Sack Lunch Productions, Inc. (OTCMKTS:SAKL) is an entertainment company that operates and franchises action oriented events in the U.S. and internationally. SAKL’s events include: Slide the City(tm) (1,000 foot long water slide for families and kids), Color Me Rad(tm) (5k color race), The Dirty Dash(tm) (mud and obstacle run), The Lantern Fest(tm) (nighttime party with lantern lighting and launch) and Trike Riot. Learn more about SAKL’s operations at www.sacklunchproductions.com, www.slidethecity.com, www.thelanternfest.com, www.thedirtydash.com, www.colormerad.com, www.trikeriot.com and www.green-endeavors.com.

Opportunity Overview

While all consumers will always need basic goods like food, clothing and shelter, there’s a consumer paradigm shift underway. Millennials are leading the sea change, but the shift has infected all age groups, and all socio-economic stratifications. Rather than luxury goods (i.e. “wants”), consumers are increasingly interested in experiencing things rather than buying things.

Ad Age’s Brian Schultz explained in detail last August:

“In their endless quest to decode millennial behavior, marketers have placed a microscope on millennials’ spending habits, hoping to glean patterns for how their behavior differs from previous generations. Good luck cracking that one.

We’re a long way from anyone being able to proclaim that they’ve “figured out the millennial consumer,” but we have gathered some valuable research. For example, millennials eschew luxury goods for sustainable ones; prefer buying organic and fair trade; and they’re a lot more willing to shell out money on experiences that enhance their lives (and their Instagram and Snapchat feeds) rather than on material things.

The thing is, it isn’t just millennials. The interesting trend I’m seeing is that these traits are bleeding beyond this demographic. Millennials are proving to be cultural trailblazers for older and newer generations. Consumers today are broadly catching on to the notion that experiences make you happier and are as valuable — or more — than buying fancy things.”

The premise is supported by recent psychological studies of how consumers rationalize spending behavior.

For instance, in research performed by San Francisco State University, it was found (and published in the Journal of Positive Psychology) that the study’s participants’ mindsets changed  before and after they bought an item. Before the purchase, the participants acknowledges they were aware that a life experience would bring them more happiness, but it would make better financial sense to buy the item in question. After making the purchase though, the study’s participants said not only would happiness be greater with a life experience, but that the life experience was also a better value than the item purchased.

As for what this may mean in terms of opportunity, in last year’s American Lifestyles report from Mintel, it was concluded that over the next five years, total consumer sales are expected  to grow 22%. Nonessential categories, however — including vacations and dining out — are expected to grow at a 27% clip.

The total U.S. market size for unique non-dining events and experiences is estimated to be $20 billion, with the global opportunity being commensurately bigger.

Sack Lunch Productions in Focus

Sack Lunch Productions is an organizer of several different kinds of interactive, revenue bearing events. These include the relatively new Trike Riot, Slide the City, The Dirty Dash, Lantern Fest, and the Cooler Me Rad 5K. The company is expecting to host more than 250 events – corporate as well as franchise events in 2016. The company generates revenue by hosting events on its own, but also generates revenue by licensing the events to franchisees. The company’s events attract a diverse range of users, in terms of age groups but also demographics; families and young people are particularly interested.

At The Lantern Fest(r), thousands of revelers join together armed with paper lanterns for one unforgettable spectacle. Music, dancing, s’mores and, when the time is just right, the sky is lit with participants’ highest hopes, deepest regrets, and fondest dreams as the lanterns take flight. These lanterns are 100% biodegradable. Moreover, after each release professional “Lantern Chasers” follow the flying formation of lanterns. This event draws more than 4000 participants, with each driving an average of $25 each.

The Dirty Dash is pseudo  military boot camp is combined with an inner five-year-old’s fantasy… a mud run obstacle course with more mud and less torture than the races of yore. The Dirty Dash attracts an average of more than 2200 runners, each of whom provide $29 worth of revenue.

Slide the City is slip ‘n’ slides’ big sister, scaled up for an urban block party. A full 1,000 feet of slick inflated vinyl (the biggest of its kind) is set up on city streets, with live music, entertainment, and local vendors. These events typically draw more than 2500 participants, who on average generate $29 worth of revenue.

The company’s newest event, the Trike Riot, is family riding course based on the magical three wheel tricycle kids used to cruise around on in their neighborhood.   Sack Lunch provides the gear, the goods, and the 5K course.  So far, these events have been drawing more than 2000 bikers, who offer an average of $90 worth of revenue.

Finally, at the starting line of a Color Me Rad 5K, runners are clean as a newborn baby. Three miles later, are so coated with a rainbow of color that their own mothers may not recognize them. At each color station – a total of eight – a new dimension of powder or gel as aimed at runners your masterpiece. Participants cross the finish line into a final blitzkrieg of color. Color Me Rad events also draw more than 2500 runners each, generating an average of $28 per participant.

SAKL also owns 35.7% of Green Endeavors (OTC:GRNE) common stock and 88% of total outstanding voting stock.

Green Endeavors is a holding company with operations in the health & beauty industry, operating two Aveda Lifestyle Salons and a retail store – Landis Salons, Inc., Landis Salons II, Inc., and Landis Experience Center LLC. Revenue for the company totaled $3.2 million in 2014, and $780,569 for the first quarter of 2016. Going forward, revenue is expected to remain stable at approximately $3 million per year.

