UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended April 1, 2018

 

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission files number 000-53948

 

GIGGLES N HUGS, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		20-1681362
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

3222 Galleria Way, Glendale, CA		91210
(Address of principal executive offices)		(Zip Code)

 

(818) 956-4847

(Registrant’s telephone number, including area code)

 

Copies of Communications to:

Libertas Law Group, Inc.

225 Santa Monica Blvd., 11th Floor

Santa Monica, CA 90401

 

Indicate by check mark whether the issuer (1) 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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [  ] (Do not check if a smaller reporting company)	Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]

 

The number of shares of Common Stock, $0.001 par value, outstanding on May 22, 2018 was 167,124,080 shares.

 

 

 

GIGGLES N’ HUGS, INC.

TWENTY-SIX WEEKS ENDED APRIL 1, 2018

 

Index to Report on Form 10-Q

 

		Page No.
	PART I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	10
Item 4.	Controls and Procedures	10
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	11
Item 1A.	Risk Factors	11
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	11
Item 3.	Defaults Upon Senior Securities	11
Item 4.	Mine Safety Disclosure	11
Item 5.	Other Information	11
Item 6.	Exhibits	12
	Signature	13

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

GIGGLES N’ HUGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

		April 1, 2018				December 31, 2017
		(Unaudited)
Assets
Current assets:
Cash and equivalents		$	134,609			$	131,336
Inventory			27,078				24,710
Prepaid expenses, other			12,774				21,196
Total current assets			174,461				177,242
Property and Equipment, net of accumulated depreciation and amortization of $1,538,155 and $1,476,520			678,554				740,189
Other assets			2,620				2,620
Total assets		$	855,635			$	920,051
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable		$	739,004			$	677,692
Incentive from lessor – current portion			105,954				102,168
Note Payable - lessor, in default			422,361				422,361
Accrued expenses			253,554				250,876
Accrued officers salary			470,900				375,900
Deferred revenue			14,719				6,530
Convertible note payable			50,000				50,000
Total current liabilities			2,056,492				1,885,527
Long-term liabilities:
Incentive from lessor – long-term			522,539				550,839
Deferred gain			384,066				401,262
Total long-term liabilities			906,605				952,101
Total liabilities			2,963,097				2,837,628
Commitments and contingencies
Stockholders’ deficit:
Common stock, $0.001 par value, 1,125,000,000 shares authorized, 147,332,251 and 145,602,251 shares issued and outstanding as of April 1, 2018 and December 31, 2017, respectively			147,332				145,602
Common stock issuable (1,397,619 shares as of April 1, 2018 and December 31, 2017, respectively)			293,535				293,535
Additional paid-in capital			9,924,886				9,874,936
Accumulated deficit			(12,473,215	)			(12,231,650	)
Total stockholders’ deficit			(2,107,462	)			(1,917,577	)
Total liabilities and stockholders’ deficit		$	855,635			$	920,051

 

See Accompanying Notes to Condensed Consolidated Financial Statements.

 

 

GIGGLES N’ HUGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

		Thirteen Weeks Ended				Thirteen Weeks Ended
		April 1, 2018				April 2, 2017
Revenue
Net sales		$	613,363			$	661,703
Costs and operating expenses
Cost of operations			499,677				503,791
General and administrative expenses			278,226				935,734
Depreciation and amortization			61,635				64,069
Total operating expenses			839,538				1,503,594
Loss from Operations			(226,175	)			(841,891	)
Other expenses:
Loss on settlement			(1,000	)			-
Finance and interest expense			(14,390	)			(49,270	)
Change in fair value of derivatives			-				(50,629	)
Gain on extinguishment of derivatives			-				185,604
Net loss		$	(241,565	)		$	(756,186	)
Net loss per share – basic and diluted		$	0.00			$	(0.01	)
Weighted average number of common shares outstanding – basic and diluted			146,988,918				96,515,942

 

See Accompanying Notes to Condensed Consolidated Financial Statements.

 

 

GIGGLES N’ HUGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

 

										Additional												Total
		Common Stock								Paid in				Stock				Accumulated				Stockholders’
		Shares				Amount				Capital				Issuable				Deficit				Deficit
Balance December 31, 2017			145,602,251			$	145,602			$	9,874,936			$	293,535			$	(12,231,650	)		$	(1,917,577	)
Shares issued for employees compensation			200,000				200				4,400												4,600
Shares issued to settle accounts payable			1,000,000				1,000				35,000												36,000
Shares issued for professional services			530,000				530				10,550												11,080
Net loss																			(241,565	)			(241,565	)
Balance April 1, 2018			147,332,251			$	147,332			$	9,924,886			$	293,535			$	(12,473,215	)		$	(2,107,462	)

 

See Accompanying Notes to Condensed Consolidated Financial Statements.

