INTERNATIONAL FAST FOOD CORP, 10KSB, 2000-04-14

INTERNATIONAL FAST FOOD CORP
10KSB, 2000-04-14
EATING PLACES

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB

[X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934 For the fiscal year ended December 31, 1999

[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the transition period from

________________ to ________________

Commission file number: 1-11386

INTERNATIONAL FAST FOOD CORPORATION
-----------------------------------
(Name of Small Business Issuer in Its Charter)

Florida 65-0302338
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
- --------------------------------- --------------------
1000 Lincoln Road, Suite 200
Miami Beach, Florida 33139
- ------------------------------------- ----------------
(Address of Principal Executive Offices) (Zip Code)
- --------------------------------------------- ----------
(305) 531-5800
-------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
-------------------------------------------------------------
Securities registered under Section 12(b) of the Exchange Act: NONE

Securities registered pursuant to Section 12(g) of the Exchange Act:

COMMON STOCK, PAR VALUE $.01 PER SHARE
--------------------------------------
(Title of Class)
WARRANTS TO PURCHASE COMMON STOCK
---------------------------------
(Title of Class)

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---

Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.

The issuer's revenues for its most recent fiscal year were $15,098,313.

The aggregate market value of the common stock held by non-affiliates
of the registrant on March 24, 2000 (computed by reference to the closing bid
price of $.77 on such date) was $10,540,964.

APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares outstanding of the issuer's Common Stock, par
value $.01 per share as of March 24, 2000, was 45,497,655.

Transitional Small Business Disclosure Format (check one):
Yes No
--- ---
DOCUMENTS INCORPORATED BY REFERENCE

None

<PAGE>

PART I

ITEM 1. DESCRIPTION OF BUSINESS.

GENERAL

Our company was incorporated in December 1991 as a Florida corporation
to develop franchised Burger King restaurants in the Republic of Poland. In July
1997, we purchased all of the outstanding shares of Krolewska Pizza Sp.zo.o.
("KP") and Pizza King Polska, Sp.zo.o. ("PKP"), which together control the
exclusive development rights and franchises of Domino's Pizza stores in Poland.
In September 1998, we purchased from a minority shareholder the remaining 15% of
the outstanding shares of International Fast Food Polska, Sp.zo.o. ("IFFP"), our
Polish subsidiary which operates the Burger King division, for $1.5 million.

We have the exclusive right to develop franchised Burger King
restaurants and Domino's Pizza stores in the Republic of Poland and we currently
operate 23 Burger King restaurants and 16 Domino's Pizza stores. The Burger King
restaurants and the majority of the Domino's Pizza 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.

RECENT DEVELOPMENTS

As more fully described herein, we believe that our cash flow from
currently existing stores, when combined with our existing financial resources
and amounts available under our lines of credit, will be sufficient to fund our
operations through April 30, 2000. However, we cannot assure you that our plans
will be achieved or that cash flow from existing and new stores will be
sufficient to fund our operations through such date. Although we are seeking
additional equity and/or debt financing in order to fund our operations and our
commitments to develop new Burger King and Domino's restaurants, there is no
assurance that it can be obtained on favorable terms or at all. The failure to
raise additional capital would require us to curtail or cease operations. See
"Management's Discussion and Analysis or Plan of Operation - Liquidity and
Capital Resources."

BURGER KING DIVISION

We operate our Burger King division through IFFP and IFFP's wholly
owned Polish limited liability corporations, IFF Polska-Kolmer and IFF-DX
Management. IFFP receives operational support from Burger King Corporation
("Burger King") through Burger King'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, we currently operate 23 Burger King restaurants. We
closed two Burger King restaurant in early 2000 and anticipate that we will
close one more during the year. 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 is located
near and in metropolitan areas and/or adjacent to service station sites.
Currently all Burger King restaurants in Poland are operated by IFFP.

Our Burger King restaurants offer flame-broiled hamburgers and
cheeseburgers, french fries and soft drinks. Other menu items may include
salads, pastries, chicken sandwiches, fish sandwiches, ice cream sundaes and
shakes. We anticipate that our future Burger King restaurants will expand their
menus by offering additional food items. We typically offer a Burger King meal
for the zloty equivalent of approximately $1.51 to $3.29, depending upon the
menu items selected. We believe, to the extent a comparison is possible, that
the prices we charge for meals are comparable to the prices charged by our
American-style fast food competitors in Poland.

By October 1994, we 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 our company and Burger King regarding Burger King'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 Burger King in 1994 until its settlement, we curtailed our Burger
King restaurant expansion. In March 1997, we settled the litigation and, under
the settlement, entered into a new ten year development agreement with Burger
King.

BURGER KING AGREEMENT AND STANDARD FRANCHISE AGREEMENTS. In October
1999, we entered into an amendment to our development agreement with Burger
King. Under the amended agreement, IFFP is required to open 73 "Development
Units" before December 31, 2007. Each traditional restaurant or drive-through
restaurant constitutes one Development Unit and each kiosk constitutes a quarter
of a Development Unit. Pursuant to the amended agreement, four of the
Development Units in each year must be in-line or free-standing restaurants
within city centers or shopping mall locations. The schedule for our required
opening of Development Units is as follows:

<PAGE>

MINIMUM NUMBER OF
DEVELOPMENT UNITS
OPEN AND TRADING
----------------
December 31, 2000 31 Development Units
December 31, 2001 37 Development Units
December 31, 2002 43 Development Units
December 31, 2003 49 Development Units
December 31, 2004 55 Development Units
December 31, 2005 61 Development Units
December 31, 2006 67 Development Units
December 31, 2007 73 Development Units

As of September 30, 1999, we were in compliance with the previously
applicable development schedule, but our gross sales were less than $11 million.
Pursuant to the Burger King agreement, on September 30, 1999, if we were in
compliance with the development schedule but our gross sales were less than
$11.0 million but greater than $9.0 million, we were required to pay Burger King
a development fee of $250,000. This fee, along with franchise fees totaling
approximately $280,000 and all other royalty fees and franchise fees which were
unpaid as of December 31, 1999, were deferred until January 15, 2001 under a
deferred payment agreement with Burger King executed in October 1999. In January
2001, we may, at our option, either pay the development fee or provide Burger
King with the written and binding undertaking of Mitchell Rubinson (our Chairman
of the Board and Chief Executive Officer) 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. Pursuant to the Burger King 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 of the parent
or subsidiary. The divestiture of the Rubinson Group or Mitchell Rubinson could
result in a change in control of our company under the indenture governing the
terms of our currently outstanding 11% convertible notes. If so, we would be
required to commence an offer to repurchase the convertible notes within 30 days
of the change in control at a purchase price equal to 101% of the accreted value
of the notes. Mr. Rubinson has personally guaranteed payment of the development
fee.

For each restaurant opened, IFFP is obligated to pay Burger King 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 fee is
payable not later than 20 days before the restaurant's opening. Pursuant to the
amendment to the Burger King agreement, Burger King agreed to defer payment of
$280,000 in accrued franchise fees until January 15, 2001. 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.
However, Burger King has reduced the royalty fee to 2% through September 30,
1998 and 3% through December 31, 2002. Thereafter, the annual royalty fee will
be 5%. 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. Payment of all amounts due from IFFP to Burger King under the
franchise agreements is guaranteed by our company.

Burger King may terminate rights granted to IFFP under the Burger King
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 compliance with the development schedule; failure to obtain
Burger King site approval before 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. As
of December 31, 1999, IFFP met such net worth requirement. However, IFFP does
not currently have a net worth of $7.5 million. Burger King has agreed to
suspend the net worth requirement through December 30, 2000. Upon termination of
the Burger King agreement, whether resulting from default or expiration of its
term, Burger King has the right to license third parties to develop and operate
Burger King restaurants in Poland, or to do so itself. In addition, under the
amendment to the Burger King agreement, in order for us to open Burger King
restaurants in excess of number shown in the development schedule, Burger King
must be reasonably satisfied that the management infrastructure of IFFP is
sufficiently strong to ensure that the proposed restaurant operations will meet
Burger King's standards.

3
<PAGE>

Specifically excluded from the scope of the Burger King agreement are
restaurants on United States of America ("United States" or "U.S.") military
establishments. Burger King 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 for of
these sites. If IFFP is unable to reach a mutually acceptable agreement with the
owners of the sites, Burger King or its affiliates or designated third parties
may initiate negotiations for these sites. IFFP and the Rubinson Group are
restricted from engaging in the fast food hamburger restaurant business, without
the prior written consent of Burger King, which consent may not be withheld so
long as our company and the franchises operating Burger King restaurants are
adequately funded.

Subject to some exceptions, as long as we are a principal of IFFP,
Burger King has the right to review and consent to our equity issuances. This
consent is not to be unreasonably withheld, provided that we have complied with
all reasonable conditions established by Burger King in connection with the
proposed sale or issuance by us of applicable equity securities.

We have obtained all required Burger King, government and regulatory
approvals and permits for our 23 Burger King restaurants.

CO-DEVELOPMENT AGREEMENTS. We intend 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
Conoco Poland Sp.zo.o ("Conoco") and BP Poland Sp.zo.o, an affiliate of British
Petroleum ("BP"), for the co-development of Burger King restaurants and service
stations throughout Poland. In connection with the execution of these letters of
intent, Conoco and BP agreed to cooperate with IFFP to achieve the rapid and
coordinated growth of the respective networks and operations in Poland. The
letters, although not binding, state that Conoco and BP agree to make sites
available to IFFP to lease for a specific term plus option periods at IFFP's
discretion, subject to Burger King approval. Rental terms will be based on a
minimum monthly rental fee and/or a percentage of sales. Currently, IFFP has
open six Burger King restaurants adjacent to BP stations and one Burger King
restaurant adjacent to a Conoco station.

In September 1997, IFFP entered into an agreement with Statoil to
develop up to 19 Burger King restaurants on Statoil service station properties
in Poland. Pursuant to the agreement, the rental terms for each site consists of
a 20-year term with a ten-year option. The annual lease payments are 4% of sales
or $36,000, whichever is higher. Currently, IFFP has opened nine restaurants
adjacent to Statoil stations. In January 2000, IFFP and Statoil agreed to
terminate the agreement; with no further obligation to either party.

In October 1998, IFFP and the Polish subsidiary of Shell Oil ("Shell")
entered into a joint venture and became equal partners in the newly incorporated
polish limited liability company, CRSB Sp.zo.o. IFFP and Shell intend to
co-develop a limited number of Burger King restaurants and Shell service
stations throughout Poland. We have not currently executed any leases under our
joint venture with Shell.

AGREEMENT WITH MARRIOTT. In March 1999, we entered into a letter
agreement whereby we granted Host Marriott Service Corporation ("Host Marriott")
the non-exclusive rights to develop and operate Burger King restaurants within
enclosed shopping centers located in Poland where Host Marriott has leased
substantially all of the food and beverage facilities, each location to be
subject to the approval of Burger King. Pursuant to this agreement, which was
amended in May 1999, Host Marriott will pay us (a) an initial fee of US $25,000
per location in exchange for our pre-opening support and assistance, including
furnishing design and construction advice, hiring and training management staff,
and advising on the selection of information and accounting systems for each
Burger King restaurant developed by Host Marriott, and (b) an on-going annual
fee equal to the greater of U.S. $7,000 per location, or 1.5% of Host Marriott's
gross receipts from the operation of each Burger King restaurant, in exchange
for our on-going technical assistance and services, including maintaining
quality standards, procurement and supply services, and on-going staff training.
The annual fee will be payable monthly, with an annual reconciliation, and will
continue for the duration of Host Marriott's operation of the location as a
Burger King restaurant.

4
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Further, we have the option to acquire up to 50% interest in the net
income of any Burger King restaurants developed by Host Marriott under the
agreement. We may exercise the option by giving Host Marriott written notice, at
any time before the opening of each Burger King restaurant, specifying the
percentage interest that we intend to acquire. If we exercise the option, we
will be responsible for a pro rata portion of the total costs incurred by Host
Marriott in building, equipping and opening the restaurant, together with a pro
rata portion of the cost of any common facilities (e.g., seating areas, tray
wash areas, office and storage space, point of sale and telecommunications
systems, etc.). The letter agreement terminates simultaneously with the Burger
King agreement. Additionally, Host Marriott will be responsible for all amounts
payable to Burger King (e.g., franchise fees, advertising contributions, and
royalty fees) for the franchise rights for each location developed by it under
the agreement.

BURGER KING RESTAURANT SYSTEM. The Burger King restaurant system is one
of the world's largest restaurant systems, with approximately 10,000 restaurants
currently located in the United States and 53 foreign countries and territories
around the world, including extensive company-owned and franchised operations in
Europe. Burger King 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 the trademarks,
services marks and other marks as Burger King may authorize from time to time
for use in connection with Burger King restaurants.

All Burger King restaurants are required to be operated in compliance
with Burger King 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.
Our current menu does not include breakfast items. Sandwich menu items account
for the most significant amount of system-wide sales. Prices for the menu items
are determined by us and, accordingly, may vary from other Burger King
restaurants in other countries.

The standard restaurant floor plan consists of a kitchen/preparation
area and ordering counter and customer seating area. The design must comply with
specified Burger King standards, which are relatively flexible, and can be
located in an existing building or a specially constructed free-standing
building with varying floor plans and configurations. We currently estimate that
once space has been leased and made available to us, approximately 120 days are
required to complete construction, obtain necessary licenses and approvals and
open a restaurant. We currently estimate the cost of opening a Burger King
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 (but excluding the cost of land). These estimates, however, vary
depending on the size and condition of a proposed restaurant and the extent of
leasehold improvements required.

BURGER KING RESTAURANT DEVELOPMENT. Our restaurant development strategy
is to lease prominent sites in major Polish metropolitan areas and adjacent to
service stations on major thoroughfares. All sites are subject to the approval
of Burger King. We consider restaurant location to be critical to our success
and devote 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. Our personnel inspect and approve a
proposed site for each restaurant and a detailed site package is prepared for
Burger King review and approval before the execution of a lease. 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 Burger King
provide that each franchised restaurant must spend 6% of its gross sales on
advertising, sales promotion, and public relations. We contribute these funds
into a self-administered marketing fund. All expenditures are based on a
marketing plan created jointly by us and Burger King, except for local store
marketing programs. In addition, the fund reimburses us up to a specified amount
for our marketing manager. As the number of our Burger King restaurants
increases, we believe that the increased advertising funds will provide the
financial resources necessary to conduct a fully integrated marketing effort
using all advertising media.

5
<PAGE>

SOURCES OF SUPPLY. IFFP is dependent upon Burger King-approved
suppliers for its food products and other supplies. Pursuant to the Burger King
agreement and the standard franchise agreements, all of these supplies must be
of a quality and conform to specifications acceptable to Burger King.
Additionally, IFFP currently obtains its restaurant furniture and fixtures,
prefabricated kitchen equipment and point of sale equipment in Poland and
obtains other equipment and paper products from Burger King-approved sources in
the United States and Europe.

IFFP has established Burger King-approved lines of supply for all major
ingredients used in its menu with substantially all of its inventory needs
sourced in Poland from third-party vendors. We believe local sourcing is
important because it avoids expensive import duties and taxes. IFFP has entered
into multi-year contracts with its major suppliers of soft drinks, buns, meat
patties and condiment supplies, and for the distribution of its supplies to each
of its restaurants throughout Poland. The distributor has been our 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. We operate our restaurants under
uniform standards shown in Burger King's operating manual, including
specifications relating to food quality and preparation, design and day-to-day
operations. IFFP uses Burger King training techniques and manuals and solicits
the assistance and counsel of Burger King personnel. IFFP is responsible, at its
expense, for the translation of Burger King manuals into Polish and pays Burger
King for specified support services relating to employee training in Burger King
facilities in Europe and the U.S. In addition, IFFP operates two Burger
King-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.

Our Burger King operations are managed by Joanna Makowska, who began
her career with us in 1992. Pursuant to the requirements of the Burger King
agreement, Ms. Makowska has been approved by Burger King as the Director of
Operations of the Burger King restaurants. As of December 31, 1999, IFFP
employed approximately 210 full-time and 495 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. We are authorized to use the trademarks, service marks and
other marks as Burger King may authorize from time to time for use in connection
with Burger King restaurants (collectively, the "Burger King Marks"). Burger
King 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 Burger King agreement and the individual franchise agreements, we
are 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. Burger King is obligated to bear
the legal expenses and costs incidental to our participation in these actions.
Burger King has made no warranty or representation that the Burger King Marks
will be available to us on an exclusive basis or at all.

DOMINO'S DIVISION

KP controls the exclusive development rights, and PKP controls the
franchises, for Domino's Pizza stores in Poland under a master franchise
agreement with Domino's Pizza International, Inc., 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 Domino's under which KP has been
granted the exclusive right to open and operate one or more commissaries for all
Domino's Pizza stores in Poland for the term of the Domino's agreement and any
renewal term.

Through PKP, we operate 16 Domino's Pizza stores. 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
Pizza store size is approximately 1,000 square feet and is located in a
residential area with a high base of telephone installations. One Domino's store
shares space with an existing Burger King restaurant.

6
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Our Domino's Pizza stores offer various types of pizza, soft drinks,
salads, sandwiches, breadsticks and ice cream, and we anticipate that our future
Domino's Pizza stores will offer other food items. We typically offer pizzas for
the zloty equivalent of approximately $4.52 to $8.84, depending upon the size of
the pizza and the number of toppings selected. We believe, to the extent a
comparison is possible, that the prices we charge for meals is comparable to the
prices charged by our American-style fast food competitors in Poland.

DOMINO'S AGREEMENT AND STANDARD FRANCHISE AGREEMENT. The relationship
between us and Domino's is governed principally by the Domino's agreement and
the individual Domino's store franchise agreements. Pursuant to the Domino's
agreement, we have the exclusive right to develop, operate and franchise
Domino's Pizza stores in Poland. The schedule for our required opening of
Domino's stores is as follows:

NUMBER OF STORES
TO BE OPENED
TIME PERIOD DURING TIME PERIOD
----------- ------------------
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

We have opened 12 Domino's Pizza stores under the Domino's agreement
and satisfied our development requirements through 1999.

As a condition to the Domino's agreement, we contributed $2,000,000 to
KP. We also agreed that any additional capital required above this amount will
also be dedicated to KP as needed to permit KP to meet its development quotas.
Pursuant to the Domino's agreement, Domino's received $300,000 as a
non-refundable development fee. The term of the Domino's agreement will expire
on December 31, 2003, and if KP is in compliance with all material provisions of
the agreement, it may be extended for an additional 10 years in compliance with
specified minimum development quotas which KP and Domino's may agree upon by
execution of an amendment to the Domino's agreement.

With respect to each operating Domino's store, KP is required to pay an
initial franchise fee of up to $5,000 and a monthly royalty fee equal to 3% of
each store's gross sales, net of taxes, irrespective of profitability. KP's
royalty payments to Domino's are payable in U.S. currency, or at Domino's
option, in local currency. Although Domino's may elect to accept payment in
alternative currencies if payment in U.S. currency is prohibited by applicable
law, it may terminate the Domino's agreement if KP is unable to pay in U.S.
currency for a period of one year.

Under the terms of the 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 Pizza stores and commissaries, including, without limitation, plans and
specifications for Domino's Pizza 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. This information is to be provided by Domino's to us in the form of the
Domino's Operations Manual, memoranda or through consultations with Domino's
experienced staff members.

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Domino's has reserved the right to review and audit some of KP's
operations, financial and tax accounting reports, statements and returns.
Domino's may terminate rights granted to KP under the 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 Pizza
stores in compliance with the development schedule; failure to obtain Domino's
site approval before 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 shown in
the Domino's agreement and the standard franchise agreements. Upon termination
of the 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
Pizza 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
Pizza 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 other specified circumstances of default, Domino's has the
right to terminate the 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 Pizza stores and all of the assets of each Domino's store controlled by
KP.

