certain events of bankruptcy, insolvency and
reorganization.

Under the 9% Indenture, IFFC may not be consolidated with or merge
into, or transfer all or substantially all of its assets to, another corporation
unless the successor corporation assumes all the obligations of IFFC.
Thereafter, all such obligations of IFFC will terminate.

57
<PAGE>

Exchange Warrants

In January 1994, IFFC offered to exchange Units consisting of Common
Stock and Warrants to purchase Common Stock ("Exchange Warrants") for all of its
then outstanding Debentures. The Exchange Warrants became detached and
separately transferable from the Common Stock included in the Units on August 2,
1994. As of August 15, 1998, there were 290,800 Exchange Warrants issued and
outstanding.

The Exchange Warrants are governed by a warrant agreement (the "Warrant
Agreement") between IFFC and Continental Stock Transfer & Trust Company (the
"Warrant Agent"). Each Exchange Warrant entitles the registered holder thereof
to purchase one share of Common Stock at a price of $7.00 at any time beginning
during the five-year period commencing on the date that the Warrants become
detachable and separately transferable from the Common Stock included in the
Units. The number of shares purchasable upon exercise of the Exchange Warrants
and the exercise price of the Exchange Warrants are subject to adjustment upon
the occurrence of specified events, including stock dividends, stock splits,
reorganizations or certain other occurrences, all as set forth in the Warrant
Agreement. There will be no adjustment for the payment of any cash dividends by
IFFC on its Common Stock.

The Exchange Warrants are redeemable in whole but not in part, at the
option of IFFC, at any time commencing 90 days from the date the Exchange
Warrants become exercisable, on not less than 30 days prior written notice, at a
redemption price of $.001 per Warrant, provided that the closing bid price of
the Common Stock during a period of 10 consecutive trading days ending within 10
days prior to the date on which notice of redemption is given equals or exceeds
$8.50 per share. A holder may exercise his or her Exchange Warrants up to the
date of redemption. Prior to their exercise, the Exchange Warrants do not
entitle holders to any rights of a stockholder of IFFC.

No Exchange Warrant will be exercisable unless at the time of exercise
IFFC has filed with the SEC a current registration statement covering the shares
of Common Stock issuable upon exercise of such Exchange Warrant and such shares
of Common Stock have been registered or qualified or deemed to be exempt under
the securities laws of the state of residence of the holder of such warrant.
IFFC will use its best efforts to have all such shares of Common Stock so
registered or qualified on or before the exercise date and to maintain a current
registration statement relating thereto until the expiration of the Exchange
Warrants, subject to the terms of the Warrant Agreement.

Convertible Notes

In November 1997, IFFC raised an aggregate of approximately $17.7
million (before placement costs) from the sale of approximately $27.5 million
stated principal amount at maturity of 11% Convertible Senior Subordinated
Discount Notes (the "Convertible Notes") issued pursuant to the terms of an
Indenture (the "11% Indenture") between IFFC and Marine Midland Bank, as trustee
(the "Trustee"). The Convertible Notes are general, unsecured obligations of
IFFC, limited to $27,536,000 aggregate stated principal amount at maturity, and
will mature on October 31, 2007. From and after October 31, 2000, each
Convertible Note will pay cash interest at a rate of 11%, payable semi-annually
(to holders of record at the close of business on the April 15 or October 15
immediately preceding the Interest Payment Date) on April 30 and October 31 of
each year, commencing April 31, 2001.

The description of the Convertible Notes and the terms of the 11%
Indenture pursuant to which they were issued is of a summary mature, does not
purport to be complete and is qualified in its entirety by reference to the 11%
Indenture and form of Convertible Note.

The Convertible Notes will be redeemable, at IFFC's option, in whole or
in part, at any time or from time to time, on or after October 31, 2002 and
prior to maturity, upon not less than 30 nor more than 60 days' prior notice
mailed by first-class mail to each holder at certain redemption prices set forth
in the 11% Indenture plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of holders of record on the relevant record date that
is on or prior to the redemption date to receive interest due on an interest
payment date).

In the case of any partial redemption, selection of the Convertible
Notes for redemption will be made by IFFC in compliance with the requirements of
the principal national securities exchange, if any, on which such Convertible
Notes are listed or, if such Convertible Notes are not listed on a national
securities exchange, on a pro rata basis, by lot or such other

58
<PAGE>

method as IFFC, in its sole discretion, shall deem fair and appropriate,
provided, however, that no Convertible Note of $1,000 in principal amount or
less shall be redeemed in part.

The Convertible Notes are convertible (in denominations of $1,000
principal amount at maturity or integral multiples thereof), at the option of
the holder, into Common Stock of IFFC at any time after one year following the
Closing Date. The number of shares of Common Stock issuable upon conversion of
the Convertible Notes is equal to the Accreted Value of the Convertible Notes
being converted (on the date of conversion) divided by $.70, subject to
adjustment in certain events (the "Conversion Ratio"). IFFC is not required to
issue fractional shares upon conversion of Convertible Notes (including pursuant
to the mandatory conversion feature described below) and, in lieu thereof, will
pay a cash adjustment based upon the Closing Price of the Common Stock on the
last Trading Day prior to the date of conversion. In the case of Convertible
Notes called for redemption, conversion rights will expire at the close of
business on Trading Day next preceding the date fixed for redemption, unless
IFFC defaults in payment of the Redemption Price.

In addition, (a) if the Closing Price of the Common Stock on the Nasdaq
National or Small Cap Market or other principal securities exchange or system on
which the Common Stock is then traded, if any, or (b) if not so traded, then if
the best bid offered price on the OTC BB on days when transactions in the Common
Stock are not effected, or, on such days as transactions are effected on the
BBS, the highest price at which a trade was executed as reported to the National
Association of Securities Dealers, Inc. through the Automated Confirmation
Transaction Service (the "OTC Price"), during any period described below has
exceeded the price for such period referred to below for at least 20 consecutive
Trading Days ("Market Criteria," with the 20-day period being referred to as the
"Market Criteria Period"), and the registration statement with respect to the
Convertible Notes is effective and available, all of the Convertible Notes will
be automatically converted into that number of shares of Common Stock derived by
application of the Conversion Ratio.

The denominator of the Conversion Ratio is subject to adjustment (under
formula set forth in the 11% Indenture) in certain events, including: (i) the
issuance of Common Stock as a dividend or distribution on Common Stock; (ii)
certain subdivisions and combinations of the Common Stock; (iii) the issuance to
all holders of Common Stock of certain rights or warrants to purchase additional
shares of Common Stock; (iv) the distribution to all holders of Common Stock of
shares of capital stock of IFFC (other than Common Stock) or evidences of
indebtedness of IFFC or assets (including securities, but excluding those
rights, warrants, dividends and distributions referred to above and dividends
and distributions in connection with the liquidation, dissolution or winding up
of IFFC or paid in cash); (v) distributions consisting of cash, excluding any
quarterly, semi-annual, annual or other regularly scheduled cash dividend paid
on the Common Stock; and (vi) payment in respect of a tender or exchange offer
by IFFC or any subsidiary of IFFC for the Common Stock to the extent that the
cash and value of any other consideration included in such payment per share of
Common Stock exceeds the Current Market Price per share of Common Stock on the
Trading Day next succeeding the last day on which tenders or exchanges may be
made pursuant to such tender or exchange.

No adjustment to the denominator of the Conversion Ratio will be
required unless such adjustment would require a change of at least 1.0% in the
denominator of the Conversion Ratio then in effect; provided that any adjustment
that would otherwise be required to be made shall be carried forward and taken
into account in any subsequent adjustment. Except as stated above, the
denominator of the Conversion Ratio will not be adjusted for the issuance of
Common Stock or any securities convertible into or exchangeable for Common Stock
or carrying the right to purchase any of the foregoing.

In the case of (i) any reclassification or change of the Common Stock,
(ii) a consolidation, merger or combination involving IFFC or (iii) a sale or
conveyance to another corporation of the property and assets of IFFC as an
entirety or substantially as an entirety, in each case as a result of which
holders of Common Stock shall be entitled to receive stock, other securities,
other property or assets (including cash) with respect to or in exchange for
such Common Stock, the holders of the Convertible Notes then outstanding will be
entitled thereafter to convert such Convertible Notes into the kind and amount
of shares of stock, other securities or other property or assets which they
would have owned or been entitled to receive upon such reclassification, change,
consolidation, merger, combination, sale or conveyance had such Convertible
Notes been converted into Common Stock immediately prior to such
reclassification, change, consolidation, merger, combination, sale or conveyance
assuming that a holder of Convertible Notes would not have exercised any rights
of election as to the stock, other securities or other property or assets
receivable in connection therewith.

59
<PAGE>

IFFC from time to time may, to the extent permitted by law, reduce the
denominator of the Conversion Ratio by any amount for any period of at least 20
days, in which case IFFC shall give at least 15 days' notice of such reduction,
if the Board has made a determination that such reduction would be in the best
interests of IFFC, which determination shall be conclusive. IFFC may, at its
option, make such reductions in the denominator of the Conversion Ratio, in
addition to those set forth above, as the Board deems advisable to avoid or
diminish any income tax to holders of Common Stock resulting from any dividend
or distribution of stock (or rights to acquire stock) or from any event treated
as such for income tax purposes.

In order to effect any optional conversion of any of the Convertible
Notes, the holder thereof is required to surrender to the Trustee the
Convertible Notes to be converted and a duly executed copy of the conversion
form set forth in the Convertible Notes Certificate. Upon the conversion of any
Convertible Notes into Common Stock in accordance with the 11% Indenture
(including any mandatory conversion), the Trustee will instruct IFFC to transfer
promptly to or upon the written order of the holder of the Convertible Notes to
be converted appropriate evidence of ownership of any shares of Common Stock or
other security or property to which it is entitled, registered or otherwise
placed in such name or names as it may direct in writing, and will deliver such
evidence of ownership to the person or persons entitled to receive the same and
an amount in cash in lieu of any fractional shares, if any. All shares of Common
Stock or other securities issuable by IFFC upon the conversion of the
Convertible Notes are required to be validly issued, fully paid and
nonassessable.

The holders of Convertible Notes are not entitled, as such, to receive
dividends or other distributions, receive notice of any meeting of the
stockholders, consent to any action of the stockholders, receive notice of any
other stockholder proceedings, or to any other rights as stockholders of IFFC.

At the date of conversion (including mandatory conversion), the rights
of the holders of Convertible Notes being converted (as such holders) will
terminate (except the right to receive accrued and unpaid interest, if any) and
the Convertible Notes to be converted will no longer be deemed outstanding and
will represent only the right to receive shares of Common Stock and a right to
receive cash for fractional shares, as described above.

Certain Anti-takeover Effects

Certain provisions of the Company's Articles of Incorporation could
have the effect of deterring takeovers. The Company's Articles of Incorporation
(i) provide that a special meeting of shareholders may only be called by the
Board of Directors, the Chief Executive Officer or by the written demand of the
holders of not less than 50% of all the votes entitled to be cast on the issue
proposed to be considered and (ii) do not provide for cumulative voting. In
addition, the State of Florida has enacted legislation that may deter or
frustrate takeovers of Florida corporations. The Florida Control Share Act
generally provides that shares acquired in excess of certain specified
thresholds will not possess any voting rights unless such voting rights are
approved by a majority of a corporation's disinterested shareholders. The
Florida Affiliated Transactions Act generally requires supermajority approval by
disinterested shareholders of certain specified transactions between a public
corporation and holders of more than 10% of the outstanding voting shares of the
corporation (or their affiliates).

Indemnification

The Company has authority under Section 607.0850 of the Florida
Business Corporation Act to indemnify its directors and officers to the extent
provided for in such statute. The Company's Amended and Restated Articles of
Incorporation provide that the Company shall indemnify its officers and
directors to the fullest extent not prohibited by law, including indemnification
against liability under the Securities Act. The Company has also entered into an
agreement with certain directors and executive officers wherein it has agreed to
indemnify them to the fullest extent permitted by law.

The provisions of the Florida Business Corporation Act that authorize
indemnification do not eliminate the duty of care of a director, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of nonmonetary relief will remain available under Florida law. In addition, each
director will continue to be subject to liability for (a) violations of criminal
laws, unless the director had reasonable cause to believe his conduct was lawful
or had no reasonable cause to believe his conduct was unlawful, (b) deriving an
improper personal benefit from a transaction, (c) voting for or assenting to an
unlawful distribution and (d) willful misconduct or conscious disregard for the
best interests of the

60
<PAGE>

Company in a proceeding by or in the right of the Company to procure a judgment
in its favor or in a proceeding by or in the right of a shareholder. The statute
does not affect a director's responsibilities under any other law, such as the
federal securities laws.

The effect of the foregoing is to require the Company to indemnify the
officers and directors of the Company for any claim arising against such persons
in their official capacities if such person acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed that
in the opinion of the Commission, such indemnification is against public policy
as expressed in the Act and is therefore unenforceable.

Transfer Agent

The transfer agent and registrar for the Common Stock, Series A
Preferred Stock, Exchange Warrants and Debentures is Continental Stock Transfer
& Trust Company, New York, New York. The paying agent and registrar for the
Convertible Notes is Bankers Trust Company, New York, New York.

<PAGE>
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information. IFFC's Common Stock was quoted on the Nasdaq
SmallCap Market under the symbol "FOOD" until May 29, 1996 and was listed on the
Pacific Stock Exchange under the symbol "FOD" until December 4, 1996. The Common
Stock is now listed on the NASD OTC Bulletin Board (the "OTC BB") under the
symbol "IFFC." The following table sets forth, for the period since January 1,
1996, the high and low closing bid quotations for the Common Stock as reported
by Nasdaq and the OTC BB. Such quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission, and may not represent actual
transactions.
<TABLE>
<CAPTION>
High Low
1996
<S> <C> <C>
First Quarter.......................................... .81 .19
Second Quarter......................................... .22 .19
Third Quarter.......................................... .43 .06
Fourth Quarter......................................... .24 .15

1997
First Quarter.......................................... .57 .15
Second Quarter......................................... .42 .27
Third Quarter.......................................... .55 .37
Fourth Quarter......................................... .91 .40

1998
First Quarter.......................................... .55 .31
Second Quarter......................................... .85 .43
</TABLE>

Holders. As of June 30, 1998, there were 77 record holders of IFFC's
Common Stock. The Company believes that there are over 800 beneficial holders of
IFFC's Common Stock.

Dividends. IFFC does not currently intend to declare or pay cash
dividends in the foreseeable future. IFFC intends to retain any earnings that
may be generated to provide funds for the operation and expansion of IFFC's
business.

Florida law provides that no distribution may be made to shareholders
if, after giving effect to such distribution, (i) the corporation would be
unable to pay its debts as they become due in the usual course of business, or
(ii) the corporation's total assets would be less than the sum of its total
liabilities plus (unless the articles of incorporation provide otherwise) the
amount that would be needed in a dissolution to satisfy the preferential rights
of shareholders whose preferential rights are senior to those receiving the
distribution. The Board of Directors is empowered to base its evaluation of
whether a distribution is permitted under the statute either on (i) financial
statements that are prepared on a basis of accounting principles and practices
that are reasonable under the circumstances or (ii) fair valuation or other
method that is reasonable in the circumstances. Accordingly, the payment of
dividends on the Common Stock will be subject to the statutory insolvency test.
Additionally, the indenture governing the Convertible Notes significantly
restricts the Company's ability to pay dividends on its outstanding securities.
In addition, the Company has in the past failed to pay the dividends on its
outstanding Series A Convertible Preferred Stock. A condition of the payment of
dividends on the Common Stock is the payment of the dividends, in arrears, owing
to the holders of the Series A Convertible Preferred Stock. There is no
assurance that the Company will be able to pay any future dividends on either
the Series A Convertible Preferred Stock or the Common Stock.

<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

At August 31 1998, the Company had outstanding 44,776,143 shares of
Common Stock, of which 3,916,708 shares are freely tradable without restriction
unless acquired by affiliates of the Company. The Shares that may be offered and
issued pursuant to this Prospectus will also be freely tradable without
restriction unless acquired by affiliates of the Company. Of the currently
outstanding shares of Common Stock, 40,724,539 (including 37,644,539 shares of
Restricted Common Stock beneficially owned by the Company's officers, directors
and certain other stockholders) have not been registered under the Securities
Act and are not being registered herein, which means that they may be resold
publicly only upon registration under the Securities Act or in compliance with
an exemption from the registration requirements of the Securities Act, including
the exemption provided by Rule 144 thereunder.

In general, under Rule 144 as currently in effect, if one year has
elapsed since the later of the date of the acquisition of restricted shares of
Common Stock from either the Company or any affiliate of the Company, the
acquiror or subsequent holder thereof may sell, within any three-month period, a
number of shares that does not exceed the greater of one percent of the then
outstanding shares of the Common Stock, or the average weekly trading volume of
the Common Stock during the four calendar weeks preceding the date on which
notice of the proposed sale is sent to the SEC. Sales under Rule 144 are also
subject to certain manner of sale provisions, notice requirements and the
availability of current public information about the Company. If two years have
elapsed since the later of the date of the acquisition of restricted shares of
Common Stock from the Company or any affiliate of the Company, a person who is
not deemed to have been an affiliate of the Company at any time for 90 days
preceding a sale would be entitled to sell such shares under Rule 144 without
regard to the volume limitations, manner of sale provisions or notice
requirements.

Sales, or the availability for sale, of substantial amounts of the
Common Stock in the public market could adversely affect prevailing market
prices and the ability of the Company to raise equity capital in the future.

USE OF PROCEEDS

This Prospectus relates to shares of Common Stock being offered and
sold for the accounts of the Selling Shareholders and the Company will not
receive any of the proceeds from the sale of the shares of Common Stock offered
hereby. The Company will pay for all of the expenses related to the registration
of the shares of Common Stock. See "Selling Shareholders" and "Plan of
Distribution."