 

 

GIGGLES N’ HUGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

		Thirteen Weeks ended				Thirteen Weeks ended
		April 1, 2018				April 2, 2017
Cash flows from operating activities
Net loss		$	(241,565	)		$	(756,186	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			61,635				64,069
Amortization of debt discount			-				-
Stock-based compensation			4,600				28,470
Loss on stock issuance for payable settlement			1,000				108,000
Warrants granted for services			-				531,000
Shares issued for services			11,080				1,400
Interest and fees included in note payable			-				34,784
Amortization of deferred gain			(17,196	)			(15,699	)
Gain on extinguishment of derivative liability			-				(185,604	)
Change in fair value of derivative liability			-				50,629
Changes in operating assets and liabilities:
Decrease in prepaid expenses and deposits			8,422				6,003
(Increase) in inventory			(2,368	)			(4,994	)
Increase in accounts payable			96,312				57,362
Decrease in lease incentive liability			(24,514	)			(20,863	)
Increase (decrease) in accrued expenses			97,678				(69,610	)
Increase (decrease) Increase in deferred revenue			8,189				(2,941	)
Net cash provided by (used in) operating activities			3,273				(174,180	)
Cash flows from financing activities
Payments on promissory note payable			-				(11,497	)
Proceeds from related party			-				25,000
Proceeds from common stock issuable			-				25,000
Net cash provided by financing activities			-				38,503
NET DECREASE IN CASH			3,273				(135,677	)
CASH AT BEGINNING OF PERIOD			131,336				144,520
CASH AT END OF PERIOD		$	134,609			$	8,843
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid		$	-			$	4,359
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Shares issued to settle convertible notes payable		$	-			$	272,847
Reclass of notes payable to accrued interest		$	-			$	12,235
Shares issued to settle accounts payable		$	36,000			$	72,000

 

See Accompanying Notes to Condensed Consolidated Financial Statements.

 

 

 

GIGGLES N’ HUGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Weeks ended April 1, 2018 and April 2, 2017

(Unaudited)

 

NOTE 1 – HISTORY AND ORGANIZATION

 

Giggles N’ Hugs, Inc. (“GIGL Inc.” or the “Company”) was originally organized on September 17, 2004 under the laws of the State of Nevada, as Teacher’s Pet, Inc. GIGL Inc. was organized to sell teaching supplies and learning tools. On August 20, 2010, GIGL Inc. filed an amendment to its articles of incorporation to change its name to Giggles N’ Hugs, Inc.

 

On December 30, 2011, GIGL Inc. completed the acquisition of all the issued and outstanding shares of GNH, Inc. (“GNH”), a Nevada corporation, pursuant to a Stock Exchange Agreement. For accounting purposes, the acquisition of GNH by GIGL Inc. has been recorded as a reverse merger. Giggles N Hugs restaurant concept brings together high-end, organic food with the play elements and entertainment for children. Giggles N Hugs offers an upscale, family-friendly atmosphere with a play area dedicated to children ages 10 and younger with nightly entertainment, such as magic shows, concerts, puppet shows, as well as activities and games which include face painting, dance parties, karaoke, and arts and crafts,

 

The Company adopted a 52/53 week fiscal year ending on the Sunday closest to December 31^st for financial reporting purposes. Fiscal year 2018 and 2017 consists of a year ending December 30, 2018 and December 31, 2017.

 

NOTE 2 – BASIS OF PRESENTATION

 

The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US Dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with US generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

 

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2017 and notes thereto included in the Company’s annual report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports. The condensed consolidated balance sheet as of December 31, 2017 included herein was derived from the audited consolidated financial statements as of that date, but does not included all disclosures, including notes, required by GAAP.

 

Results of operations for the interim periods may not be indicative of annual results.

 

 

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Going concern

 

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements, during the thirteen weeks ended April 1, 2018, the Company incurred a net loss of $241,565and had a stockholders’ deficit of $2,107,462 as of that date. In addition, the note payable to the Company’s landlord was in default. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. In addition, the Company’s independent registered public accounting firm in its report on the December 31, 2017 financial statements has raised substantial doubt about the Company’s ability to continue as a going concern within one year from the date that the financial statements are issued. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

The Company had cash on hand in the amount of $134,609 as of April 1, 2018. Subsequent to April 1, 2018 the Company raised $593,754 through the sale of its equity securities. Management estimates that the current funds on hand will be sufficient to continue operations through December 2018. Management is currently seeking additional funds, primarily through the issuance of debt and equity securities for cash to operate our business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company can obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in case or equity financing.

