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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number: 0-23278

BRAZIL FAST FOOD CORP.
(Exact name of registrant as specified in its charter)

Delaware 13-3688737
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Praia do Flamengo
200-22. Andar
CEP 22210-030
Rio de Janeiro, Brazil N/A
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 55-21-556-0424


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

Name of each exchange
Title of each class on which registered
------------------- ---------------------

- -

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

Common Stock, Class A Redeemable Common Stock Purchase Warrants,
Class B Redeemable Common Stock Purchase Warrants
(Title of Class)

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


Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes..X..... No........


Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes........ No.........

The number of shares outstanding of the Registrant's common stock is
12,310,638 (as of April 14, 1998).

The aggregate market value of the voting stock held by non-affiliates of
the Registrant is $24,425,046 (as of April 14, 1998).


DOCUMENTS INCORPORATED BY REFERENCE

Registrant's Proxy Statement for its Annual Meeting of Stockholders to be
convened on May 29, 1998.


Unless otherwise specified, all references in this Report to (i) "reais,"
the "real" or "R$" are to the Brazilian real (singular), or to the Brazilian
reais (plural), the legal currency of Brazil, and (ii) "U.S. dollars" or "$" are
to United States dollars. All amounts in Brazilian currencies which existed
prior to the adoption of the real as the Brazilian national currency on July 1,
1994 have been restated in reais in this Report. Unless otherwise specified,
all financial statements and other financial information presented herein are in
accordance with generally accepted accounting principles in the United States
("U.S. GAAP").


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


PART I

ITEM 1. BUSINESS

(a) General Development of Business

Brazil Fast Food Corp. (the "Company"), through its wholly-owned
subsidiary, Venbo Comercio de Alimentos Ltda. ("Venbo"), a Brazilian limited
liability company which conducts business under the tradename "Bob's", owns and,
directly and through franchisees, operates the second largest chain of hamburger
fast food restaurants in Brazil.


Recent Developments
- -------------------

As of August 11, 1997, AIG Latin America Equity Partners, Ltd. ("AIGLAEP"),
a Bermudian investment company, pursuant to the terms of a Stock Purchase
Agreement dated July 23, 1997 between AIGLAEP and the Company (the "Stock
Purchase Agreement"), purchased 1,500,000 shares of the Company's Common Stock
(the "Shares") and five-year warrants (the "Warrants") to purchase 250,000
shares of the Company's Common Stock at an initial exercise price of $4.00 per
share, which exercise price and number of shares is subject to adjustment, for
an aggregate purchase price of $4,500,000.

Pursuant to the terms of the Stock Purchase Agreement and a contemporaneous
Stockholders' Agreement between AIGLAEP, the Company and certain of the
Company's stockholders (the "Stockholders' Agreement"), AIGLAEP and certain of
its transferees were afforded the right to nominate one member of the Company's
Board of Directors, and have the right to nominate additional directors which,
under certain circumstances may enable AIGLAEP to nominate directors
constituting a majority of the Company's Board of Directors (through an
expansion of the Board and the filling of vacancies created by the resignation
of certain directors serving at such time) if the Company does not attain
certain operating goals.


The Stockholders' Agreement also provides that the Company not offer, issue
or sell any shares of its capital stock or any warrants or options to purchase
or rights to subscribe for or any other securities convertible into or
exchangeable for shares of its capital stock, unless the Company first offers to
AIGLAEP its proportionate percentage of the securities proposed to be offered by
the Company. AIGLAEP also has certain other rights in connection with certain
sales by the stockholders party to such agreement of the shares of the Company's
Common Stock owned by such stockholders.


(b) Financial Information About Industry Segments

Not applicable.


(c) Narrative Description of Business


History of "Bob's"
- ------------------

The first Bob's was established in 1952 by Bob Falkenburg, an American
Wimbledon tennis champion. Mr. Falkenburg opened his first restaurant on
Copacabana Beach, selling hamburgers, hot-dogs, french fries and milk shakes.
Following upon the success of the first Bob's, Mr. Falkenburg opened another six
in the metropolitan Rio area. He ran the business for 22 years and sold it to
Libby McNeil E. Libby USA ("Libby") in 1974. After acquiring such business,
Libby opened additional outlets and broadened the menu. In 1982 Nestle Ind'l
Com'l Ltd. ("Nestle") purchased the worldwide businesses of Libby, including
Bob's. Nestle ran the business until 1987, when it was sold to Vendex
International N.V. ("Vendex"), which in turn sold to the Company on March 19,
1996.


Restaurant Operations
- ---------------------

Bob's, whose slogan is "Tasty is in Bob's," is particularly known for its
milkshakes (which were selected almost unanimously as the milkshake preferred by
leading young artists in a survey conducted for the Sunday magazine of the
Jornal do Brasil, a national newspaper) and the special spicing of its
hamburgers. Each Bob's restaurant serves a generally uniform menu featuring
hamburgers, french fries, soft drinks and juices, cold sandwiches, desserts and
milkshakes. Selected Bob's restaurants also serve coffee and/or beer. The food
is prepared to order with the customer's choice of selected condiments.

The made to order feature of Bob's restaurants distinguishes it from other
"fast food" operations. Although Bob's system is somewhat slower than the
single-line system used by its

2


competitors, the quality and flavor of its food is enhanced. Most Bob's
restaurants are designed with two service lines, one to place the order and pay
for the food and another to pick up the food. The customer's guest check is read
by a service representative, who after instructing the grill team to prepare the
order, delivers the order to the customer. A factor which helps ensure the
quality of the products delivered to customers is the bin holding time which is
limited to five minutes during peak operating hours. During non-peak hours, all
products are cooked to order.

Bob's restaurants generally open at 10:00 A.M. for lunch and remain open
for dinner. Closing hours vary according to location. In some locations with
proximity to late night entertainment, the outlets remain open for the "after
hours" crowd. Bob's restaurants are not generally open for breakfast, although
the Company is presently test marketing a limited breakfast menu at selected
restaurants.

Bob's prices are consistently positioned at the same level as those for
comparable products offered by its major competitors. Management attempts to
maintain the overall cost of a Bob's meal competitive with lunch prices covered
at the popular street snack bars ("lanchonetes").

Originally, Bob's restaurants were built as counter service facilities to
accommodate its initial primary clientele of teenagers. In keeping with its
current efforts to attract family oriented customers, all of the Bob's
restaurants built since 1980 have included seating facilities. In addition,
approximately one-half of the 26 pre-1980 restaurants have been renovated to
update the decor, expand the seating facilities and provide air condi tioning.
Bob's restaurants have an identifiable style highlighted by their distinctive
red and white color theme, which is used on all Bob's signage as well as paper
goods. The Bob's style is carried through in the uniforms worn by Bob's
personnel, which are occasionally modified to feature hats and T-shirts used in
Bob's promotions.

For the past several years, Bob's has been the exclusive provider of
hamburgers and related items at three of Brazil's largest special events -
Carnivale, the two week festive period which precedes the advent of Lent, the
Formula One Automobile Racing Championships and the Motorcycle Grand Prix. In
addition, Bob's products are sold at other special events throughout Brazil,
including boat fairs, automobile fairs and State rodeos. Using custom
constructed trailers and moveable kiosks, Bob's is able to offer most of its
products at temporary locations for the duration of the special event. In
addition to providing an additional source of revenues, Bob's visibility is
enhanced by signage that can be picked up via television coverage of the special
event and by reaching a consumer market where the Company may not have a
permanent outlet.

3


The Company's revenues are subject to seasonal fluctuations. Customer
traffic is highest in the summer months and is lowest during the winter months.*

The following table presents information concerning openings and closings
of Company-owned and franchised restaurants for the years ended December 31,
1997, 1996 and 1995:


YEAR ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995
---- ---- ----
COMPANY-OWNED RESTAURANTS:

OPENED DURING PERIOD 7 30 3
CLOSED DURING PERIOD 1 0 0
SOLD TO FRANCHISEES
DURING PERIOD 9 0 0
OPEN AT END OF PERIOD 77 80 50

FRANCHISED RESTAURANTS:

OPENED DURING PERIOD 23 17 1
CLOSED DURING PERIOD 1 3 0
OPEN AT END OF PERIOD 56 34 20



The Company has the opportunity from time to time to acquire the interests
of and to sell restaurants to franchisees, and it is anticipated by management
that the Company may engage in such transactions in the future. The Company
generally retains a right of first refusal in connection with any proposed sale
of a franchisee's interest. During the year ended December 31, 1997, the
Company sold 9 retail outlets, mostly located outside of Rio de Janeiro and its
immediate environs, to franchisees.

The following table presents information concerning the average guest check
per customer and the sales distribution by meal period for Company-owned
restaurants for the years ended December 31, 1997, 1996 and 1995:



____________
* Denotes a statement that may be considered forward-looking. See "- Forward-
Looking Statements."


4


PERCENT OF TOTAL AVERAGE GUEST
DAILY SALES CHECK PER PERSON
---------------------- ----------------------
1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
Lunch (10:00 a.m. -
5:00 p.m. ) 50.1 70.0% 70.0% R$4.01 R$4.79 R$4.29
Dinner (5:00 p.m. -
10:00 p.m.) 49.9 30.0% 30.0% R$4.30 R$5.11 R$4.58
------
Total 100.0% 100.0% 100.0%
===== ===== =====


The Company strives to maintain quality and uniformity throughout all
Company-owned restaurants by publishing detailed specifications for food
products, food preparation, and service, by continuous in-service training of
employees, and by field visits from Company supervisors. Quality control at
each restaurant is undertaken by the store manager, who visually inspects the
products as they are being prepared for cooking. The manager also keeps a
record of the expiration date of the products in inventory. In the case of
franchisees, field visits are made by Company personnel who review operations
and make recommendations to assist in compliance with company specifications.
The Company's quality control inspectors are also sent to each restaurant
periodically to conduct a review of the food stock. These inspectors also take
samples of the water used at each restaurant in the preparation of food and
drinks as well as random samples of one food item which are taken to a contract
laboratory for a microbiological analysis.


Growth Strategy*
- ----------------

Brazil's population of 160 million is the sixth largest in the world and is
expected to increase to 180 million by the year 2000. Brazil's largest city, Sao
Paulo has 10 million residents and a metropolitan area population of 17 million
persons. Rio de Janeiro, the second largest city, has 5.5 million residents and
a metropolitan area population of 11 million persons. Eight other metropolitan
areas have populations in excess of one million. According to Media Data '95, a
non-affiliated consulting concern, the average income for the population of nine
main markets in Brazil including Sao Paulo and Rio de Janeiro, was as follows:
$3,900 for 20% of such population, $7,500 for 31% of such population, $13,000
for 29% of such population, $39,000 for 18% of such population and $78,000 for
2% of such population. The study, which took into account income and spending
habits of the targeted population, concluded that the fast food market is one of
Brazil's fastest growing business segments and that the potential Brazilian fast
food market could exceed 60,000,000 persons. Based upon the foregoing,
management believes there is significant room for expansion in the fast food
market.

5


Management expects to focus its growth in the more densely populated
regions of the country, particularly the developing population corridor from Rio
de Janeiro to Sao Paulo. Management plans to continue to open additional
stores, both Company-owned and franchised, in the Rio de Janeiro/Sao Paulo
corridor and to facilitate its expansion in other areas by focusing more
significantly on franchising its operations, particularly through territory
agreements pursuant to which a franchisee will be obligated to develop several
Bob's restaurants in a particular region ("Territory Agreements"). Management
also anticipates taking advantage of the continuing construction and development
of shopping malls in Brazil, where food courts can be a significant profit
center.

In addition, management expects to capitalize on Venbo's 46 year history in
Brazil. As a locally based company, Venbo believes it has the capacity to
understand and respond to consumer taste preferences in developing additional
local markets and test marketing new products and concepts. Management will
also take advantage of its customized trailers and moveable kiosks, unique among
the Company's competitors, to continue to maximize its ability to cater to
special events and temporary markets, and also to test certain markets on a
temporary basis.

In conjunction with its growth plans for the Company, management is
evaluating methods of maximizing the efficiency of the Company's operations.
Management is currently testing computer systems which are intended to provide
automated transmission of sales receipts, inventory levels and personnel
utilization data from each retail point-of-sale to the Company's headquarters on
a daily basis.

Management is exploring alternate distribution channels for the Company to
maximize consumer exposure in an economically efficient manner. Management
expects to utilize the "store-within-a-store" concept where the Company will
either rent space from a larger non-competitive retail consumer operation or
will rent space in its own outlet to other non-competitive fast food providers,
to maximize consumer traffic while minimizing costs of operation. The Company
currently rents space in two of its Sao Paulo stores to Dunkin' Donuts, which
does not compete directly with Bob's, but offers complementary products.

Management is also considering systemwide expansion of a telephone
order/office and home delivery service which is currently offered at 7 Company-
owned outlets, as well as at 7 franchised outlets.

An agreement between the Company and Hardee's Food Systems, Inc.
("Hardee's"), entered into in 1996, pursuant to which the Company had been
afforded the right to purchase restaurant equipment and food from Hardee's on
the same terms and conditions

6


as Hardee's' restaurant licensees, was cancelled by mutual agreement in 1997
following the Company's conclusion that its volume purchasing discounts under
this agreement were of insufficient magnitude to warrant its continuation.

Management also expects to explore opportunistic acquisitions in the
Brazilian fast food industry.


Franchise Program
- -----------------

Each Company franchise agreement provides for a franchisee of a traditional
Bob's outlet to make an initial payment of $30,000 (or $20,000 for a compact
store) and to pay additional fees equal to 4% of the franchisee's gross sales in
its first two years of operation and 5% of monthly gross sales thereafter. In
addition, franchisees pay 4% of monthly gross sales for cooperative advertising.
The franchise agreement also provides that the franchisee must use Company
approved supplies and suppliers and must build each franchised outlet in
accordance with Company specifications at Company approved locations. The term
of a majority of the franchise agreements is 10 years, with a few agreements
having 5 year terms.

At present, approximately 9 months elapse between the Company's initial
contact with a prospective franchisee and the opening of a franchised outlet.
After the initial meeting, and if the potential franchisee meets certain basic
conditions, such as significant business experience, financial resources and
knowledge of the market in the area where the franchise will be located, a
preliminary agreement is signed. Prospective franchisees are required to pay
the Company a non-refundable fee equal to 50% of the initial franchising fee to
partially compensate the Company for the cost of a three-month training program
to familiarize the prospective franchisee with the operation. After
approximately three months, a final franchising contract is signed outlining the
obligations and responsibilities of each party, including the franchising fees
and promotion commissions to be paid to the Company, and the franchisee begins a
three-month training program. Construction of the restaurant typically begins at
this point and, generally, is completed within three to six months. The
franchising fee is sufficient to cover all training expenses incurred by the
Company.

In some cases, the contracts negotiated with existing franchisees have
differed from the standard described above to accommodate specific requirements
and characteristics of the franchisee. The Territory Agreement has been, and
management expects that it will be, used with franchisees located in areas where
the Company has determined that it is in its best interest to establish two or
more stores within the geographic region. The Territory Agreements incorporate
the same terms and conditions of

7


the Company's franchise agreements, but also provide for the franchisee to
commit to opening an agreed upon number and type of stores within a specified
time-frame. In a limited number of instances, the Company may grant franchisees
exclusive territorial rights if the Company believes such grants would further
the development of new market opportunities.

By law, the Company cannot dictate the price at which franchisees sell
their products, although in general, franchisee prices mirror the prices at
company-owned stores.

The Company receives 80 to 100 inquiries monthly from potential
franchisees. Up to 300 such inquiries are made in the weeks immediately
following industry trade shows. A steering committee formed by the Company's
top management receives formal franchising proposals and reviews them to
determine which should be accepted.

In addition to the 37 franchisees who, collectively, operated 63 outlets at
January 31, 1998, the Company has signed final franchising contracts with 3 new
franchisees, as well as six existing franchisees, to open and operate 12
additional outlets, to be located in the States of Rio de Janeiro, Sao Paulo,
Mato Grosso de Sul, Brasilia, Rio Grande do Norte and Maranhao. The majority of
these additional outlets are scheduled to be operations prior to the end of
1998.

In December 1997, the Brazilian Franchise Association, an independent trade
organization, selected the Company, from among approximately 1,000 other
candidates, as the best Brazilian franchise operation for 1997.


Advertising and Promotions
- --------------------------

The Company utilizes television, radio, and a variety of promotional
campaigns to advertise its products. The Company's primary promotional campaign
in 1996, a four-in-one meal, consisting of a sandwich, french fries, a drink and
dessert for one value price, was well received, and was added as a regular menu
feature in 1997.

New packaging was introduced during 1997 for the Company's premium sandwich
offerings, with colorful cardboard boxes imprinted with the "Bob's" symbol
replacing previously utilized paper bags, thereby enhancing their quality image.

In September 1997, the Company launched a new line of chicken products in
an effort to capitalize upon customers' requests for "health-oriented" food
offerings. One of such products, a chicken steak sandwich, has become one of
the Company's best selling products.

8


The Company and its advertising agency annually develop a multi-media
marketing program to advertise the restaurant network in its primary markets.
The Company periodically develops 15 and 30 second television commercials which,
typically, are aired one to six times a day for a 15-day period. Temporary
product discounts are offered in Rio de Janeiro and Sao Paulo through radio and
television several times a year. Other successful promotional programs have
included offering products tied into popular movies with certain value meals,
and selling specially produced hats at a discount with certain value meals.
Bob's outlets also offer a "kids meal" which includes three food items and a
small packaged toy. Certain outlets offer special services for children's
birthday parties and also feature appearances by "Bobi", Bob's mascot. All
these programs are reinforced by visual tools, such as banners, posters and
place mats.