PLAN OF DISTRIBUTION

The Selling Shareholders have advised the Company that they may from
time to time sell all or part of the Shares in one or more transactions in the
over-the-counter market, in negotiated transactions or otherwise, or pursuant to
a combination of such methods of sale. Such Shares will be sold at the market
prices prevailing at the time of sale, at prices related to such market prices
or at negotiated prices. The Selling Shareholders may effect such transactions
by selling the Shares to or through broker-dealers, and such broker-dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Selling Shareholders or purchasers of the Shares, or both,
for whom they may act as agent (which compensation may be in excess of customary
commissions). In connection with such sales, the Selling Shareholders and any
broker-dealers or agents participating in such sales may be deemed to be
underwriters as that term is defined under the Securities Act. Neither the
Company nor the Selling Shareholders can presently estimate the amount of
commissions or discounts, if any, that will be paid by the Selling Shareholders
in connection with their sale of the Shares from time to time.

Under the securities laws of certain states, the Shares may be sold in
such states only through registered or licensed broker-dealers or pursuant to
available exemptions from such requirements. In addition, in certain states the
Shares may not be sold unless the Shares have been registered or qualified for
sale in such state or an exemption from registration or qualification is
available.

63
<PAGE>

The Company will pay all of the expenses, estimated to be approximately
$55,000, in connection with this Offering, other than underwriting commissions
and discounts. The Company has agreed to indemnify the Selling Shareholders, and
any underwriters, against certain liabilities, including liabilities under the
Securities Act. The Selling Shareholders have also agreed to indemnify the
Company, its directors, officers, agents and representatives against certain
liabilities, including liabilities under the Securities Act. The Company will
not receive any of the proceeds from the sale of any of the Shares by the
Selling Shareholders.

Any Shares covered by this Prospectus which qualify for sale pursuant
to Rule 144 or any other available exemption from registration under the
Securities Act may be sold under Rule 144 or such other available exemption
rather than pursuant to this Prospectus.

The Company shall use its best efforts to maintain the effectiveness of
the Registration Statement for the lesser of 12 months or such time as all of
the Shares have been sold, through the preparation and filing with the SEC of
such amendments and post-effective amendments to the Registration Statement, and
such supplements to the Prospectus, as may be required by the rules, regulations
or instructions applicable to the use of Form SB-2 by the Securities Act or
rules and regulations thereunder or otherwise necessary to keep the Registration
Statement effective and will cause the Prospectus as so supplemented to be filed
pursuant to Rule 424 under the Securities Act.

CHANGE IN ACCOUNTANTS

On January 5, 1998, the Company, upon recommendation of the Board of
Directors, advised Moore Stephens Lovelace, P.L. ("Moore Stephens") that it
would not be appointed as the Company's auditors for the year ended December 31,
1997. During the most recent fiscal year and subsequent interim period through
January 5, 1998, there were no disagreements with Moore Stephens on any matter
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure or any reportable events. Moore Stephens' report on
the Company's financial statements for the year ended December 31, 1996 did not
contain an adverse opinion or a disclaimer of opinion, nor was it qualified or
modified as to an uncertainty, audit scope or accounting principles.

On January 8, 1998, the Board appointed Arthur Andersen LLP as
independent auditors of the Company for the fiscal year ended December 31, 1997.

LEGAL MATTERS

The legality of the securities offered by this Prospectus will be
passed upon for the Company by Greenberg Traurig, P.A., Miami, Florida.

EXPERTS

The financial statements of the Company for the year ended December 31,
1997 included in this Prospectus have been audited by Arthur Andersen LLP,
independent certified public accountants, as indicated in their report with
respect thereto, and are included herein in reliance upon the authority of said
firm given as experts in accounting and auditing in giving said report. The
financial statements of the Company for the year ended December 31, 1996
included in this Prospectus have been audited by Moore Stephens Lovelace, P.L.,
independent auditors, as stated in their report with respect thereto, and
included herein in reliance upon the authority of said firm given as experts in
accounting and auditing in giving said report.

<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied (at prescribed rates) at the Public Reference Room maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549.
Information regarding the Operation Reference Room may be obtained by calling
the Commission at 1-800-SEC-0330. The Commission also maintains an internet site
that contains reports, proxy and information statements, and other information
regarding the Company and other issuers that file electronically with the
Commission. The Commission's internet address is http://www.sec.gov.

The Company has filed with the Commission a Registration Statement on
Form SB-2 (the "Registration Statement") under the Securities Act with respect
to the Shares offered hereby. This Prospectus, which is a part of the
Registration Statement, does not contain all the information set forth in, or
annexed as exhibits to, such Registration Statement, certain portions of which
have been omitted pursuant to rules and regulations of the Commission. For
further information with respect to the Company and the Shares, reference is
hereby made to such Registration Statement, including the exhibits thereto.
Copies of such Registration Statement, including exhibits, may be obtained from
the aforementioned public reference facilities of the Commission upon payment of
the prescribed fees, or may be examined without charge at such facilities.
Statements contained herein concerning any document filed as an exhibit are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement. Each such
statement is qualified in its entirety by such reference.

<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
INTERNATIONAL FAST FOOD CORPORATION

Page
----
<S> <C>
Reports of Independent Certified Public Accountants..................................... F-2

Consolidated Balance Sheets as of December 31, 1997 and 1996 ........................... F-4

Consolidated Statements of Operations for the years ended December 31, 1997 and 1996 ... F-5

Consolidated Statements of Shareholders' Equity for the years ended December 31, 1997
and 1996................................................................................ F-6

Consolidated Statements of Cash Flows for the years ended December 31, 1997 and 1996 ... F-7

Notes to Consolidated Financial Statements.............................................. F-9 to F-24

Consolidated Balance Sheet as of June 30, 1998 (unaudited).............................. F-25

Consolidated Statements of Operations for the six months ended June 30, 1998 and 1997
(unaudited)............................................................................. F-26

Consolidated Statements of Shareholders' Equity for the six months ended June 30, 1998
(unaudited)............................................................................. F-27

Consolidated Statements of Cash Flows for the six months ended June 30, 1998 and 1997
(unaudited)............................................................................. F-28

Notes to Consolidated Financial Statements (unaudited).................................. F-30 to F-41

</TABLE>

F-1
<PAGE>

REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors of
International Fast Food Corporation

We have audited the accompanying consolidated balance sheet of
International Fast Food Corporation (a Florida corporation) and subsidiaries as
of December 31, 1997, and the related consolidated statements of operations,
shareholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
International Fast Food Corporation and subsidiaries as of December 31, 1997,
and the results of their operations and their cash flows for the year then ended
in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Miami, Florida,
March 6, 1998

F-2

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors
International Fast Food Corporation
Miami Beach, Florida

We have audited the accompanying consolidated balance sheet of
International Fast Food Corporation and subsidiaries as of December 31, 1996,
and the related consolidated statements of operations, shareholders' equity and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
International Fast Food Corporation and subsidiaries as of December 31, 1996,
and the consolidated results of their operations and their cash flows for the
year then ended in conformity with generally accepted accounting principles.

Moore Stephens Lovelace, P.L.

Certified Public Accountants

Orlando, Florida,
March 27, 1997

F-3

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
ASSETS
December 31, December 31,
1997 1996
-------------- -------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents............................................. $18,642,335 $ 194,269
Restricted cash and certificates of deposit........................... 999,990 500,000
Receivables........................................................... 101,528 42,348
Inventories........................................................... 372,599 300,217
Advances to affiliates................................................ -- 228,984
Prepaid expenses and other............................................ 130,711 53,794
----------- ------------
Total Current Assets.............................................. 20,247,163 1,319,612
Furniture, Equipment and Leasehold Improvements, net....................... 5,959,378 5,865,417
Deferred Debenture Issuance Costs, net of accumulated amortization of
$157,410 and $124,155, respectively..................................... 274,915 308,170
Deferred Issuance Costs of 11% Convertible Senior Subordinated
Discount Notes, net of accumulated amortization of $41,049.............. 2,446,869 --
Other Assets, net of accumulated amortization of $199,484 and
$137,192, respectively.................................................. 333,533 340,405
Burger King Development Rights, net of accumulated amortization of 918,919 --
$81,081.................................................................
Domino's Development Rights, net of accumulated amortization of $15,542.... 173,561 --
----------- -------------
Total Assets...................................................... $30,354,338 $ 7,833,604
=========== =============
Current Liabilities:
Accounts payable...................................................... 581,555 454,697
Accrued interest payable.............................................. 17,911 10,335
Other accrued expenses................................................ 788,412 1,009,606
Current portion of bank credit facilities............................. 1,349,995 1,220,495
Other notes payable................................................... -- 69,307
Payable to affiliate.................................................. -- 149,382
Non-interest bearing obligation payable to minority shareholder
of IFF Polska....................................................... -- 500,000
----------- -------------
Total Current Liabilities......................................... 2,737,873 3,413,822

11% Convertible Senior Subordinated Discount Notes due October 31, 20,354,680 --
2007....................................................................
Bank Credit Facilities..................................................... 630,000 300,000
9% Subordinated Convertible Debentures, due December 15, 2007.............. 2,756,000 2,756,000
----------- -------------
Total Liabilities................................................. 26,478,553 6,469,822
----------- -------------
Deferred Credit............................................................ 1,000,000 --
----------- -------------
Minority Interest in Net Assets of Consolidated Subsidiary................. 115,294 460,361
----------- -------------
Commitments and Contingencies
Shareholders' Equity:
Preferred Stock, $.01 par value, 1,000,000 shares authorized; 33,450 and
38,240 shares issued and outstanding, respectively
(liquidation preference of $3,345,000).............................. 334 382
Common Stock, $.01 par value, 100,000,000 shares authorized;
44,641,247 and 10,322,521 shares issued and outstanding, 446,413 103,225
respectively........................................................
Additional paid-in capital............................................ 17,691,542 14,523,361
Accumulated deficit................................................... (15,377,798) (13,723,547)
----------- -------------
Total Shareholders' Equity........................................ 2,760,491 903,421
------------ -------------
Total Liabilities and Shareholders' Equity........................ $30,354,338 $ 7,833,604
=========== =============
</TABLE>
See Accompanying Notes

F-4

<PAGE>
INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------
1997 1996
--------------- ----------------
<S> <C> <C>
Revenues:
Sales.................................................................. $ 6,083,011 $ 5,486,178

Food and Packaging Costs................................................... 2,476,775 2,286,261
----------- -----------

Gross Profit............................................................... 3,606,236 3,199,917
----------- -----------

Operating Expenses:
Payroll and related costs.............................................. 1,067,282 816,048
Occupancy and other operating expenses................................. 1,828,894 1,535,378
Depreciation and amortization.......................................... 888,538 984,707
----------- -----------
Total operating expenses.......................................... 3,784,714 3,336,133
----------- -----------
(178,478) (136,216)
General and Administrative Expenses........................................ 1,963,233 1,551,129

Other Income (Expenses):
Interest and other income, net......................................... 477,053 98,136
Interest expense, including amortization of issuance costs............. (945,598) (446,561)
Foreign currency exchange loss......................................... (314,731) (189,662)
Gain on settlement of litigation, net of applicable costs............. 1,327,070 --
----------- -----------
Total other income (expenses)..................................... 543,794 (538,087)
----------- -----------
Loss Before Minority Interest.............................................. (1,597,917) (2,225,432)
Minority Interest in Losses of Consolidated Subsidiary.................... 345,067 229,320
----------- -----------
Net Loss................................................................... $(1,252,850) $(1,996,112)
=========== ===========

Basic and Diluted Net Loss Per Common Share................................ $ (.05) $ (.37)
=========== ===========

Weighted Average Number of Common Shares Outstanding....................... 26,246,885 5,967,325
=========== ===========

</TABLE>
See Accompanying Notes

F-5
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>

Additional
Paid In Accumulated
Common Stock Preferred Stock Capital Deficit Total
--------------------- ------------------ ------------- ------------ ---------
Shares Amount Shares Amount
---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1995..... 3,759,564 $37,595 50,030 $500 $14,046,571 $(11,727,435) $2,357,231
Conversion of Preferred Stock... 392,957 3,930 (11,790) (118) (3,812) -- --

Common Stock Issued in
exchange for professional
services...................... 620,000 6,200 -- -- 81,102 -- 87,302
Private placement of Common
Stock for cash................ 5,550,000 55,500 -- -- 389,500 -- 445,000
Payment received for
termination of stock option... -- -- -- -- 10,000 -- 10,000

Net loss for the year........... -- -- -- -- -- (1,996,112) (1,996,112)
---------- -------- -------- ------ ----------- ------------ -----------

Balances, December 31, 1996..... 10,322,521 103,225 38,240 382 14,523,361 (13,723,547) 903,421
Conversion of Preferred Stock... 159,650 1,597 (4,790) (48) (1,549) -- --

Common Stock issued in
exchange for professional
services...................... 2,000,000 20,000 -- -- 180,000 -- 200,000
Common Stock issued in
exchange for Underwriter
and debenture warrants........ 200,000 2,000 -- -- (2,000) -- --
Conversion of 8%
Convertible Promissory
Notes......................... 5,000,000 50,000 -- -- 450,000 -- 500,000
Conversion of Litigation
Funding Promissory Note....... 25,909,211 259,092 -- -- 2,000,828 -- 2,259,920
Issuance of Common Stock in
payment of dividends on
Preferred Stock............... 549,865 5,499 -- -- 395,902 (401,401) --
Issuance of Common Stock in
payment of costs
associated with issuance
of debt securities............ 500,000 5,000 -- -- 145,000 -- 150,000
Net loss for the year........... -- -- -- -- -- (1,252,850) (1,252,850)
---------- -------- -------- ------ ----------- ------------ -----------
Balances, December 31, 1997..... 44,641,247 $446,413 33,450 $334 $17,691,542 $(15,377,798) $2,760,491
========== ======== ======== ====== =========== ============ ===========
</TABLE>

See Accompanying Notes
F-6
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------
1997 1996
------------- ------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss............................................................... $ (1,252,850) $(1,996,112)
Adjustments to reconcile net loss to net cash used in
operating
activities:
Amortization and depreciation of furniture, equipment and
leasehold improvements............................................. 989,395 1,008,106
Amortization of debt discount and issuance costs..................... 428,892 180,992
Minority interest in losses of subsidiary............................ (345,067) (229,320)
Other operating items................................................ 287,261 115,099
Gain on forgiveness of indebtedness.................................. (329,465) --
Changes in operating assets and liabilities, net of
acquisition
of business:
Receivables.......................................................... (10,890) 8,518
Inventories.......................................................... (15,507) 84,217
Prepaid expenses and other........................................... (64,873) (14,805)
Accounts payable and accrued expenses................................ (363,663) 465,108
----------- ----------
Net cash used in operating activities.................................. (676,767) (378,197)
----------- -----------
Cash Flows From Investing Activities:
Purchase of business, net of cash acquired............................. (209,357) --
Increase in restricted cash and certificates of deposit................ (499,990) --
Payments for furniture, equipment and leasehold
improvements......................................................... (368,797) --
Payments for other assets.............................................. (57,635) (192,399)
Disposition of furniture & equipment................................... -- 129,113
Refund of franchise fees............................................... 30,000 --
------------ ------------
Net cash used in investing activities.................................. (1,105,779) (63,286)
------------ ------------
Cash Flows From Financing Activities:
Sale of common stock for cash.......................................... -- 445,000
Payment received for termination of stock option....................... -- 10,000
Advances from (to) Affiliate........................................... 19,941 38,792
Repayments of bank credit facilities................................... (1,510,000) (383,753)
Net proceeds from issuance of 11% Convertible
Senior Subordinated Discount Notes................................... 17,662,174
Net proceeds from settlement of litigation........................... 3,227,015 --
Payment to Litigation Funding.......................................... (1,028,521) --
Payment of other notes payable......................................... (69,307) --
Payment of non-interest bearing obligation to minority (500,000) --
shareholder of IFF Polska............................................
Borrowings under bank credit facilities................................ 1,955,146 300,000
Net Proceeds from issuance of convertible promissory notes............. 500,000 --
------------ ------------
Net cash provided by financing activities.............................. 20,256,448 410,039
------------ ------------
Effect of Exchange Rate Changes on Cash and Cash Equivalents........... (25,836) (27,797)
------------ ------------
Increase (Decrease) in Cash and Cash Equivalents....................... 18,448,066 (59,241)
Beginning Cash and Cash Equivalents.................................... 194,269 253,510
------------ ------------
Ending Cash and Cash Equivalents....................................... $18,642,335 $194,269
============ ============
Supplemental Disclosures of Cash Flow Information:.....................
Cash paid during the year for:
Interest............................................................. $ 447,705 $424,550
============ ============
</TABLE>

(continued)

F-7

<PAGE>
INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)

Supplemental Schedule of Non-Cash Investing & Financing Activities:

Year Ended December 31, 1997:

Issuance of 159,650 shares of Common Stock upon the exchange of 4,790
shares of Preferred Stock. Issuance of 2,000,000 shares of Common Stock in
payment of $200,000 of legal fees. Issuance of 5,000,000 shares of Common
Stock upon conversion of $500,000 principal amount of 8% Convertible
Promissory Notes.
Issuance of 200,000 shares of Common Stock in exchange for the
cancellation of 130,000 Underwriter Common Stock warrants and
Underwriter $1,000,000 debenture warrants.
Issuance of 25,909,211 shares of Common Stock in payment of $2,198,424
principal amount of a promissory note payable to Litigation Funding
plus $60,496 of accrued interest.
Issuance of 549,865 shares of Common Stock in payment of $401,401 of
dividends on Preferred Stock. Issuance of 500,000 shares of Common Stock
in payment of a portion of the placement fee in connection with
the issuance of the 11% Convertible Senior Subordinated Discount Notes
Due 2007.

Year Ended December 31, 1996:

Issuance of 392,957 shares of Common Stock upon the exchange of 11,790
shares of Preferred Stock. Issuance of 620,000 shares of Common Stock in
payment of $87,302 professional fees.

See Accompanying Notes

F-8

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION:

International Fast Food Corporation (the "Company" or "IFFC") was
organized for the purpose of developing and operating franchised Burger King
restaurants in the Republic of Poland ("Poland").

