U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number: 333-121787

HPIL HOLDING

(Exact name of registrant as specified in its charter)

7075 Gratiot Road, Suite One, Saginaw, MI 48609

(Address of principal executive offices)

(248) 750-1015

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No ¨ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes x  No ¨ 

Check whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Check whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨    No  x 

As of July 15, 2015, there were 57,698,000 shares of common stock, par value $0.0001, issued and outstanding.

HPIL HOLDING

FORM 10-Q

INDEX

PART I---FINANCIAL INFORMATION

Item 1. Financial Statements.

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

NOTE 1 – NATURE OF BUSINESS, BASIS OF PRESENTATION AND GOING CONCERN

Nature of Operations and Going Concern

HPIL Holding (referred to in this report as “HPIL”, the “Company”, “us”, “our” or “we”) (formerly Trim Holding Group) was incorporated on February 17, 2004 in the state of Delaware under the name TNT Designs, Inc. A substantial part of the Company’s activities were involved in developing a business plan to market and distribute fashion products.  On June 16, 2009, the majority interest in the Company was purchased in a private agreement by Mr. Louis Bertoli, an individual, with the objective to acquire and/or merge with other businesses. On October 7, 2009, the Company merged with and into Trim Nevada, Inc., which became the surviving corporation.  The merger did not result in any change in the Company’s management, assets, liabilities, net worth or location of principal executive offices. However, this merger changed the legal domicile of the Company from Delaware to Nevada where Trim Nevada, Inc. was incorporated.  Each outstanding share of TNT Designs, Inc. was automatically converted into one share of the common stock of Trim Nevada, Inc. Pursuant to the merger, the Company changed its name from TNT Designs, Inc. to Trim Holding Group and announced the change in the Company’s business focus to health care and environmental quality sectors. Afterwards the Company determined it no longer needed its inactive subsidiaries, and as such, all three subsidiaries were dissolved. On May 21, 2012, the Company changed its name to HPIL Holding.

HPIL Holding intends that its main activity will be in the business of investing in differing business sectors. To begin the implementation of the business plan, on September 10, 2012, the Company organized six new subsidiary companies. Each of these subsidiary companies was wholly (100%) owned by the Company. The names of the new subsidiary companies were HPIL HEALTHCARE Inc., HPIL ENERGYTECH Inc., HPIL WORLDFOOD Inc., HPIL REAL ESTATE Inc., HPIL GLOBALCOM Inc. and HPIL ART&CULTURE Inc. (collectively, the “Subsidiaries” and, each individually a “Subsidiary”) These companies were organized to implement the various growth strategies of the Company. 

On May 27, 2015, the Company entered into a Plan of Merger (the “Plan of Merger”) with its Subsidiaries in an effort to consolidate and simplify the Company’s operations and accounting practices.  In accordance with the Plan of Merger, Articles of Merger were completed, executed, and filed with the Nevada Secretary of State making the merger effective as of May 28, 2015 (the “Merger Effective Date”).  Pursuant to the terms of the Plan of Merger, as of the Merger Effective Date, all shares of each Subsidiary were canceled and each Subsidiary merged with and into the Company and ceased to exist, with the Company remaining as the sole surviving entity.  As a result of the merger, the Company is the successor to all rights and obligations of each of the Subsidiaries.  We do not expect the merger to materially affect our business plan or the Company’s continued pursuit thereof.

The concentration of the Company has become the development of the IFLOR Business to produce a “Massage Vibrator for the Relief of Aches and Pain” product, the IFLOR Stimulating Massage Device (the “IFLOR Device”). The Company is in the process of completing production of IFLOR Device - Standard Version samples and packaging mock ups in connection with the Product Reseller Agreement (as defined in Note 7).  During December 2014, the Company began the study and development of the IFLOR Device - Plus Version, and the Company expects to begin design, molding, product samples and packaging mock ups for marketing testing during 2015. Due to various circumstances, such as the unknown definitive completion date of product sample manufacturing and ongoing evaluations being conducted by the Company regarding our prior marketing efforts, expected product demand, product manufacturing and rollout schedules, the Company cannot currently determine with confidence when the Company expects to commence operations with respect to production of the IFLOR Device.

As of June 30, 2015, the Company has yet to commence substantial operations. In the course of its start-up activities, the Company has sustained operating losses and expects to incur operating losses in 2015.  The Company has generated a limited amount of revenue and has not achieved profitable operations or positive cash flows from operations.  These factors and uncertainties raise substantial doubt about the Company's ability to continue as a going concern.

The Company will continue targeting sources of additional financing and opportunities to produce profitable revenue streams, whether through sole or joint ventures, to provide for the continuation of its operations.  The Company is also prepared to re-evaluate its expense load, if necessary, to determine whether any efficiency can be achieved prior to the commencement of substantial operations related to the Product Reseller Agreement or other potential operations identified by the Company.  Additionally, the Company’s majority stockholder has indicated his ability to provide financial support to the Company for the continuation of its operations, should it be necessary.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

These unaudited condensed consolidated interim financial statements are presented in accordance with accounting principles generally accepted in the United Stated (“GAAP”), and are expressed in United States dollars.  These unaudited condensed consolidated interim financial statements include the accounts of HPIL Holding and HPIL HEALTHCARE Inc., HPIL ENERGYTECH Inc., HPIL WORLDFOOD Inc., HPIL REAL ESTATE Inc., HPIL GLOBALCOM Inc., and HPIL ART AND CULTURE Inc. (formerly wholly owned subsidiaries of the Company that have been merged with and into the Company effective as of May 28, 2015).  All inter-company balances and transactions have been eliminated on consolidation.

