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 September 30, 2016

¨ 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)

3738 Coach Cove, Sanford, MI 48657

(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 ¨  No x 

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 November 21, 2016, there were 47,308,000 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.

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 NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

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” or the “Company”) (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 providing consulting services and 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.  The Company does not expect the merger to materially affect the business plan or the Company’s continued pursuit thereof.

The concentration of the Company has become the consulting services and the development of products related to the Brand License Agreement (see Note 6 for further discussion of the Brand License Agreement), after the disposition of the IFLOR Asset (see Note 3 for further discussion of the disposition of the IFLOR Asset). As of September 30, 2016, the Company has yet to commence substantial operations. Expenses incurred from February 17, 2004 (date of inception) through September 30, 2016, relate to the Company’s formation and general administrative activities. In the course of its start-up activities, the Company has sustained operating losses and expects to incur operating losses in 2016. 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 Brand License Agreement (Note 6) or other potential operations identified by the Company.  Additionally, the Company’s Chief Financial Officer, who is also the Company’s Corporate Secretary and Treasurer and Director and stockholder, has indicated his ability to provide financial support to the Company for the continuation of its operations, should it be necessary (Note 5).

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 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, 2015.  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 equity method of accounting, as prescribed by ASC Topic 323 “Investments – Equity Method and Joint Ventures”, is used when a company is able to exercise significant influence over the entity’s operations, which generally occurs when a company has an ownership interest of between 20% and 50% in an entity.  The cost method of accounting is used when a company does not exercise significant influence, generally when a company has an ownership interest of less than 20%. As of September 17, 2015, the Company’s 32% investment in Haesler Real Estate Management SA (“HREM”) was accounted for under the equity method of accounting. As of September 17, 2015, the carrying amount of the investment was equal to the Company’s equity interest of the carrying amount of the net assets of HREM. On September 17, 2015, the Company entered into an Amendment Agreement (“Amendment Agreement”) with Daniel Haesler (“Haesler”), pursuant to which the Company agreed to return 16% of the outstanding ownership in HREM. As a result of the closing of the Amendment Agreement, the Company’s ownership in HREM was reduced from 32% of the outstanding ownership of HREM to 16% of the outstanding ownership of HREM. Starting from September 17, 2015, the Company utilizes the cost method of accounting due to the fact that HREM is a private company and it is therefore not practicable to estimate the fair value of the investment.  On November 15, 2015, the Company entered into a Second Amendment Agreement (“Second Amendment Agreement”) with Haesler, pursuant to which the Company agreed to return 16% of the outstanding ownership in HREM.  As a result of the closing of the Second Amendment Agreement, the Company’s ownership in HREM was reduced from 16% of the outstanding ownership of HREM to 0% of the outstanding ownership of HREM.

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 (Note 6) with World Traditional Fudokan Shotokan Karate-Do Federation, a worldwide karate federation based in Switzerland (“WTFSKF”), and in respect to the Company’s asset disposed, the IFLOR Asset (Note 3).  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 Accounting Standards Update (“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.  Early adoption is permitted for annual periods beginning after December 15, 2016.  The Company is currently evaluating the impact of the new standard on its 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 its consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory.”  Under this ASU, inventory will be measured at the “lower of cost and net realizable value” and options that currently exist for “market value” will be eliminated. The ASU defines net realizable value as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” No other changes were made to the current guidance on inventory measurement. ASU 2015-11 is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating the impact of the new standard on its consolidated financial statements.

In November 2015, the FASB released ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 simplifies the presentation of deferred income taxes by deferred tax assets and liabilities be classified as noncurrent on the balance sheet. ASU 2015-17 is effective for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years. The guidance may be adopted prospectively or retrospectively and early adoption is permitted. Adoption of this guidance is not expected to have any effect on the Company’s consolidated financial statements. The Company is currently evaluating the impact of the new standard on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases. This update will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The new guidance will also require additional disclosures about the amount, timing and uncertainty of cash flows arising from leases. The provisions of this update are effective for annual and interim periods beginning after December 15, 2018. The Company is currently evaluating the impact of the new standard on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends ASC Topic 718, Compensation – Stock Compensation. The ASU simplifies several aspects of the accounting for employee share-based payment transaction. This standard is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that that reporting period. The Company is currently evaluating the impact of the new standard on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross vs. Net).  ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations.  In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing.  ASU 2016-10 clarified the implementation guidance on identifying performance obligations.  These ASUs apple to all companies that enter into contracts with customers to transfer goods or services.  There ASUs are effective for public entities for interim and annual reporting periods beginning after December 15, 2017.  Early adoption is permitted, but not before interim and annual periods beginning after December 16, 2016.  Entities have the choice to apply these ASUs either retrospectively to each reporting period presented or by recognizing the cumulative effect or applying these standards at the date of initial application and not adjusting comparative information.  The Company is currently evaluating the impact of the new standard on its consolidated financial statements.

In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligation and Licensing, to clarify the identification of performance obligation as well as the licensing implementation guidance.

In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers: Narrow Scope Improvements and Practical Expedients, which clarifies certain core recognition principles including collectability, sales tax presentation, and contract modification, as well as identifies disclosures no longer required if the full retrospective transition method is adopted.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The standard provides guidance for eight targeted changes with respect to how cash receipts and cash payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. This guidance will be effective for the Company in the first quarter of our fiscal year 2018, and early adoption is permitted. The Company is currently evaluating the impacts the adoption of this accounting standard will have on the Company’s cash flows.

