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

[ThreeOneTwo]

The drop in share price is hard to stomach, but in my eyes, all this bad debt is coming off the books before things really ramp up. We'll find out soon exactly what's happening (Q1 not far off). Iconic was taken care of, yes at the shareholders expense, but it was taken care of. It appears this debt, one way or another, will be off the books soon as well. 18M shares may be possible, but it seems unlikely given the fact St. George already got over 9M shares last year and the share price has increased dramatically since then.

By the way, all of these agreements were on last year's 10-k (besides the updated terms of St. George, but the original agreement is on there): http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=11314331

The only debts reported (for both years) are through GPP, Iconic, J&N, and St. George. GPP is a Glendale mall affiliate that receives a monthly payment, and there's nothing mentioned about stock conversion. Iconic is off the books now per the recent PR. J&N was only $50k with a conversion price of .10 per share (so max 500k shares). St. George is what appears to be getting worked through now. Worst case is that it is 18M shares that come to market at the shareholders expense, but given the timing of the lawsuit, it seems the company is trying to protect the shareholder. The section with all this was followed by:

Off-Balance Sheet Arrangements

We do 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.

***

Reading the previous year's 10-k after observing what happened with Iconic would have been a red flag that something like this could happen, but it doesn't change the value or positive outlook on the company moving forward. This is the toxic debt management has been referring to that they do not want to use again in the future. Bringing Jillian onboard as a part owner (for which her restricted shares seem to have already been accounted as ~10M was added right around the time of her signing) is just one piece of hard evidence that better sources of funding are being sought after. That's where Michelle and Chardan come in. This drop in share price sucks, but this doomsday crap is unbelievable if you read between the lines of every PR and interview that has come out this year.

Below is what stood out to me in the St. George section:

St. George Investments, LLC - The Company executed into a Promissory Note Agreement with St. George Investments, LLC, (“Holder”) dated December 18, 2015, with a principal amount of $265,000 due in full on June 18, 2016. The Note went into default when the Company failed to make payment on the due date. Consequently, on July 8, 2016, the Company entered into an Exchange Agreement with St. George Investments, LLC, to replace the original Promissory Note with a new Convertible Promissory Note (“Note”) carrying the following terms and conditions.

1. The new Note will add 10% ($26,500) to the original principal as an Exchange Fee, making the new principal amount $291,500.

2. The Note shall carry an interest rate of 8% per annum

3. The Note carries a Conversion clause that allows the Holder to have a cashless conversion into shares of Common Stock for all or part of the principal, at a price equal to the average market price for 20 days prior to the conversion,

4. In conjunction with the conversion provision, the Company agreed to an Irrevocable Letter of Instructions to Transfer Agent, along with a Secretary’s Certificate and Board Resolution, which allows a Share Reserve equal to three times the number of shares of Common Stock divided by outstanding debt by the defined conversion price, but not less than 18,000,000 shares.

5. In addition, the Company executed a Share Issuance Resolution Authorizing the Issuance of New Shares of Common Stock. This document, in effect, allows the Holder to provide, at their discretion, a Conversion Notice directly to the Transfer Agent to receive unrestricted shares under the terms of this Exchange Agreement.

6. Further to this Exchange Agreement, the Company executed an Authorization to Initiate ACH Debit Entries that allowed the Holder to receive a daily payment of $312.50 ($7,500 per month). The Company can cancel such authorization with five days’ written notice.

During the fiscal year ended January 1, 2017, the Holder converted $81,300 of debt into 9,261,973 shares of Common Stock. In addition, the Company paid $20,841 of the principal balance. The balance outstanding as of January 1, 2017 was $183,359 plus $3,981 of accrued interest, and is past its maturity date of September 15, 2016.