Giggles N’ Hugs, Inc. (OTCQB: GIGL) is engaged as a high-end, family-friendly restaurant and entertainment company. Shares of the restaurant company are down 12%, through afternoon trading on Monday, April 17, 2017. Over the past month, Giggles N’ Hugs, Inc. has seen average daily volume of 3.05 million shares. However, volume of 3.14 million shares or dollar volume of $438,972, has already exchanged hands on Monday.

Shares of Giggles N’ Hugs, Inc. are declining Monday, after the company reported fiscal 2016 earnings. During the fiscal year ending on January 1, 2017, the company saw sales dip 12.4% to $428,278, thanks to major remodeling at the Century City Westfield Mall. The remodeling forced the company to close its Century City restaurant back in June 2016. However, the company’s Glendale and Topanga locations helped offset some of the losses with decent growth. Here is the full press release detailing of the fiscal 2016 earnings results:

Giggles N’ Hugs, Inc. Press Release:

Los Angeles, April 17, 2017 (GLOBE NEWSWIRE) —Giggles N’ Hugs, Inc. (GIGL), owner and operator of family-friendly restaurants that bring together high-end, organic food with active, cutting-edge play and entertainment for children, announces its financial results for the fiscal-year ended January 1, 2017.

“We are excited of our operational successes for 2016 and there is a lot to be proud of.  As we work hard to get the company ready for additional future growth, we understand that this is just the beginning and that there is much more work for us to do,” commented Joey Parsi, founder and CEO of Giggles N’ Hugs. “Our year-over-year results reflect the selling of our lease  of our Century City location back to Westfield at the end of June of 2016. Given that Westfield had embarked on a multi-year, $1 billion renovation and redevelopment of the mall, they offered to buy back our lease, an offer we accepted since we only had a limited time remaining on our lease. This sale muted the overall impact of our other stores in Topanga and Glendale, which generated annual sales increases of 5.3% and 5.7%, while quarterly revenue was up an astounding 35% and 23%, respectively.”

Parsi continued, “the impressive same-store sales growth we saw in Topanga and Glendale, further validates our award-winning concept. And with our loss from operations declining 54% year-over-year, we believe we’ve further proven our ability to execute. We are working hard to continue this momentum”, Parsi continued.

“Since the fiscal-year end, we’ve seen quite a few successes. Through our work with DomainLA and Michelle Steinberg, who joined our team in 2016, we’ve brought on two very high-profile brand ambassadors, Jillian Michaels and Tia Mowry-Hardict. These are amazing business women, entertainers, and most importantly, incredible mothers who happen to be among our best and most loyal customers. With their huge fan base, which combined, totals tens of millions of followers, we know that our vision, who we are and what we do will be effectively communicated to families throughout the country. We believe other celebrities will join their ranks moving forward, helping us spread the Giggles N’ Hugs story further, extending our reach, and ultimately increasing our customer base and revenue,” continued Parsi.

With DomainLA’s help, we plan on having our brand ambassadors and CEO appear on national talk shows which could include, Ellen, Dr. OZ and others, as well as on TV entertainment and news programs, such as, Good Morning America, The Today Show, Access Hollywood, and Extra, among the many others on major networks and  cable TV outlets. In addition to TV, we expect to have our ambassadors, as well as our CEO, be interviewed on national and local news, business and entertainment magazines. We anticipate publications like Forbes, Bloomberg Businessweek and the Wallstreet Journal, who have already featured us, to be just a few examples, as well as People, Us and OK magazines on the entertainment side.

“From the founding of the company over 9 years ago and with significant personal resources invested to date, our mission has been to go slowly but surely”, commented Parsi. “However, now that the foundation of the company has been put in place, our primary goal will be to go full throttle and expand our footprint through company and franchised locations, as well as the launching of our licensing and merchandising products throughout the country and the world”.  Parsi continued, “For this to happen, we are going to need funding which is the case for any company at our stage”. “This is also the case for much larger companies like Tesla or any others at the same stage as we are. “The key for us however, will be to get funding that is minimally dilutive, as we have learned our lessons and understand the effects of what bad financing can cause. We will do whatever we have to do to get it done right”, Parsi stated.