Unaudited Condensed Consolidated Interim Financial Statements

These unaudited condensed consolidated interim financial statements have been prepared on the same basis as the annual financial statement and should be read in conjunction with those annual financial statements filed on Form 10-K for the year ended December 31, 2014.  In the opinion of management, these unaudited condensed consolidated interim financial statements reflect adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown.  The results of operations for such periods are not necessarily indicative of the results for a full year or for any future period.

Investment in Unconsolidated Affiliate

The Company utilizes the equity method of accounting, as prescribed by ASC Topic 323 “Investments – Equity Method and Joint Ventures”, when it is able to exercise significant influence over the entity’s operations, which generally occurs when HPIL has an ownership interest of between 20% and 50% in an entity.  The cost method of accounting is used when the Company does not exercise significant influence, generally when the Company has an ownership interest of less than 20%. The Company’s 32% investment in Haesler Real Estate Management SA (“HREM”) is accounted for under the equity method of accounting. As of June 30, 2015, the carrying amount of the investment is equal to the Company’s equity interest of the carrying amount of the net assets of HREM.

Inventory

               Inventory is stated at the lower of cost or market determined using the first-in, first-out method. Inventory is periodically reviewed for use and obsolescence, and adjusted as necessary. Inventory consists of IFLOR Device - Standard Version units.

Equipment

The Company’s equipment consists of molds and designs not yet being used in operations at June 30, 2015.  Once placed into operations, the Company will depreciate these assets over their estimated useful lives, expected to range between 5 and 10 years. For the periods ended June 30, 2015 and 2014, the Company has not recorded any depreciation expense related to these assets as they are not yet placed in service.

Impairment of long-lived assets

The Company follows the ASC 360, which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the assets’ carrying amount may not be recoverable. In performing the review for recoverability, if future discounted cash flows (excluding interest charges) from the use of ultimate disposition of the assets are less than their carrying values, an impairment loss represented by the difference between its fair value and carrying value, is recognized.

Research and Development

The Company is engaged in research and development in respect to the Company’s Brand License Agreement with World Traditional Fudokan Shotokan Karate-Do Federation (“WTFSKF”) and in respect to the Company’s product, IFLOR Device - Plus Version.  Research and development costs are charged as an operating expense as incurred. 

Revenue Recognition

Revenue is recognized when persuasive evidence that an arrangement or contract exists, delivery has occurred, the fees are fixed and determinable, and collectability is probable or certain.  Revenue from consulting services is recognized upon delivery of consulting services when persuasive evidence of an arrangement exists and collection of the related receivable is reasonably assured.

Net Loss per Share

Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of shares of common stock outstanding for the period.  Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period and the number of shares of common stock issuable upon assumed exercise of preferred stock provided the result is not anti-dilutive.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers.  This new standard provides guidance for the recognition, measurement and disclosure of revenue resulting from contracts with customers and will supersede virtually all of the current revenue recognition guidance under GAAP.  The standard is effective for the first interim period within annual reporting periods beginning after December 15, 2017.  The Company is currently evaluating the impact of the provisions of this new standard on our consolidated financial statements. 

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  This new standard provided guidance for the presentation of the disclosure of uncertainties about an Entity’s Ability to Continue as a Going Concern.  This standard is effective for annual periods beginning after December 15, 2016.  The Company is currently evaluating the impact of the new standard on our consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-05, Consolidation: Amendments to the Consolidation Analysis.  This new standard provided guidance regarding the consolidation of certain legal entities.  All legal entities are subject to revaluation under the revised consolidation method.  The standard is effective for fiscal periods beginning after December 15, 2015.  The Company is currently evaluating the impact of the new standard on our consolidated financial statements.

None of the other recently issued accounting pronouncements are expected to significantly affect the Company.

NOTE 3 – CAPITAL STOCK

On June 12, 2014, the Company entered into a Stock Purchase Agreement with an accredited investor, pursuant to which the Company agreed to sell and the investor agreed to purchase 50,000 shares of Convertible Preferred Stock Series 1 Class P-2 of the Company at the par value of $7.00 each for a total purchase price of $350,000.  On June 24, 2014, the Company issued the shares to the investor in exchange for the purchase price.  As provided in the articles of incorporation of the Company, the holders of the Convertible Preferred Stock Series 1 Class P-2 may convert, at any time, their preferred stock in whole or part, into shares of common stock of the Company. Each one (1) share of Preferred Stock Series 1 Class P-2 is convertible into one (1) share of common stock of the Company. This beneficial conversion feature (“BCF”) has an intrinsic value at the issuance date of $66,000, and is recorded as a preferred dividend to the preferred stockholder.  On December 15, 2014, the Company entered into an Amendment Agreement with an accredited investor amending the Stock Purchase Agreement entered into by the Company and Investor on June 12, 2014.  The Amendment Agreement adjusted the purchase price set forth in the Stock Purchase Agreement upward by the amount of $66,000, to a total purchase price of $416,000.  The Company has received the additional $66,000 of the purchase price from the Investor.  No additional shares were issued as a result of the Amendment Agreement. During 2014, the Preferred Shares were converted into 50,000 shares of common stock of the Company in accordance with the conversion rights of the Convertible Preferred Stock Series 1 Class P-2.

On December 29, 2014, the Company, entered into a Brand License Agreement with WTFSKF, a worldwide karate federation based in Switzerland.  Pursuant to the Brand License Agreement, WTFSKF has granted to the Company an exclusive, worldwide, transferrable license to use certain logos, names, and marks of WTFSKF, and manufacture and sell certain products (clothing, accessories and sporting goods) bearing the Marks.  Pursuant to the Brand License Agreement the Company will pay WTFSKF a license fee equal to 5% of the net selling price for the licensed products sold in accordance with the Brand License Agreement, and in addition as a partial consideration for the License, the Company issued to WTFSKF 752,000 shares of its treasury common stock on December 30, 2014 (see Note 6 for further discussion of the Brand License Agreement).

