INTERNATIONAL FAST FOOD CORP, 10QSB, 2000-08-14

INTERNATIONAL FAST FOOD CORP
10QSB, 2000-08-14
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-QSB

[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the quarterly period ended June 30, 2000

[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act

For the transition period from ____________ to ____________.

COMMISSION FILE NUMBER: 1-11386

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

FLORIDA 65-0302338
------- ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)

1000 LINCOLN ROAD, SUITE 200
MIAMI BEACH, FLORIDA 33139
----------------------------------------------------------
(Address of Principal Executive Office)

(305) 531-5800
----------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)

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 [ ]

The number of shares outstanding of the issuer's common stock, par value $.01
per share as of July 31, 2000 was 45,863,209.

Traditional Small Business Disclosure Format: Yes [ ] No [X]

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES

INDEX

PART I. FINANCIAL INFORMATION
<S> <C>
ITEM 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2000 (unaudited) and
December 31, 1999..................................................... 2
Consolidated Statements of Operations for the Three Months and Six
Months Ended June 30, 2000 and 1999 (unaudited)....................... 3-4
Consolidated Statements of Shareholders' Equity (Deficit) for the Six
Months Ended June 30, 2000 (unaudited)................................ 5
Consolidated Statements of Cash Flows for the Six Months Ended June
30, 2000 and 1999 (unaudited)......................................... 6
Notes to Consolidated Financial Statements............................ 7-17
ITEM 2. Management's Discussion and Analysis or Plan of Operation.... 17-25

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings............................................ 26
ITEM 6. Exhibits and Reports on Form 8-K............................. 27
SIGNATURES............................................................ 28

</TABLE>

1
<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1........ FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS

JUNE 30 DECEMBER 31
2000 1999
------- -----------
CURRENT ASSETS: (unaudited)
<S> <C> <C>
Cash.................................................................. $229,641 $383,531
Restricted cash and certificates of deposit........................... -- 999,990
Receivables........................................................... 275,849 246,077
Inventories........................................................... 623,690 795,906
Prepaid expenses and other............................................ 382,333 147,009
------------ ------------
Total Current Assets.............................................. 1,511,513 2,572,513
Furniture, Equipment, Buildings and Leasehold Improvements, net of
accumulated depreciation and amortization of $8,915,955 and 17,448,313 18,957,883
$7,786,191........................
Deferred Debt Issuance Costs, net of accumulated amortization of
$462,408 and $511,723, respectively..................................... 939,325 2,931,015
Other Assets, net of accumulated amortization of $519,013 and $443,033,
respectively............................................................ 1,103,449 1,132,548
Burger King Development Rights, net of accumulated amortization of
$162,162 and $74,324, respectively...................................... 87,838 175,676
Domino's Development Rights, net of accumulated amortization of $93,252
and $77,710, respectively............................................... 95,851 111,393
------------ ------------

Total Assets...................................................... $21,186,289 $25,881,028
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
Accounts payable...................................................... $2,068,183 $2,658,055
Accrued interest payable.............................................. 10,339 56,137
Other accrued expenses................................................ 2,894,643 1,960,956
Current portion of bank credit facilities............................. 642,938 1,615,685
Shareholder Loans 540,000 --
----------- -----------
Total Current Liabilities......................................... 6,156,103 6,290,833
11% Convertible Senior Subordinated Discount Notes due October 31, 2007... 9,292,572 8,818,532
Bank Credit Facilities..................................................... 958,342 8,176,950
9% Subordinated Convertible Debentures, due December 15, 2007.............. 2,756,000 2,756,000
------------ ------------
Total Liabilities................................................. 19,163,017 26,042,315
------------ ------------
Other Liabilities.......................................................... 250,000 250,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (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 issued and outstanding
(liquidation preference of $15,813,400)............................. 1,581 1,581
Common Stock, $.01 par value, 200,000,000 shares authorized;
45,863,209 and 45,497,655 shares issued and outstanding, 458,633 454,977
respectively........................................................
Additional paid-in capital............................................ 34,651,398 34,506,099
Accumulated deficit................................................... (33,338,670) (35,374,274)
------------ ------------
Total Shareholders' Equity (Deficit)............................. 1,773,272 (411,287)
------------ ------------
Total Liabilities and Shareholders' Equity (Deficit).............. $21,186,289 $25,881,028
============= =============

</TABLE>

3
See Accompanying Notes

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30,
--------------------- --------------------------

2000 1999 2000 1999
---- ---- ---- ----
REVENUES:
<S> <C> <C> <C> <C>
Sales................................................................ $2,746,418 $4,147,345 $5,853,689 $7,841,918
----------- ------------ ---------- ------------

FOOD AND PACKAGING COSTS............................................. 919,409 1,576,554 1,958,244 3,028,520
----------- ------------ ---------- ------------

GROSS PROFIT......................................................... 1,827,009 2,570,791 3,895,445 4,813,398
----------- ------------ ---------- ------------

OPERATING EXPENSES:
Payroll and related costs........................................ 622,715 789,590 1,344,677 1,517,851
Occupancy and other operating expenses........................... 1,087,126 1,610,140 2,190,296 2,732,853
Preopening expenses ............................................. -- 290,857 -- 738,592
Depreciation and amortization.................................... 716,465 411,471 1,442,395 1,284,967
----------- ------------ ---------- ------------
Total operating expenses.................................... 2,426,306 3,102,058 4,977,368 6,274,263
----------- ------------ ---------- ------------
Loss from operations before general and administrative expenses...... (599,297) (531,267) (1,081,923) (1,460,865)
GENERAL AND ADMINISTRATIVE EXPENSES.................................. 780,480 979,993 1,515,482 2,258,714
----------- ------------ ---------- ------------
Loss from operations................................................. (1,379,777) (1,511,260) (2,597,405) (3,719,579)
----------- ------------ ---------- ------------

OTHER INCOME (EXPENSES):
Interest and other income, net................................... 91,327 108,266 217,602 251,429
Interest expense, including amortization of issuance costs....... (719,891) (852,524) (1,434,316) (1,511,652)
Gain on settlement............................................... 5,830,416 - 5,830,416 -
Foreign currency exchange gain/(loss)............................ 108,527 (311,178) 118,262 (144,914)
----------- ------------ ---------- ------------
Total other income (expenses)............................... 5,310,379 (1,055,436) 4,731,964 (1,405,137)
----------- ------------ ---------- ------------
Income (loss) before provision for income taxes and cumulative
effect of accounting change...................................... 3,930,602 (2566,696) 2,134,559 (5,124,716)
Provision for income taxes.....................................
-- -- -- --
Income (loss) before cumulative effect of accounting change ... 3,930,602 (2,566,696) 2,134,559 (5,124,716)
Cumulative effect of accounting change .............................. -- -- -- (620,000)
----------- ------------ ---------- ------------
-- --
NET INCOME (LOSS).................................................... $3,930,602 $(2,566,696) $2,134,559 $(5,744,716)
=========== ========== ========== ===========