The Company keeps franchisees informed of current advertising techniques
and effective promotions and makes the Company's advertising materials available
to the franchisees. The franchise agreement provides that franchisees will
spend 4% of their monthly gross receipts for advertising and promotions.
Individual stores also develop promotional programs to attract additional
clientele or to assist in the implementation of expanded business hours. These
promotions are paid for by each outlet. The Company commits a minimum of
approximately 4% of systemwide gross sales to its marketing activities.


Sources of Supply
- -----------------

The Company and its franchisees have not experienced any material shortages
of food, equipment, fixtures, or other products which are necessary to
restaurant operations. Management antici pates no such shortages of products
and, in any event, alternate suppliers are available.

The Company purchases food products and packaging from numerous independent
suppliers. To take advantage of volume discounts, the Company has entered into
centralized purchasing agreements with these suppliers. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations." Food
products are ordered by, and delivered directly to, each restaurant. Billing
and payment for company-owned restaurants are handled through the centralized
office, while franchisees handle their own invoices directly. Packaging and
durable goods are delivered to a centralized warehouse operated by a non-
affiliated person, which delivers supplies to each of the Company's restaurants.
This centralized purchasing helps assure availability of products and provides
quantity discounts, quality control and efficient distribution.

The Company participates in joint promotion and marketing

9


programs for Coca-Cola soft drink products, as well as for hamburger meat and a
popular Brazilian brand of iced tea.


Trademarks
- ----------

Management believes that the Company trademarks and servicemarks, all of
which are owned by the Company, are important to its business.

The Company trademarks and servicemarks have been registered in the
Brazilian trademark office. These trademarks and servicemarks expire at various
times from 1998 to 2007. Renewals of these trademarks and servicemarks
generally have been obtained prior to their expiration.


Competition
- -----------

In terms of revenues, the Company is the second largest food service
organization in Brazil. Each Bob's restaurant is in competition with other food
service operations within the same geographical area. The Company competes with
other organizations primarily through the quality, variety, and value perception
of food products offered. The number and location of units, quality and speed
of service, attractiveness of facilities, and effectiveness of marketing are
also important factors. The price charged for each menu item may vary from
market to market depending on competitive pricing and the local cost structure.


Based on articles which have appeared in independent Brazilian newspapers
and periodicals, the Company believes that it and McDonald's are the market
leaders in the hamburger fast food business in Rio de Janeiro and Sao Paulo.
Statistical data drawn from these articles indicate that the Company's share of
the fast food hamburger chain market approximated 11.2%, 11.5% and 11.7% during
the years ended December 31, 1997, 1996 and 1995, respectively. McDonald's
accounted for substantially all of the balance of this market, which the Company
estimates to have been approximately $740 million in sales during 1996.

Pizza Hut ended 1997 with 110 fast food pizza outlets in Brazil, as
contrasted with 132 outlets at the end of 1996. Subway, which had undertaken an
expansion program in late 1996 and early 1997, closed several outlets by the end
of 1997 (some of which were subsequently taken over by the Company and reopened
as "Bob's" outlets). Kentucky Fried Chicken closed all of its 22 outlets (some
of which were subsequently reopened as "Bob's" stores) and has withdrawn from
the Brazilian market. Domino's Pizza, which also withdrew from the Brazilian
market in 1997, recently announced that it intends to return to the Brazilian
market in 1998, opening 26 stores in the next 2 years. Arby's has increased its
points of


10


sale from 17 in the end of 1996 to 24 by the end of 1997. Habib's, a Middle
Eastern fast food chain ended 1997 with 76 outlets, and has also announced
intentions of expanding in the near future. McDonald's, currently the leader in
the fast food business ended 1997 with 450 stores in the Brazilian market.

The Company's competitive position is enhanced by its use of fresh ground
beef and special flavorings, its made-to-order operations, its comparatively
diverse menu, promotional products, its wide choice of condiments, the
atmosphere and decor of its restaurants and its relatively long history in
Brazil. Management believes that the use of moveable trailers and kiosks, which
are not utilized by competitors, affords the Company a competitive advantage.*
Management also believes that Venbo, as a Brazilian based company, has the
advantage over its American competitors of being able to readily understand and
respond to local consumer preferences.*


Personnel
- ---------

As of December 31, 1997, the Company, including its franchisees, employed
3,430 persons, of whom 2,171 were employed in Company-owned restaurants. The
total number of full-time employees at that date was 1,977, of which 424 were
temporary personnel. The Company's employee relations historically have been
satisfactory. The Company is not a party to any collective bargaining
agreements. However, it has agreed to be bound by the terms, as they may be
applicable to the Company's employees, of agreements negotiated on a city-by-
city basis by trade associations of hotel, restaurant and fast food owners and
operators, of which the Company is a member.


Government Regulation
- ---------------------

The Company and its franchisees are subject to regulatory provisions
relating to the wholesomeness of food, sanitation, health, safety, fire, land
use and environmental standards and where applicable liquor licensing as it
relates to serving beer in selected restaurants. Suspension of certain licenses
or approvals due to failure to comply with applicable regulations or otherwise,
could interrupt the operations of the affected restaurant. The Company and its
franchisees are also subject to Brazilian federal labor codes establishing
minimum wages and regulating overtime and working conditions.

Franchising regulations at the federal level were enacted at the end of
1994 in Brazil and the Company is in compliance with such regulations. Should
any further laws applicable to franchise relationships and operations be
enacted, the Company is unable to predict their effect on its operations. The
Company is in material compliance with all regulatory provisions relating to its

11


operations.


(d) Financial Information About Foreign and Domestic
Operations and Export Sales

Not applicable.


FORWARD-LOOKING STATEMENTS

Forward-looking statements in this report, including without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties including without limitation the following:


Risks Relating to Operations
----------------------------

Operating Losses; Accumulated Deficit; Need for Additional Financing

For the year ended December 31, 1997, the Company incurred a net loss of
R$(6,515,000). The Company's accumulated deficit at December 31, 1997 was
R$(11,553,000) and its working capital deficit at such date was R$(6,741,000).
There can be no assurance that the Company could achieve its operating plans
without obtaining additional financing in excess of what is currently available.
See "Management's Discussion and Analysis - Liquidity and Capital Resources" for
the Company's anticipated sources of such additional financing.



Competition

The restaurant industry, and particularly the fast food segment, is highly
competitive with respect to price, service, food quality (including taste,
freshness, healthfulness and nutritional value) and location. The Company and
its franchisees face competition from a broad range of other restaurants and
food service establishments. These competitors include international, national
and local fast food chains. The Company's most significant competitor is
McDonald's, whose restaurants offer food products similar to those offered by
Bob's restaurants, at com parable prices. Several other international
competitors are present in the Brazilian fast food market, including Arby's,
Subway and Pizza Hut. A significant Brazilian fast food competitor is Habbib's,
which offers Middle Eastern food at its 76 stores. McDonald's, in particular,
has vastly greater over-all financial and other resources than the Company.

The fast food industry is characterized by the frequent introduction of new
products, accompanied by substantial promotional campaigns. In recent years,
numerous companies in the fast food industry have introduced products positioned
to capitalize on growing consumer preference for food products that

12


are, or are perceived to be, healthful, nutritious, low in calories and low in
fat content. It can be expected that the Company will be subject to increasing
competition from companies whose products or marketing strategies address these
consumer preferences. There can be no assurance that consumers will continue to
regard Bob's products as sufficiently distinguishable from competitive products,
that substantially equivalent products will not be introduced by the Company's
other competitors or that the Company will be able to compete successfully.


Certain Factors Affecting the
Fast Food Restaurant Industry

In order to remain competitive, the Company is required to respond to
changing consumer preferences, tastes and eating habits, increases in food and
labor costs and national, regional and local economic conditions. Many
companies internationally have adopted "value pricing" strategies. Such
strategies could have the effect of drawing customers away from companies that
do not engage in discount pricing and could also negatively impact the operating
margins of competitors that do attempt to match competitors' price reductions.
Continuing or sustained price discounting in the fast food industry could have
an adverse effect on the Company. In addition, after investing resources in
the training of its employees, the Company faces pressure from competitors who
may try to hire such employees after they have been trained by the Company.


Risks Attendant to Franchise Expansion

The Company's growth strategy is substantially dependent upon its ability
to attract, retain and contract with qualified franchisees and the ability of
these franchisees to open and operate their restaurants successfully. In
addition, the Company's continued growth will depend in part on the ability of
existing and future franchisees to obtain sufficient financing or investment
capital to meet their market development obligations. If the Company
experiences difficulty in contracting with qualified franchisees, if franchisees
are unable to meet their development obligations or if franchisees are unable to
operate their restaurants profitably, then the Company's future operating
results could be adversely affected.


Government Regulation

The Company and its franchisees are subject to regulatory provisions
relating to the wholesomeness of food, sanitation, health, safety, fire, land
use and environmental standards. Suspension of certain licenses or approvals due
to failure to comply with applicable regulations or otherwise, could interrupt

13


the operations of the affected restaurant. The Company and its franchisees are
also subject to Brazilian federal labor codes establishing minimum wages and
regulating overtime and working conditions. Changes in such codes could result
in increased labor costs that could adversely impact future operating results.
A Brazilian federal franchising law, enacted in December 1994, requires a
franchisor to furnish a written offering statement to each perspective
franchisee prior to consummation of the sale of a franchise, containing (i) the
franchisor's background; (ii) the duties and responsibilities of each of the
franchisor and franchisee; (iii) all fees payable by the franchisee to the
franchisor; and (iv) information with respect to the operations and
profitability of prior franchisees of the franchisor. Such offering statement
is not required to be reviewed by, or filed with any governmental agency. The
franchise law also delineates the respective legal rights, primarily rights of
action, of the franchisor and franchisee. Should any further laws applicable to
franchise relationships and operations be enacted, the Company is unable to
predict their effect on its operations.


Dependence on Key Personnel

Management believes that the Company's future success will depend in
significant part upon the continued service of certain key personnel
(principally Peter van Voorst Vader and Rogerio Carlos Lamim Braz, the Chief
Executive Officer and the President, respectively, of both the Company and
Venbo), and upon the Company's ability to attract and retain highly qualified
managerial personnel. Competition for such personnel is intense, and there can
be no assurance that the Company can retain its existing key managerial
personnel or that it can attract and retain such employees in the future. The
loss of key personnel or the inability to hire or retain qualified personnel in
the future could have a material adverse effect upon the Company's results of
operations.


Risks Relating to Brazil
------------------------


Change of Economic Environment

In March 1994 the Brazilian government commenced a new economic
stabilization plan, known as the "Real Plan". Pursuant to the Real Plan, the
government (a) implemented a tax and public spending reform program designed to
reduce public expenditures and to improve the collection of tax revenues, (b)
announced the continuation of a privatization program and (c) on July 1, 1994,
introduced a new currency, known as the real, to replace the cruzeiro real.

14


The Real Plan has resulted in substantial reduction in Brazil's rate of
inflation, which has declined from 2,489.11% per annum in 1993 to 929.32% per
annum in 1994 to 22.5% per annum in 1995 to 9.2% per annum in 1996 to 7.7% per
annum in 1997, respectively.

Despite the success to date of the Real Plan in reducing substantially
prevailing inflation levels in Brazil, there can be no assurance that this
economic program will be any more successful than previous programs in reducing
inflation over the long term. Accordingly, periods of substantial inflation may
in the future once again have significant adverse effects on the Brazilian
economy, on the value of the real and on the Company's financial condition,
results of operations and business prospects.


Currency Fluctuations

Fluctuations in the exchange rates between the Brazilian currency and the
U.S. Dollar will affect the Company's operations. Brazil has historically
experienced generally unpredictable currency devaluations for many years.
Although the exchange rate between the real and the U.S. Dollar has been
relatively stable since July 1994, compared to prior periods, the potential for
future devaluation or volatility continues to persist.


Political and Constitutional Uncertainty

The Brazilian political scene has been marked by high levels of uncertainty
since the country returned to civilian rule in 1985 after 20 years of military
government. The death of a President-elect and the impeachment of another
President, as well as frequent turnovers at and immediately below the cabinet
level, particularly in the economic area, have contributed to the absence of a
coherent and consistent policy to confront Brazil's economic problems. While the
free market and liberalization measures of recent years have enjoyed broad
political and public support, some important political factions remain opposed
to significant elements of the reform program, including, in particular, the
Workers' Party, headed by Mr. Luiz Inacio Lula da Silva, the runner-up in the
1989 Presidential elections and a candidate in the Presidential elections held
on October 3, 1994. Mr. Fernando Henrique Cardoso, the former Finance Minister,
was elected as the new President and took office on January 1, 1995 for a single
four year term. Brazil's constitution has recently been amended to permit Mr.
Cardoso to stand for re-election to a second four-year term. Mr. Cardoso, whose
re-election is anticipated although not assured, is expected to continue to
pursue the adoption of free market and economic liberalization measures similar
to those undertaken in recent years. There can be no assurance, however, that
such measures will be adopted or, if adopted, that they will be

15


successful.


Controls on Foreign Investments

Brazil generally requires governmental approval for the repatriation of
capital and income by foreign investors. Although such approvals are usually
given, there can be no assurance that such approvals will be forthcoming in the
future. In addition, the government may impose temporary restrictions on
foreign capital remittances abroad, if there is a deterioration in the balance
of payments or for other reasons. The Company could be adversely affected by
delays in, or a refusal to grant, any required govern mental approval for
repatriation of capital from Venbo. There can be no assurance that additional
or different restrictions or adverse policies applicable to Venbo will not be
imposed in the future, or as to the duration or impact of any such restrictions
or policies.


Accounting Reporting Standards

Companies in Brazil are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to companies in the United States. In particular, inflation
accounting rules may require for both tax and accounting purposes that certain
assets and liabilities be restated using an index established by the government
in order to express such items in terms of currency of constant purchasing
power. However, the official index for price level restatement varies from year
to year and may more accurately reflect actual inflation rates in one year than
in another year. Consequently, the financial statements of the Company included
in this Report, expressed in reais although prepared in accordance with U.S.
GAAP, may not accurately reflect all inflationary distortions in such financial
statements.



ITEM 2. PROPERTIES

Bob's restaurants are built to Company specifications as to exterior style
and interior decor. All 133 "Bob's" restaurants currently in operation,
excluding kiosks and movable trailers, are either in a strip of stores on a
neighborhood street or in mall food court outlets, with some free-standing, one-
story buildings, all substantially uniform in design and appearance. The
restaurants are constructed on sites ranging from approximately 1,100 to 7,500
square feet, with parking at the free-standing restaurants for more than 15
cars. Most restaurants are located in downtown areas or shopping malls, are of
a store-front type and vary according to available locations but generally
retain the

16


standard signage and interior decor.

The Company owns the land and building for 9 restaurants, of which 3 are
presently leased to franchisees, has leases covering land and building for 4
restaurants, and has leases for 67 restaurants, respectively. The Company's
land and building leases are generally written for terms of five years with one
or more five-year renewal options. In certain lease agreements the Company has
the option to purchase the underlying real estate. Certain leases require the
payment of additional rent equal to the greater of a percentage (ranging from 1%
to 10%) of monthly sales or specified amounts.

The Company's corporate headquarters are located in leased premises at
Praia do Flamengo, 200-22. Andar, CEP 22210-030, Rio de Janeiro, Brazil. The
lease covering these premises, which contains approximately 10,700 square feet
of office space, expires on May 31, 1999.



ITEM 3. LEGAL PROCEEDINGS

The Company is not a party to any legal proceedings which may have a
material adverse effect upon either the Company, its assets or its properties.



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

There were no matters submitted to a vote of security holders during
the fourth quarter of the year ended December 31, 1997.

17


PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK
AND RELATED STOCKHOLDER MATTERS

(a) The Company's Common Stock, Class A Redeemable Common Stock Purchase
Warrants ("Class A Warrants") and Class B Redeemable Common Stock Purchase
Warrants ("Class B Warrants") are each quoted on the OTC Bulletin Board under
the respective symbols "BOBS," "BOBSA" and "BOBSB". The following table sets
forth the range of the high and low bid quotations on the OTC Bulletin Board for
the periods indicated:


CLASS A CLASS B
THREE MONTHS COMMON STOCK WARRANTS WARRANTS
-------------- -------------- --------------
ENDED HIGH LOW HIGH LOW HIGH LOW
------------ ---- --- ---- --- ---- ---

March 31, 1996 $5-7/64 $4-3/4 $1-5/8 $ 3/8 $1-3/8 $ 3/8

June 30, 1996 $4-7/8 $4-3/16 $1-9/16 $1-1/4 $1-3/16 $1-1/16

September 30, 1996 $4-1/8 $3-3/8 $1-9/64 $ 5/8 $1-1/8 $11/16

December 31, 1996 $3-1/2 $2-3/8 $ 1/2 $ 1/2 $ 1/2 $ 3/8

March 31, 1997 $3 $2-7/64 $ 19/32 $ 3/8 $ 1/2 $ 1/8

June 30, 1997 $3-1/16 $2 $ 13/16 $ 3/8 $ 5/16 $ 1/8

September 30, 1997 $3-1/2 $1-7/8 $ 5/16 $ 1/4 $ 1/16 $ 1/16

December 31, 1997 $4-7/8 $2-1/8 $ 5/16 $ 1/8 $ 3/16 $ 1/16


The above quotations represent prices between dealers and do not include
retail markup, markdown or commission. They do not necessarily represent actual
transactions.