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF PRESENTATION -- The accompanying consolidated financial
statements include the accounts of the Company and its majority-owned
(85%)Polish subsidiary, International Fast Food Polska, Sp.zo.o. ("IFFP"), a
limited liability corporation, and IFFP's three wholly-owned Polish limited
liability corporations. Additionally, the consolidated financial statements
include the accounts of the Company's two wholly-owned Polish limited liability
corporations, Krolewska Pizza, Sp.zo.o.("KP") and Pizza King Polska,
Sp.zo.o.("PKP") for the period from their acquisition in July 1997 through
December 31,1997. KP and PKP presently operate seven Domino's Pizza stores and a
Domino's approved commissary. All significant intercompany transactions and
balances have been eliminated in consolidation.

IFFC's restaurant and store operations are conducted in Poland. The
Polish economy has historically been characterized by high rates of inflation
and devaluation of the Polish zloty against the dollar and European currencies.
However, in the years ended December 31, 1996 and 1997, the rates of inflation
and devaluation improved. For the years ended December 31, 1993, 1994,
1995,1996, and 1997 the annual inflation rate in Poland was 35%, 32%, 21.6%,
19.5%, and 13.0% respectively. Payment of interest and principal on the 9%
Convertible Subordinate Debentures, 11% Convertible Senior Subordinated Discount
Notes and payment of franchise fees to BKC and DPI for each restaurant and store
opened are in United States currency. Additionally, IFFC is dependent on certain
sources of supply which require payment in European or United States currencies.
Since IFFC's revenues from operations will be in zlotys, IFFC is subject to the
risk of currency fluctuations. IFFC has and intends to maintain substantially
all of its unutilized funds in United States or Western European currency
denominated securities and/or European Currency Units. There can be no assurance
that IFFC will successfully manage its exposure to currency fluctuations or that
such fluctuations will not have a material adverse effect on IFFC.

The official currency of Poland is the Zloty. The value of the Zloty is
pegged pursuant to a system based on a basket of currencies, as well as all
other economic and political factors that effect the value of currencies
generally. At December 31, 1997 and 1996, the exchange rate was 3.514 and 2.873
zlotys per dollar, respectively. The accounts of IFFC's Polish subsidiaries are
maintained in zlotys and are remeasured into U.S. dollars, the functional
currency, at the end of each reporting period. Monetary assets and liabilities
are remeasured using current exchange rates. Non-monetary assets, liabilities,
and related expenses, primarily furniture, equipment, leasehold improvements and
related depreciation and amortization, are remeasured using historical exchange
rates. Income and expense accounts, excluding depreciation and amortization, are
remeasured using an annual weighted average exchange rate. Transaction gains and
losses that arise from exchange rate fluctuations in transactions denominated in
a currency other than the functional currency are included in the results of
operations as incurred.

LIQUIDITY AND PLAN OF OPERATIONS -- As of December 31, 1997, IFFC had
working capital of approximately $17,509,290 and Cash and Cash Equivalents of
$18,642,335. IFFC's working capital and cash position were significantly
improved by the settlement of its litigation with Burger King Corporation
("BKC") in March 1997 coupled with the recent debt consolidation, merger with
Litigation Funding, Inc. and placement of the 11% Convertible Senior
Subordinated Discount Notes, Due October 31, 2007 (See Notes 8, 13 and 14).
Although IFFC believes that it has sufficient funds to finance its present plan
of operations through April 30, 1999, IFFC cannot reasonably estimate how long
it will be able to satisfy its cash requirements. The capital requirements

F-9
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

relating to implementation of the BKC Development Agreement and the New Master
Franchise Agreement with Dominos are significant. Based upon current
assumptions, IFFC will seek to implement its business plan utilizing its Cash
and Cash Equivalents and cash generated from restaurant and store operations. In
order to satisfy the capital requirements of the BKC Development Agreement and
the New Master Franchise Agreement with Dominos, IFFC will require resources
substantially greater than the amounts it presently has or amounts that can be
generated from restaurant and store operations. Other than its existing Bank
Credit Facilities (See Note 6), IFFC has no current arrangements with respect
to, or sources of additional financing and there can be no assurance that IFFC
will be able to obtain additional financing or that additional financing will be
available on acceptable terms to fund future commitments for capital
expenditures.

CASH AND CASH EQUIVALENTS -- The Company considers all highly liquid
investments purchased with a maturity of three months or less at the time of
acquisition to be cash equivalents. The Company maintains its U.S. cash in bank
deposit accounts which, at times, may exceed federally insured limits. The
Company has not experienced any losses in such accounts. The Company believes it
is not exposed to any significant credit risk on cash and cash equivalents.

INVENTORIES -- Inventories are stated at the lower of cost (first in,
first out) or market and consist primarily of restaurant food items.

NET (LOSS) PER COMMON SHARE -- The net loss per common share in the
accompanying statements of operations has been computed based upon the
provisions of SFAS No. 128, Earnings per Share, which became effective for
reporting periods ending after December 15, 1997, and requires restatement of
previously reported per share amounts. The adoption of SFAS No. 128 did not
require a change in the net loss per common share amount reported for the year
ended December 31, 1996. The basic and diluted net loss per common share in the
accompanying statements of operations is based upon the net loss after preferred
dividend requirements of $171,961 and $229,440 in 1997 and 1996, respectively,
divided by the weighted average number of shares outstanding during each period.
Diluted per share data is the same as basic per share data since the inclusion
of all potentially dilutive common shares that would be issuable upon the
exercise of options and warrants and the assumed conversion of convertible debt
and preferred stock would be anti-dilutive.

FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS -- Furniture, equipment
and leasehold improvements are stated at cost. Maintenance and repairs are
charged to expense, when incurred. Leasehold improvements, additions, major
renewals and betterments are capitalized. Furniture and equipment is being
depreciated over periods ranging from three to five years on a straight-line
basis and leasehold improvements are amortized over the life of the respective
lease. When items are sold, or otherwise disposed of, the related costs and
accumulated amortization or depreciation are removed from the accounts and any
resulting gains or losses are recognized.

ACQUISITION COSTS OF BURGER KING DEVELOPMENT RIGHTS -- All costs
associated with the acquisition of Burger King Development Rights were
capitalized. The cost of these rights is being amortized over the period from
April 1, 1997, through the expiration date of the agreement on September 30,
2007.

DEFERRED CHARGES AND OTHER ASSETS -- All costs incurred in connection
with the organization of the Company were deferred and amortized on a
straight-line basis over the five year period ended December 31, 1996. Software
costs are amortized on a straight line basis over five years. Franchise fees are
amortized over the primary term of each agreement ranging from five to twenty
years. Debt issuance costs related to the issuance of the 9% Convertible
Subordinated Debentures due December 15, 2007 and the 11% Convertible Senior
Subordinated Discount Notes due October 31, 2007, have been capitalized and are
amortized using the straight-line method over the term of the related debt,
which does not differ materially from the effective interest method.

F-10
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INCOME TAXES - Deferred Income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets and
liabilities and their financial reporting amounts. Deferred tax assets are also
established for the future tax benefits of loss and credit carryforwards.
Valuation allowances are established to reduce deferred tax assets to the amount
expected to be realized.

ADVERTISING AND PROMOTION EXPENSES -- Production costs of future media
advertising are deferred until the advertising occurs. All other advertising and
promotion costs are expensed when incurred. At December 31, 1997 and 1996, the
Company had no significant deferred advertising costs.

RECLASSIFICATIONS -- Certain amounts in the 1996 financial statements
have been reclassified to conform with the 1997 presentation.

RECENTLY ISSUED ACCOUNTING STANDARDS -- IFFC is required is adopt SFAS
No. 130, Reporting Comprehensive Income, in the first quarter of 1998. SFAS No.
130 establishes standards for reporting and display of comprehensive income and
its components in a full set of financial statements. The objective of SFAS No.
130 is to report comprehensive income, a measure of all changes in equity of an
enterprise that result from transactions and other economic events in a period,
other than transactions with owners. Management believes that the adoption of
SFAS No. 130 will not have a material impact on IFFC's consolidated financial
statements and IFFC has elected to disclose comprehensive income in the
consolidated statement of shareholders' equity upon adoption. SFAS No. 131,
Disclosures About Segments of an Enterprise and Related Information, establishes
standards for the way that public business enterprises report information about
operating segments and for related disclosures about products and services,
geographic area and major customers. IFFC will implement the disclosure
provisions of SFAS No. 131 effective December 31, 1998.

3. RESTRICTED CASH:

At December 31, 1997 and 1996, the Company had $999,990 and $500,000 of
restricted cash and certificates of deposit which represents collateral for an
outstanding line of credit and a letter of credit, respectively.

4. FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS:

Furniture, equipment, and leasehold improvements at December 31, 1997
and 1996 are as follows:
<TABLE>
<CAPTION>

1997 1996
------------- -------------
<S> <C> <C>
Vehicles................................................. $ 92,470 $ 79,581
Office furniture and equipment........................... 405,205 183,851
Restaurant equipment..................................... 3,730,027 3,238,242
Leasehold improvements................................... 6,044,228 5,123,660
------------- ------------
10,271,930 8,625,334
Less: accumulated depreciation and amortization.......... (4,312,552) (2,759,917)
------------- ------------
$ 5,959,378 $ 5,865,417
============= ============
Depreciation and amortization expense.................... $ 848,838 $ 965,668
============= ============
</TABLE>

F-11
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. OTHER ASSETS:

Other assets at December 31, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Franchise fees........................................... $339,386 $337,512
Deferred lease costs..................................... 91,350 72,987
Software and other intangibles........................... 102,281 67,098
--------- ---------
533,017 477,597
Less: accumulated amortization........................... (199,484) (137,192)
--------- ---------
$333,533 $340,405
========= =========
Amortization Expense..................................... $ 43,934 $ 42,438
========= =========
</TABLE>
6. BANK CREDIT FACILITIES:

Bank credit facilities at December 31, 1997 and 1996 consists of the
following:
<TABLE>
<CAPTION>
1997 1996
------------- ------------
<S> <C> <C>
Amerbank in Poland, S.A., PKP overdraft credit
line, variable rate approximately equal to
prime, expires March 31, 1998......................... $ 15,772 $ --

Amerbank in Poland, S.A., IFFP overdraft credit
line, variable rate approximately equal to
prime, expires March, 30, 1998........................ 15,223 10,495

Amerbank, IFFP line of credit of $950,000 payable
in twenty nine installments of $32,000
commencing on March 31, 1998 interest payable
monthly at 2.75% above LIBOR, $22,000 due at
maturity on August 12, 2000........................... 950,000 --

F-12
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amerbank IFFP revolving credit facility, interest is
payable monthly at 2.50% above LIBOR, $1,500,000
maximum credit until August 1999, payable in thirty
five monthly installments thereafter of $42,000
with final payment of $30,000 due at maturity on
August 12, 2002.*..................................... -- --

Totalbank IFFC line of credit of $999,000 payable
in full on May 19, 1998, interest at 6.5%
payable quarterly collateralized by
certificates of deposit in the amount $999,990........ 999,000 --

Amerbank, IFFP line of credit of $300,000 payable in three
quarterly installments of $100,000 commencing on
March 31, 1998, interest payable monthly at Amerbank
prime, guaranteed by IFFC: paid in full on
August 12, 1997....................................... -- 300,000

Amerbank revolving credit facility 12% interest, $100,000
plus interest payable on March 31, 1997 and June 30,1997,
remaining principal and all accrued interest was paid in
full on September 30, 1997............................ -- 310,000

Bank Handlowy Warszawie, S.A., IFFP credit facility of
$2,000,000 payable $50,000 on January 31, 1997, $100,000
quarterly commencing on March 31, 1997 through
September 30, 1997, and the remaining balance payable
in full on or before December 16, 1997, interest
at LIBOR plus 3.875% collateralized by amounts on deposit
with Bank Handlowy, unconditional guarantee of IFFC,
fixed assets of IFFP of $1,250,000 and a letter of credit
in the amount of $500,000, paid in full on
August 12, 1997....................................... -- 900,000
--- ----- ----------- ------------

Total bank credit facilities............................. 1,979,995 1,520,495

Less: Current Maturities................................. 1,349,995 1,220,495
----------- ------------

Long bank credit facilities.............................. $ 630,000 $ 300,000
=========== ============
</TABLE>
- -------------------

The Ameribank revolving facility for $1,500,000 had not been drawn upon
as of December 31, 1997.

7. 9% SUBORDINATED CONVERTIBLE DEBENTURES:

The Convertible Subordinated Debentures (the "Debentures") mature on
December 15, 2007 and provide for the payment of interest at 9% semi-annually
until maturity.

The Debentures are subordinated and subject in right of payment to the
prior payment of all Senior Indebtedness. The indenture contains no provision
restricting the incurrence of additional debt or the issuance of additional
securities. The Debentures may be redeemed together with accrued interest at the
option of the Company in whole or in part, at any time on at least 30 days
notice to Debentureholders at decreasing redemption prices from 109% in 1993 to
100% in 2002 and thereafter. The Debentures are redeemable through the operation
of a sinking fund beginning 1998 through 2006. Sinking fund payments will be
reduced for Debentures previously converted or redeemed by the Company.

F-13
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. 11% CONVERTIBLE SENIOR SUBORDINATED DISCOUNT NOTES:

On November 5, 1997, the Company sold $27,536,000 of 11% Convertible
Senior Subordinated Discount Notes Due October 31, 2007 ( the "Notes") in a
private offering. At December 31, 1997, the notes are comprised as follows:
<TABLE>
<CAPTION>
<S> <C>
Face amount of notes at maturity............. $27,536,000
Unamortized discount to be accredited as
interest expense and added to the original
principal balance of the notes over a
period of three years........................ (7,181,320)
-----------
Balance at December 31, 1997................. $20,354,680
===========
</TABLE>

The Company received net proceeds of $17,662,174 after reduction of the
face of the notes for unamortized discount of $7,535,908 and placement costs in
the amount of $2,337,918. In addition to the placement costs incurred the,
Company also issued to the placement agent 500,000 shares of Common Stock which
were valued at $150,000.

The Notes mature on October 31, 2007, and interest is payable
semi-annually, in cash, on April 30 and October 31 of each year, commencing
April 30, 2001.

The Notes are redeemable at the option of the Company, in whole or in
part, at any time or from time to time on and after October 31, 2002; initially
at 105.5% of their accreted value on the date of redemption, plus accrued
interest, declining ratably to 100% of their principal amount, plus accrued
interest, on and after October 31, 2006.

The Notes are convertible, at the option of the holder, into Common
Stock at any time after November 5, 1998. The number of shares of Common Stock
issuable upon conversion of the Notes is equal to the Accreted Value of the
Notes being converted, on the date of conversion, divided by $.70 (the
"Conversion Ratio"), subject to adjustment in certain events. Accordingly, the
number of shares of Common Stock issuable upon conversion of the Notes will
increase as the accreted value of the Notes increases. In addition, (a) if the
closing sale price (the "closing price") of the Common Stock on the Nasdaq
National Market or other securities exchange or system on which the Common Stock
is the traded or (b) if not so traded, then the best bid offered price on the
OTC Bulletin Board Service (the "BBS") on the days when transactions in the
Common Stock are not effected, or on such days as transactions are effected on
the BBS, the highest price at which a trade was executed, during any period
described below has exceeded the price for such period for at least 20
consecutive trading days (the "Market Criteria Period"), and a registration
statement with respect to the resale of Common Stock to be issued upon
conversion of the Notes is effective, all of the Notes will be automatically
converted into Common Stock at the close of business on the last day of the
Market Criteria Period; provided, however, that if the Market Criteria is
satisfied during the third year after the closing date of the offering, the
conversion will occur only if the Closing Price or OTC Price, as applicable, of
the Common Stock is at least $2.80 on such date :

12 Months Beginning Closing Price
--------------------------- ---------------

October 31, 1999........... $2.80
October 31, 2000........... $3.25

F-14
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

event a registration statement is not declared effective by such date, the
denominator of the Conversion Ratio will be decreased by $.15 from $.70. If such
registration statement is declared effective but, subject to certain exceptions,
thereafter ceases to be effective, then IFFC is obligated to pay certain
liquidated damages to the holders of the Notes ranging from 1/2% to a maximum of
5.0% of the principal balance of such Notes, depending upon the length of the
period of time the registration statement is not effective.

In the event of a change of control, as defined in the Convertible
Senior Subordinated Discount Notes Indenture (the "Indenture"), the holders of
the Notes will have the right to require the Company to purchase the Notes at a
purchase price of 101% of their Accreted Value on the date of such purchase,
plus accrued interest.

The Indenture contains certain covenants which among other things,
restrict the ability of IFFC and its Restricted Subsidiaries (as defined in the
Indenture) to: incur additional indebtedness; create liens, pay dividends or
make distributions in respect to their capital stock; make investments; or make
certain other restricted payments; sell assets, issue or sell stock of
Restricted Subsidiaries; enter into transactions with stockholders or
affiliates; engage in unrelated lines of business; or consolidate, merge, or
sell all or substantially all of their assets. In addition, Mitchell Rubinson
must remain the Company's Chief Executive Officer.

The Indenture specifically requires that any temporary cash investments
can only be placed in banks that have total capital in excess of $100 million.

9. FINANCIAL INSTRUMENTS:

Fair Value of Financial Instruments - The carrying amounts of cash,
cash equivalents, receivables, accounts payable, accrued expenses and bank
credit facilities payable approximate fair value because of the short maturity
of these items. The fair value of the Company's 9% Subordinated Convertible
Debentures is not readily determinable at December 31, 1997, due to the lack of
trading activity. The fair value of the 11% Convertible Senior Subordinated
Discount Notes is estimated to be approximately equivalent to their carrying
value due to the recent issuance of such debt.

10. SHAREHOLDERS' EQUITY:

The Company's stock option plan provides for the granting of options to
qualified employees and directors of the Company. Stock option activity is shown
below at December 31:
<TABLE>
<CAPTION>
1997 1996
--------------- --------------
<S> <C> <C>
Outstanding at beginning of year...... 210,000 292,000
Granted............................... 410,000 --
Exercised............................. -- --
Expired............................... (50,000) (82,000)
------- -------
Outstanding at end of year............ 570,000 210,000
======= =======
Exercisable at end of year............ 256,000 190,000
======= =======
Price range of options outstanding at
end of year......................... $.40 $1.375
Available for grant at end of year.... 1,430,000 440,000
</TABLE>

In January 1995, and July 1997, all options outstanding were repriced
to $1.375 and $.40, respectively, which was equivalent to the market price of
the Common Stock on such dates.

SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123")
was issued during 1995 and was effective for the year ended December 31, 1996.
This pronouncement establishes financial accounting and

F-15
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

disclosure standards for stock-based employee compensation plans. It encourages,
but does not require, companies to recognize compensation expense for grants of
stock, stock options and other equity instruments to employees based on new fair
value accounting rules. Companies that choose not to adopt the new fair value
accounting rules are required to disclose proforma net income and earnings per
share under the new method. The Company has adopted only the disclosure
provisions of SFAS 123. Had compensation costs for the Company's stock option
plans been determined based upon the fair value at the grant date for awards
under these plans consistent with the methodology prescribed under SFAS 123 for
options granted in 1997 and 1996, the Company's net loss and basic and diluted
net loss per share for those years would have increased by approximately
$170,000 and $5,000 or $.006 and $.001 per share respectively. The fair value of
the options granted during 1997 is estimated at $49,000 on the dates of grant
using the Black-Scholes option-pricing model with the following assumptions:
expected volatility of 107%, expected dividend yield of 0%, risk-free interest
rate of 5%, and terms of 8.7 years.

The June 15, 1996, December 15, 1996, and June 15, 1997 dividend
payments with respect to the series A 6% Convertible Preferred Stock were not
declared or made on their respective due dates. As of December 31, 1996,
$229,440 of preferred dividends were in arrears. On December 15, 1997, the
Company issued 549,865 shares of Common Stock valued at $401,401 in payment of
the December 15, 1997 dividend and all dividends in arrears as of that date. At
December 31, 1997, no dividends were in arrears.

During the years ended December 31, 1997 and 1996, the Company has
issued shares of Common Stock in satisfaction of outstanding liabilities,
payment of expenses and acquisition of working capital. In the opinion of
management, the value assigned to the Common Stock issued was approximately
equivalent to its fair market value on the date such shares were issued.

During the years ended December 31, 1997 and 1996, 159,650 and 392,957
shares of Common Stock were issued upon exchange of 4,790 and 11,790 shares of
Preferred Stock.

At December 31, 1997, IFFC had reserved the following shares of Common
Stock for issuance:
<TABLE>
<CAPTION>
<S> <C>
Stock option plans................................ 2,000,000

Warrants issued in connection with 1994
exchange offer, exercisable at $7.00 per
share through August 1, 1999...................... 290,800

Convertible Debentures convertible into
Common Stock at a conversion price of $8.50
per share on or before December 15, 2007.......... 324,235

Preferred Stock convertible into Common
Stock at a conversion price of $3.00 per
share............................................. 1,115,000

Warrants to purchase 50,000 shares of
Common Stock at an exercise price of $.2831
per share......................................... 50,000

Convertible Senior Subordinated Discount
Notes convertible into Common Stock, after
November 5, 1998, at a conversion price of
$.70 per share.................................... 29,078,114
----------
Total reserved shares............................. 32,858,149
==========
</TABLE>
F-16

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. INCOME TAXES:

As of December 31, 1997 and 1996, the Company had net operating loss
carryforwards of approximately $4,417,000 and $4,927,000 respectively, for U.S.
tax purposes which expire in various years through 2012. Deferred tax assets as
of December 31, 1997 and 1996 of approximately $1,661,000 and $1,853,000
respectively, were subject to and presented net of a 100% valuation allowance.

At December 31, 1997 and 1996, the Company has capital loss
carryforwards of approximately $1,338,000, which expire in 1999.

As of December 31, 1997 and 1996, the Company's Poland subsidiaries had
net operating loss carry forwards of approximately $6,952,000 and $5,998,000
respectively, which expire in various years through 2000. Deferred tax assets,
which primarily result from the net operating loss carry forwards, which
primarily result from the net operating loss carryforwarded as of December 31,
1997 and 1996 of approximately $2,781,000 and $2,339,000 respectively, were
subject to and presented net of a 100% valuation allowance.

12. RELATED PARTY TRANSACTIONS:

During 1996, the Company sold an aggregate of 4,950,000 shares of
Common Stock to members of the family of the Company's Chairman of the Board,
Chief Executive Officer and President and received aggregate proceeds of
$385,000 in connection with such sales.

In January 1997, Mitchell Rubinson and his wife, Marilyn Rubinson, the
mother of Mitchell Rubinson, Jaime Rubinson and Kim Rubinson, Mr. Rubinson's
daughters, purchased $100,000, $300,000, $50,000, and $50,000 aggregate
principal amount of convertible promissory notes, respectively. The notes bore
interest at 8% per annum and were convertible into shares of the Company's
Common Stock at $.10 per share. The proceeds from the sale of the notes were
used to fund the cost and expenses in connection with the Company's litigation
against BKC and for general working capital purposes. In June 1997 the $500,000
aggregate principal amount of the convertible promissory notes were converted
into 5,000,000 shares of Common Stock.

See Note 14 for a description of transactions with Litigation Funding,
Inc.

See Note 15 for a description of the Company's purchase of KP and PKP,
two Polish limited liability companies. Prior to KP's purchase of PKP, PKP was
wholly-owned by QPQ Corporation, a former affiliate of the Company.

13. COMMITMENTS AND CONTINGENCIES:

On March 14, 1997, IFFC and BKC entered into a new Development
Agreement (the "BKC Development Agreement"), which was then assigned by IFFC to
IFFP; IFFC continues to remain liable for the obligations contained in the BKC
Development Agreement. Pursuant to the BKC Development Agreement, IFFP has been
granted the exclusive right until September 30, 2007 to develop and be
franchised to operate Burger King restaurants in Poland with certain exceptions
discussed below. Pursuant to the BKC Development Agreement, IFFC is required to
open 45 restaurants during the term of the Agreement. Each traditional Burger
King restaurant, in-line Burger King restaurant, or drive-thru Burger King
restaurant shall constitute one restaurant. A Burger King kiosk restaurant
shall, for purposes of the BKC Development Agreement, be considered one quarter
of a restaurant.

Pursuant to the BKC Development Agreement, IFFC is to open three
restaurants through September 30, 1998, four restaurants in each year beginning
October 1, 1998 and ending September 30, 2001 and five restaurants in each year
beginning October 1, 2001 and ending September 30, 2007.

F-17
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to the BKC Development Agreement, IFFC shall pay BKC
$1,000,000 as a development fee. IFFC shall not be obligated to pay the
development fee if IFFC is in compliance with the development schedule by
September 30, 1999, and has achieved gross sales of $11,000,000 for 12 months
preceding the September 30, 1999 target date. If the development schedule has
been achieved but gross sales were less than $11,000,000, but greater than
$9,000,000, the development fee shall be reduced to $250,000. If the development
fee is payable due to failure to achieve the performance targets set forth
above, IFFC, at its option, may either pay the development fee or provide BKC
with the written and binding undertaking of Mr. Mitchell Rubinson, IFFC's
Chairman, that the Rubinson Group (as defined below) will completely divest
themselves of any interest in IFFC and the Burger King restaurants opened or
operated by IFFC in Poland within six (6) months of the date the development fee
payment is due. The Rubinson Group shall be defined to include any entity that
Mr. Rubinson directly or indirectly owns an aggregate interest of ten percent
(10%) or more of the legal or beneficial equity interest and any parent,
subsidiary or affiliate of a Rubinson entity. Mr. Rubinson has personally
guaranteed payment of the development fee.

For each restaurant opened, IFFC is obligated to pay BKC an initial fee
of up to $40,000 for franchise agreements with a term of 20 years and $25,000
for franchise agreements with a term of ten years, payable not later than twenty
days prior to the restaurant's opening. Each franchised restaurant must also pay
a percentage of the restaurant's gross sales, irrespective of profitability, as
a royalty for the use of the Burger King System and the Burger King Marks. The
annual royalty fee is five percent (5%) of gross sales. The franchises must also
contribute a monthly advertising and promotion fee of 6% of the restaurant's
gross sales, to be used for advertising, sales promotion, and public relations.
Payment of all amounts due to BKC is guaranteed by IFFC. The BKC Development
Agreement calls for certain cash contributions from BKC to IFFC over the term of
the BKC Development Agreement and additional sums based on an incentive
arrangement when earned to be retained by IFFC out of BKC's future royalties.

Under the New BKC Development Agreement, IFFP must develop a minimum of
45 Burger King restaurants by September 30, 2007. Subject to negotiation of
definitive agreements, the Company intends to develop a majority of the new
Burger King restaurants in conjunction with oil companies which are presently
expanding throughout Poland. The Company has executed a development agreement
with Statoil, and letters of intent with BP and Dupont-Conoco, to co-locate the
Burger King restaurants on selected service station properties. This agreement
and the letters of intent provide for the initial development of over 40 Burger
King restaurant locations, plus additional locations in the future. There can be
no assurance that the transactions contemplated by such agreement and letters of
intent will be consummated. The Company anticipates that the majority of the new
restaurants will be traditional free standing and attached type of drive-thru
restaurants with a seating capacity of up to 85 people. The Company is in
various stages of evaluating and/or receiving BKC approval for over 40 sites.
Presently, the Company has executed five leases, four leases with the oil
companies and one lease with a non oil company. The Company continues to explore
opportunities with other fuel companies for the development of Burger King
restaurants throughout Poland.

BKC may terminate rights granted to IFFC under the BKC Development
Agreement, including franchise approvals for restaurants not yet opened, for a
variety of possible defaults by IFFC, including, among others, failure to open
restaurants in accordance with the schedule set forth in the BKC Development
Agreement; failure to obtain BKC site approval prior to the commencement of each
restaurant's construction; failure to meet various operational, financial, and
legal requirements set forth in the BKC Development Agreement, including
maintaining of IFFP's net worth of $7,500,000 beginning on June 1, 1999. Upon
termination of the BKC Development Agreement, whether resulting from default or
expiration of its terms, BKC has the right to license others to develop and
operate Burger King restaurants in Poland, or to do so itself.

The BKC Development Agreement requires IFFC to designate a full-time
Managing Director to be responsible for the restaurants to be developed. Such
General Manager must be acceptable to BKC. Leon Blumenthal, who has served as
IFFP's President, Chief Operating Officer, and Managing Director since 1995, has
been approved by BKC.

F-18
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Specifically excluded from the scope of the BKC Development Agreement
are restaurants on United States military establishments. BKC has also reserved
the right to open restaurants in hotel chains with which BKC has, or may in the
future have, a multi-territory agreement encompassing Poland. With respect to
restaurants in airports, train stations, hospitals and other hotels, IFFC has
the right of first refusal with the owners of such sites. If IFFC is unable or
unwilling to reach a mutually acceptable agreement, BKC or its affiliates or
designated third parties may do so. IFFC is restricted from engaging in the fast
food hamburger restaurant business without the prior written consent of BKC,
which consent may not be withheld so long as IFFC and the franchisees operating
Burger King restaurants by designation of IFFC are adequately funded.

Subject to certain exceptions, as long as IFFC is a principal of IFFP,
BKC has the right to review and consent to certain types of new stock issuances
of IFFC for which the consent will not be unreasonably withheld, provided that
IFFC has complied with all reasonable conditions then established by BKC in
connection with the proposed sale or issuance of applicable equity securities by
IFFC.

On August 28, 1997, KP entered into a New Master Franchise Agreement
with Domino's Pizza International, Inc. ("Domino's"), granting KP the exclusive
right to develop and operate and to sub-license Domino's Pizza stores and to
operate a commissary for the Domino's system and the use of the Domino's and
related marks in the operation of stores in Poland. IFFC has agreed that as a
condition to the New Master Franchise Agreement it shall contribute or cause
other entities to contribute to KP a minimum amount of $2,000,000 by December
31, 1997. As of December 31, 1997, IFFC had contributed $2,000,000 to KP. IFFC
also agreed that any additional capital required above such amount will also be
dedicated to KP as needed to permit KP to meet its development quotas. The term
of the New Master Franchise Agreement will expire on December 31, 2003, and if
KP is in compliance with all material provisions of the New Master Franchise
Agreement, it may be extended for an additional ten (10) years in accordance
with certain minimum development quotas which KP and Domino's may agree upon by
execution of an amendment to the New Master Franchise Agreement. Under the terms
of the New Master Franchise Agreement, KP shall be obligated to open 5, 6, 7, 8,
9, and 10 stores, respectively, beginning in 1998 and ending in the year 2003
for a total of 45 new stores. Of such stores, third party franchise stores shall
not exceed 25% of the number of open and operating stores and all stores located
in Warsaw, Poland shall be corporate stores.

During the term of the New Master Franchise Agreement, KP and its
controlling shareholders, including the controlling shareholder of IFFC, will
not have any interest as an owner, investor, partner, licensee or in any other
capacity in any business engaged in sit-down, delivery or carry-out pizza or in
any business or entity which franchises or licenses or otherwise grants to
others the right to operate a business engaged in such business which is located
in Poland. The latter restriction shall apply for a period of one (1) year
following the effective date of termination of the New Master Franchise
Agreement.

The Company maintains its executive offices in approximately 2,500
square feet of leased office space. Annual lease payments are approximately
$32,200. IFFC has exercised its second of three, two year renewal options.

IFFP maintains principal offices in Warsaw, Poland in approximately
4,000 square feet of office space. Annual lease payments are $54,000. The term
of the lease is for an unlimited period; however, either party may terminate the
lease after the first year with six month written notice. IFFP has the right of
first refusal to the purchase of the building and will be reimbursed for the net
book value of its improvements to the space upon termination of the lease
agreement by the landlord.

On November 7, 1996, IFFC amended its employment agreement with the
Chairman of the Board, Chief Executive Officer and President, extending his
employment term until December 31, 1999. The minimum annual salary during the
first year is $183,013 subject to a 10% annual increase for each of the
remaining two years. The agreement provides for an annual incentive bonus of
2.5% of the Company's net income. The agreement also provides for various fringe
benefits, certain payments if employment is terminated by reason of death or
disability

F-19
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and a severance payment of twice the minimum annual salary then in effect, plus
the incentive bonus paid in the prior year, in the event employment is
terminated by the Company without cause.

On July 1, 1997, the Company entered into an employment agreement with
its Chief Financial Officer for an initial term of three years, which may be
extended by the Company for up to two additional years. Minimum annual salary
for the first year is $85,000. The agreement provides for various fringe
benefits, a payment of $20,000 in the event employment is terminated by reason
of death or disability and a maximum payment of $20,000 if employment is
terminated without cause by the Company. In the event of a required move to
Poland, the Company will be required to pay an appropriate housing allowance to
be determined at the time of the move.

On July 1, 1997, the Company entered into an employment agreement with
its Senior Vice President, Chief Operating Officer and General Manager for an
initial term of three years, which may be extended by the Company for up to an
additional two years. Minimum annual salary for the first year is $100,000. The
agreement provides for various fringe benefits, a payment of $25,000 in the
event employment is terminated by reason of death or disability and a maximum
payment of $25,000, if employment is terminated without cause by the Company.

In connection with the procurement of restaurant sites, IFFP and PKP
have entered into various long-term arrangements for restaurant space. The terms
of the various agreements range from approximately two to ten years, plus
extensions based upon agreement between the parties. The following is a schedule
by years of minimum future rentals on noncancellable operating leases as of
December 31, 1997, based on the year end exchange rate:
<TABLE>
<CAPTION>

Year Ending December 31: Poland U.S.A.
--------------------------------- --------------- -----------
<S> <C> <C> <C>
1998............... $ 589,869 $32,200
1999............... 549,831 32,200
2000............... 544,700 32,200
2001............... 544,700 --
2002............... 544,700 --
Thereafter......... 3,360,692 --
------------- ----------
$6,134,492 $96,600
============= ==========
</TABLE>

Rent expense for 1997 and 1996 was $560,933 and $450,572, respectively.

IFFP has entered into long-term purchase agreements with its suppliers
for its major menu items, which are sourced in Poland. The range of prices and
volume of purchases under the agreements vary according to IFFP's demand for the
products and fluctuations in market rates.

14. LITIGATION:

BKC Litigation. On March 17, 1995, IFFC and IFFP (collectively, the
"IFFC Affiliates"), filed suit against BKC in the Eleventh Judicial Circuit
Court of the State of Florida. In their amended complaint, the IFFC Affiliates
alleged, among other things, that BKC breached certain of its express and
implied obligations under the old BKC Development Agreement and the eight
existing franchise agreements (the "Franchise Agreements") pertaining to IFFP's
eight Burger King restaurants. The IFFC Affiliates further alleged that in
connection with BKC's sale of certain of its rights pursuant to the old BKC
Development Agreement and the Franchise Agreements, BKC failed to timely deliver
to the IFFC Affiliates a complete and accurate franchise offering circular in
accordance with rules promulgated by the Federal Trade Commission (the "FTC
Count"). The IFFC affiliates also alleged that BKC committed certain acts which
constitute fraud and/or deceptive and unfair business practices. The IFFC
Affiliates asked the court to, among other things, award them compensatory
damages of not less than $15,000,000, punitive damages and certain costs and
expenses.

F-20
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On March 11, 1997, BKC, IFFC, IFFP and Rubinson, individually and on
behalf of Litigation Funding, Inc. entered into a Settlement Agreement. In
connection with the execution of the Settlement Agreement, IFFC and BKC entered
into the New BKC Development Agreement and eight (8) new franchise agreements.
BKC paid to IFFC the sum of $5,000,000 (less $21,865 of royalties owed by IFFP
to BKC for February 1997) for a net amount of $4,978,135. In addition, BKC
forgave $499,768 representing all monies owed BKC by IFFP and IFFC through
January 31, 1997. Under the terms of the Settlement Agreement, a portion of such
proceeds, not to exceed $2,000,000, could be used to immediately satisfy the
actual legal fees and costs of IFFC and IFFP incurred in connection with the BKC
litigation, including IFFC's and IFFP's obligation under the agreement between
IFFC, IFFP and Litigation Funding, Inc. The remaining $3,000,000 is to be used
by IFFC and IFFP for the development of additional BKC restaurants in Poland or
working capital for IFFP pursuant to the New BKC Development Agreement. All
parties to the litigation stipulated to dismissal of the litigation and executed
mutual releases.

