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 September 30, 1997



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

                For the transition period from ____________ to ____________.


                   Commission file number 0-20203 and 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
    Incorporation or Organization)                       Identification No.)

                          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 November 5, 1997 was 44,091,382.

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




<PAGE>

              INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
                          INDEX TO FINANCIAL STATEMENTS



                                                                       Page
                                                                       ----
PART I.  FINANCIAL INFORMATION
------------------------------

      ITEM. 1     Financial Statements


                  Consolidated Balance Sheets as of
                  September 30, 1997 and December 31,
                  1996                                                 2 - 3


                  Consolidated Statements of Operations
                  for the Three and Nine Months Ended
                  September 30, 1997 and 1996                            4


                  Consolidated Statements of
                  Shareholders' Equity for the Nine
                  Months Ended September 30, 1997                        5


                  Consolidated Statements of Cash Flows
                  for the Nine Months Ended September
                  30, 1997 and 1996                                    6 - 7


                  Notes to Consolidated Financial
                  Statements                                           8 - 20



      ITEM. 2     Management's Discussion and Analysis
                  or Plan of Operation                                21 - 35



PART II.  OTHER INFORMATION
---------------------------

      ITEM. 2     Legal Proceedings                                      36

      ITEM. 4     Results of Votes of Security Holders                 36 - 37

      ITEM. 5     Other Information                                      37

      ITEM. 6     Exhibits and Reports on Form 8-K                       37


SIGNATURES


                                        1

<PAGE>

              INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)


                                     ASSETS
                                     ------

                                                  September 30,     December 31,
                                                       1997              1996
                                                   -----------       -----------


CURRENT ASSETS:

   Cash and cash equivalents                       $ 1,640,140       $   194,269
   Restricted cash and
      certificates of deposit                          999,990           500,000
   Receivables                                          90,203            42,348
   Inventories                                         336,604           300,217
   Advances to affiliate                                  --             228,984
   Prepaid expenses                                     88,450            53,794
                                                   -----------       -----------

      Total Current Assets                           3,155,387         1,319,612
                                                   -----------       -----------


FURNITURE, EQUIPMENT AND
   LEASEHOLD IMPROVEMENTS, NET                       5,889,265         5,586,844

DEFERRED DEBENTURE ISSUANCE COSTS,
   NET OF ACCUMULATED AMORTIZATION
   OF $149,097 AND $124,155,
   RESPECTIVELY                                        283,229           308,170

OTHER ASSETS, NET OF ACCUMULATED
   AMORTIZATION OF $310,961 and
   $206,792                                            510,675           618,978

BURGER KING DEVELOPMENT
   RIGHTS, NET OF ACCUMULATED
   AMORTIZATION OF $54,054                             945,946              --

DOMINOS DEVELOPMENT RIGHTS
   NET OF ACCUMULATED AMORTIZATION
   OF $7,771                                           181,332              --
                                                   -----------       -----------



   Total Assets                                    $10,965,834       $ 7,833,604
                                                   ===========       ===========














                             See Accompanying Notes
                                        2


<PAGE>
              INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS, Continued
                                   (Unaudited)

                      LIABILITIES AND SHAREHOLDERS' EQUITY

                                                 September 30,     December 31,
                                                      1997              1996
                                                 ------------      ------------
CURRENT LIABILITIES:
   Accounts payable                              $    562,442      $    454,697
   Accrued interest payable                            69,586            10,335
   Other accrued expenses                             480,152         1,009,606
   Bank credit facilities payable                   1,253,545         1,220,495
   Other notes payable                                   --              69,307
   Payable to affiliate                                  --             149,382
   Non-interest bearing obligation
     payable to minority shareholder
     of IFF Polska                                       --             500,000
                                                 ------------      ------------

      Total Current Liabilities                     2,365,725         3,413,822

LONG TERM BANK CREDIT FACILITIES                      726,000           300,000

9% SUBORDINATED CONVERTIBLE
  DEBENTURES, DUE DECEMBER 15, 2007                 2,756,000         2,756,000
                                                 ------------      ------------

      Total Liabilities                             5,847,725         6,469,822
                                                 ------------      ------------

DEFERRED CREDIT                                     1,000,000              --
                                                 ------------      ------------

MINORITY INTEREST IN NET ASSETS OF
   CONSOLIDATED SUBSIDIARY                            254,014           460,361
                                                 ------------      ------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
   Preferred Stock, $.01 par value, 
   1,000,000 shares authorized;     
   33,450 and 38,240 shares issued  
   and outstanding, respectively    
   (liquidation preference of       
   $3,345,000)                                           334               382
   
   Common Stock, $.01 par value,
   100,000,000 shares authorized;
   43,591,382 and 10,322,521 shares
   issued and outstanding, respectively               435,914           103,225

   Additional paid-in capital                      17,150,640        14,523,361

   Accumulated deficit                            (13,816,806)      (13,706,261)

   Accumulated translation adjustment                  94,013           (17,286)
                                                 ------------      ------------

      Total Shareholders' Equity                    3,864,095           903,421
                                                 ------------      ------------
      Total Liabilities and
          Shareholders' Equity                   $ 10,965,834      $  7,833,604
                                                 ============      ============

                            See Accompanying Notes

                                      3


<PAGE>
              INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
<TABLE>
<CAPTION>

                                          Three Months Ended             Nine Months Ended
                                             September 30,                  September 30,
                                     ----------------------------    ----------------------------
                                         1997            1996            1997            1996
                                     ------------    ------------    ------------    ------------
<S>                                  <C>             <C>             <C>             <C>         
REVENUES:
  Sales                              $  1,493,656    $  1,281,125    $  4,246,215    $  3,895,891
  Other operating                          14,780          32,596          66,258         101,465
                                     ------------    ------------    ------------    ------------

     Total Revenue                      1,508,436       1,313,721       4,312,473       3,997,356

FOOD AND PACKAGING                        595,406         529,358       1,714,428       1,692,546
                                     ------------    ------------    ------------    ------------

GROSS PROFIT                              913,030         784,363       2,598,045       2,304,810

OPERATING EXPENSES:
  Payroll and Related Costs               309,633         210,361         749,703         594,230
  Occupancy and Other Operating
     Expenses                             488,491         354,157       1,253,208       1,061,556
  Depreciation and Amortization           263,285         208,625         700,160         684,617
                                     ------------    ------------    ------------    ------------

     Total Operating
        Expenses                        1,061,409         773,143       2,703,071       2,340,403
                                     ------------    ------------    ------------    ------------

                                         (148,379)         11,220        (105,026)        (35,593)
                                     ------------    ------------    ------------    ------------
GENERAL AND ADMINISTRATIVE
  EXPENSES                                523,397         349,949       1,238,283       1,119,086
                                     ------------    ------------    ------------    ------------


OTHER INCOME (EXPENSES):
  Interest and other, net                 222,668         (17,023)        119,823          89,776
  Interest expense, including
     amortization of debenture
     issuance costs                      (147,305)       (115,685)       (420,476)       (344,227)
  Gain on settlement of
     litigation, net of applicable
     costs                                   --              --         1,327,070            --
                                     ------------    ------------    ------------    ------------

     Total other income
        (expenses)                         75,363        (132,708)      1,026,417        (254,451)
                                     ------------    ------------    ------------    ------------

LOSS BEFORE MINORITY
  INTEREST                               (596,413)       (471,437)       (316,892)     (1,409,130)

MINORITY INTEREST IN LOSSES OF
  CONSOLIDATED SUBSIDIARY                  83,848          48,531         206,347         166,192
                                     ------------    ------------    ------------    ------------

NET LOSS                             $   (512,565)   $   (422,906)   $   (110,545)   $ (1,242,938)
                                     ============    ============    ============    ============


NET LOSS PER COMMON SHARE            $       (.01)   $       (.06)   $       (.01)   $       (.27)
                                     ============    ============    ============    ============




WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING            37,005,288       6,776,544      20,239,892       5,053,117
                                     ============    ============    ============    ============

</TABLE>

                             See Accompanying Notes

                                        4

<PAGE>


<TABLE>
<CAPTION>
                                        INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                            For the Nine Months Ended September 30, 1997
                                                            (Unaudited)



                                      Common Stock      Preferred Stock      Additional   Accumulated
                                 -------------------   ------------------      Paid In    Translation    Accumulated
                                   Shares    Amount     Shares    Amount       Capital     Adjustment      Deficit         Total
                                 ---------  --------   --------  --------   ------------  -----------    -----------    ----------
<S>                            <C>         <C>          <C>      <C>       <C>           <C>            <C>             <C>        
Balances,
   December 31, 1996           10,322,521  $103,225     38,240   $   382   $ 14,523,361  $(    17,286)  $(13,706,261)   $   903,421


Conversion of
   Preferred Stock                159,650     1,597   (  4,790)  (    48)   (     1,549)          -             -              -
Common Stock issued in
   exchange for professional
   services                     2,000,000    20,000       -         -           180,000           -             -           200,000
Common Stock issued in
   exchange for Underwriter
   and debenture warrants         200,000     2,000       -         -       (     2,000)          -             -
Conversion of 8% Convertible
   Promissory Notes             5,000,000    50,000       -         -           450,000           -             -           500,000
Conversion of Litigation
   Funding Promissory Note     25,909,211   259,092       -         -         2,000,828           -             -         2,259,920
Translation adjustments              -         -          -         -              -           111,299          -           111,299
Net income for the period            -         -          -         -              -                     (   110,545)   (   110,545)
                               ----------  --------   --------   -------   ------------   ------------  ------------    -----------
Balances,
   September 30, 1997          43,591,382  $435,914     33,450   $   334   $ 17,150,640   $     94,013  $(13,816,806)   $ 3,864,095
                               ==========  ========   ========   =======   ============   ============  ============    ===========

</TABLE>


















































                                        See Accompanying Notes
                                                  5



<PAGE>

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


                                                 Nine Months Ended September 30,
                                                 -------------------------------
                                                      1997             1996
                                                 -------------     -------------

CASH FLOWS FROM OPERATING
   ACTIVITIES:

   Net loss                                        $  (110,545)     $(1,242,938)
   Adjustment to reconcile net loss
      to net cash provided by
      (used in)operating activities:
      Amortization and depreciation                    791,160          776,174
      Minority interest in losses of
          subsidiary                                  (206,347)        (166,192)
   Gain on forgiveness of indebtedness                (337,859)            --
   Changes in operating assets and
      liabilities, net of acquisition
      of business:
          Receivables                                      435           14,212
          Inventories                                   20,488           80,009
          Prepaid expenses                             (22,612)          (6,311)
          Accounts payable and
             accrued expenses                         (284,943)         191,789
                                                   -----------      -----------

   Net cash used in operating
      activities                                      (150,223)        (353,257)
                                                   -----------      -----------


CASH FLOWS FROM INVESTING
  ACTIVITIES:

   Purchase of business, net of
      cash acquired                                   (500,849)            --
   Increase in restricted cash and
      certificates of deposit                         (499,990)            --
   Payments for furniture, equipment
      and leasehold improvements, net                 (247,764)            --
   Payments for other assets                           (25,866)         (53,794)
   Disposition of furniture & equipment                   --            114,308
   Refund of franchise fees                             30,000             --
                                                   -----------      -----------

