PART II AND III

PART II – OFFERING CIRCULAR

An offering statement pursuant to Regulation A relating to these shares has been filed with the U.S. Securities and Exchange Commission (the “Commission”). Information contained in this preliminary offering circular is subject to completion or amendment. These shares may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified. This preliminary offering circular shall not constitute an offer to sell or a solicitation of an offer to buy or sell any of these shares in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a final offering circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the final offering circular or the offering statement in which such final offering circular was filed may be obtained.

Generally, no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

Preliminary Offering Circular dated September 25, 2017

 

SACK LUNCH PRODUCTIONS, INC.

2,400,000 shares of Series E Convertible Preferred Stock

This is an initial public offering of our Series E Convertible Preferred Stock (the “Series E Preferred Stock”). The offering price is $ 5.00 per share.

The offering consists of 2,400,000 shares of Series E Preferred Stock (the “Offering Shares”). None of our existing shareholders, nor any of our officers, directors or affiliates is selling any securities in this offering.

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In the event all of the Offering Shares are sold, we may, in our discretion, sell up to 400,000 additional newly issued shares of Series E Preferred Stock (“Additional Shares”) in the offering.

The Series E Preferred Stock is convertible, no earlier than one year after issuance, into that number of shares of our common stock determined by dividing the Original Issue Price by the Conversion Price. The “Original Issue Price” is $5.00 per share of Series E Preferred Stock and the “Conversion Price” is 85.0% multiplied by the Market Price. See “Description of Registrant’s Securities to be Qualified” beginning on page 44.

Our Series E Preferred Stock is not currently quoted or traded on any exchange or marketplace. Following this offering, we intend to seek a market maker that will submit a Form 211 to have the Series E Preferred Stock quoted on the over-the-counter marketplace.

There is no minimum number of Offering Shares that we must sell in order to conduct a closing in this offering. The offering will commence within two calendar days after this offering circular has been qualified by the Commission. See “Plan of Distribution” on page 16. This offering will terminate upon the earlier of when all shares qualified hereunder are sold or [90 days] after this offering circular has been qualified by the Commission.

Although our common stock is quoted on the OTC-Pink (symbol “SAKL”), there has been a very limited trading market in our common stock, and it is not anticipated that an active market will develop as a result of this offering. See “Risk Factors” beginning on page 5 and “Plan of Distribution” on page 16. As of September 14, 2017, the last reported sales price of our common stock was $0.006. No shares of Series E Preferred Stock have been issued prior to the Offering.

See “Risk Factors” beginning on page 5 of this offering circular for a discussion of information that should be considered in connection with an investment in such securities.

The Commission does not pass upon the merits of or give its approval to any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering circular or other solicitation materials. These securities are being offered pursuant to an exemption from registration with the Commission; however, the Commission has not made an independent determination that the securities offered are exempt from registration.

	Price Per Share		Selling Agents’ Discounts and Commissions(1)(2)		Proceeds to Our Company(2)
Offering Shares	$	5.00	$	1,680,000	$	10,320,000

(1)	We do not have any agreement in place with a selling agent. These expenses are estimated at 14% of the Offering Price based on our observation of standard market prices.
(2)	Assumes that all of the Shares offered are sold and we have not taken advantage of our option to sell any Additional Shares as described herein.

__________________

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We plan to market this offering to potential investors through our officers or we may engage broker-dealers and selling agents. This offering will terminate on [______], 2017, subject to extension for up to ninety (90) days, in our sole discretion (the offering period, as extended, being referred to as the “Offering Period”). We may hold an initial closing on any number of Offering Shares at any time during the Offering Period and thereafter may hold one or more additional closings during the Offering Period. We will close on proceeds based upon the order in which they are received. With respect to Additional Shares, however, we may accept or reject orders in our sole discretion. We will consider various factors in determining the timing of any additional closings following the initial closing, including the amount of proceeds received at the initial closing and any prior additional closings. See “Plan of Distribution” on page 16.

We may decide to extend the offering, close the offering early, or cancel it, in our sole discretion. If we extend the offering, we will provide that information in an amendment to this offering circular. If we close the offering early or cancel it, we may do so without notice to you, although if we cancel the offering all funds that may have been provided by any investors will be promptly returned without interest or deduction. See “Plan of Distribution” on page 16.

This is a Regulation A+ Tier 2 offering.

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and have elected to comply with certain reduced public company reporting requirements. As a smaller reporting company within the meaning of Rule 405, we are following the Form S-1 disclosure requirements for smaller reporting companies. This offering circular is intended to provide the information required by Part I of Form S-1.

_______, 2017

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TABLE OF CONTENTS

MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY

AND RELATED STOCKHOLDER MATTERS18 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS19 

“Slide The City™, Lantern Fest™, Color Me Rad 5K™, The Dirty Dash™, Trike Riot™.” and related names are trademarks owned by Sack Lunch Productions, Inc. (“Sack Lunch“). Solely for our convenience, trademarks and trade names referred to in this offering circular may appear without the “®” or “™” symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent possible under applicable law, our rights or the rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Each trademark, trade name, or service mark of any other company appearing in this offering circular is the property of its respective holder.

You should rely only on the information contained in this offering circular. We have not authorized anyone to provide you with different information.

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The information in this offering circular assumes that all of the Shares offered are sold and we have not taken advantage of our option to sell any Additional Shares as described herein.

Unless otherwise stated in this offering circular, “we,” “us,” “our,” “our company” or “Sack Lunch” refers to Sack Lunch Productions, Inc. and our predecessor operations.

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SUMMARY

This summary highlights certain information appearing elsewhere in this offering circular. For a more complete understanding of this offering, you should read the entire offering circular carefully, including the risk factors and the financial statements.

Forward-Looking Statements

This document contains forward-looking statements. All statements pertaining to our future financial and/or operating results, future events, or future developments may constitute forward-looking statements. The statements may be identified by words such as “expect,” “look forward to,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “project,” or words of similar meaning. Such statements are based on the current expectations and certain assumptions of our management, of which many are beyond control. These are subject to a number of risks, uncertainties, and factors, including but not limited to those described in disclosures. Should one or more of these risks or uncertainties materialize, or should underlying expectations not occur or assumptions prove incorrect, actual results, performance, or achievements of the Company may (negatively or positively) vary materially from those described explicitly or implicitly in the relevant forward-looking statement. We neither intend, nor assume any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated.

Overview

We are an action-oriented events and entertainment company providing immersive experiences that bring families, friends and communities together through corporate hosted and managed events across the U.S. and Canada. In addition, we operate globally through a proven franchise system. We own, operate, and hold exclusive rights or an equity interest in well-branded events including Slide The City™, Lantern Fest™, Color Me Rad 5K™, The Dirty Dash™, and our newest event series, Trike Riot™.

We generate revenue primarily from selling admission to our unique community-building events and activities, franchise agreements, corporate sponsorship as well as the sale of health and beauty products and services.

Our History

On April 20, 1987, Sack Lunch Productions, Inc. was incorporated under the laws of the State of Colorado. On October 5, 2000 we merged with a Nevada corporation with the same name, and later changed our state of incorporation to Utah. Green Endeavors, Inc., a Utah corporation, was originally organized as Jasper Holdings.com, Inc. We currently hold 82% of Green Endeavor’s shares of common stock and have voting control of 99% of the total outstanding votes. We currently own 100% of Lantern Fest Productions, Inc., Slide the City Productions, Inc., Color Me Rad Productions, Inc., Trike Riot Productions, Inc. and The Dirty Dash Productions, Inc., Wasatch Capital Corporation, Downtown Development Corporation and Diversified Management Services, Inc.

Our Products and Services

Admission Tickets

We generate revenue from selling admission to our events. For the year ended December 31, 2016, event admissions accounted for approximately 74% or our revenue. We maintain an online presence including social media to promote advanced sales and provide guests convenience and easy entry.

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Franchise Agreements

We generate revenue through fees associated with our branded franchise systems, Slide the City and Color Me Rad. In accordance with our franchise agreements, all franchisees pay fees including lump sum franchise fees, development fees, equipment and asset fees, royalty fees, installment plan fees, deposit fees, advertising fees, local advertising cooperative fees, on-site consultation fees, annual state renewal fees, transfer fees, late charges, testing or supplier approval fees, default and indemnity fees, audit fees, interim management fees, system non-compliance fees. In addition, franchisees purchase trademarked products, services, event assets, event supplies, event equipment, and promotional items from us. During the fiscal year ended December 31, 2016, franchise operations generated approximately 4% of our total revenue.

Corporate Sponsorships and Strategic Alliances

We create and maintain long-term corporate sponsorship and strategic alliances with leading companies and brands. Utilizing a combination of strategic, international, national and local opportunities that allow businesses to reach customers through our events, we add significant brand marketing value and drive mutual business gains. Our corporate sponsors during 2015 and 2016 included, among others, Sprite, Sony, Nestle, Nivea, CBS, Razer, GoPro, Uber, Aaape, Vita Coco, and Hong Kong Airlines. During 2016 sponsorship and advertising generated approximately 2% of our total revenue.

Health and Beauty Services and Products

Green Endeavors, Inc., a subsidiary, provides a wide range of upmarket health and beauty services and Aveda products targeted at a high-end clientele. For the year ended December 31, 2016, the sale of health and beauty services and products accounted for 23% of our revenue.

Competitive Strengths

Driving dynamic innovation that capitalizes on the power of nostalgia, we believe our events tap into an intrinsic need to revisit the wonder and awe of childhood experiences and a desire to share these traditions with the next generation. We believe our competitive strengths to be our unique blend of entertainment and event promotion that targets an underserved millennial demographic. Utilizing both corporate managed events and a franchise model to garner a large market share, our scalable business model allows us to expand worldwide. With proven operating experience and an impressive list of corporate sponsors, our high-profile events effectively increase publicity through positive media coverage and generate revenue through admission sales and franchise agreements.

Our strategy is to grow and innovate through the initiatives listed below:

Maintain and utilize a database of millions of potential participants; 

Expand and utilize our social media followers and reach to procure sponsors and participants; 

Create new, innovative events that appeals to both new and existing participants; 

Increase our brand offerings through acquisitions that contribute substantially to short and long-term growth; and 

Expand into new geographic markets. 

We believe our focus on franchise growth and the continued acquisition of branded events will increase shareholder value as we continue to grow our revenue, earnings and cash flow. With over 200 projected

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corporate and franchise events worldwide in 2018 that optimize our cost structure, we believe we will continue to strengthen our core operations as we expand into additional global markets.

Each of these events incorporates quality vendors that provide live music, food and drinks to service the festivities. These events, which are entertainment and not sporting events, attract a wide and diverse attendance from all age groups and especially appeal to families and young people.

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The Offering

Securities offered and price per share:	Up to 2,800,000 shares of Series E Preferred Stock, at $5.00 per share (“Shares”).
Best efforts offering:	There is no minimum number of Offering Shares that we must sell in order to conduct a closing in this offering. If all the Offering Shares are sold in the offering, we will have the option to sell up to 400,000 additional newly issued shares in the offering in our discretion (“Additional Shares”).  Our directors and officers shall be entitled to purchase Shares in the offering.
Securities outstanding prior to this offering:	211,185,353 shares of common stock 503,750 shares of Series A Preferred Stock 14,750,000 shares of Series B Preferred Stock 360,233 shares of Series C Preferred Stock 35,000 shares of Series D Preferred Stock
Securities outstanding after this offering:	211,185,353 shares of common stock 503,750 shares of Series A Preferred Stock 14,750,000 shares of Series B Preferred Stock 360,233 shares of Series C Preferred Stock 35,000 shares of Series D Preferred Stock 2,400,000 shares of Series E Preferred Stock(1)
Use of proceeds:	See “Use of Proceeds” beginning on page 11.
Risk factors:	Investing in our preferred and common stock involves a high degree of risk. See “Risk Factors” beginning at page 5.

(1)If we sell the Additional Shares, 2,800,000 shares of Series E Preferred Stock will be outstanding after the offering.  

Corporate Information

Our principal executive offices are located at 59 West 100 South Salt Lake City, Utah 84101, telephone: 801–575–8073 Ext.111. Our principal website is www.sacklunchproductions.com. Our common stock is quoted on the OTC Markets and trades under the symbol “SAKL.”

We file annual, quarterly and special reports and other information with OTC Markets. Our filings with the OTC Markets site are available to the public on otcmarkets.com. Those filings are also available to the public on, or accessible through, our website for free via the “Investor Info” section at www.sacklunchproductions.com.

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RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this offering circular, including our consolidated financial statements and related notes, before investing in our common stock. If any of the following risks materialize, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that event, the price of our common stock could decline, and you could lose part or all of your investment.

Risks Related to Our Business and Our Industry

Our business is highly sensitive to changes in consumer preferences.

We believe that consumers are often looking for new ways to remain active as well as be entertained.   We must be able to constantly adapt our events to changing technologies and preferences for exercise and entertainment.  Our events are generally meant to appeal to a sense of nostalgia which is ever changing depending on the segment of the population we are targeting.  We must be able to appeal to newer generations by creating themes, colors, music and activities that meet current consumer preferences whatever those preferences may be.  Some of our events may not be appealing to attend multiple times without adequately varying the experience from season to season.  If we cannot adequate brand, modify, innovate or improve our events with themes and activities that are in alignment with changes in consumer preferences, we may be unable to attract participants, which would have a negative impact on revenues.

We may not be able to attain profitability without additional funding, which may be unavailable.

We have limited capital resources.  Unless we begin to generate sufficient revenues from our business to finance operations as a going concern, we may experience liquidity and solvency problems.  Such liquidity and solvency problems may force us to go out of business if additional financing is not available.  We have no intention of liquidating.  In the event our cash resources are insufficient to continue operations, we intend to raise additional capital through offerings and sales of equity or debt securities.  In the event we are unable to raise sufficient funds, we will be forced to go out of business and will be forced to liquidate.  A possibility of such outcome presents a risk of complete loss of investment in our common stock.

We face intense competition in the live events industry, and we may not be able to maintain or increase our current revenue, which could adversely affect our business, financial condition and results of operations.

Our business is in a highly competitive industry, and we may not be able to maintain or increase our current revenue due to such competition. The live event industry competes with other forms of entertainment for consumers’ discretionary spending and within this industry we compete with sporting events, charity races, music performers and other live events. We face competition from other promoters and venue operators. Our competitors may engage in more extensive development efforts, undertake more far-reaching marketing campaigns, adopt more aggressive pricing policies and make more attractive offers to existing and potential artists. Our competitors may develop services, advertising options or venues that are equal or superior to those we provide or that achieve greater market acceptance and brand recognition than we achieve. It is possible that new competitors may emerge and rapidly acquire significant market share.

Other variables that could adversely affect our financial performance by causing unfavorable fluctuations in operating costs which we may be unwilling or unable to pass through to our customers include:

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Competitors’ offerings that may include more favorable terms than we offer in order to obtain agreements for new venues or ticketing arrangements or to obtain events for the venues they operate; 

Technological changes and innovations that we are unable to adopt or are late in adopting that offer more attractive entertainment alternatives than we or other entertainment providers currently offer, which may lead to a reduction in attendance at our events; 

Other entertainment options available to our audiences that we do not offer; 

General economic conditions which could cause our consumers to reduce discretionary spending; 

Unfavorable changes in labor conditions which may require us to spend more to retain and attract key employees; and 

Unfavorable shifts in population and other demographics which may cause us to lose audiences as people migrate to markets where we have a smaller presence, or which may cause sponsors to be unwilling to pay for sponsorship and advertising opportunities if the general population shifts into a less desirable age or geographical demographic from an advertising perspective. 

The occurrence of any of such variables leading to an adverse effect on our financial performance could adversely affect our business, financial condition and results of operations.

There is the risk of personal injuries and accidents in connection with our events, which could subject us to personal injury or other claims and increase our expenses, as well as reduce attendance at our events, causing a decrease in our revenue.

There are inherent risks involved with our events. As a result, personal injuries and accidents have, and may, occur from time to time, which could subject us to claims and liabilities for personal injuries. Incidents in connection with our events at any of our venues could also result in claims, reducing operating income or reducing attendance at our events, which could cause a decrease in our revenue. While we maintain insurance policies that provide coverage within limits that are sufficient, in management’s judgment, to protect us from material financial loss for personal injuries sustained by persons at our venues or events or accidents in the ordinary course of business, there can be no assurance that such insurance will be adequate at all times and in all circumstances.

Our business and the success of our events depend on our ability to secure venues that we do not own, and if we are unable to do so on acceptable terms, or at all, our events may be moved to less desirable venues or cancelled, in each case adversely affecting our results of operations.

The events that we produce depend upon our ability to lease venues or obtain certain government permits and approvals from third parties over which we have no control. We may be unable to secure these venues and the necessary leases, permits or approvals. Our ability to reserve certain venues depends on a number of factors, including national and local business conditions, competition with other events and changes to local laws and ordinances.

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Our liabilities exceed our assets and we may not be able to continue our business if we do not raise additional funds to service and pay off our debts.

As of March 31, 2017, our total liabilities were $10,615,109 and our total assets were $5,172,279. On that same date, we had negative working capital of $7,738,293. The continuation of our business depends on our ability to pay off or refinance our debt. Because our revenues are not sufficient to service all of our debts, we will depend on the sale of preferred stock, convertible notes and common stock to finance our operations. Failure to raise the necessary funds through the sale of securities or issuing new debt may result in default under the terms of our debt agreements. If we are not able to repay our debts, we may face litigation from creditors and be forced to sell our assets. On June 16, 2017, TCA Global Credit Master Fund filed a complaint against us seeking unpaid payments that were due under a secured credit facility agreement. If we are unable to resolve this dispute, our business will be adversely affected.

Our Lantern Fest® events are subject to extra review and regulation due to the use of fire and airborne lanterns in the events.

There are a number of states that have adopted laws prohibiting the release of sky lanterns under any condition. Drought and other events causing a high level of fire danger can also lead to government officials prohibiting the release of sky lanterns. During 2016 the Federal Aviation Administration (FAA) created an Aviation Rulemaking Committee to develop recommendations regarding rules on the “safe operation of “… unmanned free balloons, fireworks, sky lanterns…”  Engineering reports prepared by the Company indicated that based on the short burn time of the fuel cells in the sky lanterns used by Lantern Fest® the maximum elevation and disbursement of the lanterns is limited and allow for the safe use of the lanterns within guidelines used in our operations. However, government regulations may prohibit or limit our ability to conduct Lantern Fest® events and adversely impact our income.

Our operations are seasonal and the occurrence of certain events during our peak times could have a negative impact on our results of operations.

Our special events operations are highly seasonal. Most of our events are in the summer. If certain events arise during these events, attendance may drop resulting in a reduction of revenue. The occurrence of any of the following events could adversely impact the success of the events we sponsor and our results of operations:  

Adverse weather conditions, including drought conditions; 

Terrorist acts; 

Competitive sporting events; and 

Other entertainment events. 

Activities or conduct, such as illegal drug use, at our events may expose us to liability, cause us to lose business licenses or government approvals, result in the cancellation of all or a part of an event or result in adverse publicity.

We are subject to risks associated with activities or conduct, such as drug use at our events or venue that are illegal or violate the terms of our business licenses. Illegal activities or conduct at any of our events or venues may result in negative publicity, adverse consequences (including illness, injury or death) to the persons engaged in the illegal activity or others, and litigation against us. We have developed policies and procedures aimed at ensuring that the operation of each event is conducted in conformance with local, state and federal laws. Additionally, we have a ‘‘no tolerance’’ policy on illegal drug use in or around our events, and we continually monitor the actions of participants, guests, customers and our employees to ensure that proper behavioral standards are met. However, such policies, no matter how well designed and enforced,

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cannot provide absolute assurance that the policies’ objectives are achieved. Because of the inherent limitations in all control systems and policies, there can be no assurance that our policies will prevent deliberate acts by persons attempting to violate or circumvent them. The consequences of these acts may increase our costs, result in the loss or termination of certain business relationships, result in our inability to get the necessary permits and locations for our events, or lead to the cancellation of all or part of an event. These consequences may also make it more difficult for us to obtain or retain sponsorships, lower consumer demand for our events, subject us to liability claims, divert management’s attention from our business and make an investment in our securities unattractive to current and potential investors. These outcomes could have the effect of lowering our revenue, profitability and/or our stock price.

Costs associated with, and our ability to obtain, adequate insurance could adversely affect our profitability and financial condition.

Heightened concerns and challenges regarding property, casualty, liability, business interruption and other insurance coverage have resulted from terrorist and related security incidents along with varying weather-related conditions and incidents. As a result, we may experience increased difficulty obtaining high policy limits of coverage at reasonable rates, including coverage for acts of terrorism and weather-related property damage. We have material investments in future and recurring events, which are located in or near major cities and which hold events typically attended by a large number of participants, guests and customers.

These operational, geographical and situational factors, among others, may result in significant increases in insurance premium costs and difficulties obtaining sufficiently high policy limits with deductibles that we believe to be reasonable. We have 7 lawsuits pending in which we, or our one of our subsidiaries, are named as a defendant. We currently pay over $160,000 in insurance premiums annually to address these risks. We cannot assure that future increases in insurance costs and difficulties obtaining high policy limits will not adversely impact our profitability, thereby possibly impacting our operating results and growth.

We cannot guarantee that our insurance policy coverage limits, including insurance coverage for property, casualty, liability and business interruption losses and acts of terrorism, would be adequate under the circumstances should one or multiple events occur at or near any of our events, or that our insurers would have adequate financial resources to sufficiently or fully pay our related claims or damages. We cannot guarantee that adequate coverage limits will be available, offered at reasonable rates, or offered by insurers with sufficient financial soundness. The occurrence of such an incident or incidents affecting our existing events or any one or more of our future events could have a material adverse effect on our financial position and future results of operations if asset damage and/or company liability were to exceed insurance coverage limits or if an insurer were unable to sufficiently or fully pay our related claims or damages.

We face risks associated with security breaches or cyber-attacks.

We face risks associated with security breaches or cyber-attacks of our computer systems or those of our third-party representatives, vendors, and service providers. Our sales are conducted online. If we are unable to complete sales through our online sales platforms, our sales will be adversely impacted. In addition, we rely on advertising through email and social media. If our accounts are compromised, it will limit our ability to reach our audience and adversely impact our sales. Although we have implemented security procedures and controls to address these threats, our systems may still be vulnerable to data theft, computer viruses, programming errors, attacks by third parties, or similar disruptive problems. If our systems, or systems owned by third parties affiliated with our company, were breached or attacked, the proprietary and confidential information of our company and our customers could be disclosed and we may be required to incur substantial costs and liabilities, including the following: expenses to rectify the consequences of the security breach or cyber-attack; liability for stolen assets or information; costs of repairing damage to our systems; lost revenue and income resulting from any system downtime caused by such breach or attack;

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loss of competitive advantage if our proprietary information is obtained by competitors as a result of such breach or attack; increased costs of cyber security protection; costs of incentives we may be required to offer to our customers or business partners to retain their business; and damage to our reputation. In addition, any compromise of security from a security breach or cyber-attack could deter customers or business partners from entering into transactions that involve providing confidential information to us. As a result, any compromise to the security of our systems could have a material adverse effect on our business, reputation, financial condition, and operating results.

Our ability to operate effectively could be impaired if we were to lose the services of key personnel, or if we are unable to recruit qualified managers and key personnel in the future. 

Our success is substantially dependent on the continued availability of our key management and technical personnel. Several of our key management personnel have been with us throughout most of our history and have substantial experience with our business and technology. If one or more of our key management personnel leaves us and we are unable to find a replacement with the combination of skills and attributes necessary to execute our business plan, it may have an adverse impact on our business. Our success will also depend, in part, on our ability to attract and retain additional qualified professional, technical, production, managerial and marketing personnel, both domestically and internationally.

Risks Relating to the Securities Markets and Ownership of Our Common Stock

Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to obtain financing on unfavorable terms to us.

We may seek additional capital through a variety of means, including through private and public equity offerings and debt financings. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take certain actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds from third parties, we may have to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms that are not favorable to us. If we are unable to raise additional funds through equity or debt financing when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts for our product candidates, or grant to others the rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. 

The requirements of being a public company may strain our resources, divert our management’s attention and affect our ability to attract and retain qualified board members. 

As a public company, we will be subject to the reporting requirements of the Exchange Act, and will be required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the securities exchange on which our common stock is traded and other applicable securities rules and regulations.  Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources.  Among other things, the Exchange Act requires that we file annual, quarterly and current reports with respect to our business and results of operations and maintain effective disclosure controls and procedures and internal controls over financial reporting.  In order to maintain and, if required, improve our disclosure controls and procedures and internal controls over financial reporting to meet this standard, significant resources and management oversight may be required.  As a result, management’s attention may be diverted from other

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business concerns, which could harm our business and results of operations.  We may need to hire additional employees to comply with these requirements, which will increase our costs and expenses.

In addition, we also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage.  These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

We will be required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we will be required to furnish a report by our management on our internal control over financial reporting the year following our first annual report required to be filed with the SEC.  When required, such report will contain, among other matters, an assessment of the effectiveness of our internal control over financial reporting as of the end of our fiscal year, including a statement as to whether or not our internal control over financial reporting is effective.  This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management.  If we are unable to assert that our internal control over financial reporting is effective, we could lose investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our stock price.

We are an “emerging growth company,” as defined by the JOBS Act. For as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various public company reporting requirements. These exemptions include, but are not limited to, (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements, and (iii) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In this offering circular, we have elected to take advantage of certain of the reduced disclosure obligations regarding financial statements and executive compensation. In addition, Section 107(b) of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to “opt in” to such extended transition period election under Section 107(b). Therefore we are electing to delay adoption of new or revised accounting standards, and as a result, we may choose to not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result of such election, our financial statements may not be comparable to the financial statements of other public companies.

We do not intend to pay dividends for the foreseeable future and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.

We intend to retain any earnings to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends on our common stock. As a result, you may only receive a return on your investment in our common stock if the market price of our common stock increases.

We may not be successful in getting our Series E Preferred Stock quoted for trading on any marketplace.

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Our Series E Preferred Stock is not currently quoted or traded on any exchange or marketplace. Following this offering, we intend to seek a market maker that will submit a Form 211 to have the Series E Preferred Stock quoted on the over-the-counter marketplace. However, there can be no assurance that we will be successful in getting our Series E Preferred Stock quoted for trading on any marketplace, and even if we do, we cannot determine when it will be available for trading.

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USE OF PROCEEDS

If we sell Shares for aggregate gross proceeds of $12,000,000 (or $14,000,000 if we sell the Additional Shares) our net proceeds (after our estimated other offering expenses of $1,680,000 or $1,960,000) will be $10,320,000 (or $12,040,000 if we sell the Additional Shares). We intend to use these net proceeds as follows:

$2,258,646 to repay amounts owed to TCA Global Credit Master Fund, L.P., maturity date June 30, 2017, 18%;  

$546,970 to repay certain convertible notes payable: 

o$257,030 note payable due August 3, 2017 7%; 

o$123,750 note payable due February 13, 2018, 18%; 

o$57,500 note payable due December 15, 2017, 18%; 

o$57,500 note payable due June 1, 2018, 18%; 

o$51,190 note payable due August 17, 2014 8%; 

$384,196  to repay certain notes payable (defined below); 

o$62,587 note payable due January 10, 2019, 8%; 

o$159,744, due 8/19/2017, 8%; 

o$93,471, due 11/11/2017, 5%; 

$68,394, due 12/11/2017, 6%; and  

These amounts include accrued interest through September 14, 2017.

Upon completion of this offering, we will be required to pay the outstanding debt and accrued interest to TCA Global Credit Master Fund, L.P.  Additionally, in all but the 25% scenario below, we will pay, (i) the outstanding principal balance and any accrued interest related to certain convertible notes payable, $546,970, (see list above), (ii) the outstanding principal balance and any accrued interest related to certain notes payable, $384,196, and (iii) the outstanding principal balance and any accrued interest related to certain related party notes payable, $166,756 as detailed below:

$121,756, due 11/20/2011, 24%; 

$32,500, due 11/6/2017, 20%; and 

$12,500, due 5/6/2016, 18%. 

Any remaining proceeds will be used for working capital and other general corporate purposes. The precise amounts that we will devote to each of the foregoing items, and the timing of expenditures, will vary depending on numerous factors.

The following table sets forth a breakdown of our estimated use of our net proceeds as we currently expect to use them, assuming the sale of, respectively, 100%, 75%, 50% and 25% of the Shares (based on an offering amount of $12,000,000).

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Assumed Percentage of Shares Sold	100%	75%	50%	25%
Price to Public	$ 12,000,000	$ 9,000,000	$ 6,000,000	$ 3,000,000
Selling agent commissions	840,000	630,000	420,000	210,000
Other Offering expenses	840,000	780,000	720,000	660,000
Net proceeds	$ 10,320,000	$ 7,590,000	$ 4,860,000	$ 2,130,000
Repayment of Notes	$ 3,424,962	$ 3,424,962	$3, 424,942	$ 1,491,000
Working capital	6,895,038	4,165,038	1,435,038	639,000
Total use of proceeds	$ 10,320,000	$ 7,590,000	$ 4,860,000	$ 2,130,000

We have estimated our offering expenses based on prices we have observed in other similar offerings.

PLAN OF DISTRIBUTION

The Shares and Additional Shares are being sold through our executive officers. We may also engage broker-dealers or selling agents to sell the Shares and Additional Shares. We have not yet engaged anyone else to sell Shares and Additional Shares in this offering.  

This is an offering of 2,400,000 shares of our Series E Preferred Stock issued by the Company. None of our officers, directors, or affiliates is selling any securities in this offering.

We will have the option to sell up to 400,000 Additional Shares, if all of the Offering Shares have been sold in the offering. There is no minimum number of Offering Shares that we must sell in order to conduct a closing in this offering.

If we do engage a broker-dealer or selling agent, we will arrange for the sale of securities to investors on a “best efforts” basis, meaning that they need only use their best efforts to sell the securities. Any third party we engage may sell some of the Offering Shares and Additional Shares through selected dealers.

The offering price of the Offering Shares and Additional Shares was determined by us. This determination was done without reference to our book value or asset values or by the application of any customary, established models for valuing companies or securities. Accordingly, the offering price may not be indicative of any amounts you might receive should you seek to sell your shares or should there be a liquidation of our company. In addition, such prices are not necessarily indicative of any prices at which our securities may trade, or any value that might be ascribed to our company after the completion of the offering. See “Dilution” on page 18.

Our officers and directors shall be entitled to purchase Offering Shares in the offering. Any such purchases shall be conducted in compliance with the applicable provisions of Regulation M.

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Procedures for Subscribing

We will hold an initial closing on any number of Offering Shares at any time during the Offering Period when we determine and thereafter may hold one or more additional closings until we determine to cease having any additional closings during the Offering Period. We will close on proceeds based upon the order in which they are received. We will consider various factors in determining the timing of any additional closings following the initial closing, including the amount of proceeds received at the initial closing and any prior additional closings.

We may decide to close the offering early or cancel it, in our sole discretion. If we extend the offering, we will provide that information in an amendment to this offering circular. If we close the offering early or cancel it, we may do so without notice to you, although if we cancel the offering all funds that may have been provided by any investors will be promptly returned without interest or deduction.

Prior to this offering, there has been no public market for our common stock or our Series E Preferred Stock. Our common stock is quoted on the OTC Markets under the symbol “SAKL.” As of September 14, 2017, the last reported sales price of our common stock was $0.006. No shares of Series E Preferred Stock have been issued prior to the Offering. Our Series E Preferred Stock is not currently quoted or traded on any exchange or marketplace. Following this offering, we intend to seek a market maker that will submit a Form 211 to have the Series E Preferred Stock quoted on the over-the-counter marketplace.

Discounts, Commissions and Expenses

We shall be responsible for and pay all expenses relating to the offering, including, without limitation, (a) all filing fees and expenses relating to the registration of the Shares and Additional Shares to be sold in the offering with the SEC and the filing of the offering materials with the OTC Markets, as applicable; (b) all fees and expenses relating to the registration or qualification of the Offering Shares (and any Additional Shares); as required under the “blue sky” laws, including the fees of counsel selected by us; (c) the costs of all mailing and printing of the offering documents; (d) fees and expenses of the transfer agent for such shares; (e) our road show expenses; (f) the fees and expenses of our accountants and the fees and expenses of our legal counsel and other agents and representatives; and (g) any fees or commissions we may incur if we engage a broker-dealer or selling agent to market the offering.

Offer Restrictions Outside the United States

Other than in the United States, no action has been taken by us or the lead selling agent that would permit a public offering of the securities offered by this offering circular in any jurisdiction where action for that purpose is required. The securities offered by this offering circular may not be offered or sold, directly or indirectly, nor may this offering circular or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction outside of the U.S., except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this offering circular comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this offering circular. This offering circular does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this offering circular in any jurisdiction in which such an offer or a solicitation is unlawful.

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DETERMINATION OF OFFERING PRICE

The offering price of the Offering Shares and Additional Shares was determined by us. This determination was done without reference to our book value or asset values or by the application of any customary, established models for valuing companies or securities. Accordingly, the offering price may not be indicative of any amounts you might receive should you seek to sell your shares or should there be a liquidation of our company. In addition, such prices are not necessarily indicative of any prices at which our securities may trade, or any value that might be ascribed to our company after the completion of the offering.

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DILUTION

The difference between the offering price per share of our Series E Preferred Stock in this offering and the Pro Forma As Adjusted net tangible book value per share after this offering constitutes the dilution to investors in this offering. Net tangible book value per share is determined by dividing our net tangible book value, which is our total tangible assets less total liabilities, by the total number of outstanding shares of common stock, Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock.

As of December 31, 2016, on an Actual basis and a Pro Forma basis, our net tangible book value is as follows:

	Actual	Pro Forma
Net Book value	$       (3,735,834)	$        8,304,166
Less: (intangibles assets)	(846,666)	(846,666)
Net tangible book value	$       (4,582,500)	$        7,457,500
Total common shares outstanding - Pro Forma		1,349,341,152
Net tangible book value per common share - Pro Forma		$             0.006

After giving effect to the sale of the Shares and Additional Shares in this offering, on a Pro Forma As Adjusted basis, our net tangible book value would be $7,457,500, or $0.005 per common share, after deducting selling agents’ discounts, commissions, a non-accountable expense allowance and expenses of this offering totaling approximately $1,720,000. This represents an immediate increase in Pro Forma As Adjusted net tangible book value of $0.033 per share to our existing stockholders and an immediate dilution of $4.994 per share to investors purchasing shares in this offering.

The following table illustrates the dilution to new investors on a per-share basis: 

Offering price per share			$	5.00
Pro Forma net tangible book value per share before this offering	$	(0.028)
Increase in Pro Forma As Adjusted net tangible book value per share attributable to investors purchasing shares in this offering		0.033
Pro Forma As Adjusted net tangible book value per share after this offering				0.006
Dilution in Pro Forma As Adjusted net tangible book value per share to investors in this offering			$	4.994

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The following table sets forth information with respect to our existing stockholders and the new investors as follows:

						Average Price Per Share
	Shares Purchased (all series of Preferred stock fully converted)			Total Consideration
	Number	Percent		Amount	Percent	$
Existing stockholders	360,809,553	37%	$	8,921,709	43%	$   0.02
New investors	609,756,098	63%		12,000,000	57%	$   5.00
Total	970,565,651	100%	$	20,921,709	100%

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MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

No established public trading market exists for our common stock, and there can be no assurance that a public trading market for our common stock will develop. Our common stock is quoted on the OTC Markets trading platform (www.otcmarkets.com), specifically the OTC Pink marketplace, under the trading symbol “SAKL.” Although we are quoted on the OTC Pink platform, this trading market lacks the depth, liquidity, and orderliness necessary to maintain a liquid market. The OTC Pink prices are quotations, which reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions.

The following table sets forth the quarterly high and low sale prices of our common stock for the two most recent fiscal years as reported on the OTC Pink trading platform:

Fiscal Quarter Ended	High	Low
June 30, 2017	0.035	0.01
March 31, 2017	0.03	0.002
December 31, 2016	0.057	0.02
September 30, 2016	0.096	0.0285
June 30, 2016	0.15	0.0757
March 31, 2016	0.129	0.04
December 31, 2015	0.0989	0.013
September 30, 2015	0.025	0.005
June 30, 2015	0.015	0.0018
March 31, 2015	0.0176	0.005

As of September 14, 2017, we had 211,185,353 shares of common stock issued and outstanding and there are approximately 57 stockholders of record.

We have never declared or paid cash dividends on our common stock.  We anticipate that in the future we may be in a position to do so and will make modifications as needed.

We currently have no equity compensation plans.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The current operations of Sack Lunch Productions, Inc. (“SAKL” or the “Company”) consist of two principal areas: (1) the entertainment events operated under the Slide the City™® Color Me Rad™®, Dirty Dash™® and Lantern Fest®™ divisions of the Company and (2) the operation of Landis Lifestyle Salons through SAKL’s ownership interest in Green Endeavors, Inc. (“GRNE”).  

The following discussion examines our results of operations and financial condition based on our consolidated financial statements for the three months ended March 31, 2017 and 2016 and the years ended December 31, 2016 and 2015.

Results of Operations

Revenue

Three Months ended March 31, 2017 and 2016

Gross revenues for the three months ended March 31, 2017, were $1,231,569 as compared to $1,297,203 for the same period in 2016. The decrease in revenue for the period ended March 31, 2017 compared with the same period in 2016 was $65,634, or 5.06%, was primarily due to a decrease in franchise and royalty fees of $145,700.  The company has scheduled events later in the season in 2017 which will result in revenues being recognized later in the calendar year in 2017 versus 2016.

Years ended December 31, 2016 and 2015

Gross revenues for the years ended December 31, 2016, were $14,841,029 as compared to $10,472,854 for the same period in 2015. The increase in revenue for the year ended December 31, 2016 compared with the same period in 2015 was $4,368,175, or 41.71%, is primarily due to an increase of $3,842,304 in event revenue, Color Me Rad and Dirty Dash event companies were purchased in the second half of 2015, and an increase of $361,804 in salon services and offset by a decrease in franchise and royalty revenue of $710,002, reflecting our shifting focus to company owned events.

Costs and Expenses

Three Months ended March 31, 2017 and 2016

Costs of revenue for the period ended March 31, 2017, decreased to $2,287,268 from $2,377,345 for the comparable period in 2016, a decrease of $90,077 or 3.79%. The decrease was primarily attributable to a reduction in staff resulting in savings of $123,523 in salaries and wages over the comparable period in 2016.

Depreciation and amortization expense for the period ended March 31, 2017, increased to $128,827 from $124,067.

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Years ended December 31, 2016 and 2015

Costs of revenue for the year ended December 31, 2016, increased to $16,612,875 from $11,375,495 for the year ended December 31, 2015 an increase of $5,237,380 or 46.04%. The increase over the comparable annual period is primarily attributable to an increase in the number of Events held in 2016 over 2015

Depreciation and amortization expense for the year ended December 31, 2016, increased to $500,485 from $359,205 due to the acquisition of Color Me Rad and The Dirty Dash.

Other Expenses, net

Three Months ended March 31, 2017 and 2016

Other net expenses for the period ended March 31, 2017, were $109,703 compared to $632,565 in the comparable period in 2016, a decrease of $522,862 or 476%. The decrease in other net expenses over the comparable period was primarily due to a gain on sale of subsidiaries of $807,372, a decrease in interest expense of $292,056 netted against an increase on loss on the settlement of debt of $649,788.  The loss on settlement of debt was a result of selling a portion of the TCA Global note to a third party.

Years ended December 31, 2016 and 2015

Other net expenses for the year ended December 31, 2016, were $1,415,227 compared to $671,432 for the year ended December 31, 2015, an increase of $743,795 or 110%. The increase over the comparable annual period was due to a $2,167,129 loss on the settlement of debt as a result of the note with TCA Global being rewritten because of additional $440,000 borrowing.  The new note called for the advisory fees under the original note to be wrapped into the principle of the replacement note.  Additionally, other net expenses increased as a result of an increase in interest expense which was $1,569,805 for the year ended December 31, 2016 compared to $679,968 for the same period in 2015, an increase of $889,837 or 130%.  The increase interest expense was the result of interest on the TCA Global note which was recorded for the complete year of 2016 versus the last quarter in 2015.

Net Income (Loss)

Three Months ended March 31, 2017 and 2016

Net loss for the period ended March 31, 2017, were $1,165,402 compared to a loss of $1,712,707 for the comparable period in 2016, a decrease of $547,305 or 31.9%. The decrease in loss was primarily due to a gain on the sale of subsidiaries of $807,372 offset by a decrease in interest expenses of $292,056.

Years ended December 31, 2016 and 2015

Net loss for the year ended December 31, 2016, were $3,187,073 compared to a loss of $1,574,073 for the year ended December 31, 2015, an increase of $1,613,000 or 102%. The increase in loss was primarily due to a loss on settlement of debt in the amount of $2,167,129 versus a gain on settlement of debt in 2015 of $110,220. The loss on settlement of debt was one-time non-cash charge.

Liquidity and Capital Resources

As of March 31, 2017 and December 31, 2016

We had a working capital deficit of $7,738,293 as of March 31, 2017.

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	For the Period Ended
Working Capital	Mar-17	Dec-16	Variance	%
Total Current Assets	$       2,246,458	$       2,223,236	$            23,222	1.04
Total Current Liabilities	9,984,751	8,574,122	1,410,629	16.45
Working Capital Deficit	$      (7,738,293)	$      (6,350,886)	$      (1,387,407)	21.85

Current liabilities increased primarily due to an increase in deferred revenues resulting from advanced ticket sales for events, an increase in convertible notes financing and related derivative liabilities. We expect to fully realize all deferred revenue by the end of the fiscal year.

As of December 31, 2016 and 2015

We had a working capital deficit of $6,350,886 and $4,036,513 as of December 31, 2016 and 2015, respectively.

	For the Period Ended December 31,
Working Capital	2016	2015	Variance	%
Total Current Assets	$    2,223,236	$    2,890,042	$     (666,806)	(23.07)
Total Current Liabilities	8,574,122	6,926,555	1,647,567	23.79
Working Capital Deficit	$  (6,350,886)	$  (4,036,513)	$  (2,314,373)	57.34

Cash Flows from Operating Activities

Cash flows from operating activities include net income, adjusted for certain non-cash charges, as well changes in the balances of certain assets and liabilities.

Three Months ended March 31, 2017 and 2016

Net cash provided by operating activities for the period ended March 31, 2017, was $143,111 as compared to $204,225 for the comparable period in 2016. A major contributing factor to the decrease in cash provided by operating activities over the comparable period was a $1,055,785 decrease in deferred revenues offset by a non-cash $807,372 gain in sale of subsidiary.

During the three months ended March 31, 2017 and 2016 we received franchise fees of $21,000 and $166,700, respectively.

Years ended December 31, 2016 and 2015

Net cash used by operating activities for the year ended December 31, 2016, was $134,181 as compared to $1,608,928 for the year ended December 31, 2015. The decrease in cash used by operating activities over the comparable periods is primarily due to a $2,105,528 increase in derivative fair value adjustment.

During the fiscal years ended December 31, 2016 and 2015 we received franchise fees of $616,092 and $1,326,094, respectively.

We expect to increase cash provided by operating activities over the next twelve months by executing the individual business strategies of our subsidiaries.

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Cash Flows from Investing Activities

Three Months ended March 31, 2017 and 2016

Cash flow used in investing activities for the period ended March 31, 2017, was $147,940 as compared to $99,830 for the comparable period in 2016. The increase in cash flows used in investing activities is primarily due to disposal of subsidiaries that held restricted cash in escrow for third parties.

Years ended December 31, 2016 and 2015

Cash flow used in investing activities for the year ended December 31, 2016, was $146,042 as compared to $414,243 for the year ended December 31, 2015. The decrease in cash flows used in investing activities is primarily due to a decrease in the purchase of property, plant, and equipment.

We expect to continue our investing activities, including purchasing both property and equipment for an additional salon location and making both short and long-term equity investments.

Cash Flows from Financing Activities

Three Months ended March 31, 2017 and 2016

Cash flows used in financing activities for the period ended March 31, 2017, was $262,273 as compared to $55,573 for the comparable period in 2016. The increase in cash used by financing activities is primarily due to an increase in payments on notes issued in prior periods.

Years ended December 31, 2016 and 2015

Cash flows provided in financing activities for the year ended December 31, 2016, was $409,886 as compared to $2,155,343 for the year ended December 31, 2015. The decrease in cash provided by financing activities is primarily due to an increase in payments on notes issued in prior periods.

Other Factors Affecting Liquidity and Capital Resources

We have insufficient current assets to meet our current liabilities resulting in negative working capital of $7,738,293 as of March 31, 2017.  We expect to fully realize $1,500,999 in deferred revenues which will decrease our working capital deficit by the same amount. Historically, we have funded our cash needs from a combination of revenues, management of accounts payable and accrued expenses, sales of equity, and debt transactions. Since we are not currently realizing net cash flows from our business, we may need to seek financing to continue our operations. Prospective sources of funding could include shareholder loans, equity sales or loans from other sources though no assurance can be given that such sources would be available or that any commitment of support is forthcoming to date. However, if we are successful in this offering, we expect to pay off our debt and have sufficient funds for the next 12 months.

We do not intend to pay cash dividends in the foreseeable future.

Impact of Inflation

We compensate some of our salon employees with percentage commissions based on sales they generate. Accordingly, this provides us certain protection against inflationary increases, as payroll expense is a variable cost of sales. In addition, we may increase pricing in our salons to offset any significant increases

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in wages and cost of services provided. Therefore, we do not believe inflation has had a significant impact on the results of our operations.

Off Balance Sheet Arrangements

We do not have any off-balance sheet financing arrangements.

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BUSINESS

Overview

We are an action-oriented events and entertainment company providing immersive experiences that bring families, friends and communities together through corporate hosted and managed events across the U.S. and Canada. In addition, we operate globally through a proven franchise system. We own, operate, and hold exclusive rights or an equity interest in well-branded events including Slide The City™, Lantern Fest™, Color Me Rad 5K™, The Dirty Dash™, and our newest event series, Trike Riot™.

In addition to our branded events, we have built a stable portfolio of diversified operations established in burgeoning markets that include segments in entertainment, health and beauty, and real estate industries.

We generate revenue primarily from selling admission to our unique community-building events and activities, franchise agreements, corporate sponsorship as well as the sale of health and beauty products and services.

Our principal executive offices are located at 59 West 100 South Salt Lake City, Utah 84101, telephone: 801–575–8073 Ext.111. Our principal website is www.sacklunchproductions.com. Our common stock is quoted on the OTC Markets and trades under the symbol “SAKL.”

Our Business

Taking full advantage of a thriving special events industry and bringing with it a sense of unity and community pride, our portfolio of branded events include:

Slide the City™

Slide the City is a family friendly slip-n-slide water party event. In 2017, we scaled back the number of events and plan to change our strategy in 2018

Color Me Rad™

Color Me Rad is a popular 5K run where participants complete an entertaining course teeming with color stations, eventually culminating in a polychromatic party with music and food.

Lantern Fest™

Lantern Fest organizes sky lantern events where participants light lanterns, endow them with hopes and wishes for the future, and in a grand-scale release them to the sky in an extraordinary communal display.

The Dirty Dash™

The Dirty Dash is a fun run incorporating a muddy obstacle course that caters to a runner’s inner child.

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Trike Riot™

Our newest event, Trike Riot, is set to launch in 2017. With an estimated $90 in average revenue per participant and over 2,000 anticipated participants, this event is sure to evoke childhood memories and ignite interest in family fun. Trike Riot provides a unique experience in cities throughout the United States.  We close down city streets and give participants the opportunity to cruise on three wheels around the city—going over obstacles or just cruising.   All this fun culminates at the finish line where there are food trucks, live music, and people showing off their skills. We have partnered with Razor® to present the Trike Riot events and provide trikes for participants.

Green Endeavors, Inc.

We currently hold 82% of the total issued and outstanding shares of common stock and through preferred stock, 99% of the total outstanding votes of Green Endeavors, Inc., a company operating in the health and beauty industry. Providing a stable revenue base for us, this segment operates two Aveda Lifestyle Salons and an Aveda retail store. Green Endeavors delivers a wide range of upmarket health and beauty products and services targeted at a high-end clientele. The Landis Lifestyle Salon brand, mission, and highly skilled staff bring quality and excellence to the Utah salon market, consistently outperforming other high-end boutique salons year after year. Green Endeavors generated $3.4M of revenue in 2016. Going forward, revenue is expected to remain stable at approximately $3M annually. Green Endeavors is publicly traded on the OTC Pink Market under the symbol “GRNE.”

Our Products and Services

Admission Tickets

We generate revenue from selling admission to our events. For the year ended December 31, 2016, event admissions accounted for approximately 74% of our revenue. We maintain an online presence including social media to promote advanced sales and provide guests convenience and easy entry. Approximately 95% of our admission tickets sales are made online.

Franchise Agreements

We generate revenue through fees associated with our branded franchise systems in Slide The City and Color Me Rad. In accordance with our franchise agreements, all franchisees pay fees including lump sum franchise fees, development fees, equipment and asset fees, royalty fees, installment plan fees, deposit fees, advertising fees, local advertising cooperative fees, on-site consultation fees, annual state renewal fees, transfer fees, late charges, testing or supplier approval fees, default and indemnity fees, audit fees, interim management fees, system non-compliance fees. In addition, franchisees purchase trademarked products, services, event assets, event supplies, event equipment, and promotional items.

Corporate Sponsorships and Strategic Alliances

We create and maintain long-term corporate sponsorship and strategic alliances with leading companies and brands. Utilizing a combination of strategic, international, national and local opportunities that allow businesses to reach customers through our events, we add significant brand marketing value and drive mutual business gains. Our current corporate sponsors include, among others, Sprite, Sony, Nestle, Nivea, CBS, Razer, GoPro, Uber, Aaape, Vita Coco, and Hong Kong Airlines. During 2016 sponsorship and advertising generated approximately 2% of our total revenue.

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Health and Beauty Services and Products

Green Endeavors, Inc., a subsidiary, provides a wide range of upmarket health and beauty services and Aveda products targeted at a high-end clientele. For the year ended December 31, 2016, the sale of health and beauty services and products accounted for 23% of our revenue.

Competitive Strengths

Driving dynamic innovation that capitalizes on the power of nostalgia, we believe our events tap into an intrinsic need to revisit the wonder and awe of childhood experiences and a desire to share these traditions with the next generation. We believe our competitive strengths to be our unique blend of entertainment and event promotion that targets an underserved millennial demographic. Utilizing both corporate managed events and a franchise model to garners a large market share, our scalable business model allows us to expand worldwide. With proven operating experience and an impressive list of corporate sponsors, our high-profile events effectively increase publicity through positive media coverage and generate revenue through admission sales and franchise agreements.

Our strategy is to grow and innovate through the initiatives listed below:

Maintain and utilize a database of millions of potential participants; 

Increasing our brand offerings through acquisitions that contribute substantially to short and long-term growth; and 

Expanding into new geographic markets. 

We believe our focus on franchise growth and the continued acquisition of branded events will increase shareholder value as we continue to grow our revenue, earnings and cash flow. With over 250 projected corporate and franchise events worldwide that optimize our cost structure, we believe we will continue to strengthen our core operations as we expand into additional global markets.

Each of these events incorporates quality vendors that provide live music, food and drinks to service the festivities. These events, which are entertainment and not sporting events, attract a wide and diverse attendance from all age groups and especially appeal to families and young people.

Corporate Social Responsibility

We believe in giving back to the communities that support us and improving the world we live in. In 2016, we gave back over $400,000 of cash and in kind donations to charitable organizations, while providing valuable exposure for all of our charitable partners, some of which include: Boys & Girls Club of American, March of Dimes, YMCA, Rotary International, Canadian Cancer Society, Ronald McDonald House Charities, and USA Cares.

Our Guests and Customers

Our events attract a wide and diverse attendance from all age groups and especially appeal to families and young people. Our events are held in major cities with large population centers, and generate positive media coverage on local levels.

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Our History

On April 20, 1987, Sack Lunch Productions, Inc. was incorporated under the laws of the State of Colorado. On October 5, 2000 Sack Lunch Productions, Inc. merged with a Nevada corporation with the same name, and later changed its state of incorporation to Utah. Green Endeavors, Inc., a Utah corporation, was originally organized as Jasper Holdings.com, Inc. Sack Lunch Productions, Inc. currently holds 82% of Green Endeavor’s shares of common stock and has voting control of 99% of the total outstanding votes. We currently own 100% of Lantern Fest Productions, Inc., Slide the City Productions, Inc., Color Me Rad Productions, Inc., Trike Riot Productions, Inc. The Dirty Dash Productions, Inc., Wasatch Capital Corporation, Downtown Development Corporation and Diversified Management Services, Inc.

Below is a chart showing our organizational structure:

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Seasonality

Outdoor events are seasonal by nature, typically generating the highest revenues in the second and third quarters of each year. Our global franchise network, the diversity in type and venue of our events, and the consistency of our health and beauty operations not only drive revenue growth but also reduce the seasonality of our events segment.

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Our Industry

The party and event planning industry comprises independent companies and individuals that organize parties, weddings, corporate dinners and other social gatherings. Industry participants usually orchestrate a variety of details for such events including venue booking, music arrangement, food catering, photography, video recording and other services. The industry depends on the willingness of households and businesses to spend money on social gatherings, and is set to benefit from climbing corporate profit and per capita disposable income as the U. S. economy continues to grow. We believe the events industry to be a thriving sector. We believe the market is large, lucrative and awaiting expansion in diverse areas.

Competition

Our action-oriented events and entertainment offerings compete directly for discretionary spending with other local or regional events and indirectly with other types of recreational forms of entertainment including movies, home entertainment options, sports attractions, restaurants and vacation travel. Some principal direct competitors for events are Loton, Live Nation Entertainment, Merlin Entertainment, NightCulture, and Oriental Land. We also face competition from events such as Ragnar Events, Red Frog Events, Reebok Spartan Race, The Color Run, Warrior Dash and a variety of fun runs and racing events.

We believe we compete effectively and our competitive position is protected due to strong brand recognition, unique event type and low operating cost. Operating globally through our franchise system and scalable business model, our highly differentiated products offer events that are innovative and provide authentic experiences for participants of an underserved millennial demographic. In addition, our family oriented offerings help advance healthy communities by supporting experiences that build memories through entertainment, events and playful activities.

Our main competitors at the local market level for sponsorships and advertising dollars include local sports teams, which often offer state of the art venues and strong local media packages, as well as festivals, theme parks and other local events. On the national level, our competitors include the major sports leagues that sell sponsorships combined with significant national media packages.

Insurance

We maintain insurance of the type and in the amounts that we believe to be commercially reasonable for businesses in our industry. We maintain primary and excess casualty coverage. We maintain employers’ liability and all coverage required by law in the states in which we operate. Defense costs are included in the insurance coverage we obtain against losses in these areas. Based upon our historical experience of reported claims and an estimate for incurred-but-not-reported claims, we accrue a liability for our deductible/self-insured retention contingencies regarding general liability, automobile liability and workers compensation exposures. We maintain additional forms of special casualty coverage appropriate for businesses in our industry. We also maintain commercial property coverage against fire, natural perils, so-called “extended coverage” perils such as civil commotion, business interruption and terrorism exposures for protection of our real and personal properties (other than land). We generally renegotiate our insurance policies on an annual basis. We cannot predict the amounts of premium cost that we may be required to pay for future insurance coverage, the level of any deductibles/self-insured retentions we may retain applicable thereto, the level of aggregate excess coverage available or the availability of coverage for special or specific risks.

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Regulation

We are subject to federal, state and local laws, both domestically and internationally, governing matters such as:

Construction, renovation and operation of our events; 

Licensing, permitting and zoning, including noise ordinances; 

Human health, safety and sanitations requirements; 

The service of food and alcoholic beverages; 

Working conditions, labor minimum wage and hour, citizenship and employment laws; 

Compliance with the ADA and the DDA; 

Historic landmark rules; 

Compliance with United States Foreign Corrupt Practices Act and similar regulations in other countries; 

Hazardous and non-hazardous waste and other environmental protection laws; 

Sales and other taxes and withholdings of taxes; 

Privacy laws and protection of personally identifiable information; 

Marketing activities via the telephone and online; and 

Primary ticketing services. 

We believe that we are in material compliance with these laws. The regulations relating to our food service in our venues are many and complex. A variety of regulations at various governmental levels relating to the handling, preparation and serving of food, the cleanliness of food production facilities and the hygiene of food-handling personnel are enforced primarily at the local public health department level.

We also must comply with applicable licensing laws, as well as state and local service laws, commonly called dram shop statutes. Dram shop statutes generally prohibit serving alcoholic beverages to certain persons such as an individual who is intoxicated or a minor. If we violate dram shop laws, we may be liable to third parties for the acts of the customer. Although we generally hire outside vendors to provide these services at our larger operated venues and regularly sponsor training programs designed to minimize the likelihood of such a situation, we cannot guarantee that intoxicated or minor customers will not be served or that liability for their acts will not be imposed on us.

