Giggles N'''''''' Hugs Inc. (fka GIGL)

[QualityStocks]

It may be Time to go Long on GIGL

A look at the short sales (http://dtn.fm/Fk5lI) for Giggles N’ Hugs (OTCQB: GIGL) is showing why it may be time to go long. At the end of last year, short interest in the stock was 3,671. By April 29, 2016, that had declined to 490. Changes in short interest may reflect market sentiment. When short interest climbs, it’s because there’s an expectation that the stock will fall. When short interest declines, it could be the opposite. So why are the shorts getting nervous? The company’s latest 10-Q may have an answer. It shows that revenues were $878,932 for the quarter ended March 27, 2016, which was an increase of almost 10 percent over the fourth quarter of 2015. That’s quite an achievement.

Cost of revenue, which includes operational expenses, depreciation and amortization, was $859,659, resulting in a gross profit of $19,273. This was an improvement from the fourth quarter of 2015, when the company experienced a negative gross profit of $17,986 due to increases in labor and occupancy costs. That first quarter performance is an indication that the company can weather a storm.

In December 2015, Giggles N’ Hugs engaged Chardan Capital Markets, LLC, a boutique investment bank headquartered in New York. Under that agreement, Chardan is introducing Giggles N’ Hugs to potential investors and business partners, advising management as they prepare for road shows and performing a wide variety of other financial services. A very likely part of Chardan Capital’s ambit may be a securities offering under Regulation D. Giggles N’ Hugs plans to raise $5 million through a 506(c) offering. The 506(c) provision is new and was introduced to implement Section 201(a) of the JOBS Act with the object of eliminating the prohibition on using general solicitation under, what is now, Rule 506(b). Under Rule 506(c), companies will be allowed to employ general solicitation and advertising to accredited investors.

In its last Annual Report, Giggles N’ Hugs hinted that some of those funds will be used for promotional purposes. So far, the company’s marketing and advertising initiatives have been limited as it has sought to conserve working capital for operations. However, with additional funds, the company plans to market its products and services through a multi-pronged campaign. It will directly engage local preschools, kindergartens, and elementary schools in a variety of promotional programs. The company also plans to advertise on television channels such as Disney and Nickelodeon, as well as in additional print publications, radio, and satellite radio. The company’s first store has been frequented by numerous celebrities, which provides free and invaluable publicity, and management’s belief is that a large scale marketing campaign that increases the exposure of Giggles N’ Hugs would result in a significant increase in traffic and revenue.

Giggles N’ Hugs operates kid-friendly restaurants. Currently, there are three Giggles N’ Hugs locations in upscale Los Angeles malls. There’s one at Westfield Mall in Century City on Santa Monica Boulevard; a second at Westfield Topanga Shopping Center in Woodland Hills, Canoga Park; and a third at the Glendale Galleria. Those three fine dining establishments have average revenue of close to $1.2 million.

Learn more by visiting www.gigglesnhugs.com