 

Principles of consolidation

 

The condensed consolidated financial statements include the accounts of Giggles N Hugs, Inc., GNH, Inc., GNH CC, Inc. for restaurant operations in Westfield Mall in Century City, California (which was closed June 30, 2016 due to a complete remodel of the Mall), GNH Topanga, Inc. for restaurant operations in Westfield Topanga Shopping Center in Woodland Hills, California, and Glendale Giggles N Hugs, Inc. for restaurant operations in Glendale Galleria in Glendale, California. Intercompany balances and transactions have been eliminated. Giggles N Hugs, Inc., GNH, Inc., GNH CC, Inc., GNH Topanga, Inc., and Glendale Giggles N Hugs, Inc. will be collectively referred herein to as the “Company”.

 

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. Estimates and assumptions used by management including assumptions made in impairment analysis of fixed assets, accruals of potential liabilities, valuation of derivative liabilities and equity securities issued for services and realization of deferred tax assets. Actual results could differ from those estimates.

 

 

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Revenue

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (ASC 606). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied.

 

Under ASC 606, revenue is recognized when performance obligations under the terms of a contract are satisfied, which occurs for the Company upon shipment or delivery of products or services to our customers based on written sales terms, which is also when control is transferred. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the products or services to a customer.

 

The Company adopted the guidance of ASC 606 on January 1, 2018. The implementation of ASC 606 had no impact on the condensed consolidated financial statements and no cumulative effect adjustment was recognized.

 

Loss per common share

 

Net loss per share is provided in accordance with ASC Subtopic 260-10. We present basic loss per share (“EPS”) and diluted EPS on the face of statements of operations. Basic EPS is computed by dividing reported losses by the weighted average shares outstanding. Except where the result would be anti-dilutive to income from continuing operations, diluted earnings per share has been computed assuming the conversion of the convertible long-term debt and the elimination of the related interest expense, and the exercise of stock options and warrants. Loss per common share has been computed using the weighted average number of common shares outstanding during the year. For the period ended April 1, 2018 and April 2, 2017, the assumed conversion of convertible notes payable and the exercise of 6,113,643 stock warrants and 155,000 options to acquire shares of common stock are anti-dilutive due to the Company’s net losses and are excluded in determining diluted loss per share.

 

 

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Stock-based compensation

 

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board (FASB) whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

 

The fair value of the Company’s stock option and warrant grants is estimated using the Black-Scholes Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes Option Pricing model could materially affect compensation expense recorded in future periods.

 

The Company also issues restricted shares of its common stock for share-based compensation programs to employees and non-employees. The Company measures the compensation cost with respect to restricted shares to employees based upon the estimated fair value at the date of the grant, and is recognized as expense over the period, which an employee is required to provide services in exchange for the award. For non-employees, the Company measures the compensation cost with respect to restricted shares based upon the estimated fair value at the measurement date which is either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete.

 

Recent Accounting Standards

 

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

In June 2014, the FASB issued Accounting Standards Update No. 2014-12, Compensation – Stock Compensation (Topic 718). The pronouncement was issued to clarify the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The pronouncement is effective for reporting periods beginning after December 15, 2015. The adoption of ASU 2014-12 is not expected to have a significant impact on the Company’s consolidated financial position or results of operations.

 

In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of ASU 2016-02 on the Company’s financial statements and disclosures, and believes the adoption of the pronouncement will result in the recording of lease assets and lease liabilities of approximately $1,500,000 to our balance sheet upon adoption.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

 

 

NOTE 4 – PROPERTY AND EQUIPMENT

 

Property and equipment consisted of the following at:

 

		April 1, 2018				December 31, 2017
Leasehold improvements		$	1,889,027			$	1,889,027
Fixtures and equipment			60,310				60,310
Computer software and equipment			267,372				267,372
Property and equipment, total			2,216,709				2,216,709
Less: accumulated depreciation			(1,538,155	)			(1,476,520	)
Property and equipment, net		$	678,554			$	740,189

 

Depreciation and amortization expense for the thirteen weeks ended April 1, 2018 and April 2, 2017 were $61,635 and $64,067, respectively. Repair and maintenance expense for the thirteen weeks ended April 1, 2018 and April 2, 2017 were $15,560 and $15,542, respectively.

 

Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the periods ended April 1, 2018 and December 31, 2017, there were no indications of further impairment based on management’s assessment of these assets.

 

 

NOTE 5 – NOTE PAYABLE, LESSOR – In Default

 

On August 12, 2016 the Company entered into a third amendment on its lease at The Glendale Galleria. The amendment covered several areas, including adjustment to percentage rent payable, reduced the minimum rent payable, along with the payment and principal of Promissory Note. The Promissory Note was adjusted to a balance due of $763,261 from $683,316, with no interest, payable in equal monthly instalments of $5,300 through maturity of Note on May 31, 2028. The Company imputed interest using a discount rate of 10% to determine a fair value of the note of $443,521, resulting in a valuation discount of $319,740. As of April 1, 2018, the balance of note payable was $695,968 and unamortized note discount was $273,607, with a net balance due of $422,361 The exchange of the notes in fiscal 2016 was treated as a debt extinguishment as the change in terms constituted more than a 10% change in the fair value of the original note, and the difference between the fair value of the new note and the old note (including eliminating all remaining unamortized discount) of $220,668 was treated as a gain on debt extinguishment. The Company determined that since the GGP Promissory Note and the related revision of the lease were agreed to at the same time, that the change in the lease payment terms and the reduced rent, and the issuance of the new note are directly related. As such the gain on the termination of the note of $220,668 was deferred and is being amortized over the remaining life of the lease as an adjustment to rent expense (see Note 9).