BASIC NET INCOME (LOSS) PER COMMON SHARE:............................
Income (loss) before cumulative effect of accounting change.... $.08 $(.06) $.04 $(.11)
Cumulative effect of accounting change......................... -- -- -- .02)
----------- ------------ ---------- ------------
Net income (loss) $ 08 $(.06) $ 04 $(.13)
=========== ========== ========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING................. 45,637,833 45,142,103 45,593,049 45,056,418
=========== ========== ========== ===========
</TABLE>

See Accompanying Notes

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS, CONTINUED
(UNAUDITED)

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30,
--------------------- --------------------------
2000 1999 2000 1999
---- ---- ---- ----
DILUTED NET INCOME (LOSS) PER COMMON SHARE:
<S> <C> <C> <C> <C>
Income (loss) before cumulative effect of accounting change.......... $.05 $(.06) $ .03 $(.11)
=========== ========== ========== ==========
Cumulative effect of accounting change .............................. - - - $(.02)
----------- --------- ---------- =====
Net income (loss).................................................... $ .05) $(.06) $ .03 $(.13)
=========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING.....................84,784,583 45,142,103 84,988,700 45,056,418
=========== ========== ========== ==========

</TABLE>

See Accompanying Notes

4
<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)

ADDITIONAL
PREFERRED STOCK COMMON STOCK PAID IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT TOTAL

<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1999 ........ 191,119 $1,911 45,497,655 $454,977 $34,506,099 $(35,374,274) $ (411,287)

Issuance of common stock upon
exercise of stock options ........ -- -- 92,099 921 49,079 -- 50,000

Issuance of common stock for 6%
Series A Preferred Stock dividends -- -- 273,455 2,735 96,220 (98,955) --

Net income for the period ........ -- -- -- -- -- 2,134,559 2,134,559
------- ------ ---------- -------- ----------- ------------ -----------

Balances, June 30, 2000 (unaudited) 191,119 $1,911 45,863,209 $458,633 $34,651,398 $(33,338,670) $ 1,773,272
======= ====== ========== ======== =========== ============ ===========

</TABLE>

See Accompanying Notes

5
<PAGE>

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

SIX MONTHS ENDED JUNE 30,
---------------------------
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) .......................................................... $ 2,134,559 $(5,744,716)
Adjustments to reconcile net income (loss) to net cash (used in) provided by
operating activities:
Cumulative effect of accounting change ................................... -- 620,000
Amortization and depreciation of furniture, equipment,
buildings, leasehold improvements and development rights ............... 1,546,504 1,410,889
Amortization and write-off of debt discount and issuance ............ 2,465,730 1,316,298
costs
Other operating items .................................................... 180,051 100,402
Changes in operating assets and liabilities:
Receivables .............................................................. (29,772) 1,150,107
Inventories .............................................................. 172,216 6,563
Prepaid expenses and other ............................................... (235,324) (269,972)
Accounts payable and accrued expenses .................................... 298,018 (508,123)
----------- -----------
Net cash provided by (used in) operating activities ........................ 6,531,982 (1,918,552)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Liquidation of certificates of deposit ..................................... 990,990 --
Payments for furniture, equipment, buildings and leasehold ............ (12,493) (4,773,799)
improvements
Payments for franchise fees and other assets ............................... (46,881) (216,589)
----------- -----------
Net cash provided by (used in) investing activities ........................ 931,616 (4,990,388)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of bank credit facilities ....................................... (9,292,666) (277,673)
Borrowings under bank credit facilities .................................... 1,101,311 4,057,847
Borrowings from shareholder ................................................ 540,000 --
-----------
Issuance of common stock ................................................... 50,000 --
----------- -----------
Net cash (used in ) provided by financing activities ....................... (7,601,355) 3,780,174
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS .................. (16,133) (100,402)
----------- -----------
INCREASE / DECREASE IN CASH AND CASH EQUIVALENTS .............................. (153,890) (3,229,168)
BEGINNING CASH AND CASH EQUIVALENTS ........................................... 383,531 4,013,371
----------- -----------
ENDING CASH AND CASH EQUIVALENTS .............................................. $ 229,641 $ 784,203
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest ................................................................. $ 639,213 $ 376,133
=========== ===========
Interest capitalized ..................................................... $ -- $ 155,100
=========== ===========

</TABLE>

Supplemental Schedule of Non Cash Investing and Financing activities:

Six Months Ended June 30, 2000:
Issuance of 273,455 shares of common stock in payment of $98,955 of
dividends on the 6% Series A Preferred Stock.

Six months ended June 30, 1999:
Issuance of 204,585 shares of common stock with a face value of $114,568 to
holders of 11% Senior Subordinated Discount Notes in exchange for a
waiver on bank debt

Issuance of 217,959 shares of common stock in payment of $96,775 of
dividends on the 6% Series A Preferred Stock

See Accompanying Notes

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2000

(UNAUDITED)

1. ORGANIZATION:

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

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF PRESENTATION -- The accompanying unaudited consolidated
financial statements, which are for interim periods, have been prepared in
conformity with the instructions to Form 10-QSB and Article 10 of Regulation S-X
and therefore do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
These unaudited consolidated financial statements should be read in conjunction
with the consolidated financial statements and the footnotes thereto contained
in the Annual Report on Form 10-KSB for the year ended December 31, 1999 of
International Fast Food Corporation and Subsidiaries, as filed with the
Securities and Exchange Commission. The December 31, 1999 consolidated balance
sheet contained herein was derived from audited consolidated financial
statements, but does not include all disclosures required by generally accepted
accounting principles.

The accompanying unaudited consolidated financial statements include
the accounts of the Company and its Polish subsidiaries, International Fast Food
Polska, Sp. z.o.o. ("IFFP"), Krolewska Pizza, Sp. z.o.o. ("KP") and Pizza King
Polska, Sp. z.o.o. ("PKP"). IFFP currently operates 23 Burger King restaurants
and 16 Domino's Pizza stores and a Domino's-approved commissary in Poland. All
significant intercompany transactions and balances have been eliminated in
consolidation. In the opinion of management, the interim consolidated financial
statements reflect all adjustments (which include only normal recurring
adjustments) necessary for a fair presentation of the information contained
therein. The interim results of operations are not necessarily indicative of the
results which may be expected for the full year.