Litigation Financing Agreements. IFFC entered into two agreements
specifically designed to assist it in financing the BKC Litigation. First, as of
January 25, 1996, the IFFC Affiliates entered into an Agreement to Assign
Litigation Proceeds (the "Funding Agreement") with Litigation Funding, Inc., a
Florida corporation ("Funding"). This agreement was later amended in July 1996.
Mitchell Rubinson, the chairman of the board, chief executive officer and
president of IFFC is also the chairman of the board, chief executive officer and
president and the principal shareholder of Funding.

Pursuant to the amended Funding Agreement, Funding agreed to pay on
behalf of IFFC and/or IFFP up to $750,001 (the "Amount") for all expenses
(including attorneys' fees, court costs and other related expenses, but not
judgments or amounts paid in settlement) actually incurred by or on behalf of
IFFC and/or IFFP in connection with investigating, defending, prosecuting,
settling or appealing the BKC Litigation and any and all claims or counterclaims
of BKC against IFFC and/or IFFP (collectively, the "BKC Matter"). Funding paid
all amounts it was requested to pay pursuant to the Funding Agreement.

In consideration of the Amount, IFFC and IFFP each assigned to Funding
a portion of any and all benefits and gross sums, amounts and proceeds that each
of them may receive, collect, realize, otherwise obtain or benefit from in
connection with, resulting from or arising in connection with the BKC Matter or
any related claim, demand, appeal, right and/or cause of action of the IFFC
Affiliates, including, but not limited to, amounts received or entitled to be
received by the IFFC Affiliates in respect to (i) the gross proceeds of any
court ordered decision or judgement (a "Judgement") entered in favor of IFFC
and/or IFFP, (ii) the Sale Proceeds (as such term is defined in the agreement,
the "Sales Proceeds") of any sale of the assets of IFFC and/or IFFP to BKC, any
of BKC's affiliates and/or any entity which is introduced to the IFFC Affiliates
by BKC (collectively, the "BKC Entities") in connection with a settlement of the
BKC Matter, (iii) any amounts paid in compromise or settlement (a "Settlement")
of the BKC Matter in whole or in part, (iv) any liabilities or indebtedness of
IFFC or IFFP assumed or satisfied by the BKC Entities (the "Debt Relief
Proceeds") and (v) the monetary value to the IFFC Affiliates of any concessions
made by BKC with respect to its rights under (a) the Development Agreement
and/or (b) the Franchise Agreements and any future franchise agreements between
BKC and IFFP and/or IFFC (the "Contract Modification Proceeds"). All of the IFFC
Affiliates' rights, titles and interests, legal and equitable, in and to such
aforementioned benefits and gross sums, amounts and proceeds are collectively
referred to herein as the "Proceeds".

Specifically, IFFC and IFFP each individually assigned, set over,
transferred and conveyed to Funding all of its right, title and interest in and
to the sum of the following (the "Assigned Proceeds"); (i) seventy five percent
(75%) of the Proceeds to the extent that such amount does not exceed Funding's
Expenses ("Funding's Expenses") which are defined as the sum of the aggregate
amount of money paid by Funding and the amount of money expended by Funding if
it assumes the prosecution of the BKC Matter; (ii) seventy five percent (75%) of
any Proceeds, excluding any Sales Proceeds, in excess of the sum of Funding's
Expenses and the IFFC Affiliates' Expenses (as such term is defined below, the
"IFFC Affiliates' Expenses"); and (iii) seventy five percent (75%) of any Sales
Proceeds in excess of the sum of Funding's Expenses and the IFFC Affiliates'
Expenses.

F-21
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Subject to Funding's recovery of Funding's Expenses, IFFC and IFFP have
retained the right in and shall be entitled to recover from the Proceeds the sum
of (i) $303,731, and (ii) all of the amounts they may expend in the future in
connection with the BKC Matter, before Funding shall be entitled to receive any
other Proceeds.

In connection with the execution and delivery of the Funding Agreement,
IFFC, IFFP, Funding and a law firm (the "Escrow Agent") entered into an Escrow
Agreement. Pursuant to the Funding Agreement and the Escrow Agreement, except
for Proceeds which the Escrow Agent cannot reduce to physical possession, all
Proceeds, if any, resulting from the BKC Matter are to be delivered to the
Escrow Agent before they are delivered to the IFFC Affiliates and/or Funding.
The Escrow Agent is required to dispose of Proceeds only in accordance with (1)
the joint written instructions of the Company, IFFP and Funding, or (2) the
instructions of a court of competent jurisdiction. The Funding Agreement
provides that the Escrow Agent shall first apply all Readily Available Cash
Proceeds {as such term is defined below, the "Readily Available Cash Proceeds")
to satisfy Funding's rights to Proceeds (assigned to Funding by IFFC or IFFP)
before any non-Readily Available Cash Proceeds are delivered to Funding by the
Escrow Agent on behalf of such company. Readily Available Cash Proceeds are
defined to be all cash proceeds payable to IFFC, IFFP or Funding within one (1)
year of a Judgement or Settlement. In the event that the Readily Available Cash
Proceeds are not sufficient to satisfy Funding's rights in Proceeds (assigned to
Funding by such company), then IFFC and IFFP have each agreed to pay out of its
individually available "cash and cash equivalents" (the "Cash Resources") an
amount of Cash Resources to satisfy the deficiency. In the event that the
Readily Available Cash Resources of a company are insufficient to cover the
deficiency, such company, subject to Funding's agreement, will have the right to
elect which assets it will deliver to Funding in satisfaction of Funding's
rights to receive Proceeds. In the event that Funding is unable to agree with a
company with respect to which assets such company will deliver to Funding, then
the matter shall be submitted to a court of competent jurisdiction.

In consideration of the Amount, IFFC also assigned to Funding a
security interest (the "Security Interest") in its entire equity interest in
IFFP (the "IFFP Stock"). The Security Interest secures the delivery to Funding
of all the Assigned Proceeds. In order to perfect the Security Interest, IFFC
has agreed to take all such actions as are necessary under the laws of the
Republic of Poland ("Poland") and the State of Florida to transfer title to the
IFFP Stock to the Escrow Agent; provided, however, that IFFC has retained
beneficial ownership of the IFFP Stock, including the right to vote the IFFP
Stock, unless Funding does not receive the Assigned Proceeds in accordance with
the terms of the Funding Agreement and such nonreceipt is not rectified within
45 days (an "Event of Default"). IFFC has further agreed to deliver to the
Escrow Agent such documents as are necessary to file with the appropriate
authorities in Poland to, if an Event of Default occurs, officially transfer
legal and beneficial title to the IFFP Stock to Funding. IFFC and Funding have
agreed that record title to the IFFP Stock is being transferred to the Escrow
Agent to provide Funding a perfected security interest in the IFFP Stock without
being forced to rely on Poland's system of recording and perfecting security
interest. If (1) Funding receives the Assigned Proceeds in accordance with the
terms of the Funding Agreement or (2) it becomes apparent that Funding shall not
ever be entitled to receive any Proceeds, then Funding is required to
immediately issue a notice to the Escrow Agent with respect to the IFFP Stock
and the Security Interest is to be satisfied and extinguished.

The IFFC Affiliates also entered a second agreement to assist in the
financing of the BKC Litigation. On April 7, 1996, the IFFC Affiliates entered
into a letter agreement (the "Fee Agreement") with the law firm (the "Litigation
Counsel") representing the IFFC Affiliates in the BKC Litigation. Pursuant to
the Fee Agreement, IFFC and IFFP have agreed to pay Litigation Counsel the
greater of (a) Litigation Counsel's accrued hourly fees for legal services
provided in connection with the BKC Litigation; and (b) a certain percentage of
any final monetary recovery obtained by the IFFC Affiliates in the BKC
Litigation, in exchange for Litigation Counsel's services. The Company's legal
fees and related costs in connection with the BKC litigation, exclusive of the
$750,001 paid by Funding, were approximately $1,447,082, of which $200,000 was
paid by issuance of 2,000,000 shares of Common Stock to Litigation Counsel, in
April 1997.

F-22
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The gain on settlement of the BKC Litigation is comprised as follows:
<TABLE>
<CAPTION>
<S> <C>
Settlement Proceeds:
Cash received from BKC........................... $ 5,000,000
Forgiveness of liabilities due to BKC............ 499,768
Value attributable to Development Agreement...... 1,000,000
----------
Total proceeds............................ 6,499,768

Less Settlement Costs and Deferred Credits:
Legal fees and costs paid by IFFC................ (1,447,082)
Legal fees and costs paid by Funding............. (750,001)
Deferred Credit.................................. (1,000,000)
-----------
Net settlement proceeds.......................... 3,302,685
Portion of net settlement proceeds due to Funding (2,477,014)
Legal fees and costs paid by IFFC in prior to 1997
and charged against operations................... 501,399
----------
IFFC gain on settlement.......................... $1,327,070
==========
</TABLE>
IFFC has valued the New Development Agreement at $1,000,000 which is
its best estimate of the cost that it would incur in obtaining such agreement
from BKC exclusive of all other matters associated with the BKC settlement. Due
to the uncertainty relating to IFFC's ability to meet the performance
requirements specified in the New Development Agreement, which must be achieved
by September 30, 1999, coupled with the $1,000,000 amount that will be payable
to BKC if the minimum performance requirements are not met, IFFC has recorded a
Deferred Credit of $1,000,000 in connection with recognition of gain on
settlement of the BKC Litigation. If the minimum performance objectives required
by the New Development Agreement are achieved by September 30, 1999, $750,000
will be recognized by IFFC as additional gain on the BKC Litigation settlement
and $250,000 will become payable to BKC. If the maximum performance objectives
required by the New Development Agreement are achieved by September 30, 1999,
$1,000,000 will be recognized by IFFC as additional gain on the BKC Litigation
settlement. If the minimum performance objectives are not met the $1,000,000
Deferred Credit will become payable to BKC.

The payable to Funding was calculated as follows:
<TABLE>
<CAPTION>
<S> <C>
Portion of net settlement proceeds due to Funding........ $2,477,014
Reimbursement of legal fees and costs paid by Funding.... 750,001
----------
Balance due to Funding................................... 3,227,015
Payment made in May, 1997................................ 1,028,521
----------
Promissory note payable to Funding....................... $2,198,494
==========
</TABLE>

The promissory note provided for interest at prime plus 1%, and matures
on December 31, 1998. The note was collateralized by the Company's equity
interest in IFFP.

On July 14, 1997, IFFC and IFFC Acquisition, Inc., a wholly-owned
subsidiary of the Company ("Acquisition Sub") entered into a Merger Agreement
with Litigation Funding, Inc. ("Funding") and Mitchell and Edda Rubinson, the
sole shareholders of Funding. Under the terms of the Agreement, Funding was
merged with and into Acquisition Sub. The 25,909,211 shares of common stock of
the Company to be received by the Funding shareholders was determined by
dividing the $3,021,014 value assigned to Funding by the book value per share
($.1166) of the Company's common stock as of June 30, 1997, before reduction for
the liquidation preference applicable to the outstanding shares of Preferred
Stock.

On July 14, 1997, the date of the Merger Agreement with Litigation
Funding, Inc., the Company's Common Stock was trading at approximately $.34 per
share. However, due to the lack of an established trading

F-23
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

market for the Company's Common Stock, the disinterested Directors of the
Company did not utilize the quoted price per share to determine the number of
shares to issue in connection with the Merger Agreement. Instead the June 30,
1997 book value of the Company ($.1166 per share) was utilized to measure the
Company's fair value. In the opinion of the disinterested Directors of the
Company, the value assigned to the Common Stock issued was approximately
equivalent to its fair value on the date such shares were issued.

The value assigned to Funding represents (i) the $2,198,494 plus
accrued interest owed to Funding by the Company pursuant to a promissory note
and (ii) $750,000 which represents seventy-five percent (75%) of the value
attributable to the New Development Agreement between Burger King Corporation
("BKC") and IFFC and its affiliates which was executed on March 14, 1997 in
connection with the Company's settlement of its litigation against BKC.

As of July 1995, IFFC became subject to penalties for failure to comply
with a recently amended tax law requiring the use of cash registers with certain
calculating and recording capabilities and which are approved for use by the
Polish Fiscal Authorities. IFFP was unable to modify and/or replace its cash
register system before July 1995. As a penalty for noncompliance, Polish tax
authorities may disallow certain value added tax deductions for July and August
1995. Additionally, penalties and interest may be imposed on these disallowed
deductions. IFFP believes that its potential exposure is approximately $400,000,
which amount has been accounted for in the accompanying consolidated financial
statements as of December 31, 1997. IFFP has requested a final determination by
the Polish Minister of Finance. The Company is unable to predict the timing and
nature of the Minister's ruling. Although IFFP's NCR Cash Register System is a
modern system, the system cannot be modified. IFFP is currently in the process
of replacing the system with a new system which complies with Polish
regulations. IFFP estimates the new system will cost approximately $200,000 for
its existing eight restaurants.

15. OTHER TRANSACTIONS:

In July 1997, the Company purchased 100% of KP and PKP, two Polish
limited liability companies, for a nominal consideration and assumption of all
liabilities, including the liabilities of KP to the Company under a $500,000
promissory note. KP owns the exclusive master franchise rights and PKP owns the
individual store franchises for Dominos pizza stores and a Domino's approved
commissary in Poland.

The acquisition was accounted for under the purchase method of
accounting, and the net assets acquired are included in the Company's
consolidated balance sheet based upon their estimated fair values at the date of
acquisition. Results of operations of KP are included in the Company's
consolidated statement of operations subsequent to the date of acquisition. The
excess of the net assets acquired over the purchase price are accounted for as a
reduction of furniture, equipment and leasehold improvements.

Year Ended December 31,
-----------------------------------
1997 1996
--------------- -----------------
<S> <C> <C>
Total Revenues................................ $ 6,673,191 $ 6,376,534
Net loss...................................... $(1,384,323) $(2,564,233)
Basic and diluted net loss per share.......... $(.05) $(.43)

</TABLE>

F-24

<PAGE>
INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------- -------------
(unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents............................................ $11,018,674 $18,642,335
Restricted cash...................................................... 999,990 999,990
Marketable securities................................................ 5,000,000 --
Receivables.......................................................... 375,687 101,528
Inventories.......................................................... 457,040 372,599
Prepaid expenses..................................................... 466,634 130,711
------------ ------------
Total Current Assets.............................................. 18,318,025 20,247,163
Furniture, Equipment and Leasehold Improvements, Net..................... 7,664,639 5,959,378
Deferred Debenture Issuance Costs, Net of Accumulated Amortization of
$174,038 and $157,410, Respectively.................................. 258,287 274,915
Deferred Issuance Costs of 11% Convertible Senior Subordinated Discount
Notes Net of Accumulated Amortization of $166,421 and $41,049, 2,323,219 2,446,869
Respectively.........................................................
Other Assets, Net of Accumulated Amortization of $199,539 and $199,484; 475,547 333,533
Respectively.........................................................
Burger King Development Rights, Net of Accumulated Amortization of $135,135
and $81,081, Respectively............................................ 864,865 918,919
Domino's Development Rights, Net of Accumulated Amortization of $31,084 and
$15,542, Respectively................................................ 158,019 173,561
------------ -------------
Total Assets......................................................
$30,062,601 $30,354,338
============ =============
Current Liabilities:
Accounts payable..................................................... $1,165,407 $ 581,555
Accrued interest payable............................................. 82,574 17,911
Other accrued expenses............................................... 663,003 788,412
Current portion of bank credit facilities payable.................... 1,475,113 1,349,995
------------ -------------
Total Current Liabilities......................................... 3,386,097 2,737,873

11% Convertible Senior Subordinated
Discount Notes Due October 31, 2007.................................. 21,455,816 20,354,680
Long Term Bank Credit Facilities......................................... 617,867 630,000
9% Subordinated Convertible Debentures, Due December 15, 2007............ 2,756,000 2,756,000
------------ -------------
Total Liabilities................................................. 28,215,780 26,478,553
------------ -------------
Deferred Credit.......................................................... 1,000,000 1,000,000
------------ -------------
Minority Interest In Net Assets Of Consolidated Subsidiary............... 47,816 115,294
------------ -------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred Stock, $.01 par value, 1,000,000 shares
authorized; 33,450 and 33,450 shares issued and
outstanding, respectively (liquidation reference of 334 334
3,345,000)...........................................................
Common Stock, $.01 par value, 100,000,000 shares
authorized; 44,776,143 and 44,641,247 shares issued and 447,762 446,413
outstanding, respectively............................................
Additional paid-in capital........................................... 17,790,543 17,691,542
Accumulated deficit.................................................. (17,439,634) (15,377,798)
------------ -------------
Total Shareholders' Equity........................................ 799,005 2,760,491
------------ -------------
Total Liabilities and Shareholders' Equity........................ $30,062,601 $30,354,338
============ =============

</TABLE>
See Accompanying Notes

F-25
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------------
1998 1997
----------- ------------
<S> <C> <C>
Revenues:
Restaurant sales.................................................. $3,689,022 $2,752,559
Other operating................................................... 34,774 51,478
----------- -----------
Total Revenue................................................... 3,723,796 2,804,037
Food And Packaging................................................... 1,451,366 1,119,022
----------- -----------
Gross Profit......................................................... 2,272,430 1,685,015
Restaurant Operating Expenses:
Payroll and Related Costs......................................... 671,347 440,070
Occupancy and Other Operating Expenses............................ 1,065,085 764,717
Depreciation and Amortization..................................... 520,379 436,875
----------- -----------
Total Restaurant Operating Expenses............................. 2,256,811 1,641,662
----------- -----------
15,619 43,353

General And Administrative Expenses.................................. 1,142,406 714,886
Other Income (Expenses):
Interest and other, net........................................... 516,966 (76,983)
Interest expense, including amortization of debenture (1,414,542) (273,171)
issuance costs.................................................
Gain on settlement of litigation, net of applicable costs......... -- 1,327,070
Foreign currency exchange gain (loss)............................. (4,601) (25,862)
----------- -----------
Total other income (expenses)................................... (902,177) 951,054
----------- -----------
Income (Loss) Before Minority Interest............................... (2,028,964) 279,521
----------- -----------
Minority Interest In Losses Of Consolidated Subsidiary............... 67,478 122,499
----------- -----------
Net Income (Loss).................................................... $(1,961,486) $ 402,020
============ ===========
Net Income (Loss) Per Common Share:
Basic............................................................. $(.05) $.02
====== ====
Diluted........................................................... $(.05) $.03
====== ====
Weighted Average Number Of Common Shares Outstanding:
Basic............................................................. 44,653,118 13,007,129
=========== ===========
Diluted........................................................... 44,653,118 17,453,364
=========== ===========
</TABLE>
See Accompanying Notes