NOTE 4 - REVENUE

On June 10, 2014, HPIL ENERGYTECH Inc. (formerly a wholly owned subsidiary of the Company that has been merged with and into the Company effective as of May 28, 2015) entered into a Service and Consulting Agreement (the “O.R.C. Consulting Agreement”) with O.R.C. SRL, a private company focused on investing in the energy sector.  Pursuant to the O.R.C. Consulting Agreement, HPIL ENERGYTECH Inc. began providing to O.R.C. SRL certain consulting and other services on June 10, 2014, for a monthly fee in the amount of $30,000 per month.  The term of the O.R.C. Consulting Agreement was two (2) years unless terminated earlier by either party pursuant to the terms and conditions of the O.R.C. Consulting Agreement.  HPIL ENERGYTECH Inc. and O.R.C. SRL terminated the O.R.C. Consulting Agreement, effective March 10, 2015.  The O.R.C. Consulting Agreement was terminated because the parties determined that O.R.C. SRL no longer required the services to be delivered thereunder, and no services were provided in the month of February 2015.  The termination was mutual and without recourse or the incurrence of penalty by either party thereto.

On December 5, 2014, HPIL GLOBALCOM Inc. (formerly a wholly owned subsidiary of the Company that has been merged with and into the Company effective as of May 28, 2015) entered into a Service and Consulting Agreement (the “ET Consulting Agreement”) with ECOLOGY TRANSPORT SRL, a private company focused on investing in the communication and ecology sectors.  Pursuant to the ET Consulting Agreement, HPIL GLOBALCOM Inc. began providing to ECOLOGY TRANSPORT SRL certain consulting and other services on December 5, 2014, for a monthly fee in the amount of $5,000 per month.  The term of the ET Consulting Agreement was two (2) years unless terminated earlier by either party pursuant to the terms and conditions of the ET Consulting Agreement. HPIL GLOBALCOM Inc. and ECOLOGY TRANSPORT SRL terminated the O.R.C. Consulting Agreement, effective March 4, 2015.  The ET Consulting Agreement was terminated because the parties determined that ECOLOGY TRANSPORT SRL no longer required the services to be delivered thereunder and no services were provided in the month of February 2015.  The termination was mutual and without recourse or the incurrence of penalty by either party thereto.

NOTE 5 – RELATED PARTY TRANSACTIONS AND BALANCES

HPIL HEALTHCARE Inc. (formerly a wholly owned subsidiary of the Company that has been merged with and into the Company effective as of May 28, 2015) used the service of MB Ingenia SRL (“MB Ingenia”) for the production of the "Massage Vibrator for the Relief of Aches and Pain". HPIL HEALTHCARE Inc. made equipment purchases from MB Ingenia totaling $Nil for the six months ended June 30, 2015, and $24,194 for the six months ended June 30, 2014. HPIL HEALTHCARE Inc. made equipment purchases from MB Ingenia totaling $Nil for the three months ended June 30, 2015, and 2014. Mr. Bertoli was the President and CEO of MB Ingenia until November 28, 2013, at which time Mr. Bertoli’s brother became President and CEO of MB Ingenia. Mr. Bertoli also serves as an executive officer and director of the Company.

The Company had advances receivable from MB Ingenia of $183,605 as of June 30, 2015 and $241,746 as of December 31, 2014, for the production of the IFLOR Device - Standard Version units.  These advances have been classified as current as at June 30, 2015 and will be settled upon delivery of the IFLOR Device – Standard Version units within the next 12 months. The Company is in the process of completing production of the IFLOR Device - Standard Version samples and packaging mock ups in connection with the Product Reseller Agreement (as defined in the Note 7). During the three months and six months ended June 30, 2015, $58,141 of the advance was settled upon delivery of IFLOR Device units.

The Company uses MB Ingenia for various corporate business services, including technical support and engineering services, and use of office space by Mr. Bertoli.  For the six months ended June 30, 2015 and 2014, the Company incurred expenses of $27,229  and $24,910, respectively, in relation to these services. For the three months ended June 30, 2015 and 2014, the Company incurred expenses of $13,264 and $12,488, respectively, in relation to these services. For the six months ended June 30, 2015, and 2014 the Company incurred reimbursements for handling and storage expense of $8,158 and $Nil, respectively, in relation to these services provided by MB Ingenia to HPIL HEALHCARE Inc. For the three months ended June 30, 2015, and 2014 the Company incurred reimbursements for handling and storage expense of $8,158 and $Nil in relation to these services provided by MB Ingenia to HPIL HEALHCARE Inc. For the six months ended June 30, 2015, and 2014 the Company incurred research and developments costs of $17,544 and $Nil, respectively, in relation to these services provided by MB Ingenia to HPIL HEALHCARE Inc. For the three months ended June 30, 2015, and 2014 the Company incurred in research and developments costs of $17,544 and $Nil, respectively, in relation to these services provided by MB Ingenia to HPIL HEALHCARE Inc.

On July 20, 2009, the Company entered into a two-year consulting agreement with Amersey Investments LLC (“Amersey”), a company controlled by a director and the CFO of the Company, Mr. Nitin Amersey.  Amersey will continue to provide office space, office identity and assist the Company with corporate, financial, administrative and management records.  For the six months ended June 30, 2015 and 2014, the Company incurred expenses of $35,000  and $30,000, respectively, in relation to these services. For the three months ended June 30, 2015 and 2014, the Company incurred expenses of $15,000  in relation to these services. As at June 30, 2015, and December 31, 2014, $5,000 and $Nil, respectively, are recorded as prepaid expenses in the unaudited condensed consolidated interim balance sheet.