 

The lender under the Note is GGP Limited Partnership (GGP). GGP is an affiliate of Glendale II Mall Associates, the lessor of the Company’s Glendale Mall restaurant location. In accordance with the note agreement, an event of default would occur if the Borrower defaults under the lease between the Company and Glendale II Mall Associates. Upon the occurrence of an event of default, the entire balance of the Note payable and accrued interest would become due and payable, and the balance due becomes subject to a default interest rate (which is 5% higher than the defined interest rate). As of April 1, 2018, the Company was delinquent in its payments to GGP under the note.

 

 

NOTE 6 – CONVERTIBLE NOTE PAYABLE

 

On August 24, 2015, the Company entered into an unsecured Note Payable Agreement with an investor for which the Company issued a $50,000 Convertible Note Payable, which accrues interest at a rate of 5% per annum and matured on August 31, 2016. The Lender may also convert all or a portion of the Note Payable at any time into shares of common stock at a price of $0.10 per share. The balance of the Note was $50,000 as of April 1, 2018 and December 31, 2017 and was past due.

 

NOTE 7 – BUSINESS LOAN AND SECURITY AGREEMENT

 

In August 2015, the Company entered into a Business Loan and Security Agreement with American Express Bank, which allows the Company to borrow up to $174,000. The loan originally matured in August 2016 but will remain in effect for successive one-year periods unless terminated by either party. The loan is secured by credit card collections from the Company’s store operations. The agreement provides that the Company will receive an advance of up to $180,000 at the beginning of each fiscal month and requires the Company to repay the loan from the credit card deposits it receives from its customers. Assuming the balance has been paid off by the end of the month, the Company will receive another advance up to the face amount of the note at the beginning of the next fiscal month.

 

The loan requires a loan fee of 0.5% of the outstanding balance as of each disbursement date. At April 1, 2018 and December 31, 2017, $141,435 and $131,266 were outstanding, respectively, and is included in accrued expenses in the accompanying balance sheets.

 

 

NOTE 8 – COMMON STOCK

 

Issuance of Common Stock

 

During the thirteen weeks ended April 1, 2018, the Company granted and issued 200,000 shares of restricted common stock with a fair value of $4,600 for services.

 

During the thirteen weeks ended April 1, 2018, the Company issued 1,000,000 shares of common stock in settlement of an accounts payable amounting to $35,000. The fair value of the shares issued was $36,000 based on the fair value of the shares on the date of settlement resulting in an additional cost to the Company of $1,000.

 

During the thirteen weeks ended April 1, 2018, the Company issued 530,000 shares of common stock at fair value of $11,080 for services.

 

Employee Stock Options

 

The following table summarizes the changes in the options outstanding at April 1, 2018, and the related prices for the shares of the Company’s common stock issued to employees of the Company under a non-qualified employee stock option plan.

 

		Options				Exercise Price
Outstanding, December 31, 2017			115,000			$	4.50
Granted			-				-
Exercised			-				-
Outstanding, April 1, 2018			115,000			$	4.50
Exercisable, April 1, 2018			115,000			$	4.50

 

As of April 1, 2018, the stock options had no intrinsic value.

 

There were no options granted during the fiscal quarter ended April 1, 2018, and there was no stock-based compensation expense in connection with options granted to employees recognized in the consolidated statement of operations for the thirteen weeks ended April 1, 2018.

 

 

NOTE 8 – COMMON STOCK (CONTINUED)

 

Warrants

 

The following table summarizes the changes in the warrants outstanding at April 1, 2018, and the related prices.

 

A summary of the Company’s warrants as of April 1, 2018 is presented below:

 

		Warrants				Weighted Average Exercise Price
Outstanding, December 31, 2017			6,113,643			$	0.11
Granted			-				-
Exercised			-				-
Outstanding, April 1, 2018			6,113,643			$	0.11
Exercisable, April 1, 2018			6,113,643			$	0.11

 

Range of Exercise Prices		Number Outstanding				Weighted Average Exercise Price				Weighted Average Remaining Contractual Life				Number Exercisable				Weighted Average Exercise Price
$0.01 ~ $0.15			6,113,643			$	0.11				3.81				6,113,643			$	0.11
			6,113,643								3.81				6,113,643

 

 

NOTE 9 – LEASES

 

The Company currently leases its restaurant locations. The Company evaluates teach lease to determine its appropriate classification as an operating or capital lease for financial reporting purposes.