We are also required to comply with the Americans with Disabilities Act (ADA), the Developmental Disabilities Administration (DDA) and certain state statutes and local ordinances that, among other things, require that places of public accommodation, including both existing and newly constructed venues, be accessible to customers with disabilities. The ADA and the DDA require that venues be constructed to permit persons with disabilities full use of a live entertainment venue. The ADA and the DDA may also require that certain modifications be made to existing venues to make them accessible to customers and employees who are disabled. In order to comply with the ADA, the DDA and other similar ordinances, we may face substantial capital expenditures in the future.

We are required to comply with the laws of the countries we operate in and also the United States Foreign Corrupt Practices Act and the United Kingdom Bribery Act 2010 regarding anti-bribery regulations. These regulations make it illegal for us to pay, promise to pay or receive money or anything of value to, or from, any government or foreign public official for the purpose of directly or indirectly obtaining or retaining business. This ban on illegal payments and bribes also applies to agents or intermediaries who use funds for purposes prohibited by the statute.

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We are required to comply with federal, state and international laws regarding privacy and the storing, sharing, use, disclosure and protection of personally identifiable information and user data. Specifically, personally identifiable information is increasingly subject to legislation and regulations in numerous jurisdictions around the world, the intent of which is to protect the privacy of personal information that is collected, processed and transmitted in or from the governing jurisdiction.

From time to time, governmental bodies have proposed legislation that could have an effect on our business. For example, our events may be impacted by changes to fire codes, FAA regulations, water use restrictions caused by drought and public pool laws as applied to Slide the City.

In addition, we and our venues are subject to extensive environmental laws and regulations relating to the use, storage, disposal, emission and release of hazardous and non-hazardous substances, as well as zoning and noise level restrictions which may affect, among other things, the hours of operations of our events.

Employees

As of June 30, 2017, we employed approximately 49 full-time employees and approximately 67 part-time employees. None of our employees are covered by a collective bargaining agreement, and we consider our employee relations to be good. Full-time staff members consist of event directors, operations experts, and legal support including:

Available Information

We file annual, quarterly and special reports and other information with the OTC Markets. Our filings with the OTC Markets site are available to the public on otcmarkets.com. Those filings are also available to the public on, or accessible through, our website for free via the “Investor Info” section at www.sacklunchproductions.com.

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MANAGEMENT

The following table sets forth the names, ages, and biographical information of each of our current directors and executive officers, and the positions with the Company held by each person, and the date such person became a director or executive officer of the Company. Our executive officers are elected annually by the Board of Directors. The directors serve one-year terms until their successors are elected. The executive officers serve until their death, resignation or removal by the Board of Directors. There are no family relationships among the directors and officers of the Company.

Name	Age	Position(s)
Richard Surber	44	Chief Executive Officer and Director
Scott Coffman	55	Director
Gerald Einhorn	77	Director
Taylor Russel Gourley	37	Director of Operations

Richard Surber: CEO and Director

Richard Surber’s experience includes over 20 years in the public markets. He has been the CEO and Director of Sack Lunch Productions for the last 18 years. He is a member of the California bar, and practiced law on a limited basis specializing in complex corporate and securities law matters. He graduated from the University of Utah with a Bachelor of Science degree in Finance and a Juris Doctor with an emphasis in corporate law, including securities, taxation and bankruptcy.

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 beginning in June of 2012 through March 22, 2015. He is currently employed by Vista Outdoor Inc. External Financial Reporting and has held this position since March 23, 2015. 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.

Gerald Einhorn, Director

Mr. Einhorn previously served on the Board of Directors of SAKL and an officer of the company from 2002 through 2008.  Mr. Einhorn is a member of the New York Bar and has also worked providing legal opinion and consulting with the company for the past few years.  Mr. Einhorn is currently retired from full time employment and does selected legal matters on a limited basis.

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Taylor Russel Gourley, Director of Operations

T.R. Gourley is the co-creator and developer of Slide the City, Lantern Fest, and Trike Riot, in addition to these three events TR runs and manages all events owned by Sack Lunch Productions. TR produced films for over 5 years under WG productions and Redline Productions.  These two companies produced and sold their own and other companies films domestically and internationally.   Out of the dozens of films sold, TR produced or executive produced 10 of these films. Mr. Gourley has been an employee of the Company or its subsidiaries for the past five years.

Executive Compensation

See “Certain Relationships and Related Transactions, and Director Independence” on page 42 for a description of our employment agreements and settlement agreements with Mr. Surber.

Summary Compensation Table

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation ($)	All Other Compensation ($)	Total ($)
Richard	2016	$137,000	-0-	-0-	-0-	-0-	-0-	-0-	$137,000
Surber, CEO	2015	$156,845	-0-	-0-	-0-	-0-	-0-	-0-	$156,845
Taylor R. Gourley Control Person	2016	$93,303	-0-	-0-	-0-	-0-	-0-	-0-	$93,303
	2015	$13,000	-0-	-0-	-0-	-0-	-0-	-0-	$13,000

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following tables set forth, as of September 14, 2017, certain information with respect to the Company’s equity securities owned of record or beneficially by (i) each Officer and Director of the Company; (ii) each person who owns beneficially more than 5% of each class of the Company’s outstanding equity securities; and (iii) all Directors and Executive Officers as a group.

For a description of each class of stock, see “Description of Registrant’s Securities to be Qualified” on page 44.

Common Stock

Name and Address (1)	Common Stock Ownership	Percentage of Common Stock Ownership (2)
Richard Surber (3)	24,966,011	11.82%
David Wulf 1140 South West Temple Salt Lake City, Utah 84101	13,142,337	6.22%
Taylor Russel Gourley (3)	19,713,506	9.33%
All Officers and Directors as a Group (2 Persons)	44,679,517	21.16%

(1)Unless otherwise indicated, the address of the shareholder is c/o Sack Lunch Productions, Inc., 59 West 100 South, 2^nd Floor, Salt Lake City, Utah 84101. 

(2)Unless otherwise indicated, based on 211,185,353 shares of common stock issued and outstanding as of September 14, 2017. Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the person holding such options or warrants, but are not deemed outstanding for purposes of computing the percentage of any other person. 

(3)Indicates one of our officers or directors. 

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Series A Preferred Stock

The Series A Convertible Preferred Stock (the “Series A Preferred”) has voting rights in any matter presented to the shareholders of the Company’s common stock on the basis of ten votes for each share of Series A Preferred.

The Series A Preferred shall be senior to the common stock and any other series of Preferred Stock, including Series B and Series C Convertible Preferred Stock.

Each share of Series A Preferred is convertible at the option of the Series A Preferred stockholder into the number of shares of common stock equal in value to Ten Dollars ($10). The Board of Directors shall approve and make the final determination of the conversion rate or value based upon the average closing prices for the common stock for the five day period preceding the notice of conversion made by the holder of Series A Preferred.

Name and Address (1)	Series A Preferred Stock Ownership	Percentage of Series A Preferred Stock Ownership (3)
Richard Surber (3)	139,000	27.59%
David Wulf 1140 South West Temple Salt Lake City, Utah 84101	89,000	17.66%
Taylor Russel Gourley (3)	139,000	27.59%
All Officers and Directors as a Group (2 Persons)	278,000	55.19%

(1)Unless otherwise indicated, the address of the shareholder is c/o Sack Lunch Productions, Inc., 59 West 100 South, 2^nd Floor, Salt Lake City, Utah 84101. 

(2)Unless otherwise indicated, based on 503,750 shares of Series A Preferred Stock issued and outstanding as of September 14, 2017. Shares of Series A Preferred Stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the person holding such options or warrants, but are not deemed outstanding for purposes of computing the percentage of any other person. 

(3)Indicates one of our officers or directors. 

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Series B Preferred Stock

The Series B Convertible Preferred Stock (the “Series B Preferred”) has voting rights in any matter presented to the shareholders of the Company’s common stock on the basis of 100 votes for each share of Series B Preferred.

A majority of the holders of the outstanding Series B Preferred (the “Series B Holders”) is required for approval of any proposal upon which a vote of shareholders is taken.

The Series B Preferred is convertible into shares of common stock of one (1) shares of common stock for each ten (10) shares of Series B Preferred.

The Series B Preferred is senior to the common stock and any subsequently authorized series or class of Preferred Stock.

Name and Address (1)	Series B Preferred Stock Ownership	Percentage of Series B Preferred Stock Ownership
Richard Surber (2)	14,250,000	96.61%
David Wulf 1140 South West Temple Salt Lake City, Utah 84101	250,000	1.69%
Taylor Russel Gourley (2)	250,000	1.69%
All Officers and Directors as a Group (2 Persons) (2)	14,500,000	98.30%

(1)Unless otherwise indicated, the address of the shareholder is c/o Sack Lunch Productions, Inc., 59 West 100 South, 2^nd Floor, Salt Lake City, Utah 84101. 

(2)Unless otherwise indicated, based on 14,750,000 shares of Series B Preferred Stock issued and outstanding as of September 14, 2017. Shares of Series B Preferred Stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the person holding such options or warrants, but are not deemed outstanding for purposes of computing the percentage of any other person. 

(3)Indicates one of our officers or directors. 

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Series C Preferred Stock

The Series C Convertible Preferred Stock (the “Series C Preferred”) has voting rights in any matter presented to the shareholders of the Company’s common stock on the basis of one vote for each share of Series C Preferred.

Each share of Series C Preferred is convertible at the option of the Series C Preferred stockholder into the number of shares of common stock equal in value to Five Dollars ($5). The Board of Directors shall approve and make the final determination of the conversion rate or value based upon the average closing prices for the common stock for the five day period preceding the notice of conversion made by the holder of Series C Preferred.

The Series C Preferred is senior to the common stock and any subsequently authorized series or class of Preferred Stock.

Name and Address (1)	Series C Preferred Stock Ownership(3)	Percentage of Series C Preferred Stock Ownership
Richard Surber (3)	10,000	2.78%
Casey Coleman 1124 North 780 West Clinton, Utah 84015	103,050	28.61%
Taylor Russel Gourley (3)	32,500	9.02%
Owen Spencer Hunn 502 East Main Street Lehi, Utah 84043	27,424	7.61%
Interstellar Holdings, LLC Attn: Len Amato 85 Lords Highway East Weston, CT 06883	45,000	12.49%
Johnson Stockdale JTWROS 2537 Irving Place Billings, Montana 59102	40,000	11.10%
All Officers and Directors as a Group (2 Persons) (3)	42,500	11.80%

(1)Unless otherwise indicated, the address of the shareholder is c/o Sack Lunch Productions, Inc., 59 West 100 South, 2^nd Floor, Salt Lake City, Utah 84101. 

(2)Unless otherwise indicated, based on 360,233 shares of Series C Preferred Stock issued and outstanding as of September 14, 2017. Shares of Series C Preferred Stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the person holding such options or warrants, but are not deemed outstanding for purposes of computing the percentage of any other person. 

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(3)Indicates one of our officers or directors. 

(4)The above listed Preferred Series C Stock shareholders are limited to conversion into less than 5% of the issued common stock at any point in time and hold only 1 vote per share of preferred stock and thus hold less than 0.01% of votes in any shareholder vote.  None of the named C shareholders are control persons at this point in time. 

Series D Preferred Stock

The Series D Convertible Preferred Stock (the “Series D Preferred”) has voting rights in any matter presented to the shareholders of the Company’s common stock on the basis of one vote for each share of Series D Preferred.

Each share of Series D Convertible Preferred is convertible into that number of shares of the Company’s Common Stock, equal in value to Five Dollars ($5.00).  The board of directors shall approve the conversion rate based on a calculation of 50% of the average of the three lowest trades during the ten trading days prior to the notice of conversion but in no event shall the conversion price per share of common stock be below $0.00001.

The Series D Preferred is senior to the common stock and any subsequently authorized series or class of Preferred Stock.

Name and Address (1)	Series D Preferred Stock Ownership	Percentage of Series D Preferred Stock Ownership
Mammoth Corporation 1 First Bank Plaza, Suite 205 Lake Zurich, IL 60047	35,000	100%
All Officers and Directors as a Group	0	0%

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Combined Voting

The table below lists the total votes that each person would be able to vote in any matter brought before the Company’s common stockholders for a vote. The voting information below is presented with respect to the Company’s equity securities owned of record or beneficially by (i) each Officer and Director of the Company; (ii) each person who owns beneficially more than 5% of any class of the Company’s outstanding equity securities; and (iii) all Directors and Executive Officers as a group.

Name	Common Stock Votes	Series A Preferred Stock Votes	Series B Preferred Stock Votes	Series C Preferred Stock Votes	Series D Preferred Stock Votes	Percentage of Total Votes(2)
Richard Surber (1)	24,966,011	1,390,000	1,425,000,000	10,000	-	85.80%
David Wulf	13,142,337	1,390,000	25,000,000	-	-	2.31%
Taylor Russel Gourley (1)	19,713,506	1,390,000	25,000,000	32,500	-	2.73%
Casey Coleman	-	-	-	119,050	-	*
Owen Spencer Hunn	-	-	-	27,424	-	*
Interstellar Holdings, LLC	-	-	-	45,000	-	*
Johnson Stockdale JTWROS	-	-	-	40,000	-	*
Mammoth Corporation	-	-	-	-	35,000	*
All Officers and Directors as a Group (2 Persons)	44,679,517	2,780,000	1,450,000,000	42,500	35,000	89.87%

* Less than 1%.

(1)Indicates one of our officers or directors. 

(2)Based on shares outstanding as of September 14, 2017: 211,185,353 shares of common stock outstanding (one vote per share), 505,750 shares of Series A Convertible Preferred Stock outstanding (ten votes per share), 15,000,000 shares of Series B Convertible Preferred Stock outstanding (100 votes per share), 360,233  shares of Series C Convertible Preferred Stock outstanding (one vote per share) and 35,000  shares of Series D Convertible Preferred Stock outstanding (one vote per share).   

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE

Over the years 2017, 2016 and 2015, the President of the Company has extended short-term, interest-free advances for the purchase of inventory and operational expenses. As of December 31, 2016, the outstanding balance was $56,265. Additionally, at March 31, 2017, the Company’s related party balances were, accounts payable, $209,736, notes payable, 34,309 and convertible notes payable, $59,394.  

On December 4, 2015, the company entered into a Settlement Agreement that extinguished $1,051,387 of accrued back pay owed to Richard D. Surber, the CEO and Director in exchange for 52,569,350 restricted shares of common stock.

On January 5, 2016 the Board of Directors of SAKL approved the execution of employment agreements with Richard Surber, John Malfatto, David Wulf and Taylor Gourley.  The terms of the agreements begin on January 1, 2016 and expire on December 31, 2020.  Base annual salary for each of the named persons is $250,000 and cannot be reduced below $1,500 for any single two week payroll period.  The agreements include non-compete provisions for a period equal to three years or upon sale of all preferred securities held by the employee.  Each of the named persons hold shares of Series B Preferred Stock that by agreement are not transferable without the prior approval of the Board of Directors of SAKL.  Each of these same persons has signed a Lock-Up Agreement with the Company that limits the sale of securities by the named persons and the Company in exchange agreed to protect the four named individuals’ securities from “corporate action, including any reverse stock split of the common stock exceeding a factor of two (2) or other restructuring of the Company.” Each of the parties has agreed to waive unpaid compensation for the period ended December 31, 2016. Mr. Wulf’s employment with the Company has been terminated. The employment agreements with Mr. Surber and Mr. Gourley remain in effect for 2017 and it is expected that the Company will either pay or accrue their compensation for this year.

On July 13, 2006 the Company issued a note payable for $250,000 to Mr. Surber in exchange for common shares of Green Endeavors.  The note is convertible into the Company’s common shares at Mr. Surber’s option at a conversion rate of 90% of the average market price of the Company’s common shares as reported from the date of notice to the date of conversion. The current principal balance of the note is $59,394 with $62,362 of accrued interest through September 14, 2017, the note bears interest at the rate of 24% per annum.  No payments on the note have been made during 2017.

No other loans or advances by Mr. Surber exceed one percent of the average of our total assets at year-end for the last two completed fiscal years.

On April 14, 2017 the Company entered into a Settlement Agreement and Release with John Malfatto and Martin Malfatto Squared Inc. wherein the parties agreed to terms that will end Malfatto’s current employment agreement with the Company and provide for the terms under which he will continue to provide services through the end of 2017. Malfatto and Malfatto Squared will deliver to the Company 250,000 shares of Series B Preferred stock and 139,000 shares of Series A Preferred stock and return 13,142,337 shares of common stock to Richard Surber and Taylor Gourley.

Landis Salons Inc., a subsidiary of the Company has as of August 2016 entered into an equipment lease with Diversified Holdings X, Inc., a corporation controlled by Richard Surber, for solar panel equipment to be used at the Liberty Heights Landis salon location in Salt Lake City Utah. The lease is for a term of five years, with monthly payments in the sum of $1,422.00. The equipment has been installed and appears to be operating properly. Mr. Surber received tax credits and energy rebates totaling approximately $40,000 as a result of the transaction.

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Richard Surber, a related party, is providing his personal guaranty for several lines of credit, credit cards and a second mortgage on his home that are being utilized by the Company and its operating subsidiaries. In addition to the above, Mr. Surber is a personal guarantor to notes payable by the Company with remaining principal balances of approximately $1.2 Million. Subsequent to December 31, 2016, Mr. Surber continues to provide his personal guaranty for several lines of credit, credit cards, and loans that are being utilized by the Company and its subsidiaries. The total amount of these credit obligations vary and have exceeded $1,000,000.

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DESCRIPTION OF REGISTRANT’S SECURITIES TO BE QUALIFIED

Our authorized capital stock consists of 990,000,000 shares of common stock, par value $0.001, and 50,000,000 shares of preferred stock, par value $0.001. As of the date of September 14, 2017, there were 211,185,353 shares of our common stock issued and outstanding, and 503,750 shares of Series A Convertible Preferred Stock, 14,750,000 shares of Series B Convertible Preferred Stock, 360,233 shares of Series C Convertible Preferred Stock, 35,000 shares of Series D Convertible Preferred Stock and no shares of Series E Convertible Preferred Stock issued and outstanding.

Common Stock

Each shareholder of our common stock is entitled to a pro rata share of cash distributions made to shareholders, including dividend payments. The holders of our common stock are entitled to one vote for each share of record on all matters to be voted on by shareholders. There is no cumulative voting with respect to the election of our directors or any other matter. Therefore, the holders of more than 50% of the shares voted for the election of those directors can elect all of the directors. The holders of our common stock are entitled to receive dividends when and if declared by our Board of Directors from funds legally available therefore. Cash dividends are at the sole discretion of our Board of Directors. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining available for distribution to them after payment of our liabilities and after provision has been made for each class of stock, if any, having any preference in relation to our common shareholders. Shares of our common stock have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to our common stock.

Preferred Stock

We are authorized to issue 50,000,000 shares of preferred stock, par value $0.001 per share, of which 2,500,000 shares of Series A Preferred Stock, 20,000,000 shares of Series B Preferred Stock and 2,500,000 shares of Series C Preferred Stock and 200,000 shares of Series D Preferred Stock, and 5,000,000 shares of Series E Preferred Stock have been designated and authorized. The holders of our Preferred Stock have the number of votes per share of Preferred Stock as stated below, to be voted as a group along with the common shareholders on all matters on which the shareholders are entitled to vote. Series A Preferred Stock has ten votes per share, Series B Preferred Stock has 100 votes per share, Series C Preferred Stock has one vote per share, Series D Preferred Stock has 1 vote per share and Series E Preferred Stock has 10 votes per share.

Series E Preferred Stock

Our Series E Preferred Stock is convertible, no earlier than one year after issuance, into that number of shares of our common stock determined by dividing the Original Issue Price by the Conversion Price. The Original Issue price is $5.00 per share of Series E Preferred Stock and the Conversion Price is 85.0% multiplied by the Market Price. The Market Price means the average of the lowest five (5) Trading Prices for our common stock during the ten (10) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. Trading Price is, for any security as of any date, the closing bid price as reported by OTC Markets Group, Inc., or, if the OTC Markets is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the “pink sheets” by OTC Markets Group, Inc.  If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Company and holder. “Trading Day” shall mean any day on which the Company’s

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common stock is tradable for any period on OTC Markets, or on the principal securities exchange or other securities market on which the common stock is then being traded.

The conversion of the Series E Preferred Stock is limited such that the holder of Series E Preferred Stock may not convert any shares of Series E Preferred Stock if the conversion would result in beneficial ownership by the holder and its affiliates of more than 9.99% of our outstanding shares of common stock.

The Series E Preferred Stock is not redeemable.

Liquidation Rights

In the event of any liquidation, dissolutions, or winding up of the Company, whether voluntary or involuntary, the Board of Directors shall redeem the Series A Preferred Stock and Series C Preferred Stock by issuing shares of common stock based upon the closing price of the shares of common stock on the date the Company is deemed liquidated, dissolved, or wound up.

In the event of any liquidation, dissolutions, or winding up of the Company, whether voluntary or involuntary, the Series B Preferred Stock Holders shall be entitled to be paid out of the assets of the Company available for distribution to its shareholders, before any payment or declaration and setting apart for payment of any amount shall be made in respect of any outstanding capital stock of the Company or subsequent series of preferred stock, an amount equal to $0.001 per share.

In the event of any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the holders of the Series D Preferred then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its shareholders, before any payment or declaration and setting apart for payment of any amount shall be made in respect of any outstanding capital stock of the Company, an amount equal to Five Dollars ($5.00) per share. If upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the assets to be distributed to the holders of the Preferred Stock shall be insufficient to permit the payment to the holders thereof the full preferential amount as provided therein, and to the Series D Preferred Shareholders, then such available assets shall be distributed ratably first to the holders of the Series C Preferred, and then to the holders of the Series D Preferred.

The holders of each share of Series E Preferred Stock outstanding in the event of any liquidation shall be entitled to be paid, out of the available funds and assets, subject to the rights of the holders of Series A, B and C Preferred Stock and prior and in preference to any payment or distribution (or any setting apart of any payment or distribution) of any available funds and assets on any shares of common stock or subsequent series of preferred stock, an amount per share equal to the original issue price of the Series E Preferred Stock plus all declared but unpaid dividends on the Series E Preferred Stock.  If upon any liquidation, dissolution or winding up of the Company, the available funds and assets shall be insufficient to permit the payment to holders of the Series E Preferred Stock of their full preferential amount as described in this subsection, then all of the remaining available funds and assets shall be distributed among the holders of the then outstanding Series E Preferred Stock pro rata, according to the number of outstanding shares of Series E Preferred Stock held by each holder thereof.

Finally, all of the assets of the Company remaining to be distributed after redemption of the preferred stock holders shall be distributed ratably to the holders of the outstanding shares of common stock of the Company.

43

Dividend Policy

We have not declared or paid a cash dividend on our capital stock in our last two fiscal years and we do not expect to pay cash dividends on our common stock in the foreseeable future. We currently intend to retain our earnings, if any, for use in our business. Any dividends declared in the future will be at the discretion of our Board of Directors and subject to any restrictions that may be imposed by our lenders.

Dividends may not be declared or paid without the prior written consent of the majority of the Series B Holders.

Options and Warrants

As of the date of this offering circular, we do not have any outstanding options, warrants, or other convertible securities.

INTERESTS OF NAMED EXPERTS AND COUNSEL

The financial statements of Sack Lunch included in this offering circular and elsewhere in the offering statement of which this offering circular forms a part have been so included in reliance upon the report, which includes an explanatory paragraph as to our ability to continue as a going concern, of Sadler, Gibb & Associates, LLC, independent registered public accountants, upon the authority of that firm as experts in auditing and accounting.

PROPERTIES

Downtown Development Corporation (DDC)

DDC, our wholly owned subsidiary, owns a one story retail building located at 1374 South State Street, Salt Lake City, Utah, which it purchased on December 1, 1999 for $535,000. The building is approximately 7,000 square feet, one story tall and constructed in the late 1960's. A restaurant currently occupies 2,500 square feet of retail space pursuant to a lease.  The remaining 4,500 sq ft is vacant.

DDC, on August 18, 2006, closed on the purchase of a lot immediately adjacent to the above described property and building located at 1374 South State Street. The total purchase price for the property was $250,000.

On June 23, 2011, DDC closed on refinancing of the loans on the building and lot on South State Street. A loan in the sum of $615,262 was secured from Cyprus Credit Federal Credit Union. The loan bears interest at the rate of 6.50% per annum, with monthly payments of $4,157, with a final balloon payment due on May 23, 2021 (estimated amount $478,352). The loan is personally guaranteed by Richard D. Surber, Sack Lunch’s President and C.E.O

Management believes the property held by DDC is adequately insured.

Landis Salons

Our Liberty Heights facility is located at 1298 South 900 East, Salt Lake City, Utah 84105. This lease is for a 4,000 square foot free standing commercial building with a preliminary term of ten years beginning on October 1, 2005 and the lease provides for one five year extended term.

44

Our Landis II facility is located at 600 North 300 West, Salt Lake City, Utah 84103. This lease is for a 3,000 square foot commercial building with a term of ten years beginning on September 15, 2010 and the lease provides for two, five year extended terms.

On March 10, 2012, we signed a lease through a newly formed subsidiary, Landis Experience Center, LLC to operate an Aveda™ experience center in the newly opened City Creek Mall located in downtown Salt Lake City, Utah.  This 430 square foot store will focus on the sale of products only, no salon services will be provided.  The lease is for a period of seven years beginning when the store opened in August 2012.

Event facilities

SAKL and its subsidiaries corporate headquarters of approximately 3,000 square feet are located at 59 West 100 South, second floor, Salt Lake City, Utah 84101.

SAKL has a lease for warehouse space located at 4521 West 1980 South, Salt Lake City, Utah.  The leased space is for 8,476 square feet of warehouse space for a two year term beginning January 1, 2017.

LEGAL PROCEEDINGS

Except as set forth below, we are not a party to or otherwise involved in any material pending legal proceedings, other than ordinary routine litigation incidental to our business operations.

Sack Lunch Productions, Inc. v Scott Crandall and Matt Ward, Case No. 170903524 in the Third Judicial District Court of Salt Lake County, State of Utah, filed June 2, 2017 seeking damages under the Acquisition Agreement from August of 2015 for recovery of the debts or payables of Springbok that exceeded the amount of $2 million.  Defendants have filed their appearances and discovery has begun.

TCA Global Credit Master Fund, L.P. vs Sack Lunch Productions, Inc., Green Endeavors, Inc., Landis Salons, Inc., Landis Salons II, Inc., Diversified Managements Services, Inc., Wasatch Capital Corporation, Downtown Development Corporation, WG Productions Company, Landis Experience Center, LLC, Redline Entertainment, Inc., Springbok Holdings, LLC, Color Me Rad, LLC, The Dirty Dash, LLC, Springbok Franchising LLC, and Springbok Management, LLC, Case CACE-17-011661 Division 12, in the Circuit Court of the 17^th Judicial Circuit In and For Broward County, Florida. The suit seeks recovery for payments that were due in accordance with the terms and provisions of the Senior Secured Credit Facility Agreement effective between the parties as of October 31, 2015.  Defendants are preparing to file their responses and defenses to the complaint which are due October 10, 2017.

1 Global Capital, LLC vs. Lantern Fest Productions, Inc. and Richard D. Surber, individually.  Complaint filed in the 17^th Judicial Circuit in and for Broward County, Florida on September 5, 2017, case Number: CACE 17016985.  The complaint seeks damages in the sum of $125,479.00 for failure to pay pursuant to a Merchant Agreement between Lantern Fest and 1^st Global Capital.  Defendants have not yet been served with a summons in the case and are prepared to defend and dispute the allegations set forth by the complaint.

45

FINANCIAL STATEMENTS

Audit Report

Financial Statements for the years ended December 31, 2016 and 2015

Unaudited Financial Statements for the period ended March 31, 2017

46

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Management of Sack Lunch Productions, Inc.

We have audited the accompanying consolidated balance sheets of Sack Lunch Productions, Inc. (“the Company”) as of December 31, 2016 and 2015, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the two year period ended December 31, 2016. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Sack Lunch Productions, Inc. as of December 31, 2016 and 2015, and the results of its operations and its cash flows for each of the years in the two year period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 18 to the consolidated financial statements, the Company has suffered net losses since inception and has accumulated a significant deficit. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 18. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Sadler, Gibb & Associates, LLC

Salt Lake City, UT

June 27, 2017

47

Sack Lunch Productions, Inc.

Consolidated Balance Sheets

	December 31,
	2016	2015
ASSETS
Current assets
Cash and cash equivalents	$670,352	$540,689
Restricted cash	262,996	429,832
Accounts receivable, net of allowance for doubtful accounts of $409,279 and $239,794,    respectively	42,404	156,769
Inventory	1,016,661	1,630,641
Prepaid expenses	230,823	132,111
Total current assets	2,223,236	2,890,042
Note receivable, net of allowance of $0 and $11,622, respectively	184,295	179,032
Property and equipment, net of accumulated depreciation of $1,864,966 and $1,515,698, respectively	2,048,343	2,225,673
Goodwill	139,755	139,755
Intangible assets, net of accumulated amortization of $157,707 and $46,075	846,666	959,128
Other assets	19,674	20,914
Total assets	$5,461,969	$6,414,544
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable	$1,907,237	$2,127,398
Accounts payable related party	215,437	232,348
Deferred revenue	289,466	153,717
Accrued expenses	1,634,876	1,291,531
Current portion of notes payable, net of debt discount of $95,368 and $14,461, respectively	970,406	508,142
Current portion of capital leases	26,134	22,911
Derivative liability	1,391,432	2,113,172
Convertible notes payable, net of debt discount of $133,870 and $1,500,532, respectively	2,045,431	376,314
Convertible notes payable, related party	59,394	60,282
Current portion of notes payable related party	34,309	40,740
Total current liabilities	8,574,122	6,926,555
Long-term liabilities
Notes payable	566,212	703,359
Notes payable, related party	-	14,389
Convertible notes payable, net of debt discount of $0 and $30,390 respectively	-	8,110
Capital leases	57,469	21,295
Total long-term liabilities	623,681	747,153
Total liabilities	9,197,803	7,673,708
Commitments and contingencies	-	-
Convertible preferred stock	8,921,709	8,942,303
Stockholders' deficit
Common stock, par value $0.0001; 990,000,000 shares authorized; 163,535,685 and 135,999,942 shares issued and outstanding, respectively	16,352	13,599
Additional paid-in capital	35,662,067	36,836,102
Accumulated deficit	(48,212,352)	(45,166,282)
Accumulated other comprehensive income	(760)	(760)
Total Sack Lunch Productions, Inc. and subsidiaries stockholders' deficit	(12,534,693)	(8,317,341)
Non-controlling interest	(122,850)	(1,884,126)
Total stockholders' deficit	(12,657,543)	(10,201,467)
Total liabilities and stockholders' deficit	$5,461,969	$6,414,544
The accompanying notes are an integral part of these consolidated financial statements.

48

Sack Lunch Productions, Inc.

Consolidated Statements of Operations

	Year Ended December 31,
	2016	2015
Revenue
Services	$12,367,031	$8,031,936
Products	1,408,707	829,692
Rental	38,121	39,680
Franchise Fees and Royalties	616,092	1,326,094
Other	411,078	245,452
Total revenue	14,841,029	10,472,854
Costs and Expenses
Cost of services	5,705,930	4,236,604
Cost of products	2,452,416	1,335,431
Cost of other revenues	175,610	222,324
Depreciation and amortization	500,485	359,205
Salaries and wages	1,928,475	1,766,405
General and administrative	5,849,959	3,455,526
Total operating expenses	16,612,875	11,375,495
Loss from operations	(1,771,846)	(902,641)
Other Income (Expense)
Interest income	3,688	11,354
Interest expense	(1,569,805)	(679,968)
Interest expense, related parties	(35,705)	(8,834)
Gain on derivative activity	2,311,016	55,363
Gain (loss) on settlement of debt	(2,167,129)	110,220
Gain on disposal of assets	3,523	-
Other income (expense)	80,068	(4,079)
Loss on subsidiary stock subscription receivable	(40,883)	(155,488)
Total other income (expenses), net	(1,415,227)	(671,432)
Net income (loss) before income taxes	(3,187,073)	(1,574,073)
Income taxes	-	-
Net loss before non-controlling interest	(3,187,073)	(1,574,073)
Net loss attributable to non-controlling interest	(141,003)	(459,486)
Net loss attributable to stockholders	(3,046,070)	(1,114,587)
Deemed dividends	(386,250)	-
Net loss available to common stockholders	$(3,432,320)	$(1,114,587)
Loss per common share, basic and diluted	$(0.02)	$(0.02)
Loss related to non-controlling interest, basic and diluted	$(0.00)	$(0.01)
Weighted average shares used to compute earnings per share, basic and diluted	151,474,730	70,522,542
The accompanying notes are an integral part of these unaudited consolidated financial statements.

49

Sack Lunch Productions Inc.

Consolidated Statements of Stockholders’ Deficit

	Mezzanine
	Series A		Series B		Series C		Series D		Convertible	Convertible
	Preferred		Preferred		Preferred		Preferred		Preferred	Preferred
	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount	APIC	Total
Balances at December 31, 2014	142,750	$143	15,000,000	$15,000	1,442,723	$1,443	-	$-	$8,467,267	$8,483,853
Stock issuance for investment in subsidiary	417,000	417	-	-	-	-	-	-	20,059	20,476
Preferred C shares issued for cash	-	-	-	-	5,200	5	-	-	12,995	13,000
Preferred C shares converted to common stock	-	-	-	-	(25,766)	(26)	-	-	-	(26)
Preferred C shares issued for services	-	-	-	-	85,000	85	-	-	424,915	425,000
Preferred C shares cancelled	-	-	-	-	(278,396)	(278)	-	-	278	-
Balances at December 31, 2015	559,750	$560	15,000,000	$15,000	1,228,761	$1,229	-	$-	$8,925,514	$8,942,303
Preferred A shares issued for cash	61,000	61	-	-	-	-	-	-	304,939	305,000
Preferred A shares converted to common shares	(3,000)	(3)	-	-	-	-	-	-	-	(3)
Preferred C shares issued for cash	-	-	-	-	40,000	40	-	-	99,960	100,000
Preferred C shares converted to common shares	-	-	-	-	(379,462)	(379)	-	-	-	(379)
Preferred C shares cancelled for debt	-	-	-	-	(85,000)	(85)	-	-	(424,915)	(425,000)
Preferred C shares cancelled	-	-	-	-	(336,716)	(337)	-	-	126	(212)
Extinguishment of Series C stock by issuance of Series D stock	-	-	-	-	(72,100)	(72)	72,100	72	-	-
Balances at December 31, 2016	617,750	$618	15,000,000	$15,000	395,483	$396	72,100	$72.00	$8,905,624	$8,921,709
The accompanying notes are an integral part of these consolidated financial statements.

50

Sack Lunch Productions Inc.

Consolidated Statements of Stockholders’ Deficit

					Accumulated
	Common		Additional		Other	Non-	Total
	Stock		Paid-in	Accumulated	Comprehensive	controlling	Shareholders'
	Shares	Amount	Capital	Deficit	Income	interest	Deficit
Balances at December 31, 2014	64,821,834	$6,482	$35,116,238	$(44,051,695)	$(760)	$(1,356,660)	$(10,286,395)
Options exercise of subsidiary stock	-	-	428,004	-	-	-	428,004
Derivative liability conversion to APIC	-	-	24,561	-	-	-	24,561
Preferred C shares converted to common stock	11,186,416	1,118	(1,092)	-	-	-	26
Common shares issued with debt	1,416,667	142	23,858	-	-	-	24,000
Common shares issued for conversion of note payable	2,105,625	210	69,613	-	-	-	69,823
Common shares issued for accrued payroll	52,569,348	5,257	1,046,130	-	-	-	1,051,387
Common shares issued for cash	3,000,000	300	44,700	-	-	-	45,000
Common shares issued for services	900,000	90	16,110	-	-	-	16,200
Decrease NCI for ownership change in subsidiary	-	-	67,980	-	-	(67,980)	-
Net loss	-	-	-	(1,114,587)	-	(459,486)	(1,574,073)
Balances at December 31, 2015	135,999,890	$13,599	$36,836,102	$(45,166,282)	$(760)	$(1,884,126)	$(10,201,467)
Preferred A shares converted to common shares	230,769	23	(20)	-	-	-	3
Preferred C shares issued for cash	-	-	211	-	-	-	211
Preferred C shares converted to common shares	26,118,976	2,611	(2,232)	-	-	-	379
Common shares issued for settlement of liability	2,400,000	240	53,760	-	-	-	54,000
Common shares issued for services	1,950,000	195	314,515	-	-	-	314,710
Common shares issued for conversion of note payable	847,018	85	49,967	-	-	-	50,052
Common shares issued for loan inducement	83,333	8	(8)	-	-	-	-
Common shares cancelled	(4,094,301)	(409)	409	-	-	-	-
Subsidiary stock issued for services	-	-	175,000	-	-	-	175,000
Subsidiary stock issued for debt	-	-	24,244	-	-	-	24,244
Change in derivative	-	-	112,398	-	-	-	112,398
Decrease NCI for ownership change in acquired subsidiary	-	-	(1,902,279)	-	-	1,902,279	-
Net loss	-	-	-	(3,046,070)	-	(141,003)	(3,187,073)
Balances at December 31, 2016	163,535,685	$16,352	$35,662,067	$(48,212,352)	$(760)	$(122,850)	$(12,657,543)
The accompanying notes are an integral part of these consolidated financial statements.

51

Sack Lunch Productions Inc.

Consolidated Statements of Cash Flows

	Year Ended December 31,
	2016	2015
Cash flows from operating activities
Net loss	$(3,187,073)	$(1,574,073)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	500,485	359,205
Amortization of debt issuance costs	992,505	405,987
(Gain) loss on derivative liability fair value adjustment	(2,311,016)	(205,488)
(Gain) loss on forgiveness of non-related party convertible debt	-	45,268
(Gain) loss on settlement of debt	2,167,129	-
Stock issued for services	314,710	16,200
Stock option expense	-	292,389
Initial derivative expense	22,322	177,303
Changes in assets and liabilities:
Restricted cash	166,836	(108,139)
Notes receivable	(5,264)	-
Certificate of deposit	-	28,660
Accounts receivable	114,365	(37,483)
Inventories	613,980	(267,898)
Prepaid expenses	80,100	49,637
Other assets	2,069	-
Accounts payable and accrued liabilities	288,013	1,081,025
Accounts payable, related party	(16,909)	24,373
Deferred revenue	135,749	(1,879,538)
Deferred rent expense	(12,182)	(16,356)
Net cash used in operating activities	(134,181)	(1,608,928)
Cash flows from investing activities
Purchases of property, plant, & equipment	(186,609)	(397,930)
Proceeds from sale of fixed asset	40,567	-
Investment in capitalized intangible assets	-	(16,313)
Net cash used in investing activities	(146,042)	(414,243)
Cash flows from financing activities
Payments made on capital leases	(26,084)	(21,980)
Payments made on notes payable	(1,031,515)	(922,149)
Payments made on convertible notes	(865,249)	(21,915)
Payments made on notes payable, related parties	(20,820)	(7,202)
Issuance of Preferred A shares in acquisition	(889)	20,477
Proceeds from issuance of convertible notes payable	655,700	1,802,150
Proceeds from issuance of common stock	-	45,000
Proceeds from issuance of Preferred A shares	305,000	-
Proceeds from issuance of Preferred C shares	100,000	13,000
Proceeds from issuance of notes payable	1,293,743	1,212,880
Proceeds from issuance of notes payable to related parties	-	35,082
Net cash provided by financing activities	409,886	2,155,343
Net increase in cash	129,663	132,172
Cash at beginning of period	540,689	408,517
Cash at end of period	$670,352	$540,689
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$414,355	$201,527

52

Sack Lunch Productions Inc.

Consolidated Statements of Cash Flows

Noncash investing and financing activities:
Issuance of shares of a subsidiary to settle a note payable	$24,244	$35,805
Equipment purchased for note payable	65,481	-
Stock issued in exchange for investment in a subsidiary	-	24,561
Stock issued in exchange for accrued payroll to an officer	-	1,072,133
Conversion of derivative liability	112,396	34,019
Common shares issued for settlement of a liability	54,000	15,000
Common shares issued for loan inducement	8	-
Debt discounts on notes payable	130,914	-
Subsidiary convertible debt converted to common stock of the subsidiary	-	141,102
Options issued and exercised in exchange for notes payable	-	124,732
Extinguishment of debt	1,245,860	-
Fixed assets acquired in acquisition	-	484,000
Other assets acquired in acquisition	-	2,481,000
Accounts payable, accrued expenses and other current liabilities assumed in acquisition	-	1,348,000
Deferred revenue assumed in acquisition	-	1,525,000
Note payable issued for acquisition of Series C shares	425,000	-
Common shares issued for accrued expenses	2,611	-
Issuance of subsidiary common stock for prepaid services	175,000	-
Prepaid insurance paid for via issuance of note payable	$32,561	$-
The accompanying notes are an integral part of these consolidated financial statements.

53

Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 1 – Organization and Basis of Financial Statement Presentation

Business Description

Sack Lunch Productions, Inc. (“Sack Lunch”, “SAKL”, “it”, “we”, “us”, “our”, the “Company”) conducts operations in three lines of business:

Events – We produce branded events under our own trademarked names including Color Me Rad, The Dirty Dash, Lantern Fest, Slide the City, and Trike Riot.  We also franchise our branded events to third parties under agreements with various franchisees. 

Salons - the operation of Landis Lifestyle Salons through SAKL’s controlling ownership interest in Green Endeavors, Inc. (“GRNE”) 

Other - film distribution, assisting with the development and production of film products, and the acquisition, leasing and selling of real estate.
 

SAKL was originally incorporated in the State of Colorado on April 20, 1987 as Metropolitan Acquisition Corporation. On October 5, 2000, SAKL merged with a Nevada corporation with the same name, effectively changing its state of domicile from Colorado to Nevada. In February 2002 SAKL changed its name to Nexia Holdings, Inc. In 2009, SAKL changed its domicile to the State of Utah through a merger with a Utah corporation with the same name.  The Company’s name was changed to Sack Lunch Productions, Inc. effective April 15, 2015.

During the first quarter of 2016 the Company has reorganized its operations to simplify the corporate structure and tax reporting of the Company’s subsidiaries. For Color Me Rad and Dirty Dash this resulted in the purchase of 100% of the assets of the LLC’s by new corporations formed to operate these events. Lantern Fest and Slide the City events operational LLC’s have been merged into new corporations that will continue the operations of these events. These actions have resulted in the elimination and consolidation of numerous LLC’s into four wholly owned corporations and the resulting simplification of the organization and operation of these events and the reduction of tax and accounting reporting generated by the prior organization.

Slide the City Productions, Inc., a Utah corporation formed on February 2, 2016 has merged with Slide the City Franchising LLC, Slide the City Canada LLC and Slide the City LLC and will operate the Slide the City events of the Company going forward.

The Lantern Fest Productions, Inc. a Utah corporation, formed on February 3, 2016 has merged with Lantern Fest LLC and will operate the Lantern Fest events of the Company.

Color Me Rad Productions, Inc. a Utah corporation, was formed on January 28, 2016 and has purchased 100% of the assets of Color Me Rad, LLC and will operate Color Me Rad events and the Color Me Rad franchises for the Company.

Trike Riot Productions Inc. a Utah corporation was formed on February 10, 2016 and will operate Trike Riot events for the Company.

The Dirty Dash Productions, Inc. a Utah corporation was formed on January 28, 2016 and has purchased 100% of the assets of Dirty Dash LLC and Springbok Franchising, LLC and will operate Dirty Dash events for the Company.

54

Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

On March 29, 2016 the Company transferred the LLC Memberships it held in Springbok Holdings LLC. This LLC is the sole member of Springbok Management LLC, Springbok Franchising LLC and Springbok Slide the City LLC. These membership interests were transferred to Diversified Holdings X, Inc. for $100 in cash and other good and valuable consideration. The Company agreed to indemnify DHX against any liability arising at the time the Company held the membership interests, including providing legal counsel and defense against any litigation brought against DHX.  DHX is 100% owned by Richard Surber, the CEO of Sack Lunch Productions, Inc. The transaction was affected to streamline the operations of SAKL. All the transferred LLC’s are expected to be dissolved by the end of 2017.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation / Principles of Consolidation

The consolidated financial statements include the accounts of Sack Lunch Productions, Inc. and its wholly-owned and majority-owned subsidiaries, Slide the City Productions, Inc., Lantern Fest Productions, Inc., Color Me Rad Productions, Inc., The Dirty Dash Productions, Inc., Trike Riot Productions, Inc., WG Productions Company, Redline Entertainment, Inc., Diversified Management Services, Inc., Wasatch Capital Corporation, Downtown Development Corporation, Green Endeavors, Inc., Landis Salons, Inc., Landis Salons II, Inc., and Landis Experience Center.  LLC.   All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates in the Preparation of the Financial Statements

The consolidated financial statements are prepared in conformity with U.S. GAAP, which requires the use of estimates, judgments and assumptions that affect the amounts of assets and liabilities at the reporting date and the amounts of revenue and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates actual results could differ from the original estimates, requiring adjustments to these balances in future periods.

Cash and Cash Equivalents

Investments with original maturities of three months or less at the time of purchase are considered cash equivalents. As of December 31, 2016 and 2015, SAKL had no cash equivalents.

Concentration of Credit Risk   

Our cash balances are maintained in accounts held by major banks and financial institutions located in the United States.  The Company occasionally maintains amounts on deposit with a financial institution that are in excess of the federally insured limits.  The risk is managed by maintaining all deposits in high quality financial institutions.  The Company has incurred no losses related to this risk.

Accounts Receivable

Accounts receivable consist of amounts earned and receivables for film production, rents receivable in our real estate assets, balances owed to us by franchisees for merchandise, equipment, franchise fees and royalties, and vendor rebate receivables in our salons.  The Company periodically reviews its accounts receivable balances for collectability and realizable value. An allowance is provided where collectability is considered impaired and balances are written off when considered uncollectable.

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Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Inventory

SAKL’s inventory consists of goods used in our event operations and for resale at our events, and hair care products in our salon operations. Cost is determined using the first in first out, FIFO method. Market is determined based on the estimated net realizable value, which generally is the merchandise selling price. Inventory levels are reviewed in order to identify slow-moving merchandise and damaged items. Markdowns are used to clear merchandise.

Prepaid expenses

Prepaid expenses principally consist of prepaid financing expenses, event costs incurred in advance of an event taking place including deposits on sites, equipment and vendors, and prepaid salon operating expenses.

Property, Plant, and Equipment

Property and equipment is stated at cost. Expenditures that materially increase the life of the assets are capitalized. Ordinary maintenance and repairs are charged to expense as incurred. When assets are sold, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized at that time. All capital leases are added to the property and equipment and depreciated over the life of the assets.

Depreciation is computed on the straight-line method over the following useful lives:

Leasehold improvements	Shorter of the lease term or the estimated useful life
Buildings	27.5 - 39 years
Computer equipment and related software	3 years
Furniture, equipment and fixtures	3-10 years
Vehicles	5 years

Fair Value Measurements

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

• Level 1 – Quoted market prices in active markets for identical assets or liabilities;

• Level 2 – Observable market based inputs or inputs that are corroborated by market data;

• Level 3 – Unobservable inputs that are not corroborated by market data.

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Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

	Total fair	Quoted prices	Significant other	Significant
	value at	in active	observable	unobservable
	December 31,	markets	inputs	inputs
Description	2016	(Level 1)	(Level 2)	(Level 3)
Derivative liability (1)	$1,391,432	$              -	$              -	$1,391,432
	Total fair	Quoted prices	Significant other	Significant
	value at	in active	observable	unobservable
	December 31,	markets	inputs	inputs
Description	2015	(Level)	(Level 2)	(Level)
Derivative liability (2)	$2,113,172	$              -	$              -	$2,113,172

Long-Lived Assets

We periodically review the carrying amount of our long lived assets for impairment.  An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset.  In the event the carrying amount of such asset is not considered recoverable, the asset is adjusted to its fair value.  Fair value is generally determined based on discounted future cash flow.  There were no impairments of long-lived assets during the years ended December 31, 2016 and 2015.

Goodwill and Intangible Assets  

We test goodwill balances for impairment on an annual basis as of December 31, or whenever impairment indicators arise. We utilize several reporting units in evaluating goodwill for impairment. We assess the estimated fair value of reporting units using a combination of a guideline public company market-based approach and a discounted cash flow income-based approach. If the carrying amount of a reporting unit exceeds the fair value of the reporting unit, an impairment charge is recognized in an amount equal to the excess of the carrying amount of the reporting unit goodwill over the implied fair value of that goodwill.

We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of our intangible assets are subject to amortization. Intangible assets are amortized on a straight-line basis, except for customer lists, which are generally amortized on an accelerated basis, over the following useful lives:

Deferred Revenue

Deferred revenue arises when customers pay for products and/or services in advance of revenue recognition. SAKL’s deferred revenue consists of unearned revenue associated with the purchase of event ticket sales in advance of the event date, franchise ownership sales for which revenue is recognized only when the service is performed, the product is delivered, the event takes place, or all training obligations have been satisfied, and gift certificates.

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Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

As of December 31, 2016 and December 31, 2015 the classes of deferred revenue consisted of the following:

	December 31,
	2016	2015
Event Ticket Sales	$        203,243	$   87,669
Gift Cards	86,223	66,048
Total Deferred Revenue	$        289,466	$ 153,717

Revenue Recognition

SAKL recognizes revenue from services, products, rentals, franchise fees and royalties and other.

Services

Our service revenue includes participant ticket sales to events and salon stylist services.  SAKL follows the general policy of ASC 605 and recognizes service revenue when the following conditions are met:

Persuasive evidence of an arrangement exists; 

Delivery has occurred or services have been rendered; 

Our price to the buyer is fixed or determinable; and 

Collectability is reasonably assured.   

Event revenue is recognized at the time the events occur or the product is delivered.  Ticket sales are recorded in the period in which the event takes place less refunds. Salon revenue is generally recognized at the time the service is provided in the salon.

Products

Our product revenue includes event merchandise sales and product sales at the salons. We recognize revenue generally at the point of sale and according to ASC 605, which supports the SEC’s view that it is not appropriate to recognize revenue until all of the following criteria are met:

Persuasive evidence that an arrangement exists 

Delivery has occurred or services have been rendered 

Our price to the buyer is fixed or determinable 

Collectability is reasonably assured  

Rental

SAKL owns one commercial building and two residential homes which it leases to tenants. The Company recognizes revenue from rent once all of the following criteria are met in accordance with ASC 605:

The agreement has been fully executed and delivered; 

Services have been rendered; 

The amount is fixed or determinable; and 

The collectability of the amount is reasonably assured. 

Lease agreements are generally five years for the commercial building and one year for the residential homes. Annual lease amounts generally increase each year. Commercial tenant leases include reimbursement to SAKL for allocated property taxes, insurance on the building and common area expenses.

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Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Franchise Fees and Royalties

We recognize franchise fee and royalty income from certain events and record revenue according to agreements and recognize revenue when the following conditions are met:

We have no remaining obligation or intent to refund any cash received or forgive unpaid notes to the franchisee 

All of the initial services have been performed 

No other material conditions or obligations related to the determination of substantial performance exist 

Other

The Company recognizes film revenue from the production and distribution of films and related products in accordance with ASC 926.  

ASC 926 states that all of the following criteria must be met in order to recognize revenue:

Persuasive evidence of a sale or licensing agreement with a customer exists. 

The film is complete and, in accordance with the terms of the agreement, has been delivered or is available for immediate and unconditional delivery. 

The license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale. 

The agreement fee is fixed or determinable. 

Collection of the arrangement fee is reasonably assured. 

Cost of Revenues

SAKL recognizes costs related to the revenue from services, products, rentals, franchise fees and royalties and other.

Services

Event costs include all costs relating to the production of an event for which the participant has paid including site expenses, event crew labor, entertainment, and transportation of equipment, goods and crew to and from the event site, and are expensed upon completion of the event.  Salon costs include all operating costs of the salons including labor and facility costs and are expensed as the services are provided.

Products

Event product costs include merchandise sales at the event and online, and items included in the participant bag (“swag”).  Salon product costs include those products used by the stylist and products sold retail.

Rental

Real estate properties and improvements are carried at historical cost. Depreciation is computed on the straight-line method over estimated useful lives.

Franchise fees and royalties

The costs associated with franchise fees and royalties are expensed as incurred.

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Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Other

Film production costs are subject to regular recoverability assessments, which compare the estimated fair values with the unamortized costs. Film production costs are expensed based on the ratio of the current period’s gross revenues to estimated total gross revenues. If actual demand or market conditions are less favorable than our projections, film cost write-downs may be required.

Advertising

The Company expenses advertising costs as they are incurred.  Advertising expense was $1,989,223 and $621,067 for the years ended 2016 and 2015, respectively.

General and administrative expenses

General and administrative expenses include marketing and advertising for all of our businesses, plus management, executive, human resources, legal, accounting, professional and other corporate expenses. These costs are generally expensed as incurred.

Stock-Based Compensation

SAKL recognizes the cost of employee and nonemployee services received in exchange for awards of equity instruments as stock-based compensation expense. Stock-based compensation expense is measured at the grant date based on the fair value of the restricted stock award, option, or purchase right and is recognized as expense, less expected forfeitures, over the requisite service period, which typically equals the vesting period. Because the recipient of stock based compensation is expected to and has historically received shares of common stock on or about the date of the stock option grant date as part of the exercise process, the fair value of each stock issuance is determined using the fair value of SAKL’s common stock on the grant date.  Stock-based compensation issued to non-employees that vests over time is revalued at each reporting period.

Income Taxes

The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax basis of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.

As of December 31, 2016 and 2015, SAKL’s deferred tax assets, which are solely related to net operating losses, have been fully offset by a valuation allowance.

Basic and Diluted Loss Per Common Share

SAKL computes net loss per common share by dividing the net loss available to common stockholders for the period by the weighted average number of common and potentially dilutive shares during the specified period. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share. For the year ended December 31, 2016, 483,250,144 shares were not included in the diluted net loss per share calculation as their effect would be anti-dilutive.

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Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Recent Accounting Pronouncements

Management believes the impact of recently issued standards and updates, which are not yet effective, will not have a material impact on SAKL's consolidated financial position, results of operations or cash flows upon adoption.

In February 2016, the FASB issued an ASU (Update 2016-02) amending the accounting for leases. The new guidance requires the recognition of lease assets and liabilities for operating leases with terms of more than 12 months, in addition to those currently recorded, on our consolidated balance sheets. Presentation of leases within the consolidated statements of operations and consolidated statements of cash flows will be generally consistent with the current lease accounting guidance. The ASU is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the impact and expect the ASU will not have a material impact on our consolidated financial statements.

In March 2016, The FASB issued an ASU (Update 2016-04) amending the accounting for prepaid stored-value products. This new guidance modifies the method to derecognize the financial and non-financial liabilities of these prepaid stored-value products when the likelihood of the product holder exercising its remaining rights becomes remote. The ASU is effective for reporting periods beginning after December 15, 2017 and interim periods for that fiscal year. We are currently evaluating the effects of this change and do not expect it to materially affect our financial statements.

In March 2016, the FASB issued an ASU (Update 2016-9) amending the accounting for stock-based compensation and requiring excess tax benefits and deficiencies to be recognized as a component of income tax expense rather than equity. This guidance also requires excess tax benefits and deficiencies to be presented as an operating activity on the statement of cash flows and allows an entity to make an accounting policy election to either estimate expected forfeitures or to account for them as they occur. The ASU is effective for reporting periods beginning after December 15, 2016, with early adoption permitted. We will adopt this ASU in the first quarter of 2017 by incorporating it into our stock-based compensation plan. As we do not currently have any outstanding potential forfeitures this change will not retroactively affect our financial statements.

In October 2016, the FASB issued an ASU (Update 2016-09) amending the accounting for income taxes. The new guidance requires the recognition of the income tax consequences of an intercompany asset transfer, other than transfers of inventory, when the transfer occurs. For intercompany transfers of inventory, the income tax effects will continue to be deferred until the inventory has been sold to a third party. The ASU is effective for reporting periods beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the impact and expect the ASU will not have a material impact on our consolidated financial statements.

In January 2017 the FASB issued an ASU (Update 2017-04) amending the test for goodwill impairment. The new guidance simplifies the procedures for testing impairment of goodwill for publicly traded entities. The new guidance modifies the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. The ASU is effective for reporting periods beginning after December 15, 2020 with early adoption permitted. We are currently evaluating the impact and expect the ASU will not have a material impact on our consolidated financial statements.