(b) As of April 10, 1998, there were 109, 13 and 14 record-holders of the
Common Stock, Class A Redeemable Warrants and Class B Redeemable Warrants,
respectively.

(c) The Company has not declared any cash dividends on its Common Stock and
has no intention to pay cash dividends in the foreseeable future.

(d) Reference is made to "Item 1. Business - Recent Developments,"
elsewhere herein, for information as to the sale of an aggregate of 1,500,000
shares of the Company's Common Stock during the year ended December 31, 1997.

18


ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data has been derived from the audited
consolidated financial statements of the Company subsequent to the acquisition
of Venbo and from the audited financial statements of Venbo, the predecessor,
prior to the acquisition. All amounts are stated in constant R$ in accordance
with U.S. GAAP, unless otherwise noted.

The following data should be read in conjunction with the Consolidated
Financial Statements and related notes of the Company, "Management's Discussion
and Analysis of Financial Condition and Results of Operations," and the other
financial information included elsewhere in this Report.

Statement of Operations Data:
(in thousands)



(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)

BFFC VENBO VENBO
BFFC MARCH 19, JANUARY 1, YEARS ENDED DECEMBER 31,
YEAR ENDED 1996 TO 1996 ------------------------------------------
DECEMBER 31, DECEMBER 31, TO
1997 1996 MARCH 18, 1996 1995 1994 1993
------------ ------------ --------------- ------------------------------------------
(PREDECESSOR) (PREDECESSOR)


NET OPERATING REVENUES:
RESTAURANT SALES R$73,008 R$56,381 R$15,001 R$70,188 R$55,535 R$45,232
FRANCHISE INCOME 1,475 651 161 727 508 733
OTHER INCOME 1,705 1,253 113 466 406 652
---------- --------- ------ ------- ------- -------
TOTAL NET OPERATING REVENUES
76,188 58,285 15,275 71,381 56,448 46,617
---------- --------- ------ ------- ------- -------

COSTS AND EXPENSES:

COST OF RESTAURANT SALES 25,861 20,479 6,430 26,598 19,786 18,680
RESTAURANT PAYROLL AND OTHER
EMPLOYEES BENEFITS 17,490 13,412 3,231 13,727 12,172 13,706
RESTAURANT OCCUPANCY AND
OTHER EXPENSES 7,532 4,645 1,085 6,225 5,268 3,927
DEPRECIATION AND
AMORTIZATION 4,139 2,650 675 3,117 3,548 3,999
OTHER OPERATING EXPENSES 10,751 8,632 3,111 13,200 8,113 5,401
SELLING EXPENSES 4,719 3,599 880 3,632 4,552 3,222
GENERAL AND ADMINISTRATIVE 10,745 10,128 3,609 12,205 11,231 7,075
---------- --------- ------ ------- ------- -------
EXPENSES 280 3,216

TOTAL COSTS AND EXPENSES 81,237 63,545 19,021 78,984 67,886 56,010
---------- --------- ------ ------- ------- -------


(LOSS) FROM OPERATIONS (5,049) (5,260) (3,746) ( 7,603) (11,438) (9,393)
INTEREST INCOME 45 111 2,196 1,738 2,608 1,922
INTEREST EXPENSE (1,488) (139) (989) ( 5,366) ( 5,647) (5,402)
FOREIGN EXCHANGE (LOSS) GAIN (23) 4 273 1,425 9,858 (1,805)
---------- --------- ------ ------- ------- -------

(LOSS) BEFORE BENEFIT FROM
INCOME TAXES (6,515) (5,284) (2,266) (9,806) ( 4,619) (14,678)
BENEFIT FROM INCOME TAXES - 46 - - - -------
---------- --------- ------ ------- -------

NET (LOSS) R$(6,515) R$(5,238) R$(2,266) R$(9,806) R$(4,619) R$(14,678)
---------- --------- -------- -------- -------- ---------
BASIC NET (LOSS)
PER COMMON SHARE
R$ (.58) R$ (.68)
---------- ---------

WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING (BASIC) 11,326,428 7,696,106


19


Balance Sheet Data:


(expressed in currency of constant
purchasing power at June 30, 1997)

BFFC

At At
December 31, 1997 December 31, 1996
----------------- ------------------


Working capital (deficit) R$ (6,741) R$(6,127)
Total assets R$ 49,354 R$50,613
Retained earnings (deficit) R$(11,553) R$(5,038)
Total shareholders' equity R$ 32,901 R$33,500



Exchange Rates

On August 1, 1993, the cruzeiro real replaced the cruzeiro as the unit of
Brazilian currency, with each cruzeiro real being equal to 1,000 cruzeiros.
Beginning in December 1993, the Brazilian Federal Government (the "Government")
began implementation of the Real Plan, which was intended to reduce inflation.
As part of the Real Plan, in March 1994 the Government introduced a new unit of
account, the URV, linked to the movements in the exchange rate of the cruzeiro
real to the U.S. dollar and intended to be transformed into the new unit of
currency, the real. Certain contracts and public utility rates were required to
be indexed to the URV. The URV ceased to exist upon the introduction of the
real. On July 1, 1994, the real replaced the cruzeiro real as the unit of
Brazilian currency, with each real being equal to 2,750 cruzeiros reais and
initially having an exchange rate of R$1.00 to $1.00.

The issuance of reais was initially subject to quantitative limits backed
by a corresponding amount of U.S. dollars in reserves, but the Government
subsequently expanded those quantitative limits and allowed the real to float,
with parity between the real and the U.S. dollar (R$1.00 to $1.00) as a ceiling.
In March 1995, the Central Bank do Brasil (the "Central Bank") announced that it
would intervene in the market and buy or sell U.S. dollars and established a
band within which the real/U.S. dollar exchange rate could fluctuate. The
Central Bank initially set the band with a floor of R$0.86 per $1.00 and a
ceiling of R$0.90 per $1.00 and provided that after May 2, 1995, the band would
be between R$0.88 and R$0.98 per $1.00. The band system is still in effect and,
as of February 19, 1997, the Central Bank reset the band between R$1.05 and
R$1.14 per $1.00. There can be no assurance that this most recent band will not
be altered in the future.

20


The following table sets forth information on Commercial Market Rates, for
the periods indicated, expressed in reais per U.S. dollar. Amounts expressed in
reais have been translated from the predecessor currencies in effect during the
relevant period at the rates of exchange at the time the successor currency took
effect. Accordingly, cruzeiros reais have been translated into reais at the
rate of CR$2,750 to R$1.00 and cruzeiros have been translated into reais at the
rate of C$2,750,000 to R$1.00.


Average
for
Period Period-end period(1) High Low
- -------- ---------- ----------- -------- --------

1990 0.000062 0.000025 0.000062 0.000004
1991 0.000389 0.000149 0.000389 0.000062
1992 0.004505 0.001655 0.004505 0.000389
1993 0.118584 0.032809 0.118584 0.004505
1994 0.846000 0.645000 1.000000 0.118584
1995 0.973000 0.923000 0.973000 0.842000
1996 1.038600 1.007400 1.038600 0.973000
1997 1.116400 1.077500 1.116400 1.038600


_________
(1) Weighted average of exchange rates on business days.


Through June 30, 1997 the consolidated financial statements have been
indexed and expressed in currency of constant purchasing power by using a
monthly index derived from the Indice Geral de Precos-Mercado (IGP-M). Since
the implementation of the Real Plan in June 1994, the Brazilian economy has
experienced a declining rate of inflation, with a cumulative inflation rate for
the three-year period from July 1994 to June 1997, as measured by the IGP-M of
54%. Based on the foregoing, management determined that Brazil ceased to be
considered a hyperinflationary economy, as defined in FASB 52, and from July 1,
1997 no longer indexed its financial statements for constant currency purchasing
power.

Through 1995, the Company used the Unidade Fiscal de Referencia (UFIR) as
the basis to reflect constant Brazilian Reais. Starting in 1996, the Company
commenced using the IGP-M as the basis for indexation.

VALUE OF 1.0
RESTATEMENT INFLATION FOR
UNITS THE PERIOD
YEAR OF ONE REAL %
- ----- ------------ --------------

1992 0.0026691 1,129.4
1993 0.0673164 2,422.1
1994 0.0676700 905.3
1995 0.8287000 9.2

21


June 30, 1997 0.9510000 5.09

The Company believes that the above indicies are appropriate general price level
inflation indicators to be used under US GAAP.

Items in the income statement are adjusted to the balance sheet date by:

. Allocating inflationary holding gains or losses on interest bearing
monetary assets and liabilities to their corresponding interest income
and expense captions;

. Allocating inflationary holding gains and losses from other monetary
items to their corresponding income and expense captions.

The allocation of the inflationary gains and losses to their respective
income statement captions is shown in Note 9 to the Consolidated Financial
Statements.



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is based on and should be read together with the
Consolidated Financial Statements and notes thereto appearing elsewhere in this
Report. See "Selected Historical Financial Data." All amounts referred to
herein that refer directly to financial statement balances of the Company or are
otherwise drawn directly from the Consolidated Financial Statements of the
Company or notes thereto are stated in constant R$ in accordance with U.S. GAAP.


Background
- ----------

Brazilian Political Environment

The Brazilian political environment has been marked by high levels of
uncertainty since the country returned to civilian rule in 1985 after 20 years
of military government. The death of a President in 1985 and the resignation of
another President in the midst of impeachment proceedings in 1992, as well as
rapid turnover at and immediately below the cabinet level, have adversely
affected the implementation of consistent economic and monetary policies,
including consistent policies in the areas of government-owned enterprises and
telecommunications.

Measures by the Government intended to influence the course of Brazil's
economy (e.g. actions to control inflation, interest rates

22


or consumption) have been frequent and occasionally drastic. Changes in policy,
social instability or other political or economic developments, and the
Brazilian government's responses to such developments, may have a material
adverse effect on the Company's financial condition and results of operations.

Mr. Fernando Henrique Cardoso was elected President of Brazil in October
1994 and took office in January 1995 for a single four-year term. He has
generally sought to continue the economic stabilization and liberalization
policies he developed as Finance Minister from May 1993 through April 1994
under President Itamar Franco. President Cardoso is the leader of a coalition of
political parties that represents a majority of the Federal Congress and his
party controls the state governments of the States of Sao Paulo, Rio de Janeiro
and Minas Gerais. Brazil's constitution was recently amended to permit
President Cardoso to stand for re-election to a second four-year term.
President Cardoso's policies appear to have broad political support and his re-
election seems likely although not assured. There can be no assurance that such
policies will not be revised in whole or in part at some future date.
Furthermore, some important groups remain opposed to significant elements of his
program, and the implementation of any policies of economic stabilization or
liberalization is subject to significant compromises and accommodations.

Economic Environment

The financial condition and results of operations of the Company are
dependent on general economic conditions in Brazil, and in particular on (i)
economic growth and its impact on demand for fast food services and (ii)
exchange rates between Brazilian and foreign currencies. Historically, the
Brazilian economy has been extremely volatile, and the Government has
implemented a succession of programs intended to stabilize the economy and
provide a basis for sustainable, non-inflationary growth. Venbo has been
affected by such programs in a variety of ways, particularly when such programs
have resulted in contractions in demand or very high real interest rates.

Beginning in December 1993, the Government introduced the Real Plan, an
economic stabilization program intended to reduce the rate of inflation by
reducing certain public expenditures, collecting liabilities owed to the
Government, increasing tax revenues, continuing to privatize government-owned
entities and introducing a new currency. The real was introduced as Brazil's
currency in July 1994, based on a monetary correction index, the URV, introduced
earlier in the year. Since taking office in January 1995, President Cardoso has
continued to implement the Real Plan. Under the Real Plan, the rate of
inflation has decreased significantly, and the rate of growth of real gross
domestic product has increased substantially. The long-term effects of the Real
Plan upon the Brazilian economy in general or upon the Company

23


in particular are uncertain. Notwithstanding the success of the Real Plan to
date, there can be no assurance that it will continue in effect or continue to
be successful.

Effects of Inflation and Devaluation

Brazil has experienced extremely high and generally unpredictable rates of
inflation and of devaluation of Brazilian currency for many years.

Since the introduction of the Real Plan in July 1994, the rate of inflation
has decreased considerably. As measured through 1995 by the Unidade Fiscal de
Referencia (the "UFIR") and by the Indice Geral de Precos-Mercado (the "IGP-M")
thereafter, the annualized rate of inflation was 6,624% for the first six months
of 1994, 50% for the last six months of 1994 and 22.4% for the year 1995, with
significantly all of 1995's inflation occurring during the first six months of
that year. The annual rate of inflation during 1997 was 7.7% as compared to
9.2% in 1996. Despite this reduction, the rate of inflation remains high
compared to other countries, and the potential for distortions or dislocations
attributable to changing prices continues to exist. The exchange rate between
the real and the U.S. dollar has also been relatively stable since early July
1994, compared to prior periods, although the potential for devaluation or
volatility persists.

The following table sets forth Brazilian inflation, as measured by the
UFIR/IGP-M, and the devaluation of the Brazilian currency against the U.S.
dollar for the periods shown.


YEAR ENDED DECEMBER 31,
---------------------------
1997 1996 1995 1994
----- ----- ----- ------

INFLATION (UFIR/IGP-M) 7.7% 9.2% 22.5% 905.3%
DEVALUATION (BRAZILIAN 6.7% 6.9% 14.9% 613.4%
CURRENCY VS. $)


_________________
(1) Annualized rates


See "Selected Historical Financial Data - Exchange Rates."

The Company's results of operations in 1997 have been affected by
inflation, and such financial information should be evaluated in light of the
methodology for recognition of the effects of inflation. See "Selected
Financial Data." Significant effects include the following:

Effects of Purchasing Power Gains and Losses on Revenues. Inflation
produces purchasing power losses on accounts receivable between the date of
service and the date of payment by the customer. These losses are partly offset
by purchasing-power gains

24


on accounts payable and accrued expenses, value-added taxes and other taxes on
operating revenues between the date of accrual and the date of payment. See
Note 2 to the Consolidated Financial Statements of the Company.

Effects of Inflation on Financial Instruments Denominated in Brazilian
Currency. The Company has both assets and liabilities that are financial
instruments denominated in Brazilian currency. Until July 1, 1994, the
indexation of principal was provided for according to the index specified in the
relevant instrument (subsequent to that time, only interest was impacted by
indexation). As of July 1, 1997, the Company's management determined that Brazil
no longer had a hyperinflationary economy as defined in SFAS 52 and ceased
indexing the Company's Consolidated Financial Statements for constant currency
purchasing power. In the Consolidated Financial Statements of the Company,
interest income or expense is reported net of the associated inflationary losses
or gains, respectively, and accordingly depends on the relationship between the
rate of interest (and, where applicable, indexation of principal) and the rate
of inflation as measured by the UFIR, which is used to determine inflationary
gains and losses. For example, indebtedness denominated in reais gives rise to
interest expense to the extent that the rates of interest plus indexation exceed
the rate of inflation, and it may give rise to negative interest expense if the
rates of interest plus indexation are less than the rate of inflation.

Effects of Inflation and Devaluation on Indebtedness Denominated in
Foreign Currency. At December 31, 1997, the Company had R$4,088,000 of
indebtedness denominated principally in U.S. dollars. See Note 8 to the
Consolidated Financial Statements of the Company. The Company does not hedge its
obligations under its foreign currency-denominated indebtedness. In the
Consolidated Financial Statements of the Company, the interest expense
attributable to foreign-currency denominated indebtedness is reported net of the
associated inflationary gain and foreign exchange loss. When the rate of
inflation and the rate of devaluation differ substantially, the effect on
reported interest expense can be substantial. See "Selected Financial Data -
Exchange Rates" and Note 2 to the Consolidated Financial Statements of the
Company.

The Company's financial statements are presented in accordance with U.S.
GAAP and accordingly recognize certain effects of inflation and restate data
from prior periods in constant reais of June 30, 1997 purchasing power. Such
restatement has been effected using the integral restatement method (correcao
integral) required by the CVM (the Brazilian Securities Commission) to be used
for financial statements of public corporations. In periods of inflation,
monetary assets generate inflationary loss, and monetary liabilities generate
inflationary gain, due to the decline in purchasing power of the currency.
Inflationary gains or losses on

25


monetary assets and liabilities have been allocated to their corresponding
income or expense in the income statement. Inflationary gains or losses without
a corresponding income or expense caption have been allocated to other net
operating income/(expense). See Note 9 to the Consolidated Financial Statements.


RESULTS OF OPERATIONS

Although the nature of the Company's operations subsequent to its
acquisition (the "Acquisition") of Venbo Comercio de Alimentos Ltda. ("Venbo")
on March 19, 1996 is different from that prior to the Acquisition, the following
comparative financial data of the Company for the twelve months ended December
31, 1996 (proforma*), and for the twelve months ended December 31, 1997 are
herein included in an effort to facilitate a meaningful presentation of the
evolution of the Company's operating results.

Since the implementation of Real Plan in June 1994 the Brazilian economy
has experienced declining levels of inflation rates, with a cumulative
inflation rate for the three-year period from July 1994 to June 1997, as
measured by the IGP-M (a Brazilian General Price Index), of 54%. Considering
the above, and the fact that there is a clear historical trend of decreasing
inflation in Brazil, Management has made the determination that Brazil is no
longer a highly inflationary economy from July 1, 1997 onward, pursuant to FASB
52. Brazil Fast Food Corp. has been reporting its financial statements in
Brazilian Reais since its Acquisition on March 19, 1996.

