Investor Presentation
Important Cautions Regarding Forward-Looking Statements This presentation contains forward-looking statements. These statements relate to future events or expectations regarding our future financial performance. These statements are only predictions and involve risks and uncertainties, including, but not limited to the ability to open the new location, fulfill the terms and obligations of the lease, and any other difficulties related to risks and effects of legal and administrative proceedings and governmental regulation, future financial and operational results, competition, general economic conditions, and the ability to manage and continue growth. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this news release include market conditions and those set forth in reports or documents we file from time to time with the SEC. We undertake no obligation to revise or update such statements to reflect current events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Who We Are… ✓ Family destination – Restaurant and Play Space ✓ Climbers Solution to family dining and ▪ Healthy, high-end organic food ✓ Dragons entertainment ▪ Unique in the marketplace ▪ Parents get to eat and ✓ Castles ▪ One of a kind family destination restaurant ✓ Pirate ships relax ▪ Play and daily entertainment for kids while ▪ Kids frolic in custom ✓ Swings ✓ And more the parents eat and relax supervised play area: ▪ Free wi-fi for all customers
Business Basics ▪ ▪ Two upscale locations in high-profile Mall owners and operators give Giggles N’ Hugs: • Los Angeles malls Average 75% rent discounts ▪ • 12 company-owned locations $500k-$700k up-front cash (covers 50%+ of projected by end of 2018 build-out) ▪ ▪ Shopping malls: Significant international franchisee interest & • Become Family Destinations opportunity • ▪ Increase Family foot traffic High profile Celebrity Clientele and national media • Create Vitality & Vibrancy coverage
Business Basics Strong financial performance ▪ Revenue: 18.2% CAGR (2012-2016) ▪ 4Q15 v 4Q16: Same Store Sales up 35% and 23% ▪ Multiple revenue drivers generate attractive store-level profitability opportunities ▪ Potential merchandising opportunities could accelerate growth
Stock Basics Recent Price $0.09 Market Cap $12.1M Shares Outstanding 134.3M Avg. Volume (3 month) 4.8M * Data as of 4/25/2017
Experienced Senior Leadership ✓ 20+ year career on Wall Street Joey Parsi ▪ Sutro & Co., Lehman Brothers, & TD Founder & Chief Executive Officer Waterhouse (managed $350M+ in assets) ✓ Founded Giggles N’ Hugs in 2007 ✓ Former COO of California Pizza Kitchen John Kaufman ▪ Grew from two locations to 70+ Interim-President ✓ Former President/COO of Koo Koo Roo ✓ 33 years of restaurant industry experience ✓ Former president & CEO – Grill Concepts, Inc. Philip Gay, CPA ✓ Former CFO – California Pizza Kitchen & Wolfgang Puck Chief Business Development Officer Food ✓ Former CEO & COO – Diversified Food Group ✓ Former CEO – Color Me Mine ✓ Managing Director of Triple Enterprises ✓ 25+ years of restaurant industry experience
Experienced Senior Leadership ✓ 20+ Years of operations management experience Sean Richards ▪ Regional Director at Hootwinc, LLC (operated 7 Chief Operating Officer Hooters restaurants, 1 casino & 2 bars) ▪ General Manager of The Viper Room & Pink Taco ▪ General Manager of the House of Blues, Planet Hollywood & Hard Rock Café ✓ Joined Giggles N’ Hugs in 2010 ✓ Co-founder and former CEO of Gymboree Joan Barnes ▪ Advisory Board Grew brand to 400 play centers ▪ Sold for $1.8 billion (~20x revenue) ✓ Founder of YOGA STUDIO, sold to Yoga Works in late 2008 ✓ Joined Giggles N’ Hugs in 2012
What Sets Us Apart? ✓ No other company does what we do MISSION: ✓ Giant Kid-friendly play area in a true restaurant environment ✓ Delicious, nutritious, organic menu catered to young children (1-10) Giggles ‘N’ Hugs - where and accommodative to parents ✓ New activities every half hour including arts and crafts, games, playtime, healthy food and karaoke, character appearances, dance parties and more. ✓ Entertainment, such as puppet shows & themed nights happy families converge. ✓ Trained “aides” assist with children’s enjoyment while parents relax ✓ Voted #1 Birthday Party Place by Nickelodeon ✓ Voted #1 family restaurant by Yelp! ✓ Child drop-off service (while parents shop) ▪ First and only restaurant to offer this service in LA
