about Hot Topic?

1. HOT What’s so about Hot Topic?

2. The Birth of the Loudest Store in the Mall It all started in 1988. A ton of teen retail accessory stores littered the malls, but there weren't any cool, music-inspired accessory destinations for both guys and girls. Enter Hot Topic. As 1990 rolled around, adding apparel seemed like a no-brainer, so we brought in the ultimate music fan essential: band T-shirts. Customers flipped when they walked into Hot Topic stores and saw Bauhaus, The Cure, TSOL, and Depeche Mode rock tees. Within a year, we offered about 50 different band titles, along with rock-inspired clothing lines like Lip Service and Serious. As we continued to expand, we discovered that our customers were also drawn to the underground cartoon, cult movie, and comic book scenes, so we brought the world of South Park, Care Bears, Superman, SpongeBob and tons of other pop icons right to them!   In 1996, with about 60 teen retail stores, Hot Topic became a publicly traded company on the NASDAQ stock exchange, under the symbol HOTT.  Today, Hot Topic offers band-related apparel and accessories, licensed merchandise, and fashion apparel and accessories, which you can find at more than 600 stores.

3. Objective: Investment In Hot Topic Stock Financial Facts • Is investing in NASDAQ: HOTT lucrative based on Financial Analysis • Financial Data Analysis and Comparison • Company Acquisition - 2013 • Additional non-financial company information • Hot Topic Community • Charities • **Notable business practices

4. Why invest in Hot Topic? If you have not reviewed “The Birth of the Loudest Store In The Mall” section, I recommend starting there. People express themselves through various outlets such as fashion, music, tattooing, piercings, clothing, etc. Music tends to be a driving force for the masses. It can inspire, motivate, and speak for a person. The music world changed in the 70’s and 80’s with the emergence of genre’s like gothic, alternative rock, punk rock, heavy metal, etc. Hot Topic realized the potential to create a unique business in a market that would thrive in the coming years. Today if you go to a Hot Topic store you will find a multitude of band merchandise ranging from pop music to technical death metal. It’s a store where the modern day “freak” can get their treasured possessions. On a personal note, as a teenager I was drawn to things that weren’t the “norm”. Music became the only thing I relied on in life. When I first saw Hot Topic at the age of 15 I was ecstatic. This store had all my favorite band’s shirts available, edgy jewelry, books & magazines you would never find anywhere else, and nearly everything was black! I was in heaven. As the years have passed I have watched mainstream music and fashion change several times. At 32 years of age, I’ve seen Hot Topic keep up with all of it. As a former employee of the company, I have some additional insights to share that will show you why Hot Topic is a good company to invest in. Let’s look at the numbers first!

5. When investing in any business it is extremely important to know the following: • Liquidity/Efficiency • Solvency • Profitability • Market Prospects **Detailed Financial Analysis is attached if further explanation is needed for any financial terms shown in presentation on page 10

6. Hot Topic: Liquidity and Efficiency • Are resources available to meet short-term cash requirements? • Are assets being used in an efficient and profitable manner? • Current Ratio: 2.7 • Acid-Test Ratio 0.65 • Accounts Receivable Turnover: N/A • Inventory Turnover Ratio: 6.2 • Days’ Sales Uncollected: N/A • Days’ Sales In Inventory: 62 Days • Total Asset Turnover: 2.68

7. Hot Topic: Solvency • Debt Ratio: 0.37 = 37% • Equity Ratio: 0.63 = 63% • Debt-To-Equity: 0.60 = 60% • Times Interest Earned: 2.69

8. Hot Topic: Profitability • Profit Margin: 0.03% • Return on Total Assets: 70% • Return on Common Stockholders’ Equity: 11% • Book Value Per Common Share: $3.23 • Basic Earnings Per Share: 0.46

9. Hot Topic: Market Prospects • Price-Earnings Ratio: $30.22 • Dividend Yield: 2.3%

10. After reviewing the slides above and the financial assessment, it is clear that investing in Hot Topic is low risk. That may not be enough for everyone. So let’s take a moment and review what makes Hot Topic appealing to investors other than their financial standpoint.

11. Employees Hot Topic offers great benefits, stock options, while providing an excellent and exciting work environment.

12. Hot Topic Foundation Hot Topic doesn’t just care about their employees, but feels that giving back is a core component to what it is they do. The foundation allows anyone to donate or apply for grants (currently they are not accepting grants are they are revamping the application). There are also several charities Hot Topic Foundation is involved in. Below are just a few.

13. Local Music Promotions You can go into any Hot Topic nation wide and find a variety of fliers for local shows in your area. The music most of Hot Topic’s buyers listen to is not what one would call “mainstream” and Hot Topic allows bands and local venues to promote the music scene. At times the company will host events in the store, as seen below.

14. Conclusion This presentation is just a glimpse of what Hot Topic has to offer to the world of retail. Constantly expanding and innovating their products and stores, Hot Topic is sure to grow more than ever in the future. The financial analysis that was attached can give you some more detail into why the company truly is a good company to invest in and with a low risk. Why not support music as well? Invest in the future of Hot Topic and know that when you do, not only is the company financially responsible, but also they are giving back with charities and giving the younger market a way to express themselves. The youth is our future, so why not encourage each and every one of them to be their own person, whether they shop and Hot Topic or not!