   Net cash provided by (used in)
      investing activities                          (1,244,469)          60,514
                                                   -----------      -----------














                             See Accompanying Notes

                                        6

<PAGE>

              INTERNATIONAL FAST FOOD CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
                                   (Unaudited)

                                                 Nine Months Ended September 30,
                                                 -------------------------------
                                                      1997             1996
                                                 -------------     -------------
CASH FLOWS FROM FINANCING
   ACTIVITIES:
   Sale of common shares for cash                         --            245,000
   Sale of options for cash                               --             10,000
   Advances from (to) Affiliate, net                    79,602           58,099
   Repayments of bank credit
      facilities                                    (1,515,232)        (294,248)
   Net proceeds from settlement of
      litigation                                     3,288,440             --
   Payment to Litigation Funding                    (1,028,521)            --
   Payment of other notes payable                      (69,307)            --
   Payment of non-interest bearing
      obligation to minority share-
      holder of IFF Polska                            (500,000)            --
   Borrowings under bank credit
      facilities                                     1,974,282          339,401
   Net Proceeds from issuance of
      convertible promissory notes                     500,000             --
                                                   -----------      -----------
   Net cash provided by financing
      activities                                     2,729,264          358,252
                                                   -----------      -----------

FOREIGN CURRENCY TRANSLATION
   ADJUSTMENT                                          111,299         (105,716)
INCREASE (DECREASE) IN CASH AND
   CASH EQUIVALENTS                                  1,445,871          (40,207)
BEGINNING CASH AND CASH EQUIVALENTS                    194,269          253,510
                                                   -----------      -----------
ENDING CASH AND CASH EQUIVALENTS                   $ 1,640,140      $   213,303
                                                   ===========      ===========

SUPPLEMENTAL DISCLOSURES OF
   CASH FLOW INFORMATION:
   Cash paid during the period for:
      Interest                                     $   312,005      $   262,320
                                                   ===========      ===========

SUPPLEMENTAL SCHEDULE OF NON
   CASH INVESTING & FINANCING ACTIVITIES:

Nine Months Ended September 30, 1997:
      Issuance of  159,650  shares of Common  Stock upon the  exchange  of 4,790
          shares of Preferred Stock.
      Issuance of  2,000,000  shares of Common  Stock in payment of  $200,000 of
          legal fees.
      Issuance of 5,000,000  shares of Common Stock upon  conversion of $500,000
          principal amount of 8% Convertible Promissory Notes.
      Issuance  of  200,000   shares  of  Common   Stock  in  exchange  for  the
          cancellation  of  130,000   Underwriter   Common  Stock  warrants  and
          Underwriter $1,000,000 debenture warrants.
      Issuance of  25,909,211  shares of Common  Stock in payment of  $2,198,424
          principal  amount of a promissory  note payable to Litigation  Funding
          plus $61,425 of accrued interest.

Nine Months Ended September 30, 1996:
      Issuance of 381,292  shares of Common  Stock upon the  exchange  of 11,440
          shares of Preferred Stock.
      Issuance of 620,000  shares of Common Stock in payment of $87,305 of legal
          fees.
                             See Accompanying Notes

                                        7

<PAGE>

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


1. ORGANIZATION:

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


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

   BASIS OF PRESENTATION - The accompanying  consolidated  financial  statements
include  the  accounts  of the  Company  and  its  majority-owned  (85%)  Polish
subsidiary,  International  Fast Food  Polska,  Sp. z o.o.  ("IFFP"),  a limited
liability  corporation,  and IFFP's three wholly-owned  Polish limited liability
corporations.  Additionally,  the consolidated  financial statements include the
accounts of the Company's two wholly-owned Polish subsidiaries, Krolewska Pizza,
Sp. z o.o.("KP")  and Pizza King Polska,  Sp. z o.o.("PKP")  for the period from
their  acquisition  in July 1997 through  September 30, 1997. KP and PKP operate
four Domino's  Pizza stores and one  commissary.  All  significant  intercompany
transactions and balances have been eliminated in consolidation.

   The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from these estimates.

   The accompanying unaudited  consolidated financial statements,  which are for
interim  periods,  do  not  include  all  disclosures  provided  in  the  annual
consolidated  financial  statements.   These  unaudited  consolidated  financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements  and the  footnotes  thereto  contained in the Annual  Report on Form
10-KSB  for the  year  ended  December  31,  1996  of  International  Fast  Food
Corporation and Subsidiaries  (the "Company"),  as filed with the Securities and
Exchange  Commission.  The  December  31, 1996  consolidated  balance  sheet was
derived from audited consolidated financial statements, but does not include all
disclosures required by generally accepted accounting principles.

   In the  opinion  of the  Company,  the  accompanying  unaudited  consolidated
financial  statements  contain all adjustments  (which are of a normal recurring
nature)  necessary  for a fair  presentation  of the financial  statements.  The
results of  operations  for the nine  months  ended  September  30, 1997 are not
necessarily indicative of the results to be expected for the full year.

   The  official  currency  of  Poland is the  zloty.  The value of the zloty is
pegged  pursuant  to a system  based on a basket of  currencies,  as well as all
other  economic  and  political  factors  that  effect  the value of  currencies


                                        8


<PAGE>

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

generally.  On January 1, 1995,  the  National  Bank of Poland  introduced a new
currency  unit (a "new zloty").  New zlotys are  equivalent to 10,000 old zlotys
("old zlotys").  All references in this document to zlotys are to new zlotys. At
September  30, 1997 and 1996,  the exchange  rate was 3.417 and 2.801 new zlotys
per dollar,  respectively.  Monetary  assets and liabilities are translated from
the local  currency,  the  "zloty",  to U.S.  dollars at the period end exchange
rate.  Non-monetary  assets,  liabilities,   and  related  expenses,   primarily
furniture,  equipment,  leasehold  improvements  and  related  depreciation  and
amortization, are translated using historical exchange rates. Income and expense
accounts,  excluding depreciation and amortization,  are translated at an annual
weighted average exchange rate.

   The accounts of IFFC's Polish  subsidiaries are measured using the zloty. Due
to Poland's highly inflationary environment through December 31, 1995, generally
accepted  accounting  principles required IFFC to calculate and recognize on its
statement of operations its currency translation gains or losses associated with
IFFP. Due to the reduction in Poland's  inflation  rate,  effective for the year
ended  December  31,  1996,  IFFC was no longer  required  pursuant to generally
accepted accounting principles to recognize currency translation gains or losses
in its statement of operations.

   LIQUIDITY AND PLAN OF OPERATIONS - As of September 30, 1997, IFFC had working
capital of  approximately  $789,662 and Cash and Cash Equivalents of $1,640,140.
IFFC's  working  capital and cash  position were  significantly  improved by the
settlement of it's litigation with Burger King Corporation in March 1997 coupled
with recent debt  consolidation  and merger with Litigation  Funding,  Inc. (See
Notes 7 and 9) Although IFFC believes  that it has  sufficient  funds to finance
its present plan of operations through December 31, 1998. IFFC cannot reasonably
estimate how long it will be able to satisfy its cash requirements.  The capital
requirements relating to implementation of the BKC Development Agreement and the
New Master Franchise Agreement with Domino's are significant. Based upon current
assumptions,  IFFC will seek to implement its business  plan  utilizing its Cash
and Cash Equivalents, cash generated from restaurant operations and the proceeds
from the sale of 11% convertible senior  subordinated  discounts notes due 2007,
(See  Note  10).  In  order  to  satisfy  the  capital  requirements  of the BKC
Development Agreement and the New Master Franchise Agreement with Domino's, IFFC
will require resources  substantially  greater than the amounts it presently has
or amounts  that can be generated  from  restaurant  operations.  Other than its
existing Bank Credit  Facilities (See Note 4), IFFC has no current  arrangements
with  respect  to,  or  sources  of  additional  financing  and  there can be no
assurance  that  IFFC  will be  able  to  obtain  additional  financing  or that
additional  financing  will be  available  on  acceptable  terms to fund  future
commitments for capital expenditures.

      NET  (LOSS)  PER  COMMON  SHARE - The net  loss  per  common  share in the
accompanying statements of operations is based upon the net loss after preferred
dividend   requirements  divided  by  the  weighted  average  number  of  shares
outstanding  during each period.  The net loss per common share does not include
the  assumed  exercise  of any common  stock  options or  warrants  since  their
inclusion  would be  anti-dilutive.  Fully  diluted  per share data has not been
presented  since the  inclusion of common stock  equivalents  arising from stock


                                      9


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

options and warrants and the assumed  issuance of common shares upon  conversion
of the 9% Subordinated  Convertible  Debentures and the Preferred Stock would be
anti-dilutive.

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

3.    RESTRICTED CASH:

      At September 30, 1997 the Company had $999,990 of certificates of deposit,
which represents collateral for an outstanding line of credit.

4.    BANK CREDIT FACILITIES:


BANK CREDIT FACILITIES AT SEPTEMBER 30, 1997 CONSISTS OF THE FOLLOWING:

Amerbank  in  Poland, S.A., PKP overdraft
  credit line, variable rate approximately
  equal to prime, expires March 31, 1998                        $       5,263

Amerbank  in  Poland, S.A., IFFP overdraft
  credit line, variable rate approximately
  equal to prime, expires March, 30, 1998                              25,282

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

Amerbank IFFP revolving  credit  facility,
  interest is payable monthly at 2.50%
  above LIBOR,  $1,500,000  maximum credit
  until August 1999,  payable in thirty
  five monthly installments  thereafter of
  $42,000 with final payment of $30,000
  due at maturity on August 12, 2002.                                       0

Totalbank  IFFC line of credit of $999,000
  payable  in full on May 19, 1998,
  interest at 6.5% payable quarterly
  collateralized by certificates of
  deposit in the amount $999,990                                      999,000
                                                                  -----------
          Total Debt                                                1,979,545
          Less: Current Maturities                                  1,253,545
                                                                  -----------
          Long Term Debt                                         $    726,000
                                                                 ============

* The Amerbank  revolving  facility for $1,500,000 has not been drawn upon as of
  September 30, 1997.

                                       10

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


On March 18, 1996,  PKP obtained a $150,000 line of credit from  American  Bank.
Borrowings  under the facility  bear  interest at 10% per annum,  payable  every
three months  commencing April 30, 1996, and may be used to finance up to 50% of
the cost of  developing  Domino's  Stores.  The credit  facility is secured by a
promissory  note of PK Polska,  and title to the fixtures  and  equipment of the
Domino's  Stores  developed with the credit facility  borrowings.  No draws have
been made on the credit facility. The facility expires on January 30, 1998.

5.    SHAREHOLDERS' EQUITY:

      The  Company's  stock option plan  provides for the granting of options to
qualified employees and directors of the Company.  Stock option activity for the
nine months ended September 30, 1997 is as follows:
                                                      1997
                                                      ---- 
      Outstanding at beginning of period             210,000
      Granted                                        410,000
      Exercised                                         -
      Expired                                      (  50,000)
                                                   ---------

      Outstanding at end of period                   570,000
                                                   =========

      Exercisable at end of period                   256,000
                                                   =========
      Price range of options outstanding
          at end of period                        $      .40
                                                   =========

      Available for grant at end of period         1,430,000
                                                   =========

      During the nine months  ended  September  30,  1997 and 1996,  159,650 and
381,292 shares of Common Stock were issued upon the exchange of 4,790 and 11,440
shares of Preferred Stock.