The Company uses Bay City Transfer Agency & Registrar Inc. (“BCTAR”) to do its stock transfers and corporate services.  Mr. Amersey is listed with the Securities and Exchange Commission as a control person of BCTAR.  For the six months ended June 30, 2015 and 2014, the Company incurred expenses of $8,388 and $3,147, respectively, in relation to these services. For the three months ended June 30, 2015 and 2014, the Company incurred expenses of $7,241 and $2,280, respectively, in relation to these services. As at June 30, 2015, and December 31, 2014, $1,200 and $1,700 are recorded as prepaid expenses in the unaudited condensed consolidated interim balance sheet.

The Company uses the services of Freeland Venture Resources LLC, for Edgar filings and consulting services.  Mr. Amersey is a control person in Freeland Venture Resources LLC.  For the six months ended June 30, 2015 and 2014, the Company incurred expenses of $5,435 and $7,610, respectively, in relation to these services. For the three months ended June 30, 2015 and 2014, the Company incurred expenses of $3,925 and $7,610, respectively, in relation to these services.

The Company uses the services of Cheerful Services International Inc. (“Cheerful”) for corporate press releases and consulting services.  Cheerful is owned by Mr. Amersey’s children. For the six months June 30, 2015 and 2014, the Company incurred expenses of $9,439 and $3,730, respectively, in relation to these services. For the three months June 30, 2015 and 2014, the Company incurred expenses of $5,760 and $3,730, respectively, in relation to these services. As at June 30, 2015, and December 31, 2014, $Nil and $545 are recorded as prepaid expenses in the unaudited condensed consolidated interim balance sheet.

NOTE 6 – BRAND LICENSE

On December 29, 2014, the Company, entered into a Brand License Agreement with World Traditional Fudokan Shotokan Karate-Do Federation (“WTFSKF”), a worldwide karate federation based in Switzerland.  Pursuant to the Brand License Agreement, WTFSKF has granted to HPIL the License to use the Marks of WTFSKF and manufacture and sell the Products bearing the Marks. Pursuant to the Brand License Agreement, in consideration for the License, beginning in 2018, HPIL will pay to WTFSKF an ongoing License Fee.  Additionally, HPIL issued to WTFSKF 752,000 shares of treasury common stock (the “Shares”) of HPIL in accordance with the Brand License Agreement. WTFSKF has agreed to provide to HPIL annual projected sales forecasts based on its membership and their expected needs for Products (the “Projected Sales”).  The Brand License Agreement requires the License Consideration to be subject to renegotiation by the parties in the event that Projected Sales exceed actual sales of the Products by more than an agreed upon deviation percentage.  Additionally, pursuant to the Brand License Agreement, HPIL may require WTFSKF to either return the Shares or pay to HPIL the market value of the Shares at the time of the execution of the Brand License Agreement (approximately $6,805,600), if HPIL terminates the Brand License Agreement as a result of such deviations within the first 52 months after the execution of the Brand License Agreement.  The initial term of the Brand License Agreement lasts until December 31, 2042, at which time the Brand License Agreement will automatically renew for successive 25 year terms unless and until either party provides notice of non-renewal or terminates the Brand License Agreement. The Brand License totaling $6,805,600 was measured based on the fair value of the stock issued.

The Company will amortize the license over the contractual life of the asset of 25 years. No amortization has been recognized as of June 30, 2015, as the Brand License Agreement does not commence until 2018.

NOTE 7 – COMMITMENTS

On October 9, 2014, HPIL HEALTHCARE Inc. entered into a Product Reseller Agreement (the “Product Reseller Agreement”) with WTFSKF (the Product Reseller Agreement remains an asset of the Company following the merger of HPIL HEALTHCARE Inc. with and into the Company effective as of May 28, 2015).  Pursuant to the Product Reseller Agreement, beginning in 2017, HPIL HEALTHCARE Inc. will supply its IFLOR Device - Standard Version to WTFSKF for resale exclusively at WTFSKF-sanctioned events and through the WTFSKF members and their official affiliates.  The initial term of the Product Reseller Agreement lasts until December 31, 2019, at which time the Agreement will automatically renew for 3 year terms unless and until either party provides notice of non-renewal or terminates the Product Reseller Agreement pursuant to the terms thereof.  Under the Product Reseller Agreement, WTFSKF has committed to order a minimum of 1,500,000 units of the IFLOR Device - Standard Version from January 1, 2017, through December 31, 2019, pursuant to annual purchase orders.  

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operation.

Forward Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  These forward-looking statements generally are identified by the words “believes”, “project”, “expects”, “anticipates”, “estimates”, “intends”, “strategy”, “plan”, “may”, “will”, “would”, “will be”, “will continue”, “will likely result”, and similar expressions.  We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements.  Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles.  These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.  We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.  Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Overview

HPIL Holding (herein referred to as “we”, “us”, “our”, or the “Company”) is an early stage company originally incorporated on February 17, 2004 in the state of Delaware under the name TNT Designs, Inc.  On October 7, 2009, we merged with and into Trim Nevada, Inc., a Nevada corporation, for the purpose of changing our domicile from Delaware to Nevada.  As part of the merger, we changed our name to Trim Holding Group.

On May 22, 2012, we changed our name to HPIL Holding to more fully reflect our current business operations.

On July 18, 2012, we changed our business plan.  We then began focusing on making investments in companies, whether they are public or private enterprises in differing business sectors, which continues to be a focus of the Company today.  The Company does not restrict the target companies to any specific business, industry or geographical location and thus seeks to acquire a variety of businesses.  Additionally, the Company evaluates the acquisition of intellectual properties and technologies for investment, with a particular interest in the healthcare and environmental quality sectors.  Such investments may be made in the United States and worldwide.