Accordingly, operating results for the periods ended December 31, 1997
presented in the accompanying financial statements have been indexed and
expressed in currency of constant purchasing power of June 30, 1997 by using a
monthly index derived from IGP-M index. The Company believes that the IGP-M
index is an appropriate general price inflation indicator to be used under US
GAAP. For the twelve months ended December 31, 1997, the inflation as measured
by the IGP-M was 7.7%.

____________
* Proforma financial data includes result of operations of Venbo from January 1
to March 18, 1996, prior to the Acquisition.


26



(PROFORMA)
TWELVE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, 1996 % TO DECEMBER 31, 1997 % TO
(IN THOUSANDS) SALES -------------------- SALES
------ (IN THOUSANDS) ------


NET OPERATING REVENUES:
- - RESTAURANT SALES R$ 71,382 R$ 73,008
- - FRANCHISE INCOME 812 1,475
- - OTHER INCOME 1,366 1,705
------ ------

TOTAL NET OPERATING REVENUES 73,560 100.0 76,188 100.0
------ ----- ------ -----
COSTS AND EXPENSES:
- - COST OF RESTAURANT SALES 26,909 36.6 25,861 33.9
- - RESTAURANT PAYROLL AND OTHER 16,643 22.6 17,490 23.0
EMPLOYEE BENEFITS
- - RESTAURANT OCCUPANCY COSTS 5,730 7.8 7,532 9.9
AND OTHER EXPENSES
- - DEPRECIATION AND AMORTIZATION 3,325 4.5 4,139 5.4
- - OTHER OPERATING EXPENSES 11,743 16.0 10,751 14.1
- - SELLING EXPENSES 4,479 6.1 4,719 6.2
- - GENERAL AND ADMINISTRATIVE EXPENSES 13,737 18.7 10,745 14.1
------ ----- ------ -----

TOTAL COSTS AND EXPENSES 82,566 112.2 81,237 106.6
------ ----- ------ -----

LOSS FROM OPERATIONS (9,006) (12.2) (5,049) (6.6)
------ ----- ------ -----

- - INTEREST INCOME (EXPENSE), NET 1,456 2.0 (1,466) (1.9)
------

(LOSS) BEFORE INCOME TAXES (7,550) (10.3) (6,515) (8.6)
------ ----- -----

INCOME TAXES 46 0.1 0 0
------ ----- ------ -----

NET LOSS R$ (7,504) (10.2) R$ (6,515) (8.6)
--------- ----- --------- -----




RESTAURANT SALES

Net restaurant sales for Company-owned stores were R$71,382,000 and
R$73,008,000 for the years ended December 31, 1996 and 1997, respectively. The
increase in revenues from period to period (approximately 2%) is mainly a result
of the expansion of the number of Company-owned stores. At December 31, 1996
there were 80 Company-owned stores. During calendar 1997, the Company opened 7
new stores, closed 1 unprofitable store and sold 9 unprofitable stores to
franchisees, ending the year with 77 Company-owned stores. Same store sales for
the year ended December 31, 1997 declined 7.5% when compared to the year ended
December 31, 1996. The decline in same store sales was primarily attributable to
(i) the Brazilian government's relaxation of its previous prohibition upon
installment credit purchases, which accelerated previously deferred consumer
demand for large ticket items such as automobiles and household appliances,
resulting in decreased availability of funds for discretionary spending, and
(ii) significant increases (up to 45%) in interest rates in the last quarter of
1997 as a consequence of the Asian financial crisis, which resulted in a
slowdown of the Brazilian economy, increased unemployment and significantly
decreased consumer spending.

FRANCHISE INCOME

Franchise income was R$ 812,000 and R$ 1,475,000 for the years ended
December 31, 1996 and 1997, respectively. The increase of 81.6% is primarily
driven by the expansion of franchised locations, which increased from an average
of 27 units in 1996 to an average of 46 units in 1997. At December 31, 1996 and
1997, the Company had 34 and 56 franchised locations, respectively.


27



The increase in the number of franchisees resulted in increases in initial
fees charged to new franchisees and royalty fees.


OTHER INCOME

Other income was R$1,366,000 and R$1,705,000 for the years ended December
31, 1996 and 1997, respectively, and is comprised of the income derived from
suppliers pursuant to license and exclusivity agreements and from marketing
fees.


COST OF RESTAURANT SALES

Cost of restaurant sales expressed as a percentage of net operating
revenues were 36.6% and 33.9%, for the years ended December 31, 1996 and 1997,
respectively. The reduction in cost of restaurant sales is due to the continuous
renegotiation of purchase terms and prices with suppliers and seeking
alternative sources of products. The increase of systemwide sales enabled the
Company to reduce the average cost of major products such as meat, french fries
and ice cream, by approximately 15% in the last two years. This reduction was
partly offset by an increase in costs of certain items such as bread and soft
drinks, caused, mainly, by increased Federal taxes on these items.

RESTAURANT PAYROLL AND OTHER EMPLOYEE BENEFITS

Restaurant payroll and other employee benefits expressed as a percentage of
net operating revenues increased slightly from 22.6% for the year ended December
31, 1996 to 23.0% for the year ended December 31, 1997.

This is primarily due to increases in salaries mandated by union-driven
agreements (8% for Rio de Janeiro employees since October 1996, and additional
4% since October 1997, as well as 6% for Sao Paulo employees since July 1997).
Such increases have been partially offset by new procedures implemented in early
1997: (i) a thorough store headcount revision, resulting in a reduction in the
number of assistant store managers and in the average number of store employees
(from 30 in 1996 to 25 in 1997), (ii) adoption of a new recruiting program
allowing for a greater degree of flexibility in manpower usage and lower costs
of recruitment and replacement of the staff, and (iii) reductions in employee
transportation costs through an optimization of bus routes.


RESTAURANT OCCUPANCY COSTS AND OTHER EXPENSES

Restaurant occupancy costs and other expenses expressed as a

28


percentage of net operating revenues were approximately 7.8% and 9.9% for the
years ended December 31, 1996 and 1997, respectively. The increase is mainly due
to the portion of minimum rent which is linked to the Brazilian inflation rate
(currently at around 7% per annum).


DEPRECIATION AND AMORTIZATION

Depreciation and Amortization expense expressed as a percentage of net
operating revenues was approximately 4.5% and 5.4% for the years ended December
31, 1996 and 1997, respectively. The increase is primarily due to increased
asset values resulting from the application of the purchase method of accounting
in conjunction with the Acquisition.


OTHER OPERATING EXPENSES

Other operating expenses expressed as a percentage of net operating
revenues were approximately 16.0% and 14.1% for the years ended December 31,
1996 and 1997, respectively. The decline was the result of reduction,
renegotiation and non-renewal of service contracts.


SELLING EXPENSES

Selling expenses remained constant from 1996 to 1997, at 6.1% and 6.2%,
respectively. A new marketing program has been implemented since the second half
of 1996, refocusing the consumer audience.

GENERAL AND ADMINISTRATIVE EXPENSES

General and Administrative expenses expressed as a percentage of net
operating revenues were approximately 18.7% and 14.1% for the years ended
December 31, 1996 and 1997, respectively. General and Administrative expenses
decreased by R$2,992,000 or 21.8%.

Approximately R$700,000 of this decrease is due to lower pre-operating
expenses related to new Company-owned stores openings (30 stores and 7 stores
in each of the years ended December 31, 1996 and 1997 respectively).

Additionally, general and administrative expenses before the

29


Acquisition include: (i) royalties paid by Venbo to an affiliated party in
January and February 1996 of approximately R$480,000; (ii) fixed asset write-
offs during the period between January and early March 1996, in order to adjust
the books to the pre-Acquisition inventory, which represented approximately
R$650,000.

Excluding the above mentioned effects, General and Administrative expenses
as a percentage of total net operating revenues would have been approximately
16.2% or R$11,907,000 and 14.1% or R$10,745,000, for the years ended December
31, 1996 and 1997, respectively.

The remaining reduction in administrative expenses is due to: (i) greater
use of outsourcing for certain administrative functions previously performed by
headquarters' personnel, (ii) restructuring of the Company's middle management,
elimination of certain positions, (iii) a freeze on the hiring of additional
headquarters personnel in excess of 1995 staff levels, and (iv) voluntary salary
reductions by the Company's senior management.


INTEREST INCOME AND EXPENSES

Interest income and expenses expressed as a percentage of net operating
revenues were approximately 2.0% and (1.9%) for the years ended December 31,
1996 and 1997, respectively. Net interest expense decreased by approximately
R$2,922,000 or (200.5%). Approximately R$1,485,000 of this decrease is a result
of internal financial transactions between Venbo and its parent company, BIEC,
prior to the Acquisition, which generated substantial but non-recurring profit.
Excluding the above mentioned effect, interest as a percentage of total net
operating revenues would have been approximately 0.04% or (R$ 29,000) for the
year ended December 31, 1996 and 1.9% or (R$1,466,000) for the year ended
December 31, 1997.

The increase in interest expense in 1997 results from an increase in
borrowings from revolving credit lines as well as the imposition by the
Brazilian government of a tax charge at a flat rate of 0.2% on every bank
account payment issued.


SEASONALITY

The Company's revenues are subject to seasonality as approximately 30% of
its sales are generated during the Brazilian summer months of December and
January as well as July due to higher than normal tourist traffic.


LIQUIDITY AND CAPITAL RESOURCES

Since March 19, 1996, the Company has funded its operating losses of
R$10,309,000 and made acquisitions of businesses and

30


capital improvements (including store remodeling) by using cash remaining at the
closing of the Acquisition, by borrowing funds from various sources and private
placements of securities. As of December 31, 1997, the Company had cash on hand
of R$1,522,000 and a working capital deficiency of R$6,741,000.


The Company's capital requirements are primarily for expansion of its
retail operations. Currently, 71 of the Company's stores are in leased
facilities and 6 are owned by the Company. During fiscal 1997, the Company's
average cost to open a store approximated R$300,000 to R$500,000, including
leasehold improvements, equipment and beginning inventory, as well as expenses
for store design, site selection, lease negotiation, constructions supervision
and obtaining permits. The Company currently estimates that capital expenditures
for fiscal 1998 will approximate $1,000,000. During 1998, the Company intends to
focus its efforts on expanding both the number of its franchisees and its
franchised outlets, neither of which are expected to involve significant capital
expenditures by the Company (see "Business--Growth Strategy" and "--Franchise
Program").

At December 31, 1997, the Company had aggregate credit facilities of
R$10,079,000 (of which R$1,869,000 was outstanding at December 31, 1997). In
addition, the Company received proceeds of approximately $6,168,000 from private
sales of its securities in 1997. The Company continues to enjoy favorable
relationships with its key suppliers providing for extended payment terms.
Vendor payables were approximately R$2,697,000 as of December 31, 1997.

In 1997, the Company had net cash used in operating activities of
R$3,639,000 and had net cash used in investing activities of R$2,576,000. The
primary use of cash for investing activities was for capital expenditures
related to the Company's retail store expansion.

The Company has obtained firm commitments from two Brazilian banking
institutions for long term credit facilities aggregating approximately
$5,000,000 which will bear interest (in US dollars) at the rate of 17% per
annum. Of such $5,000,000, $2,000,000 represents present short-term indebtedness
of the Company which will be converted into long-term indebtedness. In addition,
the Company is currently negotiating an institutional placement of up to
$5,000,000 in principal amount of secured convertible debentures (collectively,
"Debentures"). The Company contemplates that the Debentures will bear interest
at 8% per annum and are to be repaid in shares of the Company's Common Stock at
a conversion rate which will limit the number of shares to be issued by the
Company, assuming the sale of $5,000,000 in principal amount of Debentures, to
an aggregate maximum of 1,250,000 shares. There can be no assurance that this
placement of Debentures will be successfully completed, either upon their
contemplated terms or otherwise.

The Company's continued operation is dependent in part upon its ability to
increase sales volume through enhancements of its stores, including but not
limited to new computerized systems and refurbishments of interior designs, and
expansion of its franchise network. These activities will require additional
cash expenditures. The Company believes that cash flow from operations, when
combined with new bank borrowings, discussed above, as well as continued growth
in franchising, will enable the Company to continue in business through the end
of 1998.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


31


Reference is made to pps. F-1 through F-42 comprising a portion of
this Report.



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

Not Applicable.

32


PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Item 10 is hereby incorporated by reference from the Company's
definitive Proxy Statement to be filed within 120 days of December 31, 1997.


ITEM 11. EXECUTIVE COMPENSATION

Item 11 is hereby incorporated by reference from the Company's
definitive Proxy Statement to be filed within 120 days of December 31, 1997.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

Item 12 is hereby incorporated by reference from the Company's
definitive Proxy Statement to be filed within 120 days of December 31, 1997.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Item 13 is hereby incorporated by reference from the Company's
definitive Proxy Statement to be filed within 120 days of December 31, 1997.

33


PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K

(a) Financial Statements and Financial Statement Schedules:

(i) Financial Statements

Reports of Independent Public Accountants

Consolidated Balance Sheets - December 31, 1997
and December 31, 1996

Consolidated Statements of Operations for the year ended December
31, 1997, the period March 19, 1996 through December 31,
1996 and the period January 1, 1996 through March 18, 1996
(Venbo)

Consolidated Statement of Changes in Shareholders' Equity for the
year ended December 31, 1997, the period March 19, 1996
through December 31, 1996 and the period January 1, 1996
through March 18, 1996 (Venbo)

Consolidated Statements of Cash Flows for the year ended December
31, 1997, the period March 19, 1996 through December 31,
1996 and the period January 1, 1996 through March 18, 1996
(Venbo)

Notes to Consolidated Financial Statements

Report of Independent Public Accountants

Balance Sheet - December 31, 1995

Statement of Operations for the year ended December 31, 1995

Statement of Cash Flows for the year ended December 31, 1995

Statement of Changes in Shareholders' Equity for the year ended
December 31, 1995

Notes to the Financial Statements

(ii) Financial Statement Schedules

All financial statement schedules are omitted because the conditions
requiring their filing do not exist or the information required thereby is
included in the financial statements filed, including the notes thereto.


(b) Reports on Form 8-K

None.

34


(c) Exhibits

3.1 Certificate of Incorporation of the Registrant, as amended(2)
3.2 By-laws of the Registrant(1)
4.1 Form of certificate evidencing shares of Common Stock(1)
4.2 Form of certificate evidencing Series A Redeemable Common Stock
Purchase Warrants(1)
4.3 Form of certificate evidencing Series B Redeemable Common Stock
Purchase Warrants(1)
4.4 Form of Unit Purchase Option between the Registrant and GKN
Securities Corp.(1)
4.5 Form of Redeemable Warrant Agreement between the Registrant and
American Stock Transfer & Trust Company, as warrant agent(1)
10.1 Amended and Restated 1992 Stock Option Plan(1)
10.2 Form of Trust Agreement by and between Registrant and The Chase
Manhattan Bank, N.A.(1)
10.3 Form of Escrow Agreement by and among Registrant, Barry Goldin,
Lawrence Burstein, John Cattier, Barry Ridings, Rio Bravo
Inversiones, Ltd., Trinity Capital Corp. and American Stock
Transfer & Trust Company(1)
10.4 Form of Letter Agreement concerning conflicts of interest(1)
10.5 Form of Letter Agreement concerning finder's fees(1)
10.6 Form of Agreement relating to the vote by Affiliated Initial
Stockholders on a Business Combination and their waiver of the
right to participate in a certain type of liquidation(1)
10.7 Form of Agreement relating to the vote by Non-Affiliated Initial
Stockholders on a Business Combination and their waiver of
certain of their rights to participate in a certain type of
liquidation(1)
10.8 General and Administrative Services Agreement, dated as of
September 1, 1993, by and between Registrant and Trinity Capital
Corp.(1)
10.9 Heads of Agreement dated October 30, 1995 among Bob's Industria e
Comercio Ltda. ("BIEC"), Arnaldo Bisoni ("Bisoni"), Shampi
Investments A.E.C. ("Shampi"), Registrant and Vendex do Brasil
Industria e Comercio Ltda. ("Vendex")(2)
10.10 Supplement to Heads of Agreement dated October 30, 1995 among
BIEC, Bisoni, Shampi, Registrant and Vendex(2)
10.11 Indemnification Agreement dated October 30, 1995 among
Registrant, BIEC, Bisoni and Vendex(2)
10.12 Trademarks Commitment dated October 30, 1995 with respect to the
assignment of trademarks relating to

35


Venbo's business from Vendex International N.V. to Shampi and Registrant(2)

10.13 First Amendment to the Heads of Agreement dated January 18, 1996
among BIEC, Bisoni, Shampi, Registrant and Vendex(2)
10.14 Assignment and Transfer of Quotas and Other Covenants dated March
19, 1996 by and among BIEC, Bisoni, Registrant, Vendex and
Shampi(2)
10.15 Conditional Assignment and Transfer of Trademark Rights dated
March 19, 1996 between Registrant and Vendex International,
N.V.(2)
10.16 Pledge and Security Agreement dated March 19, 1996 by and among
Shampi, Registrant, BIEC, Vendex and Vendex International,
N.V.(2)
10.17 Agreement dated March 19, 1996 by and among Coca-Cola Industrias
Ltda., Recofarma Industria do Amazonas Ltda. and Venbo(2)
10.18 Agreement dated January 8, 1996 by and between Hardee's Food
Systems, Inc. and Venbo(2)
10.19 Agreement to the Assignment and Transfer of Quotas of Bigburger
Sao Paulo Lanchonetes Ltda. dated June 10, 1996 among Rucker,
Theodoro Henrique da Silva, Registrant and Theodoro Henrique da
Silva Junior(3)
10.20 Agreement to the Assignment and Transfer of Quotas of Bigburger
Goiania Lanchonetes Ltda. dated June 10, 1996 among Rucker,
Theodoro Henrique da Silva, Registrant and Theodoro Henrique da
Silva Junior(3)
10.21 Exchange Agreement dated July 24, 1996 among Registrant,
BigBurger Ltda., BigBurger Niteroi Lanchonetes Ltda., BigBurger
Fortaleza Lanchonetes Ltda., BigBurger Aracaju Lanchonetes Ltda.,
BigBurger Porto Alegre Lanchonetes Ltda., and BigBurger Recife
Lanchonetes Ltda.(4)
10.22 Stock Purchase Agreement dated July 23, 1997 by and between
Registrant and AIG Latin America Equity Partners Ltd.
("AIGLAEP")(5)
10.23 Stockholders' Agreement dated as of August 11, 1997 by and
between Registrant, AIGLAEP and the stockholders listed on
Schedule A thereto(5)
10.24 Warrant Agreement dated as of August 11, 1997 by and between
Registrant and AIGLAEP(5)
10.25 Registration Rights Agreement dated as of August 11, 1997 between
Registrant and AIGLAEP(5)
21.1 Subsidiaries of Registrant
27.1 Financial Data Schedule



____________
(1) Denotes document filed as an exhibit to Registrant's Registration Statement
on Form S-1 (File No. 33-71368) and incorporated herein by reference.