Upon termination of the Domino's agreement under some circumstances,
Domino's also has the right to purchase KP's outstanding rights and interests as
master franchisor at a fair market value. To exercise this right, within ten
days of termination of the Domino's agreement, Domino's is required to request
an appraisal of all of KP's rights and interests as a master franchisor 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 franchisor within 30 days of Domino's request for appraisal, the fair
market value shall be determined by an appraiser, which appraiser is selected
according to a prescribed method. The appraiser is required to submit an
appraisal report within 60 days of his or her appointment and Domino's then has
the option within 30 days of the submission to purchase all of KP's rights and
interests as a master franchisor 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 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.

Before 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 the store franchisee (whether or not
affiliated with us). 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 these 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 Pizza 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.

Each franchisee must comply strictly with the Domino's system, and the
standards, specifications and procedures comprising the 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 compliance 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 approximately 30 minutes. All of the food products
and other supplies used in Domino's Pizza 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 and data and voice
communications 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.

8
<PAGE>

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 Pizza 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 compliance
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 compliance 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 its fair market value.

During the term of the Domino's agreement, KP and its controlling
shareholders, including the controlling shareholder of our company, cannot 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 this business which is located in
Poland. The latter restriction shall apply for a period of one year following
the effective date of termination of the Domino's agreement.

DOMINO'S COMMISSARY. In conjunction with its exclusive right to develop
and franchise Domino's Pizza stores in Poland, the Domino's agreement grants KP
the exclusive right to develop and operate the commissaries from which all
franchisees in Poland purchase food and supplies. Because KP is the owner of the
Domino's commissary, additional mark-up costs on supplies provided by the
commissary are eliminated for the Domino's stores operated by PKP. Domino's has
agreed to provide us, on an ongoing basis, all information and materials
necessary to make us 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.

In 1999, PKP entered into a new ten year lease for approximately 7,300
square feet of warehouse space to be used for a new Domino's commissary. The
initial annual lease payment was approximately $32,724, excluding the cost of
electricity. Monthly lease payments commenced on June 1, 1999 at approximately
$2,700 per month; increasing by 2% starting on January 1, 2000 and each
subsequent year thereafter for the duration of the lease. The site has been
approved for its intended use by Domino's. We expect to service up to 60
Domino's Pizza stores from this facility. KP has the right to develop additional
commissaries as needed. We intend to conduct all of our purchasing, distribution
and main food supply operations from the new commissary.

DOMINO'S STORE SYSTEM. All Domino's Pizza stores are required to be
operated in compliance with Domino's standards. Domino's Pizza 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
system-wide sales. Prices for Domino's menu items are determined by the various
operators of Domino's Pizza stores and, accordingly, may vary throughout the
Domino's store system.

Domino's has developed a store format and operating system, which
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 Pizza stores may incorporate varying floor plans and
configurations and may be located in a specially constructed freestanding
building or in existing buildings.

9
<PAGE>

Our initial Domino's Pizza 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, we intend to focus our
efforts on the development of traditional Domino's Pizza stores which provide
primarily delivery and pick-up services and Domino's Pizza stores developed by
us should range in size from 900 to 1,200 square feet. We estimate that once the
space has been leased and made available to us, approximately 30 to 90 days are
required to renovate, equip, furnish and obtain necessary licenses and approvals
to open a Domino's store. We estimate 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). These 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, we have concentrated our efforts
on the development of Domino's Pizza stores in Warsaw, Poland, however, we
intend to focus most of our future Domino's store development efforts on other
Polish cities. All sites are subject to the approval of Domino's. We consider a
Domino's store location to be critical to our prospects and devote significant
efforts to the investigation and evaluation of potential leases and sites. We
believe 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 Pizza stores provide delivery and
pick-up services only, we have sought and seek to place Domino's Pizza stores in
metropolitan areas with adequate levels of telephone ownership. Our personnel
inspect and approve a proposed site for each Domino's store before 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
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 Pizza 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 our and Domino's approval. Domino's is required to provide
advertising and promotional assistance to us. We believe that many marketing
methods that have proven successful for Domino's are adaptable to the Polish
market. Most marketing efforts by currently operating Domino's Pizza stores in
continental Europe have been carried out on a local store basis, through
newspaper coupons, flyers and similar media. As the number of our Domino's
stores increases, we believe 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. We are substantially dependent upon third parties
for all of our capital equipment (including furniture, fixtures and equipment),
food products, and other supplies. Pursuant to the 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. We currently obtain
substantially all of our supplies and food products, including cheese, soft
drinks, cold cuts and paper products from Polish sources and maintain
approximately a seven to 30 day inventory of food products and supplies for our
Domino's Pizza stores. We currently obtain our store furniture and fixtures from
sources in Poland and obtain our restaurant equipment, flour and tomato sauce
primarily from Domino's approved sources in the United States and Europe. We
currently have no written, long-term supply agreements. Shipments of food and
supplies are delivered directly to the commissary or Domino's Pizza stores.

STORE OPERATIONS AND PERSONNEL. We operate our Domino's Pizza stores
under uniform standards shown in Domino's Operating Manuals, including
specifications relating to food quality and preparation, design and decor and
day-to-day operations. Our operations are similar to those of other Domino's
Pizza stores. We hire Domino's store managers who are responsible for
supervising the day-to-day operations of the Domino's Pizza 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.

10
<PAGE>

To date, we believe that we have successfully attracted and trained
local managers and other employees. We operate our own Domino's approved
training facility in Poland, with assistance from Domino's. We maintain
financial, accounting and management controls for our Domino's Pizza stores
through the use of centralized accounting systems, detailed budgets and
computerized management information systems.

Our Domino's operations are managed by James Martin, the President and
Chief Financial Officer of the Company. The Domino's agreement requires KP to
designate a full-time general manager, acceptable to Domino's, to be responsible
for the Domino's Pizza stores to be developed under the agreement. As of March
24, 2000, Domino's had not approved Mr. Martin as general manager. Mr. Martin
was supported by approximately 76 full-time and 271 part-time employees as of
December 31, 1999.

TRADEMARKS. We are authorized to use the trademarks, service marks and
other marks as Domino's may authorize from time to time for use in connection
with Domino's Pizza stores. Domino's has received trademark approval in Poland
for specified marks, including the Domino's logo and the words "Domino's Pizza."

DOING BUSINESS IN POLAND

THE INFORMATION PRESENTED IN THIS SECTION HAS BEEN EXTRACTED FROM
PUBLICLY AVAILABLE DOCUMENTS AND IS NOT INTENDED TO BE A COMPLETE DESCRIPTION OF
ALL INFORMATION ABOUT THE REPUBLIC OF POLAND THAT MAY BE MATERIAL TO OUR
COMPANY.

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, Belarus,
Lithuania and the Russian Federation. Its population, which was estimated at
approximately 39 million (as of December 31, 1999), makes it one of the most
populous countries in Europe, with approximately 62% 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.

GOVERNMENT AND POLITICAL SYSTEM. Poland is a democratic republic based
on the three-party system. The President is elected in general elections. The
President nominates the Prime Minister and the remaining Ministers who
constitute the executive branch of the government. The Parliament, which is also
elected in general elections, consists of a lower house (the Sejm) and an upper
house (the Senate). Judicial power is vested in independent courts, which answer
to the Supreme Court.

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. Poland has become the first former
centrally planned economy in Central and Eastern Europe to end its recession and
return to growth. In 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 and an acceleration in
inflation, Poland returned to growth, with positive rates of GDP growth for the
years 1992 to 1998.

Poland today stands out as one of the most successful and open
transition economies. The privatization of small and medium-sized companies and
a liberal law on establishing new firms marked the rapid development of a
private sector now responsible for at least two-thirds of the economic activity.
Currently, 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.

11
<PAGE>

The economic recovery in Poland since 1992 has benefited most sectors
of the economy. Unemployment which peaked in 1994 at 16% dropped to 10.4% in
1998. Real wages have grown during the last four years, increasing 4.8% in 1998.
Domestic demand has been driven by an increase in investment and private
consumption and exports have increased. 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. In 1998, approximately 89% of total direct investment in Poland came
from countries participating in the Organization for Economic Cooperation and
Development. The European Economic Union ("EU") accounted for approximately 60%
of total trade, with Germany becoming Poland's dominant trading partner,
followed by the United States, France and Italy. 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 and
was 1.5% of GDP in 1998. 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 including defense, health care and
education.

During the period of reform since 1992, successive governments have
supported structural transformation of the economy directed at reforming
state-owned enterprises, selling 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. Current privatizations include the General Insurance
Office, Bank Pekao S.A. (the largest bank in Poland), and Polish Telecom, as
well as entire sectors, including sugar (planned conclusion in 2000), steel,
arms, crude oil and power generation industries.

Poland is a member of the International Monetary Fund, the World Bank,
the United Nations Organization and the Organization for Economic Cooperation
and Development, and is an associate member of the EU. Additionally, in 1999
Poland became a formal member of the North Atlantic Treaty Organization
("NATO").

GROSS DOMESTIC TOTAL. Poland is one of the fastest growing economies in
Europe. In 1998, unofficial preliminary estimates indicated that Poland's GDP
grew by 4.8% in real terms, following increasing real growth rates based on IMF
estimates in 1995 of 7.0%, in 1996 of 6.1%, in 1997 of 6.9%, in 1998 of 4.8% and
in 1999 of 4.1%.

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 annual increase in the
consumer price index ("CPI") has been continuously but gradually declining from
a rate of almost 250% in 1990 to 7.3% in 1999. 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 4.9% in 1998.

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 over 16.0%
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, 1999, registered
unemployment was 13.0% of the labor force.

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 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.

POLISH CURRENCY. The only currency that may be used in Poland is the
zloty. The value of the zloty is determined under a system based on a basket of
currencies (whose weights in the basket reflect their relative importance in
Poland's foreign trading transactions), as well as all other economic and
political factors that effect the value of currencies generally. At December 31,
1999, the exchange rate was 4.148 zlotys per dollar.

12
<PAGE>

FOREIGN DIRECT INVESTMENT IN POLAND. In general, foreign investors are
not required to obtain any special permits to invest in Polish companies. 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. A foreign investor may also invest in "joint stock companies," which
are roughly analogous to publicly held corporations in the United States.
Subject to specified restrictions, the Polish foreign investment law generally
allows for full repatriation of capital dividends and profits by foreign
investors.

Other than the provisions of the Polish Commercial Code generally
applicable to all limited liability companies, there is no minimum level of
investment required of a foreign person investing in a Polish limited liability
company. The minimum capital required for establishment of any limited liability
company is 4,000 zlotys (approximately $964 at December 31, 1999 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 company's
incorporation documents, 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 company's incorporation documents, fixed assets may constitute in-kind,
non-monetary contributions to equity.

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.

TAXATION. A limited liability company with foreign investors is subject
to the same taxes, and general tax reductions, as domestic Polish companies
without foreign participation. A limited liability company 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 is currently 34%. 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, 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 the items. With respect to imports, the value
of the items is equal to the customs' value plus any customs' duties. The VAT
basic rate is 22%, but in the case of some products (including food products),
it is reduced to 7% or eliminated entirely. Under the VAT system, credit is
given for VAT paid against VAT collected.

Currently, dividends are taxed at the rate of 20%. However, Poland has
executed a bilateral tax agreement with the United States, under 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 limited liability company which is a subsidiary of our
company will be at the rate of 5%.

CUSTOMS DUTIES AND IMPORT RESTRICTIONS. Our operations may be subject
to various levels of customs duties on some 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 the contributions constitute
"fixed assets" and are not disposed of during the three-year period following
customs clearance. Although we have contributed as capital substantially all of
our subsidiaries' furniture, fixtures and equipment, there can be no assurance
that this equipment will ultimately qualify as "fixed assets" for purposes of
this exclusion.

13
<PAGE>

ITEM 2. DESCRIPTION OF PROPERTY.

OUR OFFICES. We maintain our 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 $38,000.
We currently sublease approximately 1,400 square feet for an annual fee of
$30,700. We have exercised our third of three two-year renewal options under the
lease, which expires in December 2000.

In April 1998, IFFP executed a lease for its corporate headquarters for
approximately 4,680 square feet of space located at 16 Jagiellonska St., Warsaw,
Poland. The annual rental payment is approximately $110,000, including common
area charges. The agreement is for a five-year term and we have the right of
first refusal in leasing the premises for subsequent annual periods, provided
that the lessor is notified of our intention to continue leasing the premises no
later than six months before the expiration of the initial term.

Management believes that all of our properties are adequately covered
by insurance. We have not incurred nor do we 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 March 24,
2000, the location, opening date, lease or sublease expiration date (including
all renewal options), square meters and minimum annual lease payments (in U.S.
dollars) for each of our Burger King restaurants:

LEASE SQUARE MINIMUM ANNUAL
LOCATION OPENING DATE EXPIRATION DATE METERS(2) LEASE PAYMENTS
-------- ------------ --------------- --------- --------------
<S> <C> <C> <C> <C>
Warsaw, Poland December 1992 January 2004 522 $28,942
Warsaw, Poland April 1993 (1) 720 $43,766
Warsaw, Poland May 1993 (1) 851 $52,758
Warsaw, Poland July 1993 January 2009 476 $33,282
Lublin, Poland March 1994 January 2014 824 $54,000
Warsaw, Poland March 1994 January 2009 276 $76,200
Katowice, Poland October 1994 November 2003 550 $119,040
Mikolow, Poland July 1998 November 2017 600 $12,000
Torun, Poland August 1998 January 2018 1,135 $30,000
Plonsk, Poland September 1998 April 2018 3,610 $30,000
Pabianice, Poland November 1998 June 2018 560 $24,000
Raciborz, Poland November 1998 July 2018 360 $24,000
Olsztyn, Poland November 1998 July 2018 800 $24,000
Gorzow, Poland November 1998 October 2018 850 $24,000
Wroclaw, Poland December 1998 September 2018 2,200 $30,000
Szczecin, Poland January 1999 November 2018 1,650 $24,000
Walbrzych, Poland January 1999 December 2018 1,600 $24,000
Opole, Poland February 1999 September 2018 1,600 $30,000
Czestochowa, Poland February 1999 November 2018 1,180 $24,000
Czechowice, Poland March 1999 November 2038 3,733 $21,000
Krakow, Poland April 1999 August 2018 1,500 $24,000
Tychy, Poland June 1999 January 2018 2,078 $30,000
Warsaw, Poland April 1999 October 2018 1,250 $24,000
Warsaw, Poland April 1999 November 2018 1,360 $30,000

<FN>
- -----------------------
(1) Indicates lease is for an unlimited period of time, but may be terminated
upon three months notice by the lessor, subject to specified conditions.
(2) Includes basement, second floor and land area.
</FN>
</TABLE>

DOMINO'S STORES. The following table sets forth, as of March 24, 2000,
the name, location, opening date, lease or sublease expiration date (including
all renewal options), square meters and minimum annual lease payments (in U.S.
dollars) for each of our Domino's Pizza stores:

14
<PAGE>

LEASE SQUARE MINIMUM ANNUAL LEASE
LOCATION OPENING DATE EXPIRATION DATE METERS PAYMENTS
-------- ------------ --------------- ------ --------
<S> <C> <C> <C> <C>
Warsaw, Poland March 1994 January 2009 480 $76,200
Warsaw, Poland May 1994 (1) 130 $7,970
Warsaw, Poland August 1994 March 2004 482 $35,000
Warsaw, Poland July 1997 (1) 100 $5,415
Warsaw, Poland December 1997 (1) 97 $12,422
Warsaw, Poland March 1998 (1)(2)(3) 190 $6,900
Warsaw, Poland March 1998 January 2008 93 $14,400
Warsaw, Poland April 1998 February 2008 100 $14,315
Warsaw, Poland June 1998 (1) 137 $8,422
Warsaw, Poland July 1998 (1) 83 $4,740
Lublin, Poland December 1998 September 2008 125 $13,700
Lomianki, Poland December 1998 October 2008 116 $8,054
Lodz, Poland December 1998 October 2008 211 $7,485
Warsaw, Poland January 1999 June 2007 120 $12,000
Legionowo, Poland January 1999 October 2008 120 $9,480
Piaseczno, Poland July 1999 October 2008 92 $7,800

<FN>
- -----------------------

(1) Indicates lease is for an unlimited period of time, but may be terminated
upon three months notice by the lessor, subject to specified conditions
and payments to lessee.
(2) Includes commissary.
(3) Includes training facility.
</FN>
</TABLE>

ITEM 3. LEGAL PROCEEDINGS.

DISPUTE WITH POLISH FISCAL AUTHORITY. In 1995, IFFP became subject to
penalties for failure to comply with an amended tax law requiring the use of
cash registers with calculating and recording capabilities and which are
approved for use by the Polish Fiscal Authorities. As a penalty for
noncompliance, Polish tax authorities had the right to disallow some value added
tax deductions for July and August 1995. Additionally, penalties and interest
could have been imposed on these disallowed deductions. Although IFFP's NCR Cash
Register System was a modern system, it could not be modified. IFFP replaced the
system with a new Siemen's system which complies with Polish regulations. In
December 1999, the Polish Tax Court ruled against IFFP but reduced the fine and
related penalties to 474,776 Polish zloty or approximately $114,000.

REGENESIS MATTER. We are a party to the following legal proceeding:
ELPOINT COMPANY, LLC AND GENNADY YAKOVLEV, VS. MITCHELL RUBINSON, MARILYN
RUBINSON, EDDA RUBINSON, NIGEL NORTON, JAMES F. MARTIN, LEON BLUMENTHAL, C.
LAWRENCE RUTSTEIN, SHULMAN & ASSOCIATES, INC., MANNY SCHULMAN, FRANKLYN
WEICHSELBAUM, JAMES MIRANTI, INTERNATIONAL FAST FOOD CORPORATION, DOMINO'S PIZZA
INTERNATIONAL, INC., REGENESIS HOLDINGS CORPORATION, United States District
Court, Northern District of California (Case No. 99-1107 CRB). In March 1999,
some of the shareholders of Regenesis Holdings Corporation (f/k/a QPQ
Corporation) ("Regenesis") filed a complaint against us and some of our senior
management and principal shareholders, including Mitchell Rubinson, our Chairman
of the Board and Chief Executive Officer, and James Martin, our President and
Chief Financial Officer. Regenesis formerly held the right to develop Domino's
Pizza stores in Poland. Certain former officers and principal stockholders of
Regenesis are officers and principal shareholders of our company. The complaint
alleges, among other things, that the defendants fraudulently transferred the
Domino's development rights to us, thereby causing Regenesis to lose value.
Additionally, the complaint alleges that we engaged in the misappropriation of
corporate opportunities of QPQ Corporation. We reached a settlement in this
matter and pursuant to such settlement, we must pay $300,000. An accrual for
this amount has been provided for in the 1999 consolidated financial statements.

We are 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 us.

15
<PAGE>

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

Our Annual Shareholders' Meeting was held on December 15, 1999. At the
Annual Meeting, the shareholders were asked to consider and vote upon the
following matters:

1. The election of four members to our Board of Directors to
serve until the 2000 Annual Meeting of Shareholders or until
their successors are duly elected and qualified; and

2. To consider and vote upon a proposal to increase the number of
shares of common stock which may be granted under our 1993
Stock Option Plan from 2,000,000 shares to 4,000,000 shares.

The following four members of the Board of Directors were duly elected:

DIRECTOR VOTES FOR VOTES WITHHELD
-------- --------- --------------
Mitchell Rubinson 43,428,729 23,960
Larry H. Schatz 43,428,729 23,960
James F. Martin 43,428,729 23,960
Mark Rabinowitz 43,428,729 23,960

The results of the vote on the proposal to increase the number of shares of
common stock which may be granted under our 1993 Stock Option Plan from
2,000,000 shares to 4,000,000 shares were as follows:

VOTES FOR VOTES AGAINST ABSTENTIONS
--------- ------------- -----------
42,431,810 0 20,879

16
<PAGE>

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

MARKET INFORMATION. Our common stock is listed on the NASD OTC Bulletin
Board under the symbol "IFFC." The following table sets forth, for the period
since January 1, 1998, the high and low closing bid quotations for the common
stock as reported by the NASD OTC Bulletin Board. The quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission, and may
not represent actual transactions.