6.    CONVERTIBLE PROMISSORY NOTES:

      In January  and March  1997,  IFFC sold to the  Company's  Chairman of the
Board,  Chief  Executive  Officer  and  President  and his wife as well as other
members of his family an aggregate of $500,000 8% convertible  promissory  notes
due January 1999. The notes were converted into 5,000,000 shares of Common Stock
on June 19, 1997.

      At September 30, 1997,  IFFC had reserved the  following  shares of Common
Stock for issuance:

      Stock option plan                            2,000,000

      Warrants issued in connection with
      1994 exchange offer, exercisable at
      $7.00 per share through August 1,
      1999                                           290,800
                                       11

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


      Convertible Debentures convertible
      into Common Stock at a conversion
      price of $8.50 per share                       324,235

      Preferred Stock convertible into
      Common Stock at a conversion price
      of $3.00 per share                           1,114,893

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

          Total reserved shares                    3,779,928
                                                ============

7.    COMMITMENTS AND CONTINGENCIES:

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

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

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



                                      12



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

months of the date the  development fee payment is due. The Rubinson Group shall
be defined to include any entity that Mr.  Rubinson  directly or indirectly owns
an aggregate  interest of ten percent  (10%) or more of the legal or  beneficial
equity  interest and any parent,  subsidiary or affiliate of a Rubinson  entity.
Mr. Rubinson has personally guaranteed payment of the development fee.

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

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

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

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


                                       13


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


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

      On August 28, 1997, KP entered into a New Master Franchise  Agreement with
Domino's Pizza International, Inc. ("Domino's"), granting KP the exclusive right
to develop and operate and to sub-license Domino's Pizza stores and to operate a
commissary for the Domino's system and the use of the Domino's and related marks
in the operation of stores in Poland. IFFC has agreed that as a condition to the
New Master  Franchise  Agreement it shall  contribute or cause other entities to
contribute  equity to KP in a minimum amount of $2,000,000 by December 31, 1997.
IFFC also agreed that any  additional  capital  required  above such amount will
also be dedicated to KP as needed to permit KP to meet its  development  quotas.
The term of the New Master Franchise Agreement will expire on December 31, 2003,
and if KP is in  compliance  with  all  material  provisions  of the New  Master
Franchise  Agreement,  it may be  extended for an additional  ten (10)  years in
accordance  with certain  minimum  development  quotas which KP and Domino's may
agree upon by execution of an amendment to the New Master  Franchise  Agreement.
Under the terms of the New Master Franchise Agreement,  KP shall be obligated to
open up one (1)  additional  store in 1997, in addition to the four (4) existing
stores  as of  August  28,  1997.  During  the next six (6)  years,  KP shall be
obligated to open 5, 6, 7, 8, 9, and 10 stores, respectively,  beginning in 1998
and  ending in the year 2003 for a total of 50  stores.  Of such  stores,  third
party franchise  stores shall not exceed 25% of the number of open and operating
stores and all stores located in Warsaw, Poland shall be corporate stores.

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


8.    LITIGATION:

      POLISH FISCAL  AUTHORITY  DISPUTES - As of July 1995, IFFC may have become
subject to  penalties  for  failure to comply  with a recently  amended  tax law
requiring  the use of cash  registers  with certain  calculating  and  recording
capabilities  and which are approved for use by the Polish  Fiscal  Authorities.
Although  IFFP's NCR Cash  Register  System  (the "Cash  Register  System") is a
modern  system,  the System  cannot be modified and will  ultimately  need to be
replaced in order to comply with the new tax law. IFFP is now in compliance with


                                       14


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


the tax law using a  parallel  cash  register  system  but was  unable to modify
and/or  replace its Cash  Register  System  before  July 1995.  As a penalty for
noncompliance,  Polish tax authorities  may disallow  certain VAT deductions for
July and August, which were previously deducted by IFFP. Additionally, penalties
and interest may be imposed on these disallowed  deductions.  IFFP believes that
its potential exposure is approximately $150,000, which amount has been provided
for in the  accompanying  financial  statements.  IFFP  has  requested  a  final
determination  by the  Polish  Minister  of  Finance.  The  Company is unable to
predict the timing and nature of the Ministers ruling.  IFFP believes a new cash
register system would cost approximately $250,000.

      ROMANSKA - NINKOWIC  ("RN") - In April 1997,  RN filed suit in  Voivodship
Court in Krakow, Poland against IFFP. RN alleged that IFFP owed RN approximately
266,831 PLN  (approximately  $78,000 at the September 30, 1997 exchange rate) in
final settlement for the construction of IFFP's Katowice restaurant.

      On December 19, 1996, PKP was formally informed by the Voivodship court in
Warsaw that RN, PKP's former  general  contractor,  had filed suit alleging that
PKP owed RN  approximately  123,422  zlotys or  (approximately  $36,000 based on
September 30, 1997 exchange rates) plus interest from April 6, 1994.

      On October 27, 1997, IFFP, PKP and RN settled their disputes. IFFP and PKP
agreed to pay RN $25,000 cash for full settlement of all claims.

9.    OTHER TRANSACTIONS:

      On July  14,  1997,  IFFC  and  IFFC  Acquisition,  Inc.,  a  wholly-owned
subsidiary of the Company  ("Acquisition  Sub") entered into a Merger  Agreement
with Litigation Funding,  Inc.  ("Funding") and Mitchell and Edda Rubinson,  the
sole  shareholders  of Funding.  Under the terms of the  Agreement,  Funding was
merged with and into Acquisition  Sub. The 25,909,211  shares of common stock of
the Company to be received by the Funding shareholders is determined by dividing
the $3,021,014 value assigned to Funding by the book value per share ($.1166) of
the  Company's  common  stock  as of June 30,  1997,  before  reduction  for the
liquidation   preference  applicable  to  the  36,950  (as  of  June  30,  1997)
outstanding shares of Preferred Stock.

      The value assigned to Funding  represents (i) the $2,198,494  plus accrued
interest owed to Funding by the Company  pursuant to a promissory  note and (ii)
$750,000 which represents  seventy-five  percent (75%) of the value attributable
to the New Development Agreement between Burger King Corporation ("BKC" and IFFC
and its affiliates  which was executed on March 14, 1997 in connection  with the
Company's  settlement  of its  litigation  against BKC.  Funding was entitled to
receive  seventy-five  percent (75%) of the litigation  proceeds under its prior
agreements  with the Company.  For a more  detailed  discussion of the Company's
agreements with Funding, see "Note 8 - Litigation."



                                      15


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


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

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

      The  following  unaudited  pro-forma  summary  presents  the  consolidated
results of operations as if the acquisition had occurred at the beginning of the
periods  presented  and does not  purport  to be  indicative  of what would have
occurred had the  acquisition  actually  been made as of such date or of results
which may occur in the future.

                          Three Months Ended           Nine Months Ended
                             September 30,                September 30,
                     ---------------------------  -------------------------- 
                         1997           1996          1997           1996
                     ------------   ------------  ------------  ------------   
Total Revenues*      $ 1,493,656    $ 1,535,491   $ 4,834,654    $ 4,667,395

Net income (loss)    $(  512,565)   $(  744,372)  $(  426,047)   $(1,641,979)

Net income loss
   per share         $(      .01)   $(      .11)  $(      .03)   $(      .35)

   * The $41,835 decrease in total revenues for the three months ended September
30,  1997 as  compared  with the three  months  ended  September  30,  1996,  is
attributable  to the  devaluation of the zolty in relation to the U.S. dollar of
approximately  26% in the three months ended September 30, 1997 as compared with
the three months ended September 30, 1996.

   On August 28, 1997,  KP entered into a New Master  Franchise  Agreement  with
Domino's Pizza International, Inc. ("Domino's"), granting KP the exclusive right
to develop and operate and to sub-license Domino's Pizza stores and to operate a
commissary for the Domino's system and the use of the Domino's and related marks
in the operation of stores in Poland. As a condition to the New Master Franchise
Agreement IFFC shall contribute or cause other entities to contribute  equity to
KP in a minimum amount of $2,000,000 by December 31, 1997. IFFC also agreed that
any additional  capital  required above such amount will also be dedicated to KP
as  needed  to permit  KP to meet its  development  quotas.  The term of the New
Master  Franchise  Agreement  will expire on December 31, 2003,  and if KP is in
compliance with all material  provisions of the New Master Franchise  Agreement,
it may be extended for an additional ten (10) years in  accordance  with certain
minimum  development quotas which KP and Domino's may agree upon by execution of
an amendment to the New Master Franchise  Agreement.  Under the terms of the New
Master Franchise Agreement,  KP shall be obligated to open up one (1) additional
store in 1997,  in  addition  to the four (4)  existing  stores as of August 28,
                                      16

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

1997.  During the next six (6) years,  KP shall be obligated to open 5, 6, 7, 8,
9, and 10 stores,  respectively,  beginning  in 1998 and ending in the year 2003
for a total of 50 stores. Of such stores, third party franchise stores shall not
exceed 25% of the number of open and operating  stores and all stores located in
Warsaw, Poland shall be corporate stores.

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

   On July 7, 1997,  IFFP and  British  Petroleum  ("BP") of Poland,  executed a
letter of intent for the co-development of Burger King restaurants and BP petrol
stations  throughout the Republic of Poland.  The letter,  although not binding,
states that BP will provide IFFP with  packages of between 5 and 10  development
sites each.  These sites will be available to IFFP to lease for a specific  term
plus option periods at IFFP's discretion  subject to Burger King approval.  IFFP
anticipates  that the  majority of these  locations  will open in 1998 and 1999.
Rental terms will be based on a minimum  monthly  rental fee versus a percentage
of sales. IFFP and BP are currently negotiating the terms of the master lease.

   On July 10, 1997,  IFFP and Du Pont Conoco  ("Conoco") of Poland,  executed a
letter of intent for the  co-development  of Burger King  restaurants and Conoco
petrol  stations  throughout  the Republic of Poland.  The letter,  although not
binding,  states that Conoco will provide IFFP with packages of between 5 and 10
development  sites each.  These sites will be  available  to IFFP to lease for a
specific term plus option  periods at IFFP's  discretion  subject to Burger King
approval.  IFFP  anticipates  that the majority of these  locations will open in
1998 and 1999. Rental terms will be based on a minimum monthly rental fee versus
a  percentage  of sales.  IFFP and Conoco  have  agreed on the terms of a master
lease.