36


(2) Denotes document filed as an exhibit to Registrant's Registration Statement
on Form S-1 (File No. 333-3754) and incorporated herein by reference.
(3) Denotes document filed as an exhibit to Registrant's Current Report on form
8-K dated June 24, 1996.
(4) Denotes document filed as an exhibit to Registrant's Current Report on Form
8-K-/A dated August 7, 1996.
(5) Denotes document filed as an exhibit to Registrant's Current Report on Form
8-K dated August 29, 1997.

37


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Rio de
Janeiro, Country of Brazil, on the 15th day of April, 1998.

BRAZIL FAST FOOD CORP.


By:/s/Peter van Voorst Vader
-------------------------------
Peter van Voorst Vader
Chairman and Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:




SIGNATURE TITLE DATE
--------- ----- ----

Chairman and
Chief Executive
Officer (Principal
Executive Officer)
/s/Peter van Voorst Vader and Director April 15, 1998
- ----------------------------------
Peter van Voorst Vader

Vice President -
Finance (Principal
Financial Officer
and Accounting
/s/Carlos Henrique da Silva Rego Officer) April 15, 1998
- ----------------------------------
Carlos Henrique da Silva Rego

President and
Chief Operating
/s/Rogerio Carlos Lamim Braz Officer April 15, 1998
- ----------------------------------
Rogerio Carlos Lamim Braz

Chairman of
/s/Omar Carneiro da Cunha the Board April 15, 1998
- ----------------------------------
Omar Carneiro da Cunha

/s/Ian S. Barnett Director April 15, 1998
- ----------------------------------
Ian S. Barnett

/s/Lawrence Burstein Director April 15, 1998
- ----------------------------------
Lawrence Burstein

/s/Jose Ricardo Bosquet Bomeny Director April 15, 1998
- ----------------------------------
Jose Ricardo Bosquet Bomeny

Director
- ------------------------------
Carlos Gustavo Simas





REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Shareholders of Brazil Fast Food Corp. and Subsidiaries:

We have audited the accompanying consolidated balance sheets of Brazil Fast Food
Corp. and subsidiaries (formerly Trinity Americas Inc.) (a Delaware corporation)
as of December 31, 1997 and 1996, and the related consolidated statements of
operations, changes in shareholders' equity and cash flows for the year ended
December 31, 1997 and the period from March 19, 1996 through December 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Brazil Fast Food Corp. and
subsidiaries as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for the year ended December 31, 1997 and the
period from March 19, 1996 through December 31, 1996, in conformity with
generally accepted accounting principles.




New York, New York ARTHUR ANDERSEN LLP
March 20, 1998 (except for the
matters discussed in Note 15,
as to which the date is
April 14, 1998)




F-1



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Shareholders of Brazil Fast Food Corp. and Subsidiaries:

We have audited the accompanying statements of operations and cash flows of
Venbo Comercio de Alimentos Ltda. for the period from January 1, 1996 through
March 18, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Venbo
Comercio de Alimentos Ltda. for the period from January 1, 1996 through March
18, 1996, in conformity with generally accepted accounting principles.




New York, New York ARTHUR ANDERSEN LLP
August 1, 1997

F-2


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

================================================================================



ASSETS
------



December 31,
------------------
1997 1996
------ ------

CURRENT ASSETS:
Cash and cash equivalents R$1,522 R$1,556
Accounts receivable, net of allowance for doubtful
accounts of R$187 and R$317 3,197 1,567
Inventories 775 870
Prepaid expenses and other current assets 594 1,267
------ ------

TOTAL CURRENT ASSETS 6,088 5,260

PROPERTY AND EQUIPMENT, NET 23,613 24,612

DEFERRED CHARGES, NET 14,073 14,294

GOODWILL, NET OF ACCUMULATED AMORTIZATION
OF R$508 and R$208 5,386 6,427

OTHER 194 20
------ ------

TOTAL ASSETS R$49,354 R$50,613
======== ========


LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------


CURRENT LIABILITIES:
Notes payable R$4,295 R$1,995
Accounts payable 2,697 3,238
Accrued expenses 1,874 1,658
Payroll and related accruals 1,868 2,460
Taxes, other than income taxes 672 917
Deferred income 910 657
Other 513 462
------- ------


TOTAL CURRENT LIABILITIES 12,829 11,387
------- ------

NOTES PAYABLE, less current portion 694 2,729

DEFERRED INCOME, less current portion 2,930 2,997
------- ------

TOTAL LIABILITIES 16,453 17,113
------- ------

COMMITMENTS AND CONTINGENCIES (Note 13)

SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000 shares authorized; no
shares issued - -
Common stock, $.0001 par value, 20,000,000 shares authorized;
12,304,484 and 10,404,484 shares issued and outstanding 1 1
Additional paid-in capital 44,698 38,530
Deficit (11,553) (5,038)
Cumulative translation adjustment (245) 7
------- ------

TOTAL SHAREHOLDERS' EQUITY 32,901 33,500
------- ------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY R$49,354 R$50,613
======== ========


See the accompanying notes to the consolidated financial statements.

F-3


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

================================================================================



BFFC BFFC Venbo
----------------- -------------- --------------
March 19, 1996 January 1,
through 1996
Year Ended December 31, through
December 31, 1997 1996 March 18,1996
----------------- -------------- --------------

NET OPERATING REVENUES:
Restaurant sales R$ 73,008 R$ 56,381 R$ 15,001
Franchise income 1,475 651 161
Other income 1,705 1,253 113
----------- ------------- --------------
TOTAL NET OPERATING REVENUES 76,188 58,285 15,275
----------- ------------- --------------

COSTS AND EXPENSES:
Cost of restaurant sales 25,861 20,479 6,430
Restaurant payroll and other employee benefits 17,490 13,412 3,231
Restaurant occupancy and other expenses 7,532 4,645 1,085
Depreciation and amortization 4,139 2,650 675
Other operating expenses 10,751 8,632 3,111
Selling expenses 4,719 3,599 880
General and administrative expenses 10,745 10,128 3,609
----------- ------------- --------------
TOTAL COSTS AND EXPENSES 81,237 63,545 19,021
----------- ------------- --------------


(LOSS) FROM OPERATIONS (5,049) (5,260) (3,746)
INTEREST INCOME 45 111 2,196
INTEREST EXPENSE (1,488) (139) (989)
FOREIGN EXCHANGE (LOSS) GAIN (23) 4 273
----------- ------------- --------------
(LOSS) BEFORE BENEFIT FROM
INCOME TAXES (6,515) (5,284) (2,266)
BENEFIT FROM INCOME TAXES - 46 -
----------- ------------- --------------
NET (LOSS) R$ (6,515) R$ (5,238) R$ (2,266)
=========== ============= ==============
BASIC NET (LOSS) PER COMMON SHARE R$ (.58) R$ (.68)
=========== =============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
BASIC 11,326,428 7,696,106
=========== =============


See the accompanying notes to the consolidated financial statements.

F-4


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
(EXPRESSED IN CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)




Retained
Common Stock Additional Earnings Cumulative
----------------------- Paid In (Accumulated Translation
Shares Par Value Capital Deficit) Adjustment Totals
------------ --------- ---------- ------------ ----------- ---------

Balance, January 1, 1996 2,964,861 R$ - R$10,222 R$ 200 R$ - R$10,422

Issuance of shares for
acquisitions 3,076,422 - 12,183 - - 12,183

Issuance of shares for
private placements 4,363,201 1 16,125 - - 16,126

Net loss - - - (5,238) - (5,238)

Cumulative translation
adjustment - - - - 7 7
---------- --------- ---------- ----------- ---------- ------

Balance, December 31, 1996 10,404,484 1 38,530 (5,038) 7 33,500

Issuance of shares for
private placements 1,900,000 - 6,168 - - 6,168

Net loss - - - (6,515) - (6,515)

Cumulative translation
adjustment - - - - (252) (252)
---------- --------- ---------- ----------- ---------- ------
Balance, December 31, 1997 12,304,484 R$ 1 R$44,698 R$(11,553) R$(245) R$32,901
========== ========= ========== =========== ========== ========



See the accompanying notes to the consolidated financial statements.

F-5


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)




BFFC BFFC VENBO
--------------- ----------------- ---------------
March 19, January 1,
Year Ended 1996 1996
December 31, through through
1997 December 31, 1996 March 18, 1996
--------------- ----------------- ---------------


CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (loss) R$(6,515) R$(5,238) R$(2,266)
Adjustments to reconcile
net (loss) to cash flows
(used in) provided by
operating activities:
Depreciation and
amortization 4,139 3,171 497
Changes in assets and
liabilities, net of
effects
from acquisitions:
(Increase) decrease in
accounts receivable,
net (1,630) (682) 553
Decrease (increase) in
inventories 95 (250) 1,057
Decrease (increase) in
prepaid expenses and
other current assets 673 (903) 112
(Decrease) increase in accounts
payable
and accrued expenses (325) 2,603 (2,170)

(Decrease) increase in
payroll and
related accruals (592) 352 189
(Decrease) increase in
taxes other than
income taxes (245) 452 (71)
Increase (decrease) in
other liabilities 51 (2,062) (1,044)
Increase in deferred
income 186 3,654 -
Other 524 (11) -
------ ------- --------------
CASH FLOWS (USED IN)
PROVIDED BY
OPERATING
ACTIVITIES (3,639) 1,086 (3,143)
------ ------- --------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Payment for purchase of
acquisitions,
net of cash acquired - (18,305) -
Additions to property and
equipment (1,788) (7,377) -
Additions to deferred
charges (788) - -
Decrease in restricted
cash and investments - 9,959 -
------ ------- --------------
CASH FLOWS (USED IN)
INVESTING
ACTIVITIES (2,576) (15,723) -
------ ------- --------------

CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of
shares of common stock 6,168 16,126 -
Proceeds from issuance of
notes payable 1,056 1,744 -
Repayments of notes
payable (148) (1,713) -
Net advances/repayments
of bank overadvance
facility (764) - -
Increase in due to
related parties - - 1,974
------ ------- --------------

CASH FLOWS PROVIDED
BY FINANCING
ACTIVITIES 6,312 16,157 1,974
------ ------- --------------

EFFECT OF FOREIGN EXCHANGE
RATE (131) 8 -
------ ------- --------------
NET (DECREASE) INCREASE IN
CASH AND CASH
EQUIVALENTS (34) 1,528 (1,169)

CASH AND CASH EQUIVALENTS
AT BEGINNING
------ ------ -------
OF PERIOD 1,556 28 1,169
------ ------ -------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD R$ 1,522 R$ 1,556 R$ -
============== ================ ==============


See the accompanying notes to the consolidated financial statements.

F-6


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

================================================================================

NOTE 1 - BUSINESS AND OPERATIONS

Brazil Fast Food Corp. (formerly Trinity Americas Inc.) (the "Company") was
incorporated in the state of Delaware on September 16, 1992, to serve as a
vehicle to effect a merger, exchange of capital stock, asset acquisition or
other similar business combination with an operating business. The Company was
in the development stage until March 19, 1996.

On March 19, 1996 (the "Closing"), the Company acquired all of the outstanding
quotas (shares of capital stock) of Venbo Comercio de Alimentos Ltda.
("Venbo") from Bob's Industria e Comercio Ltda. ("BIEC") and Arnaldo Bisoni
("Bisoni" and with BIEC, collectively, the "Sellers") for $19,200 (the "Purchase
Price") plus related acquisition costs, of which $16,700 was paid in cash at the
Closing (inclusive of $100 which had been previously paid in October 1995 upon
the parties' execution of the Heads of Agreement), with the balance of $2,500
payable with interest at the rate of 1-1/2% per annum over LIBOR due 720 days
from the Closing. In addition, the Company acquired all of the trademarks
relating to Venbo's business from Vendex International N.V., an affiliate of the
Sellers, for $1,800 payable to BIEC with interest at the rate of 6 7/8% per
annum in monthly installments equal to 4% of Venbo's net sales for each
immediately preceding month. The Company's acquisition of the quotas and
trademarks is hereinafter referred to as the "Acquisition".

The Acquisition was treated for accounting purposes as a purchase and the
consideration paid in excess of the net assets acquired was allocated to those
net assets based on their fair market value. The unallocated amount has been
classified as goodwill (R$3,762) and is being amortized over a 20 year period.

At the date of Acquisition, Venbo, a Brazilian limited liability company which
conducts business under the trademark "Bob's", owned and, directly and through
franchisees, operated the second largest chain of hamburger fast food
restaurants in Brazil.

In order to raise sufficient cash to complete the Acquisition and to fund the
Company's subsequent expansion strategy, the Company sold 3,115,701 shares of
its common stock to new investors in a private transaction (the "Private
Placement") at $3.20 per share, resulting in net proceeds to the Company of
approximately $10,000.

Funding of the cash portion of the Purchase Price was derived from the following
sources; (i) approximately $9,900 from the Company's own funds; (ii) $4,000 from
a Brazilian subsidiary of Coca-Cola, which was paid to the Company concurrently
with the consummation of the Acquisition, in consideration for Coca-Cola
products being designated the exclusive soft drink products for all of the
Company's restaurants for a ten-year term and for the Company's agreement to
participate at its own expense in joint promotions and marketing programs with
Coca-Cola during such term; and (iii) the balance of $2,800 from the proceeds of
the Private Placement.

At the Closing, the Company issued 1,046,422 shares of its common stock to
Shampi Investments A.E.C. ("Shampi") in exchange for the assignment by Shampi to
the Company of Shampi's right to acquire the outstanding quotas of Venbo.

F-7


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)


================================================================================

NOTE 1 - BUSINESS AND OPERATIONS (CONT'D)

As a result of the Acquisition and the Private Placement: (i) Venbo became a
wholly-owned subsidiary of the Company, (ii) Shampi and the investors in the
Private Placement, collectively, acquired approximately 58.4% of the outstanding
common stock of the Company, (iii) designees of Shampi, being respectively,
Peter VanVoorst Vader, Omar Carneiro da Cunha and Arnaldo Bisoni, became three
members of the Company's Board of Directors, and (iv) the Company's name was
changed to "Brazil Fast Food Corp.".

The Company sustained losses in the amount of R$6,515 for the year ended
December 31, 1997. The Company's current assets include approximately R$1,522 in
cash with approximately R$3,197 in accounts receivable and R$775 in inventory.
This is offset by approximately R$12,829 in current liabilities.

During 1998, the Company intends to focus its efforts on expanding both the
number of its franchisees and its franchised outlets, neither of which are
expected to involve significant capital expenditures by the Company.
Additionally, the Company plans to increase revenues by introducing new
programs, expanding its menu and offering delivery service. Management's plans
include reducing costs by continuing to negotiate more favorable terms in food
purchases as well as other general and administrative expenses. The Company has
increased its borrowing capacity and has obtained the option to extend payment
terms for certain debt that was initially scheduled to come due in May 1998.
(See Note 15). Additionally, the Company may pursue additional debt and/or
equity financing transactions in the future.

The Company's continued operation is dependent in part upon its ability to
increase sales volume through enhancements of its stores, including but not
limited to new computerized systems and refurbishments of interior designs, and
expansion of its franchise network. These activities will require additional
cash expenditures. The Company believes that cash flows from operations, when
combined with new bank financings as well as continued growth in franchising,
will enable the Company to continue in business through the end of 1998.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Generally Accepted Accounting Principles ("GAAP")

The financial statements have been prepared in accordance with GAAP used in the
United States. Such accounting principles differ in certain respects from
Brazilian GAAP, which is applied by the Company for annual financial statement
preparation. In addition, certain reclassifications and changes in terminology
have been made to the financial statements previously issued so that the
present financial statements conform with reporting practices prevailing in the
United States. Unless otherwise specified, all references in these financial
statements to (I) "reais," the "real" or "R$" are to the Brazilian real
(singular), or to the Brazilian reais (plural), the legal currency of Brazil,
and (ii) "U.S. dollars" or "$" are to United States dollars.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All material intercompany accounts and
transactions have been eliminated in consolidation.