HIGH LOW
---- ---
1998
----
First Quarter............................... $.55 $.31
Second Quarter.............................. $.85 $.43
Third Quarter............................... $.90 $.70
Fourth Quarter.............................. $1.03 $.72

1999
----
First Quarter............................... $.90 $.53
Second Quarter.............................. $.51 $.35
Third Quarter............................... $1.53 $.44
Fourth Quarter.............................. $.90 $.53

HOLDERS. As of March 24, 2000, there were 99 record holders of our
common stock. Management believes that there are over 600 beneficial holders of
our common stock.

DIVIDENDS. We have not paid any cash dividends on our common stock and
do not currently intend to declare or pay cash dividends in the foreseeable
future. We intend to retain any earnings that may be generated to provide funds
for the operation and expansion of our business.

Florida law provides that no distribution may be made to shareholders
if, after giving effect to such distribution, (a) the corporation would be
unable to pay its debts as they become due in the usual course of business, or
(b) 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 (a) financial
statements that are prepared on a basis of accounting principles and practices
that are reasonable under the circumstances or (b) 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.
In addition, IFFC has in the past failed to pay the dividends on its outstanding
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 preferred
stock. There is no assurance that we will be able to pay any future dividends on
either its preferred stock or common stock.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

Information contained in this Annual Report on Form 10-KSB contains
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. Such statements can be identified by
the use of forward-looking terminology such as "believes," "expects," "may,"
"will," "should," "could," "intends," "estimates," "projected," "contemplated"
or "anticipates" or the negative thereof or other variations thereon or
comparable terminology. No assurances can be given that the future results
covered by the forward-looking statements will be achieved. These statements, by
their nature, involve substantial risks and uncertainties, certain of which are

17
<PAGE>

beyond our control. The following factors and other factors described elsewhere
in this annual report could cause actual experience to vary materially from the
future results covered in such forward-looking statements:

- - the future growth of our business and our ability to comply with the
Burger King agreement and Domino's agreement;

- - our ability to improve levels of profitability; the sufficiency of cash
flow provided by our operations, investing and financing activities;

- - changes in our financial condition, and the economic, business and
political conditions in Poland;

- - the demand for our products and the ability of our third-party suppliers
to meet our quantity and quality requirements;

- - the ability to consummate joint ventures or other strategic associations
with third parties or lessors;

- - the ability to obtain suitable restaurant sites;

- - changes in the level of operating expenses and revenues;

- - changes in the present and future level of competition; and

- - our future liquidity and capital resource needs.

Other factors, such as the general state of the economy, could also
cause actual experience to vary materially from the matters covered in such
forward-looking statements. We disclaim any obligation to publicly announce the
results of any revisions to any forward-looking statements contained herein to
reflect future events or developments.

GENERAL

As of December 31, 1999, we had negative working capital of
approximately $3,718,320 and cash and cash equivalents of $383,531. Although we
believe that we have sufficient funds to finance our present plan of operations
through April 30, 2000, we cannot reasonably estimate how long we will be able
to satisfy our cash requirements. The capital requirements relating to
implementation of the Burger King and Domino's agreements are significant. Based
upon current assumptions, we will seek to implement our business plan utilizing
our existing cash and cash equivalents, cash generated from restaurant and store
operations, and available borrowing capacity on our bank credit facilities. To
satisfy the capital requirements of the Burger King and Domino's agreements, we
will require resources substantially greater than the amounts we presently have
or amounts that can be generated from our restaurant and store operations. There
can be no assurance that we will be able to obtain additional financing or that
additional financing will be available on acceptable terms to fund future
commitments for capital expenditures.

We currently operate 23 Burger King restaurants and 16 Domino's Pizza
stores in Poland. We have incurred losses and anticipate that we will continue
to incur losses until, at the earliest, we establish a number of restaurants and
stores generating sufficient revenues to offset our operating costs and the
costs of our proposed continuing expansion. There can be no assurance that we
will ever achieve profitability or be able to successfully establish a
sufficient number of restaurants to achieve profitability.

In July 1997, we purchased KP and PKP which currently own the exclusive
master franchise rights and commissary rights, and the individual store
franchises for Domino's Pizza stores in Poland. The acquisition was accounted
for under the purchase method of accounting, and the net assets acquired are
included in our consolidated balance sheet based upon their estimated fair
values at the date of acquisition. Results of operations of KP are included in
our consolidated statement of operations after the date of acquisition. The
excess of the net assets acquired over the purchase price was accounted for as a
reduction of furniture, equipment and leasehold improvements.

18
<PAGE>

In September 1998, we purchased the remaining 15% of the outstanding
capital stock of IFFP from the minority shareholder in exchange for $1.5 million
in cash, plus expenses associated with the purchase.

YEAR-ENDED DECEMBER 31, 1999 VS. YEAR-ENDED DECEMBER 31, 1998

RESULTS OF OPERATIONS. For the year ended December 31, 1999, we
generated sales of $15,098,313 and for the year ended December 31, 1998, we
generated sales of $8,426,104. Such amounts included sales of $10,886,141 in
1999 and $6,321,644 in 1998 for the Burger King restaurants and sales of
$4,212,172 in 1999 and $2,104,460 in 1998 for the Domino's Pizza stores. Burger
King restaurant sales increased by 72.2% in U.S. dollar terms and 95.4% in
Polish zloty terms for the year ended December 31, 1999 as compared to the year
ended December 31, 1998. The increase is primarily attributable to new
restaurants opened in 1999. The Domino's store sales increased by 100.2% in U.S.
dollar terms and 127.2% in Polish zloty terms for the year ended December 31,
1999 as compared to 1998. This increase is primarily attributable to new stores
opened coupled with same store sales growth of 20.3% in Polish zloty terms.

For the year ended December 31, 1999, our Burger King same restaurant
sales (further defined as restaurants opened for entire years of 1998 and 1999)
increased by approximately 2.8% in Polish zloty terms as compared to the year
ended December 31, 1998. Due to the devaluation of the zloty of approximately
12.2%, the Burger King same restaurant sales, in U.S. dollar terms, decreased
approximately 9.4% for the year ended December 31, 1999 as compared to the year
ended December 31, 1998. The zloty increase in same restaurant sales was
primarily attributable to television advertising commencing in March and ending
in June 1999. In U.S. dollar and Polish zloty terms, our Domino's same store
sales increased by approximately 20.3% and 6.0%, respectively, for the year
ended December 31, 1999 as compared to the year ended December 31, 1998. The
increase in same store sales was attributed to increased brand awareness in
Warsaw, Poland.

During the year ended December 31, 1999, we incurred food and packaging
costs of $5,560,064, payroll and related costs of $3,181,693, occupancy and
other operating expenses of $6,161,870 and depreciation and amortization
expenses of $3,115,531. During the year ended December 31, 1998, we incurred
food and packaging costs of $3,347,477, payroll and related costs of $1,608,283,
occupancy and other operating expenses of $2,963,262 and depreciation and
amortization expenses of $1,508,520.

Food and packaging costs applicable to Burger King restaurants were
38.5% of restaurant sales for the year ended December 31, 1999 and 41.3% of
restaurant sales for the year ended December 31, 1998. The 2.8% decrease as a
percentage of restaurant sales is primarily attributable to improved product
sourcing. Food and packaging costs applicable to Domino's Pizza stores for the
year ended December 31, 1999 were 32.4% of store sales and for the year ended
December 31, 1998 were 35.1% of store sales. The 2.7% decrease as percentage of
store sales was primarily attributable to greater purchasing power due to
increased sales in 1999.

Payroll and related costs applicable to Burger King restaurants for the
year ended December 31, 1999 were 20.5% of restaurant sales, and for the year
ended December 31, 1998 were 17.9% of restaurant sales. The 2.6% increase as a
percentage of restaurant sales was primarily as a result of higher payroll in
new restaurants during initial openings of each. Payroll and related costs
applicable to Domino's Pizza stores, which remained relatively stable, were
22.6% of store sales for the 1999 fiscal year, and were 22.8% of store sales for
the 1998 fiscal year.

Occupancy and other operating expenses applicable to Burger King
restaurants for the year ended December 31, 1999 were 42.6% of restaurant sales,
and for the year ended December 31, 1998 were 31.9% of restaurant sales. The
10.7% increase as a percentage of restaurant sales is primarily attributable to
increases in advertising expense, utilities and repairs and maintenance.
Occupancy and other operating expenses applicable to Domino's Pizza stores for
the 1999 fiscal year were 36.2% of store sales, and for the 1998 fiscal year
were 45.1% of store sales. The 8.9% decrease as a percentage of store sales was
primarily attributable to higher sales and stable costs.

19
<PAGE>

Depreciation and amortization expense applicable to Burger King
restaurants as a percentage of restaurant sales was 22.0% in the year ended
December 31, 1999 and 17.5% in the year ended December 31, 1998. The 4.5%
increase as a percentage of restaurant sales is primarily attributable to the
increase in the number of Burger King restaurants. Depreciation and amortization
expense applicable to Domino's Pizza stores as a percentage of store sales was
17.1% for the 1999 fiscal year and 19.3% for the 1998 fiscal year. The 2.2%
decrease was primarily due to increased sales.

General and administrative expenses for the year ended December 31,
1999 were 32.0% of sales and for the year ended December 31, 1998 were 39.5% of
sales. These percentages include $1,705,675 for fiscal 1999 and $1,410,458 for
fiscal 1998 applicable to the Burger King division and $553,406 for fiscal 1999
and $297,223 for fiscal 1998 applicable to the Domino's division. The 7.5%
decrease as a percentage of sales is primarily attributable to the increase in
sales in 1999. For the year ended December 31, 1999, general and administrative
expense included salary expenses of $1,306,742; corporate overhead expenses of
$3,498,241, and depreciation and amortization of $28,871. For the year ended
December 31, 1998, general and administrative expenses include salary expenses
of $1,149,363; corporate overhead expenses of $1,980,599, and depreciation and
amortization of $197,035. The $1,517,642 increase in corporate overhead expenses
is primarily attributable to costs incurred to secure and modify our new credit
facility, legal fees and settlement costs associated with the Regenesis
litigation matter, and investor relations fees.

In the fourth quarter of 1999, we recorded asset impairment charges
totaling $2,511,310 related to the write-off of costs in excess of the carrying
value of assets acquired and asset write-offs related to three store closings.
As described in Note 2 to the Consolidated Financial Statements, we have a
history of net losses and have accumulated deficit of $35,374,274 as of December
31, 1999. As a result, we determined that the carrying value of cost in excess
of net assets acquired would not be recoverable and have recorded a $1,448,033
impairment charge to write off the asset.

During 1999, we committed to a plan to close three Burger King
locations, of which two were closed in early 2000 and one is scheduled to close
in the first half of 2000. In connection with these store closings, we have
recorded asset impairment charges totaling $1,063,277. These charges primarily
represent the carrying value of abandoned buildings, fixtures and leasehold
improvements for the closed locations. Because our buildings are located on
leased properties, we will not be able to market and sell the properties.

For the year ended December 31, 1999, we generated a net loss of
$13,729,306 or $.31 per share of our common stock compared to a net loss of
$5,872,136 or $.14 per share of our common stock for the year ended December 31,
1998.

For the years ended December 31, 1999 and 1998, interest and other
income were comprised as follows:

YEAR ENDED DECEMBER 31,
--------------------------
1999 1998
---- ----
Interest income........................... $128,846 $822,029
Reduction in VAT penalty.................. 426,139 -
All other, net............................ 131,271 66,203
Total..................................... $686,256 $888,232
======== ========

All other, net includes various non-recurring charges and credits not
specifically related to operating activity.

20
<PAGE>

Interest expense is comprised as follows:
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31,
-----------------------
1999 1998
---- ----
<S> <C> <C>
Interest expense on subordinated convertible debentures........... $248,040 $ 258,375
Amortization of debt issuance costs............................... 220,230 93,034
Accretion of discount on 11% convertible senior subordinated
discount notes............................................... 456,782 2,290,522
Write-off of deferred financing costs............................. 1,532,338 -
Interest expense on bank facilities............................... 518,869 173,041
Less: capitalized interest....................................... (94,038) (142,658)
Total ....................................................... $2,882,221 $ 2,672,314
========== ===========
</TABLE>

Our interest expense on bank facilities was $518,869 for the year ended
December 31, 1999 and $173,041 for the year ended December 31, 1998. The
$345,828 increase is attributable to new bank borrowings under the Citibank
credit facility during the 1999 fiscal year.

In 1999, we exchanged $17,900,000 principal amount of our 11%
Convertible Senior Subordinated Discount Notes for 158,134 shares of Series B
Convertible Preferred Stock. Accordingly, deferred costs related to the
exchanged notes were written off.

LIQUIDITY AND CAPITAL RESOURCES. To date, our business operations have
been principally financed by proceeds from public offerings of our 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 settlement of the Burger King litigation, and proceeds from the
private sale of our 11% convertible notes.

Net cash used in operating activities increased from $1,192,863 to
$3,844,872 for the years ended December 31, 1998 and 1999, respectively. The
increase is primarily attributable to increased losses from operations in 1999
which were partially offset by a reduction in accounts receivable.

Net cash flows used in investing activities decreased from $14,835,750
for the year ended December 31, 1998 to $6,061,453 for the year ended December
31, 1999. The decrease is primarily attributable to fewer restaurant opening
costs in 1999.

Net cash provided by financing activities increased from $1,394,172 for
the year ended December 31, 1998 to $6,395,279 for the year ended December 31,
1999. The increase is attributable to new bank borrowings.

As described in Note 13 to the consolidated financial statements, we
have significant commitments to develop restaurants in accordance with the
Burger King and Domino's agreements. We have sustained losses from operations
since our incorporation in December 1991. For the year ended December 31, 1999,
we reported net losses of $13,729,306 and for the year ended December 31, 1998,
we reported net losses of $5,872,136. At December 31, 1999, we had an
accumulated deficit of $35,374,274 and a shareholders' deficit of $411,287.
These factors raise substantial doubt about our ability to continue as a going
concern. The financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should we be unable to continue
as a going concern.

We believe that cash flows from existing stores, when combined with
existing financial resources and drawings on our $10,000,000 line of credit
secured by Burger King (see Note 2 to the consolidated financial statements),
will be sufficient to fund operations through at least April 30, 2000. However,
no assurance can be given that our plans will be achieved. Further, no assurance
can be given that the cash flows from existing and new stores will be sufficient
to fund operations through April 30, 2000. We are seeking to obtain additional
equity or debt financing to fund operating losses and our commitment to develop
new Burger King restaurants and Domino's Pizza stores. No assurance can be given
that such financing will be obtained or that it can be obtained on favorable
terms. The failure to raise additional capital would require us to curtail or
cease operations.

21
<PAGE>

BURGER KING AGREEMENT AND DOMINO'S AGREEMENT - Our material commitments
for capital expenditures in the restaurant and store business relate to the
provisions of the Burger King and Domino's development agreements. See "Business
- - Burger King Agreement and Standard Franchise Agreements" and "Domino's
Agreement and Standard Franchise Agreements" for additional information
regarding these agreements.

CONVERTIBLE NOTES - In November 1997, we sold $27,536,000 of our 11%
Convertible Senior Subordinated Discount Notes Due October 31, 2007 (the "11%
convertible notes") in a private offering. Interest is payable semi-annually, in
cash, on April 30 and October 31 of each year, commencing April 30, 2001. The
carrying value of the 11% convertible notes is as follows at December 31:

<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Face amount of notes at maturity.................................. $9,636,000 $27,536,000
Unamortized discount to be accreted as interest expense and
added to the original principal balance of the notes over a
period of three years........................................ (817,468) (4,890,798)
------------ ------------
Carrying value.................................................... $8,818,532 $22,645,202
=========== ============
</TABLE>

We received net proceeds of $17,662,174 after reduction of the face of
the 11% convertible 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,
we also issued to the placement agent 500,000 shares of common stock which were
valued at $150,000.

The 11% convertible notes are redeemable at our option, 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 (as such term is defined in the note
indenture) 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 11% convertible notes are convertible, at the option of the
holder, into shares of common stock at any time after November 1998. The number
of shares of common stock issuable upon conversion of the 11% convertible notes
is equal to the accreted value of the 11% convertible 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 11% convertible notes will increase as the
accreted value of such notes increases. In addition, if the best bid offered
price on the NASD OTC Bulletin Board on the days when transactions in the common
stock are not effected, or on such days as transactions are effected on the
Bulletin Board, 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 11% convertible notes is effective, all of the 11% convertible
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 SALE PRICE
------------------- ------------------
October 31, 1999............................ $2.80
October 31, 2000............................ $3.25

On August 31, 1999, $17,900,000 of the 11% convertible notes were
exchanged for an aggregate of 158,134 newly-issued shares of our Series B
Preferred Stock. Additionally, in October 1999, the remaining holders of the 11%
convertible notes agreed to amend such notes to provide that interest earned on
the 11% convertible notes from October 31, 2000 to October 31, 2003 will be paid
in 11% convertible notes, rather than cash. Interest payable thereafter will be
payable in cash.

The note indenture contains certain customary covenants and the
noteholders were granted registration rights. Additionally, in the event of a
change of control, as defined in the note indenture, the holders of the 11%
convertible notes will have the right to require us to purchase the 11%
convertible notes at a purchase price of 101% of their accreted value on the
date of such purchase, plus accrued interest.

22
<PAGE>

DISPUTE WITH POLISH FISCAL AUTHORITIES - See "Item 3. Legal Proceedings
- - Polish Fiscal Authority Disputes" for a description of our dispute with Polish
fiscal authorities.

POLISH BANK ACCOUNTS - As of December 31, 1999, we had approximately
$334,009 in Polish bank accounts and as of March 23, 2000, we had approximately
$463,980 in Polish bank accounts, with substantially all of such funds held as
U.S. dollar denominated deposits.

CREDIT FACILITIES - We have also financed our operations through the
use of credit facilities.

In January 1993, IFFP entered into a revolving credit facility with
American Bank of Poland S.A. ("AmerBank") totaling 300,000 zlotys (approximately
$72,319 at December 31, 1999 exchange rates). Borrowings under the AmerBank
credit facility were secured by a guarantee of our company and bore interest at
a monthly adjusted variable rate approximately equal to AmerBank's prime rate.
In April 1996, the credit available was decreased to 200,000 zlotys
(approximately $48,215 at December 31, 1999 exchange rates) and in March 1997,
the credit facility was further decreased to 100,000 zlotys (approximately
$24,106 at December 31, 1999 exchange rates). The credit facility is due on
April 1, 2000. On December 31, 1999 and March 23, 2000, the facility had no
outstanding balance.

In September 1996, PKP entered into a revolving credit facility with
AmerBank totaling 100,000 zlotys (approximately $24,106 at December 31, 1999
exchange rates). The note is secured by our guarantee. The credit facility is
due on June 1, 2000. The balance on this note as of December 31, 1999 was $689
and there was no balance outstanding as of March 23, 2000.

In May 1997, we entered into a $999,000 credit facility with Totalbank
which is collateralized by $999,000 of certificates of deposit. The credit
facility bears interest at 6.5% per annum and was originally scheduled to mature
in August 1998. The credit facility was renewed in February 2000 for six months
under the same terms and is scheduled to mature in August 2000. The outstanding
balance of the facility as of December 31, 1999 and March 24, 2000 was $999,000.

In August 1997, we executed a credit agreement with AmerBank in the
amount of $950,000. Interest is payable monthly at the prevailing one month
LIBOR rate plus 2.75% (9.25% at December 31, 1999). Commencing in March 1998,
the loan is being repaid in monthly installments of $32,000 for 29 months with a
balloon payment of $22,000 due on August 12, 2000. The loan is secured by all
existing restaurant assets and our guarantee. The balance of this credit
facility as of December 31, 1999 was $246,000 and as of March 24, 2000 was
$150,000.