“One way we can do this, is to leverage our relationships with the 4 largest mall owners in America by getting them to pay for most, if not, all the costs of each of our new locations. The mall owners need what we deliver to them. It’s what they seek most; Foot traffic!!! With more and more people shopping online at places like Amazon, there are less and less consumers visiting the malls, and since we bring in thousands of people per month in each of our locations, the malls look to us as a partner. This is one of the reasons the landlords have paid for a significant portion of our existing locations’ build out costs and why they are willing to pay even more, if not, all the costs going forward.

Even with this, we’re still going to need capital to do some of the other initiatives we have decided to pursue. This would include our kids’ clothing line, frozen food line, baby furniture, toys and or any other licensing and merchandising initiatives. We want Giggles N Hugs to be a brand no different than, Disney, synonymous with children’s products and services and not just a family restaurant and play space. To this end, we are working with a few investment banks to secure the right funding for all of our growth objectives.  We expect news in this regard soon. “Overall, I believe we are finally in a great position to execute on our strategic plans and believe our accomplishments are just getting started for 2017 and beyond,” concluded Parsi.

Financial Results

During the fiscal year ended January 1, 2017, net sales reflected a drop of $428,278, a decline of 12.4%, from the year ended December 27, 2015. Due to the major remodeling of the Century City Westfield Mall, our Century City store closed on June 30, 2016. Of the decrease in sales of $428,278, $555,287 relates to the closure of the Century City location. The increase of $127,009 is due to the same store sales growth at the two current locations. The Topanga and Glendale stores had increased sales of 5.3% and 5.7%, respectively.

For the quarter, Glendale generated a 35% increase in same store sales versus last year to $375k, with 23% cash flow at the unit level. For the year, sales at Glendale were up 5.7% to $1.3 million, with 10% unit-level cash flow.

For the quarter, Topanga generated a 23% increase in same store sales versus last year to $310k, with 2.9% cash flow at the unit level. For the year, sales at Topanga were up 5.3% to $1.1 million, with 0.2% unit-level cash flow.

Total costs and operating expenses of $3,953,942 for the year ended January 1, 2017, reflected a substantial drop from $5,480,307 for the year ended December 27, 2015. The decline of $1,526,365 (28%) was due to multiple factors such as the closing of the Century City store; lower general and administrative costs; lower other operating expenses; and lower depreciation.

Cost of operations decreased by $543,460 (18%), of which $356,772 was attributable to the closing of the Century City store on June 30, 2016. Costs of food and other operating expenses decreased, which was offset slightly by higher labor costs.

Total general and administrative costs decreased by $501,543 (36%). Again, the closing of the Century City store, contributed proportionately ($163,250), to this decline. Additionally, non-employee stock compensation was accountable of much of the remaining difference.

Depreciation and other operating expenses declined by $127,948 (38%), which was mostly
reflected by the closing of the Century City store.

Loss from operation dropped $1,098,087 (54%) for the year ended January 1, 2017 compared to December 27, 2015, due to the various factors previously noted, while net loss declined from $2,068,687 in the year ended December 27, 2015, to $1,386,953, an improvement of $681,732 (33%) due to the factors noted above.

“Giggles N Hugs has established itself as one of the most unique concepts in the industry. With the strength of our talented and experienced management team, our relationships and growth plans with the top four mall owners in the country, active franchising opportunities, engagement with top notch PR firm DomainLA & recent additions of celebrity ambassadors all driven with the passion to share Giggles N Hugs with the world, we are optimistic that 2017 will be a very exciting year.”

About Giggles N’ Hugs, Inc.

Giggles N’ Hugs, Inc. is the first and only restaurant that brings together high-end, organic food with active, cutting-edge play and entertainment for children. Every Giggles N’ Hugs location offers an upscale, family-friendly atmosphere with a dedicated play area that children 10 and younger absolutely love. We feature high-quality menus made from fresh and local foods, nightly entertainment such as magic shows, concerts, puppet shows and face painting, and hugely popular party packages for families that want to do something special.

Forward Looking Statements:
Certain statements in this press release constitute “forward-looking statements” within the meaning of the federal securities laws. Words such as “may,” “might,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “predict,” “forecast,” “project,” “plan,” “intend” or similar expressions, or statements regarding intent, belief, or current expectations, are forward-looking statements. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to us on the date of this release. These forward looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including without limitation those set forth in the Company’s filings with the Securities and Exchange Commission (the “SEC”). Thus, actual results could be materially different. The Company expressly disclaims any obligation to update or alter statements whether as a result of new information, future events or otherwise, except as required by law.

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