F-8


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

================================================================================

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D):

Constant Currency Restatement

Through June 30, 1997 the consolidated financial statements have been indexed
and expressed in currency of constant purchasing power by using a monthly index
derived from the Indice Geral de Precos-Mercado ("IGP-M"). Since the
implementation of the Real Plan in June 1994, the Brazilian economy has
experienced a declining rate of inflation, with a cumulative inflation rate for
the three-year period from July 1994 to June 1997, as measured by the IGP-M of
54%. Based on the foregoing, management determined that Brazil ceased to be
considered a hyperinflationary economy, as defined in Statement of Financial
Accounting Standards ("SFAS") No. 52, and from July 1, 1997 no longer indexed
its financial statements for constant currency purchasing power.

Through 1995, the Company used the Unidade Fiscal de Referencia ("UFIR") as the
basis to reflect constant Brazilian Reais. Starting in 1996, the Company
commenced using the IGP-M as the basis for indexation.


Value of 1.0 Inflation for
Restatement Units the period
Year of One Real %
---- ----------------- --------------

1992 0.0026691 1,129.4
1993 0.0673164 2,422.1
1994 0.6767000 905.3
1995 0.8287000 22.5
1996 0.9049000 9.2
June 30, 1997 0.9510000 5.09


The Company believes that the above indicies are appropriate general price
level inflation indications to be used under US GAAP.

Items in the income statement are adjusted to the balance sheet date by:

. Allocating inflationary holding gains or losses on interest bearing monetary
assets and liabilities to their corresponding interest income and expense
captions;

. Allocating inflationary holding gains and losses from other monetary items to
their corresponding income and expense captions.

The allocation of the inflationary gains and losses to their respective income
statement captions is shown in Note 9.

F-9


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)


================================================================================

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D):

Foreign Currency

Transactions in foreign currency are recorded at the prevailing exchange rate at
the time of the related transactions. Assets and liabilities denominated in
foreign currencies are translated into Brazilian reais at exchange rates
reported by the Central Bank of Brazil at the balance sheet date. The related
transaction gains and losses are recognized in the consolidated statement of
operations as they occur.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.

Inventories

Inventories, primarily consisting of food, beverages and supplies, are stated at
the lower of cost or replacement value. Cost of inventories is determined
principally on the average cost method.

Investments

In May 1993, the Financial Accounting Standards Board ("FASB") issued SFAS No.
115, "Accounting for Certain Investments in Debt and Equity Securities". This
Statement requires the classification of debt and equity securities based on
whether the securities that will be held to maturity, are considered trading
securities or are available for sale. Classification within these categories may
require the securities, to be reported at their fair market value with
unrealized gains and losses included either in current earnings or reported as a
separate component of shareholders' equity, depending on the ultimate
classification.

Property and Equipment

Property and equipment are stated at price-level adjusted cost, less price-level
adjusted accumulated depreciation until June 30, 1997. Depreciation on property
and equipment is provided using the straight-line method over the following
estimated useful lives of the related assets:

Years
-----

Buildings and building improvements 50
Leasehold improvements 5-10
Machinery and equipment 10-15
Furniture and fixtures 10-15
Vehicles 13

F-10


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)


================================================================================

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D):

Deferred Charges

Deferred charges, which relate to leasehold premiums paid in advance for rented
outlet premises are stated at price-level adjusted cost, less price-level
adjusted accumulated amortization until June 30, 1997.

The amortization period is the term of management's estimate of the related
rental contract including renewal options which are solely at the discretion of
the Company.

Preopening Costs

Labor costs and the costs of hiring and training personnel and certain other
costs relating to the opening of new restaurants are expensed as incurred.


Revenue Recognition

Initial franchise fee revenue is recognized when all material services and
conditions relating to the franchise have been substantially performed or
satisfied which normally occurs when the restaurant is opened. Annual franchise
fees based on a percentage of the revenues of the franchisee are recognized when
earned.

Amounts received from the Coca-Cola agreement entered into as part of the
Acquisition were recorded as deferred income and are being recognized over the
term of the agreement. The Company accounts for other supplier exclusivity fees
on a straight line basis over the life of the related supply agreement.

Advertising Expenses

The Company expenses advertising costs as incurred. Advertising expense was
R$3,215 and R$2,612 for the years ended December 31, 1997 and 1996,
respectively.

Income Taxes

Deferred taxes are provided on the liability method on a full provision basis in
accordance with SFAS No. 109.

Use of Estimates

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

F-11


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)


================================================================================

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D):

Long-lived Assets

The Company adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," effective January 1, 1996.
SFAS No. 121 requires impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS No. 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. There was no material effect on the
financial statements from the adoption of SFAS No. 121.

Net Income (Loss) Per Common Share



In 1997 the FASB issued SFAS No. 128, "Earnings Per Share" effective for
financial statements issued for periods ending after December 15, 1997. This
statement establishes standards for computing and presenting earnings per share
("EPS"), replacing the presentation of currently required primary EPS with a
presentation of Basic EPS and Diluted EPS on the face of the statement of
operations. Under this new standard, Basic EPS is computed based on weighted
average shares outstanding and excludes any potential dilution; Diluted EPS
reflects potential dilution from the exercise or conversion of securities into
common stock or from other contracts to issue common stock. There were no common
share equivalents outstanding as of December 31, 1997 and 1996 that would have
had a dilutive effect on earnings for those respective years. As required by
SFAS No. 128, the 1996 net loss per share amounts have been restated to comply
with this standard.

Recently Issued Accounting Standards

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income,"
which establishes standards for reporting and display of comprehensive income
and its components (revenue, expenses, gains, and losses) in a full set of
general purpose financial statements. The Company will adopt SFAS No. 130 in the
first quarter of 1998.


In June 1997, the FASB also issued SFAS No. 131 "Disclosures about Segments
of an Enterprise and Related Information" which is effective for periods
beginning after December 15, 1997. SFAS No. 131 establishes standards for
reporting financial and descriptive information regarding an enterprise's
operating segments. The Company expects SFAS No. 131 to have no impact on its
disclosures as it operates in one industry and geographic location.

NOTE 3 - RESTRICTED CASH AND INVESTMENTS

The Company, pursuant to the terms of its initial public offering ("the
Offering"), held approximately $9.6 million as of March 19, 1996, which included
interest income, in a trust account which was primarily invested in a short term
U.S. Government Security. These funds were released, in connection with the
terms of the Offering, upon the consummation of the Acquisition.



F-12


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)


================================================================================

NOTE 4 - OTHER ACQUISITIONS


On June 10, 1996, the Company acquired all of the outstanding quotas (capital
shares) of, respectively, BigBurger Sao Paulo Lanchonetes Ltda. and BigBurger
Goiania Lanchonetes Ltda., each a Brazilian corporation (collectively, the
"Acquired Companies"), from Rucker Holding Corporation, a non-affiliated British
Virgin Islands corporation ("Rucker"), for (i) R$264 and (ii) 510,000 shares of
the Company's common stock valued at R$1,799. The Acquired Companies owned and
operated 7 "Mr. Theo" hamburger fast food restaurants in Sao Paulo and Goiania,
Brazil. All of these restaurants have been rebranded and are now operating
under the Company's "Bob's" tradename. This acquisition has been accounted for
using the purchase method of accounting. In connection with this acquisition,
the Company has recorded approximately R$387 of excess purchase price over net
assets acquired which is being amortized over a 20 year period.


On July 24, 1996, the Company acquired all of the operating assets of each of
BigBurger Ltda. ("BigBurger") and five of its affiliates, all Brazilian
corporations (collectively, the "BigBurger Companies"), for 1,520,000 shares of
the Company's common stock valued at R$6,751. The BigBurger Companies owned and
operated 27 hamburger fast food restaurants, inclusive of outlets operated by
franchisees, in 9 Brazilian states. All of these restaurants have been
rebranded and are now operating under the Company's "Bob's" tradename. This
acquisition has been accounted for using the purchase method of accounting. In
connection with this acquisition, the Company has recorded R$2,486 of excess
purchase price over net assets acquired which is being amortized over a 20 year
period.

During 1997, the Company sold all of the stock in the Acquired Companies back to
Rucker in order to transfer certain pre-acquisition liabilities back to the
seller. Before the sales were made, essentially all of the operating assets were
transferred to the Company and in essence, only the corporate shells were sold.
As these sales were made at nominal value, there was no impairment in the
acquired operating assets, and no writedown of the goodwill was necessary.

The following unaudited proforma information presents a summary of the
consolidated results of operations of the Company as if the above-mentioned
acquisitions had occurred on January 1, 1995.


1996 1995
---------- ----------

Net Operating Revenues R$80,085 R$81,590
Net Loss R$(8,047) R$(9,682)

Loss per Common Share R$ (.78) R$ (.94)


The unaudited proforma results have been prepared for comparative purposes only
and include certain adjustments, such as the amortization of the excess of cost
over net assets acquired and increased number of shares outstanding. No
adjustment has been made for stores that had been closed for rebranding during
this period. These pro-forma results do not purport to be indicative of the
results of operations which actually would have resulted had the acquisitions
been in effect on January 1, 1995 or of future results of operations of the
consolidated entities.

F-13


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)


================================================================================

NOTE 5 - PROPERTY AND EQUIPMENT



December 31,
------------------------------
1997 1996
---------- ---------


Land R$ 2,828 $ 2,828
Buildings and building improvements 4,372 4,294
Leasehold improvements 6,976 6,041
Machinery and equipment 10,426 10,075
Furniture and fixtures 3,411 3,423
Vehicles 295 194
Other 50 40
------ -------
28,358 26,895
Less: Accumulated depreciation and amortization (4,745) (2,283)
-------- --------
R$23,613 R$24,612
======== ========


NOTE 6 - DEFERRED CHARGES
December 31,
----------------------------
1997 1996
------ ------

Leasehold premiums R$15,355 R$14,975
Less: Accumulated amortization (1,282) (681)
-------- --------
R$14,073 R$14,294
======== ========


NOTE 7 - ACCRUED EXPENSES

December 31,
-----------------------------
1997 1996
-------- -------

Rent payable R$ 672 R$ 682
Accrued utilities 176 223
Accrued freight 18 102
Accrued maintenance 84 85
Accrued advertising 183 86
Other accrued liabilities 741 480
------- -------
R$1,874 R$1,658
======== ========
NOTE 8 - NOTES PAYABLE



a) The Company has revolving lines of credit with several Brazilian financial
institutions providing for maximum borrowings of R$4,500. At December 31, 1997,
R$920 were outstanding under these facilities. These borrowings are due on
demand, bear interest at 36% to 48% per annum, and in certain cases are
guaranteed by the Company's officers.

b) As part of the Acquisition, the Company incurred $1,800 (R$1,867) payable
to BEIC for the purchase of certain trademarks. This payable bears interest at
6 7/8% per annum and is due in monthly installments equal to 4% of the Company's
net revenues. At December 31, 1997, the Company owed R$257 on this obligation,
which is included in the current portion of notes payable on the accompanying
consolidated balance sheets.

F-14


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)


================================================================================

NOTE 8 - NOTES PAYABLE (CONT'D)


c) As part of the Acquisition, the Company incurred $2,500 (R$2,790) payable
to the Sellers with interest at the rate of 1 1/2% per annum over LIBOR which
was due and paid in March 1998, which is included in the current portion of
notes payable on the accompanying consolidated balance sheets.


d) Commencing in 1997, a major financial institution agreed to provide the
Company a credit facility of up to R$3,347 to fund information technology
expenditures and an additional R$2,232 for other restaurant equipment
expenditures through 2000. Interest rates vary from 15.6% to 18% per annum. At
December 31, 1997, the Company had R$949 outstanding under this
facility.

e) At December 31, 1997, future payments of debt are as follows:

December 31,
--------------
1998 R$4,295
1999 412
2000 282
-------
R$4,989
=======


NOTE 9 - INFLATIONARY EFFECTS ON THE FINANCIAL STATEMENTS

Inflationary effects on the financial statements that are included in the
consolidated statements of operations comprise principally net purchasing power
gains. For the purposes of presenting the financial statements in their fully
indexed form, realized inflationary gains and losses on non-interest bearing
assets and liabilities have been allocated to the following captions of the
statements of operations:


December 31,
---------------
1997 1996
------ -------

Net operating revenues R$ 137 R$ 216
Cost of restaurant sales 174 179
Restaurant occupancy and other expenses 99 58
Other operating expenses 56 (283)
General and administrative expenses 23 27
------ ------

R$ 489 R$197
====== ======

F-15


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)


================================================================================

NOTE 9 - INFLATIONARY EFFECTS ON THE FINANCIAL STATEMENTS (CONT'D)


The above stated gains and losses were generated from the following balance
sheet accounts:

December 31,
---------------
1997 1996
------ -------

Cash and cash equivalents R$ 54 R$ 186
Accounts receivable 72 43
Other assets 528 262
Accounts payable and accrued expenses (113) (104)
Payroll and related liabilities (121) (140)
Taxes, other than income taxes (37) (24)
Other liabilities (680) (321)
------ ------
R$(297) R$ (98)
====== ======

Inflationary gains and losses on interest bearing assets and liabilities were
allocated to the following captions in the consolidated statements of
operations:


December 31,
------------------
1997 1996
--------- -------

Gross interest income R$ 195 R$ 296
Inflationary loss (466) (313)
-------- ------
Net interest income R$ (271) R$ (17)
======== ======

Gross interest expense R$(1,272) R$(270)
Inflationary gain 274 131
-------- --------
Net interest expense R$ (998) R$(139)
======== ========

Gross exchange (loss) R$ (23) R$ (76)
Inflationary gain - 82
-------- ------
Net exchange (loss) gain R$ (23) R$ 6
======== ======

The inflationary gains and losses were generated from bank balances and bank
overdrafts.

F-16


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)


================================================================================

NOTE 10 - CASH FLOW INFORMATION

Supplemental Disclosure of Cash-flow Information:


December 31,
--------------------------
1997 1996
--------- ------------

Interest paid R$ 747 R$ 201
Income taxes paid R$ - R$ -

Details of Acquisitions:
Fair Value of assets acquired R$ - R$ 42,217
Liabilities assumed - R$(11,487)
Stock issued - R$(12,183)
Cash acquired - R$ (242)
------ ---------
Net cash used in acquisitions R$ - R$ 18,305
====== =========

NOTE 11 - TAXATION

Tax losses through December 31, 1997 relating to income tax and social
contribution tax amounted to R$23,610. Social contribution tax is a Brazilian
tax levied on taxable income and is by its nature comparable to corporate income
tax. At the date of Acquisition, Venbo had R$5,512 of loss carryforwards. The
utilization of these pre-acquisition losses recognized subsequent to the
Acquisition, first reduces to zero any goodwill related to the Acquisition,
second reduces other non-current intangible assets to zero, and third reduces
income tax expense.

The accumulated tax loss position can be offset against future taxable income.
Brazilian tax legislation restricts the offset of accumulated tax losses to 30%
of taxable profits on an annual basis. These losses can be used indefinitely
and are not impacted by a change in ownership of the Company.

The following is a reconciliation of the amount of reported income tax benefit
and the amount computed by applying the combined statutory tax rate of 33% to
the loss before income taxes:



December 31,
---------------------
1997 1996
--------- --------

Tax benefit at the combined statutory rate R$(1,256) R$ (1,743)
Valuation allowances recorded against net deferred tax assets 1,256 1,743
Other - 46
--------- -------
Income tax benefit as reported in the accompanying consolidated
financial statements R$ - R$ 46
========= =======


F-17


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)


================================================================================

NOTE 11 - TAXATION (CONT'D)

The following summarizes the composition of deferred tax assets and liabilities
and the related valuation allowances at December 31, 1997 and 1996, based on
temporary differences and tax loss carryforwards determined by applying social
contribution tax and income tax rates of 8% and 25%, respectively.



December 31,
------------------
1997 1996
-------- --------

Deferred tax assets:
Tax loss carry forward R$7,791 R$6,179
Provision for contingencies 44 8
Non-deductible reserves 16 -
Deferred income 140 -
------ ------

Total deferred tax assets 7,991 6,187
------ ------

Deferred tax liabilities:
Deferred income - 36
Present value adjustment 13 4
Fixed assets 1,028 274
Deferred charges 2,944 2,471
------ ------

Total deferred tax liabilities 3,985 2,785
------ ------

Net deferred tax assets 4,006 3,402

Valuation allowance (4,006) (3,402)
====== ======
R$ - R$ -
====== ======


The valuation allowance reflects the Company's assessment of the likelihood of
realizing the net deferred tax assets in view of current operations and the
Company's recurring losses.


NOTE 12 - RELATED PARTY TRANSACTIONS

In 1996, the Company was charged $100 by an entity related to two of the
Company's directors related to their assistance in the Company's financing
activities.

F-18


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)


================================================================================

NOTE 13 - COMMITMENTS AND CONTINGENCIES

Operating Leases

The future minimum lease payments under operating leases with an initial or
remaining noncancelable lease term in excess of one year at December 31, 1997
are as follows:

December 31,
-----------------

1998 R$ 4,329
1999 3,829
2000 3,381
2001 3,077
2002 2,041
Thereafter 6,095


Rent expense was R$5,361 and R$3,116 for the years ended December 31, 1997 and
1996, respectively.

Other Commitments

The Company has long term contracts (5 to 10 years) with all of its franchisees.
Under these contracts the franchisee has the right to use the Bob's name and
formulas in a specific location or area. The Company has no specific financial
obligations in respect of these contracts.

