Investor Presentation July 2015 OTCQB: GIGL OTCQB: GIGL Important - - PowerPoint PPT Presentation

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Investor Presentation July 2015 OTCQB: GIGL OTCQB: GIGL Important - - PowerPoint PPT Presentation

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Investor Presentation July 2015 OTCQB: GIGL OTCQB: GIGL Important Cautions Regarding Forward-Looking Statements This presentation contains forward-looking statements. These statements relate to future events or expectations regarding our

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OTCQB: GIGL

Investor Presentation

July 2015

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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

  • ther 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

  • utcomes 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.

OTCQB: GIGL OTCQB: GIGL

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OTCQB: GIGL OTCQB: GIGL

Who We Are…

Family restaurant and play space

  • Healthier, high-end version of Chuck E Cheese
  • Unique in the market place / First-of-a-kind

family restaurant

  • Brings together organic gourmet food

with play elements for children

Solution to unmet need in family dining

  • Parents get to eat and relax
  • Kids get an incredible time playing

in custom 2500 sq. ft. play area:  Climbers  Dragons  Castles  Pirate ships  Swings  And more

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Business Basics

Three locations in high-profile malls in LA

  • Expanding to 12 company-owned locations by end of 2017
  • Support from large mall operators

 Average 75% rent discounts  $500K-$700K up-front cash (covers 50%+ of build-out)

  • Interest from franchisees globally
  • Celebrity clientele and national media coverage

Strong financial performance

  • Revenue up 48% in 2014
  • 1Q15 vs 1Q14: revenue up 12%; costs down 7%
  • Current assets up 41%; long-term liabilities down 14% at

year-end 2014

  • Multiple revenue drivers generate attractive store-level

profitability opportunities

OTCQB: GIGL OTCQB: GIGL

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Stock Basics

OTCQB: GIGL OTCQB: GIGL

Recent Price $0.14 Market Cap $5.2M Shares Outstanding 33.3M Float 15.2M

  • Ave. Volume (3 mth)

22,516

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Experienced Senior Leadership

OTCQB: GIGL OTCQB: GIGL

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Joey Parsi

Founder & Chief Executive Officer

John Kaufman

Interim-President

Philip Gay, CPA

Chief Business Development Officer

  • 20+ year career on Wall Street

Sutro & Co., Lehman Brothers, & TD Waterhouse (managed $350M+ in assets)

  • Founded Giggles N’ Hugs in 2007
  • Former COO of California Pizza Kitchen

Grew from two locations to 70+

  • Former President/COO of Koo Koo Roo
  • 33 years of restaurant industry experience
  • Former president & CEO – Grill Concepts, Inc.
  • Former CFO – California Pizza Kitchen &

Wolfgang Puck Food

  • Former CEO & COO – Diversified Food Group
  • Former CEO – Color Me Mine
  • Managing Director of Triple Enterprises
  • 25+ years of restaurant industry experience
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Experienced Senior Leadership

OTCQB: GIGL OTCQB: GIGL

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Sean Richards

Chief Operating Officer

Joan Barnes

Advisory Board

  • 20+ Years of operations management

experience Regional Director at Hootwinc, LLC (operated 7 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

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
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What Sets Us Apart?

Kid-friendly play area in a true restaurant environment Delicious, nutritious, organic menu catered to young children (1-10) and accommodative to parents Activities, every half hour which include, arts and crafts, games, karaoke, character appearances, dance parties and more. Entertainment, such as puppet shows & themed nights Trained “aides” assist with children’s enjoyment while parents relax Child drop-off service (while parents shop)

  • First and only restaurant to offer this service in LA

OTCQB: GIGL OTCQB: GIGL

MISSION:

To satisfy every parent’s need for a restaurant that serves healthy, delicious food and caters to their children's experience as much as their own.