F-26
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Six Months Ended June 30, 1998
(unaudited)

Common Stock Preferred Stock Additional
---------------------- ----------------- Paid In Accumulated
Shares Amount Shares Amount Capital Deficit Total
---------- --------- --------- ------- ----------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1997..... 44,641,247 $446,413 33,450 $334 $17,691,542 $(15,377,798) $2,760,491
Issuance of common stock in
payment of dividends on 134,896 1,349 -- -- 99,001 (100,350) --
preferred stock...............
Net loss for the period....... -- -- -- -- -- (1,961,486) (1,961,486)
---------- -------- -------- ---- ----------- ------------ ----------
Balances, June 30, 1998......... 44,776,143 $447,762 33,450 $334 $17,790,543 $(17,439,634) $ 799,005
========== ======== ======== ==== =========== ============= ==========

</TABLE>
See Accompanying Notes

F-27

<PAGE>
INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------------
1998 1997
--------------- -------------
(unaudited)
<S> <C> <C>
Cash Flows From Operating Activities:
Net (loss) income.................................... $(1,961,486) $ 402,020
Adjustment to reconcile net income (loss) to net
cash provided by (used in) operating
activities:
Amortization and depreciation of furniture, 589,975 468,136
equipment, leasehold improvements and other
assets.............................................
Amortization of debt discount and issuance costs..... 1,241,414 16,628
Minority interest in losses of subsidiary............ (67,478) (122,499)
Other operating items................................ (819) 57,758
Changes in operating assets and liabilities:
Receivables....................................... (274,159) (1,887)
Inventories....................................... (84,441) 37,191
Prepaid expenses.................................. (335,923) 12,694

Accounts payable and accrued expenses............. 523,106 (363,990)
----------- ----------

Net cash (used in) provided by operating activities.. (369,811) 506,051
----------- ----------

Cash Flows From Investing Activities:
Note receivable...................................... -- (500,000)
Increase in restricted cash.......................... -- (946,291)
Payments for furniture, equipment and leasehold
improvements, net................................. (2,214,640) (162,864)
Refund of franchise fees............................. -- 30,000
Payments for other assets............................ (153,014) (4,209)

Payment for marketable securities.................... (5,000,000) --
----------- ----------

Net cash (used in) investing activities.............. (7,367,654) (1,583,364)
----------- ----------

Cash Flows From Financing Activities:
Advances from (to) Affiliate, net.................... -- (26,545)
Repayments of bank credit facilities................. (156,882) (440,794)
Increase in Payable to Litigation Funding............ -- 3,227,015
Payment to Litigation Funding........................ -- (1,028,521)
Payment of other notes payable....................... -- (69,307)
Payment of non-interest bearing obligation to
minority -- (500,000)
shareholder of IFF Polska.........................
Borrowings under bank credit facilities.............. 269,867 999,000
Net Proceeds from issuance of convertible
promissory notes.................................. -- 500,000
----------- ----------

Net cash provided by financing activities............ 112,985 2,660,848
Effect Of Exchange Rate Changes On
Cash And Cash Equivalents........................... 819 (15,574)
----------- ----------
(Decrease) Increase In Cash And Cash
Equivalents......................................... (7,623,661) 1,567,961
Beginning Cash And Cash Equivalents...................... 18,642,335 194,269
----------- ----------
Ending Cash And Cash Equivalents......................... $11,018,674 $1,762,230
=========== ==========
Supplemental Disclosures Of Cash Flow Information:
Cash paid during the period for:
Interest.......................................... $208,209 $214,291
=========== ==========
</TABLE>

(continued)

F-28
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
(continued)

Supplemental Schedule Of Non Cash Investing & Financing Activities:

Six Months Ended June 30, 1998:

Issuance of 134,896 shares of common stock in payment of $100,350 of
dividends on preferred stock.

Six Months Ended June 30, 1997:

Issuance of 42,995 shares of Common Stock upon the exchange of 1,290
shares of Preferred Stock. Issuance of 2,000,000 shares of Common Stock in
payment of $200,000 of legal fees. Issuance of 5,000,000 shares of Common
Stock upon conversion of $500,000 principal amount of 8% Convertible
Promissory Notes.
Issuance of 200,000 shares of Common Stock in exchange for the
cancellation of 130,000 Underwriter Common Stock warrants and
Underwriter $1,000,000 debenture warrants.

See Accompanying Notes

F-29

<PAGE>
INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. ORGANIZATION:

International Fast Food Corporation ("IFFC" or the "Company"), was
incorporated in December 1991 as a Florida corporation. The Company, has,
subject to certain exceptions, the exclusive right to develop franchised Burger
King restaurants and Domino's Pizza stores ("Domino's Stores") in the Republic
of Poland ("Poland").

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF PRESENTATION -- The accompanying consolidated financial
statements include the accounts of the Company and its majority-owned (85%)
Polish subsidiary, International Fast Food Polska, Sp.zo.o. ("IFFP"), a limited
liability company, and IFFP's two wholly-owned Polish limited liability
companies. IFFP currently operates nine Burger King restaurants in Poland.
Additionally, the consolidated financial statements include the accounts of the
Company's two wholly owned Polish limited liability companies, Krolewska Pizza,
Sp.z.o.o.("KP") and Pizza King Polska, Sp.z.o.o. ("PKP") for the period from
their acquisition in July 1997. KP and PKP presently operate ten Domino's Pizza
stores and a Domino's approved commissary. All significant intercompany
transactions and balances have been eliminated in consolidation.

The 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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
accompanying unaudited consolidated financial statements, which are for interim
periods, do not include all disclosures provided in the annual consolidated
financial statements. These unaudited consolidated financial statements should
be read in conjunction with the consolidated financial statements and the
footnotes thereto contained in the Annual Report on Form 10-KSB for the year
ended December 31, 1997 of International Fast Food Corporation and Subsidiaries
(the "Company"), as filed with the Securities and Exchange Commission. The
December 31, 1997 consolidated balance sheet contained herein was derived from
audited consolidated financial statements, but does not include all disclosures
required by generally accepted accounting principles. In the opinion of the
Company, the accompanying unaudited consolidated financial statements contain
all adjustments (which are of a normal recurring nature) necessary for a fair
presentation of the financial statements. The results of operations for the six
months ended June 30, 1998 are not necessarily indicative of the results to be
expected for the full year.

IFFC's restaurant and store operations are conducted in Poland. The
Polish economy has historically been characterized by high rates of inflation
and devaluation of the Polish zloty against the dollar and European currencies.
However, in the years ended December 31, 1996 and 1997, the rates of inflation
and devaluation improved. For the years ended December 31, 1993, 1994, 1995,
1996, and 1997 the annual inflation rate in Poland was 35%, 32%, 21.6%, 19.5%,
and 13.2% respectively. Payment of interest and principal on the 9% Convertible
Subordinated Debentures, 11% Convertible Senior Subordinated Discount Notes and
payment of franchise fees to Burger King Corporation ("BKC") and Domino's Pizza,
Inc. ("DPI") for each restaurant and store opened are in United States currency.
Additionally, IFFC is dependent on certain sources of supply which require
payment in European or United States currencies. Since IFFC's revenues from
operations are in zlotys, IFFC is subject to the risk of currency fluctuations.
IFFC has and intends to maintain substantially all of its unutilized funds in
United States or Western European currency denominated securities and/or
European Currency Units. There can be no assurance that IFFC will successfully
manage its exposure to currency fluctuations or that such fluctuations will not
have a material adverse effect on IFFC.

The official currency of Poland is the Zloty, The value of the Zloty is
pegged pursuant to a system based on a basket of currencies, as well as all
other economic and political factors that effect the value of currencies
generally. At June 30, 1998 and 1997, the exchange rate was 3.5095 and 3.264
zlotys per dollar, respectively. The accounts of IFFC's Polish subsidiaries are
maintained in zlotys and are remeasured into U.S. dollars, the functional
currency, at the end of each reporting period. Monetary assets and liabilities
are remeasured, using current exchange

F-30
<PAGE>
INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

rates. Non-monetary assets, liabilities, and related expenses, primarily
furniture, equipment, leasehold improvements and related depreciation and
amortization, are remeasured using historical exchange rates. Income and expense
accounts, excluding depreciation and amortization, are remeasured using an
annual weighted average exchange rate. Transaction gains and losses that arise
from exchange rate fluctuations in transactions denominated in a currency other
than the functional currency are included in the results of operations as
incurred.

LIQUIDITY AND PLAN OF OPERATIONS -- As of June 30, 1998, IFFC had
working capital of approximately $14,931,928, Cash and Cash Equivalents of
$11,018,674 and U.S. Agency Securities of $5,000,000. IFFC's working capital and
cash position were significantly improved since March 1997 by the settlement of
its litigation with Burger King Corporation ("BKC") in March 1997, the
restructuring of bank debt, the merger with Litigation Funding, Inc., conversion
of 8% convertible promissory notes and the placement of the 11% Convertible
Senior Subordinated Discount Notes, Due October 31, 2007.

Although IFFC believes that it has sufficient funds to finance its
present plan of operations through April 30, 1999, IFFC cannot reasonably
estimate how long it will be able to satisfy its cash requirements. The capital
requirements relating to implementation of the BKC Development Agreement and the
New Master Franchise Agreement with Dominos are significant. Based upon current
assumptions, IFFC will seek to implement its business plan utilizing its Cash
and Cash Equivalents, marketable securities and cash generated from restaurant
and store operations. In order to satisfy the capital requirements of the BKC
Development Agreement and the New Master Franchise Agreement with Dominos, IFFC
will require resources substantially greater than the amounts it presently has
or amounts that can be generated from restaurant and store operations. Other
than its existing Bank Credit Facilities, IFFC has no current arrangements with
respect to, or sources of additional financing and there can be no assurance
that IFFC will be able to obtain additional financing or that additional
financing will be available on acceptable terms to fund future commitments for
capital expenditures.

MARKETABLE SECURITIES -- All of the Company's marketable securities are
considered available-for-sale securities. As of June 30, 1998, marketable
securities consisted of U.S. agency securities for which fair values approximate
unamortized cost. The contractual maturities of these securities are less than
one year. Fair values are based on quoted market prices obtained from an
independent broker.

NET (LOSS) INCOME PER COMMON SHARE -- The net (loss) income per common
share in the accompanying statements of operations has been computed based upon
the provisions of SFAS No. 128, Earnings per Share, which became effective for
reporting periods ending after December 15, 1997, and requires restatement of
previously reported per share amounts. The adoption of SFAS No. 128 did not
require a change in the net income per common share amount reported for the six
months ended June 30, 1997. The basic net (loss) income per common share in the
accompanying statements of operations is based upon the net (loss) income after
preferred dividend requirements of $100,350 and $110,850 in 1998 and 1997,
respectively, divided by the weighted average number of shares outstanding
during each period. Diluted per share data for the six months ended June 30,
1998 is the same as basic per share data since the inclusion of all potentially
dilutive common shares that would be issuable upon the exercise of options and
warrants and the assumed conversion of convertible debt and preferred stock
would be anti-dilutive. Diluted net income per share for the six months ended
June 30, 1997 is based on net income for the period adjusted for the interest
expense on the 9% Subordinated Convertible Debentures and the 8% Convertible
Promissory Notes divided by the weighted average number of Common shares
outstanding after giving effect to dilutive warrants, the shares that would be
issuable on the assumed conversion of preferred stock as well as

F-31
<PAGE>
INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

the shares that would be issuable on the assumed conversion of the 9%
Subordinated Convertible Debentures and the 8% Convertible Promissory Notes.

RECLASSIFICATION -- Certain amounts in the 1997 financial statements
have been reclassified to conform with the 1998 presentation.

RECENT ACCOUNTING PRONOUNCEMENTS -- The Company capitalizes start-up
costs associated with opening new restaurant locations. Upon commencement of
revenue producing activities at a restaurant location, the related capitalized
start-up costs are amortized over one year. As of June 30, 1998 the Company had
recorded approximately $465,000 of start-up costs which are included in prepaid
expenses in the accompanying consolidated condensed balance sheet. Amortization
expense for the six months ended June 30, 1998 and 1997 was $36,000 and none,
respectively.

The impact of the initial application SOP 98-5 will be reported as a
cumulative effect of a change in accounting principle.

In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." Comprehensive income includes net income and several
other items that current accounting standards require to be recognized outside
of net income. The Company does not have any material comprehensive income items
reported outside its statement of operations for the six month periods ended
June 30, 1998 and 1997. Therefore, the Company's net income for the six month
periods ended June 30, 1998 and 1997, equals its comprehensive income for the
same time periods.

3. RESTRICTED CASH:

At June 30, 1998, the Company had a $999,990 certificate of deposit
hypothecated to an outstanding line of credit with Totalbank.

F-32

<PAGE>
INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

4. BANK CREDIT FACILITIES:

Bank credit facilities at June 30, 1998 consists of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
Amerbank, S.A, IFFP overdraft credit line, variable rate
approximately equal to prime, expires March 1, 1999.................. $ -0-

Amerbank, S.A., PKP overdraft credit line, variable rate
approximately equal to prime, expires June 1, 1999................... 2,113

Amerbank, PKP line of credit of $300,000 payable in ten quarterly
installments of $30,000 commencing on December 26, 1998, interest
payable monthly at 3-1/8% above LIBOR, due at
maturity March 26, 2001.............................................. 167,769

Amerbank, IFFP line of credit of $950,000 payable in twenty nine
monthly installments of $32,000 commencing on March 12, 1998,
interest payable monthly at .50% above LIBOR, due at
maturity on August 12, 2000.......................................... 822,000

Amerbank, IFFP revolving credit facility, interest is payable
monthly at 2.50% above LIBOR, $1,300,000 maximum credit until June
2000, payable in thirty five monthly installments thereafter of
$36,111 with final payment of
$36,115 due at maturity on May 18, 2003.............................. 102,098
Totalbank, IFFC line of credit of $999,000 payable in full
on August 19, 1998, interest at 6.5% payable quarterly
collateralized by certificates of deposit in the amount of
$999,990............................................................. 999,000
----------

Total Debt........................................................... 2,092,980
Less: Current Maturities............................................. 1,475,113
----------
Long Term Debt....................................................... $ 617,867
==========
</TABLE>

5. 9% CONVERTIBLE SUBORDINATED DEBENTURES:

The 9% Convertible Subordinated Debentures (the "Debentures") mature on
December 15, 2007 and provide for the payment of cash interest, semi-annually on
June 15 and December 15, until maturity.

The Debentures are subordinated and subject in right of payment to the
prior payment of all Senior Indebtedness as defined in the Debentures. The
indenture contains no provision restricting the incurrence of additional debt or
the issuance of additional securities. The Debentures may be redeemed together
with accrued interest at the option of the Company in whole or in part, at any
time on at least 30 days notice to Debentureholders at decreasing redemption
prices from 109% in 1993 to 100% in 2002 and thereafter. The Debentures are
redeemable through the operation of a sinking fund beginning 1998 through 2006.
Sinking fund payments will be reduced for Debentures previously converted or
redeemed by the Company.

F-33

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

6. 11% CONVERTIBLE SENIOR SUBORDINATED DISCOUNT NOTES:

On November 5, 1997, the Company sold $27,536,000 of 11% Convertible
Senior Subordinated Discount Notes Due October 31, 2007 ( the "Notes") in a
private offering. At June 30, 1998, the notes are comprised as follows:
<TABLE>
<CAPTION>
<S> <C>
Face amount of notes at maturity.............. $27,536,000
Unamortized discount to be accreted as
interest expense and added to the
original principal balance of the (6,080,184)
-----------
notes over a period of three years............
Balance at June 30, 1998...................... $21,455,816
===========
</TABLE>
The Company received net proceeds of $17,662,174 after reduction of the
face of the notes for unamortized discount of $7,535,908 and placement costs in
the amount of $2,337,918. In addition to the placement costs incurred, the
Company also issued to the placement agent 500,000 shares of Common Stock which
were valued at $150,000.

The Notes mature on October 31, 2007, and interest is payable
semi-annually, in cash, on April 30 and October 31 of each year, commencing
April 30, 2001.

The Notes are convertible, at the option of the holder, into Common
Stock at any time after November 5, 1998. The number of shares of Common Stock
issuable upon conversion of the Notes is equal to the Accreted Value of the
Notes being converted, on the date of conversion, divided by $.70 (the
"Conversion Ratio"), subject to adjustment in certain events. Accordingly, the
number of shares of Common Stock available for issue upon conversion of the
Notes will increase as the accreted value of the Notes increases. In addition,
(a)if the closing sale price (the "closing price") of the Common Stock on the
Nasdaq National Market or other securities exchange or system on which the
Common Stock is then traded or (b) if not so traded, then the best bid offered
price on the OTC Bulletin Board Service (the "BBS") on the days when
transactions in the Common Stock are not effected, or on such days as
transactions are effected on the BBS, the highest price at which a trade was
executed, during any period described below has exceeded the price for such
period for at least 20 consecutive trading days (the "Market Criteria Period"),
and a registration statement with respect to the resale of Common Stock to be
issued upon conversion of the Notes is effective, all of the Notes will be
automatically converted into Common Stock at the close of business on the last
day of the Market Criteria Period; provided, however, that if the Market
Criteria is satisfied during the third year after the closing date of the
offering, the conversion will occur only if the Closing Price or OTC Price, as
applicable, of the Common Stock is at least $2.80 on such date :

12 Months Beginning Closing Price
------------------- -------------

October 31, 1999............ $2.80
October 31, 2000............ $3.25

The Company is obligated to cause to be declared effective, before
November 5, 1998, a registration statement registering the resale of the shares
of Common Stock to be issued upon conversion of the Notes. In the event a
registration statement is not declared effective by such date, the denominator
of the Conversion Ratio will be

F-34
<PAGE>
INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

decreased by $.15 from $.70. If such registration statement is declared
effective but, subject to certain exceptions, thereafter ceases to be effective,
then IFFC is obligated to pay certain liquidated damages to the holders of the
Notes ranging from 1/2% to a maximum of 5.0% of the principal balance of such
Notes, depending upon the length of the period of time the registration
statement is not effective.