   On August 12,  1997,  the Company  executed  two credit  agreements  with the
American  Bank in Poland  ("Amerbank").  The first  credit  facility  was in the
amount of $950,000. The purpose of this facility is to consolidate existing debt
with  Amerbank  totaling  $300,000  with  existing debt owed to Bank Handlowy of
$650,000.  Both of these  loans  were due in full  within  the next six  months.
Pursuant  to the terms of the new  loan,  interest  is  payable  monthly  at the
prevailing  one month LIBOR rate plus 2.75%.  Commencing in March 1998, the loan
is to be repaid in monthly installments of $32,000 for twenty nine months with a
balloon  payment of $22,000  due at  maturity  (August  12,  2000).  The loan is
secured by all existing restaurant assets and the guarantee of IFFC.

   The second credit  agreement is a development loan in the principal amount of
$1,500,000.  The  purpose  of this loan is to  provide  partial  credit  for the
development  of new  Burger  King  restaurants.  Borrowings  under  this  credit


                                      17

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

facility  may be made until  August 1999 and are secured by: (i) fixed assets of
each new restaurant financed; and (ii) a guarantee of IFFC. The loan is required
to be repaid in thirty five equal  installments of $42,000 starting in September
1999 with a balloon  payment of  $30,000  due at  maturity  (August  12,  2002).
Interest  is paid  monthly  at the  prevailing  one month  LIBOR rate plus 2.5%.
According to the terms of the agreement,  the proceeds of the loan could be used
to finance up to fifty percent (50%) of the costs of furnishing  and  commencing
operation of Burger King restaurants operated by IFFP.

   On September 11, 1997, IFFP entered into an agreement with Statoil to develop
up to twenty-two  Burger King restaurants on Statoil service station  properties
in Poland  apportioned in five  categories.  IFFP, in coordination  with BKC, is
presently  evaluating  various Statoil sites to determine the feasibility of the
development of Burger King restaurants. In the event that BKC disapproves of any
of the  sites  within a  particular  category,  Statoil  reserves  the  right to
withdraw  from  IFFP's  consideration  all sites  within  such  category.  As of
November 6, 1997, IFFC has rejected three of the twenty two sites offered in the
agreement.

   In July 1997, PKP opened its fourth Domino's store in Warsaw.  The store cost
approximately  $125,000 which includes leasehold  improvements,  equipment,  and
furniture and fixtures.  The store consists of  approximately  100 square meters
and annual lease payments,  excluding electricity,  are approximately $4,500.00.
The lease was executed in September  1996  between PKP and the  Municipality  of
Warsaw. The lease is for an unlimited period of time, however,  either party may
terminate the lease upon three months written notice to the other party.  In the
event that the Municipality terminates the lease, PKP is entitled to recover its
costs, including leasehold improvements, net of depreciation.

   On August 29, 1997, PKP entered into a lease for an unlimited  period of time
with  the  Municipality  of Wola,  Warsaw  for its  fifth  Domino's  store  site
consisting of approximately 97 square meters. The lease may be terminated by PKP
at any time upon six  months'  notice.  The  Municipality  of Wola,  Warsaw  may
terminate  the  lease at any time  upon six  months'  notice.  In the  event the
Municipality of Wola,  Warsaw  terminates the lease,  PKP is entitled to recover
its costs, including leasehold improvements,  net of depreciation.  Annual lease
payments,  excluding utility charges are approximately  $16,684 at September 30,
1997 exchange rates.  The store is currently under  construction and the Company
anticipates that it will be opened by December 1997.

   The  Company  entered  into an  employment  agreement  with James F.  Martin,
effective July 1, 1997. Mr. Martin's employment  agreement provides that he will
serve as Chief Financial  Officer of the Company and/or that of its subsidiaries
or affiliates that may be founded, for an initial term of three (3) years, which
the Company may extend for up to two (2) additional years. His annual salary for
the first year is $85,000.  Pursuant to his employment agreement,  Mr. Martin is
required to devote his full  business  time,  attention  and best efforts to the
performance of his duties under the employment agreement. Mr. Martin is entitled
to three (3) weeks of paid vacation during any year of employment. Mr. Martin is
also entitled to an automobile allowance of $400 per month,  however, Mr. Martin
shall be responsible for all associated  expenses  relating to such  automobile,


                                      18


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

including,  without  limitation,  insurance,  gas and  repairs.  Mr.  Martin  is
eligible to receive stock option  grants under the Company's  Stock Option Plans
in the discretion of the Company's Board of Directors or Option Committees.  The
Company has granted Mr. Martin a stock option to acquire  100,000  shares of the
Company's  Common  Stock at an  exercise  price of $.40 per  share  equal to the
current  price of the Common Stock on the date of the grant,  such options to be
exercisable in whole or in part and  cumulatively  as follows,  provided in each
case that Mr. Martin is an employee of the Company on the date of reference: (i)
twenty  percent  (20%) one (1) year after the effective  date of the  employment
agreement;  (ii) sixty percent  (60%) two (2) years after the effective  date of
the employment  agreement;  and (iii) one hundred percent (100%) three (3) years
after the effective date of the employment agreement. In the event Mr. Martin is
required to move to Poland,  the Company shall provide Mr. Martin an appropriate
housing  allowance,  to be  determined  at that time.  Mr.  Martin's  employment
agreement  provides  for a payment  of $20,000  in the event his  employment  is
terminated by reason of his death or disability and a severance pay in the event
Mr.  Martin's  employment  is terminated  without  cause,  such  severance to be
calculated  as  follows:  (i)  July 1,  1997  through  June 30,  1998 a  $20,000
severance  amount;  (ii) July 1, 1998 through June 30, 1999 a $15,000  severance
amount; and (iii) July 1, 1999 through June 30, 2000 a $10,000 severance amount.
Mr. Martin's  employment  agreement does not provide for a severance  payment in
the event his  employment  is  terminated  for cause.  Mr.  Martin's  employment
agreement  requires  that he not compete or engage in any  business  competitive
with the  Company's  business for the term of the  agreement and for a period of
two (2) years thereafter.

   The  Company  entered  into an  employment  agreement  with Leon  Blumenthal,
effective July 1, 1997. Mr. Blumenthal's  employment  agreement provides that he
will serve as the Company's Senior Vice President,  Chief Operating  Officer and
General  Manager,  and shall serve as the President of  International  Fast Food
Polska for an initial term of three (3) years,  which the Company may extend for
up to an  additional  two (2)  years.  His  annual  salary for the first year is
$100,000.  Additionally,  under  the  terms  of the  employment  agreement,  Mr.
Blumenthal  shall be eligible to receive stock option grants under the Company's
Stock  Option Plans in the  discretion  of the  Company's  Board of Directors or
Option Committees.  The Company granted Mr. Blumenthal a stock option to acquire
100,000  shares of the Company's  Common Stock at an exercise  price of $.40 per
share equal to the current  price of the Common  Stock on the date of the grant,
such options to be exercisable in whole or in part and cumulatively according to
the  following  schedule:  (i)  twenty  percent  (20%)  one (1) year  after  the
effective  date of the  employment  agreement;  (ii) sixty percent (60%) two (2)
years  after  the  effective  date of the  employment  agreement;  and (iii) one
hundred  percent  (100%) three (3) after the  effective  date of the  employment
agreement.  Mr. Blumenthal is, in addition to salary, entitled to certain fringe
benefits  including an automobile to use in connection  with the  performance of
his duties under the agreement.  Mr.  Blumenthal  shall be entitled to three (3)
weeks of paid  vacation  during  his  employment.  Mr.  Blumenthal's  employment
agreement  provides  for a payment  of $25,000  in the event his  employment  is
terminated by reason of his death or disability and, in the event his employment
is terminated  without cause, Mr.  Blumenthal is entitled to a severance payment
as  follows:  if the  termination  occurs (i) on or prior to July 1,  1998,  the


                                      19


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


severance  amount  will be  $25,000;  (ii) after July 1, 1998 but on or prior to
July 1, 1999,  the  severance  amount will be  $20,000;  and (iii) after July 1,
1999,  the  severance  amount  will  be  $15,000.  Mr.  Blumenthal's  employment
agreement  does not provide for a severance  payment in the event his employment
is terminated for cause. Mr. Blumenthal's  employment agreement requires that he
not compete or engage in any business  competitive  with the Company's  business
for the term of the agreement and for two (2) years thereafter.


10.   SUBSEQUENT EVENTS:

   On November 5, 1997,  the Company  sold  approximately  $27.5  million of 11%
convertible  senior  subordinated  discount  notes due 2007,  (the "Notes") in a
private offering in which BT Alex. Brown, Incorporated acted as placement agent.

   Net proceeds received by the Company were as follows:
                                                                 In thousands
                                                                 ------------
      Face amount of notes                                         $  27,500
      Discount to be accreted as interest expense
          and added to the original principal balance
          of the notes over a period of three years                   (7,500)
      Offering expenses                                               (2,200)
                                                                   ----------

             Net proceeds                                          $  17,800
                                                                   =========

   The Notes are convertible  into  approximately  39.4 million shares of common
stock of the Company at a conversion  price of $0.70 per share at any time after
one year.  The Company  intends to use the net  proceeds of the offering for the
development of new Burger King  restaurants  and Domino's Pizza stores in Poland
and for working capital and other general corporate purposes. The Notes (and the
shares  of  common  stock  issuable  upon  conversion  thereof)  have  not  been
registered under the Securities Act of 1933, as amended, or any state securities
laws and, unless so registered,  may not be offered or sold in the United States
except  pursuant to an exemption  from, or in a transaction  not subject to, the
registration  requirements of the Securities Act and applicable state securities
laws.













                                      20


<PAGE>
ITEM I.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

GENERAL

   Managements  Discussion  and Analysis or Plan of Operation  contains  various
"forward  looking  statements"  within the meaning of the Securities Act of 1933
and the  Securities  And Exchange Act of 1934,  which  represents  the Company's
expectations or beliefs  concerning future events including  without  limitation
the following;  fluctuations  in the Polish  economy;  ability of the Company to
obtain  financing on terms and  conditions  that are  favorable;  ability of the
Company to improve levels of  profitability  and sufficiency of cash provided by
operations, investing and financing activities.

   The Company cautions that these statements are further qualified by important
factors  that  could  cause  actual  results  to differ  materially  from  those
contained in the forward  looking  statements,  including  without  limitations,
general  economic  and  political  conditions  in  Poland,  the  demand  for the
Company's  products and services,  changes in the level of operating expense and
the present and future  level of  competition.  Results  actually  achieved  may
differ materially from expected results included in these statements.

   As of September 30, 1997, IFFC had working capital of approximately  $789,662
and Cash and Cash  Equivalents  of $1,640,140.  IFFC's working  capital and cash
position were significantly  improved by the settlement of the BKC Litigation in
March 1997 coupled with the debt consolidation and IFFC's merger with Litigation
Funding,  Inc. (See Notes 7 and 9) Although IFFC believes that it has sufficient
funds to finance its present plan of operations  through December 31, 1998, IFFC
cannot  reasonably  estimate  how  long it will be  able  to  satisfy  its  cash
requirements.  The capital  requirements  relating to  implementation of the BKC
Development  Agreement and the New Master Franchise  Agreement with Domino's are
significant.  Based upon current  assumptions,  IFFC will seek to implement  its
business  plan  utilizing its Cash and Cash  Equivalents,  cash  generated  from
restaurant  operations  and the  proceeds  from the sale of the 11%  convertible
senior  subordinated  discount  notes due 2007.  In order to satisfy the capital
requirements  of the BKC  Development  Agreement  and the New  Master  Franchise
Agreement with Domino's,  IFFC will require resources substantially greater than
the amounts it presently  has or amounts that can be generated  from  restaurant
operations.  Except as discussed below,  IFFC has no current  arrangements  with
respect to, or sources of  additional  financing  and there can be no  assurance
that  IFFC  will be able  to  obtain  additional  financing  or that  additional
financing will be available on acceptable  terms to fund future  commitments for
capital expenditures.