On September 10, 2012, the Company organized six new subsidiary companies.  Each of these subsidiary companies was wholly owned (100%) by the Company.  The names of the new subsidiary companies were HPIL HEALTHCARE Inc., HPIL ENERGYTECH Inc., HPIL WORLDFOOD Inc., HPIL REAL ESTATE Inc., HPIL GLOBALCOM Inc. and HPIL ART&CULTURE Inc.  These companies were organized with the intention of satisfying the various growth strategies of the Company.  Each of the subsidiary companies was merged with and into the Company effective as of May 28, 2015 (as more fully discussed below is subsection (c) of this Item 2, Material Transactions and Other Significant Business Transactions Overview).

On October 16, 2012, HPIL HEALTHCARE Inc. (formerly a wholly owned subsidiary of the Company that has been merged with and into the Company effective as of May 28, 2015) was approved to develop certain patents and related business and product owned by the Company related to a “Massage Vibrator for the Relief of Aches and Pain”, and to begin manufacture the Stimulating Massage Device in accordance with the patents.

On November 27, 2012, HPIL ART&CULTURE Inc. (formerly a wholly owned subsidiary of the Company that has been merged with and into the Company effective as of May 28, 2015) entered into a cooperation agreement with the World Traditional Fudokan Shotokan Karate-Do Federation (“WTFSKF”), a worldwide karate federation, to develop and cooperate to expand potential projects between the parties.  The cooperation agreement with WTFSKF expired according to its terms on November 27, 2014; however, the parties continue to follow the terms of the cooperation agreement.

On December 4, 2012, HPIL ART&CULTURE Inc. entered into a cooperation agreement with Social Art World Ltd., a private company focused on investing in the art sector. The parties will work cooperatively to develop and expand potential projects.  The December 2012 cooperation agreement has since expired according to its terms in December 2014 and has been replaced by a new cooperation agreement on substantially the same terms executed on December 1, 2014.  Mauro Falaschi, who served as a director of the Company from January 2015 until his resignation effective May 23, 2015, is the founder and currently the president, a director and major shareholder of SOCIAL ART WORLD Ltd.

On December 20, 2012, HPIL ENERGYTECH Inc. (formerly a wholly owned subsidiary of the Company that has been merged with and into the Company effective as of May 28, 2015) entered into a cooperation agreement with TrueSkill Energen Pvt. Ltd., a private limited company focused on marketing renewable energy products and solutions.  In accordance with the cooperation agreement, the parties will work cooperatively to develop and expand potential projects.  The December 2012 cooperation agreement has since expired according to its terms in December 2013 and the parties continued working together without an agreement in place until executing a new cooperation agreement on substantially the same terms on October 30, 2014.  The Company’s CFO is also the Chairman of the Board of TrueSkill Energen Pvt. Ltd.

On February 22, 2013, HPIL granted to HPIL HEALTHCARE Inc. an exclusive license to use the patents relating to the “Massage Vibrator for the Relief of Aches and Pain” for the production, use, or sale of the resulting products throughout the world and especially in countries where we own the patents rights.  The name of the initial product utilizing the patents rights is “IFLOR, Stimulating Massage Device” (the “IFLOR Device”), which the Company has authorized HPIL HEALTHCARE Inc. to develop, industrialize and manufacture.  During 2013, the Company did not record any carrying value for these patents rights.  However, during the fourth quarter of 2014, the Company determined that it was appropriate to assign a nominal value to the patents as an asset of the Company.  Therefore, the Company recorded a carrying value of $1.00 for the patents rights related to the IFLOR Business.  The license of the patent rights to HPIL HEALTHCARE Inc. was terminated as it was no longer necessary when HPIL HEALTHCARE Inc. was merged with and into the Company effective as of May 28, 2015.  HPIL continues to own the patent rights related to the IFLOR Business.

On August 20, 2013, HPIL GLOBALCOM Inc. (formerly a wholly owned subsidiary of the Company that has been merged with and into the Company effective as of May 28, 2015) entered into a cooperation agreement with 2Evolution Studios, a private company focused on investing in the communication sector, through which the parties agreed to work cooperatively to develop and expand potential projects.

On December 20, 2013, HPIL HEALTHCARE Inc. entered into a cooperation agreement with MB Ingenia SRL, a private company focused on investing in the healthcare and environmental sectors, through which the parties agreed to work cooperatively to develop and expand potential projects.  Mr. Louis Bertoli was the President and CEO of MB Ingenia SRL until November 28, 2013, at which time Mr. Louis Bertoli’s brother became President and CEO of MB Ingenia SRL. Mr. Louis Bertoli also serves as an executive officer and director of our Company.

On November 10, 2014, HPIL ENERGYTECH Inc. entered into a cooperation agreement with ECOVAL & CO. SRL, a private company focused on investing in the energy sector.  Pursuant to the cooperation agreement, the parties will work cooperatively to develop and expand potential projects.

On January 5, 2015, HPIL ENERGYTECH Inc. entered into a cooperation agreement with GINARES GROUP AG, a private company focused on providing independent global and local renewable energy solutions. Pursuant to the cooperation agreement, the parties will work cooperatively to develop and expand potential projects.

On January 15, 2015, HPIL HEALTHCARE Inc. entered into a cooperation agreement with COEUS TECHNOLOGY Inc., a private company focused on investing in the healthcare and environmental sectors.  Pursuant to the cooperation agreement, the parties will work cooperatively to develop and expand potential projects.

On March 23, 2015, HPIL ENERGYTECH Inc. entered into a cooperation agreement with ARBORWIND LLC, a private limited liability company focused on marketing renewable energy products and solutions.  Pursuant to the cooperation agreement, the parties will work cooperatively to develop and expand potential projects.