The Indenture specifically requires that any temporary cash investments
can only be placed in banks that have total capital in excess of $100 million.

7. SHAREHOLDERS' EQUITY:

The Company's stock option plan provides for the granting of options to
qualified employees and directors of the Company. Stock option activity for the
six months ended June 30, 1998 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Outstanding at beginning of period.......... 670,000
Granted..................................... 250,000
Exercised................................... --
Expired..................................... --
-----------
Outstanding at end of period................ 920,000
===========
Exercisable at end of period................ 258,000
Price range of options outstanding at end of
period...................................... $.71 to $.40
Available for grant at end of period........ 1,080,000
</TABLE>

In June 1998, the Company granted 250,000 options to Michael Welch,
IFFC's new President and Chief Operating Officer, at an exercise price of $.71
per share, which was equivalent to the market price of the Common Stock on such
date.

In July 1997, all options outstanding were repriced to $.40,
respectively, which was equivalent to the market price of the Common Stock on
such date.

F-35

<PAGE>
INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

At June 30, 1998, IFFC had reserved the following shares of Common
Stock for issuance:
<TABLE>
<CAPTION>
<S> <C>
Stock option plans.......................... 2,000,000
Warrants issued in connection with 1994
exchange offer, exercisable at $7.00 per
share through August 1, 1999................ 290,800
Convertible Debentures convertible into
Common Stock at a conversion price of
$8.50 per share on or before December 15, 324,235
2007........................................
Preferred Stock convertible into Common
Stock at a conversion price of $3.00 per 1,115,000
share.......................................
Warrants to purchase 50,000 shares of
Common Stock at an exercise price of
$.2831 per share on or before January 5, 50,000
2004........................................
Convertible Senior Subordinated Discount
Notes convertible into Common Stock,
after November 5, 1998, at a conversion
price of $.70 per share..................... 39,337,143
----------
Total reserved shares....................... 43,117,178
==========
</TABLE>

8. COMMITMENTS AND CONTINGENCIES:

On March 14, 1997, IFFC and Burger King Corporation ("BKC") entered
into a new Development Agreement (the "BKC Development Agreement"), which was
then assigned by IFFC to IFFP; IFFC continues to remain liable for the
obligations contained in the BKC Development Agreement. Pursuant to the BKC
Development Agreement, IFFP has been granted the exclusive right until September
30, 2007 to develop and be franchised to operate Burger King restaurants in
Poland with certain exceptions discussed below. Pursuant to the BKC Development
Agreement, IFFC is required to open 45 restaurants during the term of the
Agreement. Each traditional Burger King restaurant, in-line Burger King
restaurant, or drive-thru Burger King restaurant shall constitute one
restaurant. A Burger King kiosk restaurant shall, for purposes of the BKC
Development Agreement, be considered one quarter restaurant.

Pursuant to the BKC Development Agreement, IFFC is to open three
restaurants through September 30, 1998 of which one was opened in July 1998,
four restaurants in each year beginning October 1, 1998 and ending September 30,
2001 and five restaurants in each year beginning October 1, 2001 and ending
September 30, 2007. As of the date hereof, construction has commenced on three
new restaurants.

F-36
<PAGE>
INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Rubinson Group(as defined below) will completely divest themselves of any
interest in IFFC and the Burger King restaurants opened or operated by IFFC in
Poland within six (6) months of the date the development fee payment is due. The
Rubinson Group shall be defined to include any entity that Mr. Rubinson directly
or indirectly owns an aggregate interest of ten percent (10%) or more of the
legal or beneficial equity interest and any parent, subsidiary or affiliate of a
Rubinson entity. Mr. Rubinson has personally guaranteed payment of the
development fee.

For each restaurant opened, IFFC is obligated to pay BKC an initial fee
of up to $40,000 for franchise agreements with a term of 20 years and $25,000
for franchise agreements with a term of ten years payable not later than twenty
days prior to the restaurant's opening. Each franchised restaurant must also pay
a percentage of the restaurant's gross sales, irrespective of profitability, as
a royalty for the use of the Burger King System and the Burger King Marks. The
annual royalty fee is five percent (5%) of gross sales. The franchises must also
contribute a monthly advertising and promotion fee of 6% of the restaurant's
gross sales, to be used for advertising, sales promotion, and public relations.
Payment of all amounts due to BKC is guaranteed by IFFC. The BKC Development
Agreement calls for certain cash contributions from BKC to IFFC over the term of
the Development Agreement and additional sums based on an incentive arrangement
when earned, to be retained by IFFC out of BKC's future royalties.

On August 28, 1997, KP entered into a New Master Franchise Agreement
with Domino's Pizza International, Inc. ("Domino's"), granting KP the exclusive
right to develop and operate and to sub-license Domino's Pizza stores and to
operate a commissary for the Domino's system and the use of the Domino's and
related marks in the operation of stores in Poland. IFFC also agreed that
additional capital as may be required above such amount will also be dedicated
to KP as needed to permit KP to meet its development quotas. The term of the New
Master Franchise Agreement will expire on December 31, 2003, and if KP is in
compliance with all material provisions of the New Master Franchise Agreement,
it may be extended for an addition ten (10) years in accordance with certain
minimum development quotas which KP and Domino's may agree upon by execution of
an amendment to the New Master Franchise Agreement. Under the terms of the New
Master Franchise Agreement, KP shall be obligated to open 5, 6, 7, 8, 9, and 10
stores, respectively, beginning in 1998 and ending in the year 2003 for a total
of fifty (50)

F-37

<PAGE>
INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

stores. Of such stores, third party franchise stores shall not exceed 25% of the
number of open and operating stores and all stores located in Warsaw, Poland
shall be corporate stores.

On April 2, 1998, PKP entered into a $300,000 development loan with the
American Bank in Poland ("Amerbank") for the development of its Domino's stores.
Borrowings under this credit facility may be made until December 26, 1998 and
are secured by: (i) fixed assets of each new store financed; and (ii) the
guarantee of IFFC. The loan shall be paid in ten equal quarterly installments of
$30,000 commencing December 26, 1998 with a final payment due at maturity (March
26, 2001). Interest is paid monthly at the prevailing one month LIBOR rate plus
3-1/8%. This rate approximates 8.75% as of August 12, 1998. According to the
terms of the agreement, the proceeds of the loan could be used to finance up to
fifty percent (50%) of the development costs of Domino's Pizza stores operated
by PKP. As of June 30, 1998, $167,769 was outstanding on the facility.

On April 10, 1998, PKP entered into a lease for an unlimited period of
time with the Municipality of Ursynow, Warsaw for its tenth Domino's store site
consisting of approximately 94 square meters. The lease may be terminated by PKP
at any time upon three months' notice. The Municipality may terminate the lease
at any time upon three months' notice. In the event the Municipality terminates
the lease, PKP is entitled to recover its costs, including leasehold
improvements, net of depreciation. Annual lease payments, excluding utility
charges are approximately 15,000 zlotys (approximately $4,300 at June 30, 1998
exchange rates). The store was opened in July (See "Subsequent Events" below).

On April 29, 1998, IFFP entered into a five year lease agreement with
Praga Centrum Department Store, Sp. zo.o. ("Praga") for approximately 468 square
meters of office space for its corporate offices in Warsaw. The minimum annual
lease payments under the lease agreement are approximately $112,000. The lease
commencement date is June 1, 1998; rent payments will commence in July 1998, and
IFFP received a one time rental rebate of $4,500. In addition, Praga is required
to build out all IFFP leasehold improvements at its expense. The company moved
into these new offices on July 20, 1998.

On April 30, 1998, IFFP entered into a twenty (20) year sublease
agreement with BP Poland, Sp. zo.o. ("BP") for purposes of constructing a Burger
King restaurant in Plonsk, Poland. The site will be built adjacent to a BP gas
station. Under the terms of the sublease agreement, the Company's annual rental
payments for the lease is $30,000 ("minimum rent") or 5.0% of its net sales,
whichever is greater. The minimum rent payment is adjusted each year to
represent 75% of the previous year's total rent paid. The lease contains two
(2), ten (10) year options, exercisable by IFFP at its sole and absolute
discretion, to renew under the same terms and conditions. Each lease grants IFFP
right of first refusal on the right to purchase the property from BP.

On May 8, 1998, the Company's symbol on the electronic bulletin board
was changed from FOOD to IFFC.

In June 1998, PKP opened its ninth Domino's store at a cost of
approximately $152,000 which costs include leasehold improvements, equipment,
furniture and fixtures, franchise fees and other pre-opening costs. The store
consists of approximately 200 square meters including a 70 square meter training
facility. Annual lease payments, excluding electricity, are approximately 23,574
zlotys (approximately $6,700 at June 30, 1998 exchange rates). The lease was
executed in November 1997 between PKP and the Municipality of Warsaw. The lease
is for a ten year term.

F-38
<PAGE>
INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

On June 15, 1998, IFFC executed an employment agreement with Michael
Welch, which provides that he will serve as IFFC's President and Chief Operating
Officer for an initial term of three years, which IFFC may extend for up to an
additional two years. His annual salary for the first year is $165,000.
Additionally, under the terms of the employment agreement, Mr. Welch shall be
eligible to receive stock option grants under IFFC's Stock Option Plans in the
discretion of IFFC's Board of Directors or Option Committee. IFFC granted Mr.
Welch stock options to acquire 250,000 shares of IFFC's Common Stock at an
exercise price of $.71 per share, which are exercisable in whole or in part and
cumulatively according to the following schedule: (i) 20% one year after the
effective date of the employment agreement; (ii) 60% two years after the
employment agreement; and (iii) 100% three years after the effective date of the
employment agreement. Mr. Welch is, in addition to salary, entitled to certain
fringe benefits including an automobile to use in connection with the
performance of his duties under the agreement; and a housing allowance of $2,500
per month which terminates when Mr. Welch's family relocates to Poland. Mr.
Welch's employment agreement provides for a payment of $50,000 in the event that
his employment is terminated by reason of death or disability and, in the event
his employment is terminated without cause, Mr. Welch is entitled to a severance
payment as follows (i) on or prior to December 14, 1998, the severance amount
will be $25,000; (ii) after December 14, 1998 but on or prior to June 14, 1999,
the severance amount will be $50,000; and (iii) after June 15, 1999, the
severance amount will be $75,000. Mr. Welch's employment agreement does not
provide for a severance payment in the event his employment is terminated for
cause. Additionally, the employment agreement requires that Mr. Welch not
compete or engage in any business competitive with IFFC's business for the term
of the agreement and for period of two years thereafter.

On June 19, 1998, a development loan in the principal amount of
$1,300,000 was executed with Amerbank for IFFP. The purpose of this loan is to
provide partial credit for the development of new Burger King restaurants.
Borrowings under this credit facility are to be made until June 18, 2000 and are
secured by: (i) fixed assets of each new restaurant financed; and (ii) a
guarantee of IFFC. The loan is scheduled to be repaid in thirty five equal
installments of $36,111 starting in June 2000 with a final payment of $36,115
due at maturity on May 18, 2003. Interest is to be paid monthly at the
prevailing one month LIBOR rate plus 2.5%. According to the terms of the
agreement, the proceeds of the loan are be used to finance up to fifty percent
(50%) of the costs of furnishing and commencing operation of Burger King
restaurants operated by IFFP. As of June 30, 1998, $102,098 was outstanding on
this credit facility.

9. GAIN ON SETTLEMENT OF BURGER KING LITIGATION:

On March 11, 1997, the Company and all other parties to the BKC
Litigation settled the litigation and the Company realized a gain on the
settlement which is comprised as follows:
<TABLE>
<CAPTION>
<S> <C>
Settlement Proceeds..................................
Cash received from BKC...................... $5,000,000
Forgiveness of liabilities due to BKC....... 499,768
Value attributable to Development
Agreement................................... 1,000,000
------------

Total proceeds.......................... 6,499,768

Less Settlement Costs and Deferred Credits:
Legal fees and costs paid by IFFC........... (1,447,082)
Legal fees and costs paid by Litigation
Funding pursuant to the litigation
financing agreements..................... (750,001)
Deferred Credit............................. (1,000,000)
------------

Net settlement proceeds................. 3,302,685

F-39
<PAGE>
INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Portion of net settlement proceeds due to
Litigation Funding pursuant to the litigation
financing agreements......................... (2,477,014)
Legal fees and costs paid by IFFC in years prior
to 1997 and charged against operations....... 501,399
------------
IFFC gain on settlement......................... $1,327,070
============
</TABLE>
At June 30, 1997, the payable to Litigation Funding was comprised as
follows:
<TABLE>
<CAPTION>
<S> <C>
Portion of net settlement proceeds due to $2,477,014
Litigation Funding...........................
Reimbursement of legal fees and costs paid 750,001
by Litigation funding........................ -----------

Original principal balance payable to 3,227,015
Litigation Funding...........................
Principal payment............................... (1,028,521)
-----------
Balance due at June 30, 1997.................... $2,198,494
===========
</TABLE>

10. OTHER TRANSACTIONS

In July 1997, the Company purchased 100% of KP and PKP, two Polish
limited liability companies, for a nominal consideration and assumption of all
liabilities, including the liabilities of KP to the Company under a $500,000
promissory note. KP owns the exclusive master franchise rights and a Domino's
approved commissary. PKP owns the individual store franchises for Domino's Pizza
stores in Poland.

The following unaudited pro forma summary presents the consolidated
results of operations as if the acquisition had occurred at the beginning of the
periods presented and does not purport to be indicative of what would have
occurred had the acquisition actually been made as of such date or of results
which may occur in the future.
<TABLE>
<CAPTION>
Three Months Ended, Six Months Ended,
----------- ----------- ------------ ----------
6/30/98 6/30/97 6/30/98 6/30/97
----------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Total Revenues.................................. $ 1,902,902 $ 1,719,006 $ 3,689,022 $3,392,476
Net income (loss)............................... $(1,074,902) $ (513,390) $ (1,961,486) $ 105,690
Basic and diluted net income (loss) per share... $(.03) $(.04) $(.05) $.01
</TABLE>

11. LITIGATION:

Polish Fiscal Authority Disputes

As of July 1995, IFFP likely became subject to penalties for failure to
comply with a recently amended tax law requiring the use of cash registers with
certain calculating and recording capabilities and which are approved for use by
the Polish Fiscal Authorities. IFFP is now in compliance with the tax law using
a parallel cash register

F-40
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

system but was unable to modify and/or replace its Cash Register System before
July 1995. As a penalty for noncompliance, Polish tax authorities may disallow
certain value added tax deductions for July and August 1995. Additionally,
penalties and interest may be imposed on these disallowed deductions. IFFP
believes that its potential exposure is approximately $400,000, which amount was
accounted for in its 1997 financial statements. IFFP has requested a final
determination by the Polish Minister of Finance. The Company is unable to
predict the timing and nature of the Minister's ruling. Although IFFP's NCR Cash
Register System (the "Cash Register System") was a modern system, the Cash
Register System could not be modified. IFFP has replaced the system with a new
Siemen's system which complies with Polish regulations.

Other Litigation

The Company is not a party to any litigation or governmental
proceedings that management believes would result in any judgements or penalties
that would have a material adverse effect on the Company.

12. SUBSEQUENT EVENTS:

On July 1, 1998, IFFP entered into a new twenty year lease with Statoil
Polska, Sp. zo.o. ("Statoil") for purposes of constructing a Burger King
restaurant in Pabianice, Poland. The site will be built adjacent to a Statoil
gas station. Under the terms of the lease agreement, IFFP's annual rental
payments for the lease is $36,000 ("minimum rent") or 4.0% of its net sales,
whichever is greater. The minimum rent payment is adjusted quarterly to Polish
inflation index. The lease contains a 10 year option, exercisable by IFFP at its
sole and absolute discretion, to renew under the same terms and conditions as
the underlying lease. The Company expects to open this Burger King restaurant in
the fourth quarter of 1998.

On July 10, 1998, IFFP opened its ninth Burger King restaurant in
Mikolow. Poland. The restaurant is attached to a Conoco-Jet petrol station. The
restaurant cost approximately $840,000 which costs include road improvements,
leasehold improvements, equipment, furniture and decor, franchise fees and
pre-opening costs. The restaurant has 60 interior seats and an outdoor
playground with 20 additional seats. Annual lease payments for the restaurant
are 2.25% of net sales with no minimum lease payments required. The lease was
executed in November 1997 between IFFP and Dupont-Conoco for a twenty year term.
The lease contains two (2) ten (10) year renewal options.

On July 20, 1998, PKP opened its tenth Domino's store in Warsaw at a
cost of approximately $132,000 which costs include leasehold improvements,
equipment, furniture and fixtures, franchise fees and other pre-opening costs.
The store consists of approximately 94 square meters. Annual lease payments,
excluding electricity, are approximately 15,000 zlotys (approximately $4,300 at
June 30, 1998 exchange rates). The lease was executed in April 1998 between PKP
and the Municipality of Ursynow. The lease is for an unlimited term.

On July 21, 1998, IFFP entered into two (2) twenty year lease
agreements with Statoil Polska, Sp. zo.o. ("Statoil") for purposes of
constructing a Burger King restaurant in Olsztyn and Raciborz, Poland. The sites
will be built adjacent to Statoil gas stations. Under the terms of the lease
agreements, the Company's annual rental payments for each lease is $36,000
("minimum rent") or 4.0% of its net sales, whichever is greater. The minimum
rent payment is adjusted quarterly to the Polish inflation index. Both leases
contain a ten (10) year option, exercisable by IFFP at its sole and absolute
discretion, to renew under the same terms and conditions as the underlying
leases. The Company expects to open these Burger King restaurants in the fourth
quarter of 1998.