 

Minimum base rent for the Company’s operating leases, which generally have escalating rentals over the term of the lease, is recorded on a straight-line basis over the lease term. The initial rent term includes the build-out, or rent holiday period, for the Company’s leases, where no rent payments are typically due under the terms of the lease. Deferred rent liabilities are recorded to the extent it exceeds minimum base rent per the lease agreement. Rent expense for the Company’s restaurant operating leases was $87,229 and $100,773 for the thirteen weeks ended April 1, 2018 and April 2, 2017, respectively.

 

The Company disburses cash for leasehold improvements and furniture, fixtures and equipment to build out and equip its leased premises. The Company also expends cash for structural additions that it makes to leased premises of which $506,271 and $475,000 were initially reimbursed Topanga and Glendale by its landlords, respectively, as construction contributions pursuant to agreed-upon terms in the lease agreements. Landlord construction contributions usually take the form of up-front cash. Depending on the specifics of the leased space and the lease agreement, amounts paid for structural components are recorded during the construction period as leasehold improvements or the landlord construction contributions are recorded as an incentive from lessor.

 

On August 12, 2016 the Company entered into a third amendment on its lease at The Glendale Galleria. The amendment covered several areas, including adjustment to percentage rent payable, reduced the minimum rent payable and payment and principal of the Promissory Note payable to GGP. The Promissory Note was adjusted to a balance due of $763,262 from $683,316, with zero percent interest, payable in equal monthly instalments of $5,300 through maturity of Note on May 31, 2028, creating a gain on extinguishment of the old note of $220,686. (see Note 4). The change in the payment terms of the lease caused a change in the previously calculated deferred rent of $69,614. For reporting purposes, the Company determined that since the GGP Promissory Note and the related revision of the lease were agreed to at the same time, that the change in the lease payment terms and the reduced rent, and the issuance of the new note are directly related. In addition, past due rent of $164,987 was forgiven. As such the gain on the termination of the note of $220,686, the adjustment to the deferred rent in the aggregate amount of $69,614, and the forgiveness of past due rent of $164,987, resulting in an aggregate gain of $455,287 had been deferred, and is being amortized on the straight-line basis over the remaining life of the lease as an adjustment to rent expense. The balance of the deferred gain was $401,260 as of December 31, 2017.

 

During the period ended April 1, 2018, $17,196 of deferred gain was amortized and offset to rent expense, resulting in a remaining deferred gain balance of $384,066 as of April 1, 2018 which will be amortized as an offset to rent expense over the remainder of the lease.

 

The balance of the incentive from lessor as of April 1, 2018 and December 31, 2017, were $628,493 and $653,007, and included deferred rent of $134,099 and $132,818, respectively. As of April 1, 2018, $105,954 of the incentive from lessor was current and $522,539 was long term. Amortization of the incentive from lessor was $24,513 and $20,863 for the thirteen weeks ended April 1, 2018 and April 2, 2017, respectively.

 

NOTE 10 – COMMITMENTS AND CONTINGENCIES

 

Litigation

 

As of April 1, 2018, there was no material outstanding litigation.

 

NOTE 11 – SUBSEQUENT EVENTS

 

On April 19, 2018, the Company closed its public offering. The Company sold 19,791,819 units, consisting of 19,791,829 shares of common stock and warrants to purchase 13,854,274 shares of common stock, for gross proceeds, before expense and dealer-manager fees, of $593,754.

 

 

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

This Report on Form 10-Q contains forward-looking statements and involves risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows, and business prospects. These statements include, among other things, statements regarding:

 

	●	our ability to diversify our operations;
	●	inability to raise additional financing for working capital;
	●	the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require our management to make estimates about matters that are inherently uncertain;
	●	our ability to attract key personnel;
	●	our ability to operate profitably;
	●	deterioration in general or regional economic conditions;
	●	adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;
	●	changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;
	●	the inability of management to effectively implement our strategies and business plan;
	●	inability to achieve future sales levels or other operating results;
	●	the unavailability of funds for capital expenditures;
	●	other risks and uncertainties detailed in this report;

 

As well as other statements regarding our future operations, financial condition and prospects, and business strategies. These forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, and in particular, the risks discussed under the heading “Risk Factors” in Part II, Item 1A and those discussed in other documents we file with the Securities and Exchange Commission. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 

References in the following discussion and throughout this quarterly report to “we”, “our”, “us”, “Giggles”, “the Company”, and similar terms refer to Giggles N’ Hugs, Inc. unless otherwise expressly stated or the context otherwise requires.

