<PAGE>
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 2000
or
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission File Number: 0-23278
Brazil Fast Food Corp.
(Exact name of registrant as specified in its charter)
Delaware 13-3688737
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Av. Brasil, 6431, CEP 21040-360, Rio De Janeiro, Brazil
(Address of principal executive offices)
011-55-21-564-6452
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. /X/ Yes / / No
Applicable only to Issuers Involved in Bankruptcy
Proceeding During the Preceding Five Years:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. / / Yes / / No
Applicable Only to Corporate Issuers:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
3,235,290 shares of Common Stock at August 11, 2000
<PAGE>
Part 1 - Financial Information
Item 1. Financial Statements
The condensed financial statements included herein have been prepared by
Brazil Fast Food Corp. (the "Company"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. While certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, the Company believes that the
disclosures made herein are adequate to make the information presented not
misleading.
BRAZIL FAST FOOD CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF BRAZILIAN REAIS, EXCEPT SHARE AMOUNTS)
===============================================================================
ASSETS
------
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
-------------- -----------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents R$ 697 R$ 1,154
Accounts receivable, net of allowance for doubtful accounts 2,016 2,515
Inventories 883 728
Prepaid expenses and other current assets 930 639
----------- ----------
TOTAL CURRENT ASSETS 4,526 5,036
PROPERTY AND EQUIPMENT, NET 20,562 20,879
DEFERRED CHARGES, NET 10,693 11,083
OTHER RECEIVABLES AND OTHER ASSETS 2,904 2,412
----------- ----------
TOTAL ASSETS R$38,685 R$39,410
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Notes payable R$ 6,918 R$ 7,376
Accounts payable and accrued expenses 2,823 4,349
Payroll and related accruals 1,610 1,760
Taxes, other than income taxes 2,409 1,829
Deferred income 821 821
Other 953 676
----------- ----------
TOTAL CURRENT LIABILITIES 15,534 16,811
NOTES PAYABLE, less current portion 2,642 2,746
DEFERRED INCOME, less current portion 1,421 1,721
OTHER LIABILITIES 11,552 9,169
----------- ----------
TOTAL LIABILITIES 31,149 30,447
----------- ----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000 shares authorized; no
shares issued - -
Common stock, $.0001 par value, 40,000,000 shares authorized;
and 3,235,290 shares issued and outstanding 1 1
Additional paid-in capital 46,226 46,226
Deficit (38,214) (36,803)
Accumulated comprehensive loss (477) (461)
----------- ----------
TOTAL SHAREHOLDERS' EQUITY 7,536 8,963
----------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY R$38,685 R$39,410
=========== ==========
</TABLE>
See Selected Notes to Consolidated Financial Statements.
2
<PAGE>
BRAZIL FAST FOOD CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF BRAZILIAN REAIS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
----------------------------
2000 1999
--------- ---------
<S> <C> <C>
NET OPERATING REVENUES:
Restaurant sales R$29,716 R$ 27,503
Franchise income 1,560 1,343
Other income 1,993 1,311
--------- ---------
TOTAL NET OPERATING REVENUES 33,269 30,157
--------- ---------
COSTS AND EXPENSES:
Cost of restaurant sales 11,135 10,537
Restaurant payroll and other employee benefits 6,112 6,490
Restaurant occupancy and other expenses 3,338 3,345
Depreciation and amortization 1,759 1,567
Other operating expenses 5,652 4,238
Selling expenses 2,531 1,636
General and administrative expenses 2,952 3,239
--------- ---------
TOTAL COSTS AND EXPENSES 33,479 31,052
--------- ---------
(LOSS) FROM OPERATIONS (210) (895)
INTEREST (EXPENSE) - net (1,210) (2,036)
FOREIGN EXCHANGE GAIN (LOSS) 9 (1,595)
--------- ---------
NET (LOSS) (1,411) (4,526)
OTHER COMPREHENSIVE INCOME (LOSS):
FOREIGN CURRENCY TRANSLATION ADJUSTMENT (16) (103)
--------- ---------
COMPREHENSIVE LOSS R$ (1,427) R$ (4,629)
========= ==========
BASIC NET (LOSS) PER COMMON SHARE R$ (.44) R$ (1.40)
========= ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC 3,235,290 3,235,290
========= =========
</TABLE>
See Selected Notes to Consolidated Financial Statements.