F-41
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------ ------------------------------------------------------
<S> <C>

International Fast Food
Corporation
No dealer, salesperson or other person has been
authorized to give any information or to make any
representations not contained in this Prospectus, and, if [LOGO]
given or made, such information or representation must not
be relied upon as having been authorized by the Company or 48,957,143 SHARES OF
the Underwriter. This Prospectus does not constitute an COMMON STOCK
offer to sell, or a solicitation of an offer to buy, any
security other than the securities offered by this
Prospectus, or an offer to sell or a solicitation of an
offer to buy any securities by anyone in any jurisdiction
in which such offer or solicitation is not authorized or is
unlawful. The delivery of this Prospectus shall not, under
any circumstances, create any implication that the
information contained herein is correct as of any time
subsequent to the date hereof

--------------------- -----------------------

TABLE OF CONTENTS PROSPECTUS
Page -----------------------
----

Prospectus Summary...............................3
Risk Factors....................................11
Management's Discussion and Analysis or Plan of
Operation.....................................19
Business........................................29
Management......................................47
Principal Shareholders..........................52
Selling Shareholders............................53
Certain Transactions............................54
Description of Securities.......................55
Market for Common Equity and Related Stockholder
Matters.......................................62 September , 1998
Shares Eligible for Future Sale.................63
Use of Proceeds.................................63
Plan of Distribution............................63
Change in Accountants...........................64
Legal Matters...................................64
Experts.........................................64
Available Information...........................65
Index to Consolidated Financial Statements.....F-1

- ------------------------------------------------------------ ------------------------------------------------------
</TABLE>

<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company has authority under Section 607.0850 of the Florida
Business Corporation Act to indemnify its directors and officers to the extent
provided for in such statute. The Company's Amended and Restated Articles of
Incorporation provide that the Company shall indemnify its officers and
directors to the fullest extent not prohibited by law, including indemnification
against liability under the Securities Act. The Company has also entered into
indemnification agreements with certain directors and executive officers wherein
it has agreed to indemnify them to the fullest extent permitted by law.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses in connection with the issuance and distribution
of the securities being registered will be borne by the Company, other than
underwriting commissions and discounts, and are as follows:

Securities and Exchange Commission registration fee........... $ 11,511
Legal fees and expenses....................................... $ 20,000
Accounting fees and expenses.................................. $ 20,000
Miscellaneous................................................. $ 5,000
---------
Total......................................................... $ 56,511

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

In June 1996, the disinterested Directors of IFFC authorized the
issuance of 2.2 million shares of IFFC's Common Stock for a total purchase price
of $110,000 to Mitchell Rubinson and his wife. IFFC used the proceeds from the
sale of such shares for payment of interest on the Debentures.

In September 1996, IFFC had additional working capital needs and had
incurred additional expenses in connection with the BKC litigation. In order to
obtain funds to cover such expenses, the disinterested Directors of IFFC
authorized the sale of 2.5 million shares of Common Stock at $.10 per share.
Marilyn Rubinson, Jaime Rubinson and Kim Rubinson, the mother and daughters of
Mitchell Rubinson, purchased 250,000 shares each or a total of 750,000 shares of

II-1
<PAGE>
the offering. In November 1996, IFFC had additional working capital needs and
the disinterested Directors of IFFC authorized the sale of 500,000 shares of
Common Stock at $.10 per share. Jaime Rubinson purchased 250,000 shares and Kim
Rubinson purchased 250,000 shares.

In December 1996, IFFC had outstanding an interest payment of
approximately $125,000 in connection with the Debentures and additional working
capital needs. After considering various alternatives, the disinterested
Directors of IFFC authorized the sale of 1.5 million shares of Common Stock of
IFFC to Marilyn Rubinson at $.10 per share.

In January 1997, the disinterested Directors of IFFC authorized the
sale of $100,000, $300,000, $50,000 and $50,000 aggregate principal amount of
convertible promissory notes to Mitchell Rubinson and his wife Edda, Marilyn
Rubinson, his mother, Jaime Rubinson and Kim Rubinson, his daughters,
respectively. The notes bore interest at 8% per annum and were to mature on
January 13, 1999. The notes were convertible into shares of IFFC's Common Stock
at $.10 per share. The proceeds from the sale of the notes were used to fund the
cost and expenses in connection with the Company's litigation against BKC and
general working capital. In June 1997, the $500,000 aggregate principal amount
of the convertible promissory notes was converted into 5 million shares of
Common Stock.

On July 14, 1997, Funding was merged with and into a subsidiary of the
Company and 25,909,211 shares of IFFC's Common Stock were issued to Mitchell and
Edda Rubinson, the shareholders of Funding.

In November 1997, the Company raised approximately $17.7 million and
completed a private placement of the Convertible Notes issued pursuant to the
terms of the 11% Indenture. The Convertible Notes are general, unsecured
obligations of the Company and will mature on October 31, 2007. BT Alex. Brown
acted as placement agent for the offering of Convertible Notes and received a
fee equal to 6% of the gross proceeds and 500,000 shares of Common Stock.

The issuance of the Company's securities set forth above were made in
reliance upon the exemption from the registration provisions of the Securities
Act of 1933, as amended, afforded by Section 4(2) thereof and/or Regulation D
promulgated thereunder, as transactions by an issuer not involving a public
offering.

ITEM 27. EXHIBITS.

Exhibit Description
------- -----------

3.1 IFFC's Articles of Incorporation (1), as amended (7,20)
3.2 IFFC's Bylaws (1)
4.1 Warrant Agreement, dated May 21, 1992, between IFFC and Whale
Securities Co., L.P. ("Whale") (1)
4.2 Form of Indenture relating to 9% Convertible Subordinated
Debentures Due 2007 (including form of Debenture) (2)(4.3)(3)
4.3 Form of Warrant Agreement, dated December 28, 1992, between
IFFC and Whale (4.4)(2)
4.4 Warrant Agreement, dated January 14, 1994, between IFFC
and Continental Stock Transfer & Trust Company, including form
of Warrants (6)
4.5 6% Series A Convertible Preferred Stock Certificates (7)
4.6 Indenture dated November 5, 1997 (10.02) (16)
5.1 Opinion of Greenberg Traurig, P.A.(19)
10.1 IFFC's 1992 Stock Option Plan (10.4)(1)
10.2 IFFC's 1992 Directors Stock Option Plan (10.5)(1)
10.3 Product Distribution Agreement, dated September 21, 1994,
between IFFC and Logistic and Distribution Systems Sp.zo.o
(10.2) (8)
II-2
<PAGE>
Exhibit Description
------- -----------

10.4 Form of Indemnification Agreement between IFFC and each of
IFFC's Directors and Executive Officers (10.09)(1)
10.5 Agreement to Assign Litigation Proceeds, dated as of January 25,
1996, among IFFC, IFFP and Funding, with exhibits including the
Escrow Indemnity Agreement among IFFC, IFFP, Funding and Escrow
Agent (10.1) (10)
10.6 Amendment to Agreement to Assign Litigation Proceeds, dated as
of July 3, 1996, among IFFC, IFFP and Litigation Funding,
Inc.(10.1) (11)
10.7 Second Amendment to Agreement to Assign Litigation Proceeds
dated March 13, 1997 between International Fast Food
Corporation, International Fast Food Polska Sp.zo.o and
Litigation Funding, Inc.(10.2) (14)
10.8 Agreement to Assign Litigation Proceeds, dated as of
September 11, 1996, among IFFC and IFFP (10.61) (13)
10.9 Agreement dated May 9, 1997, between Litigation Funding,
Inc., International Fast Food Corporation and International Fast
Food Polska Sp.zo.o. (10.2) (14)
10.10 Promissory Note dated March 11, 1997 by International Fast
Food Corporation to Litigation Funding, Inc.(10.1)(14)
10.11 Litigation Fee Agreement, dated April 7, 1996, among Joel
Hirschhorn, P.A., IFFC and IFFP (10.18)(9)
10.12 Employment Agreement, dated as of January 28, 1992,
between IFFC and Mitchell Rubinson, as amended (19.1)(4)
10.13 Amendment No. 2 to Employment Agreement, dated March 31,
1995, between IFFC and Mitchell Rubinson (10.48) (7)
10.14 Amendment No. 3 to Employment Agreement, dated November 7,
1996 between Mitchell Rubinson and IFFC (10.57)(13)
10.15 Employment Agreement, dated as of July 1, 1997, between
IFFC and James F. Martin (10.71)(17)
10.16 Employment Agreement, dated as of July 1, 1997, between
IFFC and Leon Blumenthal (10.72)(17)
10.17 Employment Agreement, dated as of March 1, 1998, between
IFFC and Ian Scattergood (10.73)(17)
10.18 Employment Agreement dated as of June 15, 1998 between
IFFC and Michael T. Welch (10.74)(18)
10.19 Key Man Life Insurance Policy, dated August 7, 1993,
insuring life of Mitchell Rubinson with IFFC as beneficiary
(10.1)(5)
10.20 Stock Option Agreement, dated as of May 21, 1992, between
IFFC and Mitchell Rubinson (10.39)(6)
10.21 Stock Option Agreement, dated as of February 1, 1993,
between IFFC and Mitchell Rubinson (10.41)(6)
10.22 Hamburger Bun Supply Agreement, dated February 1994,
between IFFC and Danish Food Products, Poland (10.55) (7)
10.23 Restaurant Development Agreement dated March 14, 1997 between
IFFC and BKC (10.58)(12)
10.24 Franchise Agreement dated March 14, 1997 between IFFC and BKC
(10.59)(12)
10.25 Securities Purchase Agreement dated November 5,1997 (10.02)(16)
10.26 Voting and Disposition Agreement dated November 5, 1997
(10.04)(16)
10.27 Credit Facility, dated February 16, 1996, between IFFP and
AmerBank (10.18)(9)
14.1 Trademark Protection Certificate No. 74441; Trademark [logo]
Burger King; Owner: BKC (7)
14.2 Trademark Protection Certificate No. 74442; Trademark [word]
Whopper; Owner: BKC (7)

II-3
<PAGE>
Exhibit Description
------- -----------

14.3 Trademark Protection Certificate No. 74443; Trademark [words]
Burger King; Owner: BKC (7)
21.1 Subsidiaries of IFFC (17)
23.1 Consent of Greenberg Traurig, P.A. (incorporated by reference
to Exhibit 5.1)*
23.2 Consent of Arthur Andersen LLP (19)
23.3 Consent of Moore Stephens Lovelace, P.A. (19)

<TABLE>
<CAPTION>
<S> <C>
(1) Incorporated by reference to the exhibit of the same number filed with IFFC's Registration Statement on
Form S-1 (File No. 33-55284)
(2) Incorporated by reference to the exhibit number indicated filed with
IFFC's Registration Statement on Form S-1 (File No. 33-55284)
(3) Incorporated by reference to the exhibit of the same number filed with the Company's Form 10-KSB for the
fiscal year ended December 31, 1992.
(4) Incorporated by reference to the exhibit number indicated filed with IFFC's Form 10-QSB for the quarterly
period ended June 30, 1993.
(5) Incorporated by reference to the exhibit of the same number filed with IFFC's Form 10-KSB for the year
ended December 31, 1993.
(6) Incorporated by reference to the exhibit number indicated filed with
IFFC's Form 10-QSB for the quarterly period ended March 31, 1994.
(7) Incorporated by reference to the exhibit number indicated filed with
IFFC's Form 10-QSB for the quarter ended March 31, 1995. (File No.
33-46784)
(8) Incorporated by reference to the exhibit of the same number filed with IFFC's Registration Statement on
Form S-1. (File No. 33-55284)
(9) Incorporated by reference the exhibit number indicated filed with IFFC's Form 10-K for the year ended
December 31, 1995.
(10) Incorporated by reference to the exhibit number indicated filed with IFFC's Form 8-K dated January 30,
1996.
(11) Incorporated by reference to the exhibit number indicated filed with IFFC's Form 8-K dated July 3, 1996.
(12) Incorporated by reference to the exhibit number indicated filed with IFFC's Form 8-K dated March 14, 1997.
(13) Incorporated by reference to the exhibit number indicated filed with IFFC's Form 10-KSB for the year
ended December 31, 1996.
(14) Incorporated by reference to the exhibit number indicated filed with
IFFC's Form 10-QSB for the quarter ended March 31, 1997.
(15) Incorporated by reference to the exhibit number indicated filed with IFFC's Form 10-QSB for the quarter
ended June 30, 1997.
(16) Incorporated by reference to the exhibit number indicated filed with
IFFC's Form 10-QSB for the quarter ended September 30, 1997.
(17) Incorporated by reference to the exhibit number indicated filed with IFFC's Form 10-KSB for the year
ended December 31, 1997.
(18) Incorporated by reference to the exhibit number indicated filed with IFFC's Form 10-QSB for the quarter
ended June 30, 1998.
(19) Filed herewith.
</TABLE>

II-4
<PAGE>
ITEM 28. UNDERTAKINGS.

The undersigned registrant hereby undertakes to:

(1) file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:

(i) include any prospectus required by Section 10(a) (3) of
the Securities Act.

(ii) reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information set forth in the Registration Statement;

(iii) include any additional or changed material information on
the plan of distribution;

(2) for determining liability under the Securities Act, treat each such
post-effective amendment as a new registration of the securities offered, and
the offering of such securities at that time to be initial bona fide offering;
and

(3) file a post-effective amendment to remove from registration any of
the securities that remain unsold at the termination of the offering.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-5

<PAGE>
SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Amendment No. 1
to the Registration Statement to be signed on its behalf by the undersigned, in
the city of Miami, State of Florida on September 4, 1998.

INTERNATIONAL FAST FOOD CORPORATION

By: /s/ Mitchell Rubinson
----------------------------
Mitchell Rubinson,
Chairman of the Board and
Chief Executive Officer

In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>

Signatures Title(s) Date
---------- ------- ----

<S> <C> <C>
/s/ Mitchell Rubinson Chairman of the Board and Chief September 4, 1998
- ---------------------------------------- Executive Officer
Mitchell Rubinson

/s/ Michael T. Welch* President, Chief Operating Officer and September 4, 1998
- ---------------------------------------- Director
Michael T. Welch

/s/ James F. Martin* Chief Financial Officer, Treasurer and September 4, 1998
- ---------------------------------------- Director
James F. Martin

/s/ Mark Rabinowitz* Director September 4, 1998
- ----------------------------------------
Mark Rabinowitz

/s/ Larry H. Schatz* Director September 4, 1998
- ----------------------------------------
Larry H. Schatz

*By: /s/ Mitchell Rubinson
---------------------
Mitchell Rubinson, Attorney-in-fact

</TABLE>

II-6

Exhibit 5.1

September 4, 1998

Mitchell Rubinson
Chairman and Chief Executive Officer
International Fast Food Corporation
1000 Lincoln Road, Suite 200
Miami Beach, Florida 33139

Gentlemen:

On August 27, 1998, International Fast Food Corporation, a Florida
corporation (the "Company"), filed with the Securities and Exchange Commission a
Registration Statement on Form SB-2, as amended (No. 333-62315) (the
"Registration Statement"), under the Securities Act of 1933, as amended (the
"Act"). The Registration Statement relates to the sale by the certain
shareholders of the Company (the "Selling Shareholders") of up to 48,957,143
shares of Common Stock, 39,377,143 of which will be acquired pursuant to the
conversion of currently outstanding 11% Convertible Senior Subordinated Discount
Notes (the "Convertible Notes"). We have acted as counsel to the Company in
connection with the preparation and filing of the Registration Statement.

In connection with the Registration Statement, we have examined,
considered and relied upon copies of the following documents (collectively, the
"Documents"): (i) the Company's Amended and Restated Articles of Incorporation
and Bylaws; (ii) the Registration Statement and all amendments and exhibits
thereto; and (iii) such other documents and instruments that we have deemed
necessary for the expression of the opinion herein contained. In making the
foregoing examinations, we have assumed without investigation the genuineness of
all signatures and the authenticity of all documents submitted to us as
originals, the conformity to authentic original documents of all documents
submitted to us as copies, and the veracity of the Documents. As to various
questions of fact material to the opinion expressed below, we have relied, to
the extent we deemed reasonably appropriate, upon the representations or
certificates of officers and/or directors of the Company and upon documents,
records and instruments furnished to by the Company, without independently
verifying the accuracy of such certificates, documents, records or instruments.

Based upon the foregoing examination, and subject to the qualifications
set forth below, we are of the opinion that (i) the Shares to be sold by the
Selling Shareholders who currently hold Convertible Notes have been duly and
validly authorized, and when issued and delivered in

<PAGE>

accordance with the terms of the Convertible Notes, will be validly issued,
fully paid and non-assessable and (ii) the shares to be sold by the remaining
Selling Shareholders pursuant to the Registration Statement have been duly and
validly authorized and issued and are fully paid and non-assessable.

Although we have acted as counsel to the Company in connection with the
preparation and filing of the Registration Statement, our engagement has been
limited to certain matters about which we have been consulted. Consequently,
there exist matters of a legal nature involving the Company in which we have not
been consulted and have not represented the Company. This opinion letter is
limited to the matters stated herein and no opinions may be implied or inferred
beyond the matters expressly stated herein. The opinions expressed herein are
given as of this date, and we assume no obligation to update or supplement our
opinions to reflect any facts or circumstances that may come to our attention or
any change in law that may occur or become effective at a later date.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the caption "Legal
Matters" in the prospectus comprising a part of the Registration Statement. In
giving such consent, we do not thereby admit that we are included within the
category of persons whose consent is required under Section 7 of the Act of the
rules and regulations promulgated thereunder.

Sincerely,
GREENBERG TRAURIG, P.A.
BY: /S/ GARY M. EPSTEIN
-------------------
Gary M. Epstein

EXHIBIT 23.2
------------

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

As independent certified public accountants, we hereby consent to the
use of our report dated March 6, 1998 for the year ended December 31, 1997 and
to all references to our firm included in or made part of this registration
statement.

Arthur Andersen LLP
Miami, Florida,

September 4, 1998

EXHIBIT 23.3
------------

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of
this Registration Statement on Form SB-2 of our report dated March 27, 1997
relating to the consolidated financial statements of International Fast Food
Corporation, which appears in such Prospectus. We also consent to the references
to us under the headings "Experts" and "Summary Consolidated Financial
Information" in such Prospectus.

Moore Stephens Lovelace, P.A.
(formerly Moore Stephens Lovelace, P.L.)
Orlando, Florida

September 4, 1998