In April 1998, PKP entered into a $300,000 development loan with
AmerBank for the development of its Domino's stores. Borrowings under this
credit facility are secured by: (a) fixed assets of each new restaurant
financed; and (b) our guarantee. The loan is being repaid in ten equal quarterly
installments of $30,000 starting in December 1998, with a final payment due at
maturity (March 26, 2001). Interest is paid monthly at the prevailing one month
LIBOR rate plus 31/8% (9.63% at December 31, 1999). As of December 31, 1999 and
March 24, 2000, approximately $146,363 was outstanding on the facility.

In June 1998, IFFP entered into a development loan in the principal
amount of $1.3 million with AmerBank. Borrowings under this credit facility are
to be made until June 18, 2000 and are secured by: (a) fixed assets of each new
restaurant financed; and (b) our guarantee. The loan is scheduled to be repaid
in thirty-five equal monthly 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% (9.0% at
December 31, 1999). According to the terms of the agreement, the proceeds of the
loan are to be used to finance up to half of the costs of furnishing and
commencing operation of Burger King restaurants operated by IFFP. In October
1998, we executed an amendment to this facility with AmerBank, increasing the
borrowing limit to $1.5 million. The scheduled loan payments are as follows:
thirty-five equal monthly installments of $41,666 starting in June 2000 with a
final payment of $41,690 due at maturity on May 18, 2003. As of December 31,
1999 and March 24, 2000, $1,500,000 was outstanding on this credit facility.

23
<PAGE>

In February 1999, IFFP entered into a line of credit agreement with
Citibank (Poland) S.A. under which Citibank granted IFFP a loan in the amount of
$5,000,000. The purpose of the line of credit was to finance the construction of
nine Burger King restaurants. The line of credit is priced at 0.8% above LIBOR
(7.3% at December 31, 1999) and was originally scheduled to mature on January
15, 2000. In order for IFFP to enter into the credit agreement with Citibank,
holders of our outstanding 11% convertible notes were required to waive
applicable provisions of the note indenture. As compensation for the waiver, the
noteholders were issued an aggregate of 204,585 shares of our common stock, with
a fair value of $.56 per share.

The line of credit is guaranteed by Burger King and we granted Burger
King a security interest in the outstanding shares of IFFP. As a condition to
the guarantee, Burger King required that we, IFFP and Mitchell Rubinson, the
Chairman of the Board and Chief Executive Officer of our company and a principal
shareholder, enter into a general release in favor of Burger King for any and
all matters occurring before the date of the guarantee. Additionally, we and
IFFP entered into a reimbursement agreement (the "Reimbursement Agreement")
under which we agreed to reimburse Burger King for any and all amounts paid out
by Burger King under the guaranty and all costs and expenses incurred by Burger
King in connection with the enforcement of its rights under the Reimbursement
Agreement. Burger King also required that we, IFFP and Mitchell Rubinson execute
a general release of Burger King relating to any matters that occurred before
the execution of the Credit Agreement.

Additionally, Mr. Rubinson entered into a purchase agreement with
Burger King which provides that if IFFP and our company default on our
obligations under the Reimbursement Agreement and Burger King takes possession
of the IFFP shares, he is required to purchase the IFFP shares from Burger King
for an amount equal to all amounts paid out by Burger King under the guaranty
and all costs and expenses incurred by Burger King in connection with the
enforcement of its rights under the Reimbursement Agreement. Mr. Rubinson
received a fee of $150,000 from our company in connection with the Purchase
Agreement.

In October 1999, IFFP increased the amount of the line of credit to
$8,000,000. IFFP may increase the line of credit in increments of $500,000 to an
aggregate of $10,000,000 if it meets specified criteria, including monthly debt
reduction. As of December 31, 1999, IFFP met such criteria. The maturity date of
the line of credit was extended to December 2002. As of December 31, 1999 and
March 24, 2000, $6,900,583 and $8,000,000 was outstanding on this facility.
Drawings on the line in excess of the original $5,000,000 bear interest at 0.95%
above LIBOR. The guarantee automatically terminates in October 2002 and Burger
King may withdraw its guarantee if the net debt movement of IFFP during the
12-month period ending October 2001 is more than 10% less than required. Burger
King may also withdraw its guarantee of incremental amounts over $8,000,000 if
the net debt movement is more than 30% less than required. In connection with
the increase of the line of credit, all of the prior transaction documents were
re-executed, including the purchase agreement and the release. Additionally, as
security of the line of credit, Burger King required that Mitchell Rubinson
enter into a personal guaranty with Burger King and pledge 5,000,000 shares of
our common stock owned by him. In connection with these matters, we entered into
a reimbursement and fee agreement whereby we agreed to reimburse Mr. Rubinson
for all amounts paid by him under his personal guaranty and to pay him a fee
equal to 3% annually of the amount being guaranteed. As of the date hereof, Mr.
Rubinson has not been paid under this agreement. In order for IFFP to increase
the line of credit, holders of the outstanding 11% convertible notes were
required to waive applicable provisions of the note indenture.

IFFP - In December 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. In September 1998, the Company
purchased the remaining 15% of the outstanding capital stock of IFFP from the
minority shareholder in exchange for $1.5 million in cash, plus expenses
associated with the purchase.

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 affect the value of currencies
generally. At December 31, 1999, the exchange rate was 4.1483 zlotys per U.S.
dollar. The accounts of our Polish subsidiaries are maintained using the Polish
zloty.

24
<PAGE>

Our 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, 1998 and 1999, the rates of inflation
and devaluation improved. For the years ended December 31, 1995, 1996, 1997,
1998 and 1999, the annual inflation rate in Poland was 21.6%, 19.5%, 13.0%, 8.6%
and 7.3% respectively, and as of December 31, 1995, 1996, 1997, 1998 and 1999,
the exchange rate was 2.468, 2.872, 3.514, 3.494 and 4.1483 zlotys per dollar,
respectively. Payment of interest and principal on our 9% convertible
debentures, 11% convertible notes and payment of franchise fees to Burger King
and Domino's for each restaurant and store opened are in United States currency.
Additionally, we are dependent on certain sources of supply which require
payment in European or United States currencies. Since our revenues from
operations will be in zlotys, we are subject to the risk of currency
fluctuations. We have and intend to maintain substantially all of our unutilized
funds in United States or Western European currency denominated securities
and/or European Currency Units. There can be no assurance that we will
successfully manage our exposure to currency fluctuations or that such
fluctuations will not have a material adverse effect our financial condition,
liquidity or results of operations.

Thus far, our revenues have been used to fund restaurant operations and
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 us 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. The "Year 2000
Issue" is the result of computer programs that were written using two digits
rather than four to define the applicable year. If our computer programs with
date-sensitive functions are not Year 2000 compliant, they may recognize a date
"00" as the Year 1900 rather than the Year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including a
temporary inability to process transactions, inability to interchange
information with connecting railroads or engage in similar normal business
activities.

To date, we have not experienced any immediate adverse impact on our
operations from the transition to the Year 2000. However, we cannot assure you
that our operations have not been affected in a manner that is not yet apparent
or in a manner that will arise in the future, or that we will not incur
additional Year 2000 expenses. In addition, some computer programs that were
date sensitive to the Year 2000 may not have been programmed to process the Year
2000 as a leap year, and negative effects from this remain unknown. As a result,
we will continue to monitor our Year 2000 compliance and the Year 2000
compliance of our suppliers and customers. However, we do not anticipate any
Year 2000 problems that are reasonably likely to have a material adverse effect
on our operations.

To date, we estimate that we have spent approximately $50,000 on Year
2000 efforts across all areas and expect to spend a total of approximately
$100,000 when complete. We expect to fund Year 2000 costs through operating cash
flows and proceeds from debt and equity financings. All system modification
costs associated with Year 2000 will be expensed as incurred.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of Effective Date of FASB Statement
No. 133". SFAS No. 137 defers for one year the effective date of SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
will now apply to all fiscal quarters of all fiscal years beginning after June
15, 2000. SFAS No. 133 will require us to recognize all derivatives on the
balance sheet at fair value. Derivatives that are not hedges must be adjusted to
fair value through income. We will adopt SFAS No. 133 as required for our first
quarterly filing of fiscal year 2001. We believe the adoption of this Statement
will not have a material effect on our results of operations and financial
position.

25
<PAGE>

ITEM 7. FINANCIAL STATEMENTS.

The information included in Appendix A hereto is incorporated herein by
reference.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

26
<PAGE>

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

EXECUTIVE OFFICERS AND DIRECTORS

Our executive officers and directors are as follows:

NAME AGE POSITION
---- --- --------
<S> <C> <C>
Mitchell Rubinson(1)(2)(3)............... 52 Chairman of the Board and Chief Executive Officer
James F. Martin.......................... 39 President, Chief Operating Officer, Chief Financial
Officer and Director
Mark Rabinowitz(1)(2)(3)................. 52 Director
Larry H. Schatz(1)(2)(3)................. 54 Vice Chairman of the Board

<FN>
- --------------------------
(1) Member of the Audit Committee.
(2) Member of the Stock Option Committee.
(3) Member of the Nomination Committee.
</FN>
</TABLE>

Mitchell Rubinson has served as our Chairman of the Board and Chief
Executive Officer since our 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 served as the Chairman of the Board,
Chief Executive Officer and President of QPQ Corporation (now known as Regenesis
Holdings, Inc.) from July 1993 to May 1997.

James F. Martin has served as our President, Chief Operating Officer
and Chief Financial Officer since November 1999 and a director since May 1997.
Mr. Martin has served as Vice President, Chief Financial Officer and Treasurer
from May 1997 to October 1999, and as Director of Finance for our Polish
subsidiaries from November 1993 through February 1995. Mr. Martin served as
Chief Financial Officer of QPQ Corporation (now known as Regenesis Holdings,
Inc.) 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 has served as a director since January 1996. Since
1983, Dr. Rabinowitz's 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 (now
known as Regenesis Holdings, Inc.) from January 1996 to May 1997. Dr. Rabinowitz
resigned his position as a director effective April 3, 2000.

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

COMPENSATION OF DIRECTORS

We generally do not pay directors' fees, but reimburse all directors
for their expenses in connection with their activities as directors. Directors
who are also our employees do not receive additional compensation for their
services as directors. Mr. Schatz receives $25,000 per annum for serving as Vice
Chairman of the Board.

27
<PAGE>

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers, and persons who own more than 10% of our
outstanding common stock, to file with the Securities and Exchange Commission
("SEC") initial reports of ownership and reports of changes in ownership of
common stock. Such persons are required by SEC regulation to furnish us with
copies of all such reports they file. To our knowledge, based solely on a review
of the copies of such reports furnished to our Company and written
representation that no other reports were required, all Section 16(a) filing
requirements applicable to our officers, directors and 10% beneficial owners
have been complied with.

ITEM 10. EXECUTIVE COMPENSATION.

EXECUTIVE COMPENSATION

The following table sets forth, for the fiscal years ended December 31,
1997, 1998 and 1999, the aggregate compensation paid by our Company to Mitchell
Rubinson, our Chairman of the Board and Chief Executive Officer (the "Named
Executive Officer"). None of our other executive officers' total annual salary
and bonus for the year ended December 31, 1998 exceeded $100,000.

ANNUAL COMPENSATION (1) LONG TERM COMPENSATION
AWARDS PAYOUTS
OTHER ANNUAL SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION OPTIONS/SARS (#)(2) COMPENSATION
--------------------------- ---- ------ ------------ ------------------- ------------
<S> <C> <C> <C> <C> <C>
Mitchell Rubinson.............. 1999 $229,962 $16,658(5) - -
Chairman of the Board and Chief 1998 $212,928 $20,885(3) - -
Executive Officer 1997 $192,163 $14,216(4) - -
James F. Martin................ 1999 $106,791 $19,229(6) 1,000,000 -
President and Chief Financial 1998 $69,862 $4,438(7) - -
Officer 1997 $51,731 $5,638(8) - -

<FN>
- ----------------
(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/SAR Value Table" for additional
information concerning options granted. We have not granted any stock
appreciation rights.
(3) Represents an automobile allowance of $12,000 and medical insurance
premiums of $8,865.
(4) Represents an automobile allowance of $12,000 and medical insurance
premiums of $2,216.
(5) Represents an automobile allowance of $12,000 and medical insurance
premiums of $4,658.
(6) Represents housing allowance of $18,000 and medical insurance premiums of
$1,229.
(7) Represents medical insurance of $1,638 and automobile allowance of $2,800.
(8) Represents medical insurance of $1,638 and automobile allowance of $4,000.
</FN>
</TABLE>

28
<PAGE>

OPTION/SAR GRANTS TABLE

The following table sets forth certain information concerning grants of
stock options made during 1999 to each of the Named Executive Officers. We did
not grant any stock appreciation rights in 1999.

OPTION/SAR GRANTS IN FISCAL YEAR 1999

NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR BASE
OPTIONS/SARS EMPLOYEES PRICE ($/SH) EXPIRATION
NAME GRANTED IN FISCAL YEAR DATE
---- ------- -------------- ----------------- -----------

<S> <C> <C> <C> <C>
Mitchell Rubinson.......................... -- -- -- --
James Martin............................... 1,000,000 100% $.66 November 2009
</TABLE>

AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-ENDED OPTION/SAR VALUE TABLE

The following table sets forth information concerning unexercised stock
options held by the Named Executive Officer as of December 31, 1999. No stock
options were exercised by the Named Executive Officer during the year ended
December 31, 1999. 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, 1999(#) DECEMBER 31, 1999($)(1)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Mitchell Rubinson ....................... 150,000 0 $45,000 $0
James Martin ............................ 120,000 1,080,000 $18,000 $52,000

<FN>
- ----------------
(1) The closing bid quotation for our common stock as reported by the NASD OTC
Bulletin Board on December 31, 1999 was $.70.
</FN>
</TABLE>

EMPLOYMENT AGREEMENTS

In January 2000, we entered into a new employment agreement with Mr.
Rubinson, Chairman of the Board and Chief Executive Officer, for a term of three
years. The agreement provides for a minimum annual salary of $250,000 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 as determined by the Board of Directors. 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 the Board of Directors. 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. For each day of vacation that Mr. Rubinson elects not to take,
pursuant to the employment agreement, we have agreed to 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 our 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 and is eligible to receive stock option grants
under our stock option plans in the discretion of the Board of Directors or
Stock Option Committee. 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. In the event Mr. Rubinson's employment is terminated by
reason of his death or as the result of a mental or physical incapacity, Mr.
Rubinson will receive a lump sum payment of $250,000.

29
<PAGE>

Our employment agreement with James F. Martin, effective November 1,
1999, provides that he will serve as our President, Chief Operating Officer and
Chief Financial Officer, for an initial term of three years. His annual salary
is $160,000 during the first year, subject to a 10% annual increase for the
remaining two years if specified criteria are met. Mr. Martin is also eligible
for an annual bonus equal to 3% of net earnings of our Polish subsidiaries, if
specified criteria are met. 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 the use of an
automobile plus related expenses, including, without limitation, insurance, gas
and repairs. Mr. Martin is eligible to receive stock option grants under our
stock option plans in the discretion of the Board of Directors or Stock Option
Committee. We have granted Mr. Martin stock options to acquire 1,000,000 shares
of our common stock at an exercise price of $.66 per share, these options to be
exercisable in whole or in part and cumulatively as follows (provided in each
case that Mr. Martin is an employee of our company on the date of exercise): (1)
20% one year after the effective date of the employment agreement; (2) 60% two
years after the effective date of the employment agreement; and (3) 100% three
years after the effective date of the employment agreement. Mr. Martin has
200,000 additional stock options which he received under a previous employment
agreement and which are subject to a similar vesting schedule. Mr. Martin'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 a severance
payment of $50,000 in the event Mr. Martin's employment is terminated without
cause. 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 requires that he not compete or engage in any business
competitive with our business for the term of the agreement and for a period of
two years thereafter.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth, as of March 24, 2000, the number of
shares of our common stock which were owned beneficially by:

(a) each person who is known by us to own beneficially more than 5% of
our common stock,

(b) each director,

(d) all directors and executive officers as a group.

Unless otherwise indicated, the address of each of the listed
beneficial owners identified is c/o 1000 Lincoln Road, Suite 200, Miami Beach,
Florida 33139. Under Rule 13d-3 of the exchange act, certain shares may be
deemed to be beneficially owned by more than one person. In addition, shares are
deemed to be beneficially owned by a person if the person has the right to
acquire the shares 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 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 March 24,
2000.

30
<PAGE>

PERCENTAGE OF
NAME AND ADDRESS OF AMOUNT AND NATURE OF OUTSTANDING SHARES
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OWNED
---------------- -------------------- -----
DIRECTORS AND EXECUTIVE OFFICERS:
<S> <C> <C>
Mitchell Rubinson.............................. 27,559,211(1) 60.4%
Mark Rabinowitz................................ 336,197(2) *
James F. Martin................................ 1,206,000(3) *
Larry H. Schatz................................ 250,000(4) *
All directors and executive officers as a
group (four persons)........................ 29,351,408 62.4%
OTHER 5% OWNERS:
Marilyn Rubinson............................... 2,754,363(5) 6.0%
Edda Rubinson.................................. 22,409,211(6) 49.2%
Joel Hirschhorn................................ 2,363,000 5.2%
Nigel Norton................................... 4,010,000(7) 8.8%
24 Avenue Princess Grace
Monte Carlo, Monaco
Pilgrim Investments, Inc....................... 24,092,697(8) 34.7%
40 N. Central, Suite 1200
Phoenix, Arizona 85004
Bank of America Corporation.................... 3,951,867(9) 8.0%
100 North Tryon Street
Charlotte, North Carolina 28255
Legg Mason High Yield Portfolio................ 9,885,431(10) 17.9%
117 E. Colorado Blvd.
Pasadena, California 91105
Burger King Corporation........................ 4,000,000(11) 8.1%
17777 Old Cutler Road
Miami, Florida 33157

<FN>
- -----------------------
* Less than 1%
(1) Includes 22,409,211 shares held jointly with his wife, Edda Rubinson, and
options to purchase 150,000 shares of common stock granted to Mr. Rubinson
that are immediately exercisable at an exercise price of $.40 per share.
(2) 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 and options to purchase 200,000 shares of common stock granted to
Dr. Rabinowitz that are immediately exercisable at an exercise price of
$.75 per share.
(3) Includes options to purchase 40,000 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,
options to purchase 67,901 shares of common stock that vest over a three
year period beginning in July 1998 at an exercise price of $.81 per share
and options to purchase 1,000,000 shares of common stock granted to Mr.
Martin pursuant to an employment agreement that vest over a three year
period beginning in November 1999 at an exercise price of $.66.
(4) Reflects 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 and options to purchase 200,000 shares of common
stock granted to Mr. Schatz that are immediately exercisable at an exercise
price of $.75 per share.
(5) Marilyn Rubinson is Mitchell Rubinson's mother; however, Mitchell Rubinson
disclaims beneficial ownership of all shares of common and preferred stock
owned by her.
(6) These shares are held jointly with Mitchell Rubinson, Edda Rubinson's
husband.
(7) Nigel Norton is Mitchell Rubinson's brother-in-law.
(8) Includes shares of common stock which would be acquired upon the conversion
of an aggregate of 158,134 shares of Series B Preferred Stock held by
Pilgrim Balance Sheet Opportunities Fund, Pilgrim High Total Return Fund
and Pilgrim High Total Return Fund II. Pilgrim Investments, Inc. is the
parent company of such funds.