 

The Company adopted a 52/53 week fiscal year ending on the Sunday closest to December 31^st for financial reporting purposes. For the years 2017 and 2018 consists of a year ending December 31, 2017 and December 30, 2018.

 

 

Overview

 

Giggles N Hugs is a unique restaurant concept that brings together high-end, organic food with the play elements and entertainment for children. Giggles N Hugs offers an upscale, family-friendly atmosphere with a play area dedicated to children ages 10 and younger. The restaurant has a high-quality menu made from fresh, organic foods that are enjoyed by both children and adults. With nightly entertainment, such as magic shows, concerts, puppet shows, as well as activities and games which include face painting, dance parties, karaoke, and arts and crafts, Giggles N Hugs has become a premier destination for families seeking healthy food in a casual and fun atmosphere. Parents get to eat and relax while the kids play.

 

In addition to its family-friendly vibe, Giggles N Hugs is also known for its own creation called “Mom’s Tricky Treat Sauce,” which hides pureed vegetables in kids’ favorite meals such as pizza, pastas and macaroni and cheese.

 

Originally, Giggles N’ Hugs owned and operated one restaurant in the Westfield Mall in Century City, California; a second restaurant in the Westfield Mall in Topanga, California; and a third restaurant in the Glendale Galleria in Glendale, California through June 26, 2016.

 

On May 13, 2016, Giggles N’ Hugs, Inc. entered into a Termination of Lease Agreement with Century City Mall, LLC (“landlord”), accelerating the termination date of the Lease dated January 13, 2010 for its store located in Westfield Century City, Los Angeles, California. Pursuant to the agreement, the lease terminated June 30, 2016 and the landlord agreed to a monetary reimbursement of $350,000 which was received by June 26, 2016.

 

The Company continues to operate its restaurants in Topanga and in the Glendale Galleria Mall.

 

 

RESULTS OF OPERATIONS

 

Results of Operations for the Thirteen Weeks Ended April 1, 2018 and April 2, 2017:

 

COSTS AND OPERATING EXPENSES

 

		For Thirteen Weeks Ended				For Thirteen Weeks Ended				Increase (Decrease)
		April 1, 2018				April 2, 2017				$				%
Revenue:
Net sales		$	613,363			$	661,703			$	(48,340	)			-7.3	%
Costs and operating expenses:
Cost of operations			499,677				503,791				(4,114	)			-0.8	%
General and administrative expenses			278,227				935,734				(657,507	)			-70.3	%
Depreciation and amortization			61,634				64,069				(2,435	)			-3.8	%
Total operating expenses			839,538				1,503,594				(664,056	)			-44.2	%
Loss from Operations			(226,175	)			(841,891	)			615,716				-73.1	%
Other expenses:
Loss on settlement with stock			(1,000	)			-				(1,000	)			*
Finance and interest expenses			(14,390	)			(49,270	)			34,880				-70.8	%
Change in fair value of derivatives			-				(50,629	)			50,629				-100.0	%
Gain on extinguishment of derivatives			-				185,604				(185,604	)			-100.0	%
Net Loss		$	(241,565	)		$	(756,186	)		$	514,621				-68.1	%

 

Notes to Costs and Operating Expenses Table:

 

Net sales. Net sales for the thirteen weeks ended April 1, 2018 and April 2, 2017 were $613,363 and $661,703 respectively. The decrease of $48,340 (-7.3%) was mostly attributable to decline of party sales.

 

Cost of operations. Costs of operations of $499,677 and $503,791 for the thirteen weeks ended April 1, 2018 and April 2, 2017, respectively, reflecting a decline of $4,114 (-0.8%). This improvement was mostly due to decreased labor cost.

 

General and administrative expenses. General and administrative expenses for the thirteen weeks ended April 1, 2018 and April 2, 2017 were $278,227 and $935,734, respectively. This significant decrease of $657,507 (-70.3%) was mainly attributable to approximately $639,000 of non-employee stock-based compensation included in the 2017 period for which there was no comparable amount in the current period.

 

Depreciation and amortization. Depreciation and amortization were $61,634 and $64,069 for the thirteen weeks ended April 1, 2018 and April 2, 2017, respectively. The decrease was due to some assets have been completed depreciated.

 

Finance and interest expense. The total finance and interest expenses of $14,390 for the thirteen weeks ended April 1, 2018 decreased by $34,880, from the $49,270 for the thirteen weeks ended April 2, 2017, and was due to conversion of notes in 2017.

 

Cost of derivative instruments. In the period ended 2017, the Company realized a net gain of $134,975 from activity of its derivative liabilities. There were no such costs in the 2018 period

 

Net Loss. The overall net losses of $241,565 and $756,186 for the thirteen weeks ended April 1, 2018 and April 2, 2017, respectively, reflects a decrease of 514,621. This significant change was mostly attributable to the fair value of $531,000 for warrants granted for services in the same period last year.