   On November 5, 1997,  the Company  sold  approximately  $27.5  million of 11%
convertible  senior  subordinated  discount  notes due 2007,  (the "Notes") in a
private offering in which BT Alex. Brown, Incorporated acted as placement agent.

   Net proceeds received by the Company were as follows:
                                                                 In thousands
                                                                 ------------
      Face amount of notes                                         $  27,500
      Discount to be accreted as interest expense
          and added to the original principal balance
          of the notes over a period of three years                   (7,500)
      Offering expenses                                               (2,200)
                                                                   ----------

             Net proceeds                                          $  17,800
                                                                   =========
                                      21

<PAGE>

    The Notes are convertible into  approximately  39.4 million shares of common
stock of the Company at a conversion  price of $0.70 per share at any time after
one year.  The Company  intends to use the net  proceeds of the offering for the
development of new Burger King  restaurants  and Domino's Pizza stores in Poland
and for working capital and other general corporate purposes. The Notes (and the
shares  of  common  stock  issuable  upon  conversion  thereof)  have  not  been
registered under the Securities Act of 1933, as amended, or any state securities
laws and, unless so registered,  may not be offered or sold in the United States
except  pursuant to an exemption  from, or in a transaction  not subject to, the
registration  requirements of the Securities Act and applicable state securities
laws.

   IFFC currently operates its Burger King restaurant business in Poland through
its majority owned (85%) Polish  subsidiary,  IFFP, and its wholly-owned  Polish
limited liability  corporations,  IFF  Polska-Kolmer,  IFF-DX Management and IFF
Polska i Spolka. IFFC operates its Domino's Pizza business in Poland through its
two  wholly-owned  Polish  subsidiaries,  Krolewska Pizza, Sp. z o.o. ("KP") and
Pizza King Polska, Sp. z o.o. ("PKP").  Unless the context indicates  otherwise,
references herein to IFFC include all of its operating subsidiaries.

   IFFC currently  operates eight  Traditional  Burger King Restaurants and four
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 be able to successfully  establish a sufficient  number
of restaurants to achieve profitable operations.

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

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

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



                                      22


<PAGE>

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

   The following unaudited  pro-forma summary presents the consolidated  results
of operations as if the acquisition had occurred at the beginning of the periods
presented  and does not purport to be indicative of what would have occurred had
the acquisition actually been made as of such date or of results which may occur
in the future.
                          Three Months Ended           Nine Months Ended
                             September 30,                September 30,
                     ---------------------------  -------------------------- 
                         1997           1996          1997           1996
                     ------------   ------------  ------------  ------------   
Total Revenues*      $ 1,493,656    $ 1,535,491   $ 4,834,654    $ 4,667,395

Net income (loss)    $(  512,565)   $(  744,372)  $(  426,047    $(1,641,979)

Net income loss
   per share         $(      .01)   $(      .11)  $(      .03)   $(      .35)

   * The $41,835 decrease in total revenues for the three months ended September
30,  1997 as  compared  with the three  months  ended  September  30,  1996,  is
attributable  to the  devaluation of the zolty in relation to the U.S. dollar of
approximately  26% in the three months ended September 30, 1997 as compared with
the three months ended September 30, 1996.

   On August 28, 1997,  KP entered into a New Master  Franchise  Agreement  with
Domino's Pizza International, Inc. ("Domino's"), granting KP the exclusive right
to develop and operate and to sub-license Domino's Pizza stores and to operate a
commissary for the Domino's system and the use of the Domino's and related marks
in the operation of stores in Poland. IFFC has agreed that as a condition to the
New Master  Franchise  Agreement it shall  contribute or cause other entities to
contribute  equity to KP in a minimum amount of $2,000,000 by December 31, 1997.
IFFC also agreed that any  additional  capital  required  above such amount will
also be dedicated to KP as needed to permit KP to meet its  development  quotas.
The term of the New Master Franchise Agreement will expire on December 31, 2003,
and if KP is in  compliance  with  all  material  provisions  of the New  Master
Franchise  Agreement,  it may be extended  for an  additional  ten (10) years in
accordance  with certain  minimum  development  quotas which KP and Domino's may
agree upon by execution of an amendment to the New Master Franchise Agreement.

   Under the terms of the New Master Franchise Agreement,  KP shall be obligated
to open up one (1)  additional  store  in  1997,  in  addition  to the  four (4)
existing  stores as of August 28, 1997.  During the next six (6) years, KP shall
be  obligated to open 5, 6, 7, 8, 9, and 10 stores,  respectively,  beginning in
1998 and ending in the year 2003 for a total of 50 stores. Of such stores, third
party franchise  stores shall not exceed 25% of the number of open and operating
stores and all stores located in Warsaw, Poland shall be corporate stores.

   During the term of the New Master Franchise Agreement, KP and its controlling
shareholders,  including the controlling  shareholder of IFFC, will not have any


                                      23

<PAGE>

interest as an owner,  investor,  partner,  licensee or in any other capacity in
any business engaged in sit-down, delivery or carry-out pizza or in any business
or entity which  franchises or licenses or otherwise  grants to others the right
to operate a business  engaged in such business which is located in Poland.  The
latter  restriction  shall  apply  for a period  of one (1) year  following  the
effective date of termination of the New Master Franchise Agreement.

   On July 7, 1997,  IFFP and  British  Petroleum  ("BP") of Poland,  executed a
letter of intent for the co-development of Burger King restaurants and BP petrol
stations  throughout the Republic of Poland.  The letter,  although not binding,
states that BP will provide IFFP with  packages of between 5 and 10  development
sites each.  These sites will be available to IFFP to lease for a specific  term
plus option periods at IFFP's discretion  subject to Burger King approval.  IFFP
anticipates  these locations will open in 1998 and beyond.  Rental terms will be
based on a minimum monthly rental fee and/ or a percentage of sales. IFFP and BP
are currently negotiating the terms of the master lease.

   On July 10, 1997,  IFFP and Du Pont Conoco  ("Conoco") of Poland,  executed a
letter of intent for the  co-development  of Burger King  restaurants and Conoco
petrol  stations  throughout  the Republic of Poland.  The letter,  although not
binding,  states that Conoco will provide IFFP with packages of between 5 and 10
development  sites each.  These sites will be  available  to IFFP to lease for a
specific term plus option  periods at IFFP's  discretion  subject to Burger King
approval.  IFFP anticipates these locations will open in 1998 and beyond. Rental
terms  will be based on a minimum  monthly  rental fee and/ or a  percentage  of
sales. IFFP and Conoco have agreed on the terms of a master lease.

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

   The second credit  agreement is a development loan in the principal amount of
$1,500,000.  The  purpose  of this loan is to  provide  partial  credit  for the
development  of new  Burger  King  restaurants.  Borrowings  under  this  credit
facility  may be made until  August 1999 and are secured by: (i) fixed assets of
each new restaurant financed; and (ii) a guarantee of IFFC. The loan is required
to be repaid in thirty five equal  installments of $42,000 starting in September
1999 with a balloon  payment of  $30,000  due at  maturity  (August  12,  2002).
Interest  is paid  monthly  at the  prevailing  one month  LIBOR rate plus 2.5%.
According to the terms of the agreement,  the proceeds of the loan could be used
to finance up to fifty percent (50%) of the costs of furnishing  and  commencing
operation of Burger King  restaurants  operated by IFFP.  No advances  have been
made on this credit facility.

   On September 11, 1997, IFFP entered into an agreement with Statoil to develop
up to twenty-two  Burger King restaurants on Statoil service station  properties
in Poland  apportioned in five  categories.  IFFP, in coordination  with BKC, is
presently  evaluating  various Statoil sites to determine the feasibility of the
development of Burger King restaurants. In the event that BKC disapproves of any


                                      24

<PAGE>

of the  sites  within a  particular  category,  Statoil  reserves  the  right to
withdraw  from  IFFP's  consideration  all sites  within  such  category.  As of
November 6, 1997, IFFC has rejected three of the twenty two sites offered in the
agreement.

   In July 1997, PKP opened its fourth Domino's store in Warsaw.  The store cost
approximately  $125,000 which includes leasehold  improvements,  equipment,  and
furniture and fixtures.  The store consists of  approximately  100 square meters
and annual lease payments,  excluding electricity,  are approximately $4,500.00.
The lease was executed in September  1996  between PKP and the  Municipality  of
Warsaw. The lease is for an unlimited period of time, however,  either party may
terminate the lease upon three months written notice to the other party.  In the
event that the Municipality terminates the lease, PKP is entitled to recover its
costs, including leasehold improvements, net of depreciation.

   On August 29, 1997, PKP entered into a lease for an unlimited  period of time
with  the  Municipality  of Wola,  Warsaw  for its  fifth  Domino's  store  site
consisting of approximately 97 square meters. The lease may be terminated by PKP
at any time upon six  months'  notice.  The  Municipality  of Wola,  Warsaw  may
terminate  the  lease at any time  upon six  months'  notice.  In the  event the
Municipality of Wola,  Warsaw  terminates the lease,  PKP is entitled to recover
its costs, including leasehold improvements,  net of depreciation.  Annual lease
payments, excluding utility charges, are 57,008 zlotys, approximately $16,684 at
September 30, 1997 exchange rates. The store is currently under construction and
is scheduled to open by December 1997.

   The  Company  entered  into an  employment  agreement  with James F.  Martin,
effective July 1, 1997. Mr. Martin's employment  agreement provides that he will
serve as Chief Financial  Officer of the Company and/or that of its subsidiaries
or affiliates that may be founded, for an initial term of three (3) years, which
the Company may extend for up to two (2) additional years. His annual salary for
the first year is $85,000.  Pursuant to his employment agreement,  Mr. Martin is
required to devote his full  business  time,  attention  and best efforts to the
performance of his duties under the employment agreement. Mr. Martin is entitled
to three (3) weeks of paid vacation during any year of employment. Mr. Martin is
also entitled to an automobile allowance of $400 per month,  however, Mr. Martin
shall be responsible for all associated  expenses  relating to such  automobile,
including,  without  limitation,  insurance,  gas and  repairs.  Mr.  Martin  is
eligible to receive stock option  grants under the Company's  Stock Option Plans
in the discretion of the Company's Board of Directors or Option Committees.  The
Company has granted Mr. Martin a stock option to acquire  100,000  shares of the
Company's  Common  Stock at an  exercise  price of $.40 per  share  equal to the
current  price of the Common Stock on the date of the grant,  such options to be
exercisable in whole or in part and  cumulatively  as follows,  provided in each
case that Mr. Martin is an employee of the Company on the date of reference: (i)
twenty  percent  (20%) one (1) year after the effective  date of the  employment
agreement;  (ii) sixty percent  (60%) two (2) years after the effective  date of
the employment  agreement;  and (iii) one hundred percent (100%) three (3) years
after the effective date of the employment agreement. In the event Mr. Martin is
required to move to Poland,  the Company shall provide Mr. Martin an appropriate
housing  allowance,  to be  determined  at that time.  Mr.  Martin's  employment
agreement  provides  for a payment  of $20,000  in the event his  employment  is
terminated by reason of his death or disability and a severance pay in the event
Mr.  Martin's  employment  is terminated  without  cause,  such  severance to be
calculated  as  follows:  (i)  July 1,  1997  through  June 30,  1998 a  $20,000
severance  amount;  (ii) July 1, 1998 through June 30, 1999 a $15,000  severance
amount; and (iii) July 1, 1999 through June 30, 2000 a $10,000 severance amount.
Mr. Martin's  employment  agreement does not provide for a severance  payment in
                                      25

<PAGE>

the event his  employment  is  terminated  for cause.  Mr.  Martin's  employment
agreement  requires  that he not compete or engage in any  business  competitive
with the  Company's  business for the term of the  agreement and for a period of
two (2) years thereafter.