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Celebrity Clientele

Jennifer Hudson and son David played at Giggles N’ Hugs in LA before going on to have an early dinner together. Adam and Sadie Sandler at Giggles N’ Hugs Ben Affleck taking Violet to Giggles N’ Hugs Halle Berry and Nahla at Giggles N’ Hugs in LA

OTCQB: GIGL OTCQB: GIGL

Gwen Stefani and Gavin Rossdale take their boys, Kingston and Zuma to Giggles N’ Hugs in LA on Sunday, March 6. Jessica Alba and Cash Warren take their daughter, Honor to birthday party at Giggles N' Hugs Century City, November 10 Sarah Michelle Gellar and daughter Charlotte love Giggles N' Hugs Victoria Beckham and Harper at Giggles N’ Hugs Jaime Pressly with son Dezi at Giggles N’ Hugs

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National Media Coverage

OTCQB: GIGL OTCQB: GIGL

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OTCQB: GIGL OTCQB: GIGL

Corporate Video Overview

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Where We Are Today

Opened Dec. 2010 – “Flagship location” Annual run rate of $1.4 million in sales and $285,000 in EBITDA (21% net operating margin) 6,100 sq. ft. 24% of households with children 21% of household income >$100k 10-year lease signed February 2012 Opened end of March 2013 Annual run rate of $1.1 million in sales (up 4.3% YTD) 5,900 sq. ft. 38% of households with children 30% of household income >$100k 10-year lease signed February 2013 Opened November 2013 Annual run rate of $1.4 million in sales (up 16.9% YTD) 6,000 sq. ft. 47% of households with children 23% of household income >$100k

Westfield Mall – Century City, CA Westfield Topanga Shopping Center – Canoga Park, CA Glendale Galleria (General Growth) – Glendale, CA

OTCQB: GIGL OTCQB: GIGL

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Strategic Expansion Plans: Company-Owned & Franchise Locations

OTCQB: GIGL OTCQB: GIGL Expanding to 12 company-owned locations by year-end 2017 Backfill Southern California market, with longer-term target markets including:

  • San Francisco, CA
  • Seattle, WA
  • Vancouver, BC
  • East Coast
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OTCQB: GIGL OTCQB: GIGL

Global Franchise Opportunity

Growing demand for Giggles N’ Hugs franchise opportunities has been received from large multi-unit franchising

  • perators 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
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Major Mall Operator Support: Rent Concessions & Up-Front Cash

Strong interest from major mall operators

  • Westfield Group (55 properties)
  • Macerich Group (62 properties)
  • General Growth Properties (135 properties)
  • Simon Properties (300+ properties)

GIGL drives traffic to mall properties; mall owners/operators

  • ffering significant concessions & allowances:
  • Average 75% discount on rent
  • $500K-$700K up-front cash (covers 50% of build-out)

Todd Star, former Westfield senior executive, spearheading negotiations with mall operators

  • Negotiating deals on per-location basis

OTCQB: GIGL OTCQB: GIGL

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Licensing & Merchandising Provide Additional Revenue Drivers

Agreement with The Licensing Shop (TLS) to extend the Giggles N’ Hugs experience into “on-brand” products TLS specializes in the strategic development of consumer products; expertise includes:

  • Extending brands into licensed products
  • Creating new revenue streams
  • Reaching new customers

TLC clients include: Plan to sell branded merchandise in-store as well as to top-tier retail outlets (Nordstrom, Bloomingdales, Whole Foods, etc.) Potential merchandising opportunities::

  • Organic food products (i.e. Frozen Pizzas with Mom’s Tricky Treat

Sauce, Mac N Cheese with Mom’s Tricky Treat Sauce, and Chicken Littles with Flax Seed)

  • High-quality children’s apparel and accessories
  • Drink ware/snack cups (BPA Free)
  • Coloring books & stickers
  • Children’s vitamin water

OTCQB: GIGL OTCQB: GIGL

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Attractive Single-Store Economics

OTCQB: GIGL OTCQB: GIGL

Site Selection Strategy Target:

  • High-traffic, upscale retail centers &

shopping malls

  • Lifestyle/entertainment centers
  • Areas with children under the age of 10

TLC clients include: Empirical site selection model Rigorous ROI review Prototype: 6,000 sq. ft. & 150 seats

Initial Investment:

Build-Out $960,000 Pre-Opening Expenses +$240,000 Total Initial Investment $1,200,000 Tenant Improvement Funds