 

 

LIQUIDITY AND CAPITAL RESOURCES

 

As of April 1, 2018, the Company has $134,609 in cash and cash equivalents, $27,078 in inventory, and $12,774 in prepaid expenses and other. The following table provides detailed information about our net cash flows for all financial statement periods presented in this report.

 

The following table sets forth a summary of our cash flows for the thirteen weeks ended April 1, 2018 and April 2, 2017:

 

		For Thirteen Weeks Ended				For Three Months Ended
		April 1, 2018				April 2, 2017
Net cash provided by (used in) operating activities		$	3,273			$	(174,180	)
Net cash provided by financing activities			-				38,503
Net increase (decrease) in Cash			3,273				(135,677	)
Cash, beginning of period			131,336				144,520
Cash, end of period		$	134,609			$	8,843

 

Operating activities

 

Net cash provided by operating activities was $3,273 for the thirteen weeks ended April 1, 2018 compared to $174,180 used in operating activities for the thirteen weeks ended April 2, 2017. This improvement was eliminated change in fair value of derivative liability.

 

Investing activities

 

There were no investing activities for both periods ended April 1, 2018 and April 2, 2017.

 

Financing activities

 

Net cash provided by financing activities for the thirteen weeks ended April 1, 2018 and April 2, 2017 was $0 and $38,503, respectively. For the same quarter previous year, the financing activities was cash receipts from related party and future common stock issuable.

 

The Company is not required to provide a tabular disclosure of contractual obligations, as it is a smaller reporting company as defined under Rule 12b-2 of the Exchange Act.

 

 

Going Concern and Liquidity

 

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements, during the thirteen weeks ended April 1, 2018, the Company incurred a net loss of $241,565 and had a stockholders’ deficit of $2,107,462 as of that date. In addition, the note payable to the Company’s landlord was in default. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date that the financial statements are issued. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. The Company’s independent registered public accounting firm in its report on the December 31, 2017 financial statements has raised substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

At April 1, 2018, the Company had cash on hand in the amount of $134,609. Subsequent to April 1, 2018 the Company raised $593,754 through the sale of its equity securities. Management estimates that the current funds on hand would be sufficient to continue operations through December 2018. Management is currently seeking additional funds through sponsorships and promotions to operate our business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in case or equity financing.

 

Notes Payable

 

On February 12, 2013, the Company entered into a $700,000 Promissory Note Payable Agreement with GGP Limited Partnership (“Lender”) to be used by the Company for a portion of the construction work to be performed by the Company under the lease by and between the Company and Glendale II Mall Associates, LLC. The Note Payable accrued interest at a rate of 10% through October 15, 2015, 12% through October 31, 2017, and 15% through October 31, 2023 and matures on October 31, 2023.

 

On March 1, 2015, the Company and the lender renegotiated the terms of the Promissory Note and agreed to a new note with a principal balance due of $683,316. As part of the new agreement, the Lender waived principal and interest payments for two years beginning March 1, 2015.

 

On August 12, 2016, the Company entered into a third amendment on its lease at The Glendale Galleria. The amendment covered several areas, including adjustment to percentage rent payable, reduced the minimum rent payable, along with the payment and principal of Promissory Note. The Promissory Note was adjusted to a balance due of $763,261.57 from $683,316, with zero percent interest, payable in equal monthly instalments of $5,300 through maturity of Note on May 31, 2028. The Company imputed interest using a discount rate of 10% to determine a fair value of the note of $443,521, resulting in a valuation discount of $319,740. As of April 1, 2018, the balance of note payable was $695,968, and unamortized note discount was $273,607, with a net balance due of $422,361.

 

The lender under the Note is GGP Limited Partnership (GGP). GGP is an affiliate of Glendale II Mall Associates, the lessor of the Company’s Glendale Mall restaurant location. In accordance with the note agreement, an event of default would occur if the Borrower defaults under the lease between the Company and Glendale II Mall Associates. Upon the occurrence of an event of default, the entire balance of the Note payable and accrued interest would become due and payable, and the balance due becomes subject to a default interest rate (which is 5% higher than the defined interest rate).

 

Convertible Notes Payable

 

On August 24, 2015, the Company entered into an unsecured Note Payable Agreement with an investor for which the Company issued a $50,000 Convertible Note Payable, which accrues interest at a rate of 5% per annum and matures on August 31, 2016. The Lender may also convert all or a portion of the Note Payable at any time into shares of common stock at a price of $0.10 per share.

 

 

Recent Accounting Pronouncements

 

See Note 3 of the consolidated financial statements for discussion of recent accounting pronouncements.