   The  Company  entered  into an  employment  agreement  with Leon  Blumenthal,
effective July 1, 1997. Mr. Blumenthal's  employment  agreement provides that he
will serve as the Company's Senior Vice President,  Chief Operating  Officer and
General  Manager,  and shall serve as the President of  International  Fast Food
Polska for an initial term of three (3) years,  which the Company may extend for
up to an  additional  two (2)  years.  His  annual  salary for the first year is
$100,000.  Additionally,  under  the  terms  of the  employment  agreement,  Mr.
Blumenthal  shall be eligible to receive stock option grants under the Company's
Stock  Option Plans in the  discretion  of the  Company's  Board of Directors or
Option Committees.  The Company granted Mr. Blumenthal a stock option to acquire
100,000  shares of the Company's  Common Stock at an exercise  price of $.40 per
share equal to the current  price of the Common  Stock on the date of the grant,
such options to be exercisable in whole or in part and cumulatively according to
the  following  schedule:  (i)  twenty  percent  (20%)  one (1) year  after  the
effective  date of the  employment  agreement;  (ii) sixty percent (60%) two (2)
years  after  the  effective  date of the  employment  agreement;  and (iii) one
hundred  percent  (100%) three (3) after the  effective  date of the  employment
agreement.  Mr. Blumenthal is, in addition to salary, entitled to certain fringe
benefits  including an automobile to use in connection  with the  performance of
his duties under the agreement.  Mr.  Blumenthal  shall be entitled to three (3)
weeks of paid  vacation  during  his  employment.  Mr.  Blumenthal's  employment
agreement  provides  for a payment  of $25,000  in the event his  employment  is
terminated by reason of his death or disability and, in the event his employment
is terminated  without cause, Mr.  Blumenthal is entitled to a severance payment
as  follows:  if the  termination  occurs (i) on or prior to July 1,  1998,  the
severance  amount  will be  $25,000;  (ii) after July 1, 1998 but on or prior to
July 1, 1999,  the  severance  amount will be  $20,000;  and (iii) after July 1,
1999,  the  severance  amount  will  be  $15,000.  Mr.  Blumenthal's  employment
agreement  does not provide for a severance  payment in the event his employment
is terminated for cause. Mr. Blumenthal's  employment agreement requires that he
not compete or engage in any business  competitive  with the Company's  business
for the term of the agreement and for two (2) years thereafter.

















                                       26


<PAGE>


NINE MONTHS ENDED SEPTEMBER 30, 1997 VS NINE MONTHS ENDED SEPTEMBER 30, 1996

RESULTS OF OPERATIONS

   Results of operations for the nine months ended  September 30, 1997,  include
the results of KP and PKP,  which were  acquired  in July 1997 in a  transaction
accounted for as a purchase.  KP owns the exclusive  master franchise rights and
PKP owns the individual store franchises for Domino's pizza stores in Poland.

   During the three  months  ended  September  30,  1997,  KP and PKP  generated
$275,075 of sales from their four  Domino's  pizza stores and incurred  Food and
Packaging Costs of $104,418, Payroll and Related Costs of $90,018, Occupancy and
Other  Operating  Expenses of $110,158  and  Depreciation  and  Amortization  of
$44,500. Food and Packaging Costs were 38.0% of sales, Payroll and Related Costs
were 32.7% of sales,  Occupancy and Other Operating Expenses were 40.0% of sales
and Depreciation and Amortization were 16.2% of sales. Since the acquisition was
accounted  for as a  purchase,  no  amounts  are  included  in the  accompanying
financial  statements  for the three and nine month periods ended  September 30,
1996.

   For the nine months ended  September 30, 1997 and  September  30, 1996,  IFFC
generated Sales of $4,246,215 and $3,895,891,  respectively which includes sales
of $275,075 for the Domino's  Pizza  stores in 1997.  In U.S.  dollar and Polish
zloty terms IFFC's Sales increased by approximately  1.9% and 23.4% for the nine
months ended  September 30, 1997 as compared to the nine months ended  September
30,  1996.  The  increase is  primarily  attributable  to improved  local stores
marketing and general improvements in the Polish economy.

   During the nine months ended  September  30,  1997,  IFFC  incurred  Food and
Packaging Costs of $1,714,428,  Payroll and Related Costs of $749,703, Occupancy
and Other Operating  Expenses of $1,253,208 and  Depreciation  and  Amortization
Expense of $700,160.

   Food and Packaging Costs  applicable to Burger King  restaurants for the nine
months  ended  September  30,  1997 and 1996 were 40.5% and 43.4% of  Restaurant
Sales,  respectively.  The 2.9% decrease as a percentage of Restaurant  Sales is
primarily  attributable to improved  product  sourcing,  the  implementation  of
tighter cost controls, a decrease in custom duties and import tax on paper goods
coupled with an increase in Restaurant Sales.

   Payroll and Related Costs  applicable to Burger King restaurants for the nine
months  ended  September  30,  1997 and 1996 were 16.6% and 15.3% of  Restaurant
Sales,  respectively.  The 1.3%  increase as a percentage  of  Restaurant  Sales
increased  primarily  as a result of an increase  in the  minimum  wage rate and
related benefits in Poland effective January 1, 1997.

   Occupancy and Other Operating Expenses  applicable to Burger King restaurants
for the nine months  ended  September  30, 1997 and 1996 were 28.8% and 27.2% of
Restaurant Sales, respectively.  The 1.6% increase as a percentage of Restaurant
Sales is primarily  attributable  to an increase in  advertising,  utilities and
repairs and maintenance.

   Depreciation and Amortization  Expense  applicable to Burger King restaurants
as a percentage of Restaurant Sales was 16.5% and 17.6% in the nine months ended
September 30, 1997 and 1996, respectively.  The 1.1% decrease as a percentage of
restaurant  sales is primarily  attributable to an increase in Restaurant  Sales

                                      27

<PAGE>

coupled  with the fully  depreciated  status of certain  assets still in use, as
well as, the  increase in  amortization  expense  associated  with the  deferred
leased costs associated with the re-negotiation of the Dantex lease.

   General and  Administrative  Expenses for the nine months ended September 30,
1997 (which  include  $47,360  applicable to KP and PKP) and 1996 were 29.2% and
27.6% of Restaurant  Sales,  respectively.  The 1.6% increase as a percentage of
Restaurant Sales is primarily  attributable to increased office rent, accounting
services,  and corporate salaries. For the nine months ended September 30, 1997,
General and Administrative Expenses were comprised of executive and office staff
salaries and benefits ("Salary Expense") $423,393;  legal and professional fees,
office rent, travel, telephone and other corporate expenses ("Corporate Overhead
Expense")  $723,799,  and depreciation and  amortization  $91,091.  For the nine
months  ended  September  30,  1996,  General and  Administrative  Expense  were
comprised  of  executive  and  office  staff   salaries   $401,573;   legal  and
professional  fees, office rent,  travel,  telephone and other general corporate
expenses $650,898, and depreciation and amortization $66,615.

   For the nine months ended  September 30, 1997,  IFFC  generated a net loss of
$(110,545) or $(.01) per share of IFFC's Common Stock  compared to a net loss of
$(1,242,938),  or $(.27) per share of IFFC's  Common  Stock for the nine  months
ended September 30, 1996.  During the nine months ended September 30, 1997, IFFC
recognized a non-recurring gain of $1,327,070 or $.07 per share of IFFC's Common
Stock in connection with the settlement of the BKC Litigation.

   IFFC  anticipates  that  it  will  continue  to  incur  certain  expenses  in
connection  with its disputes with the Polish Fiscal  Authorities.  See "Item 2.
Legal Proceedings - Polish Fiscal Authority  Disputes" for a description of such
matters.

For the nine months ended  September 30, 1997 and 1996 Interest and Other Income
was comprised as follows:

                                               Nine Months Ended September 30,
                                                    1997            1996
                                               --------------  ---------------  
      Interest income                           $   104,409      $    49,949
      Foreign exchange (losses)
          gains, net                             (  247,128)      (    9,008)
      Management fee                                 13,904           20,773
      Forgiveness of indebtedness                   337,859             -
      All other, net                             (   89,221)          28,062
                                                 ----------       ---------- 
                                                $   119,823      $    89,776
                                                 ==========       ==========


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









                                       28

<PAGE>

Interest Expense is comprised as follows:

                                               Nine Months Ended September 30,
                                               -------------------------------
                                                   1997             1996
                                               -------------    --------------
      Interest Expense on Subordinated
          Convertible Debentures                $   186,030      $   186,030

      Interest Expense on Note Payable
          to Litigation Funding                      73,767             -

      Interest Expense on Convertible
          Promissory Notes                           16,178             -

      Amortization of Debenture
          Issuance Costs                             24,942           24,942

      Interest Expense on Bank
          Facilities                                119,559          133,255
                                                 ----------       ----------

                 Total                          $   420,476      $   344,227
                                                 ==========       ==========

      Interest  Expense  exceeded  Interest  and Other  Income by  $316,067  and
$294,278 for the nine months ended September 30, 1997 and 1996, respectively.

      IFFC's  interest  expense on bank facilities was $119,559 and $133,255 for
the nine months ended  September  30, 1997 and 1996,  respectively.  The $13,666
decrease is attributable to lower borrowings under bank credit facilities during
the comparative period.

LIQUIDITY AND CAPITAL RESOURCES

      IFFC's  material  commitments  for capital  expenditures in its restaurant
business relate to the provisions of the BKC  Development  Agreement and the New
Master Franchise Agreement with Domino's..