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Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 3 – Inventory

SAKL’s event inventories consist of finished goods that include apparel and other branded merchandise which are sold to participants as part of their participation ticket price, as well as are sold as individual items.  Inventory is carried at the lower of cost or market.  SAKL’s salon inventories consist of finished good products that are held for resale at all locations or that are used for the services provided by the two salons.  Inventory is carried at the lower of cost or market.  As of December 31, 2016 and 2015 inventory by segment consisted of the following:

	December 31,
	2016	2015
Event Inventory	$        863,871	$              1,491,713
Salon Inventory	152,790	138,928
Total Inventory	$      1,016,661	$              1,630,641

Note 4 – Property, Plant, and Equipment

The following is a summary of SAKL's property, plant, and equipment by major category as of December 31, 2016:

		Accumulated
	Cost	Depreciation	Net
Computer equipment and related software	$   130,870	$     108,059	$     22,811
Construction in process	-	-	-
Leasehold improvements	732,691	530,039	202,652
Furniture and fixtures	258,060	119,190	138,870
Leased equipment	76,298	69,321	6,977
Equipment	1,187,527	584,029	603,498
Vehicle	160,868	103,956	56,912
Building and Improvements	839,032	334,160	504,872
Land	502,809	-	502,809
Signage	25,154	16,212	8,942
Total	$ 3,913,309	$  1,864,966	$ 2,048,343

The following is a summary of SAKL's property, plant, and equipment by major category as of December 31, 2015:

		Accumulated
	Cost	Depreciation	Net
Computer equipment and related software	$   113,383	$      92,011	$     21,372
Construction in process	22,147	-	22,147
Leasehold improvements	639,253	476,654	162,599
Furniture and fixtures	151,282	79,866	71,416
Leased equipment	85,933	54,543	31,390
Equipment	1,143,280	391,626	751,654
Vehicle	229,245	101,529	127,716
Building and Improvements	828,885	305,667	523,218
Land	502,809	-	502,809
Signage	25,154	13,802	11,352
Total	$ 3,741,371	$  1,515,698	$ 2,225,673

Depreciation expense is $388,853 and $313,130 for the years ended 2016 and 2015, respectively.  

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Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 5 – Intangible Assets

The following is the weighted average amortization period for our intangibles assets:

	Amortization
	(Years)
Trade Names	10
Customer Contracts	5
Patents	10

The following tables provides a summary of the carrying amount of intangible assets that will continue to be amortized;

	As of December 31,
	2016
	Gross Amount	Accumulated Amortization	Net Amount
Trade Names	$     858,061	$                  119,000	$ 739,061
Customer Contracts	120,000	33,600	86,400
Patents	26,312	5,107	21,205
	$   1,004,373	$                  157,707	$ 846,666

	As of December 31,
	2015
	Gross Amount	Accumulated Amortization	Net Amount
Trade Names	$        858,891	$               34,000	$     824,891
Customer contracts	120,000	9,600	110,400
Patents	26,312	2,475	23,837
	$    1,005,203	$               46,075	$     959,128

The expected future 5 year amortization related to intangible assets is provided in the table below:

Year	Amortization
2017	$     112,437
2018	112,437
2019	112,437
2020	102,837
2021	78,837
Thereafter	327,680
Total Amortization	$     846,666

Amortization expense was $111,632 and $46,075 for the years 2016 and 2015 respectively.

Note 6 – Notes Receivable

SAKL has one note receivable from an LLC. It bears 5% interest and matures on 11/10/2018. The balance of principle and interest on December 31, 2016 and 2015 was $184,295 and $179,032 respectively.

Note 7 – Goodwill

As of December 31, 2016 and 2015 the balance of goodwill was $139,755.  No impairment charges have been recorded against goodwill.  All of the goodwill balance is related to the acquisition of Color Me Rad. 

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Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 8 – Notes Payable

A summary of notes payable as of December 31, 2016 and 2015 is as follows:

	Interest	Maturity	December 31,
	Rate	Date	2016	2015
To an Individual (a)	11.00%	2/27/2016	$               -	$        14,844
To an Individual (b)	12.00%	3/31/2016	199,638	300,000
To an Individual (c)	7.00%	10/1/2016	-	40,000
To a Bank (d)	6.00%	3/1/2017	14,317	-
To a Bank (e)	5.00%	6/5/2017	15,224	-
To a Bank (f)	8.00%	8/19/2017	24,646	-
To a Corporation (g)	5.00%	9/1/2017	-	18,935
To a Corporation (h)	24.33%	10/25/2017	83,333
To a Bank (i)	5.00%	11/11/2017	356,157	-
To a Bank (j)	12.00%	11/19/2017	-	261,806
To a Bank (k)	6.00%	12/11/2017	322,927	-
To a Bank (l)		2/9/2019	-	17,054
To a Partnership (m)	8.00%	3/3/2019	6,206	8,532
To a Bank (n)	6.50%	5/23/2021	551,229	564,790
To a Bank (o)	5.99%	6/17/2021	58,309	-
Less Debt Discount			(95,368)	(14,461)
Total Notes Payable			1,536,618	1,211,501
Less Current portion			970,406	508,142
Long Term Notes Payable			$       566,212	$       703,359

(a)On February 27, 2012, The Company issued an 11% note payable in the amount of $50,000 to an individual in exchange for a cash payment of the same amount. The note provides for monthly payments in the amount of $1,292 of principal and interest.  As of December 31, 2016 the full balance of the note and accrued interest was paid off. 

(b)On December 1, 2015 The Company issued a note payable in the amount of $300,000 to an individual for cash payment of the same amount. The note provides for a single payment at the due date. As of December 31, 2016 there was $199,638 of principle remaining unpaid. 

(c)On October 3, 2014 The Company issued an 8% note payable to an individual in the amount of $40,000 in exchange for cash payment of the same amount. The note provided for monthly payments of principle and interest beginning 90 days after the execution of the note, to be made equally over the remaining term of the note. As of December 31, 2016 the full balance of the note and accrued interest was paid off. 

(d)On March 1, 2016, The Company entered into a loan agreement with a bank in the amount of $62,000. The note provides for daily payments of $263. In addition to the merchant account receivables, collateral for the loan includes all receivables, financial instruments, equipment assets, inventories, intangibles, deposits, and other assets as applicable. The loan requires a prepaid interest charge that is 6% ($3,720) of the $62,000 loan amount. These financing costs are being amortized monthly to interest expense during the one year term of the loan. The total amount due at the inception date is $65,720.  

(e)On September 18, 2016 The Company issued a 5% note payable to a bank in the amount of $32,651 in exchange for cash payment. The note provides for monthly payments of $2,538. The loan requires a prepaid interest charge that is 5% ($1,634) of the $32,351 loan amount. These financing costs are being amortized monthly to interest expense during the two year term of the loan. The total amount due at the inception date was $34,285. 

64

Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

(f)On August 19, 2016, the Company entered into a loan agreement with a bank in the amount of $35,000. The note is a merchant account financing arrangement wherein Lantern Fest repays the loan at the rate of $151 of the American Express credit card sales receipts that are collected each business day. In addition to the merchant account receivables, collateral for the loan includes all receivables, financial instruments, equipment assets, inventories, intangibles, deposits, and other assets as applicable. The loan requires a prepaid interest charge that is 8% ($2,800) of the $35,000 loan amount. These financing costs are being amortized monthly to interest expense during the two year term of the loan. The total amount due at the inception date is $37,800. 

(g)On August 20, 2012, the Board of Directors approved The Company enter into a loan agreement with a Corporation in the amount of $50,000. Pursuant to the board approval, a note in the amount of $50,000 was issued on August 21, 2012. The note bears interest at 5% per annum and requires 60 monthly installments of $944 commencing October 1, 2012.  As of December 31, 2016 the full balance of the note and accrued interest was paid off. 

(h)On October 17, 2016 The Company issued a 24.33%, 12 month note in the amount of $100,000 to a corporation in exchange for cash of the same amount. The note provides for 6 monthly payments of $10,833 of principal and interest and then 6 monthly payments of $9,333 of principal and interest for the remainder of the note. 

(i)On November 11, 2016, the Company entered into a loan agreement with a bank in the amount of $390,000 at a rate of 5%. The note is a merchant account financing arrangement wherein Lantern Fest repays the loan at the rate of $1,612 each business day. In addition to the merchant account receivables, collateral for the loan includes all receivables, financial instruments, equipment assets, inventories, intangibles, deposits, and other assets as applicable. 

(j)On November 20, 2015, the Company entered into a loan agreement with a bank in the amount of $250,000. The note is a merchant account financing arrangement wherein Landis repays the loan at the rate of 31% of the American Express credit card sales receipts that are collected each month. In addition to the merchant account receivables, collateral for the loan includes all receivables, financial instruments, equipment assets, inventories, intangibles, deposits, and other assets as applicable. The loan requires a prepaid interest charge that is 12% ($30,000) of the $250,000 loan amount. These financing costs are being amortized monthly to interest expense during the two year term of the loan. The total amount due at the inception date is $280,000. 

(k)On November 5, 2016, the Company entered into a loan agreement with a bank in the amount of $346,000. The note is a merchant account financing arrangement wherein Landis repays the loan at the rate of 75% of the American Express credit card sales receipts that are collected each month. In addition to the merchant account receivables, collateral for the loan includes all receivables, financial instruments, equipment assets, inventories, intangibles, deposits, and other assets as applicable. The loan requires a prepaid interest charge that is 6% ($20,760) of the $346,000 loan amount. These financing costs are being amortized monthly to interest expense during the one year term of the loan. The total amount due at the inception date is $366,760. 

(l)On January 23, 2014 The Company issued a note payable in the amount of $26,928 for the purchase of fixed assets. The note provides for monthly payments of $449. As of December 31, 2016 the entire balance of the note was paid in full. 

(m) On March 3, 2014, The Company entered into a loan agreement with a partnership in the amount of $12,021 for the financing of professional laundry equipment.  The note calls for 60 monthly payments of $244 commencing when the equipment is delivered for installment. In addition to corporate guarantees, Richard Surber, President, CEO, and Director of SAKL is a personal guarantor and the note is secured by the equipment. 

(n)On May 23, 2011 The Company entered into a mortgage note payable in the amount of $615,262 at a rate of 6.5%. The note provides for monthly payments of $4,158.  

65

Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

(o)On August 17, 2016, The Company entered into a loan agreement with a bank in the principal amount of $64,495 with an interest rate of 24%. The loan agreement requires 60 monthly payments of principal and interest in the amount of $1,242. The maturity date is June 17, 2021. 

During 2016 and 2015 the Company negotiated settlement agreements for several notes. As a result SAKL recorded a loss on extinguishment of debt of ($2,167,129) and a gain on extinguishment of debt of $110,220, respectively.

Note 9 – Convertible Notes Payable

	Interest	Maturity	December 31,
	Rate	Date	2016	2015
To a Corporation (a)	8.00%	7/21/2012	$               -	$        26,863
To a Corporation (b)	8.00%	8/17/2014	35,000	35,000
To a Corporation (c)	8.00%	10/28/2015	-	14,983
To a Corporation (d)	12.00%	6/13/2017	1,904,301	1,800,000
To a Corporation (e)	12.00%	7/30/2017	-	38,500
To a Corporation (f)	7.00%	8/3/2017	240,000	-
Less Debt Discount			(133,870)	(1,530,922)
Total Convertible Notes Payable			2,045,431	384,424
Less Current portion			2,045,431	376,314
Long Term Convertible Notes Payable			$               -	$          8,110

(a)On July 21, 2009, The Company issued a $60,000 convertible promissory note to a corporation The Company converted $60,000 of accounts payable to the corporation to the note. The transaction has been handled as a private sale exempt from registration under Rule 506 of the Securities Act of 1933. The note bears interest at a rate of 8% per annum. The note can be convertible into SAKL’s common shares at the conversion rate of 65% (a 35% discount) of the market price of the closing price on the date of notice. As of December 31, 2016, the balance of the note had either been paid or converted into shares of common stock. 

(b)On August 17, 2012, The Company issued a $35,000 convertible promissory note to a corporation The Company converted $15,000 of accounts payable to the corporation to the note and also received $20,000 in cash for the loan. The transaction has been handled as a private sale exempt from registration under Rule 506 of the Securities Act of 1933. The note matures on August 17, 2014 and bear interest at a rate of 8% per annum. After one year from issuance, the note can be convertible into Green’s common shares at the conversion rate of 54% of the market price of the lowest price of Green’s common shares during the ten-day period ending one trading day prior to the date of the conversion. As of December 31, 2016, none of the note had been converted into shares of common stock and the note is in default 

(c)On March 25, 2015, Green issued a $34,000 Convertible Promissory Note to LG Capital Funding, LLC (“LGCF Note”) that matured March 26, 2016. The LGCF Note bears interest at a rate of 8% per annum and can be convertible into Green’s common shares, at the holder’s option, at the conversion rate of 58% of the market price (a 42% discount) of an average of the three lowest trading price of Green’s common shares during the eighteen-day period ending on the date of the conversion. On March 29, 2016 Green settled the LGCF note for a payment of the remaining balance of principle and interest owed. 

(d)On October 1, 2015 The Company issued a convertible note payable in the amount of $1,800,000 for cash received in the same amount. The note bears interest at a rate of 12% per annum. In July 2016 The Company increased this note by $440,000 for cash received in the same amount and by $375,000 for value of Series C preferred shares returned to the Company. The note is convertible into SAKL’s common shares at the holder’s option, after an event of default, at the conversion rate  

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Notes to Consolidated Financial Statements

December 31, 2016 and 2015

of 85% (a 15% discount) of the lowest of the daily volume weighted average price of SAKL’s common shares during the five business days prior to the conversion date. As of December 31, 2016 none of the note had been converted in shares of common stock.

(e)On July 30, 2015, Green issued a $38,500 Convertible Promissory Note to JMJ. The JMJ Note can be convertible into Green’s common shares, at the holder’s option, at the conversion rate of 60% of the market price (a 40% discount) of an average of the three lowest trading price of Green’s common shares during the eighteen-day period ending on the date of the conversion. On March 24, 2016 Green settled the JMJ Note for a payment of the remaining balance of principle and interest owed. 

(f)On August 3, 2016 The Company issued a $240,000 convertible note payable to a corporation. The note bears guaranteed interest of 7% of the principle amount. The note is convertible into shares of SAKL common stock at the holder’s option. The conversion rate is 70% of the market price (a 30% discount) of the lowest market price during the 10 consecutive trading days prior to conversion. In the event of default the rate of conversion would be 60% of the market rate (a 40% discount). As of December 31, 2016 none of the note had been converted to shares of common stock. 

Note 10 - Related Party Notes

Convertible Related Party Notes Payable

	Interest	Maturity	December 31,
	Rate	Date	2016	2015
Convertible Note Payable to Richard Surber, President and CEO of SAKL (a)	24.00%	11/20/2011	$            59,394	$            60,282
			$            59,394	$            60,282

(a)On July 13, 2011 the Company issued a note payable, in the amount of $250,000, to Richard Surber, President and CEO of SAKL, in exchange for common shares of Green Endeavors Inc. The note is convertible into Sack’s common shares, at the holder’s option, at the conversion rate of 90% (a 10% discount) of the average market price of Sack’s common shares as reported from the date of notice to the date of conversion. 

Related Party Notes Payable

	Interest	Maturity	December 31,
	Rate	Date	2016	2015
Note Payable to a Corporation (a)	18.00%	5/6/2016	$              9,309	$              9,309
Note Payable to Richard Surber, President and CEO of SAKL (b)	20.00%	11/6/2017	25,000	25,000
Note Payable to Richard Surber, President and CEO of SAKL (c)	18.00%	3/12/2018	-	20,820
Total Related Party Notes			34,309	55,130
Less Current portion			34,309	40,740
Long Term Related Party Notes			$                     -	$            14,389

(a)On May 6, 2015 Landis salons Inc. entered into a promissory note with Diversified Holdings X Inc. for the sum of $10,000. The interest rate on this loan is 18% per annum. There was to be a lump sum payment made 12 months after the origination date.  The note is in default.  

(b)On November 6, 2012, Landis Salons II, Inc. entered into a promissory note with Richard Surber, President, CEO, and Director of Green, for the sum of $25,000 for funds loaned. The note bears interest at the rate of 20% per annum, with a term of five years and monthly payments of $662 and a demand feature by which the note can be called upon the demand of Mr. Surber. As security for  

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Notes to Consolidated Financial Statements

December 31, 2016 and 2015

the note, Landis Salons II pledged all of its assets, stock in trade, inventory, furniture, fixtures, supplies, any intangible property and all tangible personal property of Landis Salons II and all and any other assets to which Landis Salons II holds title or claims ownership or that is hereafter acquired by Landis Salons II, subject only to purchase money liens held by sellers or grantors.

(c)On March 24, 2015, Landis Salons, Inc. entered into a promissory note with Richard Surber, President, CEO, and Director of Green, for the sum of $25,082 for funds loaned. The note bears interest at the rate of 18% per annum, with a term of five years and monthly payments of $806 and a demand feature by which the note can be called upon the demand of Mr. Surber. As security for the note, Landis Salons pledged all of its assets, stock in trade, inventory, furniture, fixtures, supplies, any intangible property and all tangible personal property of Landis Salons and all and any other assets to which Landis Salons holds title or claims ownership or that is hereafter acquired by Landis Salons, subject only to purchase money liens held by sellers or grantors. During 2016 the debt was settled by paying the remainder of the principle and interest of the note. 

Note 11 – Derivative Liability

The Company has convertible notes that could be considered derivatives or contain embedded features subject to derivative accounting. The Notes convert into shares of the Company's common stock using a calculation of lowest prices over a period of time and some at a discount. The Company also added an additional convertible note in the year that converts at 85% of the lowest of the daily volume weighted average price of the Borrower's common stock during the five days immediately prior to the conversion date. The note also contains a ratchet provision. Because the terms do not dictate a maximum numbers of convertible shares, the ability to settle these obligations with shares would be unavailable causing these obligations to potentially be settled in cash. This condition creates a derivative liability Under ASC 815-40. The Company evaluates embedded conversion features within convertible debt under ASC 815 "Derivatives and Hedging" to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 "Debt with Conversion and Other Options" for consideration of any beneficial conversion feature. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. The Company has estimated the fair value of these embedded derivatives for convertible debenture using a multinomial lattice model.  As of December 31, 2016 and 2015, the Company, has a $1,391,432 and $2,113,172 derivative liability respectively, related to convertible notes payable.  For the years ended December 31, 2016 and 2015, the Company recorded gains of $2,311,016 and $55,363 from derivative liability fair value adjustments respectively.

Note 12 – Income Taxes

The Company follows ASC 740, under which deferred income taxes reflect the net effect of (a) temporary differences between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carry-forwards. No net provision for refundable Federal income tax has been made in the accompanying statement of loss because no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carry-forward has been recognized, as it is not deemed likely to be realized.  The cumulative net operating loss and the cumulative tax effect at the expected composite rate of 39 percent of our net deferred tax amount is as follows:

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Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

	December 31,
	2016	2015
Income (Loss) per books	$      (3,187,073)	$      (1,574,073)
Income tax differences:
Derivative adjustments	(2,311,016)	120,362
Interest - debt discount	992,505	-
Debt extinguishment	2,167,129	-
Loss on subscription receivable	40,883	-
Contributions - carryforward	352,909	161,340
Accrued expenses to controlling shareholder	24,724	39,007
Other non-deductible expenses	65,037	39,644
Other adjustments	(95,801)	31,476
Taxable income (loss)	(1,950,703)	(1,182,244)
Prior year NOL carryover	(18,783,065)	(17,600,821)
Cumulative NOL carryover	$    (20,733,768)	$    (18,783,065)
Deferred Income Taxes	12/31/2016	12/31/2015
Cumulative NOL	(20,733,768)	(18,783,065)
Deferred Tax Assets:
(34% Federal, 5% Avg. Corp. Rate)	8,086,170	7,325,395
Valuation allowance	(8,086,170)	(7,325,395)
Net balance	$                      -	$                      -
Deferred tax asset for current year at combined
statutory rates (39%)	760,774	461,075
Change in valuation allowance	(760,774)	(461,075)
Total	$                      -	$                      -

Note 13 – Related Party Transactions

Accounts payable, related party, includes accounts payable and interest payable to Richard Surber, CEO, and entities or companies controlled by Mr. Surber.

Mr. Surber, a related party, is providing his personal guaranty for several lines of credit and credit cards that are being utilized by the Company and its operating subsidiaries. In addition to the above, Mr. Surber is a personal guarantor to notes payable by the Company with remaining principal balances of approximately $1,200,000. Subsequent to December 31, 2016, Mr. Surber continues to provide his personal guaranty for several lines of credit, credit cards, and loans that are being utilized by the Company and its subsidiaries. The total amount of these credit obligations could exceed the amount of $300,000 from time to time.  

Note 14 – Lease Commitments

Operating Leases

Salon facilities are leased under operating leases expiring at various dates through 2020. Certain of these leases contain renewal options. Rent expense for the years ended December 31, 2016 and 2015 was $226,107 and $189,059 respectively.

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Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

As of December 31, 2016 future minimum lease payments under non-cancelable operating leases were as follows.

For the year  ended December 31,	Operating Leases
2017	$              220,292
2018	230,129
2019	206,732
2020	128,525
Total operating lease payments	$              785,678

Capital Leases

The company has entered into lease agreements that it has evaluated under the guidance of ASC 840. The Company has classified these leases as capital leases for equipment.

	Interest	Maturity	Monthly	December 31,
	Rate	Date	Payment	2016	2015
Capitalized lease for equipment	3.62%	11/12/2021	$                 389	$            21,294	$        25,110
Capitalized lease for equipment	10.07%	8/19/2020	205	7,469	9,058
Capitalized lease for equipment	14.32%	5/6/2019	2,248	54,840	-
Capitalized lease for equipment	16.96%	4/23/2016	1,535	-	5,929
Capitalized lease for equipment	17.75%	9/5/2016	485	-	4,110
Total Capital Leases Payable			$              4,862	83,603	44,206
Less Current portion				26,134	22,911
Long Term Capital Leases Payable				$            57,469	$        21,295

These leases have been capitalized and included with the company’s equipment and is amortized as such. This amortization is included with depreciation expense for financial statement presentation.  The book value of these assets is as follows:

	December 31,
	2016	2015
Carrying Amount	$            76,298	$            85,933
Accumulated Amortization	69,321	54,543
Net Book Value	$              6,977	$            31,390

As of December 31, 2016, future minimum lease payments under non-cancelable capital leases were as follows:

	December 31, 2016
Total, net	$                                       83,603
Less current portion	26,134
Long-term portion	$                                       57,469

Future minimum capital lease payments for the next 5 years:

Payments for the year ended December 31,	Capital Lease Payments
2017	$                                34,100
2018	34,100
2019	18,363
2020	6,508
2021	4,532
Total operating lease payments	97,603
Less interest for the terms	14,000
Total, net	$                                83,603

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Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 15 – Equity

Preferred Stock

SAKL is authorized to issue 50,000,000 shares of preferred stock with a par value of $0.001 per share. The Preferred Stock can be issued in various series with varying dividend rates and preferences.

As of December 31, 2016 and 2015, the number of shares of Series A Convertible Preferred Stock issued and outstanding was 617,750 and 559,750. The Series A Preferred shares have voting rights equal to 10 shares of common stock for every 1 Series A Preferred share, and it may be converted into $10 worth of common stock. A total of 10,000,000 shares have been designated and authorized as Series A Preferred Stock.

As of December 31, 2016 and 2015, the number of shares of Series B Convertible Preferred Stock issued and outstanding was 15,000,000. The shares  have  conversion rights into shares of common stock of one (1) share of common stock for each 10 (ten) shares of Series B Preferred. A total of 20,000,000 shares have been designated and authorized as Series B Preferred Stock pursuant to a filing on August 31, 2016. On August 23, 2016 an amendment to the designation of the Series B shares was filed with the State of Utah, voting rights were amended to be 100 votes per share.

As of December 31, 2016 and 2015, the number of shares of Series C Preferred Stock issued and outstanding was 467,583 and 1,228,761 shares, respectively. The Series C Preferred shares may be converted into $5.00 worth of common stock and are subject to redemption by SAKL in the amount of $5.00 per share, payable in cash or common stock of the Company. The Series C Preferred shares hold voting rights equal to 1 share of common stock for every 1 Series C Preferred share. A total of 5,000,000 shares have been designated and authorized as Series C Preferred Stock.

On December 20, 2016 the Board of Directors designated 200,000 shares of preferred stock as Series D Convertible Preferred.  As of December 31, 2016 the number of shares of Series D Preferred Stock issued and outstanding was 72,100.  The Series D Preferred shares may be converted into common stock at a 50% discount and are subject to redemption by SAKL in the amount of $5.00 per share, payable in cash or common stock of the Company.  

All series of Preferred stock are reflected on the balance sheet as Mezzanine due to their convertible nature.

On May 19, 2016 the Board of Directors approved the conversion of 3,000 shares of Series A Preferred shares into 230,796 shares of Common Stock. The shares were converted at $0.13 based on the conversion provisions of the Convertible Series A Preferred Stock designation.

On May 20, 2016 the Board of Directors approved the issuance of 10,000 shares of Series A Preferred Stock in exchange for a cash payment in the sum of $50,000.

On June 3, 2016, the Board of Directors approved the issuance of 3,000 shares of Series A Preferred Stock in exchange for a cash payment in the sum of $15,000.

On July 5, 2016, the Board of Directors approved the issuance of 4,000 shares of Series A Preferred Stock in exchange for a cash payment in the sum of $20,000.

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Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

On July 5, 2016 the Board of Directors approved the issuance of 20,000 shares of Series A Preferred Stock in exchange for a cash payment in the sum of $100,000.

On July 6, 2016, the Board of Directors approved the issuance of 4,000 shares of Series A Preferred Stock in exchange for a cash payment in the sum of $20,000.

On October 17, 2016 the Board of Directors authorized the issuance of 20,000 restricted shares of Series A Preferred Stock pursuant to a Stock Purchase Agreement for cash consideration of $100,000.

On January 23, 2015 the Board of Directors approved the conversion of 5,950 shares of Series C Preferred shares into 3,233,696 shares of Common Stock.  The shares were converted at $0.0092 based on the conversion provisions for the Convertible Series C Preferred Stock designation.

On March 12, 2015 the Board of Directors approved the conversion of 4,676 shares of Series C Preferred shares into 3,500,000 shares of Common Stock.  The shares were converted at $0.00668 based on the conversion provisions for the Convertible Series C Preferred Stock designation.

On July 23, 2015 the Board of Directors approved the conversion of 4,488 shares of Series C Preferred shares into 3,300,000 shares of Common Stock.  The shares were converted at $0.0068 based on the conversion provisions for the Convertible Series C Preferred Stock designation.

On October 15, 2015 the Board of Directors approved the issuance of 85,000 shares of Series C Preferred stock advisory services valued at $425,000.

On October 30, 2015 the Board of Directors approved the conversion of 11,776 shares of Series C Preferred shares into 3,542,720 shares of Common Stock.  The shares were converted at $0.0166 based on the conversion provisions of the Convertible Series C Preferred Stock designation.

On December 7, 2015 the Board of Directors approved the conversion of 3,552 shares of Series C Preferred shares into 1,110,000 shares of common stock. The shares were converted at $0.016 based on the conversion provisions of the Convertible Series C Preferred Stock designation.

On December 21, 2016 SAKL entered into an Exchange Agreement with an independent third party to exchange 72,100 shares of Series C Preferred stock for Series D Preferred stock.  This exchange resulted in a deemed dividend of $386,250.

During 2015 the Board of Directors cancelled or redeemed 278,396 shares of its Series C Preferred shares. The Board cancelled 193,636 Series C shares that the Company had held in its possession for in excess of 5 years based upon the non-performance of certain agreements. The Board approved 84,760 shares that were bought back pursuant to certain Stock Purchase Agreements.

On January 21, 2016 the Board of Directors approved conversion of 41,565 shares of Series C Preferred for the issuance of 4,618,333 shares of common stock. The shares were converted at $0.045 based on the conversion provisions for the Convertible Series C Preferred Stock designation.

On March 8, 2016 a conversion earlier approved by the Board of Directors was carried out whereby 11,776 shares of Series C Preferred Stock were converted into 3,542,720 shares of Common Stock.

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Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

On April 22, 2016 the Board of Directors approved the issuance of 1,595,474 shares of restricted common stock from the conversion of 25,133 shares of Series C Preferred Stock. The shares were converted at $0.07694 based on the conversion provisions for the Convertible Series C Preferred Stock designation.

The Company signed an agreement on April 26, 2016 with TCA to redeem 85,000 shares of its Series C preferred stock with a face value of $425,000. On July 13, 2016 the agreement was cancelled, the debt was rolled into an amended TCA note and the shares were returned to unissued.

On May 19, 2016 the Board of Directors approved the conversion of 169,600 shares of Series C Preferred shares into 6,523,074 shares of Common Stock. The shares were converted at $0.13 based on the conversion provisions of the Convertible Series C Preferred Stock designation.

On July 20, 2016 the Board of Directors approved the conversion of 33,164 shares of Series C Preferred Stock into 2,232,364 shares of Common Stock. The shares were converted at $0.07428 based on the conversion provisions of the Series C Preferred Stock.

On July 27, 2016 the Board of Directors approved the conversion of 50,000 shares of Series C Preferred Stock into 3,733,015 shares of Common Stock. The shares were converted at $0.06626 based on the conversion provisions of the Series C Preferred Stock.

On August 5, 2016 the Board of Directors approved the issuance of 40,000 shares of Series C Preferred Stock in exchange for a cash payment in the sum of $100,000.

On October 27, 2016 the Board of Directors approved the conversion of 10,000 shares of Series C Preferred Stock into 1,592,357 shares of Common Stock. The shares were converted at $0.03414 based on the conversion provisions of the Series C Preferred Stock.

Common Stock

As of December 2016, SAKL was authorized to issue 990,000,000 shares of common stock with a par value of $0.0001 per share. As of December 31, 2016 and 2015, the number of common shares issued and outstanding was 163,535,685 and 135,999,942, respectively. The common stock holds voting rights of one vote per share. It has no dividend or preemptive rights.

On February 8, 2016 the Board of Directors approved the issuance of 2.4 million shares of common stock to satisfy an obligation under a May 11, 2015 fee agreement with Meyers Associates L.P.

On February 17, 2016 the Board of Directors approved the issuance of 600,000 restricted shares of Common Stock to John E. Fry. Jr. as compensation for his services as a director of the Company.

On February 19, 2016, 900,000 shares of Common Stock were issued in satisfaction of Red Chip Companies, Inc. contract entered into on November 3, 2015.

On March 4, 2016 the Board of Directors approved the issuance of 83,333 restricted shares of Common Stock as provided for by the terms of a Promissory Note in the amount of $300,000 and which shares were provided as partial compensation for the granting of the loan that created the note.

On May 12, 2016 the Board of Directors approved the return to treasury of 3,800,000 shares of Common Stock held in the name of Richard Surber.

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Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

On August 3, 2016, SAKL issued a $550,000 Convertible Promissory Note, with initial consideration of $240,000, to Tangiers Global, LLC ("Tangiers Note") that matures August 3, 2017. The Tangiers Note bears interest at a rate of 7% per annum and can be convertible into SAKL's common shares, at the holder's option, at the conversion rate of 70% of the market price (a 30% discount) of the lowest closing price of SAKL's common shares during the ten days prior to the date of the conversion.

On October 23, 2015, the Company issued 2,105,65 shares of its common stock to an individual in satisfaction of a promissory note dated June 28, 2011 in the amount of $33,690.

On November 3, 2015, the Company issued 900,000 shares of common stock to a corporation for investor relations services.

On December 4, 2015, the Company issued 52,569,350 shares of common stock to Richard Surber in satisfaction of debt owed to Mr. Surber as compensation.

On December 7, 2015 the Company sold 3,000,000 shares of common stock for $45,000.

Note 16 – Litigation

From time to time, we are involved in various disputes and litigation that arise in the ordinary course of business. If the potential loss from any claim or legal proceeding is considered probable and the amount or the range of loss can be estimated, we accrue a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based only on the best information available at the time. As additional information becomes available, we reassess the potential liability related to pending claims and litigation matters and may revise estimates.

While the outcome of disputes and litigation matters cannot be predicted with any certainty, management does not believe that the outcome of any current matters will have a material adverse effect on our consolidated financial position, liquidity or results of operations.  The following are claims and litigation of which the Company has received notification;

1.Kimberly S. Livingood and Husband, Kevin Livingood v Slide the City, LLC, Sack Lunch Productions, Inc. d/b/a Slide the City, LLC and Ride the Slide, LLC, Case No 16C760 In the Circuit Court of Hamilton County, State of Tennessee. Filed June 17, 2016, amount of damages sought are not specified.  This was an injury asserted to have been occurred at a franchised Slide the City event, insurance coverage for the event has been notified and is currently providing a defense for the named parties.  Sack Lunch believes itself to be an improper party to the case and has filed an answer through counsel to that effect.  Discovery related to the case is ongoing at this time.   

2.Jennifer Kelly v. The Dirty Dash Productions Inc., unknown John Does, In the Superior Court of the State of Washington, in and For Thurston County, complaint served on Sack Lunch on January 9, 2017.  Copy of the complaint has been provided to the liability insurance carrier for Dirty Dash and Sack Lunch. Claim based upon personal injury to Ms. Kelly alleged to have occurred at a Dirty Dash event on June 25, 2016 in McCleary, Washington, the amount of damages are not specified.  Counsel for insurance carrier has filed a response and a counterclaim to the suit on behalf of Dirty Dash. 

3.Midland IRA Inc., FBO Arthur Wulf Roth IRA v Sack Lunch Productions Inc. and Richard Surber, Case No. 2017-L-003022 in the Circuit Court of Cook County, Illinois, filed March 23, 2017, seeking damages of $217,559.68, plus additional interest, attorneys’ fees and costs, arising from the December 1, 2015 Promissory Note from Sack Lunch to Plaintiff in the  

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Notes to Consolidated Financial Statements

December 31, 2016 and 2015

original amount of $300,000.  Sack Lunch has retained defense counsel to represent it in the matter and has removed the case to the U.S. District Court for the Northern District of Illinois.  Discussions to resolve the matter are taking place between the parties.  The note balance and accrued interest are recorded on the balance sheet. Additional fees and costs are not accrued as they are not estimable at this time.

4.Sack Lunch Productions Inc. v Scott Crandall and Matt Ward, Case No. 170903524 in the Third Judicial District Court of Salt Lake County, State of Utah, filed June 2, 2017 seeking damages under the Acquisition Agreement from August of 2015 for recovery of the debts or payables of Springbok that exceeded the amount of $2 million.  Defendants have not yet made appearances in the case. 

5.Shannon Lynn Basa-Sabol and Stephen Sabol v. Slide the Paradise City, LLC, a Utah limited liability company, Ryan Johnson, Slide the City Productions Inc. a Utah corporation fdba Slide the City LLC, a Utah limited liability company, David Wulf, Case No GD-17-8306 in the Court of Common Pleas of Allegheny County, PA.  No service of the matter has been made and no details regarding this claim arising out of an event conducted by a franchisee of Slide the City in 2015 is known at this time. 

6.Kane Consulting Inc. v Sack Lunch Productions Inc. Case No. 1784-00242 in the Justice Court of Utah, Salt Lake city Justice Court-Salt Lake County, filed May 3, 2017.  Suit seeks recover of $9,930 for security and medical coverage for events conducted by Sack Lunch’s subsidiaries, Color Me Rad and Slide the City during 2016.  A response is due on June 28, 2017 before the Justice Court. 

Potential Causes of Action:

7.Wolfpack Event Services vs Slide the City, demand letter dated October 15, 2015 for $21,054.57 for breach of contract, agreement alleged for events during 2015 the company responded denying liability. No court action has been filed or subsequent demands for payment received. 

8.Ashely Davis v Sack Lunch Productions Inc. A personal injury claim arising out of an injury alleged to have been suffered at a Lantern Fest event held on April 23, 2016 at the Colorado National Speedway when a sound tower provided by Electifying Events, a subcontractor of The Lantern Fest Productions, Inc. fell and struck the named person. The claim has been referred to the liability insurance carrier for the event.  The amount of damages and potential resolution of the claim are undetermined at this point in time. 

9.Melodee Marcelle Stadler v Sack Lunch Productions, Inc. is a claim asserting injuries on June 4, 2016 at the franchised Slide the City event that took place in Davie, Florida on that date.  The amount or extents of injuries and/or damages are not yet specified.  The event was covered by a liability insurance policy which the franchisee had for the event.  Counsel for the franchisee is expected to reply and investigate the nature of the claim and provide a defense for all parties against whom liability are alleged. 

10.Dorset Realty Group Canada v. City of Surrey and Color Me Rad.  Claim for the clean-up of a building located on the route of a Color Me Rad run that took place on May 23, 2015 in the City of Surrey, British Columbia, Canada.  Claim for $36,230.04 for costs to remove color that reached the building during or immediately following the event and is alleged to be the cost of removal.  Liability insurance coverage for the event has been notified of the claim and is still investigating and reviewing the claim at this time. A settlement agreement has been reached by the insurance company and the matter has been resolved. 

11.Polly Crookston v. Slide the City c/o Sack Lunch Productions, notice of claim for personal injury accident on July 19, 2014 Slide the City event in Salt Lake City.  Insurance carrier has been notified, no pending litigation, no details on injury claims or amount. 

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December 31, 2016 and 2015

12.Eric Kirshenman v. Sack Lunch dba Dirty Dash LLC, notice of claim for personal injury accident June 25, 2016 at a Dirty Dash event. Insurance carrier has been notified, no pending litigation, no details on injury claims or amount. 

13.Kathy Jo Pannkuk v Dirty Dash, notice of claim for personal injury accident June 25, 2016 at Dirty Dash event in McCleary, Washington.  Insurance carrier has been notified, no pending litigation, no details on injury claims or amount. 

14.TCA Global Credit Master Fund, LP v Sack Lunch Productions Inc. On November 23, 2016 TCA gave Sack Lunch a Notice of Default that Sack Lunch is in default for 3 months payments that were due in accordance with the terms and provisions of the Senior Secured Credit Facility Agreement effective between the parties as of October 31, 2015.  Discussions to resolve the default are ongoing and TCA has agreed to extend any claim of default until June 30, 2017. 

At the current time there are no other material pending legal proceedings to which SAKL or its subsidiaries are parties.

Note 17 – Concentration of Risk

Supplier Concentrations

For the years ended December 31, 2016 and 2015, the Company purchased a significant portion, approximately 95%, of its event merchandise from one supplier; Prodigy Promotions.  In addition, the Company purchases approximately 99% of its salon product and merchandise from Aveda Services.

Revenue Concentrations

The Company’s salon revenue is derived from three separate retail locations located within a 5 mile radius of each other in Salt Lake City, Utah.

Note 18 – Going Concern

SAKL’s consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of December 31, 2016, SAKL had negative working capital of $6,350,886 and an accumulated deficit of $48,212,352.

Primarily, revenues have not been sufficient to cover SAKL’s operating costs. Management’s plans to enable SAKL to continue as a going concern include the following:

• Creating or acquiring new types of events for the events line of business;

• Increasing the number of event locations for existing events;

• Increase retail sales of Landis Salons, Inc.;

• Open new salon locations;

• Reduce expenses through consolidating or disposing of certain subsidiary companies; and,

• Raising capital through planned public and private offerings.

There can be no assurance that SAKL can or will be successful in implementing any of its plans or that it will be successful in enabling SAKL to continue as a going concern. SAKL’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Note 19 – Segment Reporting

The Company has three significant operating segments, action-oriented events (Events), health and beauty salons (Salons), film distribution, film production assistance and real estate rentals (Other). The Events segment is comprised of the branded events Slide the City, Color Me Rad, Lantern Fest, The Dirty Dash, and Trike Riot. The Salons segment is comprised of two Aveda Lifestyle salons and an Aveda retail store.  All assets are located in and all revenues are earned in the United States.

The following table identifies assets and profit/loss for the significant operating segments.

2016	Events	Salons	Other	Total
Total Assets	$            2,571,524	$         1,179,652	$            1,710,793	$       5,461,969
Revenue	$          11,002,020	$         3,389,810	$               449,199	$     14,841,029
Cost of Sales	(6,212,432)	(1,945,914)	(175,610)	(8,333,956)
General Costs and Depreciation	(5,726,370)	(1,482,431)	(1,123,358)	(8,282,130)
Other income and Expense	14,538	(259,925)	(1,166,629)	(1,412,016)
Segment Net income	$             (922,244)	$          (298,460)	$          (2,016,398)	$      (3,187,073)

2015	Events	Salons	Other	Total
Total Assets	$            3,656,455	$            654,409	$            2,103,680	$       6,414,544
Revenue	$            7,159,716	$         3,028,006	$               284,365	$     10,472,087
Cost of Sales	(3,810,557)	(1,655,219)	(221,557)	(5,687,333)
General Costs and Depreciation	(2,901,095)	(1,445,323)	(1,340,977)	(5,687,395)
Other income and Expense	(30,683)	(530,448)	(110,301)	(671,432)
Segment Net income	$               417,381	$          (602,984)	$          (1,388,470)	$      (1,574,073)

Note 20 – Subsequent Events

SAKL has evaluated subsequent events through the date the financial statements were available to be issued.

On January 31, 2017, the board of directors approved the conversion of 6,000 shares of Series D preferred stock into 2,898,551 shares of common stock.

On February 13, 2017 the board of directors approved the debt purchase agreement between Mammoth Corporation and TCA Global Credit Master Fund, LP, whereby Mammoth will acquire $112,500 of the debt owed to TCA by SAKL.

On February 14, 2017, the board of directors approved the conversion of 16,000 shares of Series C preferred stock into 2,996,000 shares of common stock.

On February 24, 2017, the board of directors approved the conversion of 6,000 shares of Series D preferred stock into 3,278,689 shares of common stock.

On March 15, 2017 SAKL issued a nine month convertible promissory note for $57,500 including interest.

On March 21, 2017, the board of directors approved the conversion of 6,000 shares of Series D preferred stock into 7,500,000 shares of common stock.

77

Sack Lunch Productions Inc.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

On March 31, 2017 SAKL entered into a purchase agreement with an unrelated, 3rd party, for the sale of 100% of the issued and outstanding shares of common stock of Redline Entertainment, Inc. and WG Productions, Inc. for 50,000 shares of SAKL Series A preferred stock held by the buyer.

On April 14, 2017 the Company entered into a Settlement Agreement and Release with John Malfatto and Martin Malfatto Squared Inc. wherein the parties agreed to terms that will end Malfatto’s current employment agreement with the Company and provide for the terms under which he will continue to provide services through the end of 2017.  Malfatto and Malfatto Squared will deliver to the Company 250,000 shares of Series B Preferred stock and 139,000 shares of Series A Preferred stock and return 13,142,337 shares of common stock to Richard Surber and Taylor Gourley.

On June 1, 2017, the board of directors approved the conversion of 6,100 shares of Series D preferred stock into 6,100,000 shares of common stock.

On June 1, 2017 the board of directors approved the debt purchase agreement between Mammoth Corporation and TCA Global Credit Master Fund, LP, whereby Mammoth will acquire $50,000 of the debt owed to TCA by SAKL.

78

Sack Lunch Productions, Inc. and Subsidiaries
Consolidated Balance Sheets
	March 31,	December 31,
	2017	2016
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$  403,250	$  670,352
Restricted cash	-	262,996
Accounts receivable, net of allowance for doubtful accounts of $355,475 at March 31, 2017 and December 31, 2016	77,823	42,404
Inventory	1,133,455	1,016,661
Prepaid expenses	489,803	230,823
Other receivable	142,127
Total current assets	2,246,458	2,223,236
Note receivable	184,295	184,295
Property and equipment, net of accumulated depreciation of $1,888,098 and $1,864,966, respectively	1,757,351	2,048,343
Goodwill	139,755	139,755
Intangible assets, net of accumulated amortization of $185,614 and $157,707	818,759	846,666
Other assets	25,661	19,674
Total assets	$  5,172,279	$  5,461,969
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable	$  2,069,483	$  1,907,237
Accounts payable related party	209,736	215,437
Deferred revenue	1,500,999	289,466
Accrued expenses	971,513	1,634,876
Current portion of notes payable, net of debt discount of $77,436 and $95,368, respectively	731,582	970,406
Current portion of capital leases	26,956	26,134
Derivative liability	1,989,591	1,391,432
Convertible notes payable, net of debt discount of $128,847 and $133,870	2,391,188	2,045,431
Convertible notes payable, related party	59,394	59,394
Notes payable related party	34,309	34,309
Total current liabilities	9,984,751	8,574,122
Long-term liabilities
Notes payable	579,806	566,212
Capital leases	50,552	57,469
Total long-term liabilities	630,358	623,681
Total liabilities	10,615,109	9,197,803
Commitments and contingencies	-	-
Convertible preferred stock	8,380,084	8,921,709
Stockholders' deficit
Common stock, par value $0.0001; 990,000,000 shares authorized; 178,958,925 and 163,535,685 shares issued and outstanding, respectively	17,894	16,352
Additional paid-in capital	35,660,556	35,662,067
Accumulated deficit	(49,351,357)	(48,212,352)
Accumulated other comprehensive income	(760)	(760)
Total Sack Lunch Productions, Inc. and subsidiaries stockholders' deficit	(13,673,667)	(12,534,693)
Non-controlling interest	(149,247)	(122,850)
Total stockholders' deficit	(13,822,914)	(12,657,543)
Total liabilities and stockholders' deficit	$  5,172,279	$  5,461,969
The accompanying notes are an integral part of these unaudited consolidated financial statements.

79

Sack Lunch Productions, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended March 31,
	2017	2016
Revenue
Services	$  952,507	$  821,192
Products	193,354	246,325
Rental	11,070	13,628
Franchise Fees and Royalties	21,000	166,700
Other	53,638	49,358
Total revenue	1,231,569	1,297,203
Costs and Expenses
Cost of services	542,526	586,512
Cost of products	175,601	128,693
Cost of other revenues	30,959	14
Depreciation and amortization	128,827	124,067
Salaries and wages	481,034	604,557
General and administrative	928,321	933,502
Total operating expenses	2,287,268	2,377,345
Loss from operations	(1,055,699)	(1,080,142)
Other Income (Expense)
Interest income	3,043	1,574
Interest expense	(244,210)	(536,266)
Interest expense, related parties	(6,668)	(9,796)
Loss on derivative activity	(46,507)	(61,720)
Gain on disposal of property	24,291	-
Loss on settlement of debt	(649,788)	-
Gain on sale of subsidiaries	807,372	-
Other income	2,764	7,023
Loss on subsidiary stock subscription receivable	-	(33,380)
Total other expenses, net	(109,703)	(632,565)
Net loss before income taxes	(1,165,402)	(1,712,707)
Income taxes	-	-
Net loss before non-controlling interest	(1,165,402)	(1,712,707)
Net loss attributable to non-controlling interest	(26,397)	(50,900)
Net loss attributable to stockholders	$ (1,139,005)	$ (1,661,807)
Loss per common share, basic and diluted	$  (0.01)	$  (0.01)
Loss related to non-controlling interest, basic and diluted	$  (0.00)	$  (0.00)
Weighted average shares used to compute earnings per share, basic and diluted	167,928,673	142,604,303
The accompanying notes are an integral part of these unaudited consolidated financial statements.

80

Sack Lunch Productions, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
	Three Months Ended March 31,
	2017	2016
Cash flows from operating activities
Net loss	$ (1,165,402)	$ (1,712,707)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	128,827	124,067
Amortization of debt issuance costs	93,471	410,788
Loss on derivative liability fair value adjustment	46,327	61,720
Loss on extinguishment of debt	649,538	-
(Gain) on disposal of property	(24,291)	-
(Gain) on sale of subsidiaries	(807,372)	-
Stock issued for services	-	79,110
Changes in assets and liabilities:
Restricted cash	120,730	191,487
Accounts receivable	(35,419)	(29,853)
Inventories	(116,794)	(377,629)
Prepaid expenses	(258,980)	(236,960)
Other assets	(6,817)	152
Accounts payable and accrued liabilities	317,116	(555,875)
Accounts payable, related party	(5,702)	(6,694)
Notes receivable Short Term	-	(8,540)
Deferred revenue	1,211,533	2,267,318
Deferred rent expense	(3,654)	(2,159)
Net cash provided by operating activities	143,111	204,225
Cash flows from investing activities
Purchases of property, plant, & equipment	(6,308)	(99,830)
Proceeds from sale of property	78,546	-
Cash relinquished in disposal of subsidiaries	(220,178)	-
Net cash (used in) investing activities	(147,940)	(99,830)
Cash flows from financing activities
Payments made on capital leases	(6,095)	(4,054)
Payments made on notes payable	(256,178)	(192,754)
Payments made on convertible notes	-	(317,970)
Payments made on notes payable, related parties	-	(1,906)
Issuance of Preferred A shares in acquisition	-	(889)
Proceeds from issuance of notes payable	-	462,000
Net cash (used in) financing activities	(262,273)	(55,573)
Net change in cash	(267,102)	48,822
Cash at beginning of period	670,352	540,689
Cash at end of period	$  403,250	$  589,511
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$  62,381	$  82,997
Noncash investing and financing activities:
Preferred C shares cancelled and returned	$   -	$  306
Conversion of preferred C shares to common shares	$  300	$  462
Conversion of convertible debt and interest to subsidiary common shares	$   -	$  24,244
Conversion of derivative liability	$   -	$  50,000
Common shares issued for settlement of accrued expenses	$   -	$  54,000
Common shares issued for debt	$   -	$   8
Convert preferred D shares to common	$  1,368	$   -
Convertible notes payable issued for accounts payable	$  50,000	$   -

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Reversal of conversion of preferred C shares for common shares	$  126	$   -
Other receivable from sale of property	$ 142,127	$   -
The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NOTE 1 –  BASIS OF FINANCIAL STATEMENT PRESENTATION

Basis of Presentation

The consolidated financial statements include the accounts of Sack Lunch Productions, Inc. and its subsidiaries after elimination of intercompany accounts and transactions. SAKL’s controlling share of earnings or losses of subsidiaries is included in the consolidated operating results using the equity method of accounting.

SAKL consolidates entities under control and records a non-controlling interest for the portions not owned by SAKL. Control is determined, where applicable, by the sufficiency of equity invested and the rights of the equity holders, and by the ownership of a majority of the voting interests, with consideration given to the existence of approval or veto rights granted to the minority shareholder. If the minority shareholder holds substantive participating rights, it overcomes the presumption of control by the majority voting interest holder. In contrast, if the minority shareholder simply holds protective rights (such as consent rights over certain actions), it does not overcome the presumption of control by the majority voting interest holder.

These statements should be read in conjunction with the Company’s annual financial statements included in the Company’s Annual Report for the year ended December 31, 2016. In particular, the Company’s significant accounting policies were presented as Note 2 to the consolidated financial statements in that Annual Report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed consolidated financial statements for the three months ended March 31, 2017, are not necessarily indicative of the results that may be expected for the 12 months ending December 31, 2017.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The consolidated financial statements are prepared in conformity with U.S. GAAP, which requires the use of estimates, judgments and assumptions that affect the amounts of assets and liabilities at the reporting date and the amounts of revenue and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates actual results could differ from the original estimates, requiring adjustments to these balances in future periods.

Property and Equipment

Property and equipment are stated at cost. Expenditures that materially increase the life of the assets are capitalized. Ordinary maintenance and repairs are charged to expense as incurred. When assets are sold, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized at that time. All capital leases are added to the property and equipment and depreciated over the life of the assets. Depreciation is computed on the straight-line method over the following useful lives:

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Buildings	27.5-39 years
Computer equipment and related software	3 years
Leasehold improvements	Shorter of the lease term or the estimated useful life
Furniture, equipment and fixtures	3-10 years
Vehicles	5 years

When commercial buildings are sold, the net depreciated basis is deducted from the net cash and other consideration received and the difference is reported as a net gain or loss.  

The following is a summary of SAKL’s property and equipment by major category as of March 31, 2017:

		Accumulated
	Cost	Depreciation	Net
Computer equipment and related software	$   133,016	$     112,448	$         20,568
Leasehold improvements	732,691	545,127	187,564
Furniture and fixtures	256,870	128,416	128,454
Leased equipment	76,298	73,136	3,162
Equipment	1,187,526	636,310	551,216
Vehicle	160,868	111,310	49,558
Building and Improvements	616,303	264,536	351,767
Land	456,723	-	456,723
Signage	25,154	16,815	8,339
Total	$ 3,645,449	$  1,888,098	$     1,757,351

The following is a summary of SAKL’s property and equipment by major category as of December 31, 2016:

		Accumulated
	Cost	Depreciation	Net
Computer equipment and related software	$   130,870	$     108,059	$     22,811
Leasehold improvements	732,691	530,039	202,652
Furniture and fixtures	258,060	119,190	138,870
Leased equipment	76,298	69,321	6,977
Equipment	1,187,527	584,029	603,498
Vehicle	160,868	103,956	56,912
Building and Improvements	839,032	334,160	504,872
Land	502,809	-	502,809
Signage	25,154	16,212	8,942
Total	$ 3,913,309	$  1,864,966	$ 2,048,343

Fair Value Measurements

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

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• Level 1 – Quoted prices for identical instruments in active markets;

• Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

• Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

85

	Total fair	Quoted prices	Significant other	Significant
	value at	in active	observable	unobservable
	March 31,	markets	inputs	inputs
Description	2017	(Level 1)	(Level 2)	(Level 3)
Derivative liability (1)	$1,989,591	$              -	$              -	$1,989,591
	Total fair	Quoted prices	Significant other	Significant
	value at	in active	observable	unobservable
	December 31,	markets	inputs	Inputs
Description	2016	(Level)	(Level 2)	(Level)
Derivative liability (2)	$1,391,432	$              -	$              -	$1,391,432

Basic and Diluted Income (Loss) Per Common Share

SAKL computes net income (loss) per common share by dividing the net income (loss) available to common stockholders for the period by the weighted average number of common and potentially dilutive shares during the specified period. The calculation of diluted net income (loss) per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share. For the three months ended March 31, 2017, 540,492,910 shares were not included in the diluted net loss per share calculation as their effect would be anti-dilutive.

Deferred Revenue

Deferred revenue arises when customers pay for products and/or services in advance of revenue recognition. SAKL’s deferred revenue consists of unearned revenue associated with the purchase of gift certificates, event ticket sales, or franchise ownership sales for which revenue is recognized only when the service is performed, the product is delivered, the event takes place, or all training obligations have been satisfied.

As of March 31, 2017 and December 31, 2016 the classes of deferred revenue consisted of the following:

	March 31,	December 31,
	2017	2016
Event Ticket Sales	$   1,425,535	$203,243
Gift Cards	75,464	86,223
Total Deferred Revenue	$   1,500,999	$289,466

Advertising and Promotional Expense

SAKL expenses advertising costs the first time the advertising occurs. Advertising expense was $314,118 and $291,075 for the three months ended March 31, 2017 and 2016, respectively

Recent Accounting Pronouncements

Management believes the impact of recently issued standards and updates, which are not yet effective, will not have a material impact on SAKL's consolidated financial position, results of operations or cash flows upon adoption.

In January 2017 the FASB issued an ASU (Update 2017-04) amending the test for goodwill impairment. The new guidance simplifies the procedures for testing impairment of goodwill for publicly traded entities. The new guidance modifies the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. The ASU is effective for reporting periods beginning after December 15, 2020 with early adoption permitted. We are currently evaluating the impact and expect the ASU will not have a material impact on our consolidated financial statements.

NOTE 3 – GOING CONCERN

SAKL’s consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of March 31, 2017, SAKL had negative working capital of $7,738,293 and an accumulated deficit of $49,351,357.

Primarily, revenues have not been sufficient to cover SAKL’s operating costs. Management’s plans to enable SAKL to continue as a going concern include the following:

•Creating or acquiring new types of events for the events line of business; 

•Increasing the number of event locations for existing events; 

•Increase retail sales of Landis Salons, Inc.; 

•Open new salon locations; 

•Reduce expenses through consolidating or disposing of certain subsidiary companies; and, 

•Raising capital through planned public and private offerings. 

There can be no assurance that SAKL can or will be successful in implementing any of its plans or that it will be successful in enabling SAKL to continue as a going concern. SAKL’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 4 – INVENTORY

SAKL’s event inventories consist of finished goods that include apparel and other branded merchandise which are sold to participants as part of their participation ticket price, as well as are sold as individual items.  Inventory is carried at the lower of cost or market.  SAKL’s salon inventories consist of finished good products that are held for resale at all locations or that are used for the services provided by the two salons.  Inventory is carried at the lower of cost or market.  As of March 31, 2017 and December 31, 2016 inventory by segment consisted of the following:

March 31,	December 31,
2017	2016

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Event Inventory	$        990,276	$                863,871
Salon Inventory	143,179	152,790
Total Inventory	$      1,133,455	$              1,016,661

NOTE 5 – NOTES RECEIVABLE

SAKL has one note receivable from an LLC. It bears 5% interest and matures on 11/10/2018. The balance on March 31, 2017 and December 31, 2016 was $184,295.

NOTE 6 – DEBT

During the three months ended March 31, 2017 the Company entered into new notes payable.