Contingencies

In the normal course of business, Venbo is involved in legal procedures and
claims with both private and governmental parties. At December 31, 1997,
contingencies for labor, civil and fiscal claims exist for a total gross amount
of approximately R$136. The consolidated balance sheets at December 31, 1997,
contain a provision for these claims.

NOTE 14- SHAREHOLDERS' EQUITY

Preferred Stock

The Board of Directors of the Company is empowered, without shareholder
approval, to issue up to 5,000 shares of "blank check" preferred stock (the
"Preferred Stock") with dividend, liquidation, conversion, voting or other
rights which could adversely affect the voting power or other rights of the
holders of the Company's common stock. As of December 31, 1997, no preferred
stock had been issued.

F-19


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)


================================================================================

NOTE 14- SHAREHOLDERS' EQUITY (CONT'D)

Common Stock

In March 1996, the Company completed a Private Placement of 3,115,701 shares of
its common stock at $3.20 per share, resulting in net proceeds to the Company of
approximately $10,000. In addition, 5,000 shares of the Company's common stock
were redeemed in accordance with the terms of the Company's Articles of
Incorporation.


At the Closing of the Acquisition, the Company issued 1,046,422 shares of its
common stock to Shampi valued at $3,349, in exchange for the assignment by
Shampi to the Company of Shampi's right to acquire the outstanding quotas of
Venbo.

In June 1996, the Company issued 510,000 shares of its common stock to the
Acquired Companies (as defined in Note 4) valued at R$1,799 for the acquisition
of all of its outstanding quotas (capital shares).

In July 1996, the Company issued 1,520,000 shares of its common stock to the
BigBurger Companies (as defined in Note 4) valued at R$6,751 for the acquisition
of the operating assets of the BigBurger Companies.

In September 1996, the Company closed a private placement of 621,250 units (the
"Private Placement Units"). Each Private Placement Unit consisted of two shares
of the Company's common stock and one warrant to purchase one share of common
stock at an exercise price of $5.50 through September 20, 2001. The Company
received net proceeds exclusive of related expenses of approximately $4,854
(R$4,956).

In fiscal 1997, the Company issued 1,900,000 shares of its common stock and
warrants to purchase 250,000 shares of the Company's common stock at an initial
exercise price of $4.00 per share, which exercise price and number of shares is
subject to adjustment, in private placements, receiving net proceeds of R$6,168.


Stock Option Plan

On September 18, 1992, the Company's Board of Directors and a majority interest
of the shareholders of the Company approved the Trinity Americas Inc. 1992 Stock
Option Plan (the "Plan"). The Plan was subsequently amended and restated on
October 27, 1995.

F-20


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)


================================================================================

NOTE 14- SHAREHOLDERS' EQUITY (CONT'D)

The Plan, as amended and restated, authorizes the granting of awards, the
exercise of which would allow up to an aggregate of 500,000 shares of the
Company's common stock to be acquired by the holders of said awards. The awards
can take the form of Incentive Stock Options ("ISOs") or Non-qualified Stock
Options ("NQSOs"). Options may be granted to employees, directors and
consultants. ISOs and NQSOs are granted in terms not to exceed ten years and
become exercisable as set forth when the award is granted. Options may be
exercised in whole or in part. The exercise price of the ISOs must be at least
equal to the fair market price of the Company's common stock on the date of
grant or in the case of a plan participant who is granted an option price with
at least 110% of the fair market value on the date of grant and the option must
be exercised within five years from the date of grant. The exercise price of
all NQSOs granted under the Plan shall be determined by the Board of Directors
of the Company at the time of grant. No options may be granted under the Plan
after September 17, 2002.

The Company accounts for awards granted to employees and directors under
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees", under which no compensation cost has been recognized for stock
options granted. Had compensation costs of these stock options been determined
consistent with SFAS No. 123, "Accounting for Stock Based Compensation", the
Company's net loss and loss per share would have been the following pro forma
amounts:

Year Ended December 31,
-------------------------------
1997 1996
--------- -----------

Net (loss) as reported R$(6,515) R$(5,238)
Net (loss) pro forma R$(7,289) R$(5,921)
Basic (loss) per common share as reported R$ (.58) R$(.68)
Basic (loss) per common share pro forma R$ (.64) R$(.77)


The effects of applying SFAS No. 123 in this pro forma disclosure are not
indicative of future amounts. SFAS No. 123 does not apply to awards prior to
1995, and additional awards in future years are anticipated.

All transactions with individuals other than those considered employees, as set
forth within the scope of APB No. 25, must be accounted for under the provisions
of SFAS No. 123. During 1997 and 1996, no options were granted to outside
consultants.

F-21


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)


================================================================================


NOTE 14- SHAREHOLDERS' EQUITY (CONT'D)


Vesting terms of the options range from immediately vesting of all options to a
ratable vesting period of 5 1/2 years. Option activity for the years ended
December 31, 1997 and 1996 is summarized as follows:



Year Ended December 31,
--------------------------------------------------------
1997 1996
------------------------- -------------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
-------- ---------- -------- --------


Options outstanding at beginning of year 465,000 $ 3.25 (A) - $ -
Granted 95,000 3.25 465,000 4.71
Exercised - - - -
Canceled - - - -
------- ----- ------- -------
Options outstanding at end of year 560,000 3.25 465,000 4.71 (A)
Options exercisable at end of year 340,000 3.25 135,000 3.80 (A)


(A) On June 6, 1997, as a result of the decline in market price of the
Company's common stock, the Board of Directors approved a repricing of all
options outstanding prior to this date to an exercise price of $3.25 per share,
the market value of the Company's common stock on that date.





1997 1996
---------------------------------------- ---------------------------------------
Weighted Average Weighted Average Weighted Average Weighted Average
Fair Market Value Exercise Price Fair Market Value Exercise Price
------------------- ----------------- ------------------- ----------------


Options granted at a discount N/A N/A $4.53 $4.81
Options granted at fair market value 2.16 3.25 $3.56 $3.94
Options granted at a premium N/A N/A $4.60 $5.16


At December 31, 1997, the Company had issued 60,000 options in excess of those
available for grant under the Plan. The Company intends to amend the Plan to
increase the number of options allowed under the Plan at its next shareholders'
meeting.

The fair value of each option grant is estimated on the date of grant
using the Black Scholes option pricing model with the following weighted average
assumptions used for grants in 1997 and 1996: (1) risk-free interest rate of
6.35% and 6.26%; (2) no expected divided yield, (3) expected lives of 5 years;
and (4) expected stock price volatility of 76% and 142%, respectively.

At December 31, 1997, all of the 560,000 outstanding options have an exercise
price of $3.25 with a weighted average remaining contractual life of 3.55 years.


Subsequent to December 31, 1997, options to purchase an aggregate of 6,154

shares of common stock have been exercised, having an aggregate purchase price
of $20,000.

F-22


BRAZIL FAST FOOD CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CURRENCY OF CONSTANT PURCHASING POWER AT JUNE 30, 1997)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)


================================================================================



NOTE 15 - SUBSEQUENT EVENTS

In April 1998, the Company entered into transactions with two Brazilian banks as
follows:

a) The Company obtained an option to extend for two years the due date
of R$2,000 or a short term credit facility which was originally due
in May 1998. The extension of this facility would require semi-
annual paydowns of the note of R$500 commencing November 1998.


b) The Company has obtained approval from a bank, subject to the
completion of certain documentation and other administrative
matters, for a R$3,000 credit facility.

F-23


[LETTERHEAD OF KPMG PEAT MARWICK]


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Directors and Shareholders of
Venbo Comercio de Alimentos Ltda.



We have audited the accompanying balance sheet of Venbo Comercio de Alimentos
Ltda. as of December 31, 1995, and the related statement of operations, cash
flows and changes in shareholders' equity of Venbo Comercio de Alimentos Ltda.
for the year ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

As described in Note 10, the Company is dependent upon additional financial
support from its shareholder. The Company has obtained assurance that it will
continue to receive financial support, if necessary, from its shareholder.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Venbo Comercio de Alimentos
Ltda. at December 31, 1995, and the result of its operations and its cash flows
for the year ended December 31, 1995 in conformity with generally accepted
accounting principles in the United States of America.

As described in Note 3, the accompanying financial statements expressed in
Brazilian reais have been fully indexed using appropriate indices to recognize
the effects of changes in purchasing power of the Brazilian currency which
conforms with generally accepted accounting principles in the United States of
America.


/s/ KPMG Peat Marwick

Sao Paulo, Brazil KPMG Peat Marwick
March 12, 1996, except for
Note 20 which is as of March 26, 1996 and
Note 3d which is as of July 3, 1997
Second paragraph of Note 3a, the first and fourth paragraph
of Note 3b which are as of March 27, 1998


F-24


VENBO COMERCIO DE ALIMENTOS LTDA.


Balance Sheet

December 31, 1995

(In thousands of constant Brazilian reais - R$,
of June 30, 1997 and thousands of US dollars - US$)







December 31
--------------------------

1995 1995
Assets Note US$ R$
(Note 3d)

Current:
Cash and cash equivalents 4 1,048 1,169
Customer accounts receivable, net 5 1,338 1,493
Inventories 1,476 1,647
Due from parent 16 - -
Other assets 275 306
------------- ------------

Total current assets 4,137 4,615
------------- ------------

Property and equipment, net 6 8,356 9,324
------------- ------------

Other assets:
Deferred charges, net 7 1,054 1,176
Financial investments 8 21,002 23,436
------------- ------------

22,056 24,612
------------- ------------

34,549 38,551
============= ============


1995 1995
Liabilities Note US$ R$
(Note 3d)

Current:
Accounts payable and accrued
liabilities 3,195 3,565
Due to parent 16 8,539 9,528
Due to other related parties 16 1,987 2,217
Payroll and related accruals 1,605 1,791
Taxes other than income taxes 372 415
Other liabilities 9 3,057 3,411
------------- -----------

Total current liabilities 18,755 20,927
------------- -----------

Loans and financing 10 39,095 43,624
------------- -----------

Shareholders' equity: 11
Monetarily corrected share capital 4,277 4,772
Accumulated deficit (27,578) (30,772)
------------- -----------

Total shareholders' equity (deficit) (23,301) (26,000)
------------- -----------

34,549 38,551
============= ===========

Commitments and contingencies 17, 18, 19



See the accompanying notes to the financial statements.



F-25



VENBO COMERCIO DE ALIMENTOS LTDA.


Statement of Operations

Year Ended December 31, 1995

(In thousands of constant Brazilian reais - R$,
of June 30, 1997 and thousands of U.S. dollars - US$)



Year ended
December 31
----------------------

1995 1995
Note US$ R$
(Note 3d)

Net operating revenues:
Restaurant sales 62,901 70,188
Franchise income 652 727
Other income 417 466
---------- --------

Total net operating revenues 63,970 71,381
---------- --------

Costs and expenses:
Cost of restaurant sales 23,837 26,598
Restaurant payroll and other employee benefits 12,302 13,727
Restaurant occupancy and other expenses 5,578 6,225
Depreciation and amortization 2,794 3,117
Other operating expenses 11,829 13,200
Selling expenses 3,254 3,632
General and administrative expenses 10,939 12,205
Restructuring expenses 14 251 280
---------- --------

Total costs and expenses 70,784 78,984
---------- --------

Loss from operations (6,814) (7,603)

Interest income 1,558 1,738
Interest expense (4,809) (5,366)
Exchange gain 1,277 1,425
---------- --------

Net loss (8,788) (9,806)
========== ========


See the accompanying notes to the financial statements.



F-26



VENBO COMERCIO DE ALIMENTOS LTDA.


Statement of Cash Flows

Year Ended December 31, 1995

(In thousands of constant Brazilian Reais - R$,
of June 30, 1997 and thousands of U.S. dollars - US$)




Year ended
December 31
---------------------------
1995 1995
US$ R$
(Note 3d)

Cash provided by operations:
Net loss (8,788) (9,806)

Adjustments to reconcile net loss
to cash provided by (used in) operating activities:
Depreciation and amortization 2,794 3,118
(Increase)/decrease in customer accounts receivable, net (188) (210)
(Increase)/decrease in inventories (932) (1,040)
(Increase)/decrease in other current assets (120) (134)
Increase in deferred charges (276) (308)
Increase/(decrease) in accounts payable and accrued expenses 2,550 2,846
Increase/(decrease) in payroll and related accruals 463 516
Increase/(decrease) in taxes other than income taxes (187) (209)
Increase/(decrease) in other liabilities 724 808
---------- ----------

Cash flows provided by (used in) operating activities (3,960) (4,419)
---------- ----------

Cash flow from investing activities:
Additions to property and equipment (2,080) (2,321)
Asset disposals 357 398
Decrease in other investments - -
(Increase)/decrease in financial investments (64) (71)
---------- ----------

Cash flows provided by (used in) investing activities (1,787) (1,994)
---------- ----------

Cash flow from financing activities:
Distribution of net assets - -
Increase/(decrease) in bank loans - -
Increase/(decrease) in amounts due to group companies, net 8,498 9,482
Increase/(decrease) in other non-current liabilities (2,553) (2,849)
---------- ----------

Cash flows provided by (used in) financing activities 5,945 6,633
---------- ----------

Increase/(decrease) in cash and cash equivalents 198 220

Cash and cash equivalents at beginning of year 850 949
---------- ----------

Cash and cash equivalents at end of year 1,048 1,169
========== ==========



See the accompanying notes to the financial statements.


F-27


VENBO COMERCIO DE ALIMENTOS LTDA.


Statement of Changes in Shareholders' Equity

Year Ended December 31, 1995

(In thousands of constant Brazilian Reais - R$, of June 30, 1997)




Monetarily
corrected Accumulated
share capital deficit Total

Balances at December 31, 1994 4,772 (20,966) (16,194)

Net loss for the year - (9,806) (9,806)
----------------- ---------- -------------

Balances at December 31, 1995 4,772 (30,772) (26,000)
================= ========== =============






See the accompanying notes to the financial statements.


F-28


VENBO COMERCIO DE ALIMENTOS LTDA.



NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 1995

(In thousands of constant Brazilian reais - R$, of June 30, 1997)



1 - OPERATIONS

Venbo Comercio de Alimentos Ltda. ("Venbo" or "the Company"), a subsidiary of
Bob's Industria e Comercio Ltda. ("Bob's") with headquarters in Rio de Janeiro,
Brazil, was incorporated on April 30, 1993 to operate fast food outlets in
conjunction with its holding company Bob's.

There are a total of 70 Bob's restaurants in Brazil, 50 of which are operated by
Venbo and 20 by Venbo's franchisees. In addition, Venbo has 4 permanent kiosks
and 4 trailers which are used at different locations for special events. Of the
78 units currently in operation (including the kiosks and trailers), 46 are
located in the State of Rio de Janeiro, 22 are in the State of Sao Paulo and the
balance in the capital cities of the other States of Brazil. Nine of the Venbo
operated outlets occupy Venbo owned real estate.


2 - FINANCIAL STATEMENT PRESENTATION

The Company's predecessor was established in 1952 by Bob Falkenburg when he
opened his first ("Bob's") store on Copacabana Beach selling hamburgers, hot-
dogs, milkshakes and french fries. Mr. Falkenburg sold his interest in 1974 to
Libby McNeil E. Libby USA ("Libby"). Under Libby ownership, a manufacturing
operation was established for the purpose of supplying food products to Bob's as
well as other users in the Rio de Janeiro and Sao Paulo areas. In 1982, Libby
sold its interest in Bob's to Nestle who operated the business until 1987, when
it sold its interest in Bob's operations to Bob's, the current shareholder of
Venbo. In April 1993, Bob's formed two wholly-owned subsidiaries, Venbo and
Venbis Comercio e Industria de Alimentos Ltda. ("Venbis") and simultaneously
transferred all of the fixed assets relating to the store operations to Venbo
and all of the fixed assets relating to the manufacturing operation to Venbis,
respectively. In May 1994, Bob's transferred all of the store operations to
Venbo and all of the factory operations to Venbis.

Finally, in October 1995, Bob's entered into a Heads of Agreement to sell all of
the Quotas (capital shares) of Venbo to Trinity Americas Inc. for total
consideration of approximately US$ 21,000,000 subject to the timely resolution
of certain outstanding matters and the outcome of certain investigations by the
potential buyer.

As part of this agreement, on or before the closing date, Venbo's rights and
obligations to the floating rate notes and zero coupon bonds, as described in
Notes 8 and 10, will be vested in the current shareholder or a company
affiliated to the current shareholder. In addition, the intercompany
indebtedness of Venbo will be converted into quotas (shares) of Venbo to be
issued to the current shareholder and to be transferred to the potential buyer.


F-29




VENBO COMERCIO DE ALIMENTOS LTDA.



NOTES TO THE FINANCIAL STATEMENTS

(In thousands of constant Brazilian reais - R$, of June 30, 1997)



3 - Summary of Significant Accounting Policies

A. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP")

These financial statements have been prepared in accordance with GAAP in the
United States. Such accounting principles differ in certain respects from
Brazilian GAAP, which is applied by the Company for annual financial
statement preparation. In addition, certain reclassifications and changes in
terminology have been made to financial statements previously issued in order
that the present financial statements conform with reporting practices
prevailing in the United States.

All amounts in Brazilian currency have been restated in constant Brazilian
reais of June 30, 1997 purchasing power. Management has determined that
effective July 1, 1997 Brazil ceased to be considered a hyperinflationary
economy, as defined in FASB 52, and from then on no longer indexed its
financial statements to constant currency purchasing power.