On May 27, 2015, the Company entered into a Plan of Merger (the “Plan of Merger”) with its six wholly owned subsidiaries (collectively, the “Subsidiaries” and, each individually a “Subsidiary”), HPIL HEALTHCARE Inc., HPIL ENERGYTECH Inc., HPIL WORLDFOOD Inc., HPIL REAL ESTATE Inc., HPIL GLOBALCOM Inc., and HPIL ART&CULTURE Inc. in an effort to consolidate and simplify the Company’s operations and accounting practices.  In accordance with the Plan of Merger, Articles of Merger were completed, executed, and filed with the Nevada Secretary of State making the merger effective as of May 28, 2015 (the “Merger Effective Date”).  Pursuant to the terms of the Plan of Merger, as of the Merger Effective Date, all shares of each Subsidiary were canceled and each Subsidiary merged with and into the Company and ceased to exist, with the Company remaining as the sole surviving entity.  As a result of the merger, the Company is the successor to all rights and obligations of each of the Subsidiaries.  We do not expect the merger to materially affect our business plan or the Company’s continued pursuit thereof.

We have continued to pursue our business plan of making investments in companies, as more particularly described in subsection (a) above, and expect that we will continue on that business plan for the foreseeable future.  Also, the Company will continue to concentrate on the development of the IFLOR Business line to produce the IFLOR Device.  We are currently in the advanced planning stages of our marketing efforts and hope to continue generating interest in the IFLOR Device through existing strategic cooperation agreements and other consumer outreach and feedback.  Design and initial molding of the IFLOR Device - Standard Version is now complete and we have engaged an initial manufacturer to make product samples related to both the Product Reseller Agreement we executed with WTFSKF in October 2014 (the “Product Reseller Agreement”) and for further marketing and testing purposes.

Pursuant to the Product Reseller Agreement with WTFSKF, we will supply a total of 1,500,000 units of the IFLOR Device - Standard Version over a three (3) year period beginning in January of 2017.  To meet the initial orders expected under the Product Reseller Agreement, we believe it will be necessary to commence production of the IFLOR Device - Standard Version no later than the second quarter of 2016.  Over the next approximately four (4) months, we plan to finalize the IFLOR Device - Standard Version model and related graphic design and packaging that will be sold under the Product Reseller Agreement and present samples to the purchaser for final approval prior to manufacturing.  During the three months ended June 30, 2015, we received an initial shipment of the IFLOR Device - Standard Version samples from our manufacturer, MB Ingenia SRL.  These samples are intended for continued market testing in connection with the Product Reseller Agreement.

Despite the execution of the Product Reseller Agreement, we intend to continue developing potential customer relationships and anticipate pursuing additional potential customer orders for the IFLOR Device through the remainder of 2015.  In addition, we continue our evaluations of the results of our past marketing efforts, anticipated demand for the IFLOR Device and strategic production efficiencies to meet projected demand.  We plan to continue these evaluations during the second half of 2015 parallel with continuing to finalize production details related to the Product Reseller Agreement.  Based on early indications of these evaluations and the expected orders pursuant to the Product Reseller Agreement, we continue to develop an estimation of our target production needs for the IFLOR Device.  As of the date of this Quarterly Report, our production capacity remains insufficient to meet the currently anticipated target production needs related to the Product Reseller Agreement and otherwise expected.  We plan to continue developing our production plans accordingly throughout 2015, including the potential engagement of additional manufacturers, evaluation of potential Company-operated manufacturing capabilities, and the production of additional molds to increase production capacity in line with projected needs.

Our ability to meet our projected production and distribution goals with respect to the IFLOR may be adversely affected by a number of factors, some of which may include:

·        Our inability to generate additional customer orders for the IFLOR Device to a level necessitating scaled production and distribution of the IFLOR Device;

·        Our inability to produce a sufficient number of additional IFLOR Device molds to maintain necessary and efficient production of the IFLOR Device to keep up with projected demand;

·        Our inability to produce replacement IFLOR Device molds, if existing molds are broken or otherwise become unusable, to keep a sufficient number of molds in active production necessary to keep up with projected demand;

·        Changes in the current business plan, as set forth above, based on our current strategic market studies and evaluations or other currently unknown factors; or

·        Other factors that may affect our ability to reach necessary production capacity in an efficient manner, including, without limitation, acts of God, changes in labor laws, work stoppages, or inability to engage additional manufactures on satisfactory terms.

Based on the Product Reseller Agreement, we currently expect to commence operations with respect to production of the IFLOR Device - Standard Version no later than the second quarter of 2016.  Additionally, during December 2014, the Company began the study and development of the IFLOR Device - Plus Version, and we expect to begin design, molding, product samples and packaging mock ups for marketing testing in late 2015.  However, due to various circumstances, such as the unknown definitive completion date manufacturing of the remaining product samples and ongoing evaluations being conducted by the Company regarding our prior marketing efforts, expected product demand, additional customer orders, product manufacturing and rollout schedules, and product samples received to date, our production commencement schedule may be accelerated or delayed.

Additionally, we executed a Brand License Agreement with WTFSKF on December 29, 2014 (the “Brand License Agreement”), through which we acquired the exclusive rights to commercially use certain logos, names, and marks of WTFSKF in the production and sale of certain products (clothing, accessories and certain sporting goods; collectively, the “Product”) throughout the world beginning in 2018.  We believe the Brand License Agreement provides us with an opportunity to access a revenue stream that is diversified, but complimentary to, that expected to be derived in relation to the Product Reseller Agreement.