Celebrity Clientele Jessica Alba and Cash Warren take their Sarah Michelle Gellar and daughter Gwen Stefani and Gavin Rossdale take their daughter, Honor to birthday party at Giggles boys, Kingston and Zuma to Giggles N’ Hugs Charlotte love Giggles N' Hugs N' Hugs, November 10 in LA on Sunday, March 6. Ben Affleck taking Violet to Giggles N’ Hugs Jennifer Hudson and son David played at Giggles N’ Hugs in LA before going on to Victoria Beckham and Halle Berry and Nahla at Adam and Sadie Sandler at have an early dinner together. Harper at Giggles N’ Hugs Giggles N’ Hugs in LA Giggles N’ Hugs
National Media Coverage
Corporate Video Overview
Where We Are Today ✓ ✓ 10-year lease signed February 2012 10-year lease signed February 2013 ✓ ✓ Opened end of March 2013 Opened November 2013 ✓ ✓ Annual run rate of $1.1 million in Annual run rate of $1.4 million in sales (up 4.3% YTD) sales (up 16.9% YTD) ✓ ✓ 5,900 sq. ft. 6,000 sq. ft. ✓ ✓ 38% of households with children 47% of households with children ✓ ✓ 30% of household income >$100k 23% of household income >$100k Westfield Topanga Shopping Glendale Galleria (General Center – Canoga Park, CA Growth) – Glendale, CA In discussions with the largest mall owners throughout the country and the world for multiple locations. Westfield wants us in all major airports throughout the nation including LAX, Kennedy, LaGuardia, Newark, O'Hare, Boston Logan, and more.
Strategic Expansion Plans: Company-Owned Locations ✓ Targeted expansion to 12 company-owned locations by year-end 2018 ✓ Backfill Southern California market, longer- term target markets include: ▪ San Francisco, CA ▪ Seattle, WA ▪ Vancouver, BC ▪ East Coast
Global Franchise Opportunity ✓ Growing demand for Giggles N’ Hugs franchise opportunities has been received from large multi- unit franchising operators and small individual franchisees, both domestically and internationally. ▪ Upfront Multi-Unit Licensing fees ($100Ks to $millions) ▪ Ongoing Royalties (3%-8% of gross sales) ✓ In North America, the Company has received interest from franchise operators from Canada and from nearly every major city in almost every state in the U.S. ✓ International demand for Giggles N’ Hugs franchises has already been received from numerous operators in key International Markets ▪ Asia ▪ Australia ▪ Europe ▪ Latin America ▪ The Middle East
Relationships with Largest Mall Owners Rent Concessions & Up-Front Cash ✓ ✓ Strong interest from major mall GIGL drives family traffic to mall operators properties: ▪ ▪ Westfield Group (55 Turns malls into major family properties) destinations ▪ ▪ Macerich Group (62 Increased family foot traffic ▪ properties) Creates Vitality and Vibrancy ▪ General Growth Properties within the mall ✓ (135 properties) Mall owners/operators offer ▪ Simon Properties (300+ significant concessions & allowances: ▪ properties) Average 75% discount on rent ✓ ▪ Todd Star, former Westfield senior $500K-$700K up-front cash executive, spearheads negotiations (covers 50% of build-out) with mall operators ▪ Negotiates deals on per- location basis
Huge Licensing & Merchandising opportunity to Provide Additional Revenue Drivers ✓ Agreement with Domain Integrated to ✓ Plan to sell branded merchandise in-store extend the Giggles N’ Hugs experience as well as to top-tier retail outlets into “on - brand” products (Nordstrom, Bloomingdales, Whole Foods, ✓ Domain specializes in the strategic etc.) development of consumer products; ✓ Potential merchandising opportunities: expertise includes: ▪ Organic food products (i.e. Frozen ▪ Extending brands into licensed Pizzas with Mom’s Tricky Treat products Sauce, Mac N Cheese with Mom’s ▪ Bringing in celebrity endorsers Tricky Treat Sauce,etc ▪ Creating new revenue streams ▪ High- quality children’s apparel and ▪ PR and Reaching new customers accessories ▪ Kids furniture ▪ Drink ware/snack cups (BPA Free) ▪ Coloring books & stickers ▪ Children’s vitamin water
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