(a) On January 5, 2017 the Company entered into a replacement convertible promissory note agreement with TCA which effectively extinguished the prior TCA note.  The extinguishment resulted in a loss on settlement of debt of $649,788.  The original TCA note was issued on October 1, 2015 for $1,800,000 at 12%, maturing on January 6, 2016. The original note had previously been modified for an additional borrowing, advisory fees owed and accrued interest totaling $2,176,285 at January 5, 2017.  On this date TCA bifurcated the note and sold a $112,000 piece, see (b) below.  The remainder became the TCA replacement note, maturing on June 13, 2017, bearing interest at 18% and is convertible upon the terms of conversion into SAKL’s common shares at a discount to market of 15%.

(b) On February 13, 2017, the Company entered into a convertible promissory note agreement with a corporation in the amount of $123,750. The loan includes 10% prepaid interest of $11,250, a default interest rate of 18.00%  and matures on November 13, 2017.  The note is convertible upon the terms of conversion into SAKL’s common shares at a discount to market of 50%.  This note replaces a portion of the TCA note purchased by the note holder from TCA.

(c) On March 15, 2017, the Company entered into a convertible promissory note agreement with a corporation in the amount of $57,500 including cash proceeds of $50,000 prepaid interest of $7,500, a default interest rate of 18% and matures on December 15, 2017.   The note is convertible upon the terms of conversion into SAKL’s common shares at a discount to market of 50%.

NOTE 7 – DERIVATIVE LIABILITY

The Company has convertible notes that could be considered derivatives or contain embedded features subject to derivative accounting.   We have estimated the fair value of these embedded derivatives for convertible debentures using a multinomial lattice model.  As of March 31, 2017 and December 31, 2016, the Company has a $1,989,591 and $1,391,432 derivative liability respectively, related to convertible notes payable.  For the three months ended March 31, 2017 and 2016 the Company recorded losses of $46,507 and $61,720 from derivative liability fair value adjustments, respectively

NOTE 8 – RELATED PARTY TRANSACTIONS

Accounts payable, related party, includes accounts payable and interest payable to Richard Surber, CEO, and entities or companies controlled by Mr. Surber.

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Mr. Surber, a related party, is providing his personal guaranty for several lines of credit and credit cards that are being utilized by the Company and its operating subsidiaries. In addition to the above, Mr. Surber is a personal guarantor to notes payable by the Company with remaining principal balances of approximately $1,200,000. Subsequent to December 31, 2016, Mr. Surber continues to provide his personal guaranty for several lines of credit, credit cards, and loans that are being utilized by the Company and its subsidiaries. The total amount of these credit obligations could exceed the amount of $300,000 from time to time.  

NOTE 9 – EQUITY

Preferred Stock

SAKL is authorized to issue 50,000,000 shares of preferred stock with a par value of $0.001 per share. The Preferred Stock can be issued in various series with varying dividend rates and preferences.

As of March 31, 2017 and December 31, 2016, the number of shares of Series A Convertible Preferred Stock issued and outstanding was 567,750 and 617,750, respectively. The Series A Preferred shares have voting rights equal to 100 shares of common stock for every 1 Series A Preferred share, and it may be converted into $10 worth of common stock. A total of 10,000,000 shares have been designated and authorized as Series A Preferred Stock.  (See Note 10 – Dispositions, Disposition of Subsidiaries, for a description of the decrease of 50,000 Series A Preferred shares during the three months ending March 31, 2017.)

As of March 31, 2017 and December 31, 2016, the number of shares of Series B Convertible Preferred Stock issued and outstanding was 15,000,000. The Series B preferred stock holds voting rights equal to 2,000 shares of common stock for each share of the Series B Preferred Stock issued. The shares can be converted into Common Stock at the rate of 1 share of Common Stock for every 10 shares of Series B Preferred Stock. A total of 20,000,000 shares have been designated and authorized as Series B Preferred Stock pursuant to a filing on September 7, 2016.

As of March 31, 2017 and December 31, 2016, the number of shares of Series C Preferred Stock issued and outstanding was 382,233 and 395,483, respectively. The Series C Preferred shares may be converted into $5.00 worth of common stock and are subject to redemption by SAKL upon a $5.00 cash payment. The Series C Preferred shares hold voting rights equal to 1 share of common stock for every 1 Series C Preferred share. A total of 5,000,000 shares have been designated and authorized as Series C Preferred Stock.

As of March 31, 2017 and December 31, 2016 the number of shares of Series D Preferred Stock issued and outstanding was 54,100 and 72,100, respectively.  The Series D Preferred shares may be converted into common stock at a 50% discount and are subject to redemption by SAKL in the amount of $5.00 per share, payable in cash or common stock of the Company.  

All series of Preferred stock are reflected on the balance sheet as Mezzanine due to their convertible nature.

Common Stock

As of March 31, 2017, SAKL was authorized to issue 990 Million shares of common stock with a par value of $0.0001 per share. As of March 31, 2017 and December 31, 2016, the number of

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common shares issued and outstanding was 178,958,925 and 163,535,685, respectively. The common stock holds voting rights of one vote per share. It has no dividend or preemptive rights.  

NOTE 10 - DISPOSITIONS

Dispositions of Subsidiaries

On March 31, 2017 SAKL entered into a purchase agreement with an unrelated, 3rd party, for the sale of 100% of the issued and outstanding shares of common stock of Redline Entertainment, Inc. and WG Productions, Inc. for 50,000 shares of SAKL Series A preferred stock held by the buyer. The 50,000 shares were cancelled.  The sale resulted in a gain on sale of subsidiaries of $807,372 and was calculated based on the fair value of the preferred shares on the date of sale and the book value of net assets sold.

Dispositions of Property

On March 16, 2017, our subsidiary Wasatch Capital Corporation sold a residential property with a book value of $195,078 for net cash proceeds of $78,546.  The transaction resulted in a net gain on disposal of property of $24,291.  Additionally, the property carried a mortgage of $142,127 which, according to the terms of the original (2008) real estate purchase agreement remained as an obligation to the seller of the property at that time.  The mortgage was paid off at closing with proceeds from the sale and Wasatch recorded an “Other Receivable” from the original seller for the $142,127.

NOTE 11 – CONTINGENCIES

The Company evaluates contingencies on an ongoing basis and establishes provisions for matters in which losses are probable and the amount of loss can be reasonably estimated, and is not currently a party to any legal proceedings that management believes could have a material adverse effect on our results of operations or that the outcome is estimable at this time.

NOTE 12 – LITIGATION

From time to time, we are involved in various disputes and litigation that arise in the ordinary course of business. If the potential loss from any claim or legal proceeding is considered probable and the amount or the range of loss can be estimated, we accrue a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based only on the best information available at the time. As additional information becomes available, we reassess the potential liability related to pending claims and litigation matters and may revise estimates.

While the outcome of disputes and litigation matters cannot be predicted with any certainty, management does not believe that the outcome of any current matters will have a material adverse effect on our consolidated financial position, liquidity or results of operations.  The following are claims and litigation of which the Company has received notification;

1.Kimberly S. Livingood and Husband, Kevin Livingood v Slide the City, LLC, Sack Lunch Productions, Inc. d/b/a Slide the City, LLC and Ride the Slide, LLC, Case No 16C760 In the Circuit Court of Hamilton County, State of Tennessee. Filed June 17, 2016, amount of damages sought are not specified.  This was an injury asserted to have been occurred at a franchised Slide the City event, insurance coverage for the event  

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has been notified and is currently providing a defense for the named parties.  Sack Lunch believes itself to be an improper party to the case and has filed an answer through counsel to that effect.  Discovery related to the case is ongoing at this time.  

2.Jennifer Kelly v. The Dirty Dash Productions Inc., unknown John Does, In the Superior Court of the State of Washington, in and For Thurston County, complaint served on Sack Lunch on January 9, 2017.  Copy of the complaint has been provided to the liability insurance carrier for Dirty Dash and Sack Lunch. Claim based upon personal injury to Ms. Kelly alleged to have occurred at a Dirty Dash event on June 25, 2016 in McCleary, Washington, the amount of damages are not specified.  Counsel for insurance carrier has filed a response and a counterclaim to the suit on behalf of Dirty Dash. 

3.Midland IRA Inc., FBO Arthur Wulf Roth IRA v Sack Lunch Productions Inc. and Richard Surber, Case No. 2017-L-003022 in the Circuit Court of Cook County, Illinois, filed March 23, 2017, seeking damages of $217,559.68, plus additional interest, attorneys’ fees and costs, arising from the December 1, 2015 Promissory Note from Sack Lunch to Plaintiff in the original amount of $300,000.  Sack Lunch has settled the matter and the litigation has been dismissed with prejudice. 

4.Sack Lunch Productions Inc. v Scott Crandall and Matt Ward, Case No. 170903524 in the Third Judicial District Court of Salt Lake County, State of Utah, filed June 2, 2017 seeking damages under the Acquisition Agreement from August of 2015 for recovery of the debts or payables of Springbok that exceeded the amount of $2 million.  Defendants have not yet made appearances in the case. 

5.Shannon Lynn Basa-Sabol and Stephen Sabol v. Slide the Paradise City, LLC, a Utah limited liability company, Ryan Johnson, Slide the City Productions Inc. a Utah corporation fdba Slide the City LLC, a Utah limited liability company, David Wulf, Case No GD-17-8306 in the Court of Common Pleas of Allegheny County, PA.  No service of the matter has been made and no details regarding this claim arising out of an event conducted by a franchisee of Slide the City in 2015 is known at this time. 

6.Kane Consulting Inc. v Sack Lunch Productions Inc. Case No. 1784-00242 in the Justice Court of Utah, Salt Lake city Justice Court-Salt Lake County, filed May 3, 2017.  Suit seeks recover of $9,930 for security and medical coverage for events conducted by Sack Lunch’s subsidiaries, Color Me Rad and Slide the City during 2016.  A response is due on June 28, 2017 before the Justice Court. 

7.TCA Global Credit Master Fund, L.P. vs Sack Lunch Productions, Green Endeavors, Inc., Landis Salons, Inc., Landis Salons II, Inc., Diversified Managements Services, Inc., Wasatch Capital Corporation, Downtown Development Corporation, WG Productions Company, Landis Experience Center, LLC, Redline Entertainment, Inc., Springbok Holdings, LLC, Color Me Rad, LLC, The Dirty Dash, LLC, Springbok Franchising LLC, and Springbok Management, LLC, Case CACE-17-011661 Division 12, in the Circuit Court of the 17^th Judicial Circuit In and For Broward County, Florida. The suit seeks recovery for payments that were due in accordance with the terms and provisions of the Senior Secured Credit Facility Agreement effective between the parties as of October 31, 2015.  Defendants have not yet filed responses to the complaint and discussions to resolve the matter are ongoing.  

Potential Causes of Action:

8.Wolfpack Event Services vs Slide the City, demand letter dated October 15, 2015 for $21,054.57 for breach of contract, agreement alleged for events during 2015 the company responded denying liability. No court action has been filed or subsequent demands for payment received. 

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9.Ashely Davis v Sack Lunch Productions Inc. A personal injury claim arising out of an injury alleged to have been suffered at a Lantern Fest event held on April 23, 2016 at the Colorado National Speedway when a sound tower provided by Electifying Events, a subcontractor of The Lantern Fest Productions, Inc. fell and struck the named person. The claim has been referred to the liability insurance carrier for the event.  The amount of damages and potential resolution of the claim are undetermined at this point in time. 

10.Melodee Marcelle Stadler v Sack Lunch Productions, Inc. is a claim asserting injuries on June 4, 2016 at the franchised Slide the City event that took place in Davie, Florida on that date.  The amount or extents of injuries and/or damages are not yet specified.  The event was covered by a liability insurance policy which the franchisee had for the event.  Counsel for the franchisee is expected to reply and investigate the nature of the claim and provide a defense for all parties against whom liability are alleged. 

11.Dorset Realty Group Canada v. City of Surrey and Color Me Rad.  Claim for the clean-up of a building located on the route of a Color Me Rad run that took place on May 23, 2015 in the City of Surrey, British Columbia, Canada.  Claim for $36,230.04 for costs to remove color that reached the building during or immediately following the event and is alleged to be the cost of removal.  Liability insurance coverage for the event has been notified of the claim and is still investigating and reviewing the claim at this time. A settlement agreement has been reached by the insurance company and the matter has been resolved. 

12.Polly Crookston v. Slide the City c/o Sack Lunch Productions, notice of claim for personal injury accident on July 19, 2014 Slide the City event in Salt Lake City.  Insurance carrier has been notified, no pending litigation, no details on injury claims or amount. 

13.Eric Kirshenman v. Sack Lunch dba Dirty Dash LLC, notice of claim for personal injury accident June 25, 2016 at a Dirty Dash event. Insurance carrier has been notified, no pending litigation, no details on injury claims or amount. 

14.Kathy Jo Pannkuk v Dirty Dash, notice of claim for personal injury accident June 25, 2016 at Dirty Dash event in McCleary, Washington.  Insurance carrier has been notified, no pending litigation, no details on injury claims or amount. 

At the current time there are no other material pending legal proceedings to which SAKL or its subsidiaries are parties.

NOTE 13 – CONCENTRATION OF RISK

Supplier Concentrations

For the three months ended March 31, 2017 and year ended December 31, 2016, the Company purchased a significant portion, approximately 95%, of its event merchandise from one supplier; Prodigy Promotions.  In addition, the Company purchases approximately 99% of its salon product and merchandise from Aveda Services.

Revenue Concentrations

The Company’s outdoor event business tickets are sold online throughout the year.  The revenue from these ticket sales are recognized when the event takes place, primarily during the second and third quarters of the year.

The Company’s salon revenue is derived from three separate retail locations located within a 5 mile radius of each other in Salt Lake City, Utah.

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NOTE 14 – SEGMENT REPORTING

The Company has two significant operating segments, action-oriented events (Events) and health and beauty salons (Salons).  The Events segment is comprised of Slide the City Productions, Inc., Color Me Rad Productions, Inc., Lantern Fest Productions, Inc., Dirty Dash Productions, Inc. and Trike Riot.  The Salons segment is comprised of two Aveda Lifestyle salons and an Aveda retail store.

The following tables identify assets and profit/loss for the significant operating segments.  

As of March 31, and for the three months ended March 31, 2017

	Events	Salons	Other	Total
Total Assets	$            3,322,226	$            845,820	$            862,106	$       5,030,152
Revenue	322,338	844,523	64,708	1,231,569
Cost of Sales	(232,504)	(485,623)	(30,959)	(749,086)
General Costs and Depreciation	(621,940)	(523,876)	(392,366)	(1,538,182)
Other Income and Expense	(42,236)	21,559	(231,153)	(251,830)
Segment Net loss	$             (574,342)	$          (143,417)	$             (589,770)	$      (1,307,529)

As of December 31, 2016 and for the three months ended march 31, 2016

	Events	Salons	Other	Total
Total Assets	$            2,571,524	$         1,179,652	$            1,710,793	$       5,461,969
Revenue	442,709	791,508	62,986	1,297,203
Cost of Sales	(237,550)	(446,747)	(30,922)	(715,219)
General Costs and Depreciation	(1,181,807)	(349,436)	(130,883)	(1,662,126)
Other Income and Expense	(8,593)	(103,064)	(520,928)	(632,565)
Segment Net loss	$             (985,241)	$          (107,739)	$             (619,727)	$      (1,712,707)

NOTE 15 – SUBSEQUENT EVENTS

SAKL has evaluated subsequent events through August 1, 2017, which is the date the financial statements were issued.

On April 25, 2017 the Company entered into a Settlement Agreement and Release with John Malfatto and Martin Malfatto Squared Inc. wherein the parties agreed to terms that will end Malfatto’s current employment agreement with the Company and provide for the terms under which he will continue to provide services through the end of 2017.  Malfatto and Malfatto Squared will deliver to the Company 250,000 shares of Series B Preferred stock and 139,000 shares of Series A Preferred stock and return 13,142,337 shares of common stock to Richard Surber and Taylor Gourley.

On June 1, 2017, the board of directors approved the conversion of 6,100 shares of Series D preferred stock into 6,100,000 shares of common stock.

On June 1, 2017 the board of directors approved the debt purchase agreement between Mammoth Corporation and TCA Global Credit Master Fund, LP, whereby Mammoth will acquire $50,000 of the debt owed to TCA by SAKL.

On June 21, 2017, the board of directors approved the conversion of 22,000 shares of Series C preferred stock into 9,166,667 shares of common stock based upon the terms of conversion.

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In the above transactions, the Board of Directors relied upon Rule 506 of the Securities Act of 1933 in originally issuing the convertible notes or preferred stock and in the subsequent issuances resulting from conversions of the notes and preferred securities into common stock were done pursuant to Rule 4(2) of the Securities Act of 1933.

On July 10, 2017 the Company received notice of the June 16, 2017 compliant filed by TCA Global Credit Master Fund, L.P. against Sack Lunch Productions and its subsidiaries.  The suit seeks recovery for payments that were due in accordance with the terms and provisions of the Senior Secured Credit Facility Agreement effective between the parties as of October 31, 2015.  We have not yet filed a response to the complaint and discussions to resolve the matter are ongoing.

On July 24, 2017 the Board of Directors approved the filing of a Certificate of Designation for the Series E Convertible Preferred Stock comprising 5,000,000 shares with a par value of $0.001, an original price of $5.00 per share and subject to the terms of conversion at 80% of the market price.

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PART III - EXHIBITS

Exhibit No.	Description of Exhibit
3.1	Articles of Incorporation
3.2	Bylaws
3.3	Certificate of Determination – Series A Preferred Stock
3.4	Certificate of Determination – Series B Preferred Stock
3.5	Certificate of Determination – Series C Preferred Stock
3.6	Certificate of Determination – Series D Preferred Stock
3.7	Certificate of Determination – Series E Preferred Stock
3.8	Amendment to the Certificate of Determination – Series A Preferred Stock
3.9	Amendment to the Certificate of Determination – Series C Preferred Stock
4.1	Subscription Agreement
6.1	Settlement Agreement and Release by and between the Company and John Malfatto, dated April 14, 2017.
6.2	Purchase Agreement by and between the Company and David Wulf, dated March 31, 2017.
6.3	Employment Agreement between the Company and Richard Surber
6.4	Employment Agreement between the Company and David Wulf
6.5	Employment Agreement between the Company and Taylor R. Gourley
6.6	Compensation Settlement Agreement with Richard Surber
6.7	TCA Credit Agreement
6.8	Springbok Acquisition Agreement
11.1	Consent of Auditors
12.1	Legal Opinion

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SIGNATURES

Pursuant to the requirements of the Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A, and hereby has duly caused this Offering Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Salt Lake City, State of Utah on September 25, 2017.

SACK LUNCH PRODUCTIONS, INC.
By:	/s/ Richard Surber
	Richard Surber
	Chairman and Chief Executive Officer
	(Principal Executive Officer)

By:	/s/ Richard Surber
	Richard Surber
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

Pursuant to the requirements of the Securities Act of 1933, this Form 1-A has been signed by the following persons in the capacities and on the dates indicated.

Name	Position	Date
/s/ Richard Surber	Chairman and Chief Executive Officer	September 25, 2017
Richard Surber
/s Scott Coffman	Director	September 25, 2017
Scott Coffman
/s/ Gerald Einhorn	Director	September 25, 2017
Gerald Einhorn

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EX1A-3 HLDRS RTS

ARTICLES OF INCORPORATION OF

SACK LUNCH PRODUCTIONS, INC.

FIRST.  The name of the Corporation shall be SACK LUNCH PRODUCTIONS, INC.

SECOND.  The registered agent in the State of Utah is:

Michael Golightly

59 West 100 South, Second Floor

Salt Lake City, Utah 84101

THIRD.  The purpose for which this corporation is organized is to transact any lawful business, or to promote or conduct any legitimate object or purpose, under and subject to the laws of the State of Utah.

FOURTH.  The stock of the corporation is divided into two classes: (1) common stock in the amount of Nine Hundred Ninety million (990,000,000) shares having par value of $0.0001 each, and (2) preferred stock in the amount of Fifty million (50,000,000) shares having par value of $0.001 each. The Board of Directors shall have the authority, by resolution or resolutions, to divide the preferred stock into series, to establish and fix the distinguishing designation of each such series and the number of shares thereof (which number, by like action of the Board of Directors from time to time thereafter may be increased, except when otherwise provided by the Board of Directors in creating such series, or may be decreased, but not below the number of shares thereof then outstanding) and, within the limitations of applicable law of the State of Utah or as otherwise set forth in this article, to fix and determine the relative rights and preferences of the shares of each series so established prior to the issuance, thereof. There shall be no cumulative voting by shareholders.

FIFTH.  The Board of Directors shall have the authority, by resolution or resolutions

at any time or from time to time after the Issuance Date to fix a record date for the effectuation of

a forward or reverse split of the issued and outstanding shares of Common Stock.

SIXTH.  The Corporation, by action of its directors, and without action by its shareholders, may purchase its own shares in accordance with the provisions of Utah Revised Statutes. Such purchases may be made either in the open market or at public or private sale, in such manner and amounts, from such holder or holders of outstanding shares of the Corporation, and at such prices as the directors shall from time to time determine.

SEVENTH.  No holder of shares of the Corporation of any class, as such, shall have any preemptive right to purchase or subscribe for shares of the Corporation, of any class, whether now or hereafter authorized.

EIGHTH.  The Board of Directors shall consist of no fewer than one member and no more than seven members. The initial Board of Directors will consist of:

Richard Surber

59 West 100 South, Second Floor

Salt Lake City, UT 84101

The incorporator is:

Richard Surber

59 West 100 South, Second Floor

Salt Lake City, UT 84101

NINTH.  No officer or director shall be personally liable to the corporation or its shareholders for money damages.

TENTH.  The corporation shall not issue any nonvoting equity securities.

IN WITNESS WHEREOF, these Articles of Incorporation are hereby made effective

February 11, 2009

/s/ Richard Surber                                

Richard Surber

Director and President

EX1A-3 HLDRS RTS

BYLAWS

OF

Sack Lunch Productions, Inc.

ARTICLE 1 

Offices 

Section 1.01 -- Principal And Registered Office.  

The principal and registered office for the transaction of the business of the Corporation is hereby fixed and located at:  59 West 100 South, Second Floor, Salt Lake City, Utah 84101.  The Corporation may have such other offices, either within or outside the State of Utah as the Corporation's board of directors (the "Board) may designate or as the business of the Corporation may require from time to time.

Section 1.02 -- Other Offices.  

Branch or subordinate offices may at any time be established by the Board at any place or places wherein the Corporation is qualified to do business.

ARTICLE 2 

Meetings of Shareholders 

Section 2.01 -- Meeting Place.  

All annual meetings of shareholders and all other meetings of shareholders shall be held either at the principal office or at any other place within or outside the State of Utah which may be designated either by the Board, pursuant to authority hereinafter granted, or by the written consent of all shareholders entitled to vote thereat, given either before or after the meeting and filed with the secretary of the Corporation.

Section 2.02 -- Annual Meetings.  

A.  The annual meetings of shareholders shall be held on the anniversary date of the date of incorporation at the hour of 2:00 o'clock p.m., commencing with the year 2017, provided, however, that should the day of the annual meeting fall upon a legal holiday, then any such annual meeting of shareholders shall be held at the same time and place on the next business day thereafter which is not a legal holiday.

B.  Written notice of each annual meeting signed by the president or vice president, or the secretary, or an assistant secretary, or by such other person or persons as the Board may designate, shall be given to each shareholder entitled to vote thereat, either personally or by mail or other means of written communication, charges prepaid, addressed to such shareholder at his address appearing on the books of the Corporation or given by him to the Corporation for the purpose of notice.  If a shareholder gives no address, notice shall be deemed to have been given to him if sent by mail or other means of written communication addressed to the place where the principal office of the Corporation is situated, or if published at least once in some newspaper of general circulation in the county in which said office is located.  All such notices shall be sent to each shareholder entitled thereto, or published, not less than ten (10) nor more than sixty (60) days before

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each annual meeting, and shall specify the place, the day and the hour of such meeting, and shall also state the purpose or purposes for which the meeting is called.

C.  Failure to hold the annual meeting shall not constitute dissolution or forfeiture of the Corporation, and a special meeting of the shareholders may take the place thereof.

Section 2.03 -- Special Meetings.  

Special meetings of the shareholders, for any purpose or purposes whatsoever, may be called at any time by the president or by the Board, or by one or more shareholders holding not less than ten percent (10%) of the voting power of the Corporation.  Except in special cases where other express provision is made by statute, notice of such special meetings shall be given in the same manner as for annual meetings of shareholders.  Notices of any special meeting shall specify in addition to the place, day and hour of such meeting, the purpose or purposes for which the meeting is called.

Section 2.04 -- Adjourned Meetings and Notice Thereof.

A.  Any shareholders' meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the shares, the holders of which are either present in person or represented by proxy thereat, but in the absence of a quorum, no other business may be transacted at any such meeting.

B.  When any shareholders' meeting, either annual or special, is adjourned for thirty (30) days or more, notice of the adjourned meeting shall be given as in the case of an original meeting.  Otherwise, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting, other than by announcement at the meeting at which such adjournment is taken.

Section 2.05 -- Entry of Notice.  

Whenever any shareholder entitled to vote has been absent from any meeting of shareholders, whether annual or special, an entry in the minutes to the effect that notice has been duly given shall be conclusive and incontrovertible evidence that due notice of such meeting was given to such shareholder, as required by law and these bylaws.

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Section 2.06 -- Voting.  

At all annual and special meetings of shareholders, each shareholder entitled to vote thereat shall have one vote for each share of common stock so held and represented at such meetings, either in person or by written proxy, unless the Corporation's articles of incorporation ("Articles") provide otherwise, in which event, the voting rights, powers and privileges prescribed in the Articles shall prevail.  Voting for directors and, upon demand of any shareholder, upon any question at any meeting, shall be by ballot.  If a quorum is present at a meeting of the shareholders, the vote of a majority of the shares represented at such meeting shall be sufficient to bind the corporation, unless otherwise provided by law or the Articles.

Section 2.07 -- Quorum.  

The presence in person or by proxy of the holders of a majority of the shares entitled to vote at any meeting shall constitute a quorum for the transaction of business.  The shareholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum.

Section 2.08 -- Consent of Absentees.  

The transactions of any meeting of shareholders, either annual or special, however called and notice given thereof, shall be as valid as though done at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the shareholders entitled to vote, not present in person or by proxy, sign a written Waiver of Notice, or a consent to the holding of such meeting, or an approval of the minutes thereof.  All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of such meeting.

Section 2.09 -- Proxies.  

Every person entitled to vote or execute consents shall have the right to do so either in person or by an agent or agents authorized by a written proxy executed by such person or his duly authorized agent and filed with the secretary of the Corporation; provided however, that no such proxy shall be valid after the expiration of eleven (11) months from the date of its execution, unless the shareholder executing it specifies therein the length of time for which such proxy is to continue in force, which in no case shall exceed seven (7) years from the date of its execution.

Section 2.10 -- Shareholder Action Without A Meeting.

Any action required or permitted to be taken at a meeting of the shareholders may be taken without a meeting if a written consent thereto is signed by shareholders holding at least a majority of the voting power, except that if a different proportion of voting power is required for such an action at a meeting, then that proportion of written consents is required.  In no instance where action is authorized by this written consent need a meeting of shareholders be called or notice given.  The written consent must be filed with the proceedings of the shareholders.

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ARTICLE 3 

Board of Directors 

Section 3.01 -- Powers.  

Subject to the limitations of the Articles, these bylaws, and the provisions of Utah corporate law as to action to be authorized or approved by the shareholders, and subject to the duties of directors as prescribed by these bylaws, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be controlled by, the Board.  Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly declared that the directors shall have the following powers:

A.  To select and remove all the other officers, agents and employees of the Corporation, prescribe such powers and duties for them as are not inconsistent with law, with the Articles, or these bylaws, fix their compensation, and require from them security for faithful service.

B.  To conduct, manage and control the affairs and business of the Corporation, and to make such rules and regulations therefore not inconsistent with the law, the Articles or these bylaws, as they may deem best.

C.  To change the principal office for the transaction of the business if such change becomes necessary or useful; to fix and locate from time to time one or more subsidiary offices of the Corporation within or without the State of Utah, as provided in Section 1.02 of Article 1 hereof; to designate any place within or without the State of Utah for the holding of any shareholders' meeting or meetings; and to adopt, make and use a corporate seal, and to prescribe the forms of certificates of stock, and to alter the form of such seal and of such certificates from time to time, as in their judgment they may deem best, provided such seal and such certificates shall at all times comply with the provisions of law.

D.  To authorize the issuance of shares of stock of the Corporation from time to time, upon such terms as may be lawful, in consideration of money paid, labor done or services actually rendered, debts or securities canceled, or tangible or intangible property actually received, or in the case of shares issued as a dividend, against amounts transferred from surplus to stated capital. To describe and determine the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, and qualifications and rights of any Preferred Stock to be issued by the Corporation.

E.  To borrow money and incur indebtedness for the purposes of the Corporation, and to cause to be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecation or other evidences of debt and securities.

F.  To appoint an executive committee and other committees and to delegate to the executive committee any of the powers and authority of the Board in management of the business and affairs of the Corporation, except the power to declare dividends and to adopt, amend or repeal bylaws.  The executive committee shall be composed of one or more directors.

G.  The Board of Directors shall have the authority, by resolution or resolutions at any time or from time to time after the Issuance Date to fix a record date for the effectuation of a forward or reverse split of the issued and outstanding shares of Common Stock.  In accordance with NRS 78.2055 shareholder approval shall not be required.  Also in accordance with NRS 78.207 the Corporation will not be required to reduce or increase its authorized shares in a corresponding ratio in the event of a reverse or

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forward split.

Section 3.02 -- Number and Qualification of Directors.  

The authorized number of directors of the Corporation shall not be less than one (1) nor more than seven (7).

Section 3.03 -- Election and Term of Office.

The directors shall be elected at each annual meeting of shareholders, but if any such annual meeting is not held, or the directors are not elected thereat, the directors may be elected at any special meeting of shareholders.  All directors shall hold office until their respective successors are elected.

Section 3.04 -- Vacancies.  

A.  Vacancies in the Board may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director, and each director so elected or appointed shall hold office until his successor is elected at an annual or a special meeting of the shareholders.

B.  A vacancy or vacancies in the Board shall be deemed to exist in case of the death, resignation or removal of any director, or if the authorized number of directors be increased, or if the shareholders fail at any annual or special meeting of shareholders at which any director or directors are elected to elect the full authorized number of directors to be voted for at that meeting.

C.  The shareholders may elect a director or directors at any time to fill any vacancy or vacancies not filled by the directors.

D.  No reduction of the authorized number of directors shall have the effect of removing any director unless also authorized by a vote of the shareholders.

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ARTICLE 4

Meetings of the Board of Directors 

Section 4.01 -- Place of Meetings.  

Regular meetings of the Board shall be held at any place within or without the State of Utah which has been designated from time to time by resolution of the Board or by written consent of all members of the Board.  In the absence of such designation, regular meetings shall be held at the principal office of the Corporation.  Special meetings of the Board may be held either at a place so designated, or at the principal office.  Failure to hold an annual meeting of the Board shall not constitute forfeiture or dissolution of the Corporation.

Section 4.02 -- Organization Meeting.

Immediately following each annual meeting of shareholders, the Board shall hold a regular meeting for the purpose of organization, election of officers, and the transaction of other business.  Notice of such meeting is hereby dispensed with.

Section 4.03 -- Other Regular Meetings.

 Other regular meetings of the Board shall be held, whether monthly or quarterly or by some other schedule, at a day and time as set by the president; provided however, that should the day of the meeting fall upon a legal holiday, then such meeting shall be held at the same time on the next business day thereafter which is not a legal holiday.  Notice of all such regular meetings of the Board is hereby required.

Section 4.04 -- Special Meetings.

A.  Special meetings of the Board may be called at any time for any purpose or purposes by the president, or, if he is absent or unable or refuses to act, by any vice president or by any two directors.

B.  Written notice of the time and place of special meetings shall be delivered personally to each director or sent to each director by mail (including overnight delivery services such as Federal Express) or telegraph, charges prepaid, addressed to him at his address as it is shown upon the records of the Corporation, or if it is not shown upon such records or is not readily ascertainable, at the place in which the regular meetings of the directors are normally held.  No such notice is valid unless delivered to the director to whom it was addressed at least twenty-four (24) hours prior to the time of the holding of the meeting.  However, such mailing, telegraphing, or delivery as above provided herein shall constitute prima facie evidence that such director received proper and timely notice.

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Section 4.05 -- Notice of Adjournment.  

Notice of the time and place of holding an adjourned meeting need not be given to absent directors, if the time and place be fixed at the meeting adjourned.

Section 4.06 -- Waiver of Notice.  

The transactions of any meeting of the Board, however called and noticed or wherever held, shall be as valid as though a meeting had been duly held after regular call and notice, if a quorum be present, and if, either before or after the meeting, each of the directors not present signs a written waiver of notice or a consent to holding such meeting or an approval of the minutes thereof.  All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

Section 4.07 -- Quorum.  

If the Corporation has only one director, then the presence of that one director constitutes a quorum.  If the Corporation has only two directors, then the presence of both such directors is necessary to constitute a quorum.  If the Corporation has three or more directors, then a majority of those directors shall be necessary to constitute a quorum for the transaction of business, except to adjourn as hereinafter provided.  A director may be present at a meeting either in person or by telephone.  Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present, shall be regarded as the act of the Board, unless a greater number be required by law or by the Articles.

Section 4.08 -- Adjournment.  

A quorum of the directors may adjourn any directors' meeting to meet again at a stated day and hour; provided however, that in the absence of a quorum, a majority of the directors present at any directors' meeting, either regular or special, may adjourn such meeting only until the time fixed for the next regular meeting of the Board.

Section 4.09 -- Fees and Compensation.

Directors shall not receive any stated salary for their services as directors, but by resolution of the Board, a fixed fee, with or without expenses of attendance, may be allowed for attendance at each meeting.  Nothing stated herein shall be construed to preclude any director from serving the Corporation in any other capacity as an officer, agent, employee, or otherwise, and receiving compensation therefor.

Section 4.10 -- Action Without A Meeting.  

Any action required or permitted to be taken at a meeting of the Board, or a committee thereof, may be taken without a meeting if, before or after the action, a written consent thereto is signed by all the members of the Board or of the committee.  The written consent must be filed with the proceedings of the Board or committee.

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ARTICLE 5

Officers

Section 5.01 -- Executive Officers.  

The executive officers of the Corporation shall be a president, a secretary, and a treasurer/chief financial officer.  The corporation may also have, at the direction of the Board, a chairman of the Board, one or more vice presidents, one or more assistant secretaries, one or more assistant treasurers, and such other officers as may be appointed in accordance with the provisions of Section 5.03 of this Article.  Officers other than the president and the chairman of the board need not be directors.  Any one person may hold two or more offices, unless otherwise prohibited by the Articles or by law.

Section 5.02 -- Appointment.

The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Sections 5.03 and 5.05 of this Article, shall be appointed by the Board, and each shall hold his office until he resigns or is removed or otherwise disqualified to serve, or his successor is appointed and qualified.

Section 5.03 -- Subordinate Officers.

The Board may appoint such other officers as the business of the Corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board may from time to time determine.

Section 5.04 -- Removal and Resignation.  

A.  Any officer may be removed, either with or without cause, by a majority of the directors at the time in office, at any regular or special meeting of the Board.

B.  Any officer may resign at any time by giving written notice to the Board or to the president or secretary.  Any such resignation shall take effect on the date such notice is received or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 5.05 -- Vacancies.

A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these bylaws for regular appointments to such office.

Section 5.06 -- Chairman of The Board.  

The Chairman of the Board, if there be such an officer, shall, if present, preside at all meetings of the Board, and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board or prescribed by these bylaws.

Section 5.07 -- President.

Subject to such supervisory powers, if any, as may be given by the Board to the Chairman of the Board (if there be such an officer), the president shall be the chief executive officer of the Corporation and

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shall, subject to the control of the Board, have general supervision, direction and control of the business and officers of the Corporation.  He shall preside at all meetings of the shareholders and, in the absence of the Chairman of the Board, or if there be none, at all meetings of the Board.  He shall be an ex-officio member of all the standing committees, including the executive committee, if any, and shall have the general powers and duties of management usually vested in the office of president of a corporation, and shall have such other powers and duties as may be prescribed by the Board or these bylaws.

Section 5.08 -- Vice President.  

In the absence or disability of the president, the vice presidents, in order of their rank as fixed by the Board, or if not ranked, the vice president designated by the Board, shall perform all the duties of the president and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president.  The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board or these bylaws.

Section 5.09 -- Secretary.

A.  The secretary shall keep, or cause to be kept, at the principal office or such other place as the Board may direct, a book of (i) minutes of all meetings of directors and shareholders, with the time and place of holding, whether regular or special, and if special, how authorized, the notice thereof given, the names of those present and absent at directors' meetings, the number of shares present or represented at shareholders' meetings, and the proceedings thereof; and (ii) any waivers, consents, or approvals authorized to be given by law or these bylaws.

B.  The secretary shall keep, or cause to be kept, at the principal office, a share register, or a duplicate share register, showing (i) the name of each shareholder and his or her address; (ii) the number and class or classes of shares held by each, and the number and date of certificates issued for the same; and (iii) the number and date of cancellation of every certificate surrendered for cancellation.

C.  The secretary shall give, or cause to be given, notice of all the meetings of the shareholders and of the Board required by these bylaws or by law to be given, and he shall keep the seal of the Corporation, if any, in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board or these bylaws.

Section 5.10 -- Treasurer/Chief Financial Officer.  

A.  The treasurer/chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, surplus and shares.  Any surplus, including earned surplus, paid-in surplus and surplus arising from a reduction of stated capital, shall be classified according to source and shown in a separate account.  The books of account shall at all times be open to inspection by any director.

B.  The treasurer/chief financial officer shall deposit all monies and other valuables in the name and to the credit of the Corporation with such depositaries as may be designated by the Board.  He shall disburse the funds of the Corporation as may be ordered by the Board, shall render to the president and directors, whenever they request it, an account of all of his transactions as treasurer and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board or these bylaws.

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ARTICLE 6 

Miscellaneous 

Section 6.01 -- Record Date and Closing Stock Books.

The Board may fix a time in the future, for the payment of any dividend or distribution, or for the allotment of rights, or when any change or conversion or exchange of shares shall go into effect, as a record date for the determination of the shareholders entitled to notice of and to vote at any such meeting, or entitled to receive any such dividend or distribution, or any such allotment of rights, or to exercise the rights in respect to any such change, conversion or exchange of shares, and in such case only shareholders of record on the date so fixed shall be entitled to notice of and to vote at such meetings, or to receive such dividend, distribution or allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after any record date fixed as herein set forth.  The Board may close the books of the Corporation against transfers of shares during the whole, or any part, of any such period.

Section 6.02 -- Inspection of Corporate Records.

The share register or duplicate share register, the books of account, and records of proceedings of the shareholders and directors shall be open to inspection upon the written demand of any shareholder or the holder of a voting trust certificate, at any reasonable time, and for a purpose reasonably related to his interests as a shareholder or as the holder of a voting trust certificate, and shall be exhibited at any time when required by the demand of ten percent (10%) of the shares represented at any shareholders' meeting.  Such inspection may be made in person or by an agent or attorney, and shall include the right to make extracts.  Demand of inspection other than at a shareholders' meeting shall be made in writing upon the president, secretary, or assistant secretary, and shall state the reason for which inspection is requested.

Section 6.03 -- Checks, Drafts, Etc.

All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board.

Section 6.04 -- Annual Report.

The Board shall cause to be prepared after the close of the fiscal or calendar year an annual report in the form as directed by the Board.

Section 6.05 -- Contracts: How Executed.  

The Board, except as otherwise provided in these bylaws, may authorize any officer, officers, agent, or agents, to enter into any contract, deed or lease, or execute any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances; and unless so authorized by the Board, no officer, agent, or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or render it liable for any purpose or for any amount.

Section 6.06 -- Certificates of Stock.  

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A certificate or certificates for shares of the capital stock of the Corporation shall be issued to each shareholder when any such shares are fully paid up.  All such certificates shall be signed by the president or a vice president and the secretary or an assistant secretary, or be authenticated by facsimiles of the signature of the president and secretary or by a facsimile of the signatures of the president and the written signature of the secretary or an assistant secretary.  Every certificate authenticated by a facsimile of a signature must be countersigned by a transfer agent or transfer clerk.

Section 6.07 -- Representations of Shares of Other Corporations.

The president or any vice president and the secretary or assistant secretary of this Corporation are authorized to vote, represent, and exercise on behalf of this Corporation, all rights incident to any and all shares of any other corporation or corporations standing in the name of this Corporation.  The authority herein granted to said officers to vote or represent on behalf of this Corporation or corporations may be exercised either by such officers in person or by any person authorized so to do by proxy or power of attorney duly executed by said officers.

Section 6.08 -- Inspection of Bylaws.

The Corporation shall keep in its principal office for the transaction of business the original or a copy of these bylaws, as amended or otherwise altered to date, certified by the secretary, which shall be open to inspection by the shareholders at all reasonable times during office hours.

Section 6.09 -- Indemnification.

A.  The Corporation shall indemnify its officers and directors for any liability including reasonable costs of defense arising out of any act or omission of any officer or director on behalf of the Corporation to the full extent allowed by the laws of the State of Utah, if the officer or director acted in good faith and in a manner the officer or director reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful.  No officer or director shall be personally liable to the corporation or its shareholders for money damages except as provided or allowed by the laws of the State of Utah.

B.  Any indemnification under this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because the officer or director has met the applicable standard of conduct.  Such determination shall be made by the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or, regardless of whether or not such a quorum is obtainable and a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or by the stockholders.

ARTICLE 7

Amendments  

Section 7.01 -- Power of Shareholders.  

New bylaws may be adopted, or these bylaws may be amended or repealed, by the affirmative vote of the shareholders collectively having a majority of the voting power or by the written assent of such shareholders.

Section 7.02 -- Power of Directors.

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Subject to the rights of the shareholders as provided in Section 7.01 of this Article, bylaws other than a bylaw, or amendment thereof, changing the authorized number of directors, may also be adopted, amended, or repealed by the Board.

Certificate

The undersigned does hereby certify that the undersigned is the President of the Corporation as named at the outset in these bylaws, a corporation duly organized and existing under and by virtue of the laws of the State of Utah; that the above and foregoing bylaws of said corporation were duly and regularly adopted as such by the board of directors of the Corporation at a meeting of said Board, which was duly held on the 28^th day of July, 2017,  that the above and foregoing bylaws are now in full force and effect.

DATED this 28^th day of July, 2017.

__/s/ Richard Surber___________

   Richard Surber, President

  /s/ Richard Surber                       .

   Richard Surber, Secretary

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EX1A-3 HLDRS RTS

CERTIFICATE OF DETERMINATION

OF THE RIGHTS AND PREFERENCES OF SERIES A PREFERRED STOCK

OF SACK LUNCH PRODUCTIONS, INC.

WHEREAS, the Articles of Incorporation of SACK LUNCH PRODUCTIONS INC., a corporation organized and existing under the laws of Utah (the “Company”), provide that the Company has authorized Fifty Million (50,000,000) shares of par value $0.001 preferred stock (“Preferred Stock”) and, further, that the designation, powers, preferences and relative participating, option or other special rights and qualification, limitations or restrictions of the shares of such Preferred Stock may be issued from time to time in one or more series, each of such series to have such voting powers, designation, preferences, and relative participating, optional or other special rights and the qualifications, limitations or restrictions thereof, as expressed herein or in a resolution or resolutions, providing for the issuance of such series, adopted by the directors;  and

WHEREAS, THE COMPANY DOES HEREBY CERTIFY that pursuant to the authority contained in its Articles of Incorporation, and in accordance with the provisions of applicable law of Utah, the Company’s directors have duly adopted the following resolutions amending and determining the Designations, Rights and Preferences of a special class of its authorized Preferred Stock, herein designated as Series A Convertible Preferred Stock.

RESOLVED, that pursuant to the authority vested in the directors of this Company by its Articles of Incorporation, a special class of preferred stock of the Company be and is hereby created out of the 50,000,000 shares of Preferred Stock available for issuance, such series to be designated as Series A Convertible Preferred Stock (the “Series A Preferred”), consisting of Five Million (5,000,000) shares, of which the preferences and relative rights and qualifications, limitations or restrictions thereof (in addition to those set forth in the Company’s Articles of Incorporation), shall be as follows:

1.DEFINITIONS 

Common Stock.  The term "Common Stock" shall mean all shares now or hereafter authorized of any class of Common Stock of the Company and any other stock of the Company, howsoever designated, authorized after the Issue Date, which has the right (subject always to prior rights of any class or series of Preferred Stock) to participate in the distribution of the assets and earnings of the Company without limit as to per share amount.

Issue Date.  The term "Issue Date" shall mean the date that shares of Series A Preferred are first issued by the Company.

Junior Stock.  The term "Junior Stock" shall mean, for purposes of these resolutions, any class or series of stock of the Company authorized after the Issue Date not entitled to receive any dividends in any dividend period unless any dividends required to have been paid or declared and set apart for payment on the Series A Preferred shall have been so paid or declared and set apart for payment and, for purposes of these resolutions, shall mean Common Stock and any other class or series of stock of the Company authorized after the Issue Date not entitled to receive any assets upon liquidation, dissolution or winding up of the affairs of the Company until the Series A Preferred shall have received the entire amount to which such stock is entitled upon such liquidation, dissolution or winding up.

Parity Stock.  The term "Parity Stock" shall mean, for purposes of these resolutions the Common Stock and any other class or series of stock of the Company authorized after the Issue Date entitled to receive payment of dividends subject only to those preferential rights of dividends granted to the Series A Preferred and, for purposes of these resolutions, shall mean any class or series of stock of the Company authorized after the Issue Date entitled to receive assets upon liquidation, dissolution or winding up of the affairs of the Company subject to only those preferential rights and preference granted to the Series A Preferred.

Senior Stock.  The term "Senior Stock" shall mean, for purposes of these resolutions, any class or series of stock of the Company authorized before the Issue Date of the Series A Preferred except for those preferential rights as granted herein but the right to receive dividends providing all dividends granted to the Series A Preferred shall have been paid or set aside to be paid, and, for purposes of these resolutions, shall mean any class or series of stock of the Company authorized after the Issue Date ranking equal to the Series A Preferred and the right to participate in any distribution upon liquidation, dissolution or winding up of the affairs of the Company except for those preferential rights granted to the Series A Preferred herein.

2.Rights, Powers and Preferences 

The Series A Preferred shall have the voting powers, preferences and relative, participating, optional and other special rights, qualifications, limitations and restrictions as follows:

A.Designation and Amount.  Of the currently authorized preferred stock, Five Million (5,000,000) shares of par value $0.001 preferred stock shall be designated as shares of “Series A Convertible Preferred Stock” and carry a stated conversion value of $10.00 per share. 

B.Rank.  The Series A Preferred shall be senior to the Common Stock and any other series or class of the Company’s Preferred Stock including Series B and C Preferred Stock. 

C.Liquidation Rights.  In the event of liquidation, dissolution, or winding up of the Company, the board of director shall redeem the Series A Preferred Stock by issuing shares of Common Stock based upon the closing price of the shares of common stock on the date the Company is deemed liquidated, dissolved, or wound up.  In the event the Company’s Common Stock is not publicly traded, the board of directors may redeem the Series A Preferred Shares based upon the book value of the Company’s Common Stock on a fully diluted, pro rata basis.  

The following events shall be treated as or deemed to be liquidation hereunder:

(a)A merger, consolidation or reorganization of the Company that wholly changes the Company’s operations and management; 

(b)A sale or other transfer of all or substantially all of the Company's assets, excepting a spin-off transaction or stock dividend issued in a subsidiary of the Company as more fully described in paragraph 3 below; 

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(c)A sale of 80% or more of the Company's capital stock then issued and outstanding; 

D.Voting Rights.  In any and all matters the Series A Preferred shall have voting rights in any matter presented to the shareholders of the common stock of the Company on the basis of ten votes for each share of Series A Preferred Stock issued and outstanding.  Matters affecting the rights of holders of Series A Preferred shares to dividends or affecting their liquidation rights shall be presented to holders thereof for a vote of approval as herein provided for and for no other purpose.  If the Company effects a stock split which either increases or decreases the number of shares of Common Stock outstanding and entitled to vote, the voting rights of the Series A Preferred shall not be subject to adjustment unless such stock split shall be applied to the Series A Preferred. 

3.Dividends 

The holders of the Series A Preferred shall be entitled to receive Common Stock dividends when, as, and if declared by the directors of the Company, to be paid in cash or in Market Value of the Company’s common stock at the election of the Company. “Market Value”, for the purposes of this Certificate of Determination shall mean the average of the bid and ask prices for the common stock of the Company for the five business days preceding the declaration of a dividend by the Board of Directors.

Without prior written consent of the majority of the holders of Series A Preferred, so long as any shares of Series A Preferred shall be outstanding, the Company shall not declare or pay on any Junior Stock any dividend whatsoever, whether in cash, property or otherwise, nor shall the Company make any distribution on any Junior Stock, nor shall any Junior Stock be purchased or redeemed by the Company or any of its subsidiaries of which it owns not less than 51% of the outstanding voting stock, nor shall any monies be paid or made available for a sinking fund for the purchase or redemption of any Junior Stock, unless all dividends to which the holders of Series A Preferred shall have been entitled for all previous dividend periods shall have been paid or declared and a sum of money sufficient for the payment thereof and the Redemption Price is set apart.

The spin off or any distribution of ownership consisting of any shares of a subsidiary of the Company, as designated as such by the Board of Directors, shall be handled on the basis of treating all issued and outstanding shares of common stock and Series A Preferred on the same basis, that is that each share of each of these two classes shall received the same distribution for each share issued and outstanding in each of the two classes and shall be treated on an equal or identical basis for the purposes set forth in this paragraph.

4.Conversion 

The Series A Preferred shall have the following conversion rights (the "Conversion Rights"):

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A.Holder's Optional Right to Convert.  Each share of Series A Preferred shall be convertible, at the option of the holder(s), on the Conversion Basis in effect at the time of conversion.  Such right to convert shall commence as of the Issue Date and shall continue thereafter for a period of ten years, such period ending on the tenth anniversary of the Issue Date.  In the event that the holder(s) of the Series A Preferred elect to convert such shares into Common Stock, the holder(s) shall have ten (10) days from the date of such notice in which to tender their shares of Series A Preferred to the Company. 

B.Conversion Basis.  Each share of Series A Preferred shall be convertible into that number of shares of the Company’s Common Stock, equal in value to Ten Dollars ($10.00).  The board of directors shall approve and make the final determine of the conversion rate or value based upon the average closing prices for the common stock for the five day period preceding the notice of conversion made by the Holder(s).  

C.Mechanics of Conversion.  Before any holder of Series A Preferred shall be entitled to convert the same into shares of Common Stock, such holder shall (i) give written notice to the Company, at the office of the Company, that he elects to convert the same and shall state therein the number of shares of Series A Preferred being converted; and (ii) surrender the certificate or certificates therefor, duly endorsed.  Thereupon the Company shall have a period of ninety (90) days within which to issue and deliver to such holder of Series A Preferred a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled.  The conversion shall be deemed to have been made and the resulting shares of Common Stock shall be deemed to have been issued immediately prior to the close of business on the date of such notice and surrender of the shares of Series A Preferred. 

D.Adjustments to the Conversion Basis. 

(i)Reclassification, Exchange or Substitution.  At any time after the Company first issues the Series A Preferred and while any of the shares of Series A Preferred remain outstanding, if the Common Stock issuable upon the conversion of the Series A Preferred shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets), then and in each such event the holder of each share of Series A Preferred shall have the right thereafter to convert such shares into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which such shares of Series A Preferred might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustments as provided herein. 

(ii)Reorganization, Mergers, Consolidations or Sales of Assets.  At any time after the Company first issues the Series A Preferred and while any of such shares remain outstanding, if there shall be a capital reorganization of the Common Stock (other than  

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a subdivision, combination, reclassification, or exchange of shares), or a merger or consolidation of the Company with or into another Company, or the sale of all or substantially all of the Company's assets to any other person, then as a part of such reorganization, merger, consolidation, or sale, provision shall be made so that the holders of the Series A Preferred thereafter shall be entitled to receive upon conversion of the Series A Preferred, the number of shares of stock or other securities or property of the Company, or of the successor Company resulting from such merger or consolidation or sale, to which a holder of Series A Preferred deliverable upon conversion would have been entitled on such capital reorganization, merger, consolidation, or sale.

E.Notices of Record Date.  In the event of any reclassification or recapitalization of the capital stock of the Company, any merger or consolidation of the Company, or any transfer of all or substantially all of the assets of the Company to any other Company, entity, or person, or any voluntary or involuntary dissolution, liquidating, or winding up of the Company, the Company shall mail to each holder of Series A Preferred at least 30 days prior to the record date specified therein, a notice specifying the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation, or winding up is expected to become effective, and the time, if any is to be fixed, as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation, or winding up. 

F.Fractional Shares.  No fractional shares of Common Stock shall be issued upon conversion of the Series A Preferred.  In lieu of any fractional shares to which the holder would otherwise be entitled, the Company shall round up to the next whole number the number of shares to be issued to the shareholder as determined in good faith by the Company’s directors. 

G.Reservation of Stock Issuable Upon Conversion.  At such time as the Company increases its authorized capital resulting in a sufficient number of shares of Common Stock becoming available for the conversion of the Series A Preferred, the Company shall reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series A Preferred, a number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series A Preferred. 

H.Limitations on Conversion.  No conversion of any issued shares of Series A Preferred into common stock shall be allowed where the holder’s beneficial ownership in Common Stock would exceed 9.9% of the then issued and outstanding shares of common stock as reported by the Company’s transfer agent.  The Company may request information from the holder of any Series A Preferred shares submitted for conversion as to that shareholders current ownership of common stock or other securities of the Company. 

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Liquidation Rights, as described under paragraph 2.C above or a Redemption, as described in paragraph 6, of this Certificate of Designation that is initiated by and approved by the board of directors of the Company is not subject to the 4.9% conversion limitation.  

5.Protective Provisions 

Notwithstanding anything contained herein to the contrary, including but not limited to paragraph 4.D above, so long as any of the Series A Preferred shall be outstanding, the Company shall not without obtaining the approval (by vote or written consent, as provided by law) of the holders of at least fifty one percent (51%) of the total number of shares of Preferred Stock outstanding:

A.Alter or change the rights, preferences or privileges of the Series A Preferred so as to adversely affect in any manner the conversion basis by which the shares of Series A Preferred are presently converted into shares of Common Stock. 

B.Increase the authorized number of Series A Preferred. 

C.Create any new class of shares having preferences over or being on a parity with the Series A Preferred as to dividends or assets, unless the purpose of creation of such class is, and the proceeds to be derived from the sale and issuance thereof are to be used for, the retirement of all Series A Preferred then outstanding. 

6.Redemption 

Subject to the applicable provisions of Utah law, the Company, at the option of its directors, may at any time or from time to time redeem the whole or any part of the outstanding Series A Preferred.  Upon redemption the Company shall pay for each share redeemed the amount of Ten Dollars ($10.00) per share, payable in cash or common stock of the Company.

At least thirty (30) days previous notice by mail, postage prepaid, shall be given to the holders of record of the Series A Preferred to be redeemed, such notice to be addressed to each such shareholder at the address of such holder appearing on the books of the Company or given by such holder to the Company for the purpose of notice, or if no such address appears or is given, at the place where the principal office of the Company is located.  Such notice shall state the date fixed for redemption and shall call upon the holder to surrender to the Company on said date at the place designated in the notice such holder's certificate or certificates representing the shares to be redeemed.  On or after the date fixed for redemption and stated in such notice, each holder of Series A Preferred called for redemption shall surrender the certificate evidencing such shares to the Company at the place designated in such notice and shall thereupon be entitled to receive payment of the redemption price.  If less than all the shares represented by any such surrendered certificate are redeemed, a new certificate shall be issued representing the unredeemed shares.  If such notice of redemption shall have been duly given, and if on the date fixed for redemption funds necessary for the redemption shall be available therefore, notwithstanding that the certificates evidencing any Series A Preferred called for redemption shall not have been surrendered, the dividends with respect to the shares so called for redemption shall forthwith

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after such date cease and determine, except only the right of the holders to receive the redemption price without interest upon surrender of their certificates therefore.

If, on or prior to any date fixed for redemption of Series A Preferred, the Company deposits, with any bank or trust company as a trust fund, the number of shares of Common Stock of a sum sufficient to redeem, on the date fixed for redemption thereof, the shares called for redemption, with irrevocable instructions and authority to the bank or trust company to give the notice of redemption thereof (or to complete the giving of such notice if theretofore commenced) and to pay, or deliver, on or after the date fixed for redemption or prior thereto, the redemption price of the shares to their respective holders upon the surrender of their share certificates, then from and after the date of the deposit (although prior to the date fixed for redemption), the shares so called shall be redeemed and any dividends on those shares shall cease to accrue after the date fixed for redemption.  The deposit shall constitute full payment of the shares to their holders and from and after the date of the deposit the shares shall no longer be outstanding and the holders thereof shall cease to be shareholders with respect to such shares, and shall have no rights with respect thereto except the right to receive from the bank or trust company payment of the redemption price of the shares without interest, upon the surrender of their certificates therefore.  Any interest accrued on any funds so deposited shall be the property of, and paid to, the Company.  If the holders of Series A Preferred so called for redemption shall not, at the end of six years from the date fixed for redemption thereof, have claimed any funds so deposited, such bank or trust company shall thereupon pay over to the Company such unclaimed funds, and such bank or trust company shall thereafter be relieved of all responsibility in respect thereof to such holders and such holders shall look only to the Company for payment of the redemption price.