31
<PAGE>

(9) As reported in the shareholder's Schedule 13G filed with the Securities and
Exchange Commission on March 21, 2000. Reflects 3,951,867 shares of common
stock beneficially owned by Bank of America Corporation, 3,931,429 shares
of common stock beneficially owned by BankAmerica Investment Corporation,
20,438 shares of common stock beneficially owned by NB Holdings
Corporation, 20,438 shares of common stock beneficially owned by
NationsBanc Montgomery Holdings Corporation and 20,438 shares of common
stock beneficially owned by Banc of America Securities LLC.
(10) Includes shares of common stock which would be acquired upon the conversion
of 11% convertible notes held by such entity based on the principal amount
at maturity of such notes.
(11) Reflects shares of common stock which would be acquired upon the exercise
of a warrant to acquire 4,000,000 shares of common stock at an exercise
price of $2.00 per share, which expires on October 21, 2004.

</FN>
</TABLE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

In February 1999, IFFP entered into a credit agreement with Citibank
(Poland) S.A. under which Citibank granted IFFP a line of credit in the amount
of $5,000,000. The line of credit is guaranteed by Burger King and we granted
Burger King a security interest in the outstanding shares of IFFP. As a
condition to the guarantee, Burger King required that we and Mitchell Rubinson
enter into a general release in favor of Burger King for any and all matters
occurring before the date of the guarantee. In order for IFFP to enter into the
line of credit, holders of the outstanding 11% convertible notes were required
to waive applicable provisions of the note indenture. As compensation for the
waiver, the noteholders were issued an aggregate of 204,585 shares of our common
stock at a value of $.56 per share.

Additionally, in connection with this transaction, Mitchell Rubinson
entered into a purchase agreement with Burger King which provides that (1) if we
default on the line of credit and Burger King takes possession of the IFFP
shares and (2) we are unable to repurchase the shares of IFFP from Burger King,
Mr. Rubinson is required to purchase the IFFP shares from Burger King for an
amount equal to all amounts paid out by Burger King plus costs and expenses
incurred by Burger King in connection with the enforcement of its rights under a
reimbursement agreement with us. In connection with the purchase agreement, we
paid Mitchell Rubinson a fee of $150,000.

In October 1999, IFFP increased the amount of the line of credit to
$8,000,000. Additionally, the line of credit may be increased to a maximum to
$10 million if IFFP meets specified criteria, including monthly debt reduction.
As of March 24, 2000, IFFP did meet such criteria. The guarantee automatically
terminates in October 2002 and Burger King may withdraw its guarantee under
certain circumstances. All of the prior transaction documents were re-executed,
including the purchase agreement and the release. Burger King was given a
warrant to acquire 4,000,000 shares of our common stock at a price per share of
$2.00 in connection with its guarantee. The warrant is immediately exercisable
and expires in October 2004. Additionally, as security of the line of credit,
Burger King required that Mitchell Rubinson enter into a personal guaranty with
Burger King and pledge 5,000,000 shares of our common stock owned by him. In
connection with these matters, we entered into a reimbursement and fee agreement
whereby we agreed to reimburse Mr. Rubinson for all amounts paid by him under
his personal guaranty and to pay him a fee equal to 3% annually of the amount
being guaranteed. As of the date hereof, Mr. Rubinson has not been paid under
this agreement.

In order for IFFP to increase the line of credit, holders of the
outstanding 11% convertible notes were required to waive applicable provisions
of the note indenture. In addition, the note holders agreed that the notes would
be amended to provide that interest earned on the notes from October 31, 2000 to
October 31, 2003 will be paid in additional 11% convertible notes. Interest
payable thereafter will be payable in cash.

In August 1999, $17,900,000 in stated principal amount at maturity of
the 11% convertible notes held by the Pilgrim Balance Sheet Opportunities Fund,
Pilgrim High Total Return Fund and Pilgrim High Total Return Fund II were
exchanged for an aggregate of 158,134 newly issued shares of our Series B
Convertible Preferred Stock.

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

32
<PAGE>

PART IV

ITEM 13. EXHIBITS, LISTS AND REPORTS ON FORM 8-K.

(a) Exhibits:

EXHIBIT DESCRIPTION
------- -----------

3.1 Articles of Incorporation, as amended (Incorporated by reference
to the Exhibit 3.1 filed with the Form 10-KSB for the year ended
December 31, 1994)

3.2 Bylaws (Incorporated by reference to the Exhibit 3.2 filed with
the Registration Statement on Form S-1 (File No. 33-46784))

3.3 Amendment to Amended and Restated Articles of Incorporation

4.1 Specimen Common Stock Certificate (Incorporated by reference to
the Exhibit 3.3 filed with the Registration Statement on Form
S-1 (File No. 33-46784))

4.3 Form of Indenture relating to 9% Convertible Subordinated
Debentures Due 2007 (including form of Debenture) (Incorporated
by reference to the Exhibit 4.3 filed with our Registration
Statement on Form S-1 (File No. 33-55284))

4.5 Warrant Agreement, dated January 14, 1994, between IFFC and
Continental Stock Transfer & Trust Company, including form of
Warrants (Incorporated by reference to Exhibit 4.5 of the same
number filed with the Form 10-KSB for the year ended December
31, 1993)

4.6 Unit Certificate (Incorporated by reference to Exhibit 4.6 of
the same number filed with the Form 10-KSB for the year ended
December 31, 1993)

4.7 Series A 6% Convertible Preferred Stock Certificates
(Incorporated by reference to Exhibit 4.7 filed with the Form
10-KSB for the year ended December 31, 1994)

10.1* 1993 Stock Option Plan (Incorporated by reference to the Exhibit
10.4 filed with our Registration Statement on Form S-1 (File No.
33-46784))

10.2* 1993 Directors Stock Option Plan (Incorporated by reference to
the Exhibit 10.5 filed with our Registration Statement on Form
S-1 (File No. 33-46784))

10.3 Product Distribution Agreement, dated September 21, 1994,
between IFFC and Logistic and Distribution Systems Sp.zo.o (
Incorporated by reference to the Exhibit 10.2 filed with the
Form 10-QSB for the quarter ended March 31, 1995)

10.4* Form of Indemnification Agreement between IFFC and each of
IFFC's Directors and Executive Officers (Incorporated by
reference to the Exhibit 10.9 filed with our Registration
Statement on Form S-1 (File No. 33-46784))

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 (Incorporated by reference to the Exhibit 10.1 filed with
the Form 8-K dated January 30, 1996)

33
<PAGE>

EXHIBIT DESCRIPTION
------- -----------

10.6 Amendment, dated August 31, 1995, to credit facility, dated
January 28, 1993, between IFFP and AmerBank (Incorporated by
reference the Exhibit 10.11 filed with the Form 10-KSB for the
year ended December 31, 1995)

10.7 Credit Facility, dated February 1, 1996, between IFFP and
AmerBank (Incorporated by reference the Exhibit 10.20 filed with
the Form 10-KSB for the year ended December 31, 1995)

10.8 Credit Facility, dated February 12, 1993, between IFFC and
AmerBank in Poland S.A. (Incorporated by reference to Exhibit
10.23 filed with the Form 10-KSB for the fiscal year ended
December 31, 1992)

10.9 Credit Facility, dated January 28, 1993, between IFFC and
AmerBank in Poland S.A. (Incorporated by reference to Exhibit
10.24 filed with the Form 10-KSB for the fiscal year ended
December 31, 1992)

10.10* Stock Option Agreement, dated as of May 21, 1992, between IFFC
and Mitchell Rubinson (Incorporated by reference to Exhibit
10.39 of the same number filed with the Form 10-KSB for the year
ended December 31, 1993)

10.11* Stock Option Agreement, dated as of February 1, 1993, between
IFFC and Mitchell Rubinson (Incorporated by reference to Exhibit
10.41 of the same number filed with the Form 10-KSB for the year
ended December 31, 1993)

10.12 Management Agreement, dated January 1, 1995, between IFFC and
IFFP (Incorporated by reference to Exhibit 10.46 filed with the
Form 10-KSB for the year ended December 31, 1994)

10.13 Credit Facility, dated February 23, 1994, between IFFC and
American Bank in Poland, S.A. (Incorporated by reference to
Exhibit 10.49 filed with the Form 10-KSB for the year ended
December 31, 1994)

10.14 Restaurant Development Agreement dated March 14, 1997 between
IFFC and BKC (Incorporated by reference to Exhibit 99.1 filed
with the Form 8-K dated March 14, 1997)

10.15 Franchise Agreement dated March 14, 1997 between IFFC and BKC
(Incorporated by reference to Exhibit 99.2 filed with the Form
8-K dated March 14, 1997)

10.16 Amendment to Agreement to Assign Litigation Proceeds, dated as
of July 3, 1996, among IFFC, IFFP and Litigation Funding
(Incorporated by reference to Exhibit 10.1 filed with the Form
8-K dated July 3, 1996)

10.17 Agreement to Assign Litigation Proceeds, dated as of September
11, 1996, among IFFC and IFFP (14)

10.18 Promissory Note dated March 11, 1997 by International Fast Food
Corporation to Litigation Funding, Inc. (Incorporated by
reference to Exhibit 10.1 filed with the Form 10-QSB for the
quarter ended March 31, 1997)

10.19 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. (Incorporated by reference to Exhibit
10.2 filed with the Form 10-QSB for the quarter ended March 31,
1997)

34
<PAGE>

EXHIBIT DESCRIPTION
------- -----------

10.20 Agreement dated May 9, 1997, between Litigation Funding, Inc.,
International Fast Food Corporation and International Fast Food
Polska Sp.zo.o. (Incorporated by reference to Exhibit 10.3 filed
with the Form 10-QSB for the quarter ended March 31, 1997)

10.21 Indenture dated November 5, 1997 (Incorporated by reference to
Exhibit 10.01 filed with the Form 10-QSB for the quarter ended
September 30, 1997)

10.22 Securities Purchase Agreement dated November 5,1997
(Incorporated by reference to Exhibit 10.02 filed with the Form
10-QSB for the quarter ended September 30, 1997)

10.23 Registration Rights Agreement dated November 5, 1997
(Incorporated by reference to Exhibit 10.03 filed with the Form
10-QSB for the quarter ended September 30, 1997)

10.24 Voting and Disposition Agreement dated November 5, 1997
(Incorporated by reference to Exhibit 10.04 filed with the Form
10-QSB for the quarter ended September 30, 1997)

10.25 Amendment to Restaurant Development Agreement dated as of
February 24, 1999 by and among Burger King Corporation and IFFC
(Incorporated by reference to Exhibit 10.75 filed with the Form
10-KSB for the year ended December 31, 1998)

10.26 Reimbursement Agreement dated as of February 24, 1999 by and
among IFFC, IFFP and Burger King Corporation (Incorporated by
reference to Exhibit 10.76 filed with the Form 10-KSB for the
year ended December 31, 1998)

10.27 Agreement for the Transfer of Title to Shares By Way of Security
dated as of February 24, 1999 by and between IFFC, IFFP and
Burger King Corporation (Incorporated by reference to Exhibit
10.77 filed with the Form 10-KSB for the year ended December 31,
1998)

10.28 General Release dated as of February 24, 1999 by and among
Burger King Corporation, IFFC, IFFP and Mitchell Rubinson
(Incorporated by reference to Exhibit 10.78 filed with the Form
10-KSB for the year ended December 31, 1998)

10.29 Purchase Agreement dated as of February 24, 1999 by and among
IFFC, IFFP, Mitchell Rubinson and Burger King Corporation
(Incorporated by reference to Exhibit 10.79 filed with the Form
10-KSB for the year ended December 31, 1998)

10.30 Credit Agreement dated February 24, 1999, as amended, between
IFFP and Citibank (Poland) S.A. (Incorporated by reference to
Exhibit 10.80 filed with the Form 10-KSB for the year ended
December 31, 1998)

10.31 Addendum dated March 17, 1999, by and among Burger King
Corporation, IFFC, IFFP and Mitchell Rubinson (Incorporated by
reference to Exhibit 10.81 filed with the Form 10-KSB for the
year ended December 31, 1998)

10.32 Letter Agreement dated March 18, 1999 between IFFC and Host
Marriott Services Corporation (Incorporated by reference to
Exhibit 10.82 filed with the Form 10-KSB for the year ended
December 31, 1998)

10.33* Employment Agreement dated October 4, 1999 between IFFC and
James F. Martin (Incorporated by reference to Exhibit 10.1 filed
with the Form 10-QSB for the quarter ended September 30, 1999)

35
<PAGE>

EXHIBIT DESCRIPTION
------- -----------

10.34 Amendment to Restaurant Development Agreement dated as of
October 21, 1999 by and among Burger King Corporation, IFFC and
IFFP (Incorporated by reference to Exhibit 10.2 filed with the
Form 10-QSB for the quarter ended September 30, 1999)

10.35 Amended and Restated Reimbursement Agreement dated as of October
21, 1999 by and among IFFC, IFFP and Burger King (Incorporated
by reference to Exhibit 10.3 filed with the Form 10-QSB for the
quarter ended September 30, 1999)

10.36 Amended and Restated Agreement for the Transfer of Title to
Shares by way of security dated as of October 21, 1999 by and
between IFFC, IFFP and Burger King Corporation (Incorporated by
reference to Exhibit 10.4 filed with the Form 10-QSB for the
quarter ended September 30, 1999)

10.37 General Release dated as of October 21, 1999 by and among Burger
King Corporation, IFFC, IFFP and Mitchell Rubinson (Incorporated
by reference to Exhibit 10.5 filed with the Form 10-QSB for the
quarter ended September 30, 1999)

10.38 Amended and Restated Purchase Agreement dated as of October 21,
1999 by and among IFFC, Mitchell Rubinson, IFFP and Burger King
Corporation (Incorporated by reference to Exhibit 10.6 filed
with the Form 10-QSB for the quarter ended September 30, 1999)

10.39 Guarantee of Future Advances Agreement dated as of October 21,
1999 by and among IFFC, Mitchell Rubinson, IFFP and Burger King
Corporation (Incorporated by reference to Exhibit 10.7 filed
with the Form 10-QSB for the quarter ended September 30, 1999)

10.40 Deferred Payment Agreement dated as of October 21, 1999 by and
among IFFC, IFFP and Burger King Corporation (Incorporated by
reference to Exhibit 10.8 filed with the Form 10-QSB for the
quarter ended September 30, 1999)

10.41 Warrant to Subscribe for and purchase 4,000,000 shares of Common
Stock issued to Burger King Corporation (Incorporated by
reference to Exhibit 10.9 filed with the Form 10-QSB for the
quarter ended September 30, 1999)

10.42 Guaranty dated as of October 21, 1999 by and between Mitchell
Rubinson and Burger King Corporation (Incorporated by reference
to Exhibit 10.10 filed with the Form 10-QSB for the quarter
ended September 30, 1999)

10.43 Security and Pledge Agreement dated as of October 21, 1999 by
and between Mitchell Rubinson and Burger King Corporation
(Incorporated by reference to Exhibit 10.11 filed with the Form
10-QSB for the quarter ended September 30, 1999)

10.44 Reimbursement and Fee Agreement dated as of October 14, 1999 by
and among IFFC and Mitchell Rubinson (Incorporated by reference
to Exhibit 10.12 filed with the Form 10-QSB for the quarter
ended September 30, 1999)

10.45* Employment Agreement dated January 1, 2000 between IFFC and
Mitchell Rubinson

14.1 Trademark Protection Certificate No. 74441; Trademark [logo]
Burger King; Owner: BKC (Incorporated by reference to Exhibit
14.1 filed with the Form 10-KSB for the year ended December 31,
1994)

36
<PAGE>

EXHIBIT DESCRIPTION
------- -----------

14.2 Trademark Protection Certificate No. 74442; Trademark [word]
Whopper; Owner: BKC (Incorporated by reference to Exhibit 14.2
filed with the Form 10-KSB for the year ended December 31, 1994)

14.3 Trademark Protection Certificate No. 74443; Trademark [words]
Burger King; Owner: KC (Incorporated by reference to Exhibit
14.3 filed with the Form 10-KSB for the year ended December 31,
1994)

21.1 Subsidiaries of IFFC

27.1** Financial Data Schedule

- -------------
* These exhibits are management contracts or compensatory plans or
arrangements.
** Filed electronically only.

(b) Reports on Form 8-K: None

37
<PAGE>

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

INTERNATIONAL FAST FOOD CORPORATION

DATE: April 12 , 2000 BY: /S/ MITCHELL RUBINSON
------------------------------------------------
Mitchell Rubinson, Chairman of the Board,
Chief Executive Officer and President
[Principal Executive Officer]

DATE: April 12, 2000 BY: /S/ JAMES F. MARTIN
------------------------------------------------
James F. Martin, President, Chief Financial
Officer and Treasurer [Principal Financial
Officer and Principal
Accounting Officer]

In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated:

DATE: April 12, 2000 /S/ MITCHELL RUBINSON
------------------------------------
Mitchell Rubinson, Director

DATE: April 12, 2000 /S/ JAMES F. MARTIN
------------------------------------
James F. Martin, Director

DATE: April 12, 2000 /S/ LARRY H. SCHATZ
------------------------------------
Larry H. Schatz, Director

38
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS

Page
----
Report of Independent Certified Public Accountants ....................... F-2
Consolidated Balance Sheets as of December 31, 1999 and 1998 ............. F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1999 and 1998 .......................................... F-4
Consolidated Statements of Shareholders' Equity (Deficit)
for the Years Ended December 31, 1999 and 1998 ...................... F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999 and 1998 .......................................... F-6
Notes to Consolidated Financial Statements ............................... F-8

F-1
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of
International Fast Food Corporation:

We have audited the accompanying consolidated balance sheets of International
Fast Food Corporation (a Florida Corporation) and subsidiaries as of December
31, 1999 and 1998, and the related consolidated statements of operations,
shareholders' equity (deficit) and cash flows for the years 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 audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 audits provide 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, 1999 and 1998, and the
results of their operations and their cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and has a net capital deficiency that raises substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 2. The consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to continue as a
going concern.

/S/ ARTHUR ANDERSEN LLP
- -----------------------

Miami, Florida
March 29, 2000.