 

Critical Accounting Policies

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 1 to the Consolidated Financial Statements describes the significant accounting policies and methods used in the preparation of the Consolidated Financial Statements. Estimates are used for, but not limited to, impairment analyses, accounting for contingencies and equity instruments issued for services. Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Consolidated Financial Statements.

 

Long-Lived Assets

 

Our management regularly reviews property, equipment and other long-lived assets, including identifiable amortizing intangibles, for possible impairment. This review occurs quarterly or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment of property and equipment or amortizable intangible assets, then management prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair value is estimated at the present value of the future cash flows discounted at a rate commensurate with management’s estimates of the business risks. Quarterly, or earlier, if there is indication of impairment of identified intangible assets not subject to amortization, management compares the estimated fair value with the carrying amount of the asset. An impairment loss is recognized to write down the intangible asset to its fair value if it is less than the carrying amount. Preparation of estimated expected future cash flows is inherently subjective and is based on management’s best estimate of assumptions concerning expected future conditions.

 

Management believes that the accounting estimate related to impairment of our long lived assets, including our trademark license and trademarks, is a “critical accounting estimate” because: (1) it is highly susceptible to change from period to period because it requires management to estimate fair value, which is based on assumptions about cash flows and discount rates; and (2) the impact that recognizing an impairment would have on the assets reported on our balance sheet, as well as net income, could be material. Management’s assumptions about cash flows and discount rates require significant judgment because actual revenues and expenses have fluctuated in the past and we expect they will continue to do so.

 

 

Stock-Based Compensation

 

The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

 

The fair value of the Company’s common stock option grants is estimated using the Black-Scholes Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes Option Pricing model could materially affect compensation expense recorded in future periods.

 

The Company also issues restricted shares of its common stock for share-based compensation programs to employees and non-employees. The Company measures the compensation cost with respect to restricted shares to employees based upon the estimated fair value at the date of the grant, and is recognized as expense over the period, which an employee is required to provide services in exchange for the award. For non-employees, the Company measures the compensation cost with respect to restricted shares based upon the estimated fair value at the measurement date which is either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete.

 

Off-Balance Sheet Arrangements

 

We did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Without sufficient cash flow from operations we will require additional cash resources, including the sale of equity or debt securities, to meet our planned capital expenditures and working capital requirements for the next 12 months. We will require additional cash resources due to changed business conditions to implement of our strategy to successfully expand our operations. If our own financial resources and then-current cash-flows from operations are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities will result in dilution to our existing stockholders. The incurrence of indebtedness will result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict our operations or modify our plans to grow the business. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, will limit our ability to expand our business operations and could harm our overall business prospects.

 

 

Item 3. Quantitative and Qualitative Disclosure about Market Risk

 

Smaller reporting companies are not required to provide the information under this item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our Principal Executive Officer and Principal Financial Officer, Joey Parsi, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on his evaluation, he concluded that our disclosure controls and procedures are not designed at a reasonable assurance level and are not effective to provide reasonable assurance that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control Over Financial Reporting

 

There have been no changes in the Company’s internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affected, the Company’s internal control over the financial reporting.

 

Limitations on Effectiveness of Controls and Procedures

 

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

 

 

PART II—OTHER INFORMATION

 

ITEM 1. Legal Proceedings.

 

As of April 1, 2018, there was no material outstanding litigation.

 

ITEM 1A. Risk Factors

 

Smaller reporting companies are not required to provide the information under this item.

 

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

None.

 

Issuer Purchases of Equity Securities

 

None.

 

ITEM 3. Defaults Upon Senior Securities.

 

None.

 

ITEM 4. Mine Safety Disclosures.

 

Not applicable.

 

ITEM 5. Other Information.

 

Effective April 17, 2018, Joey Parsi and Philip Gay were appointed to serve as Co- CEOs.

 

 

ITEM 6. Exhibits.

 

Exhibit No.		Description
31.1 and 31.2*		Certification of Principal Executive Officer & Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 and 32.2*		Certifications of Principal Executive Officer & Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS**		XBRL Instance Document
101.SCH**		XBRL Taxonomy Extension Schema
101.CAL**		XBRL Taxonomy Extension Calculation Linkbase
101.DEF**		XBRL Taxonomy Extension Definition Linkbase
101.LAB**		XBRL Taxonomy Extension Label Linkbase
101.PRE**		XBRL Taxonomy Extension Presentation Linkbase

 

*	Filed herewith.
**	XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 

SIGNATURE

 

Pursuant to the requirements 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.

 

	GIGGLES N’ HUGS, INC.
Date May 22, 2018	By:	/s/ Joey Parsi
		Joey Parsi
		Co- Chief Executive Officer
		(Co- Principal Executive Officer; Co-Principal Financial Officer)
	By:	/s/ Philip Gay
		Philip Gay
		Co- Chief Executive Officer
		(Co-Principal Executive Officer; Co-Principal Financial Officer )