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

The value of the zloty is pegged pursuant to a system based on a basket
of currencies, as well as all other economic and political factors that effect
the value of currencies generally. At June 30, 2000 and December 31, 1999, the
exchange rate was 4.40 and 4.15 zlotys per dollar, respectively. The accounts of
IFFC's Polish subsidiaries are maintained in zlotys and are remeasured into U.S.
dollars, the functional currency, at the end of each reporting period. Monetary
assets and liabilities are remeasured, using current exchange rates.
Non-monetary assets, liabilities, and related expenses, primarily furniture,
equipment, leasehold improvements and related

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2000

(UNAUDITED)

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.

GOING CONCERN -- The report of the Company's independent certified
public accountants on their audit of the Company's December 31, 1999, financial
statements contained uncertainties relating to the Company's ability to continue
as a going concern. As shown in the accompanying financial statements the
Company reported net income of $2,134,559 (which includes a non-recurring gain
of $5,830,416) for the six months ended June 30, 2000, and had a working capital
deficiency and an accumulated deficit of $4,644,590 and $33,338,670
respectively, at June 30, 2000. These factors among others raise substantial
doubt about the Company's ability to continue as a going concern for a
reasonable period of time. The accompanying financial statements do not include
any adjustments relating to the outcome of this uncertainty. .

LIQUIDITY AND PLAN OF OPERATIONS -- As of June 30, 2000, IFFC had
negative working capital of approximately $4,644,590 and cash of $229,641. IFFC
has significant commitments to develop restaurants in accordance with the BKC
Development Agreement and the New Master Franchise Agreement with Domino's. The
Company does not presently have sufficient financial resources to meet its
development obligations under the terms of the BKC and Domino's agreements. The
Company has sustained losses from operations since its incorporation in December
1991. For the six months ended June 30, 2000 and 1999, the Company reported net
income of $2,134,559 (which includes a non-recurring gain of $5,830,416) and a
net loss of $5,744,716, respectively. At June 30, 2000 the Company had an
accumulated deficit of $33,338,670. These factors raise substantial doubt about
the Company's 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 be necessary should the Company be unable to continue as a going concern.

Management believes that cash flows from currently existing stores
together with existing financial resources will not be sufficient to fund
operations. Management is seeking to obtain additional equity and or debt
financing to fund future development. No assurance can be given that such
financing will be obtained or that it can be obtained on favorable terms. If the
Company is unable to obtain additional equity or debt financing it may be forced
to curtail or cease operations with respect to its Burger King and Domino's
operations.

NET INCOME (LOSS) PER COMMON SHARE -- The net income (loss) per common
share in the accompanying statements of operations has been computed based upon
the provisions of SFAS No. 128, Earnings Per Share, which became effective for
reporting periods ending after December 15, 1997. The basic net income (loss)
per common share in the accompanying statements of operations is based upon the
net income (loss) after preferred dividend requirements of $98,955 and $96,775
in 2000 and 1999, respectively, divided by the weighted average number of shares
outstanding during each period. Diluted per share data for the three months and
six months ended June 30, 1999 is the same as basic per share data since the
inclusion of all potential common shares that would be issuable upon the
exercise of options and warrants and the assumed conversion of convertible debt
and preferred stock would be anti-dilutive.

Diluted per share data for the three months and six months ended June
30, 2000 assumes that all dilutive convertible debt and convertible preferred
shares outstanding at the beginning of each period were converted at those
dates, with related interest and preferred stock dividend requirements added to
income available to common shareholders and weighted average outstanding shares
increased to reflect the assumed conversions. It also

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2000

(UNAUDITED)

assumes that outstanding common shares were increased by shares issuable upon
exercise of those options for which the market price of the common stock exceeds
the exercise price of the options, less shares which could have been purchased
by the Company with proceeds received from such exercises.

The computation of the adjusted numerator and denominator used in the
computation of diluted per share data for the three months and six months ended
June 30, 2000 is as follows:

<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
2000 2000
------------- ------------
(unaudited) (unaudited)

<S> <C> <C>
Net income ...... ......................................... $ 3,930,602 $ 2,134,559
Less preferred stock dividends ............................ (98,955) (98,955)
------------ ------------
Income available to common shareholders, basic ............ 3,831,647 2,035,604
Add interest expense on convertible debt .................. 361,626 671,919
Add preferred dividend requirements ....................... 98,955 98,955
------------ ------------
Income available to common shareholders, diluted .......... $ 4,292,228 $ 2,806,478
============ ============
Weighted average number of common shares outstanding, basic
45,637,833 45,593,049
Assumed shares issuable upon conversion of convertible
debt ................................................. 14,089,949 14,089,949
Assumed shares issuable upon conversion of preferred shares 25,056,801 25,056,801
Dilutive effect of stock options .......................... -- 248,901
------------ ------------
Weighted average number of common shares outstanding,
diluted .............................................. 84,784,583 84,988,770
============ ============
</TABLE>

There was no dilutive effect of stock options for the three months
ended June 30, 2000, since the average exercise price of the outstanding options
was equivalent to the average trading price of the common stock during the
period.

STORE PREOPENING EXPENSES -- Prior to January 1, 1999, the Company
capitalized preopening costs associated with opening new restaurants. Upon
commencement of revenue producing activities at a restaurant location, these
capitalized preopening 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 on the
accompanying statement of operations for the six months ended June 30, 1999.
Preopening costs incurred subsequent to December 31, 1998 have been charged
directly to expense.

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2000

(UNAUDITED)

ADVERTISING EXPENSE -- The Company accounts for advertising expense in
accordance with SOP 93-7, "Accounting for Advertising Costs" which generally
requires that advertising costs be expensed either as incurred or the first time
the advertising takes place. It is the Company's policy to expense advertising
costs the first time the advertising takes place. However, Accounting Principles
Board Opinion ("APB") No. 28, "Interim Financial Reporting" allows advertising
costs to be deferred within a fiscal year if the benefits of an advertising
expenditure clearly extend beyond the interim period in which the expenditure is
made. Pursuant to APB 28, it is the Company's policy to defer advertising
expenses at the end of interim periods to the extent that such costs will
clearly benefit future interim periods. During the six months ended June 30,
2000, the Company incurred advertising expense of $446,010, all of which was
charged to expense during the period. During the six months ended June 30, 1999,
the Company incurred advertising expense of approximately $1,490,056, of which
approximately $576,651 was deferred at June 30, 1999 and was included in prepaid
expenses on the accompanying balance sheet as of June 30, 1999. Pursuant to SOP
93-7, the Company is required to expense all advertising incurred at the end of
the fiscal year.