7.Reissuance 

Share or shares of Series A Preferred acquired by the Company by reason of conversion or otherwise may be reissued as Series A Preferred, and all such shares thereafter shall be returned to the status of unissued shares of Preferred Stock of the Company.

8.Headings or Subdivisions 

The heading of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereto.

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9.Severability of Provisions 

If any right, preference or limitation of the Series A Preferred set forth in this resolution (as such resolution may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other rights, preferences and limitations set forth in this resolution (as so amended) which can be given effect without the invalid, unlawful or unenforceable right, preference or limitation shall, nevertheless, remain in full force and effect, and no right, preference or limitation herein set forth shall be deemed dependent upon any other such right, preference or limitation unless so expressed herein.

10.Status of Reacquired Stock 

Shares of Series A Preferred which have been issued and reacquired in any manner shall, upon compliance with any applicable provisions of Utah law, have the status of authorized and unissued shares of Preferred Stock and may be redesignated and reissued in any series or class.

IN WITNESS WHEREOF, the undersigned Directors of SACK LUNCH PRODUCTIONS INC., a Utah corporation, did hereby execute this Certificate effective the 18^th day of May 2016.

/s/ Richard Surber

Richard D. Surber, Director

/s/ John E. Fry, Jr.

John E. Fry, Jr., Director

/s/ Scott C. Coffman

Scott C. Coffman, Director

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EX1A-3 HLDRS RTS

Amended Certificate of Determination - Series B Preferred Stock

EX1A-3 HLDRS RTS

CERTIFICATE OF DETERMINATION

OF THE RIGHTS AND PREFERENCES OF PREFERRED STOCK

OF SACK LUNCH PRODUCTIONS, INC.

WHEREAS, the Articles of Incorporation of SACK LUNCH PRODUCTIONS INC., a corporation organized and existing under the laws of Utah (the “Company”), provide that the Company has authorized Fifty Million (50,000,000) shares of par value $0.001 preferred stock (“Preferred Stock”) and, further, that the designation, powers, preferences and relative participating, option or other special rights and qualification, limitations or restrictions of the shares of such Preferred Stock may be issued from time to time in one or more series, each of such series to have such voting powers, designation, preferences, and relative participating, optional or other special rights and the qualifications, limitations or restrictions thereof, as expressed herein or in a resolution or resolutions, providing for the issuance of such series, adopted by the directors;  and

WHEREAS, THE COMPANY DOES HEREBY CERTIFY that pursuant to the authority contained in its Articles of Incorporation, and in accordance with the provisions of applicable law of Utah, the Company’s directors have duly adopted the following resolutions amending and determining the Designations, Rights and Preferences of a special class of its authorized Preferred Stock, herein designated as Series C Convertible Preferred Stock.

RESOLVED, that pursuant to the authority vested in the directors of this Company by its Articles of Incorporation, a special class of preferred stock of the Company be and is hereby created out of the 50,000,000 shares of Preferred Stock available for issuance, such series to be designated as Series C Convertible Preferred Stock (the “Series C Preferred”), consisting of Five Million (5,000,000) shares, of which the preferences and relative rights and qualifications, limitations or restrictions thereof (in addition to those set forth in the Company’s Articles of Incorporation), shall be as follows:

1.DEFINITIONS 

Common Stock.  The term "Common Stock" shall mean all shares now or hereafter authorized of any class of Common Stock of the Company and any other stock of the Company, howsoever designated, authorized after the Issue Date, which has the right (subject always to prior rights of any class or series of Preferred Stock) to participate in the distribution of the assets and earnings of the Company without limit as to per share amount.

Issue Date.  The term "Issue Date" shall mean the date that shares of Series C Preferred are first issued by the Company.

Junior Stock.  The term "Junior Stock" shall mean, for purposes of these resolutions, any class or series of stock of the Company authorized after the Issue Date not entitled to receive any dividends in any dividend period unless any dividends required to have been paid or declared and set apart for payment on the Series C Preferred shall have been so paid or declared and set apart for payment and, for purposes of these resolutions, shall mean Common Stock and any other class or series of stock of the Company authorized after the Issue Date not entitled to receive any assets upon liquidation, dissolution or winding up of the affairs of the Company until the Series C Preferred shall have received the entire amount to which such stock is entitled upon such liquidation, dissolution or winding up.

Parity Stock.  The term "Parity Stock" shall mean, for purposes of these resolutions the Common Stock and any other class or series of stock of the Company authorized after the Issue Date entitled to receive payment of dividends subject only to those preferential rights of dividends granted to the Series C Preferred and, for purposes of these resolutions, shall mean any class or series of stock of the Company authorized after the Issue Date entitled to receive assets upon liquidation, dissolution or winding up of

the affairs of the Company subject to only those preferential rights and preference granted to the Series C Preferred.

Senior Stock.  The term "Senior Stock" shall mean, for purposes of these resolutions, any class or series of stock of the Company authorized before the Issue Date of the Series C Preferred except for those preferential rights as granted herein but the right to receive dividends providing all dividends granted to the Series C Preferred shall have been paid or set aside to be paid, and, for purposes of these resolutions, shall mean any class or series of stock of the Company authorized after the Issue Date ranking equal to the Series C Preferred and the right to participate in any distribution upon liquidation, dissolution or winding up of the affairs of the Company except for those preferential rights granted to the Series C Preferred herein.

2.Rights, Powers and Preferences 

The Series C Preferred shall have the voting powers, preferences and relative, participating, optional and other special rights, qualifications, limitations and restrictions as follows:

A.Designation and Amount.  Of the currently authorized preferred stock, Five Million (5,000,000) shares of par value $0.001 preferred stock shall be designated as shares of “Series C Convertible Preferred Stock” and carry a stated conversion value of $5.00 per share. 

B.Rank.  The Series C Preferred shall be senior to the Common Stock and any other series or class of the Company’s Preferred Stock except Series A and B Preferred Stock. 

C.Liquidation Rights.  In the event of liquidation, dissolution, or winding up of the Company, the board of director shall redeem the Series C Preferred Stock by issuing shares of Common Stock based upon the closing price of the shares of common stock on the date the Company is deemed liquidated, dissolved, or wound up.  In the event the Company’s Common Stock is not publicly traded, the board of directors may redeem the Series C Preferred Shares based upon the book value of the Company’s Common Stock on a fully diluted, pro rata basis subject to the rights of Series A and B Preferred Classes of Stock.  

The following events shall be treated as or deemed to be liquidation hereunder:

(a)A merger, consolidation or reorganization of the Company that wholly changes the Company’s operations and management; 

(b)A sale or other transfer of all or substantially all of the Company's assets, excepting a spin-off transaction or stock dividend issued in a subsidiary of the Company as more fully described in paragraph 3 below; 

(c)A sale of 80% or more of the Company's capital stock then issued and outstanding; 

D.Voting Rights.  In any and all matters the Series C Preferred shall have voting rights in any matter presented to the shareholders of the common stock of the Company on the basis of one vote for each share of Series C Preferred Stock issued and outstanding.  Matters affecting the rights of holders of Series C Preferred shares to dividends or affecting their liquidation rights shall be presented to holders thereof for a vote of approval as herein provided for and for no other purpose.  If the Company effects a stock split which either increases or decreases the  

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number of shares of Common Stock outstanding and entitled to vote, the voting rights of the Series C Preferred shall not be subject to adjustment unless such stock split shall be applied to the Series C Preferred.

3.Dividends 

The holders of the Series C Preferred shall be entitled to receive Common Stock dividends when, as, and if declared by the directors of the Company, to be paid in cash or in Market Value of the Company’s common stock at the election of the Company. “Market Value”, for the purposes of this Certificate of Determination shall mean the average of the bid and ask prices for the common stock of the Company for the five business days preceding the declaration of a dividend by the Board of Directors.

Without prior written consent of the majority of the holders of Series C Preferred, so long as any shares of Series C Preferred shall be outstanding, the Company shall not declare or pay on any Junior Stock any dividend whatsoever, whether in cash, property or otherwise, nor shall the Company make any distribution on any Junior Stock, nor shall any Junior Stock be purchased or redeemed by the Company or any of its subsidiaries of which it owns not less than 51% of the outstanding voting stock, nor shall any monies be paid or made available for a sinking fund for the purchase or redemption of any Junior Stock, unless all dividends to which the holders of Series C Preferred shall have been entitled for all previous dividend periods shall have been paid or declared and a sum of money sufficient for the payment thereof and the Redemption Price is set apart.

The spin off or any distribution of ownership consisting of any shares of a subsidiary of the Company, as designated as such by the Board of Directors, shall be handled on the basis of treating all issued and outstanding shares of common stock and Series C Preferred on the same basis, that is that each share of each of these two classes shall received the same distribution for each share issued and outstanding in each of the two classes and shall be treated on an equal or identical basis for the purposes set forth in this paragraph.

4.Conversion 

The Series C Preferred shall have the following conversion rights (the "Conversion Rights"):

A.Holder's Optional Right to Convert.  Each share of Series C Preferred shall be convertible, at the option of the holder(s), on the Conversion Basis in effect at the time of conversion.  Such right to convert shall commence as of the Issue Date and shall continue thereafter for a period of ten years, such period ending on the tenth anniversary of the Issue Date.  In the event that the holder(s) of the Series C Preferred elect to convert such shares into Common Stock, the holder(s) shall have sixty (60) days from the date of such notice in which to tender their shares of Series C Preferred to the Company. 

B.Conversion Basis.  Each share of Series C Preferred shall be convertible into that number of shares of the Company’s Common Stock, equal in value to Five Dollars ($5.00).  The board of directors shall approve and make the final determine of the conversion rate or value based upon the average closing prices for the common stock for the five day period preceding the notice of conversion made by the Holder(s).  

C.Mechanics of Conversion.  Before any holder of Series C Preferred shall be entitled to convert the same into shares of Common Stock, such holder shall (i) give written notice to the Company, at the office of the Company or of its transfer agent for the Common Stock or the Preferred  

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Stock, that he elects to convert the same and shall state therein the number of shares of Series C Preferred being converted; and (ii) surrender the certificate or certificates therefor, duly endorsed.  Thereupon the Company shall have a period of ninety (90) days within which to issue and deliver to such holder of Series C Preferred a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled.  The conversion shall be deemed to have been made and the resulting shares of Common Stock shall be deemed to have been issued immediately prior to the close of business on the date of such notice and surrender of the shares of Series C Preferred.

D.Adjustments to the Conversion Basis. 

(i)Reclassification, Exchange or Substitution.  At any time after the Company first issues the Series C Preferred and while any of the shares of Series C Preferred remain outstanding, if the Common Stock issuable upon the conversion of the Series C Preferred shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets), then and in each such event the holder of each share of Series C Preferred shall have the right thereafter to convert such shares into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which such shares of Series C Preferred might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustments as provided herein. 

(ii)Reorganization, Mergers, Consolidations or Sales of Assets.  At any time after the Company first issues the Series C Preferred and while any of such shares remain outstanding, if there shall be a capital reorganization of the Common Stock (other than a subdivision, combination, reclassification, or exchange of shares), or a merger or consolidation of the Company with or into another Company, or the sale of all or substantially all of the Company's assets to any other person, then as a part of such reorganization, merger, consolidation, or sale, provision shall be made so that the holders of the Series C Preferred thereafter shall be entitled to receive upon conversion of the Series C Preferred, the number of shares of stock or other securities or property of the Company, or of the successor Company resulting from such merger or consolidation or sale, to which a holder of Series C Preferred deliverable upon conversion would have been entitled on such capital reorganization, merger, consolidation, or sale. 

E.Notices of Record Date.  In the event of any reclassification or recapitalization of the capital stock of the Company, any merger or consolidation of the Company, or any transfer of all or substantially all of the assets of the Company to any other Company, entity, or person, or any voluntary or involuntary dissolution, liquidating, or winding up of the Company, the Company shall mail to each holder of Series C Preferred at least 30 days prior to the record date specified therein, a notice specifying the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation, or winding up is expected to become effective, and the time, if any is to be fixed, as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation, or winding up. 

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F.Fractional Shares.  No fractional shares of Common Stock shall be issued upon conversion of the Series C Preferred.  In lieu of any fractional shares to which the holder would otherwise be entitled, the Company shall pay cash equal to the product of such fraction multiplied by the fair market value of one share of the Company's Common Stock on the date of conversion, as determined in good faith by the Company’s directors. 

G.Reservation of Stock Issuable Upon Conversion.  At such time as the Company increases its authorized capital resulting in a sufficient number of shares of Common Stock becoming available for the conversion of the Series C Preferred, the Company shall reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series C Preferred, a number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series C Preferred. 

H.Limitations on Conversion.  No conversion of any issued shares of Series C Preferred into common stock shall be allowed where the holder’s beneficial ownership in Common Stock would exceed 4.9% of the then issued and outstanding shares of common stock as reported by the Company’s transfer agent.  The Company may request information from the holder of any Series C Preferred shares submitted for conversion as to that shareholders current ownership of common stock or other securities of the Company. 

Liquidation Rights, as described under paragraph 2.C above or a Redemption, as described in paragraph 6, of this Certificate of Designation that is initiated by and approved by the board of directors of the Company is not subject to the 4.9% conversion limitation.  

5.Protective Provisions 

Notwithstanding anything contained herein to the contrary, including but not limited to paragraph 4.D above, so long as any of the Series C Preferred shall be outstanding, the Company shall not without obtaining the approval (by vote or written consent, as provided by law) of the holders of at least fifty one percent (51%) of the total number of shares of Preferred Stock outstanding:

A.Alter or change the rights, preferences or privileges of the Series C Preferred so as to adversely affect in any manner the conversion basis by which the shares of Series C Preferred are presently converted into shares of Common Stock. 

B.Increase the authorized number of Series C Preferred. 

C.Create any new class of shares having preferences over or being on a parity with the Series C Preferred as to dividends or assets, unless the purpose of creation of such class is, and the proceeds to be derived from the sale and issuance thereof are to be used for, the retirement of all Series C Preferred then outstanding. 

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6.Redemption 

Subject to the applicable provisions of Utah law, the Company, at the option of its directors, may at any time or from time to time redeem the whole or any part of the outstanding Series C Preferred.  Upon redemption the Company shall pay for each share redeemed the amount of Five Dollars ($5.00) per share, payable in cash or common stock of the Company.

At least thirty (30) days previous notice by mail, postage prepaid, shall be given to the holders of record of the Series C Preferred to be redeemed, such notice to be addressed to each such shareholder at the address of such holder appearing on the books of the Company or given by such holder to the Company for the purpose of notice, or if no such address appears or is given, at the place where the principal office of the Company is located.  Such notice shall state the date fixed for redemption and shall call upon the holder to surrender to the Company on said date at the place designated in the notice such holder's certificate or certificates representing the shares to be redeemed.  On or after the date fixed for redemption and stated in such notice, each holder of Series C Preferred called for redemption shall surrender the certificate evidencing such shares to the Company at the place designated in such notice and shall thereupon be entitled to receive payment of the redemption price.  If less than all the shares represented by any such surrendered certificate are redeemed, a new certificate shall be issued representing the unredeemed shares.  If such notice of redemption shall have been duly given, and if on the date fixed for redemption funds necessary for the redemption shall be available therefore, notwithstanding that the certificates evidencing any Series C Preferred called for redemption shall not have been surrendered, the dividends with respect to the shares so called for redemption shall forthwith after such date cease and determine, except only the right of the holders to receive the redemption price without interest upon surrender of their certificates therefore.

If, on or prior to any date fixed for redemption of Series C Preferred, the Company deposits, with any bank or trust company as a trust fund, the number of shares of Common Stock of a sum sufficient to redeem, on the date fixed for redemption thereof, the shares called for redemption, with irrevocable instructions and authority to the bank or trust company to give the notice of redemption thereof (or to complete the giving of such notice if theretofore commenced) and to pay, or deliver, on or after the date fixed for redemption or prior thereto, the redemption price of the shares to their respective holders upon the surrender of their share certificates, then from and after the date of the deposit (although prior to the date fixed for redemption), the shares so called shall be redeemed and any dividends on those shares shall cease to accrue after the date fixed for redemption.  The deposit shall constitute full payment of the shares to their holders and from and after the date of the deposit the shares shall no longer be outstanding and the holders thereof shall cease to be shareholders with respect to such shares, and shall have no rights with respect thereto except the right to receive from the bank or trust company payment of the redemption price of the shares without interest, upon the surrender of their certificates therefore.  Any interest accrued on any funds so deposited shall be the property of, and paid to, the Company.  If the holders of Series C Preferred so called for redemption shall not, at the end of six years from the date fixed for redemption thereof, have claimed any funds so deposited, such bank or trust company shall thereupon pay over to the Company such unclaimed funds, and such bank or trust company shall thereafter be relieved of all responsibility in respect thereof to such holders and such holders shall look only to the Company for payment of the redemption price.

7.Reissuance 

Share or shares of Series C Preferred acquired by the Company by reason of conversion or otherwise may be reissued as Series C Preferred, and all such shares thereafter shall be returned to the status of unissued shares of Preferred Stock of the Company.

6

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8.Headings or Subdivisions 

The heading of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereto.

9.Severability of Provisions 

If any right, preference or limitation of the Series C Preferred set forth in this resolution (as such resolution may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other rights, preferences and limitations set forth in this resolution (as so amended) which can be given effect without the invalid, unlawful or unenforceable right, preference or limitation shall, nevertheless, remain in full force and effect, and no right, preference or limitation herein set forth shall be deemed dependent upon any other such right, preference or limitation unless so expressed herein.

10.Status of Reacquired Stock 

Shares of Series C Preferred which have been issued and reacquired in any manner shall, upon compliance with any applicable provisions of Utah law, have the status of authorized and unissued shares of Preferred Stock and may be redesignated and reissued in any series or class.

IN WITNESS WHEREOF, the undersigned Directors of SACK LUNCH PRODUCTIONS INC., a Utah corporation, did hereby execute this Certificate effective the 1^st day of January 2016.

/s/ Richard Surber

Richard D. Surber, Director

/s/ John E. Fry, Jr.

John E. Fry, Jr., Director

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EX1A-3 HLDRS RTS

Certificate of Determination - Series D Convertible Preferred Stock

EX1A-3 HLDRS RTS

EX1A-3 HLDRS RTS

AMENDED CERTIFICATE OF DETERMINATION

OF THE RIGHTS AND PREFERENCES OF A PREFERRED STOCK

OF SACK LUNCH PRODUCTIONS, INC.

WHEREAS, the Articles of Incorporation of SACK LUNCH PRODUCTIONS., a corporation organized and existing under the laws of Utah (the “Company”), as amended, provide that the Company has authorized Fifty Million (50,000,000) shares of par value $0.001 preferred stock (“Preferred Stock”) and, further, that this be the designation, powers, preferences and relative participating, option or other special rights and qualification, limitations or restrictions of the shares of such Preferred Stock as may be issued from time to time in one or more series, each of such series to have such voting powers, designation, preferences, and relative participating, optional or other special rights and the qualifications, limitations or restrictions thereof, as expressed herein or in a resolution or resolutions, providing for the issuance of such series, adopted by the directors; and

WHEREAS, THE COMPANY DOES HEREBY CERTIFY that pursuant to the authority contained in its Articles of Incorporation, and in accordance with the provisions of applicable law of Utah, the Company’s directors have duly adopted the following resolutions determining this Amended Designations, Rights and Preferences of a special class of its authorized Preferred Stock, herein designated as Series A Convertible Preferred Stock.

RESOLVED, that pursuant to the authority vested in the directors of this Company by its Articles of Incorporation, a special class of preferred stock of the Company be and is hereby created out of the 50,000,000 shares of Preferred Stock available for issuance, such series to be designated as Series A Convertible Preferred Stock (the “Series A Preferred”), consisting of Two Million Five Hundred Thousand (2,500,000) shares, all prior shares issued in excess of that number shall be returned to the Company and cancelled, of which for the authorized shares the preferences and relative rights and qualifications, limitations or restrictions thereof (in addition to those set forth in the Company’s Articles of Incorporation), shall be as presently constituted and adopted by the Company.

IN WITNESS WHEREOF, the undersigned Directors, the president and the secretary of SACK LUNCH PRODUCTIONS INC., a Utah corporation, did hereby execute this Certificate effective the 24^th day of July, 2017.

 /s/ Richard Surber                                                                  

Richard D. Surber, Director and President

 /s/ Gerald Einhorn                                                                  

Gerald Einhorn, Director

__/s/ Scott C. Coffman____________________________________

Scott C. Coffman, Director

1

EX1A-3 HLDRS RTS

AMENDED CERTIFICATE OF DETERMINATION

OF THE RIGHTS AND PREFERENCES OF C PREFERRED STOCK

OF SACK LUNCH PRODUCTIONS, INC.

WHEREAS, the Articles of Incorporation of SACK LUNCH PRODUCTIONS., a corporation organized and existing under the laws of Utah (the “Company”), as amended, provide that the Company has authorized Fifty Million (50,000,000) shares of par value $0.001 preferred stock (“Preferred Stock”) and, further, that this be the designation, powers, preferences and relative participating, option or other special rights and qualification, limitations or restrictions of the shares of such Preferred Stock as may be issued from time to time in one or more series, each of such series to have such voting powers, designation, preferences, and relative participating, optional or other special rights and the qualifications, limitations or restrictions thereof, as expressed herein or in a resolution or resolutions, providing for the issuance of such series, adopted by the directors; and

WHEREAS, THE COMPANY DOES HEREBY CERTIFY that pursuant to the authority contained in its Articles of Incorporation, and in accordance with the provisions of applicable law of Utah, the Company’s directors have duly adopted the following resolutions determining this Amended Designations, Rights and Preferences of a special class of its authorized Preferred Stock, herein designated as Series C Convertible Preferred Stock.

RESOLVED, that pursuant to the authority vested in the directors of this Company by its Articles of Incorporation, a special class of preferred stock of the Company be and is hereby created out of the 50,000,000 shares of Preferred Stock available for issuance, such series to be designated as Series C Convertible Preferred Stock (the “Series C Preferred”), consisting of Two Million Five Hundred Thousand (2,500,000) shares, all prior shares issued in excess of that number shall be returned to the Company and cancelled, of which for the authorized shares the preferences and relative rights and qualifications, limitations or restrictions thereof (in addition to those set forth in the Company’s Articles of Incorporation), shall be as presently constituted and adopted by the Company.

IN WITNESS WHEREOF, the undersigned Directors, the president and the secretary of SACK LUNCH PRODUCTIONS INC., a Utah corporation, did hereby execute this Certificate effective the 24^th day of July, 2017.

 /s/ Richard Surber                                                                  

Richard D. Surber, Director and President

 /s/ Gerald Einhorn                                                                   

Gerald Einhorn, Director

_/s/ Scott C. Coffman_____________________________________

Scott C. Coffman, Director

1

EX1A-4 SUBS AGMT

Sack Lunch - Subscription Agreement (01229273-2).DOCX

EX1A-6 MAT CTRCT

EX1A-6 MAT CTRCT

PURCHASE AGREEMENT

PURCHASE AGREEMENT (this “Agreement”), dated as of 31^st day of March 2017, is by and between Sack Lunch Productions Inc. a Utah Corporation having a principal address of 59 West 100 South, Second Floor, Salt Lake City, Utah 84101 (the “Seller”) and David Wulf, an individual resident of the State of Utah having a principal address of 59 West 100 South 2^nd Floor, Salt Lake City, Utah 84101 (the “Buyer”).

RECITALS

1. The Seller owns 100% of the issued and outstanding Shares of common stock, 251,000,000 shares, of Redline Entertainment, Inc. (“Redline”) and 10,000,000 shares of WG Productions Inc.,(“WG Productions”)together the “Seller Shares”, Redline and WG Productions jointly the “Corporations”; and

2. The Buyer desires to purchase from the Seller, and the Seller desires to sell, transfer and/or assign to Buyer ownership of the Corporations as set forth above which includes the Seller's entire right, title and interest in and to the Seller Shares, in accordance with the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the representations, warranties and agreements contained herein and for other good and valuable consideration, the receipt and legal adequacy of which is hereby acknowledged, the parties agree:

1. Agreement to Purchase Seller Shares.  The Buyer hereby agrees to receive and the Seller hereby agrees to transfer, the Seller Shares pursuant to the terms and conditions set forth herein. The consideration payable to the Seller for the purchase of the Seller Shares by the Buyer shall be 50,000 shares of Series A Preferred Stock of Sack Lunch Productions Inc., the Seller.  The closing under this Agreement shall occur upon the execution of this Agreement by both parties.  Seller shall have all current officers and directors resign their positions in the Corporations and Appoint Buyer as the sole officer and director effective as of the date of the closing of the transaction.

2. Delivery of Seller Shares to the Buyer; Stock Powers.  On Closing, the seller shall be obligated to issue a certificate (the “Seller Share Certificate”) representing the Seller Shares that shall be delivered to the Buyer and shall cause the current share certificates in the name of the Seller to be cancelled on the records of the Corporations after or upon the return of the certificate from a secured lender of Seller that currently holds the share certificate as collateral for a loan, delivery of the Seller Shares shall take place upon the return to Seller of the certificate.  The effective date of the transfer and purchase provided for by this agreement shall be March 31, 2017.

3. Representations, Warranties and Covenants of Buyer.  The Buyer represents and warrants to the Seller, and covenants for the benefit of the Seller, as follows:

(a)The Buyer is acquiring the Seller Shares for his own uses and to obtain ownership and control of the Corporations; 

Purchase Agreement

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(b)The Buyer acknowledges that it has been furnished with all documents and other information regarding the Corporations that the Buyer has requested or desired to know and all other documents which could be reasonably provided have been made available for the Buyer’s inspection and review; 

(c)The Buyer acknowledges that the Seller Shares have not been passed upon or reviewed by the Securities and Exchange Commission.  The Buyer agrees that it will not sell, transfer or otherwise dispose of any of the Seller Shares unless they are registered under the Securities Act, or unless an exemption from such registration is available.  The Buyer understands that the Seller Shares have not been registered under the Securities Act and are being transferred by reason of a claimed exemption under the provisions of the Securities Act; 

(d)This Agreement constitutes a valid and binding agreement and obligation of the Buyer enforceable against the Buyer in accordance with its terms, subject to limitations on enforcement by general principles of equity and bankruptcy or other laws affecting the enforcement of creditors' rights generally; 

(e)Buyer shall cause the 50,000 shares of Series A Preferred Stock to be submitted to the Transfer Agent of the Seller with instructions to transfer 50,000 shares of that stock to be transferred as instructed by the Seller at the time of closing.  All necessary stock powers, instructions and documentation required of the Buyer to carry out the transfer by the Transfer Agent shall be provided by the Buyer. 

(f)This Agreement has been duly authorized, validly executed and delivered on behalf of the Buyer, and the Buyer has full power and authority to execute and deliver this Agreement and the other agreements and documents contemplated hereby and to perform its obligations hereunder and thereunder.; 

4. Representations, Warranties and Covenants of the Seller.  The Seller represents and warrants to the Buyer, and covenants for the benefit of the Buyer, as follows: 

(a)The offer and sale of the Seller Shares is exempt from registration under the Securities Act pursuant to an exemption thereunder; 

(b)This Agreement has been duly authorized, validly executed and delivered on behalf of the Seller and is a valid and binding agreement and obligation of the Seller enforceable against the Seller in accordance with its terms, subject to limitations on enforcement by general principles of equity and by bankruptcy or other laws affecting the enforcement of creditors' rights generally, and the Seller has full power and authority to execute and deliver this Agreement and the other agreements and documents contemplated hereby and to perform its obligations hereunder and thereunder; 

(c)The Seller is the legal, beneficial and sole owner of the Seller Shares, free and clear of any liens, charges or encumbrances, subject to existing financing liens held by creditor of Seller as known to the Buyer.  

Purchase Agreement

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(d)In connection with the offer and sale of the Seller Shares, neither the Seller nor any affiliate of the Seller or any person acting on the Seller’s or the Seller’s affiliates’ behalf has engaged in any form of “general solicitation” or “general advertising” as those terms are used in Rule 502(c) under the Securities Act; and 

(e)Trading Status of the Sellers Shares. The Seller hereby represents and warrants to the Buyer that the Shares do constitute “restricted securities” within the meaning of the Securities Act and may not be sold, pledged, or otherwise disposed of by the Buyer under the Securities Act and applicable state securities laws.  

5. Binding Effect; Assignment.  This Agreement is not assignable by the Seller or the Buyer without the prior written consent of the other party.  This Agreement and the provisions hereof shall be binding and shall inure to the benefit of the Seller and its successors and permitted assigns with respect to the obligations of the Buyer under this Agreement and to the benefit of the Buyer and its successors and permitted assigns with respect to the obligations of the Seller under this Agreement.

6. Expenses.  Each of the parties agrees to pay its own expenses incident to this Agreement and the performance of its obligations hereunder.

7. Governing Law; Jurisdiction.  This Agreement shall be governed by and interpreted in accordance with the laws of the State of Utah without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction.  Each of the Seller and the Buyer (i) hereby irrevocably submits to the jurisdiction of the United States District Court sitting in the District of Utah and the courts of the State of Utah located in Salt Lake County for the purposes of any suit, action or proceeding arising out of or relating to this sale and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper.  Each of the Seller and the Buyer consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address set forth in Section 8 hereof and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing in this Section 7 shall affect or limit any right to serve process in any other manner permitted by law.

8. Notices.  All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, express overnight courier, registered first class mail, overnight courier, or telecopier, initially to the address set forth below, and thereafter at such other address, notice of which is given in accordance with the provisions of this Section.

Purchase Agreement

3

If to the Seller: Sack Lunch Productions, Inc.

Attention: Richard Surber 

Street: 59 West 100 South, 2^nd Floor 

City: Salt Lake City 

State/Zip:  Utah, 84101 

If to the Buyer:  David Wulf 

Attention:David Wulf 

Street:59 West 100 South, 2^nd Floor 

City:Salt Lake City 

State/Zip: Utah 84101 

or to any other address specified by any party by notice given as aforesaid.

All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; three (3) Business Days after being deposited in the mail, postage prepaid, if mailed; the next Business Day after being deposited with an overnight courier, if deposited with a nationally recognized, overnight courier service; when receipt is acknowledged, if telecopied.

9. Entire Agreement.  This Agreement constitutes the entire understanding and agreement of the parties with respect to the subject matter hereof and supersedes all prior and/or contemporaneous oral or written proposals or agreements relating thereto all of which are merged herein.  This Agreement may not be amended or any provision hereof waived in whole or in part, except by a written amendment signed by both of the parties.

10. Counterparts.  This Agreement may be executed by facsimile signature and in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  

11. Transfer Taxes.  The Buyer shall pay any transfer taxes or other fees that may be payable upon transfer of the Seller Shares.  

12. Survival.  The representations and warranties of the Seller and the Buyer shall survive the Closing hereunder.

Purchase Agreement

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IN WITNESS WHEREOF, this Agreement was duly executed on the date first written above.

Seller:  Sack Lunch Productions Inc.

By:   /s/ Richard Surber                             

Name: Richard Surber 

Title:    CEO 

Buyer: David Wulf

By:   /s/ David Wulf                                   

Name:  David Wulf 

Title: 

Purchase Agreement

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EX1A-6 MAT CTRCT

Employment Agreement

EX1A-6 MAT CTRCT

Employment Agreement

EX1A-6 MAT CTRCT

Employment Agreement

EX1A-6 MAT CTRCT

Settlement Agreement and Release

EX1A-6 MAT CTRCT

SENIOR SECURED CREDIT FACILITY AGREEMENT

IN THE MAXIMUM AMOUNT OF US$5,000,000

BY AND AMONG

SACK LUNCH PRODUCTIONS, INC.,
as Borrower,

GREEN ENDEAVORS, INC., LANDIS SALONS, INC., LANDIS SALONS II, INC., DIVERSIFIED MANAGEMENT SERVICES, INC., WASATCH CAPITAL CORPORATION, DOWNTOWN DEVELOPMENT CORPORATION, WG PRODUCTIONS COMPANY, LANDIS EXPERIENCE CENTER, LLC, SLIDE THE CITY, LLC, SLIDE THE CITY FRANCHISING, LLC, LANTERN FEST, LLC, REDLINE ENTERTAINMENT, INC., SLIDE THE CITY CANADA, LLC, SPRINGBOK HOLDINGS, LLC, COLOR ME RAD, LLC, THE DIRTY DASH, LLC, SPRINGBOK SLIDE THE CITY, LLC, SPRINGBOK FRANCHISING, LLC, AND SPRINGBOK MANAGEMENT, LLC,

as Joint and Several Guarantors,

AND

TCA GLOBAL CREDIT MASTER FUND, LP,
as Lender

Dated as of June 30, 2015

Effective as of October 13, 2015

SENIOR SECURED CREDIT FACILITY AGREEMENT

This SENIOR SECURED CREDIT FACILITY AGREEMENT (as amended, restated, modified or supplemented from time to time, this “Agreement”), dated as of June 30, 2015 and made effective as of October 13, 2015 (the “Effective Date”), is executed by and among: (i) SACK LUNCH PRODUCTIONS, INC., a corporation incorporated under the laws of the State of Utah (the “Borrower”); (ii) GREEN ENDEAVORS, INC., a corporation incorporated under the laws of the State of Utah, LANDIS SALONS, INC., a corporation incorporated under the laws of the State of Utah, LANDIS SALONS II, INC., a corporation incorporated under the laws of the State of Utah, DIVERSIFIED MANAGEMENT SERVICES, INC., a corporation incorporated under the laws of the State of Utah, WASATCH CAPITAL CORPORATION, a corporation incorporated under the laws of the State of Utah, DOWNTOWN DEVELOPMENT CORPORATION, a corporation incorporated under the laws of the State of Utah, WG PRODUCTIONS COMPANY, a corporation incorporated under the laws of the State of Utah, LANDIS EXPERIENCE CENTER, LLC, a limited liability company organized under the laws of the State of Utah, SLIDE THE CITY, LLC, a limited liability company organized under the laws of the State of Utah, SLIDE THE CITY FRANCHISING, LLC, a limited liability company organized under the laws of the State of Utah, LANTERN FEST, LLC, a limited liability company organized under the laws of the State of Utah, REDLINE ENTERTAINMENT, INC., a corporation incorporated under the laws of the State of Utah, SLIDE THE CITY CANADA, LLC, a limited liability company organized under the laws of the State of Utah, SPRINGBOK HOLDINGS, LLC, a limited liability company organized under the laws of the State of Utah, COLOR ME RAD, LLC, a limited liability company organized under the laws of the State of Utah, THE DIRTY DASH, LLC, a limited liability company organized under the laws of the State of Utah, SPRINGBOK SLIDE THE CITY, LLC, a limited liability company organized under the laws of the State of Utah, SPRINGBOK FRANCHISING, LLC, a limited liability company organized under the laws of the State of Utah, and SPRINGBOK MANAGEMENT, LLC, a limited liability company organized under the laws of the State of Utah (each individually, a “Corporate Guarantor” and collectively, the “Corporate Guarantors”); (iii) any Person to hereafter become a Subsidiary of the Borrower pursuant to Section 3.19 hereof, and any Person that from time to time may hereafter become liable for the Obligations, or any part thereof (the “Additional Guarantors”) (the Corporate Guarantors and the Additional Guarantors, together, jointly and severally, the “Guarantors,” and together with the Borrower, the “Credit Parties”); and (iv) TCA GLOBAL CREDIT MASTER FUND, LP, a limited partnership organized and existing under the laws of the Cayman Islands, as lender (the “Lender”).

WHEREAS, Borrower has requested that Lender extend a senior secured credit facility to Borrower of up to Five Million and No/100 United States Dollars (US$5,000,000.00) for working capital financing for Borrower and its Subsidiary, and for any other purposes permitted hereunder; and for these purposes, Lender is willing to make certain loans and extensions of credit available to Borrower of up to such amount and upon the terms and conditions set forth herein; and

WHEREAS, as a material inducement for Lender to make loans and extensions of credit to Borrower pursuant to the terms and conditions set forth herein: (i) the Corporate Guarantors have, inter alia, agreed to execute Guaranty Agreements in favor of Lender, whereby Corporate Guarantors shall jointly and severally guarantee any and all of the Borrower’s Obligations owed

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under this Agreement and under any other Loan Documents; (ii) the Credit Parties have, inter alia, agreed to execute Security Agreements in favor of Lender, whereby each Credit Party shall grant to the Lender a first priority security interest in and Lien upon all of its existing and after-acquired tangible and intangible assets, as security for the payment and performance of any and all Obligations owed under this Agreement and under any other Loan Document; and (iii) the Borrower and certain Corporate Guarantors have agreed to execute Pledge Agreements in favor of Lender, whereby the Borrower and the Corporate Guarantors, as applicable, shall pledge to the Lender all of their right, title and interest in and to, and provide a first priority Lien and security interest on, all of its issued and outstanding shares and/or membership interests of the Corporate Guarantors, as applicable, as security for the payment and performance of any and all Obligations owed under this Agreement and under any other Loan Documents;

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration, the parties hereto agree as follows:

1. DEFINITIONS. 

1.1 Defined Terms.  For the purposes of this Agreement, the following capitalized words and phrases shall have the meanings set forth below. 

(a)“Additional Closings” means any closings hereunder after the First Closing, pursuant to which Lender makes Additional Loans to Borrower under the terms of this Agreement. 

(b)“Additional Loans” means each advance, and the aggregate of all such advances, made by Lender to Borrower under and pursuant to this Agreement or any other Loan Documents after the Initial Loan. 

(c)“Account” shall mean, individually, and “Accounts” shall mean, collectively, any and all accounts (as such term is defined in the UCC) of any Credit Party. 

(d)“ACH” shall have the meaning given to it in Section 2.4(c) hereof. 

(e)“Advisory Fee” shall have the meaning given to it in Section 2.5(f) hereof. 

(f)“Advisory Fee Shares” shall have the meaning given to it in Section 2.5(f) hereof. 

(g) “Affiliate” (a) of Lender shall mean: (i) any entity which, directly or indirectly, Controls or is Controlled By or is under common Control with Lender; and (ii) any entity administered or managed by Lender, or an Affiliate or investment advisor thereof and which is engaged in making, purchasing, holding or otherwise investing in commercial loans; and (b) of any Credit Party shall mean any entity which, directly or indirectly, Controls or is Controlled By or is under common Control with any Credit Party. 

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(h)“Agreement” shall mean this Senior Secured Credit Facility Agreement by and among the Credit Parties and the Lender. 

(i)“Asset Monitoring Fee” shall have the meaning given to it in Section 2.5(a) hereof. 

(j)“Borrower” shall have the meaning given to such term in the preamble hereof. 

(k)“Business Day” shall mean any day other than a Saturday, Sunday or a legal holiday on which banks are authorized or required to be closed for the conduct of commercial banking business in the State of Nevada. 

(l)“BSA” shall have the meaning given to it in Section 14.22 hereof. 

(m)“Capital Expenditures” shall mean expenditures (including Capital Lease obligations which should be capitalized under GAAP) for the acquisition of fixed assets which are required to be capitalized under GAAP. 

(n)“Capital Lease” shall mean, as to any Person, a lease of any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, by such Person as lessee that is, or should be, in accordance with Financial Accounting Standards Board Statement No. 13, as amended from time to time, or, if such Statement is not then in effect, such statement of GAAP as may be applicable, recorded as a “capital lease” on the balance sheets of any Credit Party prepared in accordance with GAAP. 

(o)“Change in Control” shall mean any sale, conveyance, assignment or other transfer, directly or indirectly, of any ownership interest of any Credit Party, which results in any change in the identity of the individuals or entities in Control of such Credit Party as of the Effective Date or the grant of a security interest in any ownership interest of any Person, directly or indirectly Controlling the Credit Parties, which could result in a change in the identity of the individuals or entities in Control of such Credit Party as of the Effective Date. 

(p)“Closings” means, collectively, the First Closing, and any Additional Closings, if any, under this Agreement. 

(q) “Collateral” shall mean “Collateral” as defined in the Security Agreements, and if there is more than one Security Agreement, it shall mean, as the context so requires, the “Collateral” for each individual Credit Party, as such term is defined in the Security Agreement for such applicable Credit Party, and all of the “Collateral,” in the aggregate, for all Credit Parties, collectively, under each of the Security Agreements. 

(r)“Common Stock” shall mean the common stock of the Borrower, par value $0.0001 per share. 

(s)“Compliance Certificate” shall mean the covenant compliance certificate, the form of which is attached hereto as Exhibit “A”. 

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(t)“Contingent Liability” and “Contingent Liabilities” shall mean, respectively, each obligation and liability of the Credit Parties and all such obligations and liabilities of the Credit Parties incurred pursuant to any agreement, undertaking or arrangement by which any Credit Party either: (i) guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, dividend, obligation or other liability of any other Person in any manner (other than by endorsement of instruments in the course of collection), including without limitation, any indebtedness, dividend or other obligation which may be issued or incurred at some future time; (ii) guarantees the payment of dividends or other distributions upon the shares or ownership interest of any other Person; (iii) undertakes or agrees (whether contingently or otherwise): (A) to purchase, repurchase, or otherwise acquire any indebtedness, obligation or liability of any other Person or any property or assets constituting security therefor; (B) to advance or provide funds for the payment or discharge of any indebtedness, obligation or liability of any other Person (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, working capital or other financial condition of any other Person; or (C) to make payment to any other Person other than for value received; (iv) agrees to lease property or to purchase securities, property or services from such other Person with the purpose or intent of assuring the owner of such indebtedness or obligation of the ability of such other Person to make payment of the indebtedness or obligation; (v) to induce the issuance of, or in connection with the issuance of, any letter of credit for the benefit of such other Person; or (vi) undertakes or agrees otherwise to assure or insure a creditor against loss.  The amount of any Contingent Liability shall (subject to any limitation set forth herein) be deemed to be the outstanding principal amount (or maximum permitted principal amount, if larger) of the indebtedness, obligation or other liability guaranteed or supported thereby. 

(u)“Control,” “Controlling,” “Controlled By,” or words of similar import shall mean the possession, directly or indirectly, of the power to direct, or cause the direction of, the management and policies of a Person by contract, voting of securities, or otherwise. 

(v)“Conversion Shares” shall have the meaning given to it in Section 2.5(g) hereof. 

(w)“Corporate Guarantors” shall have the meaning given to such term in the preamble hereof. 

(x)“Credit Party(ies)” shall have the meaning given to such term in the preamble hereof. 

(y)“Credit Party Leases” shall have the meaning given to it in Section 7.18 hereof. 

(z)“Default Rate” shall mean a per annum rate of interest equal to the highest non-usurious rate permitted by applicable law, and if there is no such rate under applicable law, then twenty-two percent (22%) per annum. 

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(aa)“Dollars” or “$” means lawful currency of the United States of America. 

(bb)“Effective Date” shall have the meaning given to it in the preamble hereof. 

(cc)“Eligible Accounts” means, as applicable for each Credit Party: 

(A)all sales of the Credit Parties arising from Point-of-Sale Transactions which meet each of the criteria set forth below (any sale that fails to meet the criteria below can still be deemed an Eligible Account, in Lender’s sole discretion): 

(i) are genuine in all respects and have arisen in the Credit Parties’ Ordinary Course of Business from the sale of goods or performance of services by Credit Parties, which delivery of goods has occurred or performance of services have been fully performed; 

(ii) payment for the sale has been made in full at the time of the sale, and such sale is not subject to any chargeback, credit, setoff, allowance, adjustment, repurchase or return agreement or obligation of any kind; 

(iii) the Person obligated on the sale is not a Subsidiary or a director, officer, employee, agent, parent or Affiliate of any Credit Party; and 

(iv) the proceeds from the sale are subject to a perfected, first priority Lien in favor of Lender and not subject to any Lien whatsoever, other than the Lien of Lender and except for Permitted Liens. 

(B)all Accounts of the Credit Parties which meet each of the criteria set forth below (an Account that fails to meet the criteria below can still be deemed an Eligible Account, in Lender’s sole discretion): 

(i) are genuine in all respects and have arisen in the Credit Parties’ Ordinary Course of Business from the sale of goods or performance of services by Credit Parties, which delivery of goods has occurred or performance of services have been fully performed; 

(ii) are evidenced by an invoice delivered to the Person obligated under such Account, are due and payable within thirty (30) days after the date of the invoice, and are not more than ninety (90) days outstanding past the invoice date; 

(iii) do not arise from a “sale on approval”, “sale or return”, “consignment”, “guaranteed sale” or “bill and hold”, or are subject to any other repurchase or return agreement; 

(iv) have not arisen in connection with a sale to a Person obligated under such Account who is not a resident or citizen of, or an entity organized in, and is principally located within, the United States of America; 

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(v) are not due from a Person obligated under such Account which is a Subsidiary or a director, officer, employee, agent, parent or Affiliate of any Credit Party; 

(vi) do not arise out of contracts with the United States or any Governmental Authority thereof, unless the a Credit Party has assigned its right to payment of such Account to Lender pursuant to the Federal Assignment of Claims Act of 1940 (or analogous statute), and evidence (satisfactory to Lender) of such assignment has been delivered to Lender; 

(vii) do not arise in connection with a sale to a Person obligated under such Account who is located within a state or jurisdiction which requires any Credit Party, as a precondition to commencing or maintaining an action in the courts of that state or jurisdiction, either to: (A) receive a certificate of authority to do business and be in good standing in such state or jurisdiction; or (B) file a notice of business activities or similar report with such state’s or jurisdiction’s taxing authority, unless: (I) the applicable Credit Party has taken one of the actions described in clauses (A) or (B); (II) the failure to take one of the actions described in either clause (A) or (B) may be cured retroactively by the applicable Credit Party at its election; or (III) the applicable Credit Party has proven to the satisfaction of Lender that it is exempt from any such requirements under such state’s or jurisdiction’s laws; 

(viii) do not arise out of a contract or order which, by its terms, forbids or makes void or unenforceable the assignment to Lender of the Account arising with respect thereto and are not assignable to Lender for any other reason; 

(ix) are the valid, legally enforceable and unconditional obligation of the Person obligated under such Account, are not the subject of any setoff, counterclaim, credit, allowance or adjustment by the Person obligated under such Account, or of any claim by the Person obligated under such Account denying liability thereunder in whole or in part, and the Person obligated under such Account has not refused to accept and/or has not returned or offered to return any of the goods or services which are the subject of such Account; 

(x) are subject to a perfected, first priority Lien in favor of Lender and not subject to any Lien whatsoever, other than the Lien of Lender and except for Permitted Liens; 

(xi) no Proceedings are pending or threatened against the Person obligated under such Account which might result in any material adverse change in its financial condition or in its ability to pay any Account in full; 

(xii) if the Account is evidenced by chattel paper or an instrument, the originals of such chattel paper or instrument shall have been endorsed and/or assigned and delivered to Lender or, in the case of electronic chattel paper, shall be in the control of Lender, in each case in a manner satisfactory to Lender; and 

(xiii) there is no bankruptcy, insolvency or liquidation Proceeding pending by or against the Person obligated under such Account, nor has the Person obligated under such Account gone out of or suspended business, made a general assignment for the benefit of creditors or failed to pay its debts generally as they come due, and/or no condition or event has  

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occurred having a Material Adverse Effect on the Person obligated under such Account which would require the Accounts of such Person to be deemed uncollectible in accordance with GAAP.

A sale or Account which is an Eligible Account shall cease to be an Eligible Account whenever it ceases to meet any one of the foregoing requirements. In addition, any sale or Account that otherwise meets each of the criteria above for an Eligible Account, may nonetheless be deemed not to be an Eligible Account, or may be deemed as an Eligible Account for a discounted value, all in Lender’s sole but reasonably exercised discretion.

If Accounts representing Fifty Percent (50%) or more of the unpaid net amount of all Accounts from any one Person fail to qualify as Eligible Accounts, including because such Accounts are unpaid more than ninety (90) days after the due date of such Accounts, then all Accounts relating to such Person shall cease to be Eligible Accounts.  If Accounts owed by a single Person exceed Fifty Percent (50%) of all Eligible Accounts, then all Accounts relating to such Person in excess of such amount shall cease to be Eligible Accounts. 

(dd)“Employee Plan” includes any pension, stock bonus, employee stock ownership plan, retirement, disability, medical, dental or other health plan, life insurance or other death benefit plan, profit sharing, deferred compensation, stock option, bonus or other incentive plan, vacation benefit plan, severance plan or other employee benefit plan or arrangement, including, without limitation, those pension, profit-sharing and retirement plans of the Credit Parties described from time to time in the consolidated financial statements of the Credit Parties and any pension plan, welfare plan, Defined Benefit Pension Plans (as defined in ERISA) or any multi-employer plan, maintained or administered by the Credit Parties or to which is the Credit Parties are a party or may have any liability or by which the Credit Parties are bound. 

(ee)“Environmental Laws” shall mean all federal, state, district, local and foreign laws, rules, regulations, ordinances, and consent decrees relating to health, safety, hazardous substances, pollution and environmental matters, as now or at any time hereafter in effect, applicable to the Credit Parties’ business or facilities owned or operated by the Credit Parties, including laws relating to emissions, discharges, releases or threatened releases of pollutants, contamination, chemicals, or hazardous, toxic or dangerous substances, materials or wastes in the environment (including ambient air, surface water, land surface or subsurface strata) or otherwise relating to the generation, manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials. 

(ff)“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. 

(gg)“Event of Default” shall mean any of the events or conditions set forth in Section 12 hereof. 

(hh)“Financial Statements” shall have the meaning given to it in Section 7.10 hereof. 

(ii)“First Closing” means the closing of the Initial Loan hereunder, which shall take place on the Effective Date. 

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(jj)“Funded Indebtedness” shall mean, as to any Person, without duplication: (i) all indebtedness for borrowed money of such Person (including principal, interest and, if not paid when due, fees and charges), whether or not evidenced by bonds, debentures, notes or similar instruments; (ii) all obligations to pay the deferred purchase price of property or services; (iii) all obligations, contingent or otherwise, with respect to the maximum face amount of all letters of credit (whether or not drawn), bankers’ acceptances and similar obligations issued for the account of such Person (including the Letters of Credit), and all unpaid drawings in respect of such letters of credit, bankers’ acceptances and similar obligations; and (iv) all indebtedness secured by any Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person (provided, however, if such Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to be in an amount equal to the fair market value of the property subject to such Lien at the time of determination).  Notwithstanding the foregoing, Funded Indebtedness shall not include trade payables and accrued expenses incurred by such Person in accordance with customary practices and in the Ordinary Course of Business of such Person. 

(kk)“GAAP” shall mean United States generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination; provided, however, that interim financial statements or reports shall be deemed in compliance with GAAP despite the absence of footnotes and fiscal year-end adjustments as required by GAAP. 

(ll)“Governmental Authority” means any foreign, federal, state or local government, or any political subdivision thereof, or any court, agency or other body, organization, group, stock market or exchange exercising any executive, legislative, judicial, quasi-judicial, regulatory or administrative function of government. 

(mm)“Guarantors” shall have the meaning given to it in the preamble hereof.  If any Guarantor is an individual, then the term “Guarantors” shall also include such individual’s spouse, if any. 

(nn)“Guarantee Agreement(s)” shall mean the guaranty agreements executed by the Corporate Guarantors in favor of the Lender, pursuant to which the Corporate Guarantors shall each guarantee all of the Obligations of the Borrower, the form of which is attached hereto as Exhibit “B”. 

(oo)“Hazardous Materials” shall mean any hazardous, toxic or dangerous substance, materials and wastes, including hydrocarbons (including naturally occurring or man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, biological substances, polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type of pollutants or contaminants (including, without limitation, materials which include hazardous constituents), sewage, sludge, industrial slag, solvents and/or any other similar substances, materials or wastes that are or become regulated  

8

under any Environmental Law (including any that are or become classified as hazardous or toxic under any Environmental Law).

(pp)“Income Projections” shall have the meaning given to it in Section 10.8 hereof. 

(qq)“Initial Loan” means the initial loan contemplated to be made by Lender to the Borrower at the First Closing in the amount of One Million Eight Hundred Thousand Dollars ($1,800,000). 

(rr)“Insurance Policies” shall have the meaning given to it in Section 7.23 hereof. 

(ss)“Interest Rate” shall mean a fixed rate of interest equal to twelve percent (12.0%) per annum, calculated on the actual number of days elapsed over a 360-day year. 

(tt)“IP Rights” shall have the meaning given to it in Section 7.21 hereof. 

(uu)“Irrevocable Transfer Agent Instructions” shall mean the Irrevocable Transfer Agent Instructions to be entered into by and among the Lender, the Borrower and the Borrower’s Transfer Agent, the form of which is attached hereto as Exhibit “C”. 

(vv) “Lender” shall have the meaning given to it in the preamble hereof. 

(ww)“Lender Indemnitee(s)” shall have the meaning given to it in Section 14.19 hereof. 

(xx)“License Agreements” shall have the meaning given to it in Section 7.21 hereof. 

(yy)“Lien” shall mean, with respect to any Person, any mortgage, pledge, hypothecation, judgment lien or similar legal process, title retention lien, or other lien, security interest or encumbrance of any nature or kind granted by such Person or arising by judicial process or otherwise, including the interest of a vendor under any conditional sale or other title retention agreement and the interest of a lessor under a lease of any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, by such Person as lessee that is, or should be, a Capital Lease on the balance sheet of such Person prepared in accordance with GAAP. 

(zz)“Loan” or “Loans” means, collectively, the Initial Loan, and all Additional Loans, if any, made by Lender to Borrower from time to time hereunder. 

(aaa)“Loan Documents” shall mean those documents listed in Sections 3.1, 3.2 and 3.3 hereof, and any other documents or instruments executed in connection with this Agreement or the Loans contemplated hereby, and all renewals, extensions, future advances, modifications, substitutions, or replacements thereof. 

(bbb)“Material Adverse Effect” shall mean: (i) a material adverse change in, or a material adverse effect upon, the assets, business, prospects, properties, financial condition  

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or results of operations of any Credit Party; (ii) a material impairment of the ability of any Credit Party to perform any of its Obligations under any of the Loan Documents; or (iii) a material adverse effect on: (A) any material portion of the Collateral; (B) the legality, validity, binding effect or enforceability against any Credit Party of any of the Loan Documents; (C) the perfection or priority (subject to Permitted Liens) of any Lien granted to Lender under any Loan Document; (D) the rights or remedies of Lender under any Loan Document; or (E) the Lender’s ability to sell, without limitation or restriction, if applicable, any Advisory Fee Shares hereunder or any shares issued to the Lender upon a conversion pursuant to the Promissory Note.  For purposes of determining whether any of the foregoing changes, effects, impairments, or other events have occurred, such determination shall be made by Lender, in its sole and absolute discretion.

(ccc)“Material Contract” shall mean any contract or agreement to which any Credit Party is a party or by which any Credit Party or any of its assets are bound and which: (i) must be disclosed to the SEC, the Principal Trading Market, or any other Governmental Authority pursuant to the Securities Act, the Exchange Act, the rules and regulations of the SEC, or any other laws, rules or regulations of any Governmental Authority or the Principal Trading Market; (ii) involves aggregate payments of One Hundred Thousand and No/100 United States Dollars (US$100,000.00) or more to or from any Credit Party; (iii) involves delivery, purchase, licensing or provision, by or to any Credit Party, of any goods, services, assets or other items having a value (or potential value) over the term of such contract or agreement of One Hundred Thousand and No/100 United States Dollars (US$100,000.00) or more or is otherwise material to the conduct of the Credit Party’s business as now conducted and as contemplated to be conducted in the future; (iv) involves a Credit Party Lease; (v) imposes any guaranty, surety or indemnification obligations on any Credit Party; or (vi) prohibits any Credit Party from engaging in any business or competing anywhere in the world. 

(ddd)“Material Shareholder” shall have the meaning given to it in Section 7.31 hereof. 

(eee)“Maturity Date” shall mean the earlier of: (i) fifteen (15) months from the Effective Date; (ii) upon prepayment of the Promissory Note by Borrower (subject to Section 2.4(b)); or (iii) the occurrence of an Event of Default and acceleration of the Promissory Note pursuant to this Agreement, unless the date in clause (i) shall be extended by Lender pursuant to any modification, extension or renewal note executed by Borrower and accepted by Lender in its sole and absolute discretion in substitution for the Promissory Note. 