3
<PAGE>
BRAZIL FAST FOOD CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF BRAZILIAN REAIS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
------------------------
2000 1999
----------- ----------
<S> <C> <C>
NET OPERATING REVENUES:
Restaurant sales R$13,933 R$ 13,119
Franchise income 768 722
Other income 1,076 633
--------- ---------
TOTAL NET OPERATING REVENUES 15,777 14,474
--------- ---------
COSTS AND EXPENSES:
Cost of restaurant sales 5,252 5,024
Restaurant payroll and other employee benefits 3,039 3,125
Restaurant occupancy and other expenses 1,681 1,623
Depreciation and amortization 894 790
Other operating expenses 2,934 2,021
Selling expenses 1,331 983
General and administrative expenses 1,343 1,540
--------- ---------
TOTAL COSTS AND EXPENSES 16,474 15,106
--------- ---------
(LOSS) FROM OPERATIONS (697) (632)
INTEREST (EXPENSE) (650) (953)
FOREIGN EXCHANGE (LOSS) GAIN (253) 804
--------- ---------
NET (LOSS) (1,600) (781)
OTHER COMPREHENSIVE INCOME (LOSS):
FOREIGN CURRENCY TRANSACTION ADJUSTMENT (16) (14)
--------- ---------
COMPREHENSIVE LOSS R$ (1,616) R$ (795)
========= =========
BASIC NET (LOSS) PER COMMON SHARE R$ (.49) R$ (.24)
========= =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING-BASIC 3,235,290 3,235,290
========= =========
</TABLE>
See Selected Notes to Consolidated Financial Statements.
4
<PAGE>
BRAZIL FAST FOOD CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS OF BRAZILIAN REAIS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
Common Stock Additional Cumulative
---------------------- Paid-In Translation
Shares Par Value Capital (Deficit) Adjustment Total
--------- ----------- --------- ---------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 2000 3,235,290 R$ 1 R$ 46,226 R$(36,803) R$(461) R$ 8,963
Net loss - - - (1,411) - (1,411)
Cumulative translation
adjustment - - - - (16) (16)
---------- ----- --------- ---------- ------ --------
Balance, June 30, 2000 3,235,290 R$ 1 R$ 46,226 R$(38,214) R$(477) R$ 7,536
========== ===== ========= ========= ====== ========
</TABLE>
See Selected Notes to Consolidated Financial Statements.
5
<PAGE>
BRAZIL FAST FOOD CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF BRAZILIAN REAIS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
-----------------------------
2000 1999
------ ------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) R$(1,411) R$ (4,526)
Adjustments to reconcile net (loss) to net cash provided by
operating activities:
Net gain on sale of assets - (72)
Depreciation and amortization 1,683 1,567
Changes in operating assets and expenses:
(Increase) decrease in:
Accounts receivable 499 (153)
Inventories (155) 84
Other current assets (291) (512)
Other assets (492) (45)
Increase (decrease) in:
Accounts payable and accrued liabilities (1,311) (55)
Payroll and related accruals (150) 1,207
Taxes, other than income taxes 583 2,377
Deferred income (300) 128
Other current liabilities 2,442 122
-------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,097 122
-------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (976) (2,233)
Proceeds from sale of assets - 320
-------- ----------
NET CASH (USED IN) INVESTING ACTIVITIES (976) (1,913)
-------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under lines of credit (562) 1,693
-------- ----------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (562) 1,693
-------- ----------
EFFECT OF FOREIGN EXCHANGE RATES (16) (103)
-------- ----------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (457) (201)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,154 817
-------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD R$ 697 R$ 616
======== ==========
</TABLE>
See Selected Notes to Consolidated Financial Statements.
6
<PAGE>
BRAZIL FAST FOOD CORP. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF BRAZILIAN REAIS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
===============================================================================
NOTE 1 - FINANCIAL STATEMENT PRESENTATION
The accompanying financial statements have been prepared by Brazil Fast
Food Corp. (the "Company"), without audit. In the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary
to present fairly the financial position, results of operations and cash
flows at June 30, 2000 and for all periods presented have been made. The
results of operations for the period ended June 30, 2000 are not
necessarily indicative of the operating results for a full year. Unless
otherwise specified all reference in these financial statements to (i )
"Reais", or "R$" are to the Brazilian Real (singular), or to Brazilian
Reais (plural), the legal currency of Brazil, and (ii ) "U.S. Dollars" or
"$"are to United States' dollars.
Certain information and footnote disclosures prepared in accordance with
general accepted accounting principles and normally included in the
financial statements have been condensed or omitted. It is suggested that
these financial statements be read in conjunction with the consolidated
financial statements and notes included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999.