  • $600,000

Total Company Cost $600,000

Achieve Payback in 2.5 Years

(in thousands) YEAR 1 YEAR 2 YEAR 3 YEAR 4

Revenue $1,743 $1,893 $1,983 $2,008 SSS Growth n/a 9% 5% 2% Costs ($1,415) ($1,519) ($1,576) ($1,571) Store Net Profit $328 $374 $407 $437 Corporate Op. Costs ($50) ($50) ($50) ($50) EBITDA $278 $324 $357 $387 EBITDA % 15.9% 17.1% 17.9% 19.3%

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Track Record of Revenue Growth (in millions) $1.1 $1.3 $2.3 $3.3

$0 $1 $2 $3 $4 2011 2012 2013 2014

OTCQB: GIGL OTCQB: GIGL

31.6% CAGR

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Same Store Sales Performance Driving Positive Operating Income

OTCQB: GIGL OTCQB: GIGL $636 $822 $825 $913 $781 $918

$0 $250 $500 $750 $1,000 Dec 31, 2013 Mar 30, 2014 June 30, 2014 Sept 30, 2014 Dec 31, 2014 Mar 30, 2015

  • $42
  • $30
  • $30

$41 $37 $62

($50) ($25) $0 $25 $50 $75

(in thousands)

Quarterly Revenue Quarterly Operating Income

(store-level)

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Key Take-Aways

First-of-its-kind family restaurant and play space

  • Addresses unmet consumer need
  • Expanding to 12 company-owned locations by year-end 2017
  • Strong interest from franchisees globally

Experienced management team

  • California Pizza Kitchen, Koo Koo Roo, Wolfgang Puck

Foods, Gymboree, Color Me Mine, etc. Significant interest/support from major mall operators

  • Rent concessions (75%) and tenant allowances ($500k-

$700K) offset 50% or more of per location start-up costs Proven ability to deliver financial performance

  • 2014 revenue up 48% YoY
  • 31.6% CAGR (2011-2014)

Multiple revenue drivers

  • Food, beverage, private parties, merchandise, etc.

Attractive store-level profitability opportunities OTCQB: GIGL OTCQB: GIGL

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Contact Us

Giggles N’ Hugs, Inc. 10250 Santa Monica Blvd. #155 Los Angeles, CA 90067 Tel: (310) 553-4847

OTCQB: GIGL OTCQB: GIGL

Investor Relations Contact Jon Cunningham, VP of IR RedChip Companies Tel (800) 733-2447 ext. 107 jon@redchip.com

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Appendix: Awards & Accolades

Rated among best family & kid- friendly restaurants by CitySearch and GoCityKids Voted the #1 birthday party place in Los Angeles by Nickelodeon Voted “Best Pizza in Los Angeles” by Nickelodeon

“Treat your children like the stars they are with red-carpet-worthy

  • fun. Giggles ‘N’ Hugs, Tinseltown’s

favorite tot hotspot, is where playtime, healthy food and happy families converge.” — L. Souris Hong-Porretta, Gilt City Editor

OTCQB: GIGL OTCQB: GIGL

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Appendix: What Our Customers Say

“There is so many activities for kids. There isn't a dull moment. Food is delicious and kid friendly as well. They even offer a variety of gourmet entrees for adults. This place deserves 10 stars. Thanks Giggles!! We will be back!!” – 7/9/15 “I've been to this place three times & consistently the service has been outstanding from the

  • wner to servers. Everyone is

professional, courteous, and

  • friendly. I also love their beverage

selection as well. ” – 5/15/15 “My kids love it here!!! I love the healthy & delicious salads, you actually get a good portion size for your money. The employees all have great positive attitudes. I got so lucky that the manager was very flexible and arranged for a last minute small party celebration for my son who turned three years old. – 2/5/15

OTCQB: GIGL OTCQB: GIGL

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Appendix: Organic & Nutritious Menus for Adults

OTCQB: GIGL OTCQB: GIGL

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Appendix: Organic & Nutritious Menus for Children

OTCQB: GIGL OTCQB: GIGL

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Appendix: Some of Our Popular Menu Items

OTCQB: GIGL OTCQB: GIGL