F-2

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

ASSETS
DECEMBER 31, DECEMBER 31,
1999 1998
------------ ------------
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents ............................................ $ 383,531 $ 4,013,371
Restricted cash and certificates of deposit .......................... 999,990 999,990
Receivables .......................................................... 246,077 1,573,480
Inventories .......................................................... 795,906 842,867
Prepaid expenses and other ........................................... 147,009 1,150,700
------------ ------------
Total Current Assets ............................................. 2,572,513 8,580,408
Furniture, Equipment, Buildings and Leasehold Improvements, net ........... 18,957,883 17,137,181
Deferred Debt Issuance Costs, net ......................................... 2,931,015 2,659,205
Other Assets, net of accumulated amortization of $443,033 and $284,532,
respectively ........................................................... 1,132,548 991,461
Burger King Development Rights, net of accumulated amortization of
$74,324 and $189,189, respectively ..................................... 175,676 810,811
Domino's Development Rights, net of accumulated amortization of $77,710
and $46,626, respectively .............................................. 111,393 142,477
Costs in excess of net assets acquired, net of accumulated amortization ... -- 1,525,260
------------ ------------
of $19,307 in 1998
Total Assets ..................................................... $ 25,881,028 $ 31,846,803
============ ============
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable ..................................................... $ 2,658,055 $ 3,889,528
Accrued interest payable ............................................. 56,137 87,077
Other accrued expenses ............................................... 1,960,956 1,176,019
Current portion of bank credit facilities ............................ 1,615,685 1,512,260
------------ ------------
Total Current Liabilities ........................................ 6,290,833 6,664,884
11% Convertible Senior Subordinated Discount Notes due October 31, 2007 .. 8,818,532 22,645,202
Bank Credit Facilities .................................................... 8,176,950 1,892,362
9% Subordinated Convertible Debentures, due December 15, 2007 ............. 2,756,000 2,756,000
------------ ------------
Total Liabilities ................................................ 26,042,315 33,958,448
------------ ------------
Other Liabilities ......................................................... 250,000 1,000,000
------------ ------------
COMMITMENTS AND CONTINGENCIES (NOTES 2, 13 AND 14) SHAREHOLDERS' DEFICIT:
Series A Convertible Preferred Stock, $.01 par value, 2,000,000 shares
authorized; 32,985 shares issued and outstanding
(liquidation preference of $3,298,500) ............................. 330 330
Series B Convertible Preferred Stock, $.01 par value, 400,000
shares authorized; 158,134 shares and no shares issued and
outstanding, respectively (liquidation preference of $15,813,400) .. 1,581 --
Common Stock, $.01 par value, 200,000,000 shares authorized;
45,497,655 and 44,901,587 shares issued and outstanding, ........... 454,977 449,016
respectively
Additional paid-in capital ........................................... 34,506,099 17,888,248
Accumulated deficit .................................................. (35,374,274) (21,449,239)
------------ ------------
Total Shareholders' Deficit ...................................... (411,287) (3,111,645)
------------ ------------
Total Liabilities and Shareholders' Deficit ...................... $ 25,881,028 $ 31,846,803
============ ============
</TABLE>
SEE ACCOMPANYING NOTES

F-3

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
REVENUE ........................................................... $ 15,098,313 $ 8,426,104

FOOD AND PACKAGING COSTS .......................................... 5,560,064 3,347,477
------------ ------------

GROSS PROFIT ...................................................... 9,538,249 5,078,627
------------ ------------

OPERATING EXPENSES:
Payroll and related costs ..................................... 3,181,693 1,608,283
Occupancy and other operating expenses ........................ 6,161,870 2,963,262
Pre-opening expenses .......................................... 605,522 --
Depreciation and amortization ................................. 3,115,531 1,508,520
Asset impairment charges ...................................... 2,511,310 --
------------ ------------
Total operating expenses ................................. 15,575,926 6,080,065
------------ ------------
Loss from operations before general and administrative expenses ... (6,037,677) (1,001,438)
GENERAL AND ADMINISTRATIVE EXPENSES ............................... 4,833,854 3,326,997
------------ ------------
Loss from operations .............................................. (10,871,531) (4,328,435)
------------ ------------

OTHER INCOME (EXPENSE):
Interest and other income, net ................................ 686,256 888,232
Interest expense, including amortization of debt issuance costs (2,882,221) (2,672,314)
Foreign currency exchange gain/(loss) ......................... (41,810) 124,903
------------ ------------
Total other expense ...................................... (2,237,775) (1,659,179)
------------ ------------
Loss before minority interest ..................................... (13,109,306) (5,987,614)
------------ ------------
Minority interest in losses of consolidated subsidiary ............ -- 115,478
------------ ------------
Loss before cumulative effect of accounting change ................ (13,109,306) (5,872,136)
------------ ------------
Cumulative effect of accounting change (Note 2) ................... (620,000) --
------------ ------------
NET LOSS .......................................................... $(13,729,306) $ (5,872,136)
============ ============

BASIC AND DILUTED NET LOSS PER COMMON SHARE:
Loss before cumulative effect of accounting change ............ $ (.30) $ (.14)
============ ============
Cumulative effect of accounting change ........................ (.01) --
============ ============
Net loss ...................................................... $ (.31) $ (.14)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING .............. 45,198,921 44,727,685
============ ============

</TABLE>

SEE ACCOMPANYING NOTES

F-4

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

TOTAL
ADDITIONAL SHAREHOLDERS'
PREFERRED STOCK COMMON STOCK PAID-IN ACCUMULATED EQUITY
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT (DEFICIT)

<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 ...... 33,450 $ 334 44,641,247 $446,413 $ 17,691,542 $(15,377,798) $ 2,760,491
Conversion of preferred stock ... (465) (4) 15,500 155 (151) -- --
Issuance of common stock in
payment of dividends on Series
A Convertible Preferred Stock . -- -- 244,840 2,448 196,857 (199,305) --
Net loss ........................ -- -- -- -- -- (5,872,136) (5,872,136)
------- ------- ---------- -------- ------------ ------------ ------------
BALANCE, DECEMBER 31, 1998 ...... 32,985 330 44,901,587 449,016 17,888,248 (21,449,239) (3,111,645)
Issuance of common stock to 11%
Noteholders ................... -- -- 204,585 2,046 112,522 -- 114,568
Issuance of common stock in
payment of dividends on Series
A Convertible Preferred Stock . -- -- 365,650 3,657 192,072 (195,729) --
Issuance of Series B Convertible
Preferred Stock in exchange for
$17,900,000 face amount of 11%
notes ......................... 158,134 1,581 -- -- 14,281,871 -- 14,283,452
Issuance of warrants ............ -- -- -- -- 2,024,378 -- 2,024,378
Exercise of warrants ............ -- -- 25,833 258 7,008 -- 7,266
Net loss ........................ -- -- -- -- -- (13,729,306) (13,729,306)
------- ------- ---------- -------- ------------ ------------ ------------
BALANCE, DECEMBER 31, 1999 ...... 191,119 $ 1,911 45,497,655 $454,977 $ 34,506,099 $(35,374,274) $ (411,287)
======= ======= ========== ======== ============ ============ ============

</TABLE>

SEE ACCOMPANYING NOTES

F-5

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31,
----------------------------
1999 1998
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss ................................................................... $(13,729,306) $(5,872,136)
Adjustments to reconcile net loss to net cash used in operating activities:
Cumulative effect of change in accounting principle ...................... 620,000 --
Amortization and depreciation of furniture, equipment,
buildings, ............................................................. 3,144,401 1,702,444
leasehold improvements and development rights
Accretion of debt discount and amortization of issuance costs ............ 677,012 2,383,556
Write off of deferred issuance costs of 11% Convertible
Senior Subordinated Discount Notes ..................................... 1,532,338 --
Minority interest in losses of subsidiary ................................ -- (115,478)
Other operating items .................................................... 118,794 (24,620)
Asset impairment charges ................................................. 2,511,310 --
Changes in operating assets and liabilities, net of acquisition of business:
Receivables .............................................................. 1,327,403 (1,471,952)
Inventories .............................................................. 46,961 (470,268)
Prepaid expenses and other ............................................... 383,691 (1,019,989)
Accounts payable and accrued expenses .................................... (477,476) 3,695,580
------------ -----------
Net cash used in operating activities ...................................... (3,844,872) (1,192,863)
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for furniture, equipment, buildings and leasehold
improvements ............................................................. (5,679,378) (12,875,611)
Payments for franchise fees and other assets ............................... (382,075) (415,754)
Purchase of minority interest in subsidiary ................................ -- (1,544,385)
------------ -----------
Net cash used in investing activities ...................................... (6,061,453) (14,835,750)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of bank credit facilities ....................................... (528,984) (384,889)
Borrowings under bank credit facilities .................................... 6,916,997 1,809,516
Proceeds from exercise of warrants ......................................... 7,266 --
Payment of registration costs
-- (30,455)
------------ -----------
Net cash provided by financing activities .................................. 6,395,279 1,394,172
------------ -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS ............... (118,794) 5,477
------------ -----------
DECREASE IN CASH AND CASH EQUIVALENTS ...................................... (3,629,840) (14,628,964)
BEGINNING CASH AND CASH EQUIVALENTS ........................................ 4,013,371 18,642,335
------------ -----------
ENDING CASH AND CASH EQUIVALENTS ........................................... $ 383,531 $ 4,013,371
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest (net of capitalized interest of $94,038 and
$142,658 in 1999 and 1998, respectively) ............................... $ 739,688 $ 405,258
============ ============
</TABLE>

(CONTINUED)

F-6
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

YEAR ENDED DECEMBER 31, 1999:

Issuance of 204,585 shares of common stock with a face value of
$114,568 to holders of 11% Convertible Senior Subordinated Discount Notes in
exchange for waiver on bank debt.

Issuance of 365,650 shares of common stock in payment of $195,729 of
dividends on Series A Convertible Preferred Stock.

Issuance of 158,134 shares of Series B Convertible Preferred Stock in
exchange for $14,283,452 in 11% Convertible Senior Subordinated Discount Notes.

Issuance of 4,000,000 warrants with a fair value of $2,024,378 in
exchange for Burger King Corporation guarantee of the Citibank (Poland) S.A.
line of credit.

YEAR ENDED DECEMBER 31, 1998:

Issuance of 15,500 shares of common stock upon the exchange of 465
shares of Preferred Stock.

Issuance of 244,840 shares of common stock in payment of $199,305 of
dividends on Preferred Stock.

SEE ACCOMPANYING NOTES

F-7

<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. IFFC was incorporated in the State of
Florida in 1991.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF PRESENTATION -- The accompanying consolidated financial
statements include the accounts of the Company and its 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"). 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.
For the years ended December 31, 1995, 1996, 1997, 1998 and 1999 the annual
inflation rate in Poland was 21.6%, 19.5%, 13.0%, 8.6% and 7.3%, respectively.
Payment of interest and principal on the 9% Subordinated Convertible Debentures,
11% Convertible Senior Subordinated Discount Notes and payment of franchise fees
to Burger King Corporation ("BKC") and Domino's Pizza International ("Domino's")
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 operating
revenues 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.

LIQUIDITY AND PLAN OF OPERATIONS -- As of December 31, 1999, IFFC had
negative working capital of $3,718,320 and cash and cash equivalents of
$383,531. As described in Note 13, the Company has significant commitments to
develop restaurants in accordance with the BKC Development Agreement and the New
Master Franchise Agreement with Domino's. The Company has sustained losses from
operations since its incorporation in December 1991. For the years ended
December 31, 1999 and 1998, the Company reported net losses of $13,729,306 and
$5,872,136, respectively. At December 31, 1999, the Company had an accumulated
deficit of $35,374,274 and shareholders' deficit of $411,287. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. The following paragraph sets forth management's plans with respect to
addressing the foregoing factors:

Management believes that cash flows from currently existing stores,
when combined with existing financial resources and drawings on the Company's
$10,000,000 line of credit secured by BKC (see Note 6), on which the Company has
$2,000,000 of borrowing availability as of March 24, 2000, will be sufficient to
fund operations through at least April 30, 2000. However, no assurance can be
given that management's plans will be achieved. Further, no assurance can be
given that the cash flows from existing and new stores will be sufficient to
fund operations through April 30, 2000. Management is seeking to obtain
additional equity or debt financing to fund operating losses and its commitment
to develop new Burger King restaurants and Domino's Pizza stores. No assurance
can be given that such financing will be obtained or that it can be obtained on
favorable terms. The consolidated financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.

F-8

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

FURNITURE, EQUIPMENT, BUILDINGS AND LEASEHOLD IMPROVEMENTS --
Furniture, equipment, buildings 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. Buildings and leasehold improvements are
amortized over the shorter of their expected useful lives or the respective
lease term. 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. In connection with the development of
new restaurants, the Company has capitalized certain development costs. These
costs include direct and indirect costs of the projects that are incremental to
normal operations and specifically identifiable to the related projects. The
amount of such costs included in the accompanying consolidated balance sheets
are approximately $283,000 and $434,000 as of December 31, 1999 and 1998,
respectively. In addition, the Company capitalizes interest incurred to finance
construction of the Company's stores. Capitalized interest was $94,038 and
$142,658 in 1999 and 1998, respectively.

ACQUISITION COSTS OF DEVELOPMENT RIGHTS -- All costs associated with
the acquisition of Burger King and Domino's Development Rights were capitalized.
The cost of these rights is being amortized over the term of the respective
agreements.

DEFERRED CHARGES AND OTHER ASSETS -- 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% Subordinated Convertible 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 effective
interest method over the life of the related debt.

COST IN EXCESS OF NET ASSETS ACQUIRED - Cost in excess of net assets
acquired principally represents the excess of cost over the fair value of the
net assets of IFFP, which were acquired for approximately $1.5 million, with the
purchase of the remaining interest of IFFP's minority shareholder, Agros
Investments, S.A., in September 1998. These costs were written off in 1999. See
Note 16 for discussion of asset impairment charges.

LONG-LIVED ASSETS -- The Company evaluates its long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. Recoverability of assets
to be held and used is measured by a comparison of the carrying amount of any
asset to undiscounted future cash flows expected to be generated by the asset.
If such assets are considered to be impaired, the impairment to be recognized is
measured as the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell. See Note 16 for discussion
of asset impairment charges.

TRANSLATION OF FOREIGN CURRENCIES -- 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, 1999 and 1998, the
exchange rate was 4.1483 and 3.494 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, buildings and 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.

F-9

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amounts of cash and
cash equivalents, receivables, accounts payable, and bank credit facilities
payable approximate fair value because of the short-term nature of these items.
The fair value of the Company's 9% Subordinated Convertible Debentures and 11%
Convertible Senior Subordinated Discount Notes are not readily determinable at
December 31, 1999, due to the lack of trading activity. However, management
believes that the carrying value approximates fair value using valuation
assumptions that would apply to similar debt instruments issued by companies
with similar risks.

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.

REVENUE RECOGNITION - Restaurant sales are recognized at time of sale
with delivery of product to the customer.

COMPREHENSIVE INCOME - Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income", establishes standards for
the reporting and display of comprehensive income and its components in a full
set of general purpose financial statements. Comprehensive income is defined as
the change in equity during the financial reporting period of a business
enterprise resulting from non-owner sources. The Company had no items of other
comprehensive income for the years ended December 31, 1999 and 1998. Therefore,
comprehensive income is equal to net income for the periods presented.

NET LOSS PER COMMON SHARE -- The net loss per common share in the
accompanying consolidated Statements of Operations has been computed based upon
the provisions of SFAS No. 128, "Earnings per Share". The basic and diluted net
loss per common share in the accompanying consolidated statements of operations
is based upon the net loss after preferred dividend requirements of $195,729 and
$199,305 in 1999 and 1998, 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.

The following options to purchase shares of common stock were
outstanding at the end of each year, but were not included in the computation of
diluted loss per share because the effect would be anti-dilutive:

1999 1998
---- ----
Options outstanding....................... 1,670,000 1,020,000
Weighted average exercise prices.......... $ 0.58 $ 0.52

Additionally, the effect of approximately 43,149,000 shares of common
stock issuable upon the exercise of warrants, the conversion of the 11% Senior
Subordinated Discount Notes and 9% Subordinated Convertible Debentures, and the
conversion of the Series A and B Convertible Preferred Stock have been excluded
from the calculation of diluted loss per share because the effect would be
antidilutive.

ESTIMATES -- The preparation of financial statements in conformity with
accounting principles generally accepted in the United States 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.

F-10

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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. Advertising expense for the years
ended December 31, 1999 and 1998 was approximately $2,277,000 and $719,000,
respectively. As of December 31, 1999 and 1998, the Company had no deferred
advertising costs.

STORE PRE-OPENING EXPENSES - Prior to January 1, 1999, the Company
capitalized pre-opening costs associated with opening new restaurants. Upon
commencement of revenue producing activities at a restaurant location, these
capitalized pre-opening costs were amortized over one year. In April 1998, the
Accounting Standards Executive Committee of the American Institute of Public
Accountants issued Statement of Position ("SOP") 98-5, "Reporting on the Costs
of Start-Up Activities." SOP 98-5 requires costs of start-up activities to be
expensed as incurred. The Company adopted SOP 98-5 on January 1, 1999. Upon
adoption, the Company expensed previously capitalized start-up costs totaling
$620,000 at January 1, 1999. In accordance with SOP 98-5, adoption has been
reported as a cumulative effect of change in accounting principle in the
accompanying consolidated statement of operations for the year ended December
31, 1999. Pre-opening costs of $605,522 incurred subsequent to December 31, 1998
have been charged directly to expense.

ACCOUNTING FOR STOCK-BASED COMPENSATION - As permitted by SFAS No. 123,
"Accounting for Stock-Based Compensation", the Company continues to account for
stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and has made the pro forma disclosures required by SFAS No. 123 for
each of the two years ended December 31, 1999.

RECENTLY ISSUED ACCOUNTING STANDARD -- In June 1999, the FASB issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of Effective Date of FASB Statement No. 133". SFAS No. 137
defers for one year the effective date of SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities". SFAS No. 133 will now apply to
all fiscal quarters of all fiscal years beginning after June 15, 2000. SFAS No.
133 will require the Company to recognize all derivatives on the balance sheet
at fair value. Derivatives that are not hedges must be adjusted to fair value
through income. The Company will adopt SFAS No. 133 as required for its first
quarterly filing of fiscal year 2001. The Company believes the adoption of this
Statement will not have a material effect on its results of operations and
financial position.

RECLASSIFICATION OF PRIOR YEAR AMOUNTS -- Certain amounts in the
December 31, 1998 financial statements have been reclassified to conform to the
current year presentation.

3. RESTRICTED CASH:

At December 31, 1999 and 1998, the Company had $999,990 in certificates
of deposit which represents collateral for an outstanding line of credit.

4. FURNITURE, EQUIPMENT, BUILDINGS AND LEASEHOLD IMPROVEMENTS:

Furniture, equipment, buildings and leasehold improvements are
comprised of the following at December 31, 1999 and 1998:

1999 1998
---- ----
<S> <C> <C>
Vehicles................................................... $699,065 $ 614,119
Office furniture and equipment............................. 711,963 604,841
Restaurant equipment....................................... 11,754,410 12,469,826
Buildings and leasehold improvements....................... 13,341,940 8,346,745
Add: capitalized interest.................................. 236,696 142,658
----------- ------------
26,744,074 22,178,189
Less: accumulated depreciation and amortization............ (7,786,191) (5,041,008)
----------- ------------
Total.................................................... $18,957,883 $17,137,181
=========== ===========
Depreciation expense....................................... $ 2,871,205 $ 1,430,340
============ ============
</TABLE>

F-11

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. DEFERRED DEBT COSTS AND OTHER ASSETS:

Deferred debt costs are comprised of the following at December 31, 1999
and 1998:
1999 1998
---- ----
Deferred issuance costs on 11% Convertible Senior
<S> <C> <C>
Subordinated Discount Notes ........................................... $986,035 $ 2,518,373

Deferred Debenture Issuance Costs on 9% Subordinated
Convertible Debenture..................................................... 432,325 432,325

Deferred costs related to Citibank (Poland) S.A.
$10 million line of credit ............................................... 2,024,378 --
------------ ----------
3,442,738 2,950,698
Less: accumulated amortization.............................................. (511,723) (291,493)
------------ ----------
Total..................................................................... $2,931,015 $2,659,205
========== ==========

Amortization included in Interest Expense................................... $ 220,230 $ 93,034
========== ============

Other assets are comprised of the following at December 31, 1999 and 1998:

1999 1998
---- ----
Franchise fees.............................................................. $915,761 $ 662,714
Deferred lease costs........................................................ 433,775 459,664
Software and other intangibles.............................................. 226,045 153,615
---------- ----------
1,575,581 1,275,993
Less: accumulated amortization.............................................. (443,033) (284,532)
------------ -----------
Total..................................................................... $1,132,548 $ 991,461
========== =========

Amortization expense........................................................ $ 279,750 $ 113,603

========== =========
</TABLE>

F-12

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. BANK CREDIT FACILITIES:

Bank credit facilities are comprised of the following at December 31,
1999 and 1998:

1999 1998
---- ----
<S> <C> <C>
AmerBank in Poland, S.A., PKP overdraft credit line, variable rate
approximately equal to prime, expires June 1, 2000............................ $689 $ 25,288
AmerBank in Poland, S.A., IFFP overdraft credit line, variable rate
approximately equal to prime, expires April 1, 2000........................... -- 386
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....................... .................................................. 246,000 630,000
AmerBank IFFP revolving credit facility of $1,500,000, interest is payable
monthly at 2.50% above LIBOR, and principal is payable in thirty-five monthly
installments of $41,666 starting in June 2000 with a final payment
of $41,690 due at maturity on May 18, 2003.................................... 1,500,000 1,500,000
Totalbank IFFC line of credit of $999,000, interest at 6.5% payable quarterly,
collateralized by certificates of deposit in the amount of $999,990 maturing
in August 2000................................................................ 999,000 982,586
Citibank (Poland) S.A. line of credit of $10,000,000 payable in December 2002...
6,900,583 --
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 on March 26, 2001........................... 146,363 266,362
---------- -----------
Total bank credit facilities.................................................... 9,792,635 3,404,622
Less: current maturities........................................................ (1,615,685) (1,512,260)
----------- -----------
Long term bank credit facilities................................................ $8,176,950 $1,892,362
========= =========
</TABLE>

On February 24, 1999, IFFP entered into a line of credit agreement with
Citibank (Poland) S.A. under which Citibank granted IFFP a loan in the amount of
$5,000,000. The purpose of the line of credit was to finance the construction of
nine Burger King restaurants. The line of credit is priced at 0.8% above LIBOR
and was originally scheduled to mature on January 15, 2000 but was extended to
December 2002. In order for IFFP to enter into the credit agreement with
Citibank, holders of our outstanding 11% Convertible Senior Subordinated
Discount Notes (the "Notes") were required to waive applicable provisions of the
note indenture. As compensation for the waiver, the noteholders were issued an
aggregate of 204,585 shares of common stock, with a fair value of $.56 per
share.