INCOME TAXES -- The Company accounts for income taxes under the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes." SFAS No. 109 requires recognition of deferred tax
liabilities and assets for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based upon the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. The Company has incurred losses since its
inception. Due to the uncertainty of the realization of the tax loss
carryforward, the Company has established a 100% valuation allowance against the
carryforward benefit.

For the three and six months ended June 30, 2000, the Company reported
income of $3,930,602 and $2,134,559, respectively. No provision for income taxes
has been provided since the Company expects to incur a loss for the full year
ended December 31, 2000, and accordingly, no provision for income taxes is
expected.

For the three and six months ended June 30, 1999, the deferred tax
asset associated with tax benefit of the losses incurred for such periods has
been completely offset by a 100% valuation allowance due to the uncertainty of
realization of the applicable tax loss carryforward.

RECLASSIFICATION -- Certain amounts in the 1999 financial statements
have been reclassified to conform with the 2000 presentation.

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2000

(UNAUDITED)

3. RESTRICTED CASH:

At December 31 1999, the Company had a $999,990 certificate of deposit
hypothecated to an outstanding line of credit with Totalbank. During June 2000,
proceeds from the liquidation of the certificate of deposit were used to repay
the outstanding line of credit.

4. BANK CREDIT FACILITIES:

Bank credit facilities at June 30, 2000 and December 31, 1999
consists of the following:
<TABLE>
<CAPTION>

June 30, December 31,
2000 1999
---- ----
(unaudited)
<S> <C> <C>
Amerbank, S.A, PKP overdraft credit line, variable rate approximately
equal to prime, expires May 31, 2001 ..................................... $ 2,583 $ 689
Amerbank, S.A.,IFFP overdraft credit line, variable rate approximately
equal to prime, expires September 30, 2000 ............................... -- --
Amerbank, PKP line of credit of $300,000 payable in 10 quarterly
installments of $30,000 commencing on December 26, 1998, interest payable
monthly at 3-1/8% above LIBOR, due at maturity March 26, 2001
86,363 146,363
Amerbank, IFFP line of credit of $950,000 payable in 29 monthly installments of
$32,000 commencing on March 12, 1998, interest payable monthly at .50%
above LIBOR, due at maturity on August 12,
2000 ..................................................................... 54,000 246,000
Amerbank, IFFP revolving credit facility of $1,500,000, interest is
payable monthly at 2.50% above LIBOR, payable in 35 monthly installments
of $41,666 with final payment of $41,690 due at
maturity on May 18, 2003 ................................................. 1,458,334 1,500,000
Totalbank, IFFC line of credit of $999,000 payable in full on August 19,
2000, interest at 6.5% payable quarterly collateralized by ............... --
certificates of deposit in the amount of $999,990
-- 999,000

Citibank, IFFP line of credit of $10,000,000 payable at maturity on December
30, 2002, interest at LIBOR plus .95%, interest payable
quarterly, unsecured ..................................................... -- 6,900,583
----------- -----------
Total Debt .................................................................... 1,601,280 9,792,635
Less: Current Maturities ...................................................... 642,938 (1,615,685)
----------- -----------
Long Term Debt ................................................................ $ 938,342 $ 8,176,950
=========== ===========
</TABLE>

5. 9% CONVERTIBLE SUBORDINATED DEBENTURES:

The 9% Convertible Subordinated Debentures (the "Debentures") mature on
December 15, 2007 and provide for the payment of cash interest, semi-annually on
June 15 and December 15, until maturity. At June 30, 2000 and December 31, 1999,
there are $2,756,000 of Debentures outstanding.

6. 11% CONVERTIBLE SENIOR SUBORDINATED DISCOUNT NOTES:

On November 5, 1997, the Company sold $27,536,000 of 11% Convertible
Senior Subordinated Discount Notes Due October 31, 2007 ( the "Notes") in a
private offering. At June 30, 2000 and December 31, 1999, the notes are
comprised as follows:

June 30, December 31,
2000 1999
---------- ----------
(unaudited)
<S> <C> <C>
Face amount of notes at maturity....................... $9,636,000 $9,636,000
Unamortized discount to be accreted as interest
expense and added to the original principal
balance of the notes over a period of three years...... (343,428) (817,468)
---------- ----------
Carrying value......................................... $9,292,572 $8,818,532
========== ==========
</TABLE>

The Notes are convertible, at the option of the holder, into Common
Stock at any time after November 5, 1998. 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. As of June 30, 2000,
no additional portion of the Notes had been converted into Common Stock or
Preferred Stock.

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2000

(UNAUDITED)

7. SHAREHOLDERS' EQUITY:

The Company's stock option plan provides for the granting of options to
qualified employees and directors of the Company. Stock option activity is shown
below for the six months ended June 30, 2000:

Weighted
Average
2000 Share Price
---- -----------

<S> <C> <C>
Outstanding at beginning of period...................... 1,670,000 $ .45
Granted................................................. ---
Expired................................................. (1,000,000) $ .61
Exercised............................................... (92,099) $ .54
--------
Outstanding at end of period............................ 577,901 $ .41
========
Exercisable at end of period............................ 425,401 $ .41
Price range of options outstanding at end of period..... $.40 - $.61
Available for grant at end of period.................... 3,574,599

</TABLE>

At June 30, 2000, IFFC had reserved the following shares of Common
Stock for issuance:

<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 23,957,301
share.....................................................................
Convertible Senior Subordinated Discount Notes convertible into Common
Stock, after November 5, 1998, at a conversion price of $.70 per share...... 13,765,714
----------
Total reserved shares............................................................ 43,146,750
==========
</TABLE>

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2000

(UNAUDITED)

8. RELATED PARTY TRANSACTIONS:

During the six months ended June 30, 2000, the Company borrowed an
aggregate of $540,000 from Mitchell Rubinson, the Chairman of the Board and
Chief Executive Officer of the Company and principal shareholder, pursuant to
the terms of a $1 million line of credit bearing interest at 10% per annum. The
loans are due on demand. As of August 2, 2000, the balance of such loans was
$854,000.