      On March 14,  1997,  a new  Development  Agreement  (the "BKC  Development
Agreement")  was entered into between BKC and IFFC,  which was then  assigned by
IFFC to IFFP on  March  14,  1997;  IFFC  continues  to  remain  liable  for the
obligations  contained  in the BKC  Development  Agreement.  Pursuant to the BKC
Development Agreement, IFFC has been granted the exclusive right until September
30, 2007 to develop and be  franchised  to operate  Burger King  restaurants  in
Poland with certain exceptions discussed below.  Pursuant to the BKC Development
Agreement,  IFFC is required to open 45 Development Units during the term of the
Agreement.  Each  traditional  Burger  King  restaurant,   in-line  Burger  King
restaurant,  or drive-thru  Burger King restaurant  shall constitute one unit. A
Burger  King  kiosk  restaurant  shall,  for  purposes  of the  BKC  Development
Agreement,  be  considered  one quarter  unit.  Pursuant to the BKC  Development
Agreement,  IFFC is to open three  Development Units through September 30, 1998,
four units in each year beginning  October 1, 1998 and ending September 30, 2001
and five units in each year beginning  October 1, 2001 and ending  September 30,
2007.

      Pursuant to the BKC Development  Agreement,  IFFC shall pay BKC $1,000,000
as a development  fee. IFFC shall not be obligated to pay the development fee if
IFFC is in compliance with the  development  schedule by September 30, 1999, and
has  achieved  gross  sales  of  $11,000,000  for the 12  months  preceding  the
September 30, 1999,  target date. If the development  schedule has been achieved

                                      29

<PAGE>

but gross sales were less than  $11,000,000,  but greater than  $9,000,000,  the
development fee shall be reduced to $250,000.  If the development fee is payable
due to the failure of IFFC to achieve the  performance  targets set forth above,
IFFC, at its option,  may either pay the development fee or provide BKC with the
written and binding undertaken of Mr. Mitchell Rubinson,  IFFC's Chairman,  that
the Rubinson Group will completely divest themselves of any interest in IFFC and
the Burger King restaurants  opened or operated by IFFC in Poland within six (6)
months of the date the  development fee payment is due. The Rubinson Group shall
be defined to include any entity that Mr.  Rubinson  directly or indirectly owns
an aggregate  interest of ten percent  (10%) or more of the legal or  beneficial
equity  interest and any parent,  subsidiary or affiliate of a Rubinson  entity.
Mr. Rubinson has personally guaranteed payment of the development fee.

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

      IFFC currently  estimates the cost of opening a traditional  restaurant to
be  approximately  $450,000 to  $1,000,000,  including  leasehold  improvements,
furniture,  fixtures,  equipment,  and opening inventories.  Such estimates vary
depending  primarily on the size of a proposed  restaurant and the extent of the
improvements  required.  The development of additional restaurants is contingent
upon, among other things, IFFC's ability to generate cash from operations and/or
securing additional debt or equity financing.  If cash is unavailable from those
sources,  IFFC will have to curtail any additional  development until additional
cash resources are secured.

      On August 28, 1997, KP entered into a New Master Franchise  Agreement with
Domino's Pizza International, Inc. ("Domino's"), granting KP the exclusive right
to develop and operate and to sub-license Domino's Pizza stores and to operate a
commissary for the Domino's system and the use of the Domino's and related marks
in the operation of stores in Poland. As a condition to the New Master Franchise
Agreement, IFFC shall contribute or cause other entities to contribute equity to
KP in a minimum amount of $2,000,000 by December 31, 1997. IFFC also agreed that
any additional  capital  required above such amount will also be dedicated to KP
as  needed  to permit  KP to meet its  development  quotas.  The term of the New
Master  Franchise  Agreement  will expire on December 31, 2003,  and if KP is in
compliance with all material  provisions of the New Master Franchise  Agreement,
it may be extended for an additional  ten (10) years in accordance  with certain
minimum  development quotas which KP and Domino's may agree upon by execution of
an amendment to the New Master Franchise Agreement.

      Under  the  terms  of the New  Master  Franchise  Agreement,  KP  shall be
obligated to open up one (1)  additional  store in 1997,  including the four (4)
existing  stores as of August 28, 1997.  During the next six (6) years, KP shall


                                      30


<PAGE>

be  obligated to open 5, 6, 7, 8, 9, and 10 stores,  respectively,  beginning in
1998 and ending in the year 2003 for a total of 50 stores. Of such stores, third
party franchise  stores shall not exceed 25% of the number of open and operating
stores and all stores located in Warsaw, Poland shall be corporate stores.

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

      IFFC  anticipates  that it will  continue  to incur  certain  expenses  in
connection with its disputes with the Polish Fiscal  Authorities.  See "Part II.
Item 2. Legal Proceedings - Polish Fiscal Authority  Disputes" for a description
of such  matters and IFFC's best  estimates  of the  expenses  IFFC  anticipates
incurring and the timing of such expenses.

      On May 17,  1996,  IFFC's  Common  Stock was deleted from the NASDAQ Stock
Market and has traded on the over the counter market (Electronic bulletin board)
since that date.

      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 and proceeds from the sale of certain  equity  securities and the BKC
Settlement Agreement.

      IFFC did not pay the preferred  dividends  that were due on June 15, 1996,
December  15, 1996 and June 15, 1997 and as of September  30, 1997,  $301,050 of
preferred  dividends remain in arrears.  At September 30, 1997 there were 33,450
shares of Preferred Stock outstanding.

      In June 1996,  after  considering  various  alternatives and including the
market price for the Company's Common Stock, its trading volume and various time
constraints the Board of Directors  authorized the issuance of 2,200,000  shares
of the Company's Common Stock for a total purchase price of $110,000 to Mitchell
Rubinson and his wife Edda.  The Company used the proceeds  from the sale of the
shares  for  payment  of  interest  on the  Company's  Convertible  Subordinated
Debentures.

      In September 1996, the Company had working capital needs, and had incurred
additional  expenses  in  connection  with  the BKC  Litigation.  The  Board  of
Directors of IFFC  authorized  the sale of  2,500,000  shares of common stock at
$.10 per share.  Marilyn Rubinson,  Jaime Rubinson and Kim Rubinson , the mother
and daughters of Mitchell Rubinson,  the Company's  President  purchased 250,000
shares each or a total of 750,000 shares of the offering.

      In November 1996, the Company had additional  working  capital needs.  The
Board of Directors of IFFC authorized the sale of 500,000 shares of common stock
at $.10 per share.  Jaime  Rubinson  purchased  250,000  shares and Kim Rubinson
purchased  250,000  shares.  Both are the  daughters of Mitchell  Rubinson,  the
Company's President.


                                      31

<PAGE>

      In  December  1996,   IFFC  had   outstanding   an  interest   payment  of
 approximately   $125,000  in  connection  with  its  Convertible   Subordinated
 Debentures and additional
working capital needs. After considering various  alternatives and factors,  the
Board of Directors  of IFFC  authorized  the sale of 1,500,000  shares of common
stock  of IFFC to  Marilyn  Rubinson,  the  Mother  of  Mitchell  Rubinson,  the
Company's President at $.10 per share.

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

      On March 14, 1997, IFFC issued a promissory note in the original principal
amount of $2,198,494 to Litigation  Funding as partial payment of amounts due to
Litigation Funding in connection with the settlement of the BKC Litigation.  See
Note 9 of  notes to  consolidated  financial  statements  for a  description  of
transactions  involving  the  payment of amounts  due to  Litigation  Funding by
issuance of 25,909,211 shares of Common Stock.

      As of September  30, 1997 and  November 5, 1997,  the Company had $550,163
and  $606,835,  respectively,  in accounts  with Bank Handlowy and AmerBank with
substantially  all of such  funds held as  European  Currency  Unit  denominated
deposits.  Substantially  all of the Company's  remaining cash including the net
proceeds of the private placement is held in U.S.dollar accounts in U.S. Banks.

      IFFC  has  also  financed  its  operations   through  the  use  of  credit
facilities, which credit facilities are described below.

      As of January 28, 1993, IFFP entered into a revolving credit facility with
American  Bank  of  Poland  S.A.  ("AmerBank")  totalling  300,000  new  zlotys.
Borrowings  under the January 28,1993  AmerBank credit facility are secured by a
guarantee  of IFFC  and  bear  interest  at a  monthly  adjusted  variable  rate
approximately  equal to AmerBank's prime rate.  Borrowings under the January 28,
1993 AmerBank  credit  facility were  repayable as of January 28, 1996. On April
12, 1996, the credit facility was amended as follows:  (i) to 200,000 new zlotys
(approximately  $58,531 at September 30, 1997 exchange rates), and (ii) in March
1997,   the  credit   facility  was  further   amended  to  100,000  new  zlotys
(approximately  $29,265  at  September  30,  1997  exchange  rates).  The credit
facility  matures on March 31, 1998.  As of  September  30, 1997 and November 5,
1997, the  outstanding  balance on the credit  facility was $25,282 and $14,145,
respectively.

      On March 18, 1996,  PKP obtained a $150,000  line of credit from  American
Bank.  Borrowings  under the facility  bear  interest at 10% per annum,  payable
every three months  commencing  April 30, 1996, and may be used to finance up to
50% of the cost of developing Domino's Stores. The credit facility is secured by
a promissory  note of PK Polska,  and title to the fixtures and equipment of the
Domino's  Stores  developed with the credit facility  borrowings.  No draws have
been made on the credit facility. The facility expires on January 30, 1998.

                                      32

<PAGE>

      On September 30, 1996, PKP entered into a revolving  credit  facility with
Amerbank  totaling  100,000 new zlotys  (approximately  $29,265 at September 30,
1997 exchange  rates).  The credit facility  matures on March 30, 1998 and bears
interest at a monthly  adjusted  rate.  The note is secured by the  guarantee of
IFFC. As of September 30, 1997 and November 5, 1997, the outstanding  balance on
the credit facility was $5,263 and $8,064, respectively.

      As of February 23, 1994,  IFFC  terminated  a credit  facility  created on
February  12,  1993 and  entered  into a new  $1,000,000  credit  facility  with
AmerBank.  The new credit facility was structured as a revolving credit facility
through May 31, 1994. During this initial period, draws could be made in minimum
increments of $40,000 to purchase, and are secured by, furniture,  equipment and
related items for  restaurants.  During the initial period,  interest accrued on
the  outstanding  balance  at a rate of 12% per  annum  and was due and  payable
quarterly.  As of July 31,  1994,  the  outstanding  balance  under  the  credit
facility  became due and payable at a rate of $90,000  plus  interest  every six
months with any principal  outstanding as of April 30, 1996  immediately due and
payable.  On November 7, 1996  AmerBank  agreed to amend the credit  facility so
that the  outstanding  principal  balance  becomes  due and payable at a rate of
$100,000 on June 30, 1997 and $110,000 on September 30, 1997 plus interest every
six months. The balance of the credit facility was paid in full on September 30,
1997.