B. CONSTANT CURRENCY RESTATEMENT

The accompanying financial statements have been indexed and expressed in
currency of constant purchasing power of June 30, 1997 by using the monthly
average values of the fiscal reference unit Unidade Fiscal de Referencia
("UFIR") through December 31, 1995 and the IGP-M index for the period January
1, 1996 through June 30, 1997, depending on the nature of the account.

The value of the UFIR in Brazilian reais at December 31 1995, and the
periodic inflation as measured by the UFIR were as follows:

VALUE OF 1.0 INFLATION FOR
UFIR unit the period
YEAR OF ONE REAL %
1995 0.8287000 22.5

For the periods through 1995, the UFIR has been the officially prescribed
index required to be used under Brazilian GAAP, and Venbo believes it is an
appropriate index of general price level inflation to be used under US GAAP.

From the year 1996 onwards the IGP-M index has been adopted as the proper
index to measure inflation. The inflation as measured by the IGP-M for 1996
is 9.2% and for the six months ended June 30, 1997 5.1% (not annualized).


F-30




VENBO COMERCIO DE ALIMENTOS LTDA.



NOTES TO THE FINANCIAL STATEMENTS

(In thousands of constant Brazilian reais - R$, of June 30, 1997)



Items in the income statement are adjusted to the balance sheet date
by:
. Allocating inflationary holding gains or losses on interest bearing
monetary assets and liabilities to their corresponding interest income and
expense captions;
. Allocating inflationary holding gains and losses from other monetary items
to their corresponding income and expense captions.

The allocation of the inflationary gains and losses to their respective
income statement captions is shown in Note 12.

C. FOREIGN CURRENCY

Transactions in foreign currency are recorded at the prevailing exchange rate
at the time of the related transactions. Assets and liabilities denominated
in foreign currencies are translated into Brazilian reais at exchange rates
reported by the Central Bank of Brazil at each balance sheet date. The
related transaction gains and losses are recognized in the statement of
operations as they occur.

D. TRANSLATION OF CONSTANT BRAZILIAN REAL AMOUNTS INTO U.S. DOLLAR AMOUNTS

The translation of Brazilian real amounts into U.S. dollar amounts is
unaudited and included solely for the convenience of readers outside of
Brazil and has been performed at the closing selling exchange rate published
by the Central Bank of Brazil of R$ 0.9725 to U.S. dollar 1.00 for December
31, 1995, based on non-restated Brazilian real amounts. This translation
should not be construed as a representation that the Brazilian real amounts
could be converted to U.S. dollars at this or any other rate.

E. INVENTORIES

Inventories, consisting mainly of food, beverages and supplies, are stated at
the lower of indexed cost or replacement value. Cost of inventories is
determined principally on the average cost basis.



F-31




VENBO COMERCIO DE ALIMENTOS LTDA.



NOTES TO THE FINANCIAL STATEMENTS

(In thousands of constant Brazilian reais - R$, of June 30, 1997)


F. FINANCIAL INVESTMENTS

In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities". This Statement requires the classification of
debt and equity securities based on whether the securities that will be held
to maturity, are considered trading securities or are available for sale.
Classification within these categories may require the securities to be
reported at their fair market value with unrealized gains and losses included
either in current earnings or reported as a separate component of
shareholders' equity, depending on the ultimate classification. The Company
adopted the provisions of this Statement effective January 1, 1994, which had
no impact on the Company's financial statements.

G. PROPERTY AND EQUIPMENT

Property and equipment is stated at price-level adjusted cost, less price-
level adjusted accumulated depreciation. Depreciation on property and
equipment is provided using the straight-line method on the estimated useful
lives of the related assets.

Annual depreciation rates are as follows:

Buildings and building improvements 4%
Leasehold improvements Term of the related rent contract
or 10% for owned buildings
Machinery and equipment 10%
Furniture and fixtures 10%
Vehicles 20%

Contract terms for the rented buildings, in general, range between 5 to 10
years.

Repairs and maintenance are charged to operations as incurred. When assets
are sold, retired, or otherwise disposed of, the applicable costs and
accumulated depreciation are removed from the accounts and the resulting gain
or loss is recognized.

H. DEFERRED CHARGES

Deferred charges, which relate to leasehold premiums paid in advance for
rented outlet premises, are stated at price-level adjusted cost, less price-
level adjusted accumulated amortization.

The amortization period is the term of the related rental contract, which, in
general, ranges between 5 and 10 years.



F-32




VENBO COMERCIO DE ALIMENTOS LTDA.



NOTES TO THE FINANCIAL STATEMENTS

(In thousands of constant Brazilian reais - R$, of June 30, 1997)


I. PREOPENING COSTS

Labor costs and the costs of hiring and training personnel and certain other
costs relating to the opening of new restaurants are expensed as incurred.

J. REVENUE RECOGNITION

Revenues, whether these consist of sales to final consumers or other income,
are recognized when earned.

K. FRANCHISE FEE REVENUE

Initial franchise fee revenue is recognized when all material services and
conditions relating to the franchise have been substantially performed or
satisfied, which normally occurs when the restaurant is opened. Annual
franchise fees based on a percentage of the sales of the franchisee are
recognized when earned.

L. INTEREST INCOME AND EXPENSE

Interest income represents interest earned after adjusting for the effects of
inflation as measured by the variation in the UFIR index.

Interest expense represents interest incurred after adjusting for the effects
of inflation as measured by the variation in the UFIR index.

M. INCOME TAX

Deferred taxes are provided on the liability method on a full provision basis
in accordance with Statement of Financial Accounting Standards No. 109.

N. SEGMENT INFORMATION

Venbo operates primarily in the sale of fast food to final consumers. All of
Venbo's sales are made within Brazil.

O. USE OF ESTIMATES

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



F-33




VENBO COMERCIO DE ALIMENTOS LTDA.



NOTES TO THE FINANCIAL STATEMENTS

(In thousands of constant Brazilian reais - R$, of June 30, 1997)



4 - CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.

DECEMBER 31,
1995
------------

Cash 318
Bank accounts 851
------

1,169
======

5 - CUSTOMER ACCOUNTS RECEIVABLE, NET

DECEMBER 31,
1995
------------

Gross receivables 1,708
Provision for doubtful accounts ( 215)

1,493
======

6 - Property and Equipment, Net

December 31,
1995
------------

Land 335
Buildings and building
improvements 2,976
Leasehold improvements 14,689
Machinery and equipment 14,142
Furniture and fixtures 4,559
Vehicles 692
------

37,393
Less accumulated depreciation and
amortization (28,069)
------

9,324
======




F-34




VENBO COMERCIO DE ALIMENTOS LTDA.



NOTES TO THE FINANCIAL STATEMENTS

(In thousands of constant Brazilian reais - R$, of June 30, 1997)


7 - DEFERRED CHARGES, NET

DECEMBER 31,
1995
------------

Leasehold premiums 2,833
Less accumulated amortization (1,657)
------

1,176
=======


8 - FINANCIAL INVESTMENTS

Financial investments consist of zero coupon bonds, denominated in U.S. dollars.
The zero coupon bonds are subject to exchange variation and mature in May 2005
at the value of the floating rate notes, US$(000) 39,095 (see Note 10). The
zero coupon bonds are discounted to present value at each period end using an
implicit interest rate of 6.9%.


9 - OTHER LIABILITIES


DECEMBER 31,
1995
------------

Rent payable 429
Accrued sales promotion 186
Accrued maintenance 46
Accrued interest payable 1,432
Other accrued liabilities 1,318
-----

3,411
=====


10 - LOANS AND FINANCING

Loans and financing consists of floating rate notes of US$(000) 39,095. The
notes are subject to exchange variation and interest at LIBOR plus 1.125% per
year, and mature in July 2005. The loan is guaranteed by Venbo's ultimate
parent company, Vendex International, and will be liquidated in May 2005 against
the zero coupon bonds (see Note 8).



F-35




VENBO COMERCIO DE ALIMENTOS LTDA.



NOTES TO THE FINANCIAL STATEMENTS

(In thousands of constant Brazilian reais - R$, of June 30, 1997)


During the course of its existence the Company has relied upon financial support
from Vendex group companies to finance its operations.

The Company's shareholder has expressed its intention to provide the Company
with additional financial support, if and when required, for the Company to
continue its operations, up to the final closing date of the possible sale to
Trinity Americas Inc., or, in the event such sale does not close, up to and
including the year 1996.


11 - Shareholders' Equity

Venbo's share capital at December 31, 1995 consists of 128,632 thousand shares
of nominal value of R$ 0.01 each, issued and fully paid-in.


12 - INFLATIONARY EFFECTS ON THE FINANCIAL STATEMENTS

Inflationary effects on the financial statements that are included in the
statements of operations comprise principally net purchasing power gains. For
the purposes of presenting the financial statements in their fully indexed form,
realized inflationary gains and losses on non-interest bearing assets and
liabilities have been allocated to the following captions of the statements of
operations:

Year Ended
December 31,
1995
-------------

Net operating revenues (115)
Cost of restaurant sales 77
Restaurant payroll and other employee benefits 87
Restaurant occupancy and other expenses 50
Other operating expenses 72
Selling expenses 19
General and administrative expenses 79
----

Total 269
====



F-36




VENBO COMERCIO DE ALIMENTOS LTDA.



NOTES TO THE FINANCIAL STATEMENTS

(In thousands of constant Brazilian reais - R$, of June 30, 1997)


The above stated gains and losses were generated from the following balance
sheet accounts:


Cash and cash equivalents ( 6)
Customer accounts receivable (109)
Other assets ( 23)
Accounts payable and accrued liabilities 77
Payroll and related accruals 54
Taxes other than income taxes 40
Other liabilities 236
---

Total 269
===

Inflationary gains and losses on interest bearing assets and liabilities were
allocated to the following captions in the statement of operations:

Year Ended
December 31,
1995
------------

Gross interest income 1,738
Inflationary loss -
------
Net interest income 1,738
======


Gross interest expense (5,367)
Inflationary gain -
------

Net interest expense (5,367)
======


Gross exchange loss (3,181)
Inflationary gain 4,606
------

Net exchange gain 1,425
======


The inflationary gains and losses were generated from bank balances, bank
overdrafts, floating rate notes and zero coupon bonds.




F-37





VENBO COMERCIO DE ALIMENTOS LTDA.



NOTES TO THE FINANCIAL STATEMENTS

(In thousands of constant Brazilian reais - R$, of June 30, 1997)


13 - CASH FLOW INFORMATION

Year Ended
December 31,
1995
------------


Interest paid 4,129

No income taxes were paid in 1995.


14 - RESTRUCTURING EXPENSES


In 1995, the Company accrued and paid R$ 280 for restructuring expenses of a
similar nature to those incurred in 1994, relating to severance payments and
legal expenses.


15 - TAXATION

Venbo is in a tax loss position. Tax losses through December 31, 1995 relating
to income tax and social contribution tax amount to R$ 8,475 and R$ 11,219
respectively.
Social contribution tax is a Brazilian tax levied on taxable income and is by
its nature comparable to corporate income tax.

The accumulated tax loss position can be offset against future taxable income.
Recent tax legislation restricts the offset of accumulated tax losses to 30% of
taxable profits on an annual basis. These losses can be offset indefinitely.

Tax losses and the related deferred tax assets and liabilities and valuation
allowance relate exclusively to the legal entity Venbo. No recognition has been
given to the potential tax benefits of the losses attributable to the outlet
operations which, prior to May 1994, were carried within the Bob's legal entity.

Following is a reconciliation of the amount of reported income tax expense /
benefit and the amount computed by applying the combined statutory tax rate in
1995 of 48.1% to the loss before income taxes:




F-38



VENBO COMERCIO DE ALIMENTOS LTDA.



NOTES TO THE FINANCIAL STATEMENTS

(In thousands of constant Brazilian reais - R$, of June 30, 1997)




Year ended
December 31, 1995
------------------


Loss before taxes as reported in the accompanying financial statements 9,806

Tax benefit at the combined statutory rate (4,716)
Net losses for which no tax benefit was recorded 4,487
Other 229
------
Income tax charge / benefit as reported in the accompanying financial statements -
========


The following is the composition of deferred tax assets and liabilities and the
related valuation allowance at December 31, 1995, based on temporary differences
and tax loss carry forwards determined by applying the 1996 social contribution
and the income tax rates of respectively, 8% and 25%.



SOCIAL
CONTRIBUTION INCOME
TAX TAX TOTAL

DEFERRED TAX ASSETS:
Tax loss carry forward 832 2,118 2,950
Provision for contingencies 25 85 110
Tax deductible only when paid - 925 925
Fixed assets 849 2,653 3,502
Deferred charges 519 1,623 2,142
Zero coupon bond 164 514 678
Other 42 129 171
------ ------ ------

Total deferred tax assets 2,431 8,047 10,478
------ ------ ------

DEFERRED TAX LIABILITIES:
Additional indexation income - 973 973
Floating rate note 91 286 377
------ ------ ------

Total deferred tax liabilities 91 1,259 1,350
------ ------ ------

Net deferred tax 2,340 6,788 9,128
------ ------ ------

Valuation allowance (2,340) (6,788) (9,128)

- - -
====== ====== ======






F-39




VENBO COMERCIO DE ALIMENTOS LTDA.



NOTES TO THE FINANCIAL STATEMENTS

(In thousands of constant Brazilian reais - R$, of June 30, 1997)


The valuation allowance reflects the Company's assessment of the likelihood of
realizing the net deferred tax assets in view of current operations and the
Company's recurring losses.


16 - RELATED PARTY TRANSACTIONS

Venbo had significant business relationships with its affiliated company Venbis
as Venbis was Venbo's main supplier of products.

The following transactions were conducted with Venbis/the factory, excluding
taxes:

Year Ended
December 31,
1995
-------------

Purchase of raw materials 7,720

In 1995, Venbo paid a royalty of R$ 2,983 to Bob's for the use of the trade
name, the use of the formulas and the operational processes.

In March 1995 the parent company of Venbo, Bob's, assigned an intercompany
receivable of R$ 2,410 to Venbo. Venbo capitalized this receivable, recording
an investment in a group company which has been subsequently sold. At the same
time a loss was recorded by Venbo for the same amount as the group company had a
negative net equity. This loss is included in general and administrative
expenses.


17 - LEASES

A. GENERAL

As at December 31, 1995 Venbo's operations comprise 50 fast food outlets of
which 9 are owned and 41 are leased under operating leases.

B. OPERATING LEASES

In addition to fixed lease obligations, Venbo pays a percentage of sales for
various fast food outlets. In the year ended December 31, 1995 total rent
costs were incurred of R$ 3,818.



F-40







VENBO COMERCIO DE ALIMENTOS LTDA.



NOTES TO THE FINANCIAL STATEMENTS

(In thousands of constant Brazilian reais - R$, of June 30, 1997)


C. COMMITMENTS

The future minimum lease payments under operating leases with an
initial or remaining noncancelable lease term in excess of one year at
December 31, 1995 are as follows:

Financial year:
1996 2,054
1997 1,928
1998 1,572
1999 1,308
2000 918
Later years 1,192
-----

Total minimum lease payments 8,972
=====

18 - OTHER COMMITMENTS

The Company has long term contracts (mainly 5 to 10 years) with all of its
franchisees. Under these contracts the franchisee has the right to use the
Bob's name and formulas in a specific location or area.

The Company has no specific financial obligations in respect of these contracts.


19 - CONTINGENCIES

In the normal course of business, Venbo is involved in legal procedures and
claims with both private and governmental parties. As at December 31, 1995
contingencies for labor, civil and fiscal claims exist for a total gross amount
of approximately R$ 516. In the balance sheet as at December 31, 1995 a
provision of R$ 306 is made for these claims.

Venbo may be held liable for contingencies resulting from claims against its
parent company Bob's, in case Bob's and Vendex do Brasil, the parent company of
Bob's will be unable to meet their financial obligations resulting from these
claims. These claims in nature refer to labor, civil and fiscal disputes with
both private and governmental parties. The total value of these claims as at
December 31, 1995 amounts to approximately R$ 4,590. While the Company is unable
to estimate a range of possible loss for these claims, in the opinion of
management the ultimate liability resulting from all pending claims will not
have a material adverse effect on the financial position or results of
operations of the Company.




F-41





VENBO COMERCIO DE ALIMENTOS LTDA.



NOTES TO THE FINANCIAL STATEMENTS

(In thousands of constant Brazilian reais - R$, of June 30, 1997)

Venbo is contesting the assessment of certain value-added taxes (ICMS). Pending
the resolution of judicial proceedings, Venbo has deposited ICMS tax (sales tax)
in court, for the total amount of approximately R$ 5,623 as of December 31,
1995, which equals the gross claim amount. Considering the status of the court
cases a provision was made for the same amount. The deposit and the provision
were netted in the financial statements. Consequently, the final outcome of the
judicial proceedings in this respect could lead to a potential gain, ranging up
to a maximum of R$ 5,623. However the potential gain, if ever realized, would
be to the benefit of Venbo's current shareholders.


20 - SUBSEQUENT EVENTS

As at March 19, 1996, Bob's has sold its 100% interest in Venbo to Trinity
Americas Inc. As part of the agreement, in March 1996 Venbo's rights and
obligations to the floating rate notes and the zero coupon bonds, as described
in Notes 8 and 10, have been vested in Bob's. In addition, the intercompany
indebtedness of Venbo has been converted into quotas (shares) of Venbo (see also
Note 2).



* * *




F-42