(fff)“Obligations” shall mean, whether now existing or hereafter arising, created or incurred: (i) all Loans, advances (whether of principal or otherwise) and other financial accommodations (whether primary, contingent or otherwise) made by Lender to Borrower under any Loan Documents; (ii) all interest accrued thereon (including interest which would be payable as post-petition in connection with any bankruptcy or similar Proceeding, whether or not permitted as a claim thereunder); (iii) any and all fees, charges or other amounts due to Lender under this Agreement or the other Loan Documents; (iv) any and all expenses incurred by Lender under, or in connection with, this Agreement or the other Loan Documents; (v) any and all other liabilities and obligations of any of the Credit Parties to Lender under this Agreement and any other Loan Documents; and (vi) the performance by the Credit Parties of all covenants, agreements and  

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obligations of every nature and kind on the part of any of the Credit Parties to be performed under this Agreement and any other Loan Documents.

(ggg)“OFAC” shall have the meaning given to it in Section 14.22 hereof. 

(hhh)“Ordinary Course of Business” means the Ordinary Course of Business of the Person in question consistent with past custom and practice (including with respect to quantity, quality and frequency). 

(iii)“Payment Account” shall have the meaning given to it in Section 2.4(c) hereof. 

(jjj)“Permitted Liens” shall mean: (i) Liens for Taxes, assessments or other governmental charges not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and, in each case, for which adequate reserves are maintained in accordance with GAAP and in respect of which no Lien has been filed; (ii) Liens of carriers, warehousemen, mechanics and materialmen arising in the Ordinary Course of Business; (iii) Liens in the form of deposits or pledges incurred in connection with worker’s compensation, unemployment compensation and other types of social security (excluding Liens arising under ERISA or in connection with surety bonds, bids, performance bonds and similar obligations) for sums not overdue or being contested in good faith by appropriate Proceedings and not involving any advances or borrowed money or the deferred purchase price of property or services, which do not in the aggregate materially detract from the value of the property or assets of the Credit Parties taken as a whole or materially impair the use thereof in the operation of the Credit Parties’ business and, in each case, for which adequate reserves are maintained in accordance with GAAP and in respect of which no Lien has been filed; (iv) Liens described in the Financial Statements and acceptable to Lender in its sole and absolute discretion, and the replacement, extension or renewal of any such Lien upon or in the same property subject thereto arising out of the extension, renewal or replacement of the indebtedness secured thereby (without increase in the amount thereof and without expansion of such Liens upon any other property); (v) attachments, appeal bonds, judgments and other similar Liens, for sums not exceeding Fifty Thousand and No/100 United States Dollars (US$50,000.00) arising in connection with court Proceedings, provided the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate Proceedings, and only to the extent such judgments or awards do not otherwise constitute an Event of Default; (vi) zoning and similar restrictions on the use of property and easements, rights of way, restrictions, minor defects or irregularities in title and other similar Liens not interfering in any material respect with the ordinary conduct of the business of the Credit Parties; (vii) Liens arising in connection with Capital Leases (and attaching only to the property being leased); (viii) Liens that constitute purchase money security interests on any property securing indebtedness incurred for the purpose of financing all or any part of the cost of acquiring such property, provided that any such Lien attaches to such property within sixty (60) days of the acquisition thereof and attaches solely to the property so acquired; (ix) Liens granted to Lender hereunder and under the Loan Documents; (x) any interest or title of a lessor, sublessor, licensor or sublicensor under any lease or non-exclusive license permitted by this Agreement; (xi) Liens arising from precautionary uniform commercial code financing statements filed under any lease permitted by this Agreement; (xii) banker’s Liens and rights of set-off of financial institutions arising in connection with items  

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deposited in accounts maintained at such financial institutions and subsequently unpaid and unpaid fees and expenses that are charged to the Credit Parties by such financial institutions in the Ordinary Course of Business of the maintenance and operation of such accounts; (xiii) Liens evidenced by the following UCC Financing Statements filed with the Utah Department of Commerce, Division of Corporations: (A) UCC-1 filed against Landis Salons, Inc. on May 23, 2012 in favor of Pawnee Leasing Corporation under File No. 413104201228; (B) UCC-1 filed against Landis Salons II, Inc. on October 15, 2012 in favor of Timepayment Corporation under File No. 420142201229; and (C) UCC-1 filed against Landis Salons, Inc. on March 11, 2014 in favor of Alliance Laundry Systems, LLC under File No. 446296201442 (collectively, the “Equipment Liens”); provided, however, the Equipment Liens shall only be Permitted Liens to the extent same do not affect any other Collateral other than the specific equipment that is listed on such Equipment Liens as of the Effective Date hereof.

(kkk)“Permit” means any license, permit, approval, waiver, order, authorization, right or privilege of any nature whatsoever, granted, issued, approved or allowed by any Governmental Authority. 

(lll)“Person” shall mean any individual, partnership, limited liability company, limited liability partnership, corporation, trust, joint venture, joint stock company, association, unincorporated organization, government or agency or political subdivision thereof, or other entity. 

(mmm)“Pledge Agreement(s)” shall mean the pledge agreements executed by the Borrower in favor of the Lender, pursuant to which the Borrower grants a first priority lien and security interest in and to all of the shares or membership interest (as applicable) owned by the Borrower in each of the Corporate Guarantor, and any other Subsidiaries, to the Lender, the forms of which are attached hereto as Exhibit “D”. 

(nnn)“Point-of-Sale Transactions” means any sale transactions by any Credit Parties whereby the purchase price for the sale transaction is paid in full by the Person undertaking such sale transaction, at the time of the sale transaction. 

(ooo)“Preferred Stock” shall have the meaning given to it in Section 7.4 hereof. 

(ppp)“Premium” shall mean a payment premium due on the amount of the Obligations in accordance with the Promissory Note. 

(qqq)“Prepayment Penalty” shall have the meaning given to it in Section 2.4(b) hereof. 

(rrr)“Principal Trading Market” shall mean the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTCQX, the OTCQB, the OTC Pink, the NYSE Euronext or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for the Common Stock. 

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(sss)“Proceeding” means any demand, claim, suit, action, litigation, investigation, audit, study, arbitration, administrative hearing, or any other proceeding of any nature whatsoever. 

(ttt)“Promissory Note(s)” means any promissory notes issued by the Borrower to Lender from time to time under this Agreement which evidence the Initial Loan or any Additional Loans, which promissory notes shall be substantially in the form and substance attached hereto as Exhibit “E”. 

(uuu)“Public Documents” shall have the meaning given to it in Section 7.11 hereof. 

(vvv)“Real Property” means any real estate, land, building, structure, improvement, fixture or other real property of any nature whatsoever, including, but not limited to, fee and leasehold interests, and specifically including the real property listed on Schedule 7.18(a). 

(www)“Rule 144” shall mean Rule 144 or Rule 144A promulgated under the Securities Act (or a successor rule thereto). 

(xxx)“Rule 144 Certificate” shall have the meaning given to it in Section 10.20 hereof. 

(yyy)“Rule 144 Opinion” shall have the meaning given to it in Section 10.20 hereof. 

(zzz)“Sale Reconciliation” shall have the meaning given to it in Section 2.5(f)(i) hereof. 

(aaaa)“SEC” shall mean the United States Securities and Exchange Commission. 

(bbbb)“Securities Act” shall mean the Securities Act of 1933, as amended. 

(cccc)“Securities Being Sold” shall have the meaning given to it in Section 10.20 hereof. 

(dddd)“Security Agreement(s)” shall mean the security agreements executed by the Credit Parties in favor of Lender, pursuant to which each of the Credit Parties grant a first priority lien and security interest in and to all of their respective Collateral as security for the Obligations, the forms of which are attached hereto as Exhibit “F-1” and Exhibit “F-2”. 

(eeee)“Series C Preferred Stock” shall mean the Borrower’s Series C, non-voting, convertible preferred stock, $0.001 par value per share. 

(ffff)“Share Reserve” shall have the meaning given to it in Section 10.21 hereof. 

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(gggg)“Shell Company” shall have the meaning given to it in Section 10.20 hereof. 

(hhhh)“Subsidiary” and “Subsidiaries” shall mean, respectively, each and all such corporations, partnerships, limited partnerships, limited liability companies, limited liability partnerships or other entities of which or in which a Person owns, directly or indirectly, fifty percent (50%) or more of: (i) the combined voting power of all classes of stock having general voting power under ordinary circumstances to elect a majority of the board of directors of such entity if a corporation; (ii) the management authority and capital interest or profits interest of such entity, if a partnership, limited partnership, limited liability company, limited liability partnership, joint venture or similar entity; or (iii) the beneficial interest of such entity, if a trust, association or other unincorporated organization. 

(iiii)“Transfer Agent” shall have the meaning given to it in Section 2.5(g) hereof. 

(jjjj)“UCC” shall mean the Uniform Commercial Code in effect in Nevada from time to time. 

(kkkk)“Use of Proceeds Confirmation” shall have the meaning given to it in Section 9.8 hereof. 

(llll)“Validity Certificates” shall mean the Validity Certificates executed by certain officers and directors of the Borrower, the form of which is attached hereto as Exhibit “G”. 

(mmmm)“Valuation Date” shall have the meaning given to it in Section 2.5(g) hereof. 

(nnnn)“VWAP” shall have the meaning given to it in Section 2.5(g) hereof. 

1.2 Accounting Terms.  Any accounting terms used in this Agreement which are not specifically defined herein shall have the meanings customarily given them in accordance with GAAP.  Calculations and determinations of financial and accounting terms used and not otherwise specifically defined hereunder and the preparation of financial statements to be furnished to Lender pursuant hereto shall be made and prepared, both as to classification of items and as to amount, in accordance with GAAP as used in the preparation of the financial statements of Borrower on the date of this Agreement.  If any changes in accounting principles or practices from those used in the preparation of the financial statements are hereafter occasioned by the promulgation of rules, regulations, pronouncements and opinions by or required by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or any successor thereto or agencies with similar functions), which results in a material change in the method of accounting in the financial statements required to be furnished to Lender hereunder or in the calculation of financial covenants, standards or terms contained in this Agreement, the parties hereto agree to enter into good faith negotiations to amend such provisions so as equitably to reflect such changes to the end that the criteria for evaluating the financial condition and performance of Borrower will be the same after such changes as they were before such changes; and if the parties fail to agree on the amendment of such provisions, Borrower will furnish financial statements in accordance  

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with such changes but shall provide calculations for all financial covenants, perform all financial covenants and otherwise observe all financial standards and terms in accordance with applicable accounting principles and practices in effect immediately prior to such changes.  Calculations with respect to financial covenants required to be stated in accordance with applicable accounting principles and practices in effect immediately prior to such changes shall be reviewed and certified by Borrower’s accountants.

1.3 Other Terms Defined in UCC.  All other words and phrases used herein and not otherwise specifically defined shall have the respective meanings assigned to such terms in the UCC, as amended from time to time, to the extent the same are used or defined therein. 

1.4 Other Definitional Provisions; Construction.  Whenever the context so requires, the neuter gender includes the masculine and feminine, the single number includes the plural, and vice versa.  In addition: (i) the words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and references to Article, Section, Subsection, Annex, Schedule, Exhibit and like references are references to this Agreement unless otherwise specified; (ii) wherever the word “include,” “includes” or “including” is used in this Agreement, it will be deemed to be followed by the words “without limitation;” (iii) an Event of Default shall “continue” or be “continuing” until such Event of Default has been cured in Lender’s sole and absolute discretion, or waived by Lender in accordance with Section 14.3 hereof; (iv) any reference to the Credit Parties shall mean and refer to all the Credit Parties, collectively, and to each Credit Party, individually, and accordingly, each representation, warranty, covenant, obligation or other agreement, term or provision in this Agreement or any other Loan Documents, to the extent applicable to the Credit Parties, shall be deemed to be applicable and effective as to all Credit Parties, collectively, and to each Credit Party, individually, as the context may so require, regardless of the gender, singular, plural, or other tense used in the applicable provision; (v) references in this Agreement to any party shall include such party’s successors and permitted assigns; and (vi) references to any “Section” shall be a reference to such Section of this Agreement unless otherwise stated.  To the extent any of the provisions of the other Loan Documents are inconsistent with the terms of this Agreement, the provisions of this Agreement shall govern. 

2. LOANS. 

2.1 Initial Loan.  Subject to the satisfaction (or waiver) of the terms and conditions of this Agreement, the Lender shall make the Initial Loan to Borrower at the First Closing. 

2.2 Additional Loans. 

(a)At any time after the First Closing, but prior to the Maturity Date or earlier termination of this Agreement, the Borrower may request that Lender make Additional Loans hereunder at Additional Closings by written notice to Lender.  Any such Additional Loans shall be subject to Lender’s prior written approval, and Lender shall have the absolute right to withhold, deny or condition approval of any such requests for any such Additional Loans in Lender’s sole and absolute discretion, however, at a minimum, the following conditions must be satisfied, in Lender’s sole and absolute discretion: (i) no Event of Default shall have occurred or be continuing; (ii) Borrower shall have executed and delivered a new or revised Promissory Note;  

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(iii) after giving effect to such increase, the amount of the aggregate outstanding principal balance of all Loans shall not be in excess of the maximum amount of credit available under this Agreement; (iv) Lender shall have reviewed and accepted, in its sole and absolute discretion, the revenues, income, Collateral, and other financial or other underwriting criteria required for the increase; and (v) Lender shall have received any and all documents or agreements as it shall require in its sole and absolute discretion.  If Lender approves any request for such Additional Loans, then subject to the satisfaction (or waiver) of the terms and conditions of this Agreement, Lender shall make such Additional Loans to Borrower in such amounts and at such Additional Closings as Lender and the Borrower may mutually agree.  Borrower may only request Additional Loans if, in Lender’s sole and absolute discretion, no default or “Event of Default” (as such term is defined in any of the Loan Documents) shall have occurred or be continuing under this Agreement or any other Loan Documents, and no event shall have occurred that, with the passage of time, the giving of notice, or both, would constitute a default or an Event of Default hereunder or thereunder.

(b)It is expressly agreed and acknowledged by each of the Credit Parties that, notwithstanding that this Agreement provides for the opportunity for Additional Loans as hereby provided: (i) Lender has no obligation of any nature or kind whatsoever to make any such Additional Loans to the Credit Parties; (ii) the Credit Parties did not enter into this Agreement based on any promise, express or implied, by Lender or any of its agents or representatives, or based on any expectation by any of the Credit Parties, that Additional Loans beyond the Initial Loan would be made or provided after the Effective Date; and (iii) each of the Credit Parties hereby fully and unconditionally waives any and all claims, counterclaims, and defenses any of them may have based on any argument that Lender had any obligation or otherwise promised to fund  or make Additional Loans beyond the Initial Loan, or any argument or implied covenant of fair dealing and good faith that may in any way imply an obligation upon Lender to make such Additional Loans. 

2.3 Form of Payment; Documents Delivered.  Each Closing shall be undertaken between the Credit Parties and Lender through the use of overnight mails and subject to escrow instructions from Lender and its counsel.  Any violation or breach of any such escrow instructions, whether by any Credit Parties or counsel for any Credit Parties, shall constitute an Event of Default hereunder. Subject to such escrow instructions and the satisfaction (or waiver) of the terms and conditions of this Agreement, at each Closing: (i) the Lender shall deliver to the Borrower, to a Borrower account designated by the Borrower, the aggregate proceeds of the applicable Loan being funded at such Closing, minus the fees to be paid directly from the proceeds of such Closing as set forth in this Agreement, in the form of wire transfers of immediately available Dollars; and (ii) the Credit Parties shall deliver to Lender the Promissory Note evidencing the Loan made at such Closing (or a consolidated Promissory Note for all Loans, in Lender’s discretion), as well as all other documents required to be delivered pursuant to this Agreement or otherwise required by Lender and its counsel, duly executed on behalf of the Credit Parties, as applicable. 

2.4 Payment of Loans. 

(a)Loan Interest and Payments.  Except as otherwise provided in this Section, the outstanding principal balance of the Loans and all other Obligations shall be repaid on or before the Maturity Date.  The principal amount of the Loans outstanding from time to time shall bear interest at the Interest Rate, and be subject to payment of the Premium in accordance  

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with the Promissory Note. All Obligations shall be paid in accordance with the payment terms set forth in this Agreement and the Promissory Note. Any amount of principal, interest, or Premium on the Obligations which is not paid when due, whether at stated maturity, by acceleration or otherwise, shall at Lender’s option bear interest payable on demand at the Default Rate.

(b)Optional Prepayments.  Borrower may from time to time prepay the Loans, in whole or in part, provided, however, that if the Borrower prepays the Obligations in full within ninety (90) days following the Effective Date, Borrower shall pay to Lender as liquidated damages and compensation for the costs of being prepared to make funds available hereunder an amount equal to two and a half percent (2.5%) of the Initial Loan (the “Prepayment Penalty”). 

(c)ACH Payment.  The Credit Parties agree that all payments due and owing under this Agreement or any other Loan Documents shall be made by wire transfer to an account designated by Lender to Borrower from time to time, or at Lender’s election, shall be made through automated clearing house (“ACH”) transfers from the Borrower’s designated operating account (the “Payment Account”) directly to Lender.  In this regard, if the Lender elects to receive payments through ACH, the Borrower hereby agrees to execute and deliver to Lender an authorization agreement for direct payments whereby, among other things, Lender shall be irrevocably authorized to initiate ACH transfers from the Payment Account to Lender in the amounts required or permitted under this Agreement and all other Loan Documents, including for scheduled payments of principal, interest and Premium due under the Promissory Note, and payment of all other fees or charges due under this Agreement or any other Loan Documents.  Lender’s authorization for direct ACH transfers as hereby provided shall be irrevocable and such ACH transfers shall continue until all Obligations are paid in full.  For so long as any Obligations remain outstanding, Borrower shall: (i) not revoke Lender’s authority to initiate ACH transfers as hereby contemplated; (ii) not change, modify, close or otherwise affect the Payment Account; (iii) deposit all revenues of any nature or kind whatsoever relating to Borrower or its business only into the Payment Account; and (iv) be responsible for all costs, expenses or other fees and charges incurred by Lender as a result of any failed or returned ACH transfers, whether resulting from insufficient sums being available in the Payment Account, or otherwise.  The Credit Parties hereby agree to undertake any and all required actions, execute any required documents, instruments or agreements, or to otherwise do any other thing required or requested by Lender in order to effectuate the requirements of this Section 2.4(c). 

(d)Power of Attorney.  It is intended that all revenues of any nature or kind whatsoever relating to Borrower or its business, and all other checks, drafts, instruments and other items of payment or proceeds of Collateral at any time received, due or owing to the Credit Parties from any Person, or otherwise, shall be deposited directly into the Payment Account, and if not deposited directly into the Payment Account, shall be immediately remitted or endorsed by the Credit Parties into the Payment Account, and, if that remittance or endorsement of any such item shall not be immediately made for any reason, Lender is hereby irrevocably authorized to remit or endorse the same on Credit Parties’ behalf.  For purpose of this Section, the Credit Parties irrevocably hereby make, constitute and appoint Lender (and all Persons designated by Lender for that purpose) as the Credit Parties’ true and lawful attorney and agent-in-fact: (A) to endorse the Credit Parties’ name upon items of payment and/or proceeds of Collateral and upon any chattel paper, document, instrument, invoice or similar document or agreement relating to any revenues of the Credit Parties; (B) to take control in any manner of any item of payment or proceeds thereof;  

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(C) to have access to the Credit Parties’ operating accounts, through the Credit Parties’ online banking system, or otherwise, to make remittances of any revenues deposited therein into the Payment Account as required hereby; (D) to have access to any lock box or postal box into which any of the Credit Parties’ mail is deposited, and open and process all mail addressed to the Credit Parties and deposited therein; and (E) direct and otherwise deal with all Persons, to insure that all revenues are remitted to the Payment Account as hereby contemplated.

(e)Rights Upon Default.  Lender may, at any time and from time to time after the occurrence and during the continuance of an Event of Default, whether before or after the maturity of any of the Obligations: (A) enforce collection of any Accounts or other amounts owed to the Credit Parties by suit or otherwise; (B) exercise all of the rights and remedies of the Credit Parties with respect to Proceedings brought to collect any Accounts or other amounts owed to the Credit Parties; (C) surrender, release or exchange all or any part of any Accounts or other amounts owed to the Credit Parties, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder; (D) sell or assign any Account of the Credit Parties, or other amount owed to the Credit Parties, upon such terms, for such amount and at such time or times as Lender deems advisable; (E) prepare, file and sign any Credit Parties’ name on any proof of claim in bankruptcy or other similar document against any Person obligated to the Credit Parties; and (F) do all other acts and things which are necessary, in Lender’s sole discretion, to fulfill the Credit Parties’ obligations under this Agreement and the other Loan Documents and to allow Lender to collect the Accounts, or other amounts owed to the Credit Parties.  In addition to any other provision hereof, Lender may at any time after the occurrence and during the continuance of an Event of Default, at the Credit Parties’ expense, notify any parties obligated on any of the Accounts to make payment directly to Lender of any amounts due or to become due thereunder. 

(f)Statement.  From time to time, Lender may deliver to Borrower an invoice and or an account statement showing all Loans, charges and payments, which shall be deemed final, binding and conclusive upon Borrower, unless Borrower notifies Lender in writing, specifying any error therein, within thirty (30) days of the date such account statement is sent to Borrower and any such notice shall only constitute an objection to the items specifically identified. 

(g)View Access To Accounts.  On the Effective Date, the Credit Parties shall undertake all required actions, including providing Lender with proper sign-in or log-in credentials, user names, passwords, and other required information, to provide Lender with, and to allow Lender to have, view-only access, through the Credit Parties’ online banking system or otherwise, to any and all of the Credit Parties’ bank accounts listed on Schedule 7.28, and any additional bank accounts of the Credit Parties as may exist from time to time.  Credit Parties shall not undertake any action that prevents or impairs Lender’s ability to have view-only access of all of the bank accounts of the Credit Parties as contemplated by this Section. 

2.5 Fees. 

(a)Intentionally Left Blank. 

(b)Transaction Advisory Fee. In addition to the Advisory Fee contained in Section 2.5(f) herein, the Borrower agrees to pay to Lender a transaction advisory fee equal to  

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two percent (2.0%) of the amount of the Initial Loan, and one percent (1.0%) on the amount of any Additional Loan, which shall be due and payable on the First Closing and at each Additional Closing.

(c)Due Diligence Fees.  Borrower agrees to pay a due diligence fee equal to Six Thousand Five Hundred and No/100 United States Dollars (US$6,500.00), which shall be due and payable in full on the First Closing, or any remaining portion thereof shall be due and payable on the First Closing if a portion of such fee was paid upon the execution of any term sheet related to this Agreement. 

(d)Document Review and Legal Fees.  Borrower agrees to pay a document review and legal fee equal to Eighteen Thousand and No/100 United States Dollars (US$18,000.00) which shall be due and payable in full on the First Closing, or any remaining portion thereof shall be due and payable on the First Closing if a portion of such fee was paid upon the execution of any term sheet related to this Agreement. 

(e)Other Fees.  Borrower also agrees to pay to the Lender (or any designee of the Lender), upon demand, or to otherwise be responsible for the payment of, any and all other costs, fees and expenses, including the reasonable fees, costs, expenses and disbursements of counsel for the Lender and of any experts and agents, which the Lender may incur or which may otherwise be due and payable in connection with: (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver, subordination, or other modification or termination of this Agreement or any other Loan Documents (provided that there shall be no fees for the preparation and negotiation of this Agreement other than as specifically set forth in the closing or settlement statement executed by Borrowers and Lender on the First Closing); (ii) any documentary stamp taxes, intangibles taxes, recording fees, filing fees, or other similar taxes, fees or charges imposed by or due to any Governmental Authority in connection with this Agreement or any other Loan Documents; (iii) the exercise or enforcement of any of the rights of the Lender under this Agreement or the Loan Documents; or (iv) the failure by the Credit Parties to perform or observe any of the provisions of this Agreement or any of the Loan Documents.  Included in the foregoing shall be the amount of all expenses paid or incurred by Lender in consulting with counsel concerning any of its rights under this Agreement or any other Loan Document or under applicable law.  All such costs and expenses, if not so immediately paid when due or upon demand thereof, shall bear interest from the date of outlay until paid, at the Default Rate.  All of such costs and expenses shall be additional Obligations of the Credit Parties to Lender secured under the Loan Documents.  The provisions of this Subsection shall survive the termination of this Agreement. 

(f)Advisory Fees.    The Borrower shall pay to Lender a fee for advisory services provided by the Lender to the Borrower prior to the Effective Date in the amount of Four Hundred Twenty-Five Thousand and No/100 United States Dollars (US$425,000.00) (the “Advisory Fee”) by issuing to Lender under this Section 85,000 shares of the Borrower’s Series C Preferred Stock (the “Advisory Fee Shares”).  The Borrower shall instruct its transfer agent (the “Transfer Agent”) to issue certificates representing the Advisory Fee Shares issuable to the Lender immediately upon the Borrower’s execution of this Agreement, and shall cause its Transfer Agent to deliver such certificates to Lender within seven (7) Business Days from the Effective Date.  In the event such certificates representing the Advisory Fee Shares issuable hereunder shall not be delivered to the Lender within said seven (7) Business Day period, same shall be an  

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immediate default under this Agreement and the other Loan Documents.  The Advisory Fee Shares, when issued, shall be deemed to be validly issued, fully paid, and non-assessable shares of the Borrower’s Series C Preferred Stock.  The Advisory Fee Shares shall be deemed fully earned as of the Effective Date, regardless of the amount or number of Loans made hereunder.

(i) Adjustments.  It is the intention of the Borrower and Lender that the Lender shall be able to convert (if Lender so elects, in Lender’s sole and absolute discretion) the Advisory Fee Shares into shares of Common Stock (the “Series C Conversion Shares”) in accordance with the rights and preferences of the Series C Preferred Stock, and to thereafter sell (if Lender so elects, in Lender’s sole and absolute discretion) the Series C Conversion Shares, and generate net proceeds (net of all brokerage commissions and other fees or charges payable by Lender in connection with the sale thereof) from such sale equal to the Advisory Fee.  The Lender shall have the right (but not an obligation) to convert the Advisory Fee Shares, and to thereafter sell the Series C Conversion Shares in the Principal Trading Market or otherwise, at any time in accordance with applicable securities laws.  At any time the Lender may elect, the Lender may deliver to the Borrower a reconciliation statement showing the net proceeds actually received by the Lender from the sale of the Series C Conversion Shares (the “Sale Reconciliation”).  If, as of the date of the delivery by Lender of the Sale Reconciliation, the Lender has not realized net proceeds from the sale of such Series C Conversion Shares equal to at least the Advisory Fee, as shown on the Sale Reconciliation, then the Borrower shall immediately take all required action necessary or required in order to cause the issuance of additional shares of Common Stock to the Lender in an amount sufficient such that, when sold and the net proceeds thereof are added to the net proceeds from the sale of any of the previously issued and sold Series C Conversion Shares, the Lender shall have received total net funds equal to the Advisory Fee.  If additional shares of Common Stock are issued pursuant to the immediately preceding sentence, and after the sale of such additional issued shares of Common Stock, the Lender still has not received net proceeds equal to at least the Advisory Fee, then the Borrower shall again be required to immediately take all required action necessary or required in order to cause the issuance of additional shares of Common Stock to the Lender as contemplated above, and such additional issuances shall continue until the Lender has received net proceeds from the sale of such Common Stock equal to the Advisory Fee.  In the event the Lender receives net proceeds from the sale of Series C Conversion Shares or Common Stock equal to the Advisory Fee, and the Lender still has Advisory Fee Shares, Series C Conversion Shares, or other Common Stock issued under this Section 2.5(f) (the “Advisory Common Stock”) remaining to be sold, the Lender shall return all such remaining shares to the Borrower.  In the event additional Common Stock is required to be issued as outlined above, the Borrower shall instruct its Transfer Agent to issue certificates representing such additional shares of Common Stock to the Lender immediately subsequent to the Lender’s notification to the Borrower that additional shares of Common Stock are issuable hereunder, and the Borrower shall in any event cause its Transfer Agent to deliver such certificates to Lender within seven (7) Business Days following the date Lender notifies the Borrower that additional shares of Common Stock are to be issued hereunder.  In the event such certificates representing such additional shares of Common Stock issuable hereunder shall not be delivered to the Lender within said seven (7) Business Day period, same shall be an immediate default under this Agreement and the Loan Documents.  Notwithstanding anything contained in this Section to the contrary, the Borrower shall have the right to redeem any Advisory Fee Shares, Series C Conversion Shares, or Advisory Common Stock then in the Lender’s possession for an amount payable by the Borrower to Lender in cash equal to the Advisory Fee, less any net cash proceeds  

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received by the Lender from any previous sales of Series C Conversion Shares, or Advisory Common Stock.  Upon Lender’s receipt of such cash payment in accordance with the immediately preceding sentence, the Lender shall return any then remaining Advisory Fee Shares, Series C Conversion Shares, or Advisory Common Stock in its possession back to the Borrower.  The Borrower’s obligation to pay the Advisory Fee contemplated by this Section 2.5(f), whether in cash or thru the sale of Series C Conversion Shares, or Advisory Common Stock, shall be an Obligation hereunder, secured by all Loan Documents, and failure by the Borrower to pay such Advisory Fee in full as required by this Section 2.5(f) shall be an immediate Event of Default hereunder and under the other Loan Documents.  In the event the Lender elects to make Additional Loans as permitted by this Agreement, the Borrower agrees to pay additional advisory fees to Lender either in cash or in a similar manner as set forth in this Section 2.5(f) through the issuance of additional Advisory Fee Shares, at Lender’s sole discretion, in an amount to be mutually agreed upon between Lender and Borrower.

(ii) Mandatory Redemption.  Notwithstanding anything contained in this Agreement to the contrary, in the event the Lender has not realized net proceeds from the sale of Series C Conversion Shares, or Advisory Common Stock equal to at least the Advisory Fee by the earlier to occur of: (A) the fifteen (15) month anniversary of the Effective Date; (B) the occurrence of an Event of Default; or (C) the Maturity Date, then at any time thereafter, the Lender shall have the right, upon written notice to the Borrower, to require that the Borrower redeem all Advisory Fee Shares, Series C Conversion Shares, or Advisory Common Stock then in Lender’s possession for cash equal to the Advisory Fee, less any cash proceeds received by the Lender from any previous sales of Series C Conversion Shares, or Advisory Common Stock, if any.  In the event such redemption notice is given by the Lender, the Borrower shall redeem the then remaining Advisory Fee Shares, Series C Conversion Shares, and Advisory Common Stock then in Lender’s possession for an amount of Dollars equal to the Advisory Fee, less any cash proceeds received by the Lender from any previous sales of Series C Conversion Shares, and Advisory Common Stock, if any, payable by wire transfer to an account designated by Lender within five (5) Business Days from the date the Lender delivers such redemption notice to the Borrower. 

(iii) Piggyback Registration Rights.  In the event that the Borrower files a registration statement with respect to its Common Stock with the SEC (other than a registration statement on Form S-4 or S-8 or any successor form thereto) after the Effective Date but before the Lender converts the Advisory Fee Shares or sells the Series C Conversion Shares or any Advisory Common Stock, the Advisory Fee Shares, Series C Conversion shares and Advisory Common Stock, as applicable, shall be registered pursuant to such registration statement. 

(g)Matters with Respect to Common Stock. 

(i) Issuance of Conversion Shares.  The parties hereto acknowledge that pursuant to the terms of the Promissory Note, Lender has the right, after the occurrence of an Event of Default, to convert amounts due under the Promissory Note into Common Stock in accordance with the terms of the Promissory Notes.  In the event, for any reason, the Borrower fails to issue, or cause the Transfer Agent to issue, any portion of the Common Stock issuable upon conversion of the Promissory Note (the “Conversion Shares”) to Lender in connection with the exercise by Lender of any of its conversion rights under the Promissory Note, then the parties hereto acknowledge that Lender shall irrevocably be entitled to deliver to the Transfer Agent, on behalf  

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of itself and the Borrower, a “Conversion Notice” (as defined in the Promissory Note) requesting the issuance of the Conversion Shares then issuable in accordance with the terms of the Promissory Note, and the Transfer Agent, provided they are the acting transfer agent for the Borrower at the time, shall, and the Borrower hereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation or instructions from the Borrower, issue the Conversion Shares applicable to the Conversion Notice then being exercised, and surrender to a nationally recognized overnight courier for delivery to Lender at the address specified in the Conversion Notice, a certificate of the Common Stock of the Borrower, registered in the name of Lender or its designee, for the number of Conversion Shares to which Lender shall be then entitled under the Promissory Note, as set forth in the Conversion Notice.

(ii) Issuance of Series C Conversion Shares and Advisory Common Stock.  The parties hereto acknowledge that the Borrower has agreed to issue, upon conversion of the Advisory Fee Shares, and in the future in accordance with Section 2.5(f) above, the Series C Conversion Shares and Advisory Common Stock in accordance with Section 2.5(f) above.  In the event, for any reason, the Borrower fails to issue, or cause its Transfer Agent to issue, any portion of the Series C Conversion Shares or Advisory Common Stock issuable to Lender hereunder, either now or in the future, then the parties hereto acknowledge that Lender shall irrevocably be entitled to deliver to the Transfer Agent, on behalf of itself and the Borrower, a written instruction requesting the issuance of the Series C Conversion Shares or Advisory Common Stock then issuable, and the Transfer Agent, provided they are the acting transfer agent for the Borrower at the time, shall, and the Borrower hereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation or instructions from the Borrower, issue such shares of Series C Conversion Shares and/or Advisory Common Stock as directed by Lender, and surrender to a nationally recognized overnight courier for delivery to Lender at the address specified in the Lender’s notice, a certificate of the Common Stock of the Borrower representing such Series C Conversion Shares and/or Advisory Common Stock, registered in the name of Lender, for the number of shares of Common Stock issuable to Lender in accordance herewith. 

(iii) Removal of Restrictive Legends.  In the event that Lender has any shares of the Borrower’s Common Stock bearing any restrictive legends, and Lender, through its counsel or other representatives, submits to the Transfer Agent any such shares for the removal of the restrictive legends thereon, whether in connection with a sale of such shares pursuant to any exemption to the registration requirements under the Securities Act, or otherwise, and the Borrower and or its counsel refuses or fails for any reason to render an opinion of counsel or any other documents, certificates or instructions required for the removal of the restrictive legends, then: (A) to the extent such legends could be lawfully removed under applicable laws, Borrower’s failure to provide the required opinion of counsel or any other documents, certificates or instructions required for the removal of the restrictive legends shall be an immediate Event of Default under this Agreement and all other Loan Documents; and (B) the Borrower hereby agrees and acknowledges that Lender is hereby irrevocably and expressly authorized to have counsel to Lender render any and all opinions and other certificates or instruments which may be required for purposes of removing such restrictive legends, and the Borrower hereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation or instructions from the Borrower, issue any such shares without restrictive legends as instructed by Lender, and surrender to a common carrier for overnight delivery to the address as specified by Lender, certificates, registered in the name of Lender or its designees, representing the shares of Common Stock to  

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which Lender is entitled, without any restrictive legends and otherwise freely transferable on the books and records of the Borrower.

(iv) Authorized Agent of the Borrower.  The Borrower hereby irrevocably appoints the Lender and its counsel and its representatives, each as the Borrower’s duly authorized agent and attorney-in-fact for the Borrower for the purposes of authorizing and instructing the Transfer Agent to process issuances, transfers and legend removals upon instructions from Lender, or any counsel or representatives of Lender, as specifically contemplated herein.  The authorization and power of attorney granted hereby is coupled with an interest and is irrevocable so long as any Obligations of the Borrower under this Agreement or any other Loan Documents remain outstanding, and so long as the Lender owns or has the right to receive, any shares of the Borrower’s Common Stock hereunder or under the Promissory Notes.  In this regard, the Borrower hereby confirms to the Transfer Agent and the Lender that it can NOT and will NOT give instructions, including stop orders or otherwise, inconsistent with the terms of this Agreement with regard to the matters contemplated herein, and that the Lender shall have the absolute right to provide a copy of this Agreement to the Transfer Agent as evidence of the Borrower’s irrevocable authority for Lender and Transfer Agent to process issuances, transfers and legend removals upon instructions from Lender, or any counsel or representatives of Lender, as specifically contemplated herein, without any further instructions, orders or confirmations from the Borrower. 

(v) Injunction and Specific Performance.  The Borrower specifically acknowledges and agrees that in the event of a breach or threatened breach by the Borrower of any provision of this Section, the Lender will be irreparably damaged and that damages at law would be an inadequate remedy if this Agreement were not specifically enforced.  Therefore, in the event of a breach or threatened breach of any provision of this Section by the Borrower, the Lender shall be entitled to obtain, in addition to all other rights or remedies Lender may have, at law or in equity, an injunction restraining such breach, without being required to show any actual damage or to post any bond or other security, and/or to a decree for specific performance of the provisions of this Section. 

(h)Surviving Obligations.  The Credit Parties agree and acknowledge that notwithstanding the termination of this Agreement, or the payment in full of all of the Loans or other obligations hereunder or under any other Loan Documents, the Credit Parties’ obligations and liability under this Agreement and the other Loan Documents, and the Lender’s Lien and security interest on all Collateral, shall survive, shall remain valid and effective and shall not be released or terminated, until the Lender receives the full amount of the Advisory Fee in cash, either through the conversion of Advisory Fee Shares and subsequent sale of Series C Conversion Shares, or through cash payments from Borrower as contemplated by Section 2.5(f).  All of the Credit Parties’ obligations under Section 2.5(f) and 2.5(g) shall survive termination of this Agreement. 

(i)Right to Approve Transfer Agent. The Borrower hereby represents and warrants that the Borrower’s current Transfer Agent is Standard Registrar & Transfer Company, Inc., whose contact information is as follows: 12528 South 1840 East, Draper, UT 84020.  The Borrower hereby agrees that it shall not change the Transfer Agent, unless the Lender first approves the proposed new Transfer Agent, such approval to be in Lender’s sole and absolute discretion. 

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(j)Interest and Fee Computation; Collection of Funds.  Interest and Premium accrued hereunder shall be payable as set forth in this Agreement and the Promissory Note.  Except as otherwise set forth herein, all interest, Premium, and fees shall be calculated on the basis of a year consisting of 360 days and shall be paid for the actual number of days elapsed.  Principal payments submitted in funds not immediately available shall continue to bear interest and Premium until collected.  If any payment to be made by Borrower hereunder or under the Promissory Note shall become due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in computing any interest in respect of such payment.  Any Obligations which are not paid when due (subject to applicable grace periods) shall bear interest at the Default Rate. 

2.6 Automatic Debit.  In order to effectuate the timely payment of any of the Obligations when due, Borrower hereby authorizes and directs Lender, at Lender’s option, to: (i) debit, or cause or instruct the debit of, the amount of the Obligations to any ordinary deposit account of Borrower; or (ii) make an Additional Loan hereunder to pay the amount of the Obligations. 

2.7 Discretionary Disbursements.  Lender, in its sole and absolute discretion, may immediately upon notice to Borrower, disburse any or all proceeds of the Loans made or available to Borrower pursuant to this Agreement to pay any fees, costs, expenses or other amounts required to be paid by Borrower hereunder and not so paid.  All monies so disbursed shall be a part of the Obligations, payable by Borrower on demand from Lender. 

2.8 US Dollars; Currency Risk.  All revenues collected by any Credit Parties and deposited into the Payment Account or any other accounts of any Credit Parties will be in Dollars.  In the event any such revenues are not in Dollars, Borrower shall bear the risk of Lender’s currency losses, and if Lender suffers a currency loss and the result is to increase the cost to Lender or to reduce the amount of any sum received or receivable by Lender under this Agreement or under the Promissory Note with respect thereto, then after demand by Lender (which demand shall be accompanied by a certificate setting forth reasonably detailed calculations of the basis of such demand), Borrower shall pay to Lender such additional amount or amounts as will compensate Lender for such increased cost or such reduction. 

3. CONDITIONS OF BORROWING. 

Notwithstanding any other provision of this Agreement, the obligation of Lender to disburse or make all or any portion of any Loans is subject to satisfaction of all of the following conditions precedent (unless a condition is waived in writing by Lender) contained in this Article 3. 

3.1 Loan Documents to be Executed by Credit Parties.  As a condition precedent to Lender’s disbursal or making of the Loans pursuant to this Agreement, Credit Parties shall have executed or cause to be executed and delivered to Lender all of the following documents, each of which must be satisfactory to Lender and Lender’s counsel in form, substance and execution: 

(a)Credit Agreement.  An original of this Agreement, duly executed by Borrower and consented and agreed to by the Guarantors; 

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(b)Promissory Note.  An original Promissory Note, duly executed by Borrower and consented and agreed to by the Guarantors; 

(c)Security Agreement.  An original of the Security Agreements, duly executed by the Credit Parties; 

(d)Guaranty Agreement.  An original of the Guaranty Agreement, duly executed by the Corporate Guarantor; 

(e)Validity Certificates. An original of each Validity Certificate, duly executed by such officers and directors of Borrower as Lender shall require; 

(f)ACH Agreement.  An original of the ACH authorization agreement, duly executed by Borrower; 

(g)Pledge Agreements.  An original of the Pledge Agreements, duly executed by the Borrower and applicable Corporate Guarantors; 

(h)Irrevocable Transfer Agent Instructions.  An original of the Irrevocable Transfer Agent Instructions, duly executed by the Borrower and the Borrower’s Transfer Agent; 

(i)Closing Statement.  An original of a closing or settlement statement, duly executed by the Borrower; and 

(j)Additional Documents.  Such other agreements, documents, instruments, certificates, financial statements, schedules, resolutions, opinions of counsel, notes and other items which Lender shall require in connection with this Agreement. 

3.2 Organizational and Authorization Documents.  A certificate of the corporate secretary, manager, members or other officer, partner, manager or equivalent authorized Person of each Credit Party certifying and attaching: (i) copies of each Credit Parties’ respective articles of incorporation (including any certificates of designation, is applicable), bylaws, operating agreement, partnership agreement, certificate of organization or other applicable formation or governing documents; (ii) resolutions of the board of directors, managers, members, general partners or other Persons with proper authority to manage the affairs of, and otherwise bind, each Credit Party, approving and authorizing the execution, delivery and performance of the Loan Documents to which it is party and the transactions contemplated thereby; (iii) resolution of the Guarantors’ shareholders (if applicable), approving and authorizing the execution, delivery and performance of the Loan Documents to which it is party and the transactions contemplated thereby; and (iv) the signatures and incumbency of the officers, managers, members, partners or other authorized Persons of each Credit Party executing any of the Loan Documents, each of which Borrower hereby certifies to be true and complete, and in full force and effect without modification, it being understood that Lender may conclusively rely on each such document and certificate until formally advised by Borrower of any changes therein. 

3.3 Certificates of Good Standing.  Copies of certificates of good standing with respect to each Credit Party, issued by the Secretary of State of the state of incorporation of each  

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Credit Party, dated such a date as is reasonably acceptable to Lender, evidencing the good standing thereof.

3.4 Search Results.  Copies of UCC search reports dated such a date as is reasonably acceptable to Lender, listing all effective financing statements which name each Credit Party, under its present name and any previous names, as debtors, together with copies of such financing statements. 

3.5 Insurance.  Within thirty (30) days of the Effective Date, evidence satisfactory to Lender of the existence of insurance required to be maintained pursuant to this Agreement and the Security Agreement, together with evidence that Lender has been named as additional insured and lender’s loss payee, as applicable, on all related insurance policies. 

3.6 Use of Proceeds.  A detailed summary of the Borrower’s use of the proceeds being funded hereunder. 

3.7 Certificates.  Originals of certificates evidencing the shares and/or membership interests, as applicable, to be pledged in connection with the Pledge Agreement. 

3.8 Income Statement / Profit and Loss Statement.  An income statement or a profit and loss statement showing the consolidated revenues, expenses, profits and losses of the Credit Parties for the twelve (12) month period ending June 30, 2015, as well as a reasonable projection of the consolidated revenues, expenses, profits and losses of the Credit Parties for the twelve (12) month period immediately following the Effective Date. 

3.9 Opinion of Counsel.  A customary opinion of Borrower’s counsel, in form satisfactory to Lender. 

3.10 Perfection of Lien on Collateral.  The Credit Parties shall have duly authorized, executed and delivered any other related documentation necessary or advisable to perfect the Lien on the Collateral in the jurisdiction of incorporation of the Credit Parties, including such UCC-1 Financing Statements and any and all documents necessary to complete any filings which Lender shall require in connection with this Agreement. 

3.11 Payment of Fees.  Borrower shall have paid to Lender all fees, costs and expenses, including due diligence expenses, attorney’s fees, search fees, title fees, documentation and filing fees (including documentary stamps and taxes payable on the face amount of the Promissory Note). 

3.12 Press Release Authorization.  Evidence satisfactory to the Lender that the Borrower has authorized the Lender to publish such press releases with respect to this Agreement and the instant transaction, including a copy of an e-mail delivered to Marketwire.com by the Borrower whereby the Borrower authorizes the Lender to use its name and, if applicable, stock symbol, in connection with current or future press releases. 

3.13 Event of Default.  No Event of Default, or event which, with notice or lapse of time, or both, would constitute an Event of Default, shall have occurred and be continuing. 

3.14 Adverse Changes.  There shall not have occurred any Material Adverse Effect. 

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3.15 Litigation.  No pending claim, investigation, litigation or other Proceeding shall have been instituted against any Credit Party or any of their respective officers, shareholders, members, managers, partners, or other principals of any Credit Party. 

3.16 Representations and Warranties.  No representation or warranty of any of the Credit Parties contained herein or in any Loan Documents shall be untrue or incorrect in any material respect as of the date of any Loans as though made on such date, except to the extent such representation or warranty expressly relates to an earlier date. 

3.17 Due Diligence.  The business, legal and collateral due diligence review performed by Lender, including a review of the Credit Parties’ historical performance and financial information, must be acceptable to Lender in its sole discretion.  Lender reserves the right to increase any and all aspects of its due diligence in Lender’s sole discretion. 

3.18 Key Personnel Investigations.  Lender shall be satisfied, in its sole discretion, with results from background investigations conducted on key members of Borrower’s principals and management teams. 

3.19 Repayment of Outstanding Indebtedness.  The Credit Parties shall have repaid in full all outstanding indebtedness secured by Collateral, other than indebtedness giving rise to Permitted Liens. 

3.20 Loan Documents to be Executed by any Subsidiary following the Effective Date.  Within ten (10) days of any entity becoming a Subsidiary of any Credit Party, the following documents shall have executed or cause to be executed and delivered to Lender, each of which must be satisfactory to Lender and Lender’s counsel in form, substance and execution: 

(a)Consent and Agreement.  An original of a Consent and Agreement duly executed by such Subsidiary, pursuant to which such Subsidiary consents and agrees to become a “Credit Party” hereunder and to be bound by the terms and conditions of this Agreement and all other Loan Documents; 

(b)Security Agreement.  An original of a Security Agreement, duly executed by such Subsidiary; 

(c)Guaranty Agreement.  An original of a Guaranty Agreement, duly executed by such Subsidiary; 

(d)Pledge Agreement.  An original of a Pledge Agreement, duly executed by the parent of the Subsidiary; 

(e)Organizational and Authorization Documents. A certificate of the corporate secretary, manager, members or other officer, partner, manager or equivalent authorized Person of such Subsidiary certifying and attaching: (i) copies of such Subsidiary’s articles of incorporation (including any certificates of designation, is applicable), bylaws, operating agreement, partnership agreement, certificate of organization or other applicable formation or governing documents; (ii) resolutions of the board of directors, managers, members, general partners or other Persons with proper authority to manage the affairs of, and authorizing the  

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execution, delivery and performance of the Loan Documents to which it is party and the transactions contemplated thereby; (iii) resolution of the Subsidiary’s shareholders (if applicable), approving and authorizing the execution, delivery and performance of the Loan Documents to which it is or will become a party and the transactions contemplated thereby; and (iv) the signatures and incumbency of the officers, managers, members, partners or other authorized Persons of such Subsidiary executing any of the Loan Documents, each of which Borrower hereby certifies to be true and complete, and in full force and effect without modification, it being understood that Lender may conclusively rely on each such document and certificate until formally advised by Borrower of any changes therein.

(f)Additional Documents.  Such other agreements, documents, instruments, certificates, financial statements, schedules, resolutions, opinions of counsel, notes and other items which Lender shall require in connection with this Agreement and the other Loan Documents. 

3.21 Loan Documents to be Executed by each Credit Party Upon Each Subsequent Advance.  As a condition precedent to Lender’s disbursal or making of additional advances of principal pursuant to this Agreement following the Effective Date, the Credit Parties shall have executed or caused to be executed and delivered to Lender all of the documents in this Section 3 applicable thereto, and such documents shall remain in full force and effect as of the date of the subsequent principal advance. 

4. NOTES EVIDENCING LOANS. 

4.1   Promissory Note.  The Loans shall be evidenced by the Promissory Note (together with any and all renewal, extension, modification or replacement notes executed by Borrower and delivered to Lender and given in substitution therefor) duly executed by Borrower, and consented and agreed to by the Guarantors, and payable to the order of Lender.  At the time of the disbursement of the Initial Loan and at each time an Additional Loan shall be requested hereunder or a repayment made in whole or in part thereon, an appropriate notation thereof shall be made on the books and records of Lender.  All amounts recorded shall be, absent demonstrable error, conclusive and binding evidence of: (i) the principal amount of the Loans advanced hereunder; (ii) any unpaid interest owing on the Loans; and (iii) all amounts repaid on the Loans.  The failure to record any such amount or any error in recording such amounts shall not, however, limit or otherwise adversely affect the obligations of Borrower under the Promissory Note to repay the principal amount of the Loans, together with all other Obligations. 

5. INTENTIONALLY LEFT BLANK. 

6. SECURITY FOR THE OBLIGATIONS. 

6.1 Security Agreement.  To secure the payment and performance by Borrower of the Obligations hereunder, each of the Credit Parties grants, under and pursuant to the Security Agreement executed by the Credit Parties dated as of the Effective Date, to Lender, its successors and assigns, an unconditional, continuing, first-priority, perfected Lien and security interest in, and does hereby assign, transfer, mortgage, convey, pledge, hypothecate and set over to Lender, its successors and assigns, all of the right, title and interest of the Credit Parties in and to the Collateral, whether now owned or hereafter acquired, and all proceeds (including all insurance  

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proceeds) and products of any of the Collateral.  At any time upon Lender’s request, the Credit Parties shall execute and deliver to Lender any other documents, instruments or certificates requested by Lender for the purpose of properly documenting and perfecting the security interests of Lender in and to the Collateral granted hereunder, including any additional security agreements, mortgages, control agreements, and financing statements.  The Security Agreements executed by the Credit Parties shall terminate following the full payment and performance of all of the Obligations hereunder and under any Loan Document and upon Lender’s express written acknowledgement of such full payment and performance being received by the Borrower.

6.2 Pledge Agreement.  To secure the payment and performance by Borrower of the Obligations hereunder, the Borrower and certain Corporate Guarantors shall grant, under and pursuant to the Pledge Agreements executed by the Borrower and Corporate Guarantors, as applicable, dated as of the Effective Date, to Lender, its successors and assigns, a continuing, first-priority security interest in, and assignment, transference, mortgage, conveyance, pledge, hypothecation and set over to Lender, its successors and assigns, all of the Borrower and Corporate Guarantors’ right, title and interest in and to all of the shares and/or membership interests, as applicable, of each Corporate Guarantor.  At any time upon Lender’s request, the Borrower and the Corporate Guarantors, as applicable, shall execute and deliver to Lender any other documents, instruments or certificates requested by Lender for the purpose of properly documenting and perfecting the security interests of Lender in and to the shares of common stock and/or membership interest, as applicable, of the Corporate Guarantors granted hereunder, including any additional pledge agreements and financing statements.  The Pledge Agreements executed by the Borrower and the Corporate Guarantors, as applicable, shall terminate following the full payment and performance of all of the Obligations hereunder and under any Loan Document and upon Lender’s express written acknowledgement of such full payment and performance being received by the Borrower. 

7. REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES. 

To induce Lender to make the Loans, the Credit Parties make the following representations and warranties to Lender, each of which shall be true and correct in all material respects as of the date of the execution and delivery of this Agreement and as of the date of each Loan made hereunder, except to the extent such representation expressly relates to an earlier date, and which shall survive the execution and delivery of this Agreement: 

7.1 Subsidiaries.  A list of all of the Borrower’s Subsidiaries and each Subsidiary of each Corporate Guarantor, are listed on Schedule 7.1 hereto.  All of such Subsidiaries are wholly-owned Subsidiaries of the Borrower or a Corporate Guarantor, as applicable, except for Green Endeavors, Inc., Slide the City, LLC, Slide the City Franchising, LLC, Slide the City Canada, LLC, and Lantern Fest, LLC which Subsidiaries are not wholly-owned and the percentage of ownership for such non-wholly-owned Subsidiaries is listed on Schedule 7.1.  Except for the Subsidiaries as listed on Schedule 7.1, no Borrower or Corporate Guarantor has any Control over any other Person. The Credit Parties represent and warrant that Landis Salons III, Inc., one of the subsidiaries of the Borrower, or one of the subsidiaries of a Corporate Guarantor, has no assets or operations and shall have no assets or operations throughout the term of the Initial Loan or any Additional Loans thereafter. 

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7.2 Borrower Organization and Name.  Each Credit Party is a corporation, limited liability company, or other form of legally recognized entity, as applicable, duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and has the full power and authority and all necessary Permits to: (i) enter into and execute this Agreement and the Loan Documents and to perform all of its obligations hereunder and thereunder; and (ii) own and operate its assets and properties and to conduct and carry on its business as and to the extent now conducted.  Each Credit Party is duly qualified to transact business and is in good standing as a foreign corporation, company or other entity in each jurisdiction where the character of its business or the ownership or use and operation of its assets or properties requires such qualification.  The exact legal names of each of the Credit Parties is as set forth in the first paragraph of this Agreement, and the Credit Parties do not currently conduct, nor have the Credit Parties conducted, during the last five (5) years, business under any other name or trade name. 

7.3 Authorization; Validity.  Each Credit Party has full right, power and authority to enter into this Agreement, to make the borrowings and execute and deliver the Loan Documents as provided herein and to perform all of its duties and obligations under this Agreement and the Loan Documents and no other action or consent on the part of the Credit Parties, its board of directors, stockholders, members, managers, partners, or any other Person is necessary or required by the Credit Parties to execute this Agreement and the Loan Documents, consummate the transactions contemplated herein and therein, and perform all of its obligations hereunder and thereunder.  The execution and delivery of this Agreement and the Loan Documents will not, nor will the observance or performance of any of the matters and things herein or therein set forth, violate or contravene any provision of law or of the Credit Parties’ articles of incorporation, bylaws, operating agreement, partnership agreement, or other governing documents.  All necessary and appropriate action has been taken on the part of the Credit Parties to authorize the execution and delivery of this Agreement and the Loan Documents and the issuance of the Promissory Note.  This Agreement and the Loan Documents are valid and binding agreements and contracts of the Credit Parties, enforceable against the Credit Parties in accordance with their respective terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws enacted for the relief of debtors generally and other similar laws affecting the enforcement of creditors’ rights generally or by equitable principles which may affect the availability of specific performance and other equitable remedies.  The Credit Parties do not know of any reason why the Credit Parties cannot perform any of its obligations under this Agreement, the Loan Documents or any related agreements. 

7.4 Capitalization.  The authorized capital stock or other capitalization of each Credit Party, as applicable, is as set forth in Schedule 7.4(a) attached hereto.  Schedule 7.4(a) shall specify, for each Credit Party, the total number of authorized shares of capital stock or other securities (or functional equivalents thereof in the applicable jurisdiction), and of such authorized shares or securities, the number which are designated as Common Stock, the number designated as preferred stock (the “Preferred Stock”), or any other applicable designations.  Schedule 7.4(a) shall also specify, for each Credit Party, as applicable, as of the date hereof, the number of shares of Common Stock issued and outstanding and the number of shares of Preferred Stock issued and outstanding, or, if applicable, the number and classes of other securities issued and outstanding, and the names and amounts of such stock other securities owned by each Person who is a stockholder or owner of other securities in any Credit Party. All of the outstanding shares of capital stock or other securities of each Credit Party are validly issued, fully paid and non-assessable, have  

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been issued in compliance with all foreign, federal and state securities laws and none of such outstanding shares or other securities were issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  As of the date of this Agreement, no shares of capital stock or other securities of any Credit Party are subject to preemptive rights or any other similar rights or any Liens suffered or permitted by any Credit Parties. The Common Stock is currently quoted by the Principal Trading Market on the OTC “Pink” under the trading symbol “SAKL”.  The Borrower has received no notice, either oral or written, with respect to the continued eligibility of the Common Stock for quotation on the Principal Trading Market, and the Borrower has maintained all requirements on its part for the continuation of such quotation. Except for the securities to be issued pursuant to this Agreement, and except as set forth in Schedule 7.4(b), as of the date of this Agreement: (i) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock or other securities of any Credit Party, or contracts, commitments, understandings or arrangements by which any Credit Party is or may become bound to issue additional shares of capital stock or other securities of any Credit Party, or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock or other securities of any Credit Party; (ii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other contracts or instruments evidencing Funded Indebtedness of any Credit Party, or by which any Credit Party is or may become bound; (iii) there are no outstanding registration statements with respect to any Credit Party or any of its securities and there are no outstanding comment letters from any Governmental Authority with respect to any securities of any Credit Party; (iv) there are no agreements or arrangements under which any Credit Party is obligated to register the sale of any of its securities under the Securities Act or any other laws of any Governmental Authority; (v) there are no financing statements or other security interests or Liens filed with any Governmental Authority securing any obligations of any Credit Party, or filed in connection with any assets or properties of any Credit Party; (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by this Agreement or any related agreement or the consummation of the transactions described herein or therein; and (vii) there are no outstanding securities or instruments of any Credit Party which contain any redemption or similar provisions, and there are no contracts or agreements by which any Credit Party is or may become bound to redeem a security of any Credit Party.  Borrower has furnished to the Lender true, complete and correct copies of, as applicable, each Credit Parties’ respective articles of incorporation (including any certificates of designation, is applicable), bylaws, operating agreement, partnership agreement, certificate of organization or similar organizational and governing documents.  Except for the documents delivered to Lender in accordance with the immediately preceding sentence, there are no other shareholder agreements, voting agreements, operating agreements, or other contracts or agreements of any nature or kind that restrict, limit or in any manner impose obligations, restrictions or limitations on the governance of any Credit Party.