The line of credit is guaranteed by Burger King Corporation ("BKC") and
IFFC granted BKC a security interest in the outstanding shares of IFFP. As a
condition to the guarantee, BKC required that IFFC, IFFP and Mitchell Rubinson,
the Chairman, Chief Executive Officer and a principal shareholder of the Company
("Rubinson"), enter into a general release in favor of BKC for any and all
matters occurring before the date of the guarantee. Additionally, IFFC and IFFP
entered into a reimbursement agreement (the "Reimbursement Agreement") under
which IFFC agreed to reimburse BKC for any and all amounts paid out by BKC under
the guaranty and all costs and expenses incurred by BKC in connection with the
enforcement of its rights under the Reimbursement Agreement. BKC also required
that IFFC, IFFP and Rubinson execute a general release of BKC relating to any
matters that occurred before the execution of the Credit Agreement.

F-13

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additionally, Rubinson entered into a purchase agreement (the "Purchase
Agreement") with BKC which provides that if IFFP and IFFC default on the
obligations under the Reimbursement Agreement and BKC takes possession of the
IFFP shares, Rubinson is required to purchase the IFFP shares from BKC for an
amount equal to all amounts paid out by BKC under the guaranty and all costs and
expenses incurred by BKC in connection with the enforcement of its rights under
the Reimbursement Agreement. Rubinson received a fee of $150,000 from IFFC in
connection with the Purchase Agreement. This amount is included in the December
31, 1999 consolidated statement of operations as a component of general and
administrative expense.

In October 1999, IFFP increased the amount of the line of credit to
$8,000,000. IFFP may increase the line of credit in increments of $500,000 to an
aggregate of $10,000,000 if it meets specified criteria, including monthly debt
reduction, as defined in the credit agreement. As of December 31, 1999, IFFP met
such criteria. The maturity date of the line of credit was extended to December
2002. As of December 31, 1999 and March 24, 2000, $6,900,583 and $8,000,000 was
outstanding on this facility. Drawings on the line in excess of the original
$5,000,000 bear interest at 0.95% above LIBOR. The guarantee automatically
terminates in October 2002 and BKC may withdraw its guarantee if the net debt
movement, as defined in the Credit Agreement, of IFFP during the 12-month period
ending October 2001 is more than 10% less than required. BKC may also withdraw
its guarantee of incremental amounts over $8,000,000 if the net debt movement is
more than 30% less than required. In connection with the increase of the line of
credit, all of the prior transaction documents were re-executed, including the
Purchase Agreement and the release. Additionally, as security for the line of
credit, BKC required that Rubinson enter into a personal guaranty with BKC and
pledge 5,000,000 shares of IFFC common stock owned by him. In connection with
these matters, IFFC entered into a reimbursement and fee agreement whereby it
agreed to reimburse Rubinson for all amounts paid by him under his personal
guaranty and to pay him a fee equal to 3% annually of the amount being
guaranteed. As of the date hereof, Rubinson has not been paid under this
agreement. In order for IFFP to increase the line of credit, holders of the
outstanding Notes were required to waive applicable provisions of the note
indenture. The Company granted BKC warrants to purchase 4,000,000 common shares
at a price of $2.00 per share in connection with its guarantee of the increase
in the line of credit from $5 million to $10 million. The fair market value of
the warrants of $2,024,378 has been capitalized as deferred debt costs and is
being amortized to interest expense over the term of the credit facility.

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 Debenture holders 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. Sinking fund payments are reduced for Debentures previously
converted or redeemed by the Company. In January 1994, the Company offered to
exchange units of Common Stock and warrants to purchase common stock for its
outstanding Debentures. The Company exchanged approximately $7.0 million of the
Debentures pursuant to such offer and, as a result, is not required to fund the
Debenture sinking fund until 2004.

F-14

<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. The carrying value of the Notes is as follows at December 31:

1999 1998
---- ----
<S> <C> <C>
Face amount of notes at maturity...................................... $9,636,000 $27,536,000
Unamortized discount to be accreted as interest expense and
added to the original principal balance of the notes over a
period of three years............................................... (817,468) (4,890,798)
--------- -----------
Carrying value........................................................ $8,818,532 $22,645,202
========= ==========
</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 value of the shares was included in deferred
issuance costs on the accompanying consolidated balance sheets and is being
amortized using the effective interest method over the life of the Notes.

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.

On August 31, 1999, $17,900,000 of the Notes were exchanged for an
aggregate of 158,134 shares of Series B Convertible Preferred Stock.
Additionally, in October 1999, the remaining holders of the Notes agreed to
amend the Notes to provide that interest earned on the Notes from October 31,
2000 to October 31, 2003 will be paid in Notes, rather than cash. Interest
payable thereafter will be payable in cash.

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. As of December 31, 1999, none of the
Notes had been converted into Common Stock. 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-15

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

The Company was obligated to cause a registration statement to be
declared effective registering the resale of the shares of Common Stock to be
issued upon conversion of the Notes. The registration statement was declared
effective on September 10, 1998. If such registration statement, subject to
certain exceptions, 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 IFFC's assets. In addition, 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. FUTURE MATURITIES OF DEBT:

Future maturities of Bank credit facilities, Debentures and Notes at
December 31, 1999 are as follows:

YEARS ENDING
DECEMBER 31,
------------
2000.......... $1,615,685
2001.......... 526,355
2002.......... 7,400,575
2003.......... 250,020
2004.......... --
Thereafter.... 12,392,000
-----------
$22,184,635
===========

F-16

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. SHAREHOLDERS' EQUITY:

In August 1999, IFFC issued 158,134 shares of its Series B Convertible
Preferred Stock in connection with the exchange of $14,283,452 ($17,900,000 in
stated principal amount at maturity) of the Notes. The following is a summary of
the terms of the Series B Convertible Preferred Stock:
<TABLE>
<CAPTION>

<S> <C>
Liquidation Value............... $100.00 per share upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company.
Dividend........................ 3.0% of the liquidation value per annum beginning on
December 31, 2001, to be paid in shares of Series B
Preferred Stock; provided, however, if at any time after
January 1, 2003, the Common Stock has a Current Market
Price of $1.28 or higher, the dividend rights of the
Preferred Stock shall be cancelled.
Conversion...................... The Preferred Stock shall be immediately convertible at a
conversion price of $.66.
Registration Requirements....... The Company will be required to file a registration
statement for the Preferred Stock and the shares of Common
Stock underlying the Preferred Stock within 180 days after
the Exchange Date; provided, however, that if the Company
fails to file the registration statement prior to such
time, the dividend rate shall be increased by one-quarter
of one percent for each subsequent 30-day period that the
registration statement is not filed. The Company shall
use its reasonable business efforts to cause such
registration statement to be declared effective.
</TABLE>

On November 4, 1999, the Company increased the number of common
shares that may be granted under its 1993 Stock Option Plan (the "Plan") from
2,000,000 to 4,000,000. The Plan provides for the granting of options to
qualified employees and directors of the Company. Stock option activity is shown
below at December 31:

WEIGHTED AVERAGE WEIGHTED AVERAGE
1999 SHARE PRICE 1998 SHARE PRICE
---- ----------- ---- -----------
Outstanding at beginning
<S> <C> <C> <C> <C>
of year........................... 1,020,000 .52 570,000 $.40
Granted.............................. 1,000,000 .66 450,000 .66
Exercised............................ -- -- -- --
Expired.............................. (350,000) (.62) -- --
--------- ----- ---------
Outstanding at end of year........... 1,670,000 .58 1,020,000 .52
========= =========
Exercisable at end of year........... 497,500 .45 350,500 .42
========= ==========
Price range of options outstanding
at end of year.................... $.40-- $.61 $.40 - $.81
Available for grant at end of year 2,330,000 980,000
</TABLE>

As permitted by SFAS No. 123, the Company accounts for options issued
to employees under Accounting Principles Board Opinion No. 25 "Accounting for
Stock Issued to Employees." Consequently, no compensation cost has been
recognized on options issued to employees because the exercise price of such
options was not less than the market value of the Common Stock on the date of
grant. Had compensation cost for the Company's stock option plans been

F-17

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

determined based upon the fair value methodology prescribed under SFAS No. 123
for options granted in 1999 and 1998, the Company's net loss for those years
would have increased by approximately $127,000 and $85,000, respectively. Basic
and diluted loss per share would have increased by less than $.01 in each of the
years. The fair value of the options granted during 1999 and 1998 are estimated
at $599,000 and $271,000, respectively, 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 Company issued 365,650 shares of Common Stock and 244,840 shares of
Common Stock in 1999 and 1998, respectively, in payment of dividends on Series A
Convertible Preferred Stock. During the year ended December 31, 1998, 15,500
shares of Common Stock were issued upon conversion of 465 shares of Series A
Convertible Preferred Stock.

At December 31, 1999, IFFC had reserved the following shares of Common
Stock for issuance:
<TABLE>
<CAPTION>

<S> <C>
Stock option plans.......................................................................... 4,000,000
Convertible Debentures convertible into Common Stock at a conversion price of $8.50
per share on or before December 15, 2007.................................................. 324,235
Series A Preferred Stock convertible into Common Stock at a conversion rate of 33 1/3
Common Shares per share................................................................... 1,099,500
Series B Preferred Stock convertible into Common Stock at a conversion rate of 151 1/2
Common Shares per share................................................................... 23,957,301

Convertible Senior Subordinated Discount Notes convertible into Common Stock, after
November 5, 1998, at a conversion price of $.70 per share................................. 13,765,714
Warrants exercisable at $2.00 per share..................................................... 4,000,000
---------
Total reserved shares....................................................................... 47,146,750
==========
</TABLE>

11. INCOME TAXES:

The Company follows SFAS No. 109, "Accounting for Income Taxes," which
requires, among other things, recognition of future tax benefits measured at
enacted rates attributable to deductible temporary differences between financial
statement and income tax bases of assets and liabilities and to tax net
operating loss carryforwards to the extent that realization of said benefits is
more likely than not. As of December 31, 1999 and 1998, the Company had net
operating loss carryforwards of approximately $11,858,000 and $9,245,000
respectively, for U.S. tax purposes which expire in various years beginning in
2007 through 2019. As of December 31, 1999 and 1998, the Company's Poland
subsidiaries had net operating loss carry forwards of approximately $5,300,000
and $2,340,000 respectively, which expire in various years through 2004.

The Company had deferred tax assets of approximately $6,130,000 and
$4,412,000 at December 31, 1999 and 1998, respectively, related primarily to net
operating loss carryforwards. These deferred tax assets were subject to and
presented net of a 100% valuation allowance.

12. RELATED PARTY TRANSACTIONS:

In February 1999, IFFP entered into a credit agreement with Citibank
(Poland) S.A. under which Citibank granted IFFP a line of credit in the amount
of $5,000,000. The line of credit is guaranteed by BKC and the Company granted
BKC a security interest in the outstanding shares of IFFP. As a condition to the
guarantee, BKC required that IFFC, IFFP and Rubinson enter into a general
release in favor of BKC for any and all matters occurring before the date of the
guarantee. In order for IFFP to enter into the line of credit, holders of the
outstanding Notes were required to waive applicable provisions of the note
indenture. As compensation for the waiver, the noteholders were issued an
aggregate of 204,585 shares of our common stock at a value of $.56 per share.

F-18

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additionally, in connection with this transaction, Rubinson entered
into a purchase agreement with BKC which provides that (1) if IFFC defaults on
the line of credit and BKC takes possession of the IFFP shares and (2) IFFC is
unable to repurchase the shares of IFFP from BKC, Rubinson is required to
purchase the IFFP shares from BKC for an amount equal to all amounts paid out by
BKC plus costs and expenses incurred by BKC in connection with the enforcement
of its rights under a reimbursement agreement with IFFC. In connection with the
purchase agreement, the Company agreed to pay Rubinson a fee of $150,000.

In October 1999, IFFP increased the amount of the line of credit to
$8,000,000. Additionally, the line of credit may be increased to a maximum to
$10,000,000 if IFFP meets specified criteria, including monthly debt reduction.
As of December 31, 1999, IFFP met such criteria. All of the prior transaction
documents were re-executed, including the purchase agreement and the release.
Additionally, as security of the line of credit, BKC required that Rubinson
enter into a personal guaranty with BKC and pledge 5,000,000 shares of the
Company's common stock owned by him. In connection with these matters, IFFC
entered into a reimbursement and fee agreement whereby it agreed to reimburse
Rubinson for all amounts paid by him under his personal guaranty and to pay him
a fee equal to 3% annually of the amount being guaranteed. As of the date
hereof, Rubinson has not been paid under this agreement. The Company has accrued
approximately $207,000 representing amounts due Rubinson in connection with the
Purchase Agreement and guarantee fees. This amount is included in general and
administrative expenses in the accompanying 1999 Statement of Operations.

In order for IFFP to increase the line of credit, holders of the
outstanding Notes were required to waive applicable provisions of the note
indenture. In addition, the note holders agreed that the Notes would be amended
to provide that interest earned on the notes from October 31, 2000 to October
31, 2003 will be paid in additional Notes. Interest payable thereafter will be
payable in cash.

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. The BKC Development Agreement was amended in February
1999 and again in October 1999. Pursuant to the BKC Development Agreement, IFFP
has been granted the exclusive right until December 31, 2007 to develop and be
franchised to operate Burger King restaurants in Poland with certain exceptions
discussed below. Pursuant to the BKC Development Agreement, as amended, IFFC is
required to open 73 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. Beginning January 1, 2000, four of the
Development Units opened in each year must be in-line or free-standing
restaurants within city centers or shopping mall locations.

Pursuant to the BKC Development Agreement, IFFC was required to pay BKC
a $1 million development fee if gross sales of Burger King restaurants for the
twelve months ending September 30, 1999 was less than $9 million. If sales for
the period exceeded $9 million but were less than $11 million, IFFC was required
to pay a development fee of $250,000. Upon execution of the BKC Development
Agreement, IFFC capitalized the $1 million development fee and recorded an
offsetting deferred credit, in anticipation of having to pay the amount. The
capitalized development fee was included in Burger King Development Rights in
the accompanying 1998 consolidated balance sheet, and was being amortized over
the life of the agreement.

Sales for the twelve months ending September 30, 1999 exceeded $9
million but were less than $11 million. As a result, the Company is required to
pay BKC a development fee of $250,000 which is reflected in other debt on the
accompanying 1999 consolidated balance sheet. The excess $750,000 capitalized
upon execution of the BKC Development Agreement was offset against the related
deferred credit. Accumulated amortization related to the $750,000 totaling
approximately $223,000 has been reversed and is included as a reduction of
general and administrative expenses in the accompanying 1999 consolidated
statement of operations.

The development fee was deferred until January 15, 2001 under a
deferred payment agreement with BKC executed in October 1999. In January 2001,
the Company may, at its option, either pay the development fee or provide BKC
with the written and binding undertaking of Rubinson that the Rubinson Group
will completely divest itself of any interest in IFFP and the Burger King
restaurants

F-19

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

opened or operated by IFFP in Poland within six months of the date that the
development fee payment is due. Pursuant to the BKC agreement, the "Rubinson
Group" has been defined to include any entity of which 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 of the parent or
subsidiary. Divestiture by the Rubinson Group or Rubinson could result in a
change in control of the Company under the indenture governing the terms of our
currently outstanding Notes. If so, the Company would be required to commence an
offer to repurchase the Notes within 30 days of the change in control at a
purchase price equal to 101% of the accreted value of the Notes. 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. Pursuant to the amendment
to the BKC Development Agreement, BKC agreed to defer $280,000 of accrued
franchise fees until January 15, 2001. 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 BKC system and BKC trademarks. The annual royalty
fee is 5% of gross sales. However, BKC has agreed to reduce the royalty fee to
2% through September 30, 1998 and 3% through December 31, 2002. Thereafter, the
annual royalty fee will be 5%. 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. Payment of all amounts due from IFFP to
BKC pursuant to the franchise agreements is guaranteed by IFFC.

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. As of
December 31, 1999, IFFP did not have a net worth of $7.5 million. BKC has agreed
to suspend the net worth requirement through December 30, 2000. 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.

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 which granted 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, as a condition to the New Master Franchise Agreement,
contributed $2,000,000 to KP in 1997. 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 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 is 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. IFFC has opened 11 Domino's stores pursuant to the New Master
Franchise Agreement and has satisfied its development requirements for 1999.

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 year following
the effective date of termination of the New Master Franchise Agreement.

F-20

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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
4,680 square feet of office space. Annual lease payments are $110,000. 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 January 1, 2000, IFFC entered into a new employment agreement with
the Chairman of the Board and Chief Executive Officer, extending his employment
term until December 31, 2002. The minimum annual salary during the first year is
$250,000 subject to a 10% annual increase for each of the remaining two years.
The agreement provides for an annual incentive bonus in an amount to be
determined by the Board of Directors. The agreement also provides for various
fringe benefits, certain payments if employment is terminated by reason of 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 employment
is terminated by the Company without cause.

On November 1, 1999, the Company entered into a new employment
agreement with its President and 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 $160,000. The agreement
provides for various fringe benefits, a payment of $50,000 in the event
employment is terminated by reason of death or disability and a maximum payment
of $50,000 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, 1999, based on the year end exchange rate:

YEARS ENDING DECEMBER 31,
-------------------------
2000............... $1,151,176
2001............... 1,148,094
2002............... 1,202,094
2003............... 1,124,094
2004............... 921,375
Thereafter......... 8,357,859
-----------
$13,904,692
===========

Rent expense for 1999 and 1998 was $1,727,347 and $805,110,
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:

DISPUTE WITH POLISH FISCAL AUTHORITIES. In 1995, IFFP became subject to
penalties for failure to comply with an amended tax law requiring the use of
cash registers with calculating and recording capabilities and which are
approved for use by the Polish Fiscal Authorities. As a penalty for

F-21

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

noncompliance, Polish tax authorities had the right to disallow some value added
tax deductions for July and August 1995. Additionally, penalties and interest
could have been imposed on these disallowed deductions. Although IFFP's NCR Cash
Register System was a modern system, it could not be modified. IFFP replaced the
system with a new Siemen's system which complies with Polish regulations. In
December 1999, the Polish Tax Court ruled against IFFP but reduced the fine and
related penalties to 474,776 Polish zloty or approximately $114,000. The Company
reversed the accrual of approximately $426,000 and reflected this amount as a
component of interest and other income (net) in the December 31, 1999
consolidated statement of operations.