While we are still in the conceptual stages of the line of business that may be developed under the Brand License Agreement, throughout the next approximately twenty-five (25) months we intend to take steps necessary to bring the Product to market in a timely fashion, chiefly among them:

·        Evaluate market demand for the Product, not only among WTFSKF members and fans, but possibly even beyond, and create marketing and sales strategies around the Product to reach our target consumer groups based on these evaluations;

·        Evaluate and engage designers to develop Product concepts and designs consistent with the target consumer; and

·        Evaluate manufacturing and supply chain options to efficiently bring branded Product to various markets throughout the world.

Our ability to develop a successful line of business with respect to the Brand License Agreement and related Products may be adversely affected by a number of factors, some of which may include:

·        Our inability to adequately or accurately generate or measure demand in the market for the Products;

·        Our inability to create or execute effective marketing and sales strategies around the Product to reach consumers and/or generate interest in and orders for the Product;

·        Our inability to engage designers or develop Product concepts that are economical and appeal to the consumer;

·        Our inability to achieve efficient manufacturing, supply chain, and/or distribution channels;

·        Changes in the current business plan, as set forth above, based on our strategic market studies and evaluations or other currently unknown factors;

·        Inadequate protection of the logos, names, and marks of WTFSKF that are licensed under the Brand License Agreement; or

·        Other factors that may affect our ability to reach necessary production, supply, and/or distribution capacity in an efficient manner, including, without limitation, acts of God, changes in labor laws, work stoppages, or inability to engage the necessary business partners on satisfactory terms.

Liquidity and Capital Resources

We are an early stage company focused on developing our business in the Healthcare, Environmental Quality, Energy and Real Estate sectors.  Our principal business objective for the next twelve (12) months will be to continue to develop our business plan in these sectors and continue efforts to bring the IFLOR Device to market and begin market and design evaluations of the Products related to the Brand License Agreement.  As we have commenced only limited operations and have yet to reach full operations, particularly with respect to our principal business objective, the IFLOR Device and the Products related to the Brand License Agreement, we have not earned substantial revenues to date other than those revenues generated from a consulting arrangement entered into during 2014, both of which were terminated during the first quarter of 2015.

Net cash (used in) operating activities.  During the six months ended June 30, 2015, net cash used in operating activities was $(363,354) compared with $(305,945) used in operating activities for the six months ended June 30, 2014.  The cash flow used in operating activities in the six months ended June 30, 2015, was primarily the result of incurred operating expenses without sufficient current revenue generating a net loss.  The cash flow used in operating activities in the six months ended June 30, 2014, was primarily the result of incurred operating expenses without sufficient current revenue generating a net loss.

Net cash provided by (used in) investing activities.  During the six months ended June 30, 2015, net cash used in investing activities was $Nil compared with $(16,030) used in investing activities for the six months ended June 30, 2014.  The Company did not engage in any activities generating or using cash flow that it classified as investing activities in the six months ended June 30, 2015. The cash flow used in investing activities in the six months ended June 30, 2014, was primarily the result of the acquisition of molds and designs for the business associated with the IFLOR Device, partially offset by repayments from related parties.

Net cash provided by financing activities.  During the six months ended June 30, 2015, net cash provided by financing activities was $Nil compared with $349,975 provided by financing activities for the six months ended June 30, 2014.  The Company did not engage in any activities generating or using cash flow that it classified as financing activities in the six months ended June 30, 2015.  The cash flow provided by financing activities in the six months ended June 30, 2014, was primarily the result of proceeds from the issuance of the Company’s preferred stock (which was subsequently converted to common stock of the Company).

As of June 30, 2015, we had cash on hand of $81,715 and current liabilities of $22,000.

In the course of its start-up activities, the Company has sustained operating losses and expects to incur operating losses through the remainder of 2015 and for the foreseeable future.  As of June 30, 2015, the Company has commenced limited operations but has yet to reach full operations.  Expenses incurred from February 17, 2004 (date of inception) through June 30, 2015, relate primarily to the Company’s formation and general administrative activities.  The Company has generated a limited amount of revenue and has not achieved profitable operations or positive cash flows from operations.  These factors raise substantial doubt about our ability to continue as a going concern.  Additionally, the report of the Company’s independent registered public accounting firm on the Company’s consolidated financial statements as of and for the years ended December 31, 2014 and 2013 contained an emphasis of a matter paragraph stating this uncertainty.  The accompanying unaudited condensed consolidated interim financial statements have been prepared assuming that the Company will continue as a going concern.

The Company will continue targeting sources of additional financing and opportunities to produce profitable revenue streams, whether through sole or joint ventures, to provide for the continuation of its operations.  The Company is also prepared to re-evaluate its expense load, if necessary, to determine whether any efficiency can be achieved prior to the commencement of substantial operations related to the Product Reseller Agreement or other potential operations identified by the Company.  Management believes the Company will be successful in achieving either additional financing or one or more additional revenue streams to support the continuation of its operations through June 30, 2016.  Moreover, the Company’s majority stockholder has indicated his ability to provide financial support to the Company for the continuation of its operations, should it be necessary.  Despite the execution of the Product Reseller Agreement and the Brand License Agreement, there is no assurance that we will be able to achieve revenues sufficient to become profitable or that the Company will be able to continue to raise funds, in which case we may be unable to meet our obligations and we may cease operations.  The financial statements do not include any adjustments that may result from the outcome of this uncertainty.