7.5 No Conflicts; Consents and Approvals.  The execution, delivery  and performance of this Agreement and the Loan Documents, and the consummation of the transactions contemplated hereby and thereby, including the issuance of the Promissory Note, will not: (i) constitute a violation of or conflict with the any Credit Parties’ respective articles of incorporation (including any certificates of designation, is applicable), bylaws, operating agreement, partnership agreement, certificate of organization or similar governing or organizational documents; (ii) constitute a violation of, or a default or breach under (either immediately, upon notice, upon lapse  

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of time, or both), or conflicts with, or gives to any other Person any rights of termination, amendment, acceleration or cancellation of, any provision of any contract or agreement to which any Credit Party is a party or by which any of its or their assets or properties may be bound; (iii) constitute a violation of, or a default or breach under (either immediately, upon notice, upon lapse of time, or both), or conflicts with, any order, writ, injunction, decree, or any other judgment of any nature whatsoever; (iv) constitute a violation of, or conflict with, any law, rule, ordinance or other regulation (including foreign and United States federal and state securities laws); or (v) result in the loss or adverse modification of, or the imposition of any fine, penalty or other Lien, claim or encumbrance with respect to, any Permit granted or issued to, or otherwise held by or for the use of, any Credit Party or any of its assets.  The Credit Parties are not in violation of any Credit Parties’ respective articles of incorporation (including any certificates of designation, is applicable), bylaws, operating agreement, partnership agreement, certificate of organization or similar governing or organizational documents, as applicable, and the Credit Parties are not in default or breach (and no event has occurred which with notice or lapse of time or both could put any Credit Party in default or breach) under, and the Credit Parties have not taken any action or failed to take any action that would give to any other Person any rights of termination, amendment, acceleration or cancellation of, any contract or agreement to which any Credit Party is a party or by which any property or assets of any Credit Party are bound or affected. No business of any Credit Party is being conducted, and shall not be conducted, in violation of any law, rule, ordinance or other regulation. Except as specifically contemplated by this Agreement, the Credit Parties are not required to obtain any consent or approval of, from, or with any Governmental Authority, or any other Person, in order for it to execute, deliver or perform any of its obligations under this Agreement or the Loan Documents in accordance with the terms hereof or thereof.  All consents and approvals which any Credit Party is required to obtain pursuant to the immediately preceding sentence have been obtained or effected on or prior to the Effective Date.

7.6 Issuance of Securities.  The Advisory Fee Shares are duly authorized and, upon issuance in accordance with the terms hereof, shall be duly issued, fully paid and non-assessable, and free from all Liens, claims, charges, taxes, or other encumbrances with respect to the issue thereof, and will be issued in compliance with all applicable United States federal and state securities laws and the laws of any foreign jurisdiction applicable to the issuance thereof.  Any shares issuable upon conversion of the Promissory Note, in accordance with the terms of the Promissory Note, are duly authorized and, upon issuance in accordance with the terms hereof, shall be duly issued, fully paid and non-assessable, and free from all Liens, claims, charges, taxes, or other encumbrances with respect to the issue thereof, and will be issued in compliance with all applicable United States federal and state securities laws and the laws of any foreign jurisdiction applicable to the issuance thereof.  The issuance of the Promissory Note, any shares issuable pursuant to the Promissory Note and the Advisory Fee Shares are and will be exempt from: (i) the registration and prospectus delivery requirements of the Securities Act; (ii) the registration and/or qualification provisions of all applicable state and provincial securities and “blue sky” laws; and (iii) any similar registration or qualification requirements of any foreign jurisdiction or other Governmental Authority. 

7.7 Compliance With Laws.  The nature and transaction of the Credit Parties’ business and operations and the use of its properties and assets, including the Collateral or any real estate owned, leased, or occupied by the Credit Parties, do not and during the term of the Loans shall not, violate or conflict with any applicable law, statute, ordinance, rule, regulation or order  

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of any kind or nature, including the provisions of the Fair Labor Standards Act or any zoning, land use, building, noise abatement, occupational health and safety or other laws, any Permit or any condition, grant, easement, covenant, condition or restriction, whether recorded or not, except to the extent such violation or conflict would not result in a Material Adverse Effect.

7.8 Environmental Laws and Hazardous Substances.  Except to the extent that any of the following would not have a Material Adverse Effect (including financial reserves, insurance policies and cure periods relating to compliance with applicable laws and Permits) and are used in such amounts as are customary in the Ordinary Course of Business in compliance with all applicable Environmental Laws, the Credit Parties represent and warrant to Lender that, to the best knowledge of each of the Credit Parties: (i) the Credit Parties have not generated, used, stored, treated, transported, manufactured, handled, produced or disposed of any Hazardous Materials, on or off any of the premises of the Credit Parties (whether or not owned by the Credit Parties) in any manner which at any time violates any Environmental Law or any Permit, certificate, approval or similar authorization thereunder; (ii) the operations of the Credit Parties comply in all material respects with all Environmental Laws and all Permits certificates, approvals and similar authorizations thereunder; (iii) there has been no investigation, Proceeding, complaint, order, directive, claim, citation or notice by any Governmental Authority or any other Person, nor is any of same pending or, to Credit Parties’ knowledge, threatened; and (iv) the Credit Parties do not have any liability, contingent or otherwise, in connection with a release, spill or discharge, threatened or actual, of any Hazardous Materials or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous Material. 

7.9 Collateral Representations.  No Person other than the Credit Parties, owns or has other rights in the Collateral, and the Collateral is valid and genuine Collateral, free from any Lien of any kind, other than the Lien of Lender and Permitted Liens. 

7.10 Financial Statements. The Borrower has delivered to the Lender an unaudited consolidated Balance Sheet as of December 31, 2013, December 31, 2014, and June 30, 2015 and an unaudited consolidated Statement of Income for the twelve (12) months ended December 31, 2013 and December 31, 2014 and for the six (6) months ended June 30, 2015 (collectively, together with any financial statements filed by the Borrower with the SEC, any Principal Trading Market, or any other Governmental Authority, if applicable, the “Financial Statements”).  The Financial Statements have been prepared in accordance with GAAP, consistently applied, during the periods involved (except: (i) as may be otherwise indicated in such Financial Statements or the notes thereto; or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements), and fairly and accurately present in all material respects the consolidated financial position of the Credit Parties as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).  To the best knowledge of the Credit Parties, no other information provided by or on behalf of the Credit Parties to the Lender, either as a disclosure schedule to this Agreement, or otherwise in connection with Lender’s due diligence investigation of the Credit Parties, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstance under which they are or were made, not misleading. 

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7.11 Public Documents.  The Borrower is a non-reporting company with the SEC and the Borrower’s Common Stock is currently not registered pursuant to Section 12 of the Exchange Act, and as of the date hereof, the Borrower is not required to file, and has not filed, any periodic reports with the SEC under Sections 13 or 15(d) of the Exchange Act.  The Borrower has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC, the Principal Trading Market, or any other Governmental Authority, as applicable (all of the foregoing filed within the two (2) years preceding the date hereof or amended after the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein, being hereinafter referred to as the “Public Documents”). The Borrower is current with its filing obligations with the SEC, the Principal Trading Market, or any other Governmental Authority, as applicable, and all Public Documents have been filed on a timely basis by the Borrower. The Borrower represents and warrants that true and complete copies of the Public Documents are available on the SEC website or the Principal Trading Market website, as applicable (www.sec.gov, or www.otcmarkets.com) at no charge to Lender, and Lender acknowledges that it may retrieve all Public Documents from such websites and Lender’s access to such Public Documents through such website shall constitute delivery of the Public Documents to Lender; provided, however, that if Lender is unable to obtain any of such Public Documents from such websites at no charge, as result of such websites not being available or any other reason beyond Lender’s control, then upon request from Lender, the Borrower shall deliver to Lender true and complete copies of such Public Documents.  The Borrower shall also deliver to Lender true and complete copies of all draft filings, reports, schedules, statements and other documents required to be filed with the requirements of the Principal Trading Market that have been prepared but not filed with the Principal Trading Market as of the date hereof. None of the Public Documents, at the time they were filed with the SEC, the Principal Trading Market, or other Governmental Authority, as applicable, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  None of the statements made in any such Public Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof, which amendments or updates are also part of the Public Documents).  As of their respective dates, the consolidated financial statements of the Borrower and its Subsidiaries included in the Public Documents complied in all material respects with applicable accounting requirements and any published rules and regulations of the SEC and Principal Trading Market with respect thereto. 

7.12 Absence of Certain Changes.  Since the date of the most recent of the Financial Statements, none of the following have occurred: 

(a)There has been no event or circumstance of any nature whatsoever that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect; or 

(b)Any transaction, event, action, development, payment, or any other matter of any nature whatsoever entered into by the Credit Parties other than in the Ordinary Course of Business of the Credit Parties. 

7.13 Litigation and Taxes.  There is no Proceeding pending, or to the best knowledge of the Credit Parties, threatened, against any Credit Party or its officers, managers, members,  

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shareholders or other principals, or against or affecting any of its assets.  In addition, there is no outstanding judgments, orders, writs, decrees or other similar matters or items against or affecting the Credit Parties, its business or assets.  The Credit Parties have not received any material complaint from any Customer, supplier, vendor or employee.  The Credit Parties have duly filed all applicable income or other tax returns and has paid all income or other taxes when due.  There is no Proceeding, controversy or objection pending or threatened in respect of any tax returns of the Credit Parties.

7.14 Event of Default.  No Event of Default has occurred and is continuing, and no event has occurred and is continuing which, with the lapse of time, the giving of notice, or both, would constitute such an Event of Default under this Agreement or any of the other Loan Documents, and the Credit Parties are not in default (without regard to grace or cure periods) under any contract or agreement to which it is a party or by which any of their respective assets are bound. 

7.15 ERISA Obligations.  To the best knowledge of each of the Credit Parties, all Employee Plans of the Credit Parties meet the minimum funding standards of Section 302 of ERISA, where applicable, and each such Employee Plan that is intended to be qualified within the meaning of Section 401 of the Internal Revenue Code of 1986 is qualified.  No withdrawal liability has been incurred under any such Employee Plans and no “Reportable Event” or “Prohibited Transaction” (as such terms are defined in ERISA), has occurred with respect to any such Employee Plans, unless approved by the appropriate Governmental Authority.  To the best knowledge of each of the Credit Parties, the Credit Parties have promptly paid and discharged all obligations and liabilities arising under the ERISA of a character which if unpaid or unperformed might result in the imposition of a Lien against any of its properties or assets. 

7.16 Adverse Circumstances.  No condition, circumstance, event, agreement, document, instrument, restriction, litigation or Proceeding (or threatened litigation or Proceeding or basis therefor) exists which: (i) could adversely affect the validity or priority of the Liens granted to Lender under the Loan Documents; (ii) could adversely affect the ability of the Credit Parties to perform its obligations under the Loan Documents; (iii) would constitute a default under any of the Loan Documents; (iv) would constitute such a default with the giving of notice or lapse of time or both; or (v) would constitute or give rise to a Material Adverse Effect. 

7.17 Liabilities and Indebtedness of the Borrower.  The Credit Parties do not have any Funded Indebtedness or any liabilities or obligations of any nature whatsoever, except: (i) as disclosed in the Financial Statements; or (ii) liabilities and obligations incurred in the Ordinary Course of Business since the date of the last Financial Statements which do not or would not, individually or in the aggregate, exceed Twenty Thousand and No/100 United States Dollars (US$20,000.00) or otherwise have a Material Adverse Effect. 

7.18 Real Estate. 

(a)Real Property Ownership.  Except for the Credit Party Leases and as otherwise disclosed in Schedule 7.18(a), Borrower does not own any Real Property. 

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(b)Real Property Leases.  Except for ordinary leases for office space from which the Credit Parties conduct its business (the “Credit Party Leases”), the Credit Parties do not lease any other Real Property. In addition, the Credit Parties are currently having discussions with certain parties in order to renegotiate some of the terms of certain Credit Party Leases, the details of such negotiations which are set forth in Schedule 7.18(b).  With respect to each of the Credit Party Leases: (i) the Credit Parties have been in peaceful possession of the property leased thereunder and neither the Credit Parties nor the landlord is in default thereunder; (ii) no waiver, indulgence or postponement of any of the obligations thereunder has been granted by the Credit Parties or landlord thereunder; and (iii) there exists no event, occurrence, condition or act known to the officers or directors of the Credit Parties which, upon notice or lapse of time or both, would be or could become a default thereunder or which could result in the termination of the Credit Party Leases, or any of them, or have a Material Adverse Effect.  The Credit Parties have not violated nor breached any provision of any such Credit Party Leases, and all obligations required to be performed by the Credit Parties under any of such Credit Party Leases have been fully, timely and properly performed.  The Credit Parties have delivered to the Lender true, correct and complete copies of all Credit Party Leases, including all modifications and amendments thereto, whether in writing or otherwise.  The Credit Parties have not received any written or oral notice to the effect that any of the Credit Party Leases will not be renewed at the termination of the term of such Credit Party Leases, or that the Credit Party Leases will be renewed only at higher rents. 

7.19 Material Contracts.  An accurate, current and complete copy of each of the Material Contracts has been furnished to Lender, and each of the Material Contracts constitutes the entire agreement of the respective parties thereto relating to the subject matter thereof.  There are no outstanding offers, bids, proposals or quotations made by any Credit Party which, if accepted, would create a Material Contract with any Credit Party.  Each of the Material Contracts is in full force and effect and is a valid and binding obligation of the parties thereto in accordance with the terms and conditions thereof.  To the best knowledge of each Credit Party, all obligations required to be performed under the terms of each of the Material Contracts by any party thereto have been fully performed by all parties thereto, and no party to any Material Contracts is in default with respect to any term or condition thereof, nor has any event occurred which, through the passage of time or the giving of notice, or both, would constitute a default thereunder or would cause the acceleration or modification of any obligation of any party thereto or the creation of any Lien, claim, charge or other encumbrance upon any of the assets or properties of any Credit Party.  Further, no Credit Party has received any notice, nor does any Credit Party have any knowledge, of any pending or contemplated termination of any of the Material Contracts and, no such termination is proposed or has been threatened, whether in writing or orally. 

7.20 Title to Assets.  The Credit Parties have good and marketable title to, or a valid leasehold interest in, all of its assets and properties which are material to its business and operations as presently conducted, free and clear of all Liens, claims, charges or other encumbrances or restrictions on the transfer or use of same.  Except as would not have a Material Adverse Effect, the assets and properties of each Credit Party are in good operating condition and repair, ordinary wear and tear excepted, and are free of any latent or patent defects which might impair their usefulness, and are suitable for the purposes for which they are currently used and for the purposes for which they are proposed to be used. 

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7.21 Intellectual Property. The Credit Parties own or possess adequate and legally enforceable rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and all other intellectual property rights necessary to conduct its business as now conducted (collectively, the “IP Rights”).  All IP Rights, and any federal, state, local or foreign patent and trademark office, or functional equivalent thereof where any such IP Rights may be filed or registered, is set forth in Schedule 7.21. All of the IP Rights are owned by the Credit Parties, except for IP rights licensed by the Credit Parties, which licensed IP Rights are specifically outlined and described in Schedule 7.21.  If any IP Rights are licensed by any Credit Party, the underlying license agreement or other agreement pursuant to which such IP Rights are licensed (collectively, the “License Agreements”), permits Lender to encumber such License Agreements without any further consent or approval of any other Person, including the underlying owner of such IP Rights, such that if there was an Event of Default and Lender foreclosed on all Collateral, Lender would have the right to use such IP Rights under the License Agreements, subject only to Lender’s obligation to comply with the terms of such License Agreements.  The Credit Parties do not have any knowledge of any infringement by any Credit Party of any IP Rights of others, and, to the knowledge of the Credit Parties, there is no claim, demand or Proceeding, or other demand of any nature being made or brought against, or to any Credit Party’s knowledge, being threatened against, any Credit Party regarding IP Rights or other intellectual property infringement; and is the Credit Parties are not aware of any facts or circumstances which might give rise to any of the foregoing. 

7.22 Labor and Employment Matters.  The Credit Parties are not involved in any labor dispute or, to the knowledge of the Credit Parties, is any such dispute threatened. To the knowledge of the Credit Parties and its officers, none of the employees of any Credit Party is a member of a union and the Credit Parties believe that its relations with its employees are good.  To the knowledge of the Credit Parties and its officers, the Credit Parties have complied in all material respects with all laws, rules, ordinances and regulations relating to employment matters, civil rights and equal employment opportunities. 

7.23 Insurance.  The Credit Parties are each covered by valid, outstanding and enforceable policies of insurance which were issued to it by reputable insurers of recognized financial responsibility, covering its properties, assets and business against losses and risks normally insured against by other corporations or entities in the same or similar lines of businesses as the Credit Parties are engaged and in coverage amounts which are prudent and typically and reasonably carried by such other corporations or entities (the “Insurance Policies”).  Such Insurance Policies are in full force and effect, and all premiums due thereon have been paid.  None of the Insurance Policies will lapse or terminate as a result of the transactions contemplated by this Agreement.  The Credit Parties have complied with the provisions of such Insurance Policies.  The Credit Parties have not been refused any insurance coverage sought or applied for and the Credit Parties do not have any reason to believe that it will not be able to renew its existing Insurance Policies as and when such Insurance Policies expire or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the earnings, business or operations of the Credit Parties. 

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7.24 Permits.  The Credit Parties possess all Permits necessary to conduct its business, and the Credit Parties have not received any notice of, or is otherwise involved in, any Proceedings relating to the revocation or modification of any such Permits.  All such Permits are valid and in full force and effect and the Credit Parties are in full compliance with the respective requirements of all such Permits. 

7.25 Lending Relationship.  The Credit Parties acknowledge and agree that the relationship hereby created with Lender is and has been conducted on an open and arm’s length basis in which no fiduciary relationship exists and that Borrower has not relied, nor is relying on, any such fiduciary relationship in executing this Agreement and in consummating the Loans. 

7.26 Compliance with Regulation U.  No portion of the proceeds of the Loans shall be used by Borrower, or any Affiliates of Borrower, either directly or indirectly, for the purpose of purchasing or carrying any margin stock, within the meaning of Regulation U as adopted by the Board of Governors of the Federal Reserve System. 

7.27 Governmental Regulation.  The Credit Parties are not, nor after giving effect to any Loan, will be, subject to regulation under the Public Utility Holding Borrower Act of 1935, the Federal Power Act or the Investment Company Act of 1940 or to any federal or state statute or regulation limiting its ability to incur indebtedness for borrowed money. 

7.28 Bank Accounts.  Schedule 7.28 sets forth, with respect to each account of the Credit Parties with any bank, broker, or other depository institution: (i) the name and account number of such account; (ii) the name and address of the institution where such account is held; (iii) the name of any Person(s) holding a power of attorney with respect to such account, if any; and (iv) the names of all authorized signatories and other Persons authorized to withdraw funds from each such account. 

7.29 Places of Business.  The principal place of business of each of the Credit Parties is set forth on Schedule 7.29 and the Credit Parties shall promptly notify Lender of any change in such location.  The Credit Parties will not remove or permit the Collateral to be removed from such locations without the prior written consent of Lender, except for: (i) certain heavy equipment kept at third party sites when conducting business or maintenance; (ii) vehicles, containers and rolling stock; (iii) Inventory sold or leased in the Ordinary Course of Business of the Credit Parties; and (iv) temporary removal of Collateral to other locations for repair or maintenance as may be required from time to time in each instance in the Ordinary Course of Business of the Credit Parties. 

7.30 Illegal Payments.  Neither the Credit Parties, nor any director, officer, member, manager,  agent, employee or other Person acting on behalf of the Credit Parties has, in the course of his actions for, or on behalf of, the Credit Parties: (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee. 

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7.31 Related Party Transactions.  Except for arm’s length transactions pursuant to which the Credit Parties make payments in the Ordinary Course of Business of the Credit Parties upon terms no less favorable than the Credit Parties could obtain from third parties, none of the officers, directors, managers, or employees of the Credit Parties, nor any stockholders, members or partners who own, legally or beneficially, five percent (5%) or more of the ownership interests of the Credit Parties (each a “Material Shareholder”), is presently a party to any transaction with the Credit Parties (other than for services as employees, officers and directors), including any contract providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from, any officer, director or such employee or Material Shareholder or, to the best knowledge of the Credit Parties, any other Person in which any officer, director, or any such employee or Material Shareholder has a substantial or material interest in or of which any officer, director or employee of Borrower or Material Shareholder is an officer, director, trustee or partner.  There are no claims, demands, disputes or Proceedings of any nature or kind between the Credit Parties and any officer, director or employee of the Credit Parties or any Material Shareholder, or between any of them, relating to the Credit Parties. 

7.32 Internal Accounting Controls.  The Credit Parties maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. 

7.33 Brokerage Fees.  There is no Person acting on behalf of any Credit Party who is entitled to or has any claim for any brokerage or finder’s fee or commission in connection with the execution of this Agreement or the consummation of the transactions contemplated hereby, except as approved by the Lender and set forth in Schedule 7.33. 

7.34 Acknowledgment Regarding Lender’s Loans. The Credit Parties acknowledge and agree that Lender is acting solely in the capacity of an arm’s length lender with respect to this Agreement and the transactions contemplated hereby. The Credit Parties further acknowledge that Lender is not acting as a financial advisor or fiduciary of the Credit Parties (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by Lender or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the making of the Loans hereunder by Lender. The Credit Parties further represent to Lender that the Credit Parties’ decision to enter into this Agreement has been based solely on the independent evaluation by the Credit Parties and its representatives. 

7.35 Seniority.  No Funded Indebtedness or other equity or debt security of the Credit Parties is senior to the Obligations in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise. 

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7.36 No General Solicitation.  Neither the Credit Parties, nor any of its Affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or issuance of the Promissory Note. 

7.37 No Integrated Offering.  Neither the Credit Parties, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the Promissory Note under the Securities Act or any similar laws of any foreign jurisdiction, or cause this offering of such securities to be integrated with prior offerings by the Credit Parties for purposes of the Securities Act or any similar laws of any foreign jurisdiction. 

7.38 Private Placement.  Assuming the accuracy of the Lender’s representations and warranties set forth in Section 8 below, no registration under the Securities Act or the laws, rules or regulation of any other Governmental Authority is required for the issuance of the Promissory Note. 

7.39 Complete Information.  This Agreement and all financial statements, schedules, certificates, confirmations, agreements, contracts, and other materials submitted to Lender in connection with or in furtherance of this Agreement by or on behalf of the Credit Parties fully and fairly states the matters with which they purport to deal, and do not misstate any material fact nor, separately or in the aggregate, fail to state any material fact necessary to make the statements made not misleading. 

7.40 Interpretation; Reliance; Survival.  Each warranty and representation made by the Credit Parties in this Agreement or pursuant hereto, or in any other Loan Documents, is independent of all other warranties and representations made by the Credit Parties in this Agreement or pursuant hereto, or in any other Loan Documents (whether or not covering identical, related or similar matters) and must be independently and separately satisfied.  Exceptions or qualifications to any such warranty or representation shall not be construed as exceptions or qualifications to any other warranty or representation.  Notwithstanding any investigation made by Lender or any of its agents or representatives, or any rights to conduct such investigations, and notwithstanding any knowledge of facts determined or determinable by Lender as a result of such investigation or right of investigation, the Lender has the unqualified right to rely upon the representations and warranties made by the Credit Parties in this Agreement and in the Schedules attached hereto or pursuant hereto, or in any other Loan Documents.  Each and every representation and warranty of the Credit Parties made herein, pursuant hereto, or in any other Loan Documents has been relied upon by Lender, and is material to the decision of the Lender to enter into this Agreement and to make the Loans contemplated herein.  All representations and warranties of the Credit Parties made in this Agreement or pursuant hereto, or in any other Loan Documents, shall survive the Effective Date, the consummation of any Loans made hereunder, and any investigation, and shall be deemed and construed as continuing representations and warranties. 

8. REPRESENTATIONS AND WARRANTIES OF LENDER. 

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Lender makes the following representations and warranties to the Borrower, each of which shall be true and correct in all material respects as of the date of the execution and delivery of this Agreement and as of the date of each Loan made hereunder, except to the extent such representation expressly relates to an earlier date, and which shall survive the execution and delivery of this Agreement: 

8.1 Investment Purpose. Lender is acquiring the Promissory Note for its own account, for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the Securities Act. 

8.2 Accredited Investor Status. Lender is an “Accredited Investor” as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act. 

8.3 Reliance on Exemptions. Lender understands that the Promissory Note is being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that Borrower is relying in part upon the truth and accuracy of, and Lender’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Lender set forth herein in order to determine the availability of such exemptions and the eligibility of Lender to acquire such securities. 

8.4 Information. Lender has been furnished with all materials it has requested relating to the business, finances and operations of the Credit Parties and information deemed material by Lender to making an informed investment decision regarding the Promissory Note. Lender has been afforded the opportunity to ask questions of the Credit Parties and its management.  Neither such inquiries nor any other due diligence investigations conducted by Lender or its representatives shall modify, amend or affect Lender’s right to rely on the Credit Parties’ representations and warranties contained in Article 7 above or elsewhere in this Agreement or in any other Loan Documents. Lender understands that its investment in the Promissory Note involves a high degree of risk. Lender is in a position regarding the Credit Parties, which, based upon economic bargaining power, enabled and enables Lender to obtain information from the Credit Parties in order to evaluate the merits and risks of this investment. Lender has sought such accounting, legal and tax advice, as it has considered necessary to make an informed investment decision with respect to the Promissory Note. 

8.5 No Governmental Review. Lender understands that no United States federal or state agency or any other Governmental Authority has passed on or made any recommendation or endorsement of the Promissory Note, or the fairness or suitability of the investment in the Promissory Note, nor have such authorities passed upon or endorsed the merits of the offering of the Promissory Note. 

8.6 Transfer or Resale.  Lender understands that: (i) the Promissory Note has not been and is not being registered under the Securities Act or any other foreign or state securities laws, and may not be offered for sale, sold, assigned or transferred unless: (A) subsequently registered thereunder; or (B) such securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration requirements; and (ii) neither the Credit Parties nor any other Person is under any obligation to register such securities under the  

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Securities Act or any foreign or state securities laws or to comply with the terms and conditions of any exemption thereunder, except as otherwise set forth in this Agreement.

8.7 Authorization, Enforcement.  This Agreement has been duly and validly authorized, executed and delivered on behalf of Lender and is a valid and binding agreement of Lender enforceable in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies. 

8.8 Due Formation of Lender. Lender is an entity that has been formed and validly exists and has not been organized for the specific purpose of purchasing the Promissory Note and is not prohibited from doing so. 

8.9 No Legal Advice from Credit Parties. Lender acknowledges that it had the opportunity to review this Agreement and the transactions contemplated by this Agreement with his or its own legal counsel and investment and tax advisors. Lender is relying solely on such counsel and advisors and not on any statements or representations of the Credit Parties or any of its representatives or agents for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction; provided, however, the foregoing shall not modify, amend or affect Lender’s right to rely on the Credit Parties’ representations and warranties contained in Article 7 above or in any other Loan Documents. 

9. NEGATIVE COVENANTS. 

9.1 Indebtedness.  The Credit Parties shall not, either directly or indirectly, create, assume, incur or have outstanding any Funded Indebtedness (including purchase money indebtedness), or become liable, whether as endorser, guarantor, surety or otherwise, for any debt or obligation of any other Person, except: 

(a)the Obligations; 

(b)endorsement for collection or deposit of any commercial paper secured in the Ordinary Course of Business of the Credit Parties; 

(c)obligations for taxes, assessments, municipal or other governmental charges; provided, the same are being contested in good faith by appropriate Proceedings and are insured against or bonded over to the satisfaction of Lender; 

(d)obligations for accounts payable, other than for money borrowed, incurred in the Ordinary Course of Business of the Credit Parties; provided that any fees or other sums, other than salary accrued in the Credit Parties’ Ordinary Course of Business, payable by the Credit Parties to any officer, director, member, manager, principal, or Material Shareholder, shall be fully subordinated in right of payment to the prior payment in full of the Obligations hereunder; 

(e)unsecured intercompany Funded Indebtedness incurred in the Ordinary Course of Business of the Credit Parties; 

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(f)Funded Indebtedness existing on the Effective Date and set forth in the Financial Statements, including any extensions or refinancings of the foregoing, which do not increase the principal amount of such Funded Indebtedness as of the date of such extension or refinancing; provided such Funded Indebtedness is subordinated to the Obligations owed to Lender pursuant to a subordination agreement, in form and content acceptable to Lender in its sole discretion, which shall include an indefinite standstill on remedies and payment blockage rights during any default; 

(g)Funded Indebtedness consisting of Capital Lease obligations or secured by Permitted Liens of the type described in clause (vii) of the definition thereof not to exceed Two Hundred Fifty Thousand and No/100 United States Dollars (US$250,000.00) in the aggregate at any time; 

(h)Contingent Liabilities arising with respect to customary indemnification obligations in favor of purchasers in connection with dispositions permitted hereunder; 

(i)Contingent Liabilities incurred in the Ordinary Course of Business with respect to surety and appeal bonds, performance bonds and other similar obligations; and 

(j)Contingent Liabilities arising under indemnity agreements to title insurers to cause such title insurers to issue to Lender title insurance policies. 

9.2 Encumbrances.  The Credit Parties shall not, either directly or indirectly, create, assume, incur or suffer or permit to exist any Lien or charge of any kind or character upon any asset of the Credit Parties, whether owned at the date hereof or hereafter acquired, except Permitted Liens or as otherwise authorized by Lender in writing. 

9.3 Investments.  The Credit Parties shall not, either directly or indirectly, make or have outstanding any new investments (whether through purchase of stocks, obligations or otherwise) in, or loans or advances to, any other Person, or acquire all or any substantial part of the assets, business, stock or other evidence of beneficial ownership of any other Person, except the following: 

(a)The stock or other ownership interests in a Subsidiary existing as of the Effective Date; 

(b)investments in direct obligations of the United States or any state in the United States; 

(c)trade credit extended by the Credit Parties in the Ordinary Course of Business of the Credit Parties; 

(d)investments in securities of Customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such Customers; 

(e)investments existing on the Effective Date and set forth in the Financial Statements; 

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(f)Contingent Liabilities permitted pursuant to Section 9.1; 

(g)Capital Expenditures permitted under Section 9.5; or 

(h)expenditures for improvements to office spaces of any Credit Party Leases, which such improvements are set forth in Schedule 9.3. Any improvement as set forth in this Section 9.3(h) whose cost exceeds Ten Thousand and No/100 Dollars ($10,000.00) shall be individually approved by Lender in writing prior to the commencement by the Credit Parties, or their agents, of any work related thereto. 

9.4 Transfer; Merger.  The Credit Parties shall not, either directly or indirectly, permit a Change in Control, merge, consolidate, sell, transfer, license, lease, encumber or otherwise dispose of all or any part of its property or business or all or any substantial part of its assets, or sell or discount (with or without recourse) any of its Notes (as defined in the UCC), Chattel Paper, Payment Intangibles or Accounts; provided, however, that the Credit Parties may: 

(a)sell or lease Inventory and Equipment in the Ordinary Course of Business of the Credit Parties; 

(b)upon not less than three (3) Business Days’ prior written notice to Lender, any Subsidiary of Borrower may merge with (so long as the Borrower remains the surviving entity), or dissolve or liquidate into, or transfer its property to Borrower; 

(c)dispose of used, wornout or surplus equipment in the Ordinary Course of Business of the Credit Parties; 

(d)discount or write-off overdue Accounts for collection in the Ordinary Course of Business of the Credit Parties; 

(e)sell or otherwise dispose (including cancellation of Funded Indebtedness) of any Investment permitted under Section 9.3 in the Ordinary Course of Business of the Credit Parties; and 

(f)grant Permitted Liens. 

9.5 Capital Expenditures.  Without Lender’s prior written consent, the Credit Parties shall not make or incur obligations for any Capital Expenditures. 

9.6 Issuance of Stock.  No Credit Party shall either directly or indirectly, issue or distribute any additional capital stock or other securities (including any securities convertible or exercisable into capital stock or other securities) of any Credit Party without the prior written consent of Lender, except that any Credit Party may issue its capital stock or other securities without Lender’s prior approval (but subject to immediate notice of such issuance to Lender upon any such issuance): (i) in connection with any institutional capital raise pursuant to which a Credit Party is issuing any capital stock or other securities (including any securities convertible or exercisable into capital stock), but only if and to the extent that all of the outstanding Obligations hereunder shall be paid off in full directly from the proceeds of such capital raise (such payment of the Obligations to occur directly from the proceeds of such capital raise before such proceeds  

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are paid to any Credit Party); (ii) upon the exercise of any warrants or stock options issued by any Credit Party prior to the Closing Date and disclosed on Schedule 7.4(a); (iii) options or other securities issued in connection with any employee stock option plan approved by an independent compensation committee of the board of directors comprised solely of disinterested and independent members; (iv) if the capital stock so issued is Common Stock issued under an effective registration statement filed on Form S-8 and used for payment of legitimate services actually provided to the issuing Credit Party in the Ordinary Course of Business or (v) upon the conversion of any convertible debt of any of the Credit Parties that is existing as of the Effective Date, but only so long as: (A) no Event of Default shall have occurred or be continuing under this Agreement or any other Loan Documents, and no event shall have occurred that, with the passage of time, the giving of notice, or both, would constitute an Event of Default hereunder or thereunder; and (B) there is no Change in Control from any such issuances.

9.7 Distributions; Restricted Payments; Change in Management.  The Credit Parties shall not: (i) purchase or redeem any shares of its capital stock or other securities, or declare or pay any dividends or distributions, whether in cash or otherwise, set aside any funds for any such purpose, or make any distribution of any kind to its shareholders, partners, or members, make any distribution of its property or assets, or make any loans, advances or extensions of credit to, or investments in, any Persons, including such Credit Parties’ Affiliates, officers, directors, members, managers, principals, Material Shareholders, or employees, without the prior written consent of Lender; (ii) make any payments of any Funded Indebtedness other than as specifically permitted under the Use of Proceeds Confirmation and as otherwise permitted hereunder; (iii) increase the annual salary paid to any officers of the Credit Parties as of the Effective Date, unless any such increase is part of a written employment contract with any such officers entered into prior to the Effective Date, a copy of which has been delivered to and approved by the Lender; or (iv) add, replace, remove, or otherwise change any officers, managers, senior management positions or Persons with authority to bind the Credit Parties from the officers, managers, senior management positions, or other such Persons existing as of the Effective Date, unless approved by Lender in writing. 

9.8 Use of Proceeds.  The Credit Parties shall not use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose of purchasing any securities underwritten by any Affiliate of Lender.  In addition, the Credit Parties shall not use any portion of the proceeds of the Loans, either directly or indirectly, for any of the following purposes: (i) to make any payment towards any Funded Indebtedness of the Credit Parties or any Affiliates thereof, except as specifically permitted under the Use of Proceeds Confirmation; (ii) to pay any taxes of any nature or kind that may be due by the Credit Parties or any Affiliates thereof; (iii) to pay any obligations or liabilities of any nature or kind due or owing to any managers, officers, directors, employees, members, principals, or Material Shareholders of the Credit Parties or any Affiliates thereof.  The Credit Parties shall only use the proceeds of the Loans (or any portion thereof) for the purposes set forth in a “Use of Proceeds Confirmation” to be executed by Borrower on the Effective Date, unless Borrower obtains the prior written consent of Lender to use proceeds of Loans for any other purpose, which consent may be granted or withheld by Lender in its sole and absolute discretion. 

9.9 Business Activities; Change of Legal Status and Organizational Documents.  The Credit Parties shall not: (i) engage in any line of business other than the businesses engaged in on  

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the date hereof and business reasonably related thereto; (ii) change its name, its type of organization, its jurisdictions of organization or other legal structure; or (iii) permit its articles of incorporation (including any certificates of designation, is applicable), bylaws, operating agreement, partnership agreement, certificate of organization or similar governing or organizational documents to be amended or modified in any way which could reasonably be expected to have a Material Adverse Effect.

9.10 Transactions with Affiliates.  The Credit Parties shall not enter into any transaction with any of its Affiliates, except in the Ordinary Course of Business of the Credit Parties and upon fair and reasonable terms that are no less favorable to the Credit Parties than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate of the Credit Parties. 

9.11 Bank Accounts. The Credit Parties shall not maintain any bank, deposit or credit card payment processing accounts with any financial institution, or any other Person, for the Credit Parties or any Affiliate of the Credit Parties, other than the accounts of the Credit Parties listed in the attached Schedule 7.28. 

10. AFFIRMATIVE COVENANTS. 

10.1 Compliance with Regulatory Requirements.  Upon demand by Lender, Borrower shall reimburse Lender for Lender’s additional costs and/or reductions in the amount of principal or interest received or receivable by Lender if at any time after the date of this Agreement any law, treaty or regulation or any change in any law, treaty or regulation or the interpretation thereof by any Governmental Authority charged with the administration thereof or any other authority having jurisdiction over Lender or the Loans, whether or not having the force of law, shall impose, modify or deem applicable any reserve and/or special deposit requirement against or in respect of assets held by or deposits in or for the account of the Loans by Lender or impose on Lender any other condition with respect to this Agreement or the Loans, the result of which is to either increase the cost to Lender of making or maintaining the Loans or to reduce the amount of principal or interest received or receivable by Lender with respect to such Loans.  Said additional costs and/or reductions will be those which directly result from the imposition of such requirement or condition on the making or maintaining of such Loans. 

10.2 Corporate Existence.  The Credit Parties shall at all times preserve and maintain its: (i) existence and good standing in the jurisdiction of its organization; and (ii) its qualification to do business and good standing in each jurisdiction where the nature of its business makes such qualification necessary (other than such jurisdictions in which the failure to be qualified or in good standing could not reasonably be expected to have a Material Adverse Effect), and shall at all times continue as a going concern in the business which Borrower is presently conducting. 

10.3 Maintain Property.  The Credit Parties shall at all times maintain, preserve and keep its plants, properties and equipment, including, but not limited to, any Collateral, in good repair, working order and condition, normal wear and tear excepted, and shall from time to time, as Borrower deems appropriate in its reasonable judgment, make all needful and proper repairs, renewals, replacements, and additions thereto so that at all times the efficiency thereof shall be fully preserved and maintained.  The Credit Parties shall permit Lender to examine and inspect  

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such plant, properties and equipment, including any Collateral, at all reasonable times upon reasonable notice during business hours.  During the continuance of any Event of Default, Lender shall, at the Credit Parties’ expense, have the right to make additional inspections without providing advance notice.

10.4 Maintain Insurance.  The Credit Parties’ shall at all times insure and keep insured with insurance companies acceptable to Lender, all insurable property owned by the Credit Parties which is of a character usually insured by companies similarly situated and operating like properties, against loss or damage from environmental, fire and such other hazards or risks as are customarily insured against by companies similarly situated and operating like properties; and shall similarly insure employers’, public and professional liability risks.  Prior to the date of the funding of any Loans under this Agreement, Borrower shall deliver to Lender a certificate setting forth in summary form the nature and extent of the insurance maintained pursuant to this Section.  All such policies of insurance must be satisfactory to Lender in relation to the amount and term of the Obligations and type and value of the Collateral and assets of the Credit Parties, shall identify Lender as sole/lender’s loss payee and as an additional insured.  In the event the Credit Parties fail to provide Lender with evidence of the insurance coverage required by this Section or at any time hereafter shall fail to obtain or maintain any of the policies of insurance required above, or to pay any premium in whole or in part relating thereto, then Lender, without waiving or releasing any obligation or default by Borrower hereunder, may at any time (but shall be under no obligation to so act), obtain and maintain such policies of insurance and pay such premium and take any other action with respect thereto, which Lender deems advisable.  This insurance coverage: (i) may, but need not, protect the Credit Parties’ interest in such property, including, but not limited to, the Collateral; and (ii) may not pay any claim made by, or against, the Credit Parties in connection with such property, including, but not limited to, the Collateral.  The Credit Parties may later cancel any such insurance purchased by Lender, but only after providing Lender with evidence that the insurance coverage required by this Section is in force.  The costs of such insurance obtained by Lender, through and including the effective date such insurance coverage is canceled or expires, shall be payable on demand by the Credit Parties to Lender, together with interest at the Default Rate on such amounts until repaid and any other charges by Lender in connection with the placement of such insurance.  The costs of such insurance, which may be greater than the cost of insurance which the Credit Parties may be able to obtain on its own, together with interest thereon at the Default Rate and any other charges by Lender in connection with the placement of such insurance may be added to the total Obligations due and owing to the extent not paid by the Credit Parties. 

10.5 Tax Liabilities. 

(a)The Credit Parties shall at all times pay and discharge all property, income and other taxes, assessments and governmental charges upon, and all claims (including claims for labor, materials and supplies) against the Credit Parties or any of its properties, Equipment or Inventory, before the same shall become delinquent and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP are being maintained. 

(b)Borrower shall be solely responsible for the payment of any and all documentary stamps and other taxes in connection with the execution of the Loan Documents. 

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10.6 ERISA Liabilities; Employee Plans.  The Credit Parties shall: (i) keep in full force and effect any and all Employee Plans which are presently in existence or may, from time to time, come into existence under ERISA, and not withdraw from any such Employee Plans, unless such withdrawal can be effected or such Employee Plans can be terminated without liability to the Credit Parties; (ii) make contributions to all of such Employee Plans in a timely manner and in a sufficient amount to comply with the standards of ERISA, including the minimum funding standards of ERISA; (iii) comply with all material requirements of ERISA which relate to such Employee Plans; (iv) notify Lender immediately upon receipt by the Credit Parties of any notice concerning the imposition of any withdrawal liability or of the institution of any Proceeding or other action which may result in the termination of any such Employee Plans or the appointment of a trustee to administer such Employee Plans; (v) promptly advise Lender of the occurrence of any “Reportable Event” or “Prohibited Transaction” (as such terms are defined in ERISA), with respect to any such Employee Plans; and (vi) amend any Employee Plan that is intended to be qualified within the meaning of Section 401 of the Internal Revenue Code of 1986 to the extent necessary to keep the Employee Plan qualified, and to cause the Employee Plan to be administered and operated in a manner that does not cause the Employee Plan to lose its qualified status. 

10.7 Financial Statements.  The Credit Parties shall at all times maintain a system of accounting capable of producing its individual and consolidated financial statements in compliance with GAAP (provided that monthly financial statements shall not be required to have footnote disclosure, are subject to normal year-end adjustments and need not be consolidated), and shall furnish to Lender or its authorized representatives such information regarding the business affairs, operations and financial condition of the Credit Parties as Lender may from time to time request or require, including, but not limited to: 

(a)If the Maturity Date is extended beyond the original term, as soon as available, and in any event, within ninety (90) days after the close of each fiscal year, a copy of the annual audited consolidated financial statements of Borrower, including balance sheet, statement of income and retained earnings, statement of cash flows for the fiscal year then ended, in reasonable detail, prepared and reviewed by an independent certified public accountant reasonably acceptable to Lender, containing an unqualified opinion of such accountant; 

(b)as soon as available, and in any event, within forty-five (45) days after the close of each fiscal quarter, a copy of the quarterly unaudited consolidated financial statements of Borrower, including balance sheet, statement of income and retained earnings, statement of cash flows for the fiscal year then ended, in reasonable detail, prepared and certified as accurate in all material respects by the President, Chief Executive Officer or Chief Financial Officer of Borrower; and 

(c)as soon as available, and in any event, within ten (10) days following the end of each calendar month, a consolidated cash flow report of the Borrower for the month then ended, in reasonable detail, prepared and certified as accurate in all material respects by the President, Chief Executive Officer or Chief Financial Officer of Borrower. 

No change with respect to such accounting principles shall be made by the Credit Parties without giving prior notification to Lender. The Credit Parties represent and warrant to Lender that the financial statements delivered to Lender at or prior to the execution and delivery  

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of this Agreement and to be delivered at all times thereafter accurately reflect and will accurately reflect the financial condition of the Credit Parties in all material respects. Lender shall have the right at all times (and on reasonable notice so long as there then does not exist any Event of Default) during business hours to inspect the books and records of the Credit Parties and make extracts therefrom.

Borrower agrees to advise Lender immediately, in writing, of the occurrence of any Material Adverse Effect, or the occurrence of any event, circumstance or other happening that could be reasonably expected to lead to or become a Material Adverse Effect. 

10.8 Additional Reporting Requirements. Borrower shall provide the following reports and statements to Lender as follows: 

(a)On or prior to the Effective Date, Borrower shall provide to Lender an income statement or profit and loss statement showing actual results of the Borrower’s consolidated operations for the prior twelve (12) months, as well as an income statement projection showing, in reasonable detail, the Borrower’s consolidated income statement projections for the twelve (12) calendar months following the Effective Date (the “Income Projections”).  In addition, the Borrower shall provide to Lender on March 31, June 30, September 30, and December 31 quarterly reports comparing the Income Projections to actual results.  Any variance in the Income Projections to actual results that is more than ten percent (10%) (either above or below) will require the Borrower to submit to Lender written explanations as to the nature and circumstances for the variance.  The Borrower shall also provide to Lender on the tenth (10) day of every calendar month after the Effective Date, a bank statement for each bank account as is set forth on Schedule 7.28, and any additional bank accounts of the Credit Parties as may exist from time to time, as well as a report or statement from each active point of sale system that the Credit Parties have in existence as of the month that they are submitting such statement or report. The point of sale systems that the Credit Parties have as of the Effective Date are set forth on Schedule 10.8. 

(b)On the tenth (10^th) day of every calendar month after the Effective Date, the Borrower shall provide to Lender a report comparing the use of the proceeds of the Loans set forth in the Use of Proceeds Confirmation, with the actual use of such proceeds.  Any variance in the actual use of such proceeds from the amounts set forth in the approved Use of Proceeds Confirmation will require the Borrower to submit to Lender written explanations as to the nature and circumstances for the variance. 

(c)Borrower shall submit to Lender true and correct copies of all bank statements (and statements from any other depository accounts, brokerage accounts, or accounts with any Payment Processing Companies) received by the Credit Parties within five (5) days after the Credit Parties’ receipt thereof from its bank. 

(d)Promptly upon receipt thereof, Borrower shall provide to Lender copies of interim and supplemental reports, if any, submitted to Borrower by independent accountants in connection with any interim audit or review of the books of the Credit Parties. 

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10.9 Aged Accounts/Payables Schedules.  Upon request of Lender, Borrower shall promptly deliver to Lender an aged schedule of the Accounts of the Credit Parties, listing the name and amount due from each customer and showing the aggregate amounts due from: (i) 0-30 days; (ii) 31-60 days; (iii) 61-90 days; (iv) 91-120 days; and (v) more than 120 days, and certified as accurate by the Chief Financial Officer or the President of Borrower.  Upon request by Lender, Borrower shall promptly deliver to Lender an aged schedule of the accounts payable of the Credit Parties, listing the name and amount due to each creditor and showing the aggregate amounts due from: (v) 0-30 days; (w) 31-60 days; (x) 61-90 days;  (y) 91-120 days; and (z) more than 120 days, and certified as accurate by the Chief Financial Officer or the President of Borrower. 

10.10 Failure to Provide Reports.  If at any time during the term of this Agreement, Borrower shall fail to timely provide any reports required to be provided by any Credit Party to Lender under this Agreement or any other Loan Document, in addition to all other rights and remedies that Lender may have under this Agreement and the other Loan Documents, Lender shall have the right to require, at each instance of any such failure, upon written notice to Borrower, that the Borrower redeem 2.5% of the aggregate amount of the Advisory Fee then outstanding, which cash redemption payment shall be due and payable by wire transfer of Dollars to an account designated by Lender within five (5) Business Days from the date the Lender delivers such redemption notice to the Borrower. 

10.11 Covenant Compliance. Borrower shall, within thirty (30) days after the end of each calendar month, deliver to Lender a Compliance Certificate showing compliance by Borrower with the covenants therein, and certified as accurate by the President or Chief Executive Officer of the Borrower. 

10.12 Continued Due Diligence/Field Audits.  Borrower acknowledges that during the term of this Agreement, Lender and its agents and representatives undertake ongoing and continuing due diligence reviews of the Credit Parties and its business and operations.  Such ongoing due diligence reviews may include, and the Credit Parties do hereby allow Lender, to conduct site visits and field examinations of the office locations of the Credit Parties and the assets and records of the Credit Parties, the results of which must be satisfactory to Lender in Lender’s sole and absolute discretion.  In this regard, in order to cover Lender’s expenses of the ongoing due diligence reviews and any site visits or field examinations which Lender may undertake from time to time while this Agreement is in effect, the Borrower shall pay to Lender, within five (5) Business Days after receipt of an invoice or demand therefor from Lender, a fee of up to Ten Thousand and No/100 Dollars (US$10,000.00) per year (based on four (4) expected filed audits and ongoing due diligence of Two Thousand Five Hundred and No/100 Dollars (US$2,500.00) per audit) to cover such ongoing expenses.  Failure to pay such fee as and when required shall be deemed an Event of Default under this Agreement and all other Loan Documents.  The foregoing notwithstanding, from and after the occurrence of an Event of Default or any event which with notice, lapse of time or both, would become an Event of Default, Lender may conduct site visits, field examinations and other ongoing reviews of the Credit Parties’ records, assets and operations at any time, in its sole discretion, without any limitations in terms of number of site visits or examinations and without being limited to the fee hereby contemplated, all at the sole expense of Borrower. 

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10.13 Notice and Other Reports. Borrower shall provide prompt written notice to Lender if at any time the Credit Parties fail to comply with any of the covenants in Section 11 herein.  In addition, Borrower shall, within such period of time as Lender may reasonably specify, deliver to Lender such other schedules and reports as Lender may reasonably require. 

10.14 Collateral Records. The Credit Parties shall keep full and accurate books and records relating to the Collateral and shall mark such books and records to indicate Lender’s Lien in the Collateral including placing a legend, in form and content reasonably acceptable to Lender, on all Chattel Paper created by the Credit Parties indicating that Lender has a Lien in such Chattel Paper. 

10.15 Notice of Proceedings.  Borrower shall, promptly, but not more than five (5) days after knowledge thereof shall have come to the attention of any officer of the Credit Parties, give written notice to Lender of all threatened or pending actions, suits, and Proceedings before any Governmental Agency or other administrative agency, or before or involving any other Person, which may have a Material Adverse Effect. 

10.16 Notice of Default.  Borrower shall, promptly, but not more than five (5) days after the commencement thereof, give notice to Lender in writing of the occurrence of an Event of Default or of any event which, with the lapse of time, the giving of notice or both, would constitute an Event of Default hereunder. 

10.17 Environmental Matters.  If any release or threatened release or other disposal of Hazardous Substances shall occur or shall have occurred on any real property or any other assets of the Credit Parties or any Subsidiary or Affiliate of the Credit Parties, the Credit Parties shall cause the prompt containment and/or removal of such Hazardous Substances and the remediation and/or operation of such real property or other assets as necessary to comply with all Environmental Laws and to preserve the value of such real property or other assets.  Without limiting the generality of the foregoing, the Credit Parties shall comply with any Federal or state judicial or administrative order requiring the performance at any real property of the Credit Parties of activities in response to the release or threatened release of a Hazardous Substance.  To the extent that the transportation of Hazardous Substances is permitted by this Agreement, Borrower shall dispose of such Hazardous Substances, or of any other wastes, only at licensed disposal facilities operating in compliance with Environmental Laws. 

10.18 Subsidiaries.  Any Subsidiary which is formed or acquired or otherwise becomes a Subsidiary of the Credit Parties following the date hereof, within five (5) Business Days of such event, shall become an additional the Credit Party hereto, and the Borrower shall take any and all actions necessary or required by Lender to cause said Subsidiary to execute a counterpart to this Agreement and any and all other documents which the Lender shall require, including causing such party to execute those documents contained in Section 3.12 hereof. 

10.19 Reporting Status; Listing.  The Borrower shall, within one hundred eighty (180) days from the Closing Date (the “Reporting Date”), provide to Lender a complete set of audited financial statements of the Borrower and all of its Subsidiaries, in a form and content as required by the SEC for fully reporting companies.  In addition, by the Reporting Date, the Borrower shall have become a full reporting company required to file periodic reports with the SEC under the  

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Exchange Act, and have its Common Stock registered with the SEC under Section 12 of the Exchange Act, and provide to Lender evidence acceptable to the Lender of compliance with each of the foregoing requirements.  In addition, immediately after the Reporting Date, the Borrower shall obtain approval for the listing and quotation of the Common Stock on the OTC Bulletin Board, or another Principal Trading Market more senior and established than the OTC Pink Sheets and approved by Lender, and to have such Common Stock trading in such Principal Trading Market.  In that regard, the Borrower shall file all required applications, reports, statements and all other documents, and pay all required fees and costs, necessary or required in order for the Borrower to accomplish the foregoing requirements. Once the Borrower becomes a fully reporting company with the SEC, then so long as Lender owns, legally or beneficially, or has the right to receive, any shares of Common Stock, the Borrower shall: (i) file in a timely manner all reports required to be filed under the Securities Act, the Exchange Act or any securities laws and regulations thereof applicable to the Borrower of any state of the United States or any foreign jurisdiction, or by the rules and regulations of the Principal Trading Market, and, to provide a copy thereof to the Lender promptly after such filing; (ii) not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would otherwise permit such termination; (iii) if required by the rules and regulations of the Principal Trading Market, promptly secure the listing of the Advisory Fee Shares or any other shares of Common Stock issuable to Lender under any of the Loan Documents upon the Principal Trading Market (subject to official notice of issuance) and, take all reasonable action under its control to maintain the continued listing, quotation and trading of its Common Stock (including, without limitation, the Advisory Fee Shares or any other shares of Common Stock issuable to Lender under any of the Loan Documents) on the Principal Trading Market, and the Borrower shall comply in all respects with the Borrower’s reporting, filing and other obligations under the bylaws or rules of the Principal Trading Market, the Financial Industry Regulatory Authority, Inc. and such other Governmental Authorities, as applicable. The Borrower shall promptly provide to Lender copies of any notices it receives from the SEC or any Principal Trading Market, to the extent any such notices could in any way have or be reasonably expected to have a Material Adverse Effect.

