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WorldWide Papa’s, LLC Presentation to Bathgate Capital Partners LLC November 1, 2006.

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Presentation on theme: "WorldWide Papa’s, LLC Presentation to Bathgate Capital Partners LLC November 1, 2006."— Presentation transcript:

1 WorldWide Papa’s, LLC Presentation to Bathgate Capital Partners LLC November 1, 2006

2 Disclaimer This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of All statements, other than statements of historical facts, included in this presentation regarding the Company’s financial position, future revenues, profitability, possible exit strategies, potential evaluations, business strategy and plans and objectives for future operations are “forward-looking statements.” Although the company believes the assumptions upon which such forward-looking statements are based are reasonable, it can give no assurance that such assumptions will prove to be correct. Important factors that could cause actual results to differ substantially from the Company’s expectations are disclosed in the Company’s Confidential Offering Memorandum, in the section entitled “Risk Factors” and elsewhere in other evaluation materials provided by the Company. These factors include, but are not limited to, issues related to the success of the Papa John’s pizza concept with Russian consumers, political and capital risks.

3 St. Petersburg, Russia Second largest city in Russia with population of over six million. Cultural capital of Russia. Western quick-serve restaurants in Russia include: Over 108 restaurants in Russia Plans to invest additional $50 Million this year Operates 7 restaurants in St. Petersburg and maintains aggressive growth plans YUM! Brands recently purchase Russian fast food company Rostiks and plans to develop over 300 KFCs in Russia in the upcoming years 58 restaurants in Russia 8 currently operating in St. Petersburg 4 out of the 17 restaurants in Russia are in St. Petersburg Training facility in St. Petersburg 2 restaurants recently opened in St. Petersburg Plans call for 48 more over the next 8 years

4 MARKET CONDITIONS Pro-business environment Favorable tax laws Opportunity for transparency Fair real estate practices

5 Milestones Two Papa John’s restaurants operating in St. Petersburg. Two additional restaurants under development; both scheduled to open by the end of WWP owns and operates the Quality Control Center (QCC), facility where dough is produced and raw materials are stored, which is large enough to support current market development commitments. During a week in August, WWP averaged cooking one pizza per minute between its two restaurants. As of September 2006, WWP employed over 150 people in St. Petersburg.

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7 HISTORY August 2004 WWP purchased the exclusive development rights to St. Petersburg and first rights to all other cities in Russia. Sub-Franchise Agreement is a 40 year agreement. US professional service firms:  Legal Counsel: Ballard Spahr Andrews & Ingersoll, LLP Ireland, Stapleton, Pryor & Pascoe, P.C.  US Tax: Clifton Gunderson LLP  Audit: EKS&H  Investment Banking: W.G. Nielson & Co. (former) Nearly $5.2 Million has been secured through private equity and debt financing.  Approximately $3.2 Million in equity through A and B Round Offerings.  Approximately $1 Million outstanding on convertible debt facility.  Additional $1 Million short-term debt.

8 Significant resources expended developing team of professionals in St. Petersburg to manage operations including:  General Manager with extensive fast food experience in St. Petersburg  In-house legal counsel  Chief accountant with over 12 years of professional accounting experience Corporate structure was established in St. Petersburg to minimize tax impact, protect company assets and provide the greatest safety for the investment. HISTORY

9 August 2005 WWP opened the St. Petersburg QCC. September 2005 WWP opened the first Papa John’s in St. Petersburg. February 2006 WWP opened the second Papa John’s in St. Petersburg.

10 RESTAURANT SALES

11 SALES BY DISTRIBUTION METHOD Restaurant 1Restaurant 2

12 TODAY St. Petersburg restaurants three and four currently under development and scheduled to open by the end of Currently employ approximately 150 people in St. Petersburg. 4 – 8 restaurant management team in place. Current team can manage the development of 2 new facilities per quarter.