Results of Operations

As we are an early stage company, we have commenced only limited operations and have yet to reach full operations; therefore, we have little operations to report at this time.  Our main focus has been on the development of our business plan.  Aside from the execution of the two (2) consulting agreements during 2014 (both of which were terminated during the first quarter of 2015), entering into the Product Reseller Agreement, pursuant to which we will supply the IFLOR Device - Standard Version beginning in January of 2017, and entering into the Brand License Agreement, pursuant to which we have acquired a license to use certain logos, names, and marks of WTFSKF for commercial sales of certain Product (clothing, accessories and certain sporting goods) beginning in January of 2018, we have made no sales and all expenses to date have related to the development of our business plan and other expenses related to the daily operations of a public company and beginning stages of business activities related to the IFLOR Device.

Comparison of Three Months Ended June 30, 2015, to Three Months Ended June 30, 2014.

Consulting Revenue.  Consulting revenue decreased to $Nil for the three months ended June 30, 2015, from $30,000 for the three months ended June 30, 2014.  The decrease in consulting revenue is primarily related to the termination of consulting agreements during the first quarter of 2015 resulting in the cessation of revenues previously realized from those agreements.

General and Administrative Expenses.  General and administrative expenses increased to $213,603 for the three months ended June 30, 2015, from $162,116 for the three months ended June 30, 2014.  The increase in general and administrative expenses is primarily related to an increase in accounting-related and professional fees. 

Research and Development Costs.  Research and development costs increased to $17,544 for the three months ended, June 30, 2015, from $Nil for the three months ended June 30, 2014.  The increase in research and development costs is primarily related to an increase in research and development costs for the Company’s product, IFLOR Device - Plus Version.

Equity Losses in Unconsolidated Affiliate.  Equity losses in unconsolidated affiliate decreased to $Nil for the three months ended June 30, 2015, from $3,765 for the three months ended June 30, 2014.  The decrease in equity losses in unconsolidated affiliate is primarily related to the decrease in the unconsolidated affiliate’s losses during the three months ended June 30, 2015, as compared to the three months ended June 30, 2014.  The equity losses in unconsolidated affiliate recorded represents the Company’s proportionate shares of the affiliate’s losses for the applicable period.

Net Income (loss).  For the three months ended June 30, 2015, we incurred a net loss of $(230,607) as compared to a net loss of $(135,881) for the three months ended June 30, 2014.  The net loss was primarily a result of expenses incurred without generating sufficient revenue.  The increase in net loss was primarily a result of increased expenses incurred in conjunction with a decrease in revenue generated during the period.

Comparison of Six Months Ended June 30, 2015 to Six Months Ended June 30, 2014

Consulting Revenue.  Consulting revenue increased to $35,000 for the six months ended June 30, 2015, from $30,000 for the six months ended June 30, 2014.  The increase in consulting revenue is primarily related to additional revenue generated from a consulting agreement executed in December 2014, which was subsequently terminated during the first quarter of 2015.

General and Administrative Expenses.  General and administrative expenses increased to $358,852 for the six months ended June 30, 2015, from $295,144 for the six months ended June 30, 2014.  The increase in general and administrative expenses is primarily related to an increase in accounting-related and professional fees. 

Research and Development Costs.  Research and development costs increased to $42,549 for the six months ended, June 30, 2015, from $Nil for the six months ended June 30, 2014.  The increase in research and development costs is primarily related to an increase in research and development costs for the Company’s Brand License Agreement with WTFSKF, and to an increase in research and development costs for the Company’s product, IFLOR Device - Plus Version.

Equity Losses in Unconsolidated Affiliate.  Equity losses in unconsolidated affiliate increased to $5,027 for the six months ended June 30, 2015, from $3,765 for the six months ended June 30, 2014.  The increase in equity losses in unconsolidated affiliate is primarily related to the increased in the unconsolidated affiliate’s losses during the six months ended June 30, 2015, as compared to the six months ended June 30, 2014.  The equity losses in unconsolidated affiliate recorded represents the Company’s proportionate shares of the affiliate’s losses for the applicable period.

Net Income (loss).  For the six months ended June 30, 2015, we incurred a net loss of $(371,428) as compared to a net loss of $(268,909) for the six months ended June 30, 2014.  The net loss was primarily a result of expenses incurred without generating sufficient revenue.  The increase in net loss was primarily a result of an increased expenses incurred during the period, in particular accounting-related and professional fees, and research and development costs related to the Brand License Agreement. 

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

Inflation

We do not believe that inflation has had in the past or will have in the future any significant negative impact on our operations.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

As we are a smaller reporting company, we are not required to provide the information required by this item.

Item 4.  Controls and Procedures.

We maintain disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) that are designed to assure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. As required by Exchange Act Rule 13a-15(b), as of the end of the period covered by this report, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures and concluded that our disclosure controls and procedures are ineffective as of the date of filing this Form 10-Q due to limited accounting and reporting personnel and a lack of expertise and segregation of duties due to limited financial resources and the size of our company.  We will need to adopt additional disclosure controls and procedures prior to commencement of material operations. Consistent therewith, on an on-going basis we will evaluate the adequacy of our controls and procedures.

Management is committed to improving its internal controls and will continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities.  At this time, however, management has not established a time table for when it intends to address the aforementioned material weaknesses.

There were no changes in our internal control over financial reporting during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II---OTHER INFORMATION

Item 1.  Legal Proceedings.

There are no legal proceedings that have occurred within the past five years concerning our directors or control persons which involved a criminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one’s participation in the securities or banking industries, or a finding of securities or commodities law violations.

Item 1A.  Risk Factors.

As we are a smaller reporting company, we are not required to provide the information required by this item.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds. 

(a)          Unregistered Sales of Equity Securities. 

None.

(b)          Use of Proceeds. 

Not Applicable.

(c)          Affiliated Purchases of Common Stock. 

None.    

Item 3.  Defaults Upon Senior Securities.

None.

Item 4.  Mine Safety Disclosures.

Not applicable.

Item 5.  Other Information.

None.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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