REGENESIS MATTER. The Company is a party to the following legal
proceeding: ELPOINT COMPANY, LLC AND GENNADY YAKOVLEV, VS. MITCHELL RUBINSON,
MARILYN RUBINSON, EDDA RUBINSON, NIGEL NORTON, JAMES F. MARTIN, LEON BLUMENTHAL,
LAWRENCE RUTSTEIN, SHULMAN & ASSOCIATES, INC., MANNY SCHULMAN, FRANKLYN
WEICHSELBAUM, JAMES MIRANTI, INTERNATIONAL FAST FOOD CORPORATION, DOMINO'S PIZZA
INTERNATIONAL, INC., REGENESIS HOLDINGS CORPORATION, United States District
Court, Northern District of California (Case No. 99-1107 CRB). On March 10,
1999, certain shareholders of Regenesis Holdings Corporation (f/k/a QPQ
Corporation) ("Regenesis") filed a complaint against IFFC and certain of its
senior management and principal shareholders, including Mitchell Rubinson,
IFFC's Chairman of the Board and Chief Executive Officer, and James Martin,
IFFC's President and Chief Financial Officer. Regenesis formerly held the
right to develop Domino's Pizza stores in Poland. Certain former officers and
principal stockholders of Regenesis are officers and principal shareholders of
IFFC. The complaint alleges, among other things, that the defendants
fraudulently transferred the Domino's development rights to IFFC, thereby
causing Regenesis to lose value. Additionally, the complaint alleges that IFFC
engaged in the misappropriation of corporate opportunities of QPQ Corporation.
The plaintiffs were seeking unspecified monetary damages, including treble and
punitive damages, and reasonable costs and attorney's fees. The parties reached
a settlement in this matter and IFFC agreed to pay $300,000. Such amount has
been accrued in the 1999 consolidated financial statements.

15. SEGMENT INFORMATION:

The Company operates subsidiaries in the fast food industry in the
Republic of Poland. The Company, through its two wholly owned subsidiaries,
International Fast Food Polska, Sp. zo.o. ("IFFP") and Pizza King Polska Sp.
zo.o. ("PKP"), operates franchised Burger King restaurants and Domino's Pizza
stores, respectively, in the Republic of Poland. The Company's reportable
segments are strategic business units that offer different products. The Company
evaluates the performance of its segments based on revenue and operating income.
The Company's Burger King restaurants offer dine-in and take out hamburgers,
cheeseburgers, chicken sandwiches, fish sandwiches, french fries, soft drinks
including milk shakes and ice cream. The Company's Domino's Pizza stores offer
its customers take out and delivery service for its pizzas, salads, chicken
wings, breadsticks and soft drinks. There is no material intersegment revenue.
Interest expense related to working capital and development activity is included
in the Company's consolidated statements of operations.

F-22

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents financial information regarding the
Company's different industry segments as of and for the years ended December 31,
1999 and 1998 (in thousands):
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31, 1999
----------------------------
IFFP PKP TOTAL CORPORATE CONSOLIDATED
---- --- ----- --------- ------------
<S> <C> <C> <C> <C> <C>
Revenue ............................. $ 10,886,141 $ 4,212,172 $ 15,098,313 -- $ 15,098,313
Food and packaging costs ............ 4,195,501 1,364,563 5,560,064 -- 5,560,064
Restaurant operating expenses ....... 6,864,959 2,478,604 9,343,563 -- 9,343,563
Pre-opening costs ................... 466,369 139,153 605,522 -- 605,522
Depreciation and amortization ....... 2,395,050 720,481 3,115,531 -- 3,115,531
Asset impairment charges ............ 1,063,277 -- 1,063,277 1,448,033 2,511,310
------------ ----------- ------------ ----------- -------------
Loss from operations before
general and administrative ....... (4,099,015) (490,629) (4,589,644) (1,448,033) (6,037,677)
expenses
General and administrative expenses . 1,705,675 553,406 2,259,081 2,574,773 4,833,854
============ =========== ============ =========== ============
Loss from operations ............. $ (5,804,690) $(1,044,035) $ (6,848,725) $(4,022,806) $(10,871,531)
============ =========== ============ =========== ============

Capital Expenditures ................ $ 5,175,426 $ 886,027 $ 6,061,453 $ -- $ 6,061,453

Total Assets ........................ $ 18,381,704 $ 3,261,300 $ 21,593,004 $ 4,288,024 $ 25,881,028

</TABLE>

YEAR ENDED DECEMBER 31, 1998
----------------------------
IFFP PKP TOTAL CORPORATE CONSOLIDATED
---- --- ----- --------- ------------
<S> <C> <C> <C> <C> <C>
Revenue............................. $6,321,644 $2,104,460 $8,426,104 - $8,426,104
Food and packaging costs............ 2,609,902 737,575 3,347,477 - 3,347,477
Restaurant operating expenses....... 3,144,372 1,427,173 4,571,545 - 4,571,545
Depreciation and amortization....... 1,103,031 405,489 1,508,520 - 1,508,520
------------ ----------- ------------ ----------- ------------
Loss from operations before
general and administrative
expenses.......................... (535,661) (465,777) (1,001,438) - (1,001,438)
General and administrative expenses. 1,410,458 297,223 1,707,681 1,619,316 3,326,997
------------ ----------- ------------ ----------- -----------
Loss from operations............. $(1,946,119) $(763,000) $(2,709,119) (1,619,316) $ (4,328,435)
=========== ========= =========== ============ ============

Capital Expenditures $11,247,000 $2,034,000 $13,281,000 $ 10,365 $ 13,291,365

Total Assets $18,536,000 $3,406,000 $21,942,000 $ 9,904,803 $ 31,846,803

</TABLE>

F-23
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16. ASSET IMPAIRMENT CHARGES

In the fourth quarter of 1999, the Company recorded asset impairment
charges totaling $2,511,310 related to the write-off of costs in excess of the
carrying value of assets acquired and asset write-offs related to three store
closings.

As described in Note 2, the Company has a history of net losses and has
an accumulated deficit of $35,374,274 as of December 31, 1999. As a result, the
Company determined that the carrying value of cost in excess of net assets
acquired would not be recoverable and has recorded a $1,448,033 impairment
charge to write off the asset.

During 1999, the Company committed to a plan to close three Burger King
locations, of which two were closed in early 2000 and one is scheduled to close
in the first half of 2000. In connection with these store closings, the Company
recorded asset impairment charges totaling $1,063,277. These charges primarily
represent the carrying value of abandoned buildings, fixtures and leasehold
improvements for the closed locations totaling $987,471, and the carrying value
of franchise fees and other intangibles totaling $75,806. Because the Company's
buildings are located on leased properties, the Company will not be able to
market and sell the properties.

F-24

EXHIBIT 10.45

EMPLOYMENT AGREEMENT
--------------------

THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into
effective January 1, 2000, by and between International Fast Food Corporation, a
Florida corporation (the "Company"), and Mitchell Rubinson (the "Executive").

W I T N E S S E T H:

WHEREAS, the Company has entered into that certain Assignment and
Assumption Agreement effective December 31, 1991, with Capital Acquisitions,
Inc., a Delaware corporation, pursuant to which the Company acquired certain
rights to develop and operate Burger King restaurants in the Republic of Poland;
and

WHEREAS, the Company desires to employ the Executive for the term
provided herein, and the Executive desires to be employed by the Company for
such term, all in accordance with the terms and provisions herein contained;

NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:

1. EMPLOYMENT.
-----------
(a) The Company hereby employs the Executive to render services to the
Company as its Chairman of the Board and Chief Executive Officer, and the
Executive hereby accepts such employment, on the terms and conditions contained
in this Agreement.
(b) The Executive shall perform such duties for the Company as may be
determined and assigned to him from time to time by the Company's Board of
Directors (the "Board") which assigned duties shall be consistent with and
appropriate to the positions described above; provided that, with the
Executive's consent, such consent not to be unreasonably withheld, the Board may
delegate certain of the duties and positions to other officers or employees of
the Company or its subsidiaries and affiliates.

<PAGE>

(c) The Executive hereby agrees to devote such portion of his business
time, attention and efforts to the performance of his duties hereunder as may be
reasonably required by the Board, it being understood that the Executive has
certain other business interests to which he must devote a portion of his
business time.
(d) The Executive's place of employment during the term of his
employment hereunder shall be in Dade County, Florida or in such other place as
the Company and the Executive shall mutually agree. The Executive acknowledges
that he may be required to travel from time to time in order to carry out his
duties hereunder.
(e) The Executive agrees to accept election and to serve during all or
any part of the Term, as hereinafter defined, as an officer or director of the
Company and any subsidiary of the Company, without any compensation therefor
other than that specified herein, if elected to such position by the
shareholders or by the Board of the Company or of any subsidiary. The Executive
understands that the Company has agreed to use all reasonable efforts to elect
the Executive as a director and officer of the Company, and the Executive agrees
to act in such capacities if elected.

2. TERM.
----
The initial term of this Agreement, and the employment of the Executive
hereunder, shall be for a period commencing on January 1, 2000 and expiring on
December 31, 2002 (the "Initial Term").

<PAGE>

3. COMPENSATION PACKAGE.
--------------------
(a) The Executive's minimum annual salary during the first
year of the Initial Term shall be $250,000 per annum, payable by check in
equal bi-weekly installments or in such other periodic installments as may be in
accordance with the regular payroll policies of the Company as from time to time
in effect, less such deductions or amounts to be withheld as shall be required
by applicable law and regulations, provided that for each subsequent year during
the Term, the minimum salary shall be increased by ten percent (10%).
(b) The Executive shall be entitled to participate in Company provided
family medical/dental insurance plans, provided that the policy may have
standard co-insurance and deductible provisions. Should Executive desire to
procure supplemental or alternative insurance policy or policies for himself
and/or his family, the Company will reimburse 75% of the cost thereof.
(c) The Executive shall be entitled to four (4) weeks of paid vacation
during the first year of the Initial Term and 6 weeks of paid vacation during
any subsequent year of the Term. In the event the Executive elects not to take
all or any portion of his vacation, the Company will pay the Executive for each
day of vacation not taken an amount of money equal to the quotient of the
Executive's then current annual salary divided by 260.
(d) The Executive shall participate in all profit sharing plans adopted
by the Company. Additionally, the Executive shall be entitled to receive an
annual incentive bonus as determined by the Board. The annual bonus shall be
paid in cash within 30 days after the Company files with the SEC its Annual
Report on Form 10-K with respect to such year. The incentive bonus shall be
pro-rated for partial years.
(e) The Company shall provide the Executive with an automobile
allowance of $1,250 per month. The Executive shall be responsible for all
associated expenses relating to such automobile, including, without limitation,
insurance, gas and repairs.

<PAGE>

(f) The Company shall pay or reimburse the Executive for all reasonable
expenses actually incurred or paid by him in the performance of his duties
hereunder, including travel and entertainment, in accordance with Company policy
and upon the presentation by the Executive of an itemized account of such
expenditures.
(g) The Executive shall be eligible to receive stock option grants
under the Company's stock option plans in the discretion of the Company's board
of directors or option committees under such plans.

4. TERMINATION.
-----------
(a) Notwithstanding anything contained in this Agreement to the
contrary, the Company by written notice to the Executive shall at all times have
the right to terminate this Agreement, and the Executive's employment hereunder,
with or without "Cause", as hereinafter defined. For the purposes hereof,
"Cause" shall be defined to mean any act of the Executive or any failure to act
on the part of the Executive which constitutes:
(i) fraud or embezzlement against the Company;
(ii) conviction of a felony; or
(iii) commission of a crime involving dishonesty.
(b) Notwithstanding anything contained in this Agreement to the
contrary, this Agreement and the Executive's employment hereunder shall be
terminated automatically (i) immediately upon the death of the Executive, and
(ii) if the Executive shall, as the result of mental or physical incapacity,
illness or disability, be unable and fail to perform reasonably his duties and
responsibilities provided for herein for any continuous period of 120 days
during the term of this Agreement, provided that the obligations of the Company
to make payments hereunder shall be suspended during the pendency of any
disability which has persisted for a continuous period of 60 days during the
term of this Agreement.

<PAGE>

(c) If, during the Term, this Agreement is terminated pursuant to
Paragraph 4(b) hereof, the Company shall pay to the Executive or the personal
representative of his estate Two Hundred Fifty Thousand Dollars ($250,000) in a
lump sum within thirty (30) days of such termination.
(d) If, during the Term, the Company terminates the Executive's
employment hereunder without Cause, the Company shall pay to the Executive a
lump sum termination amount (the "Termination Amount") within thirty days of
such termination and neither party shall have any further obligations hereunder,
except pursuant to Paragraphs 5 and 6 hereof. The Termination Amount shall be an
amount equal to twice the minimum annual salary then being paid to the Executive
pursuant to Section 3(a) hereof, plus an amount equal to the incentive bonus
paid in the prior year.
(e) If the Company terminates the Executive's employment hereunder for
Cause, neither party shall have any further obligations hereunder except
pursuant to Paragraphs 5 and 6 hereof.

5. NONDISCLOSURE.
--------------
The Executive understands that, solely as a result of his employment
with the Company, he will have knowledge of and access to certain confidential
information relating to (a) Burger King Corporation ("BKC") and Domino's Pizza
International ("DPI") and the Company's relationship with BKC and DPI, (b) the
financial and planning aspects of the Company's business and (c) other aspects
of the Company's business. The Executive agrees that, during or following his
employment by the Company, he will not disclose to others (except in the course
of his employment with the Company and solely in furtherance of the interest of
the Company) any such confidential information. The provisions of this paragraph
shall not preclude the Executive from using, after the termination of his
employment with the Company, his general professional knowledge and skills
including those developed while employed by the Company. The Executive further
agrees to comply with any provision of any agreement between the Company and DPI
relating to the confidentiality of information relating to DPI or its
operations.

6. RESTRICTIVE COVENANTS.
----------------------
The Executive shall not at any time during the term of his employment
hereunder and for a period of one (1) year after the date this Agreement expires
or is terminated for any reason, directly or indirectly, for himself or for any
other person, firm, corporation, partnership, association or other entity,
except on behalf of the Company:
(a) engage or be involved in any restaurant operations in Poland the
same or similar to those conducted by the Company;
(b) interfere with business relationships between the Company and its
suppliers, franchisors, or customers;
(c) without the Company's prior written consent, become employed by an
entity with which the Company has a business relationship; or
(d) without the Company's prior written consent, hire or solicit the
employment of any person or associate in the employ of the Company or DPI.
The Executive acknowledges that (i) the foregoing covenants are
reasonable in scope and duration and (ii) he will be able to earn a living and
provide for his family without violating the foregoing covenants.

7.NO DELEGATION.
--------------
Neither the Company nor the Executive shall delegate its or his
obligations pursuant to this Agreement to any other person, except as provided
in Paragraph 8 hereof.

<PAGE>

8. NO ASSIQNMENT.
--------------
Neither the Company nor the Executive shall assign any of its or his
rights under this Agreement to any other person, except that the Company may
assign its rights under this Agreement to any successor entity in a merger with
the Company or any entity that purchases all or substantially all of the
Company's assets, and except that the Company may assign its rights and
obligations hereunder to a subsidiary reasonably acceptable to the Executive.

9. DAMAGES.
-------
Nothing contained herein shall be construed to prevent
the Company or the Executive from seeking and recovering from the other damages
sustained by either or both of them as a result of its or his breach of any term
or provision of this Agreement. In the event that either party hereto brings
suit for the collection of any damages resulting from, or the injunction of any
action constituting, a breach of any of the terms or provisions of this
Agreement, then the party found to be at fault shall pay all reasonable court
costs and attorneys' fees of the other.

10. GOVERNING LAW.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida.

11. NOTICES.
-------
Any notices, requests, demands and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given (a) when delivered by hand or facsimile, or (b) 3
days after deposit in the United States mail, by registered or certified mail,
return receipt requested, postage prepaid, as follows:

If to the Company: International Fast Food Corporation
1000 Lincoln Road, Suite 200
Miami, Florida 33139

With a copy to: Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attn: Gary M. Epstein, Esq.

If to the Executive: Mitchell Rubinson
P. O. Box 19-0089
Miami Beach, Florida 33119

or to such other addresses as either party hereto may from time to time give
notice of to the other.

<PAGE>

12. BENEFITS: BINDING EFFECT.
--------------------------
This Agreement shall be for the benefit of and binding upon the parties
hereto and their respective heirs, personal representatives, legal
representatives, successors and, where applicable, assigns.

13. SEVERABILITY.
-------------
The invalidity of any one or more of the words, phrases, sentences,
clauses, or sections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part thereof,
all of which are inserted conditionally on their being valid in law, and, in the
event that any one or more of the words, phrases, sentences, clauses or sections
contained in this Agreement shall be declared invalid, this Agreement shall be
construed as if such invalid word or words, phrase or phrases, sentence or
sentences, clause or clauses, or section or sections had not been inserted. If
such invalidity shall be caused by the length of any period of time or the size
of any area set forth in any part hereof, such period of time or such area, or
both, shall be considered to be reduced to a period or area to the extent and
only to the extent that such reduction would cure such invalidity.

14. WAIVERS.
-------
The waiver by either party hereto of a breach or violation of any term
or provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach or violation.

15. SECTION HEADINGS.
----------------
The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

16. SPECIFIC PERFORMANCE.
---------------------
The Executive agrees that a violation by him of any of the covenants
contained in Paragraphs 5 or 6 of this Agreement will cause irreparable damage
to the Company the amount of which will be virtually impossible to ascertain,
and with respect to which the Company may not have an adequate remedy at law,
and for those reasons the Executive agrees that the Company shall be entitled to
an injunction or a restraining order (both temporary or permanent) from any
court of competent jurisdiction restraining any violation of any or all of said
covenants by the Executive, all persons he controls, and all persons acting for
or with him, either directly or indirectly, in addition to any other form of
relief, at law or equity, to which the Company may be entitled. When used in
Paragraphs 5, 6 and 16 hereof, the term Company shall include all its directly
and indirectly owned subsidiaries and its affiliates involved in the restaurant
business in Poland.

<PAGE>

17. COUNTERPARTS.
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.

18. ENTIRE AGREEMENT.
----------------
This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements, understandings and arrangements, both oral and written, between the
parties hereto with respect to such subject matter. No amendment or modification
of this Agreement shall be valid or binding upon the Company unless made in
writing and signed by a duly authorized officer of the Company other than the
Executive, or upon the Executive unless made in writing and signed by him.

19. NO THIRD PARTY BENEFICIARY.
--------------------------
Nothing expressed or implied in this Agreement is intended, or shall be
construed, to confer upon or give any person other than the parties hereto and
their respective heirs, personal representatives, legal representatives,
successors and permitted assigns, any rights or remedies under or by reason of
this Agreement.

<PAGE>

IN WITNESS WHEREOF, the parties have set their hands and seals as of
the day and year first above written.

COMPANY:

INTERNATIONAL FAST FOOD CORPORATION
By: /S/ JAMES F. MARTIN
-------------------
James F. Martin, President

EXECUTIVE:

/S/ MITCHELL RUBINSON
---------------------
Mitchell Rubinson

EXHIBIT 21.1

SUBSIDIARIES OF INTERNATIONAL FAST FOOD CORPORATION

1. International Fast Food Polska, Sp.Zo.o.

2. IFF - DX Management Sp.Zo.o.

3. IFF Polska-Kolmer, Sp.Zo.o.

4. Pizza King Polska, Sp.Zo.o.

5. Kroseska Pizza, Sp.Zo.o.

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,383,521
<SECURITIES> 0
<RECEIVABLES> 246,077
<ALLOWANCES> 0
<INVENTORY> 795,906
<CURRENT-ASSETS> 2,572,513
<PP&E> 26,744,074
<DEPRECIATION> (7,786,191)
<TOTAL-ASSETS> 25,881,028
<CURRENT-LIABILITIES> 6,290,833
<BONDS> 11,574,532
0
1,911
<COMMON> 454,977
<OTHER-SE> (868,175)
<TOTAL-LIABILITY-AND-EQUITY> 25,881,028
<SALES> 15,098,313
<TOTAL-REVENUES> 15,098,313
<CGS> 5,560,064
<TOTAL-COSTS> 20,409,780
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,882,221
<INCOME-PRETAX> (13,109,306)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,109,306)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (620,000)
<NET-INCOME> (13,729,306)
<EPS-BASIC> (0.31)
<EPS-DILUTED> (0.31)

</TABLE>