NOTE 2 - MANAGEMENT PLANS REGARDING GOING CONCERN
Since the acquisition of Venbo in 1996, the Company has sustained net
losses totaling approximately R$38,214. To date, the Company has been
dependent upon its initial capital and additional equity and debt financing
to fund its operating losses and capital needed for expansion. Recently,
the Company commenced court actions to defer payments of its past due taxes
against different branches of the Brazilian Government. These actions are
intended to extend payment dates on past due taxes and reduce interest
charges.
Management plans to address its immediate and future cash flow needs by
focusing on a number of areas including; the continued sale of non-
profitable company-owned stores; reduction of expenses including headcount
optimization; the continued expansion of its franchisee base which will
generate additional cash flows form royalties and franchise fees without
significant capital expenditure; the introduction of new programs, such as
a delivery call center, an internet delivery service and menu expansion to
meet customer demand. In order to act on these plans and sustain current
operations, the Company is dependent upon the continued forbearance of its
creditors, as well as additional financing.
There can be no assurance that management's plans will be realized, or that
additional financing will be available to the Company when needed, or at
terms that are desirable. Furthermore, there can be no assurance that the
Company will continue to receive the forbearance of its creditors, or that
it will locate suitable new franchisees, or desirable locations for new
franchisees to open stores. The Company's ability to further reduce
expenses and head count is directly impacted by its need to maintain an
infrastructure to support its current and future chain of locations.
7
<PAGE>
BRAZIL FAST FOOD CORP. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
===============================================================================
NOTE 2 - MANAGEMENT PLANS REGARDING GOING CONCERN (cont'd)
The Company's ability to remarket Company-owned stores to franchisees, and
to generate cash flows from such activities, is impacted by the ability to
locate suitable buyers with the interest and capital to complete such
transactions, and the time to complete such sales. Additionally, the
Company's ability to achieve its plans is further impacted by the
instability of the economic environment in Brazil, which has a direct
impact on the desire and ability of consumers to visit fast food outlets.
The Company is also dependent upon the continued employment of key
personnel. These factors, among other, raise substantial doubt about the
Company's ability to continue as going concern.
NOTE 3 - RECLASSIFICATION
Certain reclassifications have been made to the 1999 financial statements
to conform with the current period presentation.
NOTE 4 - OTHER LIABILITIES AND LITIGATIONS
During the year ended December 31, 1999 and the period ending April 30,
2000, certain Brazilian taxes levied on the Company have not been paid.
Commencing in May 2000, the Company is making current payments of its
taxes. Using current proceedings from enacted Brazilian laws, the
Company's legal advisors have filed lawsuits claiming for those taxes to be
paid in several installments over 60 months for state taxes and 240 months
for federal taxes.
During the second quarter of 2000, the Company obtained a favorable outcome
in the state lawsuits. In the same period, the Company withdrew its lawsuit
regarding federal taxes and joined a fiscal regularization program of the
Brazilian Federal government. Through this program, all past due federal
taxes will be paid in monthly installments equivalent to 1.2% of the
Company's gross sales, with interest accruing at rates set by the Brazilian
Federal government, currently 11% per year.
8
<PAGE>
RESULTS OF OPERATIONS
The economic environment in Brazil during the second quarter of 2000
continued to improve when compared with 1999 and, in particular, the first three
months of that year. Governmental economic policies have reduced inflationary
pressures and have given Brazilian products a more competitive price in the
world economy. Further, industrial production levels increased substantially
during the first three months of 2000, resulting in reduced unemployment and a
positive trade balance.
In addition, overnight interest rates, which were 19% at December 31, 1999
and 18.5% throughout the first quarter of 2000, were recently reduced to 17.5%.
The Brazilian reais has also recently strengthened against the U.S dollar, from
R$1.789 on December 31, 1999 to R$1.791 on June 30, 2000.
These factors have positively impacted the Brazilian economy, resulting in
increased levels of consumer spending which, in turn, has positively affected
our operating results.
Restaurant Sales
Net restaurant sales for our company-owned stores were R$29,716 and
R$27,503 for the six months ended June 30, 2000 and 1999, respectively,
reflecting a Q2 2000 increase of R$2,213 or 8.1%. The increase is attributable
to the improved macroeconomic conditions in Brazil, sales initiatives and the
introduction of a delivery program, as well as an approximately 10% increase in
selling prices. Same store sales increased approximately 13.7% when compared
quarter to quarter. In this same period, we operated 62 retail stores as
compared to 63 in the corresponding 1999 quarter, reflecting the continuation
of our strategy of focusing our operations on highly profitable retail locations
and continuing to increase our expanding franchise network.