13 TODAY The unknowns of the market are now known: - Real Estate -Construction -Operations -Marketing -Reporting -Supply Chain Management -Legal -Accounting Target restaurant characteristics recognized and attainable (evidenced by units 2, 3 & 4): - Sleeping District -240 Sq. Meters year lease -70 Seats -Low to No Competition -Robust Delivery Potential

14 TODAY Experience has taught us: Restaurant Build-Out Construction$220k Equipment$120k Utilities$30k Automobiles$30k Point of Sale System$25k Unit License Fee$25k Rent & Real Estate$20k Commissions Pre-Opening Marketing$20k Pre-Opening Labor$6k Miscellaneous$4k TOTAL$500k *Figures represented are approximate and may not sum due to rounding Monthly Restaurant Operations Net Sales$108k 100% Rent$9, % Labor $14, % Labor Tax$4, % Food$37, % Utilities$1, % Marketing$2, % Miscellaneous$11, % Royalties$7, % Profit$19, %

15 PROPOSED $15 Million Investment Open 24 – 67 additional Papa John’s over the next five years (depending on financing plan). Open markets beyond St. Petersburg. Source senior management for organization including:  CFO  Russian Finance Director  CEO for Russia

16 PROPOSED $15 Million Investment Initial Draw $5.0 Million – Desired date: Jan 2007  $3.3 Million to develop 5 new restaurants  $1.1 Million to retire existing company debt  $600k to fund operations Second Draw $5.0 Million – Desired date: July 2007  $4.6 Million to develop 7 new restaurants  $380k to fund operations Third Draw $5.0 Million – Desired date: September 2007  8 new restaurants Estimates above are estimates and do not include closing costs

17 PROPOSED $15 Million Investment Once the capital is deployed (12 month period): 24 restaurants operating Over $31 Million annual gross sales $7.8 Million annual cash flow Assumptions used on following pages: Average annual restaurant gross sales of $1.3 Million Average margin of 25% Average restaurant build-out time 90 – 120 days

18 PROPOSED $15 Million Investment Option A: Distributions + Exit at the end of Year 3 $15 Million investment = 40% of company* Year 1 cash flow:$4.4 Million Year 2 cash flow:$7.8 Million Year 3 cash flow:$7.8 Million 5.5 x EBITDA:$42.9 Million 8.0 x EBITDA:$62.4 Million Equity Investment Return: Exit Distribution Return Exit Return TOTAL 5.5x $8.0 M $17.1 M $25.1 M 8.0x $8.0 M $24.9 M $32.9 M SUMMARY: We believe the execution risk in Option A is relatively low to return an average annual return of approximately 17% + return of principal and an additional $2 - $10 Million, depending on valuation, in 3 years. * Various structures may include a portion of existing shareholder buyout.

19 PROPOSED $15 Million Investment Option B: Reinvest (with potential distribution) + Exit in Year 5 Example $15 Million Investment = 40% of WWP* Reinvest approximately 80% of annual profits to build additional restaurants. Total of 32 restaurants open by the end of year 2, 47 by the end of year 3 and 67 by the end of year 4. Potential distributions of $600k in years 2 and 3, and $2 Million in year 4. Company exit value in year 5; $119 Million - $174 Million. Exit Exit Return 5.5x $47.9 M 8.0x $69.6 M SUMMARY: Management believes the execution risk is higher with Option B, but also believes it can leverage a $15 Million investment into a $120 Million company in five years. * Various structures may include a portion of existing shareholder buyout.

20 CHALLENGES Real Estate  Site Selection  Adequate Power/Utilities Systems and Controls for Exponential Growth Human Resources for Exponential Growth Growth Capital

21 SUMMARY Most of the unknowns of the business are now known. Economics of the business support exponential growth. The company is now at a crossroads and must identify the optimal financing structure:  Debt and/or equity financing  Distribution and/or reinvestment model WWP is looking for a banking partner who can help shape the most advantageous financing structure, identify potential capital sources and represent the company to the marketplace.

22 QUESTIONS & ANSWERS


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