As of June 30, 2000, the Company owed Mr. Rubinson $132,500 of salary
and benefits applicable to the six months ended June 30, 2000. The balance of
such amounts at August 2, 2000 was $143,365.

9. COMMITMENTS AND CONTINGENCIES:

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
(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
note holders 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 the Company granted
Burger King a security interest in the outstanding shares of IFFP. As a
condition to the guarantee, Burger King required that the Company, IFFP and
Mitchell Rubinson, the Chairman of the Board and Chief Executive Officer of the
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, the Company and IFFP entered into a reimbursement agreement (the
"Reimbursement Agreement") under which the Company 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 the
Company, IFFP and 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 the company default on their
obligations under the Reimbursement Agreement and Burger King takes possession
of the IFFP shares, Mr. Rubinson 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 the Company in connection with the Purchase
Agreement.

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2000

(UNAUDITED)

IFFP and BKC entered into the Guarantee of Future Advances Agreement
pursuant to which BKC would guarantee the repayment of future funds advanced
under the line of credit. Additionally, as security for the line of credit,
Burger King required that Mr. Rubinson enter into a personal guaranty with
Burger King and pledge 5,000,000 shares of the Company's common stock owned by
him. In connection with these matters, the Company entered into a reimbursement
and fee agreement whereby the Company 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. 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.

On June 16, 2000, the Company entered into an agreement (the
"Agreement") with Burger King Corporation ("BKC"), pursuant to which BKC agreed,
among other things, to discharge $8 million (plus interest) due to Citibank
under IFFP credit facility and will be freed of the obligation to guarantee any
future borrowings by IFFP. In addition, BKC, on the one hand, and the Company,
IFFP and Mr. Rubinson, the Company's Chairman and Chief Executive Officer, on
the other hand, granted mutual general releases with respect to any claims that
may have arisen prior to the date of the Agreement, subject to certain
exceptions. The Agreement also permits the Company, in its discretion, to close
Burger King stores that are unprofitable, and thereafter to dispose of them as
it deems fit. The Company recognized a gain on this transaction which is
comprised as follows:

Repayment of IFFP line of credit by BKC, including accrued interest of
<S> <C>
$109,898.............................................................. $ 8,109,898
Write-off of unamortized debt issuance costs............................... (1,624,830)
Legal and professional fees................................................
(654,652)
Gain on settlement......................................................... $5,830,416
===========
</TABLE>

In connection with the settlement agreement , the warrant held by BKC
to purchase 4,000,000 shares of common stock of the Company at a price of $2.00
per share was cancelled.

10. LITIGATION:

DISPUTE WITH POLISH FISCAL AUTHORITIES. As of July 1995, IFFC may have
become subject to penalties for failure to comply with an amended tax law
requiring the use of cash registers with certain calculating and recording
capabilities and which are approved for use by the Polish Fiscal Authorities. As
a penalty for noncompliance, Polish tax authorities may disallow certain value
added tax deductions for July and August 1995. Additionally, penalties and
interest may be imposed on these disallowed deductions. Although IFFP's NCR Cash
Register System was a modern system, it could not be modified. In 1998, 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 440,000 Polish zlotys or approximately
US$100,018 at June 30, 2000 exchange rates.

<PAGE>

INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2000

(UNAUDITED)

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 former Vice 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
Regenesis. 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.

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

11. 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. z o.o. ("IFFP") and Pizza King Polska Sp. z
o.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 Domino's Pizza stores offer its
customers take out and delivery service for its pizzas, salads, sandwiches,
chicken wings, breadsticks, soft drinks and ice cream. 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.

The following table presents financial information regarding the
Company's different industry segments as of and for the six month periods ended
June 30, 2000 and 1999 (in thousands).

<TABLE>
<CAPTION>
Six Months Ended June 30, 2000 (unaudited)
------------------------------------------
IFFP PKP Total Corporate Consolidated
---- --- ----- --------- ------------

<S> <C> <C> <C> <C> <C>
Restaurant/store sales ............ $4,022 $1,832 $ 5,854 $ -- $ 5,854
Food and packaging costs .......... 1,367 592 1,959 -- 1,959
Restaurant operating costs ........ 2,427 1,108 3,535 -- 3,535
Depreciation and amortization ..... 1,141 301 1,442 -- 1,442
General and administrative expenses 608 282 890 625 1,515
------ ------ ------ ------- -------
Loss from operations .............. $(1,521) $ (451) $(1,972) $ (625) $(2,597)
====== ====== ====== ======= =======
</TABLE>

<PAGE>
INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2000

(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30, 2000 (unaudited)
IFFP PKP Total Corporate Consolidated
---- --- ----- --------- ------------

<S> <C> <C> <C> <C> <C>
Revenue ........................... $ 1,874 $873 $2,747 $ -- $ 2,747
Food and packaging costs .......... 636 284 920 -- 920
Restaurant operating costs ........ 1,182 528 1,710 -- 1,710
Depreciation and amortization ..... 563 153 716 -- 716
General and administrative expenses 270 147 417 363 780
---- ---- ------ ------- -------
Loss from operations .............. $ ( 777) $ ( 239) $(1,016) $ (363) $(1,379)
==== ====== ======= ======= =======

Six Months Ended June 30, 1999 (unaudited)
IFFP PKP Total Corporate Consolidated
---- --- ----- ----------------------

Restaurant/store sales........... $ 5,655 $ 2,187 $ 7,842 $ -- $ 7,842
Food and packaging costs......... 2,285 744 3,029 -- 3,029
Restaurant operating costs....... 3,104 1,146 4,250 -- 4,250
Preopening 599 140 739 -- 739
expenses..................
Depreciation and amortization.... 1,030 255 1,285 -- 1,285
General and administrative expenses 672 233 905 1,354 2,259
----- ----- ---- ----- -----
Loss from operations............. $ (2,035) $ (331) $ (2,366) $ (1,354) $(3,720)
======== ====== ======== ======== ======

Three Months Ended June 30, 1999 (unaudited)
IFFP PKP Total Corporate Consolidated
---- --- ----- --------- ------------

Revenue.......................... $ 2,990 $ 1,157 $ 4,147 $ - $ 4,147
Food and packaging costs......... 1,185 391 1,576 - 1,576
Restaurant operating costs....... 1,805 595 2,400 - 2,400
Preopening expenses.............. 234 57 291 - 291
Depreciation and amortization.... 362 49 411 - 411
General and administrative expenses 342 108 450 530 980
----- ----- ----- ----- ------
Loss from operations............. $ ( 938) $(43) $ (981) $ (530) $ (1,511)
======= ====== ======= ======= =======

Total assets:
December 31, 1999............. $ 8,332 $ 3,261 $ 21,593 $4,288 $ 25,881
June 30, 2000................. $ 7,015 $ 3,048 $ 20,063 $1,123 $ 21,186
=== ===== ========= ======= ======== ====== ==========
</TABLE>

16
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

GENERAL

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

Information contained in this Quarterly Report on Form 10-QSB contains
"forward-looking statements" which 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 beyond IFFC's
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
restaurant development agreement with Burger King Corporation (the "BKC
Agreement") and the master franchise agreement with Domino's (the
"Domino's Agreement");

- our ability to improve levels of profitability; the sufficiency of cash
flow provided by our operating, 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.