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

      On May 30, 1994, IFFC's  subsidiary,  IFFP, entered into a credit facility
with Bank Handlowy Warszawie,  S.A. ("Bank Handlowy") in the principal amount of
$10,000,000.  Borrowings  under the Bank Handlowy  credit facility could be made
until May 31,  1997 and were  secured  by:  (i)  amounts  on  deposit  with Bank
Handlowy;  (ii) an  unconditional  guarantee of IFFC;  (iii) the fixed assets of
IFFP; and (iv) a letter of credit (described  below).  Borrowings under the Bank
Handlowy credit  facility were required be repaid in fourteen equal  semi-annual
installments  with the first  installment  due on November  30,  1997.  Interest
accrued  on the  amount  outstanding  under the  credit  facility  at the London
Interbank  Offered Rate (LIBOR) for nine month  deposits  plus 3.875% per annum.
The proceeds  could be used to finance up to forty percent (40%) of the costs of
furnishing and commencing  operation of fast food restaurants  operated by IFFP.
On December 13, 1995,  the credit  facility with Bank Handlowy was amended.  The
principal amount of the credit facility was reduced to $1,000,000 and borrowings
under the credit  facility were required to be repaid on December 16, 1996.  The
maturity  date and  payment  terms of the  facility  were  further  amended  and
principal  payments of  $100,000  and  $50,000  were made in  December  1996 and
January  1997,  respectively.  The  remaining  principal  balance  is payable in


                                      33

<PAGE>

quarterly  installments  of  $100,000  commencing  on  March  31,  1997  through
September 30, 1997,  with the  remaining  principal  balance  payable in full on
December 16, 1997.  Borrowings under the amended credit facility are secured by:
(i) amounts on deposit with Bank Handlowy;  (ii) an  unconditional  guarantee of
IFFC; (iii) fixed assets of IFFP having a value of $1,250,000; and (iv) a letter
of  credit in the  amount  of  $500,000.  The  Letter  of Credit is valid  until
December  30,  1997.  The  balance  of the credit  facility  was paid in full on
September 9, 1997.

      On May 19,  1997,  IFFC  entered  into a  $999,000  credit  facility  with
Totalbank which is  collateralized  by $999,990 of certificates of deposit.  The
credit facility bears interest at 6.5% per annum and is due on May 19, 1998.

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

      The second credit  agreement is a development loan in the principal amount
of  $1,500,000.  The purpose of this loan is to provide  partial  credit for the
development  of new  Burger  King  restaurants.  Borrowings  under  this  credit
facility  may be made until  August 1999 and are secured by: (i) fixed assets of
each new restaurant financed; and (ii) a guarantee of IFFC. The loan is required
to be repaid in thirty five equal  installments of $42,000 starting in September
1999 with a balloon  payment of  $30,000  due at  maturity  (August  12,  2002).
Interest  is paid  monthly  at the  prevailing  one month  LIBOR rate plus 2.5%.
According to the terms of the agreement,  the proceeds of the loan could be used
to finance up to fifty percent (50%) of the costs of furnishing  and  commencing
operation of Burger King  restaurants  operated by IFFP.  No advances  have been
made on this facility.

      IFFC has  financed  its  operations  in part  through  the use of proceeds
acquired in connection with a private  offering of IFFP's equity capital.  As of
December 14, 1994, Agros Holding S.A., a joint stock  corporation which produces
agricultural products ("Agros"),  acquired a 20% voting and property interest in
IFFP pursuant to a subscription agreement (the "Subscription Agreement"),  dated
November 30, 1994, between IFFC and Agros. Agros purchased the 20% interest from
IFFP for the  zloty  equivalent  of  $2,000,000.  On  December  28,  1995,  IFFC
increased its equity  interest in IFFP from 80% to 85% by purchasing  from Agros
5% (25% or the  Agros  holdings)  of the  outstanding  capital  stock of IFFP in
exchange for a $500,000  non-interest bearing obligation due in full on December
28, 1996. The obligation was paid in full in June 1997.

      As of January 1, 1995,  IFFC and IFFP entered into a five year  consulting
agreement (the "IFFP Consulting Agreement") pursuant to which IFFC is to provide
IFFP consultation and advice with respect to the selection, design and equipping
of IFFC's offices and facilities,  the maintenance of IFFP's financial  records,
reporting  to IFFP's Board of  Directors,  the  procurement  of  financing,  the
performance of cash management functions,  the hiring of employees and officers,
the strategic planning of IFFP's business and the management of IFFP's business.

                                      34

<PAGE>

      The IFFP Consulting Agreement  automatically renews for an additional year
unless  terminated by either party. In exchange for its services,  IFFC receives
from IFFP,  on a monthly  basis,  the greater of (a) 5% of IFFP's  Sales for the
month, or (b) $50,000 (the "Management  Fee").  IFFC receives  reimbursement for
all  out-of-pocket  expenses it incurs in connection with the fulfillment of its
obligations under the IFFP Consulting Agreement and any tax, duty or fee imposed
on the Management Fee.

IMPACT OF INFLATION AND CURRENCY FLUCTUATIONS

      The accounts of IFFP are measured using the Polish zloty.  Due to Poland's
highly inflationary  environment  through December 31, 1995,  generally accepted
accounting  principles required IFFC to calculate and recognize on its statement
of operations its currency translation gains or losses associated with IFFP. Due
to the  reduction  in  Polands  inflation  rate,  effective  for the year  ended
December 31, 1996,  IFFC was no longer required  pursuant to generally  accepted
accounting  principles to recognize currency  translation gains or losses in its
statement of operations.

      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.  As of January 1, 1995, the National Bank of Poland  introduced a new
zloty (a "new  zloty").  New zlotys are  equivalent  to 10,000 old zlotys  ('old
zlotys").  At  September  30, 1997,  the exchange  rate was 3.417 new zlotys per
dollar.

      IFFC's restaurant  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
year ended December 31, 1996, the rates of inflation and  devaluation  improved.
For the years ended December 31, 1993, 1994, 1995 and 1996, the annual inflation
rate in Poland was 35%, 32%, 21.6% and 19.5%,  respectively,  and as of December
31, 1993,  1994,  1995 and 1996 the exchange  rate was 2.134,  2.437,  2.468 and
2.872 new zlotys per dollar, respectively.  Payment of interest and principal on
the  Debentures  and payment of franchise  fees to BKC for each IFFC  restaurant
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  conditionsin  Poland.  There can be no assurance that inflationary
conditions in Poland will not have an adverse effect on IFFC in the future.






                                      35


<PAGE>

                          PART II. OTHER INFORMATION

ITEM 2.   LEGAL PROCEEDINGS

      POLISH FISCAL  AUTHORITY  DISPUTES - As of July 1995, IFFC may have become
subject to  penalties  for  failure to comply  with a recently  amended  tax law
requiring  the use of cash  registers  with certain  calculating  and  recording
capabilities  and which are approved for use by the Polish  Fiscal  Authorities.
Although  IFFP's NCR Cash  Register  System  (the "Cash  Register  System") is a
modern  system,  the System  cannot be modified and will  ultimately  need to be
replaced in order to comply with the new tax law. IFFP is now in compliance with
the tax law using a  parallel  cash  register  system  but was  unable to modify
and/or  replace its Cash  Register  System  before  July 1995.  As a penalty for
noncompliance,  Polish tax authorities  may disallow  certain VAT deductions for
July and August of 1995, which were previously  deducted by IFFP.  Additionally,
penalties  and  interest  may be imposed on these  disallowed  deductions.  IFFP
believes that its potential exposure is approximately $150,000, which amount has
been provided for in the accompanying financial statements. IFFP has requested a
final determination by the Polish Minister of Finance.  The Company is unable to
predict the timing and nature of the Ministers  ruling.  IFFP has not yet made a
decision whether or not to replace its Cash Register System. IFFP believes a new
cash register system would cost approximately $250,000.

      ROMANSKA - NINKOWIC  ("RN") - In April 1997,  RN filed suit in  Voivodship
Court in Krakow, Poland against IFFP. RN alleged that IFFP owed RN approximately
266,831 PLN  (approximately  $78,000 at the September 30, 1997 exchange rate) in
final settlement for the construction of IFFP's Katowice restaurant.

      On December 19, 1996, PKP was formally informed by the Voivodship court in
Warsaw that RN, PKP's former  general  contractor,  had filed suit alleging that
PKP owed RN  approximately  123,422  zlotys or  (approximately  $36,000 based on
September 30, 1997 exchange rates) plus interest from April 6, 1994.

      On October 27, 1997, IFFP, PKP and RN settled their disputes. IFFP and PKP
agreed to pay RN $25,000 cash for full settlement of all claims.

ITEM 4.   RESULTS OF VOTES OF SECURITY HOLDERS

      The Company's Annual Shareholders' Meeting was held on August 18, 1997. At
the Annual Meeting,  the Company's  shareholders were asked to consider and vote
upon the following matters:

      (1)   The election of four members to the Company's  Board of Directors to
            serve until the Company's  1998 Annual  Meeting of  Shareholders  or
            until their successors are duly elected and qualified; and

      (2)   A proposal to approve an increase in the number of shares  which may
            be granted under the  Company's  1993 Stock Option Plan from 600,000
            shares to 2,000,000 shares (the "Amended Plan").




                                 36


<PAGE>

The  following  four  members  of the  Company's  Board of  Directors  were duly
elected,

      Director                  Votes for        Votes against    Votes withheld
----------------------        -------------     --------------    --------------

Mitchell Rubinson               14,786,940               0             35,282
Larry H. Schatz                 14,786,940               0             35,282
James F. Martin                 14,786,940               0             35,282
Dr. Mark Rabinowitz             14,786,940               0             35,282
                                                              

The results of the vote on the Company's  proposal to approve an increase in the
number of shares which may be granted under the Company's 1993 Stock Option Plan
from 600,000 shares to 2,000,000 shares (the "Amended Plan"), were as follows,

      Votes for           Votes against       Abstentions       Not voted
      ---------           -------------       -----------       ---------

      14,518,377                  87,036            3,700         213,109


ITEM 5.   OTHER INFORMATION

      On November 5, 1997, the Company sold  approximately  $27.5 million of 11%
convertible senior subordinated discount notes due 2007 in a private offering in
which  BT Alex.  Brown,  Incorporated  acted as  placement  agent.  The  Company
received net proceeds of  approximately  $17.8  million  after  expenses of $2.2
million  associated with the offering.  The Company announced such offering in a
press release dated November 10, 1997, a copy of which is attached  hereto as an
exhibit and incorporated herein by reference.


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits:

      10.01  Indenture dated November 5, 1997. 
     
      10.02  Securities Purchase Agreement dated November 5, 1997.         

      10.03  Registration Rights Agreement dated November 5, 1997.

      10.04  Voting and Disposition Agreement dated November 5, 1997

      22     Press Release dated November 10, 1997. 

      27     Financial Data Schedule (Electronic filing only)

(b)   The  following  reports on Form 8-K were filed during the quarter ended on
      September 30, 1997:

      (i)   On July 14, 1997,  the Company filed a Form 8-K in  connection  with
            the merger of Litigation Funding into IFFC.

      (ii)  On August 28, 1997, the Company filed a Form 8-K in connection  with
            the execution of a New Master Franchise  Agreement  between Domino's
            Pizza and Krolewska Pizza, Sp. z o.o.
                                       37

<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:  November 12, 1997       By: /s/ Mitchell Rubinson
                                   ---------------------------------------------
                                   Mitchell Rubinson, Chairman of the Board,
                                   Chief Executive Officer and President
                                   (Principal Executive Officer)



DATE:  November 12, 1997        By: /s/ James Martin
                                   ---------------------------------------------
                                   James Martin, Chief Financial Officer
                                   (Principal Financial and Accounting Officer)




























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