Moreover, Sack Lunch Productions owns a majority interest in WG Production Company and Redline Entertainment, through which it produces its own feature films, participates in the production of other feature films, and acquires the distribution rights to independent and third-party films

Sack Lunch Productions has successfully produced and distributed 16 independent films thus far, and brings its promotional capabilities and strategies that can maximize a movie’s exposure.

SAKL Outlook & Analysis

As the old adage goes, numbers don’t lie.

In 2015, SAKL produced over 100 events, attracting thousands of participants per event, and has 250 scheduled for 2016. Better yet, last year the company generated gross revenues of $10,662,551, versus  $4,824,241 for 2014… an increase of 121%. The company is projecting more than $18 million worth of revenue in 2016 – an 86% increase – while EBIDTA is expected to soar 529% to $4.3 million and net income is expected to explode by 1067%, reaching $3.5 million this year.

Those are massive numbers for a $9.05 million company, but completely plausible given Sack Lunch Productions’ proven operating experience and the fact that it only has to maintain its current growth pace to hit those targets. Helping to drive that growth is an impressive list of corporate sponsors, a $5 million $5M credit facility, and a database of millions of potential participants.

It’s just the beginning though. As was noted, the total U.S. market for such entertainment events is in excess of $20 billion, and SAKL is already looking to drive significant expansion overseas. It’s already seen robust growth of international franchise agreements for Slide the City, now entering Europe, China, South America… enough to project a total of between 45 to 80 international Slide the City events in 2016. In fact, its Malaysia franchisee expects to host six events in 2016. Its two-day event in 2015 sold out with 8,000+ participants. Its recent focus on South American franchisees will not only add revenue, but reduce the seasonality of its cash flow.

Fueling this success is a stunningly effective marketing effort.

Sack Lunch Productions has a huge online presence with an estimated 8 million views across multiple platforms in 2015. SAKL has parlayed this excitement/interest into loyalty too. Each of its event types – each is its own subsidiary – boasts tens of thousands e-mail subscribers and tens of thousands of “likes” on their respective Facebook pages. All told, the company has well over 3 million subscribers on its e-mail list, all eager to hear about the next big event.

It’s at this point the buzz takes on a life of its own and goes viral, setting up 2016 as a real breakout year.  Investors looking for a proven performer with a unique product should consider adding SAKL to their portfolio as a compelling speculation.

Sack Lunch Productions Management Team

Richard D. Surber, President

Richard graduated from the University of Utah with a Bachelor of Science degree in Finance and then with a Juris Doctorate with an emphasis in corporate law, including securities, taxation, and bankruptcy. He has served as President and Director of the Company since May of 1999. He also served as an officer and director of the Company’s former parent corporation, Axia Group, Inc. (president and director from 1992 until control transferred in 2004). He has been an officer and director of several public companies, including SAKL’s majority owned subsidiary Green Endeavors, Inc. Mr. Surber is licensed to practice law in the State of California and occasionally represents corporate clients on various corporate matters, to which he occasionally devotes a significant amount of time. Mr. Surber has disclosed the fact that he, on occasion, does act as counsel to several companies for which he receives fees for the legal or consulting services provided.

John E. Fry, Jr., Director

Mr. Fry previously served on the Board of Directors of SAKL from 2002 through 2005. Mr. Fry worked for Firestone Tire Company for over 35 years, retiring from a position as a Vice President. He currently works as a business consultant and as a director for various other corporations.

Scott C. Coffman, Director

Mr. Coffman has been appointed as a Director in 2016. Mr. Coffman previously served the Company’s subsidiary, Green Endeavors, Inc. as its CFO and director. Mr. Coffman graduated from the University of Utah with a Bachelor of Science degree in Finance and then with a Masters of Business Administration and later returned to the University of Utah for additional master’s level accounting coursework.

David Wulf, Director of Event Operations

David Wulf has a bachelor’s degree from Emory University a Juris Doctor from the University of Utah and is a licensed attorney in good standing with the state of New York. From 2009 to the present, David has been utilizing his creative talents as a producer and film consultant for the movie production companies WG Productions and Redline Entertainment in Salt Lake City, Utah. He is currently the operations manager to all event companies held by SAKL.

Taylor Russel Gourley, Director of Development and Operations

T.R. Gourley is one of the creators and founders of Slide the City, LLC, and The Lantern Fest, LLC. From January 2010 until December 2013, T.R. was a producer for the movie production company WG Productions in Salt Lake City, Utah. He has a bachelor’s degree in history from the University of Utah, giving him a unique perspective that greatly informed his previous experience as a movie producer for Revel Entertainment in Salt Lake City, Utah.

John Malfatto, Director of Marketing and Event Founder

John Malfatto has a degree in Finance and a Master’s in Business Administration, Marketing and Accounting. John is also one of the creators and founders of Slide the City and The Lantern Fest. From August 2010 to May 2011, John was an account executive with Redirect, LLC, in Salt Lake City, Utah. He was Director of Marketing for Ragnar Events, LLC, in Kaysville, Utah from August 2008 to June 2010. And Since May 2012 through the date of acquisition by SAKL, John has been President of Operations of Springbok Franchising, LLC, an event franchising company in Cottonwood Heights, Utah.