GENERAL

IFFC currently operates 23 Burger King restaurants and 16 Domino's
Pizza stores. IFFC has incurred losses and anticipates that it will continue to
incur losses until, at the earliest, it establishes a number of restaurants and
stores generating sufficient revenues to offset its operating costs and the
costs of its proposed continuing expansion. There can be no assurance that IFFC
will ever achieve profitability or be able to successfully establish a
sufficient number of restaurants to achieve profitability.

<PAGE>

SIX MONTHS ENDED JUNE 30, 2000 VS SIX MONTHS ENDED JUNE 30, 1999

RESULTS OF OPERATIONS

For the six months ended June 30, 2000 and June 30, 1999, IFFC
generated sales of $5,853,689 and $7,841,918, respectively, which includes sales
of $4,022,338 and $5,654,843 for the Burger King restaurants and $1,831,351 and
$2,187,075 for the Domino's Pizza stores, respectively. In U.S. dollar and
Polish zloty terms IFFC's Burger King restaurant sales decreased by
approximately 28.9 and 21.8%, respectively, for the six months ended June 30,
2000 as compared to the six months ended June 30, 1999. In U.S. dollar and
Polish zloty terms IFFC's Burger King same restaurant sales decreased by
approximately 25.2% and 17.7%, respectively, for the six months ended June 30,
2000 as compared to the six months ended June 30, 1999. The decrease in same
restaurant sales was primarily attributable to the initial start up of
television advertising in February 1999 compared to limited local store
marketing promotions during the six months ended June 30, 2000. In U.S. dollar
terms, IFFC's Domino's store sales decreased by approximately 16.3% for the six
months ended June 30, 2000 as compared to the six months ended June 30, 1999. In
Polish zloty terms, IFFC's Domino's store sales decreased by approximately 7.9%
for the six months ended June 30, 2000 as compared to the six months ended June
30, 1999. In U.S. dollar and Polish zloty terms IFFC's Domino's same store sales
decreased by approximately 23.6% and 15.9%, respectively, for the six months
ended June 30, 2000 as compared to the six months ended June 30, 1999. The
decrease in same store sales was attributed to increased competition in the
Warsaw market, as well as the effect of less advertising during the six months
ended June 30, 2000, as compared to the six months ended June 30, 1999.

Food and packaging costs applicable to Burger King restaurants for the
six months ended June 30, 2000 and 1999 were 34% and 40.4% of restaurant sales,
respectively. The 6.4% decrease as a percentage of restaurant sales was
primarily attributable to increased menu prices coupled with lower food costs
obtained from key suppliers. Food and packaging costs applicable to Domino's
stores for the six months ended June 30, 2000 and 1999 were 32.3% and 34% of
store sales, respectively. The 1.7% decrease as a percentage of store sales was
primarily attributable to a reduction in the cost of key food items from its
major vendors.

Payroll and related costs applicable to Burger King restaurants for the
six months ended June 30, 2000 and 1999 were 23.8% and 18.6% of restaurant
sales, respectively. The 5.2% increase as a percentage of restaurant sales was
primarily the result of fixed labor costs at low volume drive thru restaurants.
Payroll and related costs applicable to Domino's stores for the six months ended
June 30, 2000 and 1999 were 21.3% and 21.3% of store sales, respectively.

Occupancy and other operating expenses applicable to Burger King
restaurants for the six months ended June 30, 2000 and 1999 were 36.6% and 26.3%
of restaurant sales, respectively. The 10.3% increase as a percentage of
restaurant sales was primarily attributable to fixed costs incurred at low
volume drive thru restaurants. Occupancy and other operating expenses applicable
to Domino's stores for the six months ended June 30, 2000 and 1999 were 39.2%
and 31.2% of store sales, respectively. The 8.0% increase as a percentage of
store sales is primarily attributable to higher delivery vehicle costs coupled
with higher fixed costs at the new Domino's commissary.

Depreciation and amortization expense applicable to Burger King
restaurants was $1,140,871 as compared to $1,029,942 for the six months ended
June 30, 2000 and 1999, respectively. Depreciation and amortization expense
applicable to Domino's stores was $301,524 as compared to $255,025 for the six
months ended June 30, 2000 and 1999, respectively. General and administrative
expenses for the six months ended June 30, 2000 and 1999 were 25.9% and 28.8% of
sales, respectively. The 2.9% decrease as a percentage of sales was primarily
attributable to lower salaries, legal and professional fees and consulting fees
incurred at the corporate level. For the six months ended June 30, 2000, general
and administrative expenses consisted of executive and office staff salaries and
benefits ("Salary Expenses") of $517,725; legal and professional fees, office
rent, travel, telephone and other corporate expenses ("Corporate Overhead
Expenses") of $893,248, and depreciation and amortization of $104,509. For the
six months ended June 30, 1999, general and administrative expense included
Salary Expenses of $711,951; Corporate Overhead Expenses of $1,459,455, and
depreciation and amortization of

<PAGE>

$87,308. The $743,232 decrease is primarily attributable to a reduction of
salaries and benefits expenses at the corporate level; and a reduction in legal
and professional and consulting fees primarily incurred in 1999 as the result of
the Citibank loan.