10.20 Rule 144.  With a view to making available to Lender the benefits of Rule 144 under the Securities Act (“Rule 144”), or any similar rule or regulation of the SEC that may at any time permit Lender to sell the Advisory Fee Shares or other shares of Common Stock issuable to Lender under any Loan Documents to the public without registration, the Borrower represents and warrants that: (i) in accordance with Section 10.19 above, the Borrower shall become a reporting company with the SEC and become a company subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act by no later than the Reporting Date; (ii) once the Borrower becomes a reporting company with the SEC, the Borrower will file all required reports under Section 13 or 15(d) of the Exchange Act, as applicable; and (iii) the Borrower is not an issuer defined as a “Shell Company” (as hereinafter defined); and (iv) if Borrower has, at any time, been an issuer defined as a “Shell Company,” Borrower has not been an issuer defined as a Shell Company for at least twelve (12) months prior to the Effective Date.  For the purposes hereof, the term “Shell Company” shall mean an issuer that meets the description defined under Rule 144.  In addition, so long as Lender owns, legally or beneficially, any securities of Borrower, Borrower shall, at its sole expense: 

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(a)Make, keep and ensure that adequate current public information with respect to Borrower, as required in accordance with Rule 144, is publicly available; 

(b)furnish to the Lender, promptly upon reasonable request: (A) a written statement by Borrower that it has complied with the reporting requirements of Rule 144; and (b) such other information as may be reasonably requested by Lender to permit the Lender to sell any of the Advisory Fee Shares or other shares of Common Stock acquired hereunder or under the Promissory Note pursuant to Rule 144 without limitation or restriction; and 

(c)promptly at the request of Lender, give Borrower’s Transfer Agent instructions to the effect that, upon the Transfer Agent’s receipt from Lender of a certificate (a “Rule 144 Certificate”) certifying that Lender’s holding period (as determined in accordance with the provisions of Rule 144) for any portion of the Advisory Fee Shares or shares of Common Stock issuable upon conversion of the Promissory Note which Lender proposes to sell (or any portion of such shares which Lender is not presently selling, but for which Lender desires to remove any restrictive legends applicable thereto) (the “Securities Being Sold”) is not less than the required holding period pursuant to Rule 144, and receipt by the Transfer Agent of the “Rule 144 Opinion” (as hereinafter defined) from Borrower or its counsel (or from Lender and its counsel as permitted below), the Transfer Agent is to effect the transfer (or issuance of a new certificate without restrictive legends, if applicable) of the Securities Being Sold and issue to Lender or transferee(s) thereof one or more stock certificates representing the transferred (or re-issued) Securities Being Sold without any restrictive legend and without recording any restrictions on the transferability of such shares on the Transfer Agent’s books and records.  In this regard, upon Lender’s request, Borrower shall have an affirmative obligation to cause its counsel to promptly issue to the Transfer Agent a legal opinion providing that, based on the Rule 144 Certificate, the Securities Being Sold may be sold pursuant to the provisions of Rule 144, even in the absence of an effective registration statement, or re-issued without any restrictive legends pursuant to the provisions of Rule 144, even in the absence of an effective registration statement (the “Rule 144 Opinion”). If the Transfer Agent requires any additional documentation in connection with any proposed transfer (or re-issuance) by Lender of any Securities Being Sold, Borrower shall promptly deliver or cause to be delivered to the Transfer Agent or to any other Person, all such additional documentation as may be necessary to effectuate the transfer (or re-issuance) of the Securities Being Sold and the issuance of an unlegended certificate to any such Lender or any transferee thereof, all at Borrower’s expense.  Any and all fees, charges or expenses, including, without limitation, attorneys’ fees and costs, incurred by Lender in connection with issuance of any such shares, or the removal of any restrictive legends thereon, or the transfer of any such shares to any assignee of Lender, shall be paid by Borrower, and if not paid by Borrower, the Lender may, but shall not be required to, pay any such fees, charges or expenses, and the amount thereof, together with interest thereon at the highest non-usurious rate permitted by law, from the date of outlay, until paid in full, shall be due and payable by Borrower to Lender immediately upon demand therefor, and all such amounts advanced by the Lender shall be additional Obligations due under this Agreement and the Promissory Note and secured under the Loan Documents.  In the event that the Borrower and/or its counsel refuses or fails for any reason to render the Rule 144 Opinion or any other documents, certificates or instructions required to effectuate the transfer (or re-issuance) of the Securities Being Sold and the issuance of an unlegended certificate to any such Lender or any transferee thereof, then: (A) to the extent the Securities Being Sold could be lawfully transferred (or re-issued) without restrictions under applicable laws, Borrower’s failure to promptly provide the Rule  

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144 Opinion or any other documents, certificates or instructions required to effectuate the transfer (or re-issuance) of the Securities Being Sold and the issuance of an unlegended certificate to any such Lender or any transferee thereof shall be an immediate Event of Default under this Agreement and all other Loan Documents; and (B) the Borrower hereby agrees and acknowledges that Lender is hereby irrevocably and expressly authorized to have counsel to Lender render any and all opinions and other certificates or instruments which may be required for purposes of effectuating the transfer (or re-issuance) of the Securities Being Sold and the issuance of an unlegended certificate to any such Lender or any transferee thereof, and the Borrower hereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation or instructions from the Borrower, transfer or re-issue any such Securities Being Sold as instructed by Lender and its counsel.

10.21 Reservation of Shares.  Borrower shall take all action reasonably necessary to at all times have authorized, and reserved for the purpose of issuance, such number of shares of Common Stock as shall be necessary to effect the full conversion of the Promissory Note in accordance with its terms (the “Share Reserve”).  If at any time the Share Reserve is insufficient to effect the full conversion of the Promissory Note then outstanding, Borrower shall increase the Share Reserve accordingly.  If Borrower does not have sufficient authorized and unissued shares of Common Stock available to increase the Share Reserve, Borrower shall call and hold a special meeting of the shareholders within forty-five (45) days of such occurrence, or take action by the written consent of the holders of a majority of the outstanding shares of Common Stock, if possible, for the sole purpose of increasing the number of shares authorized. Borrower’s management shall recommend to the shareholders to vote in favor of increasing the number of shares of Common Stock authorized. 

11. FINANCIAL COVENANTS. 

11.1 Revenue Covenant.  For each calendar quarter while this Agreement remains in effect, the Credit Parties shall have sales revenues for such calendar quarter that are not less than seventy-five percent (75%) of the sales revenues shown for the corresponding calendar quarter on the most recent of the Financial Statements (i.e. comparing third quarter results to the prior years’ third quarter results). 

11.2 Loan to Value Ratio.  The aggregate outstanding principal balance of all Loans hereunder shall never exceed the lesser of: (i) eighty percent (80%) of the then existing Eligible Accounts; or (ii) eighty percent (80%) of the value of all Collateral, as determined by Lender in its sole and absolute discretion (the “Loan Availability”).  In the event at any time the aggregate outstanding principal balance of all Loans hereunder exceeds the Loan Availability (an “Over-advance”), Borrower shall be obligated to eliminate such Over-advance as follows: (A) if the Over-advance exists as of the Effective Date, then: (I) Lender shall determine the amount of the Over-advance, as well as the estimated amount of a payment (“Estimated Over-advance Payment”) to be made by Borrower at such payment intervals as Lender may determine, to be applied against the principal balance of the outstanding Loans, such that the Over-advance would be eliminated over a one hundred twenty (120) day period from the Effective Date (Lender shall have the right to modify the amount of the Estimated Over-advance Payment from time to time upon notice to Borrower as necessary to cause the elimination of the Over-advance over the one hundred twenty (120) day period contemplated hereby); and (II) Lender shall notify Borrower of  

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the amount of the Estimated Over-advance Payment, and on each payment interval selected by Lender, Borrower shall make the Estimated Over-Advance Payment to Lender; or (B) if an Over-advance should occur after the Effective Date and during the term of this Agreement, then: (I) Lender shall determine, in its sole discretion, whether: (1) the Over-advance needs to be paid immediately; or (2) the Over-advance can be cured during a period of time as determined by Lender, in its sole discretion, and if so, what other conditions Lender may impose in connection with such cure period.  If Lender elects option (1), then Borrower shall, upon notice or demand from Lender, immediately make such repayments of the Loans or take such other actions as shall be necessary to immediately eliminate such Over-advance in full.  If Lender elects option (2) above, then Lender shall determine the amount of the Over-advance, the cure period available to Borrower in which to eliminate the Over-advance, and any other conditions to be satisfied by Borrower in connection with the cure period selected by Lender for elimination of the Over-advance, as well as the Estimated Over-advance Payment to be made by Borrower at such payment intervals as Lender may determine, to be applied against the principal balance of the outstanding Loans, such that the Over-advance would be eliminated over whatever cure period shall have been elected by Lender, in its sole discretion (Lender shall have the right to modify the amount of the Estimated Over-advance Payment from time to time upon notice to Borrower as necessary to cause the elimination of the Over-advance over the cure period selected by Lender); and (II) Lender shall notify Borrower of the amount of the Estimated Over-advance Payment, the cure period selected by Lender during which the Over-advance must be eliminated, and any other conditions applicable thereto, and on each payment interval selected by Lender, Borrower shall make the Estimated Over-Advance Payment to Lender, such that the Over-advance is eliminated in full in the period of time selected by Lender therefor.  Credit Parties shall also satisfy whatever other conditions may be imposed by Lender as conditions to allowing Credit Parties a cure period to eliminate the Over-advance.

12. EVENTS OF DEFAULT. 

Credit Parties, without notice or demand of any kind (except as specifically provided in this Agreement), shall be in default under this Agreement upon the occurrence of any of the following events (each an “Event of Default”): 

12.1 Nonpayment of Obligations.  Any amount due and owing on the Promissory Note or any of the Obligations, whether by its terms or as otherwise provided herein, is not paid on the date such amount is due. 

12.2 Misrepresentation.  Any written warranty, representation, certificate or statement of the Credit Parties in this Agreement, the Loan Documents or any other agreement with Lender shall be false or misleading in any material respect when made or deemed made. 

12.3 Nonperformance.  Any failure to perform or default in the performance of any covenant, condition or agreement contained in this Agreement (not otherwise addressed in this Article 12), which failure to perform or default in performance continues for a period of ten (10) days after any Credit Party receives notice from Lender of such failure to perform or default in performance (provided that if the failure to perform or default in performance is not capable of being cured, in Lender’s reasonable discretion, then the cure period set forth herein shall not be applicable and the failure or default shall be an immediate Event of Default hereunder). 

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12.4 Default under Loan Documents.  Any failure to perform or default in the performance by any Credit Party that continues after applicable grace and cure periods under any covenant, condition or agreement contained in any of the other Loan Documents or any other agreement with Lender, all of which covenants, conditions and agreements are hereby incorporated in this Agreement by express reference. 

12.5 Default under Other Obligations.  Any default by Borrower in the payment of principal, interest or any other sum for any other obligation beyond any period of grace provided with respect thereto or in the performance of any, other term, condition or covenant contained in any agreement (including any capital or operating lease or any agreement in connection with the deferred purchase price of property), the effect of which default is to cause or permit the holder of such obligation (or the other party to such other agreement) to cause such obligation or agreement to become due prior to its stated maturity, to terminate such other agreement, or to otherwise modify or adversely affect such obligation or agreement in a manner that could have a Material Adverse Effect on any Credit Party. 

12.6 Assignment for Creditors.  Any Credit Party makes an assignment for the benefit of creditors, fails to pay, or admits in writing its inability to pay its debts as they mature; or if a trustee of any substantial part of the assets of the Credit Parties is applied for or appointed, and in the case of such trustee being appointed in a Proceeding brought against any of the Credit Parties, the Credit Parties, by any action or failure to act indicates its approval of, consent to, or acquiescence in such appointment and such appointment is not vacated, stayed on appeal or otherwise shall not have ceased to continue in effect within sixty (60) days after the date of such appointment. 

12.7 Bankruptcy.  Any Proceeding involving any of the Credit Parties, is commenced by or against any of the Credit Parties under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law or statute of the federal government or any state government, and in the case of any such Proceeding being instituted against any of the Credit Parties: (i) the Credit Parties, by any action or failure to act, indicates its approval of, consent to or acquiescence therein; or (ii) an order shall be entered approving the petition in such Proceedings and such order is not vacated, stayed on appeal or otherwise shall not have ceased to continue in effect within sixty (60) days after the entry thereof. 

12.8 Judgments.  The entry of any judgment, decree, levy, attachment, garnishment or other process, or the filing of any Lien against the property of any of the Credit Parties, unless such judgment or other process shall have been, within sixty (60) days from the entry thereof: (i) bonded over to the satisfaction of Lender and appealed; (ii) vacated; or (iii) discharged. 

12.9 Material Adverse Effect.  A Material Adverse Effect shall occur. 

12.10 Change in Control.  Except as permitted under this Agreement, any Change in Control shall occur; provided, however, a Change in Control shall not constitute an Event of Default if: (i) it arises out of an event or circumstance beyond the reasonable control of the Credit Parties (for example, but not by way of limitation, a transfer of ownership interest due to death or incapacity); and (ii) within sixty (60) days after such Change in Control, the Credit Parties provide Lender with information concerning the identity and qualifications of the individual or individuals  

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who will be in Control, and such individual or individuals shall be acceptable to Lender, in Lender’s sole discretion.

12.11 Collateral Impairment.  The entry of any judgment, decree, levy, attachment, garnishment or other process, or the filing of any Lien against, any of the Collateral or any collateral under a separate security agreement securing any of the Obligations, and such judgment or other process shall not have been, within thirty (30) days from the entry thereof: (i) bonded over to the satisfaction of Lender and appealed; (ii) vacated; or (iii) discharged, or the loss, theft, destruction, seizure or forfeiture, or the occurrence of any material deterioration or impairment of any of the Collateral or any of the Collateral under any security agreement securing any of the Obligations, or any material decline or depreciation in the value or market price thereof (whether actual or reasonably anticipated), which causes the Collateral, in the sole opinion of Lender acting in good faith, to become unsatisfactory as to value or character, or which causes Lender to reasonably believe that it is insecure and that the likelihood for repayment of the Obligations is or will soon be impaired, time being of the essence.  The cause of such deterioration, impairment, decline or depreciation shall include, but is not limited to, the failure by the Credit Parties to do any act deemed reasonably necessary by Lender to preserve and maintain the value and collectability of the Collateral. 

12.12 Adverse Change in Financial Condition.  The determination in good faith by Lender that a material adverse change has occurred in the financial condition or operations of the any of the Credit Parties, or the Collateral, which change could have a Material Adverse Effect, or otherwise adversely affect the prospect for Lender to fully and punctually realize the full benefits conferred on Lender by this Agreement, or the prospect of repayment of all Obligations. 

12.13 Adverse Change in Value of Collateral.  The determination in good faith by Lender that the security for the Obligations is or has become inadequate. 

12.14 Prospect of Payment or Performance.  The determination in good faith by Lender that the prospect for payment or performance of any of the Obligations is impaired for any reason. 

13. REMEDIES. 

(a)Upon the occurrence and during the continuance of an Event of Default, Lender shall have all rights, powers and remedies set forth in the Loan Documents, in any written agreement or instrument (other than this Agreement or the Loan Documents) relating to any of the Obligations or any security therefor, or as otherwise provided at law or in equity.  Without limiting the generality of the foregoing, Lender may, at its option, upon the occurrence and during the continuance of an Event of Default, declare its commitments to Borrower to be terminated and all Obligations to be immediately due and payable; provided, however, that upon the occurrence of an Event of Default under either Section 12.6, “Assignment for Creditors”, or Section 12.7, “Bankruptcy”, all commitments of Lender to Borrower shall immediately terminate and all Obligations shall be automatically due and payable, all without demand, notice or further action of any kind required on the part of Lender.  The Credit Parties hereby waive any and all presentment, demand, notice of dishonor, protest, and all other notices and demands in connection with the enforcement of Lender’s rights under the Loan Documents, and hereby consents to, and  

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waives notice of release, with or without consideration, of the Credit Parties or of any Collateral, notwithstanding anything contained herein or in the Loan Documents to the contrary.

(b)No Event of Default shall be waived by Lender, except and unless such waiver is in writing and signed by Lender.  No failure or delay on the part of Lender in exercising any right, power or remedy hereunder shall operate as a waiver of the exercise of the same or any other right at any other time; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder.  There shall be no obligation on the part of Lender to exercise any remedy available to Lender in any order. The remedies provided for herein are cumulative and not exclusive of any remedies provided at law or in equity.  The Credit Parties agree that in the event that Borrower fails to perform, observe or discharge any of its Obligations or liabilities under this Agreement, the Promissory Note, and other Loan Documents, or any other agreements with Lender, no remedy of law will provide adequate relief to Lender, and further agrees that Lender shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages. 

14. MISCELLANEOUS. 

14.1 Obligations Absolute.  None of the following shall affect the Obligations of the Credit Parties to Lender under this Agreement or Lender’s rights with respect to the Collateral: 

(a)acceptance or retention by Lender of other property or any interest in property as security for the Obligations; 

(b)release by Lender of all or any part of the Collateral or of any party liable with respect to the Obligations (other than Borrower); 

(c)release, extension, renewal, modification or substitution by Lender of the Promissory Note, or any note evidencing any of the Obligations; or 

(d)failure of Lender to resort to any other security or to pursue the Credit Parties or any other obligor liable for any of the Obligations before resorting to remedies against the Collateral. 

14.2 Entire Agreement.  This Agreement and the other Loan Documents: (i) are valid, binding and enforceable against the Credit Parties and Lender in accordance with its provisions and no conditions exist as to their legal effectiveness; (ii) constitute the entire agreement between the parties; and (iii) are the final expression of the intentions of the Credit Parties and Lender.  No promises, either expressed or implied, exist between the Credit Parties and Lender, unless contained herein or in the Loan Documents.  This Agreement and the Loan Documents supersede all negotiations, representations, warranties, commitments, offers, contracts (of any kind or nature, whether oral or written) prior to or contemporaneous with the execution hereof. 

14.3 Amendments; Waivers.  No amendment, modification, termination, discharge or waiver of any provision of this Agreement or of the Loan Documents, or consent to any departure by the Credit Parties therefrom, shall in any event be effective unless the same shall be in writing  

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and signed by Lender, and then such waiver or consent shall be effective only for the specific purpose for which given.

14.4 WAIVER OF DEFENSES. THE CREDIT PARTIES WAIVE EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH THE CREDIT PARTIES MAY HAVE AS OF THE DATE HEREOF TO ANY ACTION BY LENDER IN ENFORCING THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.  THE CREDIT PARTIES WAIVE ANY IMPLIED COVENANT OF GOOD FAITH AND RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO PURSUANT TO THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AS OF THE DATE OF THIS AGREEMENT.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER GRANTING ANY FINANCIAL ACCOMMODATION TO BORROWER. 

14.5 WAIVER OF JURY TRIAL. LENDER AND CREDIT PARTIES, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE PROMISSORY NOTE, ANY LOAN DOCUMENT OR ANY OF THE OBLIGATIONS, THE COLLATERAL, OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH LENDER AND CREDIT PARTIES ARE ADVERSE PARTIES.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER GRANTING ANY FINANCIAL ACCOMMODATION TO BORROWER. 

14.6 MANDATORY FORUM SELECTION.  TO INDUCE LENDER TO MAKE THE LOANS, CREDIT PARTIES IRREVOCABLY AGREE THAT ANY DISPUTE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS AGREEMENT OR RELATED TO ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO THIS AGREEMENT ANY OTHER LOAN DOCUMENT, OR THE COLLATERAL (WHETHER OR NOT SUCH CLAIM IS BASED UPON BREACH OF CONTRACT OR TORT) SHALL, EXCEPT AS HEREINAFTER PROVIDED, BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS LOCATED IN BROWARD COUNTY, FLORIDA; PROVIDED, HOWEVER, LENDER MAY, AT LENDER’S SOLE OPTION, ELECT TO BRING ANY ACTION IN ANY OTHER JURISDICTION.  THIS PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED BY AND INTERPRETED CONSISTENT WITH FLORIDA LAW. BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING ITS SITUS IN SAID COUNTY (OR TO ANY OTHER JURISDICTION OR VENUE, IF LENDER SO ELECTS), AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS. CREDIT PARTIES HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER, AS SET FORTH HEREIN OR IN THE MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE. 

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14.7 Usury Savings Clause. Notwithstanding any provision in this Agreement or the other Loan Documents, the total liability for payments of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions, or other sums which may at any time be deemed to be interest, shall not exceed the limit imposed by the usury laws of the jurisdiction governing this Agreement or any other applicable law.  In the event the total liability of payments of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions or other sums which may at any time be deemed to be interest, shall, for any reason whatsoever, result in an effective rate of interest, which for any month or other interest payment period exceeds the limit imposed by the usury laws of the jurisdiction governing this Agreement, all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice by, between, or to any party hereto, be applied to the reduction of the outstanding principal balance of this Agreement immediately upon receipt of such sums by the Lender, with the same force and effect as though the Borrower had specifically designated such excess sums to be so applied to the reduction of such outstanding principal balance and the Lender hereof had agreed to accept such sums as a penalty-free payment of principal; provided, however, that the Lender may, at any time and from time to time, elect, by notice in writing to the Borrower, to waive, reduce, or limit the collection of any sums in excess of those lawfully collectible as interest rather than accept such sums as a prepayment of the outstanding principal balance.  It is the intention of the parties that the Borrower do not intend or expect to pay nor does the Lender intend or expect to charge or collect any interest under this Agreement greater than the highest non-usurious rate of interest which may be charged under applicable law. 

14.8 Assignability. Lender may at any time assign Lender’s rights in this Agreement, the Promissory Note, any Loan Documents, the Obligations, or any part thereof, and transfer Lender’s rights in any or all of the Collateral, all without the Credit Parties’ consent or approval, and Lender thereafter shall be relieved from all liability with respect to such instrument or Collateral so transferred.  In addition, Lender may at any time sell one or more participations in the Loans, all without the Credit Parties’ consent or approval. The Credit Parties may not sell or assign this Agreement, any Loan Document or any other agreement with Lender, or any portion thereof, either voluntarily or by operation of law, nor delegate any of its duties of obligations hereunder or thereunder, without the prior written consent of Lender, which consent may be withheld in Lender’s sole and absolute discretion.  This Agreement shall be binding upon Lender and the Credit Parties and their respective legal representatives, successors and permitted assigns.  All references herein to a Credit Party shall be deemed to include any successors, whether immediate or remote.  In the case of a joint venture or partnership, the term “Borrower” or “Credit Party” shall be deemed to include all joint venturers or partners thereof, who shall be jointly and severally liable hereunder. 

14.9 Confidentiality. Each of the Credit Parties shall keep confidential any information obtained from Lender (except information publicly available or in Credit Parties’ domain prior to disclosure of such information from Lender, and except as required by applicable laws) and shall promptly return to the Lender all schedules, documents, instruments, work papers and other written information without retaining copies thereof, previously furnished by it as a result of this Agreement or in connection herewith. 

14.10 Publicity.  Lender shall have the right to approve, before issuance, any press release or any other public statement with respect to the transactions contemplated hereby made  

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by the Credit Parties; provided, however, that the Credit Parties shall be entitled, without the prior approval of Lender, to issue any press release or other public disclosure with respect to such transactions required under applicable securities or other laws or regulations.  Notwithstanding the foregoing, the Credit Parties shall use its best efforts to consult Lender in connection with any such press release or other public disclosure prior to its release and Lender shall be provided with a copy thereof upon release thereof.  Lender shall have the right to make any press release with respect to the transactions contemplated hereby without the Credit Parties’ approval.  In addition, with respect to any press release to be made by Lender, Borrower hereby authorizes and grants blanket permission to Lender to include the Borrower’s stock symbol, if any, in any press releases.  Borrower shall, promptly upon request, execute any additional documents of authority or permission as may be requested by Lender in connection with any such press releases.

14.11 Binding Effect.  This Agreement shall become effective upon execution by the Credit Parties and Lender. 

14.12 Governing Law.  Except in the case of the Mandatory Forum Selection Clause in Section 14.6 above, which clause shall be governed and interpreted in accordance with Florida law, this Agreement, the Loan Documents and the Promissory Note shall be delivered and accepted in, and shall be deemed to be contracts made under and governed by, the internal laws of the State of Nevada, and for all purposes shall be construed in accordance with the laws of the State of Nevada, without giving effect to the choice of law provisions of such State.  The governing law provisions of this Section 14.12 are a material inducement for Lender to enter into this Agreement, and the Borrower hereby agrees, acknowledges and understands that the Lender would not have entered into this Agreement, nor made or provided the Loans, without the full agreement and consent of the Credit Parties, with full knowledge and understanding, that except in the case of the Mandatory Forum Selection Clause in Section 14.6 above, which clause shall be governed and interpreted in accordance with Florida law, this Agreement, and each of the Loan Documents, shall be governed by the internal laws of the State of Nevada, and for all purposes shall be construed in accordance with the laws of the State of Nevada, without giving effect to the choice of law provisions.  In this regard, each of the Credit Parties hereby acknowledges that it has reviewed this Agreement and all Loan Documents, and specifically, this Section 14.12, with competent counsel selected by the Credit Parties, and in that regard, each of the Credit Parties fully understands the choice of law provisions set forth in this Section.  In addition, each of the Credit Parties agrees, and acknowledges that it has had an opportunity to negotiate the terms and provisions of this Agreement and the other Loan Documents with and through its counsel, and that the Credit Parties have sufficient leverage and economic bargaining power, and have used such leverage and economic bargaining power, to fairly and fully negotiate this Agreement and the other Loan Documents in a manner that is acceptable to the Credit Parties. Moreover, because of the material nature of this choice of law provision in inducing Lender to enter into this Agreement and to make the Loans to the Credit Parties, each of the Credit Parties hereby fully and absolutely waives any and all rights to make any claims, counterclaims, defenses, to raise or make any arguments (including any claims, counterclaims, defenses, or arguments based on grounds of public policy, unconscionability, or implied covenants of fair dealing and good faith), or to otherwise undertake any litigation strategy or maneuver of any nature or kind that would result in, or which otherwise seeks to, invalidate this choice of law provision, or that would otherwise result in or require the application of the laws of any other State other than the State of Nevada in the interpretation or governance of this Agreement or any other Loan Documents (except for the Mandatory Forum  

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Selection clause in Section 14.6 hereof).  Each of the Credit Parties has carefully considered this Section 14.12 and has carefully reviewed its application and effect with competent counsel, and in that regard, fully understands and agrees that Lender would not have entered into this Agreement, nor made the Loans, without the express agreement and acknowledgement of each of the Credit Parties to this choice of law provision, and the express waivers set forth herein.

14.13 Enforceability.  Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by, unenforceable or invalid under any jurisdiction, such provision shall as to such jurisdiction, be severable and be ineffective to the extent of such prohibition or invalidity, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. 

14.14 Survival of Borrower’s Representations.  All covenants, agreements, representations and warranties made by the Credit Parties herein shall, notwithstanding any investigation by Lender, be deemed material and relied upon by Lender and shall survive the making and execution of this Agreement and the Loan Documents and the issuance of the Promissory Note, and shall be deemed to be continuing representations and warranties until such time as the Credit Parties have fulfilled all of its Obligations to Lender, and Lender has been indefeasibly paid in full. Lender, in extending financial accommodations to Borrower, is expressly acting and relying on the aforesaid representations and warranties. 

14.15 Extensions of Lender’s Commitment and the Promissory Note.  This Agreement shall secure and govern the terms of any extensions or renewals of Lender’s commitment hereunder and the Promissory Note pursuant to the execution of any modification, extension or renewal note executed by Borrower, consented and agreed to by the Guarantors, and accepted by Lender in its sole and absolute discretion in substitution for the Promissory Note. 

14.16 Time of Essence.  Time is of the essence in making payments of all amounts due Lender under this Agreement and in the performance and observance by the Credit Parties of each covenant, agreement, provision and term of this Agreement. 

14.17 Execution.  This Agreement may be executed in one or more counterparts, all of which taken together shall be deemed and considered one and the same Agreement.  In the event that any signature of this Agreement or any other Loan Documents is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format file or other similar format file, such signature shall be deemed an original for all purposes and shall create a valid and binding obligation of the party executing same with the same force and effect as if such facsimile or “.pdf” signature page was an original thereof.  Notwithstanding the foregoing, Lender shall not be obligated to accept any document or instrument signed by facsimile transmission or by e-mail delivery of a “.pdf” format file or other similar format file as an original, and may in any instance require that an original document be submitted to Lender in lieu of, or in addition to, any such document executed by facsimile transmission or by e-mail delivery of a “.pdf” format file or other similar format file. 

14.18 Notices.  Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Agreement must be in writing and in each case properly addressed to the party to receive the same in accordance with the information below, and  

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will be deemed to have been delivered: (i) if mailed by certified mail, return receipt requested, postage prepaid and properly addressed to the address below, then three (3) Business Days after deposit of same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by Federal Express, UPS or other nationally recognized overnight courier service, overnight delivery, then one (1) Business Day after deposit of same in a regularly maintained receptacle of such overnight courier; or (iii) if hand delivered, then upon hand delivery thereof to the address indicated on or prior to 5:00 p.m., EST, on a Business Day.  Any notice hand delivered after 5:00 p.m., EST, shall be deemed delivered on the following Business Day.  Notwithstanding the foregoing, notice, consents, waivers or other communications referred to in this Agreement may be sent by facsimile, e-mail, or other method of delivery, but shall be deemed to have been delivered only when the sending party has confirmed (by reply e-mail or some other form of written confirmation) that the notice has been received by the other party.  The addresses and facsimile numbers for such communications shall be as set forth below, unless such address or information is changed by a notice conforming to the requirements hereof.  No notice to or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in similar or other circumstances:

If to any Credit Party:	Sack Lunch Productions, Inc.
	59 West 100 South, 2nd Floor
	Salt Lake City, UT 84101
	Attention:	Richard Suber, CEO
	E-Mail:	richard@sacklunchproductions.com
With a copy to:	Michael Golightly, Esq.
	59 West 100 South, 2nd Floor
	Salt Lake City, UT 84101
	E-Mail:    mikegolite@hotmail.com
If to the Lender:	TCA Global Credit Master Fund, LP
	3960 Howard Hughes Parkway, Suite 500
	Las Vegas, Nevada 89169
	Attention:	Robert Press, Director
	E-Mail:	bpress@tcaglobalfund.com
With a copy to:	TCA Global Credit Master Fund, LP
	19950 W. Country Club Dr., First Floor
	Aventura, FL 33180
	Attention: Robert Press, Director
	E-Mail: bpress@tcaglobalfund.com
With a copy to:	David Kahan, P.A.
	6420 Congress Ave., Suite 1800
	Boca Raton, FL 33487
	Attention:	David Kahan, Esq.
	E-Mail:	david@dkpalaw.com

14.19 Indemnification.  As a material inducement for Lender to enter into this Agreement, the Credit Parties agree to defend, protect, indemnify and hold harmless Lender, and  

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its parent companies, Subsidiaries, Affiliates, divisions, and their respective attorneys, officers, directors, agents, shareholders, members, partners, employees, and representatives, and the predecessors, successors, assigns, personal representatives, heirs and executors of each of them (including those retained in connection with the transactions contemplated by this Agreement) (each, a “Lender Indemnitee” and collectively, the “Lender Indemnitees”) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, Proceedings, suits, claims, costs, expenses and distributions of any kind or nature (including the disbursements and the reasonable fees of counsel and paralegals for each Lender Indemnitee thereto throughout all trial and appellate levels, bankruptcy Proceedings, mediations, arbitrations, administrative hearings and at all other levels and tribunals), which may be imposed on, incurred by, or asserted against, any Lender Indemnitee (whether direct, indirect or consequential and whether based on any federal, state or local laws or regulations, including securities, Environmental Laws and commercial laws and regulations, under common law or in equity, or based on contract, tort, or otherwise) in any manner relating to or arising out of this Agreement or any of the Loan Documents, or any act, event or transaction related or attendant thereto, the preparation, execution and delivery of this Agreement and the Loan Documents, including the making or issuance and management of the Loans, the use or intended use of the proceeds of the Loans, the enforcement of Lender’s rights and remedies under this Agreement, the Loan Documents, the Promissory Note, any other instruments and documents delivered hereunder, or under any other agreement between Borrower and Lender.  To the extent that the undertaking to indemnify set forth in the preceding sentence may be unenforceable because it violates any law or public policy, the Credit Parties shall satisfy such undertaking to the maximum extent permitted by applicable law.  Any liability, obligation, loss, damage, penalty, cost or expense covered by this indemnity shall be paid to each Lender Indemnitee on demand, and, failing prompt payment, shall, together with interest thereon at the Default Rate from the date incurred by each Lender Indemnitee until paid by Borrower, be added to the Obligations of Borrower and be secured by the Collateral.  The provisions of this Section shall survive the satisfaction and payment of the other Obligations and the termination of this Agreement.

14.20 Release.  In consideration of the mutual promises and covenants made herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, each Credit Party hereby agrees to fully, finally and forever release and forever discharge and covenant not to sue the Lender Indemnitees, and each one of them, from any and all debts, fees, attorneys’ fees, liens, costs, expenses, damages, sums of money, accounts, bonds, bills, covenants, promises, judgments, charges, demands, claims, causes of action, Proceedings, suits, liabilities, expenses, obligations or contracts of any kind whatsoever, whether in law or in equity, whether asserted or unasserted, whether known or unknown, fixed or contingent, under statute or otherwise, from the beginning of time through the Effective Date, including any and all claims relating to or arising out of any financing transactions, credit facilities, notes, debentures, security agreements, and other agreements, including each of the Loan Documents, entered into by the Credit Parties with Lender and any and all claims that the Credit Parties do not know or suspect to exist, whether through ignorance, oversight, error, negligence, or otherwise, and which, if known, would materially affect their decision to enter into this Agreement or the related Loan Documents. The provisions of this Section shall survive the satisfaction and payment of the other Obligations and the termination of this Agreement. 

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14.21 Interpretation.  If any provision in this Agreement requires judicial or similar interpretation, the judicial or other such body interpreting or construing such provision shall not apply the assumption that the terms hereof shall be more strictly construed against one party because of the rule that an instrument must be construed more strictly against the party which itself or through its agents prepared the same.  The parties hereby agree that all parties and their agents have participated in the preparation hereof equally. 

14.22 Compliance with Federal Law.  The Credit Parties shall: (i) ensure that no Person who owns a controlling interest in or otherwise controls the Credit Parties is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury, included in any Executive Orders or any other similar lists from any Governmental Authority; (ii) not use or permit the use of the proceeds of the Loans to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, or any other similar national or foreign governmental regulations; and (iii) comply with all applicable Lender Secrecy Act (“BSA”) laws and regulations, as amended.  As required by federal law and Lender’s policies and practices, Lender may need to obtain, verify and record certain customer identification information and documentation in connection with opening or maintaining accounts or establishing or continuing to provide services. 

14.23 Consents.  With respect to any provisions of this Agreement or any other Loan Documents which require the consent or approval of Lender, unless expressly otherwise provided in any such provision, such consent or approval may be granted, conditioned, or withheld by Lender in its sole and absolute discretion.  In any event, when any consent or approval of Lender is required under this Agreement or any other Loan Documents, the Credit Parties shall not be entitled to make any claim for, and the Credit Parties hereby expressly waives any claim for, damages incurred by the Credit Parties by reason of Lender’s granting, conditioning or withholding any such consent or approval, and the Credit Parties’ sole and absolute remedy with respect thereto shall be an action for specific performance.  To the extent any consent or approval is given by Lender under any provision hereunder or under any other Loan Documents, such consent or approval shall only be applicable to the specific instance to which it relates and shall not be deemed to be a continuing or future consent or approval, and any such consent or approval shall not impose any liability or warranty obligation on the Lender. 

14.24 Non-U.S. Status. THE LENDER IS A NON-U.S. PERSON AS THAT TERM IS DEFINED IN THE UNITED STATES INTERNAL REVENUE CODE. IT IS HEREBY AGREED AND UNDERSTOOD THAT THE OBLIGATIONS HEREUNDER MAY BE SOLD OR RESOLD ONLY TO NON-U.S. PERSONS. THE INTEREST PAYABLE HEREUNDER IS PAYABLE ONLY OUTSIDE THE UNITED STATES. ANY U.S. PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAW. 

14.25 Escrow for Auditors Fees, Filing Fees, and Other Liens/UCC Filings. 

(a)Credit Parties have disclosed to Lender that the Credit Parties have certain outstanding current and anticipated obligations as follows: (i) anticipated obligations for auditor’s fees due to Sadler, Gibb, & Associates LLC in connection with the completion of Credit  

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Parties’ financial statements for the years of 2014 and 2015, in an anticipated approximate amount of $150,000 (the “Auditor’s Fee Obligations”); (ii) anticipated obligations for legal and filing fees due in connection with the filing of S-1 and/or Form 10 Registration Statements in an anticipated approximate amount of $30,000 (the “Filing Fee Obligations”); (iii) outstanding obligations owing by Landis Salons, Inc. and Landis Salons II, Inc. to American Express Bank, FSB and secured by UCC-1 Financing Statements filed in the State of Utah under Filing Nos. 454679201451 and 465007201533, having an approximate outstanding balance of $188,000 (the “Amex Obligations”); (the Auditor’s Fee Obligations, the Filing Fee Obligations, and the Amex Obligations are sometimes collectively referred to as the “Credit Party Obligations”.  In this regard, in connection with the funding of the Initial Loan hereunder on the Effective Date, the Lender shall fund and disburse the full amount of the Initial Loan; provided, however, the Escrow Agent shall withhold, from the Initial Loan proceeds, an amount on account of the Auditor’s Fee Obligations of $150,000 (the “Auditor’s Fee Obligations Withheld Amount”), an amount on account of the Filing Fee Obligations of $30,000 (the “Filing Fee Obligations Withheld Amount”), an amount on account of the Amex Obligations of $188,000 (the “Amex Obligations Withheld Amount”) (the Auditor’s Fee Obligations Withheld Amount, the Filing Fee Obligations Withheld Amount, and the Amex Obligations Withheld Amount are sometimes collectively referred to herein as the “Withheld Amounts”). The Withheld Amounts shall be held by David Kahan, P.A., as “Escrow Agent” hereunder, and shall only be released in accordance with the terms and provisions set forth in this Section 14.25 and Section 14.26 below. The Credit Parties acknowledge and agree that the Withheld Amounts shall be deemed to be disbursed as of the Effective Date and shall thus accrue interest as of the Effective Date in accordance with this Agreement and the other Loan Documents.

(b)The Withheld Amounts shall be released as follows: 

(i) With regards to the Auditor’s Fee Obligations, $75,000 of the Auditor’s Fee Obligations Withheld Amount shall be paid to such auditor on the Effective Date.  Thereafter, if, as, and when the Credit Parties incur and are billed for the remaining Auditor’s Fee Obligations, or any portion thereof, the Credit Parties shall timely pay any such billing and promptly thereafter provide to Lender and Escrow Agent evidence of payment thereof satisfactory to Lender. Upon receipt of such evidence of payment acceptable to Lender, so long as no Event of Default under this Agreement or any other Loan Documents exists, and so long as no event has occurred that, with the passage of time, the giving of notice, or both, would constitute an Event of Default under this Agreement or any other Loan Documents, Lender shall then direct and authorize Escrow Agent to release to the Credit Parties, from the then remaining Auditor’s Fee Obligations Withheld Amount, the amount paid by the Credit Parties, and evidenced by the payment evidence provided to Lender hereunder. 

(ii) With regards to the Filing Fee Obligations, if, as, and when the Credit Parties incur and are billed for the Filing Fee Obligations, or any portion thereof, the Credit Parties shall timely pay any such billing and promptly thereafter provide to Lender and Escrow Agent evidence of payment thereof satisfactory to Lender. Upon receipt of such evidence of payment acceptable to Lender, so long as no Event of Default under this Agreement or any other Loan Documents exists, and so long as no event has occurred that, with the passage of time, the giving of notice, or both, would constitute an Event of Default under this Agreement or any other Loan Documents, Lender shall then direct and authorize Escrow Agent to release to the Credit  

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Parties, from the Filing Fee Obligations Withheld Amount, the amount paid by the Credit Parties, and evidenced by the payment evidence provided to Lender hereunder.

(iii) With regards to the Amex Obligations, the Credit Parties shall pay and satisfy same in full within thirty (30) days from the Effective Date.  Upon payment of the Amex Obligations within the time frames required hereby, the Credit Parties shall provide to Lender and Escrow Agent: (A) evidence of payment thereof satisfactory to Lender; and (B) file-stamped terminations of any UCC-1 Financing Statements applicable to the Amex Obligations, filed in the appropriate jurisdictions of record. Upon receipt of such evidence of payment and UCC terminations acceptable to Lender, so long as no Event of Default under this Agreement or any other Loan Documents exists, and so long as no event has occurred that, with the passage of time, the giving of notice, or both, would constitute an Event of Default under this Agreement or any other Loan Documents, Lender shall then direct and authorize Escrow Agent to release to the Credit Parties, from the Amex Obligations Withheld Amount, the amount paid by the Credit Parties for such obligations, and evidenced by the payment evidence provided to Lender hereunder.  In the event the Credit Parties fail to pay the Amex Obligations and obtain UCC terminations applicable thereto within the thirty (30) day period set forth herein, and provide evidence thereof to Lender as required hereby, then such failure shall constitute an Event of Default under this Agreement, and in any such event, the Lender may, in its sole discretion, use and pay the Amex Obligations Withheld Amount, and elect to apply same to the Obligations hereunder, or otherwise to pay same, or any portion thereof as Lender may negotiate, in its sole and absolute discretion, to the holder of these obligations in satisfaction of same. 

(iv) Until the Withheld Amounts are each fully disbursed to the applicable Persons in accordance with this Section 14.25, all Withheld Amounts shall be additional security for all Obligations of the Credit Parties to Lender under this Agreement and all other Loan Documents, and be secured by the Security Agreements and other applicable Loan Documents, and in that regard, in the event, prior to disbursement of the Withheld Amounts as hereby contemplated, if an Event of Default shall occur under this Agreement or any other Loan Documents, then notwithstanding anything to the contrary contained in this Section 14.25,  Lender may, in its sole discretion, direct the Escrow Agent to disburse the Withheld Amounts, or any portion thereof then in Escrow Agent’s possession, to Lender to be applied against the Obligations hereunder.  In addition, in the event: (A) the Credit Party Obligations are not resolved as contemplated above in this Section 14.25 within the time frames required hereby; or (B) at any time, any action is taken or commenced by any of the holders of the Credit Party Obligations to enforce any rights they may have in connection with such Credit Party Obligations, any such event shall constitute an Event of Default under this Agreement, and in any such event, the Lender may, in its sole discretion, use and pay the Withheld Amounts, and elect to apply same to the Obligations hereunder, or otherwise to pay same, or any portion thereof as Lender may negotiate, in its sole and absolute discretion, to any of the holders of the Credit Party Obligations in satisfaction of same.  In addition, if the requirements to disburse any Withheld Amounts, as applicable, are satisfied hereunder, and the applicable Withheld Amount thereof is disbursed by Escrow Agent hereunder, and such Withheld Amount disbursed is less than the Withheld Amount held by Escrow Agent hereunder, then any such excess, as applicable with respect to each Withheld Amount, shall be disbursed to the Credit Parties provided the underlying obligation for which the Withheld Amount was withheld has been paid and satisfied in full, and only so long as no Event of Default under this Agreement or any other Loan Documents exists, and so long as no event has occurred  

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that, with the passage of time, the giving of notice, or both, would constitute an Event of Default under this Agreement or any other Loan Documents.

14.26 Matters Relating to Escrow Agent. 

(a)The Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no implied duties or obligations shall be read into this Agreement against the Escrow Agent.  Escrow Agent agrees to hold the Withheld Amounts (the “Escrowed Property”) in a non-interest bearing account and to release same only in accordance with the terms and conditions set forth in this Agreement and only upon a written direction from Lender. 

(b)The Escrow Agent may act in reliance upon any writing or instrument (including e-mail) or signature which it, in good faith, believes to be genuine, may assume the validity and accuracy of any statement or assertion contained in such a writing or instrument, and may assume that any Person purporting to give any writing, notice, advice or instructions in connection with the provisions hereof has been duly authorized to do so. The Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to form, manner, and execution, or validity of any instrument deposited in this escrow or given to Escrow Agent under this Agreement, nor as to the identity, authority, or right of any Person executing the same; and its duties hereunder shall be limited to the safekeeping of the Escrowed Property, and for the disposition of the same in accordance with this Agreement.  Escrow Agent shall not be deemed to have knowledge of any matter or thing unless and until Escrow Agent has actually received written notice of such matter or thing and Escrow Agent shall not be charged with any constructive notice whatsoever. 

(c)Escrow Agent shall hold in escrow, pursuant to this Agreement, the Escrowed Property actually delivered and received by Escrow Agent hereunder, and Escrow Agent shall not be obligated to ascertain the existence of (or initiate recovery of) any other property other than property actually received by Escrow Agent.  If all or any portion of the Escrowed Property is in the form of a check or in any other form other than cash, Escrow Agent shall deposit same as required but shall not be liable for the nonpayment thereof, nor responsible to enforce collection thereof.  Escrow Agent shall not be liable for failure of any financial institution where the Escrowed Property is deposited. 

(d)In the event instructions from Lender, any Credit Parties, or any other Person would require Escrow Agent to expend any monies or to incur any cost, Escrow Agent shall be entitled to refrain from taking any action until it receives payment for such costs.  It is agreed that the duties of Escrow Agent are purely ministerial in nature and shall be expressly limited to the safekeeping of the Escrowed Property and for the disposition of same in accordance with this Agreement.  The Credit Parties and Lender, jointly and severally, each hereby indemnifies Escrow Agent and holds it harmless from and against any and all claims, actions, liabilities, costs and other expenses of any nature or kind, which it may incur or with which it may be threatened, directly or indirectly, including all attorneys’ fees and costs of litigation, arising from or in any way connected with this Agreement or which may result from Escrow Agent’s following of instructions from Lender in accordance with this Agreement, except those arising as a result of Escrow Agent’s gross negligence or willful misconduct.  Escrow Agent shall be vested with a lien on all Escrowed Property under the terms of this Agreement, for indemnification,  

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attorneys’ fees, court costs and all other costs and expenses arising from any such claims or expenses, interpleader or otherwise, or other expenses, fees or charges of any character or nature, which may be incurred by Escrow Agent by reason of disputes arising between the Lender and the Credit Parties, or any other Person, as to the correct interpretation of this Agreement, and instructions given to Escrow Agent hereunder, or otherwise, with the right of Escrow Agent, regardless of the instruments aforesaid and without the necessity of instituting any proceeding, to hold any property hereunder until and unless said additional expenses, fees and charges shall be fully paid. Any fees and costs charged by the Escrow Agent for serving hereunder shall be paid by the Credit Parties.

(e)In the event Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from Lender, the Credit Parties or from any other Person with respect to the Escrowed Property, which, in Escrow Agent’s sole opinion, are in conflict with each other or with any provision of this Agreement, Escrow Agent shall be entitled to refrain from taking any action until it shall be directed otherwise in writing by Lender and the Credit Parties and said other Persons, if any, or by a final order or judgment of a court of competent jurisdiction.  If any of the parties shall be in disagreement about the interpretation of this Agreement, or about the rights and obligations, or the propriety of any action contemplated by the Escrow Agent hereunder, the Escrow Agent may, at its sole discretion, deposit the Escrowed Property with a court having jurisdiction over this Agreement, and, upon notifying all parties concerned of such action, all liability on the part of the Escrow Agent shall fully cease and terminate. The Escrow Agent shall be indemnified by the Lender and the Credit Parties for all costs, including reasonable attorneys’ fees, in connection with the aforesaid proceeding, and shall be fully protected in suspending all or a part of its activities under this Agreement until a final decision or other settlement in the proceeding is received.  In the event Escrow Agent is joined as a party to a lawsuit by virtue of the fact that it is holding the Escrowed Property, Escrow Agent shall, at its sole option, either: (i) tender the Escrowed Property in its possession to the registry of the appropriate court; or (ii) disburse the Escrowed Property in its possession in accordance with the court’s ultimate disposition of the case, and Lender and the Credit Parties hereby, jointly and severally, indemnify and hold Escrow Agent harmless from and against any damages or losses in connection therewith including, but not limited to, reasonable attorneys’ fees and court costs at all trial and appellate levels. 

(f)The Escrow Agent may consult with counsel of its own choice (and the costs of such counsel shall be paid by the Credit Parties and Lender) and shall have full and complete authorization and protection for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel. The Escrow Agent shall not be liable for any mistakes of fact or error of judgment, or for any actions or omissions of any kind, unless caused by its willful misconduct or gross negligence. 

(g)The Escrow Agent may resign upon ten (10) days’ written notice to the parties in this Agreement.  If a successor Escrow Agent is not appointed by the Lender and Credit Parties within this ten (10) day period, the Escrow Agent may petition a court of competent jurisdiction to name a successor. 

(h)Conflict Waiver. The Credit Parties hereby acknowledge that the Escrow Agent is counsel to the Lender in connection with the transactions contemplated and referred  

69

herein. The Credit Parties agree that in the event of any dispute arising in connection with this Agreement or otherwise in connection with any transaction or agreement contemplated and referred herein, the Escrow Agent shall be permitted to continue to represent the Lender and the Credit Parties will not seek to disqualify such counsel and waives any objection the Credit Parties might have with respect to the Escrow Agent acting as the Escrow Agent pursuant to this Agreement.  The Lender and the Credit Parties acknowledge and agree that nothing in this Agreement shall prohibit Escrow Agent from: (i) serving in a similar capacity on behalf of others; or (ii) acting in the capacity of attorneys for one or more of the parties hereto in connection with any matter.

[REMAINDER OF PAGE LEFT BLANK, SIGNATURE PAGE FOLLOWS]

70

IN WITNESS WHEREOF, Borrower and Lender have executed this Credit Agreement as of the date first above written.

BORROWER:

SACK LUNCH PRODUCTIONS, INC.,

a Utah corporation

By:___/s/ Richard Surber_________________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by Richard Surber, who is the CEO of Sack Lunch Productions, Inc., a Utah corporation, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly___________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

LENDER:

TCA GLOBAL CREDIT MASTER FUND, LP

By: TCA Global Credit Fund GP, Ltd. 

Its: General Partner 

By:_/s/ Robert Press______________ 

Name:Robert Press 

Title:Director 

71

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

GREEN ENDEAVORS, INC.,

a Utah corporation

By:/s/ Richard Surber___________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by Richard Surber, who is the CEO of Green Endeavors, Inc., a Utah corporation, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly_______________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

72

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

LANDIS SALONS, INC.,

a Utah corporation

By:/s/ Richard Surber__________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by Richard Surber, who is the President of Landis Salons, Inc., a Utah corporation, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly_________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

73

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

LANDIS SALONS II, INC.,

a Utah corporation

By:_/s/ Richard Surber___________________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by Richard Surber, who is the President of Landis Salons II, Inc., a Utah corporation, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly__________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

74

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

DIVERSIFIED MANAGEMENT SERVICES,

INC., a Utah corporation

By:_/s/ Richard Surber________________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by Richard Surber, who is the President of Diversified Management Services, Inc., a Utah corporation, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly______________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

75

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

WASATCH CAPITAL CORPORATION,

a Utah corporation

By:_/s/ Richard Surber__________________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by Richard Surber, who is the President of Wasatch Capital Corporation, a Utah corporation, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly_____________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

76

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

DOWNTOWN DEVELOPMENT CORPORATION,

a Utah corporation

By:_/s/ Richard Surber________________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by Richard Surber, who is the President of Downtown Development Corporation, a Utah corporation, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly_____________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

77

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

WG PRODUCTIONS COMPANY,

a Utah corporation

By:_/s/ Richard Surber________________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by Richard Surber, who is the President of WG Productions Company, a Utah corporation, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly_____________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

78

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

LANDIS EXPERIENCE CENTER, LLC,

a Utah limited liability company

By:_/s/ Richard Surber________________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by Richard Surber, who is the Manager of Landis Experience Center, LLC, a Utah limited liability company, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly____________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

79

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

SLIDE THE CITY, LLC,

a Utah limited liability company

By:_/s/ David Wulf________________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by David Wulf, who is the Manager of Slide the City, LLC, a Utah limited liability company, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly_____________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

80

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

SLIDE THE CITY FRANCHISING, LLC,

a Utah limited liability company

By:_/s/ David Wulf__________________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by David Wulf, who is the Manager of Slide the City Franchising, LLC, a Utah limited liability company, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly_____________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

81

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

LANTERN FEST, LLC,

a Utah limited liability company

By:_/s/ David Wulf__________________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by David Wulf, who is the Manager of Lantern Fest, LLC, a Utah limited liability company, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly_____________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

82

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

REDLINE ENTERTAINMENT, INC.,

a Utah corporation

By:_/s/ Richard Surber________________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by Richard Surber, who is the President of Redline Entertainment, Inc., a Utah corporation, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly_____________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

83

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

SLIDE THE CITY CANADA, LLC,

a Utah limited liability company

By:_/s/ David Wulf__________________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by David Wulf, who is the Manager of Slide the City Canada, LLC, a Utah limited liability company, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly_____________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

84

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

SPRINGBOK HOLDINGS, LLC,

a Utah limited liability company

By:_/s/ Richard Surber_______________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by Richard Surber, who is the Manager of Springbok Holdings, LLC, a Utah limited liability company, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly_______________________________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

85

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

COLOR ME RAD, LLC,

a Utah limited liability company

By:_/s/ Richard Surber________________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by Richard Surber, who is the Manager of Color Me Rad, LLC, a Utah limited liability company, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly____________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

86

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

THE DIRTY DASH, LLC,

a Utah limited liability company

By:_/s/ Richard Surber_____________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by Richard Surber, who is the Manager of The Dirty Dash, LLC, a Utah limited liability company, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly_____________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

87

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

SPRINGBOK SLIDE THE CITY, LLC,

a Utah limited liability company

By:/s/ Richard Surber______________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by Richard Surber, who is the Manager of Springbok Slide the City, LLC, a Utah limited liability company, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly____________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

88

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

SPRINGBOK FRANCHISING, LLC,

a Utah limited liability company

By:_/s/ Richard Surber_______________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by Richard Surber, who is the Manager of Springbok Franchising, LLC, a Utah limited liability company, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21, 2018

_/s/ Michael Golightly____________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

89

CONSENT AND AGREEMENT

The undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said senior secured credit facility agreement.

GUARANTOR:

SPRINGBOK MANAGEMENT, LLC,

a Utah limited liability company

By:_/s/ Richard Surber______________ 

Name:

Title:

STATE OF UTAH_______) 

 SS.

COUNTY OF SALT LAKE_) 

The foregoing instrument was acknowledged before me this 13^th day of October, 2015 by Richard Surber, who is the Manager of Springbok Management, LLC, a Utah limited liability company, on behalf of such entity.  He/She is personally known to me or has produced __________________________ as identification.

My Commission Expires: Jan. 21. 2018

_/s/ Michael Golightly_____________________

Notary Public

_________________________________________ 

Name of Notary typed or printed 

90

INDEX OF EXHIBITS

Exhibit AForm of Compliance Certificate 

Exhibit BForm of Guaranty (Corporate) 

Exhibit CForm of Irrevocable Transfer Agent Instructions 

Exhibit DForm of Pledge Agreements 

Exhibit EForm of Promissory Note 

Exhibit F-1Form of Security Agreement (Borrower) 

Exhibit F-2Form of Security Agreement (Guarantor) 

Exhibit GForm of Validity Certificate 

INDEX OF SCHEDULES

Schedule 7.1Subsidiaries 

Schedule 7.4Capitalization 

Schedule 7.18(a)Real Property 

Schedule 7.18(b)Credit Party Leases in Negotiation 

Schedule 7.21IP Rights 

Schedule 7.28 Bank Accounts and Deposit Accounts 

Schedule 7.29 Places of Business 

Schedule 7.33Lender Approved Finder’s Fees 

Schedule 9.3Improvements to Credit Party Leases 

Schedule 10.8Point of Sale Systems 

91

EX1A-7 ACQ AGMT

EX1A-11 CONSENT

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Sack Lunch Productions, Inc.

We consent to the inclusion in this Offering Statement of Sack Lunch Productions, Inc. (the “Company”) on Form 1-A/A of our report dated June 27, 2017, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern, with respect to our audits of the consolidated financial statements of Sack Lunch Productions, Inc. as of December 31, 2016 and 2015 and for the years then ended.  We also consent to the reference of our Firm under the caption “interests of named experts and counsel” in such Offering Circular.

/s/ Sadler, Gibb & Associates, LLC

Salt Lake City, UT

September 26, 2017

EX1A-12 OPN CNSL

 

September 26, 2017

Sack Lunch Productions, Inc.

59 West 100 South, 2^nd Floor

Salt Lake City, UT 84101

Re:Sack Lunch Productions, Inc. Registration Statement on Form 1-A for an offering by certain of the Company’s shareholders of up to 2,400,000 shares of Series E Convertible Preferred Stock 

Ladies and Gentlemen:

We have acted as counsel to Sack Lunch Productions, Inc., a Utah corporation (the “Company”), in connection with the proposed offering by the Company of up to 2,400,000 shares of the Company’s Series E Convertible Preferred Stock (the “Securities”), and the shares of common stock into which the Securities may convert, pursuant to the Company's Offering Statement on Form 1-A (the “Offering Statement”) filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Act”). 

We have reviewed the Company's charter documents, the Offering Statement and the corporate proceedings taken by the Company in connection with the offer, issuance and sale of the Securities.  In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as copies and the authenticity of the original of such copies.  

Based on such review, we are of the opinion that the Securities and the common stock into which the Securities may convert have been duly authorized and will be, when issued in the manner described in the Offering Statement, legally issued, fully paid and nonassessable. No opinion is being rendered hereby with respect to the truthfulness, accuracy or completeness of the Offering Statement or any portion thereof.

We consent to the filing of this opinion letter as an exhibit to the Offering Statement.   

This opinion letter is rendered as of the date first written above and we disclaim any obligation to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinion expressed herein.  Our opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other matters relating to the Company or the Securities. 

Very truly yours, 

CLYDE SNOW & SESSIONS 

/s/ Brian A. Lebrecht 

Brian A. Lebrecht