Franchise Income
Franchise income was R$1,560 and R$1,343 for the six months ended June 30,
2000 and 1999, respectively. The increase of 16.2% in the second quarter of 2000
was mainly attributable to expansion of our franchised locations, which grew
from 98 units at the end of the second quarter of 1999 to 137 units at June 30,
2000.
During the period July 1, 1999 through June 30, 2000, we sold three of our
stores, as well as one of our custom constructed trailers, to franchisees.
These stores had either low profitability or, in some instances, operating
losses. Our historical experience has shown that franchisee administration can
enhance the profitability of these kinds of stores, primarily as a result of (i)
lower taxation (tax incentives from Brazilian Federal and state governments to
small companies), (ii) better knowledge of specific markets and their local
customs, and (iii) lower operating expenses.
Average franchise income was partially reduced by the opening of
new stores, with lower sales levels than those previously in operation. A number
of these outlets are located in smaller cities or were operated as kiosks in
locations close to other Bob's stores Additionally, in some situations, we have
provided incentives in the form of reduced royalties to franchisees for a period
of time.
9
<PAGE>
Other Income
Other income was R$1,994 and R$1,311 for the six months ended June 30, 2000
and 1999, respectively, and is comprised of income derived from suppliers
pursuant to exclusivity agreements, as well as from initial fees paid by
franchisees and such franchisees' contributions to our marketing efforts. The
increase is primarily attributable to the increase in the number of our
franchised outlets which was partically offset by expiration of a joint
publicity agreement in April 1999.
Cost of Restaurant Sales.
Cost of restaurant sales expressed as a percentage of restaurant sales were
37.5% and 38.3% for the six months ended June 30, 2000 and 1999,
respectively. The decrease is mainly attributable to price reductions on some
food and packaging products as a consequence of our price renegotiation efforts,
as well as from changing certain of our suppliers, offset in part by increases
in our cost of meat and chicken products in December 1999 and January 2000. Also
contributing to this percentage decrease is the increase in our selling prices,
discussed above.
Restaurant Payroll and Other Employee Benefits
Restaurant payroll and other employee benefits expressed as a percentage of
net operating revenues decreased from 23.6% for the six months ended June 30,
1999 to 20.6% for the six months ended June 30, 2000. This reduction is
primarily attributable to changes in the status of our retail store personnel
who, prior to the last quarter of 1999, were hired at employee rather than
trainee rates. Since the last quarter of 1999, all new hires of store personnel
have been at trainee rates, resulting in lower employment charges and fringe
benefit costs, while also attracting younger and more motivated personnel.
Increases in salaries mandated by union-driven agreements (3% for Sao Paulo
employees since July 1999 and 3% for Rio de Janeiro employees since October
1999) have partially offset this percentage decrease.
Restaurant Occupancy Costs and Other Expenses
Restaurant occupancy costs and other expenses expresses as a percentage of
net operating revenues were approximately 11.2% and 12.2% for the six months
ended June 30, 2000 and 1999, respectively. This decrease is primarily
attributable to our success in negotiating temporary reductions in lease costs,
as well as our initiation of legal action with respect to a specific lease,
which resulted in a significant and permanent reduction in our costs
attributable to such lease, offset in part by upward adjustment of our minimum
rent obligations which are linked to the Brazilian inflation rate.
Depreciation and Amortization
Depreciation and amortization expressed as a percentage of net operating
revenues were approximately 5.9% and 5.7% for the six months ended June 30,
2000 and 1999, respectively.
10
<PAGE>
Other Operating Expenses
Other operating expenses expressed as a percentage of restaurant sales were
approximately 19.0% and 15.4% for the six months ended June 30, 2000 and 1999,
respectively. The percentage increase from period to period is primarily due to
(i) professional fees related to lease cost reductions, (ii) a significant
increase in the cost of utilities, (iii) expenses attributable to our
introduction of a food delivery operation, and (iv) costs related to an
incentive program for our store personnel. Reductions in the cost of certain
repair and maintenance service contracts, the non-renewal of certain other
service contracts and both negotiated and court-ordered rent reductions
partially offset this percentage increase.
Selling Expenses
Selling expenses as a percentage of restaurant sales were 8.5% and 5.9% for
the six months ended June 30, 2000 and 1999, respectively. The increase in 2000
when compared to 1999 is due to the growth in the number of franchised stores.
General and Administrative Exprenses
General and administrative expenses expressed as a percentage of net
operating revenues were approximately 9.9% and 11.8% for the six months ended
June 30, 2000 and 1999, respectively. The percentage decrease is primarily
attributable to the completion of our middle management restructuring, which
included the outsourcing of some responsibilities and functions previously
performed in-house, partially offset by costs of office automation improvements,
a provision for administrative personnel bonuses, and increases in the cost of
certain contractually outsourced administrative functions.