For the six months ended June 30, 2000 and 1999 Interest and Other
Income consisted of the following:

<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
2000 1999
---- ----
<S> <C> <C>
Interest income ....................................................... $ 41,653 $ 66,423
All other, net ........................................................ 175,949 185,006
---------- ----------
Total ................................................................. $ 217,602 $ 251,429
========== ==========
Interest Expense consisted of the following:
Six Months Ended June 30,
-------------------------
2000 1999
---- ----
Interest Expense on 9% Subordinated Convertible Debentures ............ $ 124,020 $ 124,020
Amortization of Debt Issuance Costs ................................... 366,861 65,056
Accretion of discount on 11% Convertible Senior Subordinated
Discount Notes ..................................................... 474,040 1,251,242
Interest Expense on Bank Facilities ................................... 469,395 226,434
Capitalized interest .................................................. -- ( 155,100)
--------- ----------
Total ................................................................. $1,434,316 $1,511,652
========== ==========
</TABLE>

Interest expense exceeded interest and other income by $1,216,714 and
$1,260,223 for the six months ended June 30, 2000 and 1999, respectively. The
primary reason for the decrease for the six month period ended June 30, 2000 was
higher interest and amortization of debt issuance costs, an increase in
borrowings under bank facilities, a decrease in capitalized interest, all of
which were offset by lower accretion of discount on the 11% Convertible Senior
Subordinated Discount Notes.

IFFC's interest expense on bank facilities was $469,395 and $226,434
for the six months ended June 30, 2000 and 1999, respectively. The $242,961
increase was attributable to IFFC's increase of borrowings under bank credit
facilities.

See Liquidity and Capital Resources for details relating to the
$5,830,416 gain recognized on the settlement of disputes with BKC.

As a result of the foregoing, for the six months ended June 30, 2000,
IFFC reported net income of $2,134,559 (which includes a non-recurring gain of
$5,830,416) or $.04 per share of IFFC's Common Stock compared to a net loss of
$5,744,716, or $(.13) per share of IFFC's Common Stock for the six months ended
June 30, 1999.

LIQUIDITY AND CAPITAL RESOURCES

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

Net cash provided by operating activities for the six months ended June
30, 2000 was $6,531,982 as compared to net cash used in operating activities for
the six months ended June 30, 1999 of $1,803,986. The increase was primarily
attributable to the gain on settlement of disputes with BKC before write-off of
expenses related thereto.

<PAGE>

Net cash flows (used in) provided by investing activities increased
from $(5,104,954) to $931,616 for the six months ended June 30, 1999 and 2000,
respectively. The increase was primarily attributable to the lack of development
of Burger King restaurants and Domino's stores in 2000.

Net cash (used in) provided by financing activities decreased by
$11,381,529 for the six months ended June 30, 2000, compared to the six months
ended June 30, 1999. The decrease was primarily attributable to fewer advances
under the Citibank Loan in 2000, as well as substantial loan repayments during
the period.

As of June 30, 2000, IFFC had negative working capital of approximately
$4,644,590 and cash of $229,641. IFFC has significant commitments to develop
restaurants in accordance with the BKC Agreement and the Domino's Agreement. The
Company does not presently have sufficent financial resources to meet its
development obligations under the terms of the BKC and Domino's agreements. The
Company has sustained losses from operations since its incorporation in December
1991. For the six months ended June 30, 2000 and 1999, the Company reported net
income of $2,134,559 (which includes a non-recurring gain of $5,830,416) and a
net loss of $(5,744,716), respectively. At June 30, 2000 the Company had an
accumulated deficit of $33,338,670. These factors raise substantial doubt about
the Company's 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 be necessary should the Company be unable to continue as a going concern.

Management believes that cash flows from existing stores when combined
with existing financial resources will not be sufficient to fund operations.
Management is seeking to obtain additional equity financing to fund future
development. No assurance can be given that such financing will be obtained or
that it can be obtained on favorable terms.

BKC AGREEMENT AND DOMINO'S AGREEMENT -- IFFC's material commitments for
capital expenditures in its restaurant and store business relate to the
provisions of the BKC Agreement and the Domino's Agreement.

CONVERTIBLE NOTES -- In November 1997, the Company sold $27,536,000 of
its 11% Convertible Senior Subordinated Discount Notes Due October 31, 2007 (the
"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 Notes are
comprised as follows at June 30, 2000 and December 31, 1999:

June 30, December 31,
2000 1999
---- ----
<S> <C> <C>
Face amount of notes at maturity......................... $9,636,000 $9,636,000
Unamortized discount to be accreted as interest
expense and added to the original principal balance
of the notes over a period of three years.............. (343,428) (817,468)
---------- ----------
Carrying value........................................... $9,292,572 $8,818,532
========== ==========
</TABLE>

DISPUTE WITH POLISH FISCAL AUTHORITIES -- IFFC anticipates that it will
continue to incur certain expenses in connection with its disputes with the
Polish Fiscal Authorities. See "Legal Proceedings -- Dispute with Polish Fiscal
Authority" for a description of such matters and IFFC's best estimates of the
expenses IFFC anticipates incurring and the timing of such expenses.

<PAGE>

POLISH BANK ACCOUNTS -- As of June 30, 2000 and December 31, 1999, the
Company had approximately $229,641 and $334,009, respectively, in Polish bank
accounts with substantially all of such funds held as U.S. dollar denominated
deposits. Substantially all of the Company's remaining cash is held in U.S.
dollar accounts in U.S. Banks.

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
$22,731 at June 30, 2000 exchange rates). The credit facility expires on
September 30, 2000. On June 30, 2000 and July 31, 2000, there were no amounts
outstanding under this facility.

In September 1996, PKP entered into a revolving credit facility with
AmerBank totaling 100,000 zlotys (approximately $22,731 at June 30, 2000
exchange rates). The note is secured by our guarantee. The credit facility
expires on May 31, 2001. The balance on this note as of June 30, 2000 and July
31, 2000 was $2,583 and $0, respectively.

In May 1997, we entered into a $999,000 credit facility with Totalbank
that is secured 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 company paid
off and terminated this facility on June 2, 2000.

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 IFFC's guarantee. The balance of this credit
facility as of June 30, 2000 was $54,000 and as of May 15, 2000 was $32,000.

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 June 30, 2000 and July
31, 2000, approximately $86,363 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 June 30, 2000
and July 31, 2000, $1,458,334 and $1,416,667, respectively was outstanding on
this credit facility.

<PAGE>

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
(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 the Company granted
Burger King a security interest in the outstanding shares of IFFP. As a
condition to the guarantee, Burger King required that the Company, IFFP and Mr.
Rubinson, the Chairman of the Board and Chief Executive Officer of the 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, the Company and IFFP entered into a reimbursement agreement (the
"Reimbursement Agreement") under which the Company 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 the
Company, IFFP and Mr. 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 the Company default on their
obligations under the Reimbursement Agreement and Burger King takes possession
of the IFFP shares, Mr. Rubinson 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 the Company in connection with the Purchase
Agreement.

In October 1999, IFFP increased the amount of the line of credit to
$8,000,000. IFFP could increase the line of credit in increments of $500,000 to
an aggregate of $10,000,000 if it met specified criteria. The maturity date of
the line of credit was extended to December 2002. Drawings on the line in excess
of the original $5,000,000 bore interest at 0.95% above LIBOR. The guarantee
would automatically terminate in October 2002. In addition, Burger King could
withdraw its guarantee if certain criterion set forth in the Guarantee of Future
Advances Agreement were not met. 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 and the Company, Mr. Rubinson, IFFP and BKC
entered into the Guarantee of Future Advances Agreement pursuant to which BKC
would guarantee the repayment of future funds advanced under the line of credit.
Additionally, as security for the line of credit, Burger King required that Mr.
Rubinson enter into a personal guaranty with Burger King and pledge 5,000,000
shares of the Company's common stock owned by him. In connection with these
matters, the Company entered into a reimbursement and fee agreement whereby the
Company 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. 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.

<PAGE>

Repayment of IFFP line of credit by BKC, including accrued interest of
<S> <C>
$109,898......................................................... $ 8,109,898
Write-off of unamortized debt issuance costs.......................... (1,624,830)
Legal and professional fees...........................................
(654,652)
--------------
Gain on settlement.................................................... $5,830,416
==============

</TABLE>

In connection with the settlement agreement the warrant held by BKC to
purchase 4,000,000 shares of common stock of the Company at a price of $2.00 per
share was cancelled.

SHAREHOLDER LOANS -- During the six months ended June 30, 2000, the
Company borrowed an aggregate of $540,000 from Mitchell Rubinson, the Chairman
of the Board and Chief Executive Officer of the Company and principal
shareholder, pursuant to the terms of a $1 million line of credit bearing
interest at 10% per annum. The loans are due on demand. As of August 2, 2000,
the balance of such loans was $854,000.

As of June 30, 2000, the Company owed Mr. Rubinson $132,500 of salary
and benefits applicable to the six months ended June 30, 2000. The balance of
such amounts at August 2, 2000 was $143,365.

ACCOUNTING POLICIES -- The following is a summary of certain accounting
policies that are new or have become material to the Company's operations during
the first and second quarters of 1999 and 2000. For a discussion of all of the
Company's material accounting policies, reference is made to the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1999.

Prior to January 1, 1999, the Company capitalized preopening costs
associated with opening new restaurants. Upon commencement of revenue producing
activities at a restaurant location, these capitalized preopening 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 on the accompanying statement of operations for
the three months ended March 31, 1999. Preopening costs incurred subsequent to
December 31, 1998 have been charged directly to expense.

The Company accounts for advertising expense in accordance with SOP
93-7, "Accounting for Advertising Costs" which generally requires that
advertising costs be expensed either as incurred or the first time the
advertising takes place. It is the Company's policy to expense advertising costs
the first time the advertising takes place. However, Accounting Principles Board
Opinion ("APB") No. 28, "Interim Financial Reporting" allows advertising costs
to be deferred within a fiscal year if the benefits of an advertising
expenditure clearly extend beyond the interim period in which the expenditure is
made. Pursuant to APB 28, it is the Company's policy to defer advertising
expenses at the end of interim periods to the extent that such costs will
clearly benefit future interim periods. During the six months ended June 30,
2000, the Company incurred advertising expense of $446,010, all of which was
charged to expense during the period. During the six months ended June 30, 1999,
the Company incurred advertising expense of approximately $1,490,056, of which
approximately $576,651 was deferred at June 30, 1999 and was included in prepaid
expenses on the accompanying balance sheet as of June 30, 1999. Pursuant to SOP
93-7, the Company is required to expense all advertising incurred at the end of
the fiscal year.

<PAGE>

IMPACT OF INFLATION AND CURRENCY FLUCTUATIONS

The official currency in Poland is the zloty. The value of the zloty is
pegged pursuant to a system based on a basket of currencies, as well as all
other economic and political factors that effect the value of currencies
generally. At June 30, 2000, the exchange rate was 4.40 zlotys per dollar. The
accounts of IFFC's Polish subsidiaries are maintained using the Polish zloty.

IFFC's restaurant and store operations are conducted in Poland. The
Polish economy has historically been characterized by high rates of inflation
and devaluation of the Polish zloty against the dollar and European currencies.
However, in the years ended December 31, 1997 and 1998, 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 Polish zlotys per
the U.S. dollar, respectively. Payment of interest and principal on the 9%
Convertible Subordinate Debentures, 11% Convertible Senior Subordinated Discount
Notes and payment of franchise fees to Burger King and 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. Since IFFC's revenues from operations will be in
zlotys, IFFC is subject to the risk of currency fluctuations. IFFC has and
intends to maintain substantially all of its unutilized funds in United States
or Western European currency denominated securities and/or European Currency
Units. There can be no assurance that IFFC will successfully manage its exposure
to currency fluctuations or that such fluctuations will not have a material
adverse effect on IFFC.

Thus far, IFFC's revenues have been used to fund restaurant operations
and IFFC's expansion. As a result, such revenues have been relatively insulated
from inflationary conditions in Poland. There can be no assurance that
inflationary conditions in Poland will not have an adverse effect on IFFC in the
future.

YEAR 2000 COMPUTER ISSUE

The SEC has issued Staff Legal Bulletin No. 5 stating that public
operating companies should consider whether there will be any anticipated costs,
problems and uncertainties associated with the Year 2000 issue. 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 have funded 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.

<PAGE>

PART II. OTHER INFORMATION

ITEM 1. 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 440,000 Polish zloty or approximately $100,018 using June
30, 2000 exchange rates.

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 Regenesis. 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.

<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

27.1 - Financial Data Schedule (filed electronically
only).

(b) The following reports on Form 8-K were filed during
the quarter ended on June 30, 2000:

(i) On June 16, 2000, the Registrant entered
into a settlement agreement with Burger
King Corporation regarding settlement of
various disputes between the parties.

(ii) On June 20, 2000, the Registrant reported
that Arthur Andersen LLP resigned as
independent auditors of the Registrant.

<PAGE>

SIGNATURES

In accordance with Section 13 or 15 (d) of the Securities Exchange Act
of 1934, International Fast Food has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

INTERNATIONAL FAST FOOD CORPORATION

DATE: August 14, 2000 By: /S/ MITCHELL RUBINSON
----------------------
Mitchell Rubinson, Chairman of the
Board, Chief Executive Officer
(Principal Executive Officer),
Chief Financial Officer (Principal
Financial and Accounting Officer)