Interest Income and Expenses
Net interest expense and foreign exchange expressed as a percentage of
restaurant sales were approximately (4.0%) and (13.2%) for the six months
ended June 30, 2000 and 1999, respectively. The devaluation of the Brazilian
real in January 1999 caused us to recognize approximately R$1,595 of foreign
currency losses on our US dollar denominated debt during the second quarter of
1999. In the first six months of 2000, we recorded a foreign currency gain of
approximately R$9.
Excluding the effect of currency fluctuations, our interest income and
expenses as a percentage of net operating revenues would have been (3.6%) or
R$(1,210) and approximately (6.8%) or R$(2,036) for the six months ended June
30, 2000 and 1999, respectively. The decrease from period to period is primarily
attributable to the reduction of the Brazilian overnight interest rate,
discussed above, and to our lower level of short term debt.
LIQUIDITY AND CAPITAL RESOURCES
Since March 19, 1996, we have funded our operating losses of R$38,214 and
made
11
<PAGE>
acquisitions of businesses and capital improvements (including store remodeling)
by using cash remaining at the closing of our acquisition of BOB's, by borrowing
funds from various sources and from private placements of our securities. As of
June 30, 2000, we had cash on hand of R$697 and a working capital deficiency
of R$11,008.
Our capital requirements are primarily for expansion of our retail
operations. Currently, four of our stores are in owned facilities, with all of
the others in leased facilities. For the six months ended June 30, 2000, our
EBITDA was R$1,599. During the same period, our average cost to open a store
approximated R$300 to R$500, including leasehold improvements, equipment and
beginning inventory, as well as expenses for store design, site selection, lease
negotiation, construction supervision and obtaining requisite permits. We
currently estimate that capital expenditures for fiscal 2000 will approximate
R$1,200. We anticipate that our primary use of our cash resources during 2000
will be to service our debt obligations. During 2000, we intend to focus our
efforts on expanding both the number of our franchisees and our franchised
outlets, neither of which are expected to involve significant capital
expenditures on our part.
In the second quarter of 2000, we had net cash provided by operating
activities of R$1,097 and had net cash used in investing activities of R$976.
The primary use of cash for investing activities was for capital expenditures
related to our retail store expansion.
Management plans to address our immediate and future cash flow needs by
focusing on a number of area including: reduction of expenses, including head
count reductions; the expansion of our franchisee base, which would generate
additional cash flows from royalties and franchise fees without significant
capital expenditures; and the introduction of new programs and menu expansion to
meet consumer demand. In order to act on these plans and sustain current
operations, we are dependent upon the continued forbearance of our creditors, as
well as additional financing.
Recently, we commenced court actions to defer payments of our past due
taxes against different branches of Brazilian government. These actions are
intended to extend payments on past due taxes and we joined special programs of
the Brazilian government for fiscal debts regularization.
There can be no assurance that management's plans will be realized, or that
additional financing will be available to us when needed, or at terms that are
desirable. Furthermore, there can be no assurance that we will continue to
receive the forbearance of our creditors, or that we will locate suitable new
franchisees, or desirable locations for new franchisees to open stores. Our
ability to further reduce expenses and head count is directly impacted by our
need to maintain an infrastructure to support our current and future chain of
locations. Additionally, our ability to achieve our plans is further impacted by
the instability of the economic environment in Brazil, which has direct impact
on the desire and ability of consumers to visit fast food outlets. We are also
dependent upon the continued employment of key personnel. These factors, among
others, raise substantial doubt about our ability to continue as a going
concern.
12
<PAGE>
PART II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
On May 22, 2000 we held our annual meeting of stockholders to elect six
directors for a term of one year. Omar Carneiro da Cunha, Peter J.F. van Voorst
Vader, Ian S. Barnett, Lawrence Burstein, Jose Ricardo Bosquet Bomeny and John
Michael Streithorst were each elected by a vote of 1,565,962 in favor with 1,425
votes withheld and 1,667,903 not voting.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) None
13
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report, as amended, to be signed on its behalf
by the undersigned thereunto duly authorized.
Brazil Fast Food Corp.
(registrant)
Dated: August 11, 2000
By: /s/ Peter van Voorst Vader
----------------------------------
Peter van Voorst Vader
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Carlos Henrique da Silva Rego
----------------------------------
Carlos Henrique da Silva Rego
Chief Financial Officer
(Principal Financial and
Accounting Officer)
14