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

NOTE 3 – CAPITAL STOCK

The Company entered into a Quota Purchase Agreement with Haesler on October 26, 2012, pursuant to which the Company acquired from Haesler 32 quotas of HREM representing 32% of the outstanding ownership in HREM, in exchange for 350,000 shares of common stock of the Company, which was valued at $297,500 at the time of the Quota Purchase Agreement. The Company and Haesler entered into an Amendment Agreement dated September 17, 2015, pursuant to which the Company agreed to return to Haesler 16 quotas of HREM, representing 16% of the outstanding ownership in HREM.  In exchange for the 16 quotas of HREM, Haesler agreed to return to the Company 175,000 shares of common stock of the Company, which was valued at $175,000 at the time of the Amendment Agreement, based on the trading price of the Company’s stock on September 17, 2015.  The Company returned the quotas to Haesler on September 17, 2015, and Haesler returned the common stock of the Company to the treasury of the Company on September 22, 2015.  As a result of the closing of the Amendment Agreement, the Company’s ownership in HREM was reduced from 32% of the outstanding ownership of HREM to 16% of the outstanding ownership of HREM. The Company recorded a gain of $169,547 on the disposition of its 16% ownership in HREM included in profit or loss.  The Company and Haesler then entered into a Second Amendment Agreement dated November 15, 2015, pursuant to which the Company agreed to return to Haesler 16 quotas of HREM, representing 16% of the outstanding ownership in HREM.  In exchange for the 16 quotas of HREM, Haesler agreed to return to the Company 175,000 shares of common stock of the Company, which was valued at $183,750 at the time of the Second Amendment Agreement, based on the trading price of the Company’s stock on November 15, 2015.  On December 2, 2015, the Company returned the quotas to Haesler, and on December 8, 2015, Haesler returned the common stock of the Company to the treasury of the Company.  As a result of the closing of the Amendment Agreement, the Company’s ownership in HREM was reduced from 16% of the outstanding ownership of HREM to 0% of the outstanding ownership of HREM.

The Company entered into an Asset Purchase and Sale Agreement (the “Asset Agreement”) with GIOTOS Limited, a private limited company organized in the United Kingdom (“GIOTOS”) on December 9, 2015. Pursuant to the Asset Agreement, the Company sold, assigned, conveyed and delivered certain patent rights and other related business processes and know-how related to the IFLOR Device (collectively, the “IFLOR Business”) and the patents, inventory and equipment related to the IFLOR Business (collectively, the “Additional IFLOR Business”; the Additional IFLOR Business together with the IFLOR Business and Intellectual Property, the “IFLOR Asset”) to GIOTOS, in consideration for 10,040,000 shares of the Company common stock (the “Purchase Price”) transferred from GIOTOS to the Company.  The portion of the Purchase Price allocated as consideration for the IFLOR Business was 9,615,500 shares, and the portion of the Purchase Price allocated as consideration for the Additional IFLOR Business was 424,500 shares.  The Asset Agreement was closed on December 9, 2015, at which time, pursuant to the Asset Agreement, the Company executed and delivered an assignment of the IFLOR Asset to GIOTOS, and GIOTOS transferred the full amount of the Purchase Price to the Company and completed the cancellation of the shares composing the Purchase Price on December 16, 2015. Immediately prior to the transaction consummated by the Asset Agreement, GIOTOS owned 50,000,000 shares of the Company common stock. Additionally, GIOTOS is majority owned and operated by Louis Bertoli, who is the Company’s Chairman of the Board and the President and Chief Executive Officer. As Louis Bertoli is majority owner of GIOTOS the transfer of the IFLOR Business and the Additional IFLOR Business represents a common control transaction and therefore the 10,040,000 shares received as consideration have been valued at $527,851, based on the carrying value of the equipment, inventory and patents given up.

The Company filed an amendment with the Secretary of State of Nevada on April 19, 2016, amending its Articles of Incorporation, Article IV - Capital Stock. The effect of the amendment was to cancel all 100,000,000 shares of the Company’s authorized preferred stock (“Preferred Stock”), consisting of 25,000,000 shares of Preferred Stock, par value $8.75 per share; and 75,000,000 shares of Preferred Stock, par value $7 per share.  The amendment was effective as of April 18, 2016, at which time there were no shares of Preferred Stock issued and outstanding.  Following the amendment, the Company has 400,000,000 shares of stock authorized for issuance (reduced from 500,000,000 shares authorized prior to the effect of the amendment), consisting solely of shares of the Company’s common stock, par value $0.0001 per share.

NOTE 4 – REVENUE

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”), dated June 10, 2014, 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.

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”), dated December 5, 2014, 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 ET 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

The Company has advances payable to its current majority shareholder totaling $34,700 as of September 30, 2016 and $Nil as of December 31, 2015. These advances were made to be used for working capital. These advances are unsecured, non-interest bearing and due on demand.

The Company has advances payable to its current Chief Financial Officer, who is also the Company’s Corporate Secretary and Treasurer and Director and stockholder, totaling $7,000 as of September 30, 2016 and $Nil as of December 31, 2015. These advances were made to be used for working capital. These advances are unsecured, non-interest bearing and due on demand.

The Company used MB Ingenia SRL (“MB Ingenia”) for various corporate business services, including technical support and engineering services, and use of office space by Mr. Bertoli, until November 4, 2015.  For the nine months ended September 30, 2016 and 2015, the Company incurred expenses of $Nil and $33,909, respectively, in relation to these services.  For the three months ended September 30, 2016 and 2015, the Company incurred expenses of $Nil and $6,680, respectively, in relation to these services.  For the nine months ended September 30, 2016, and 2015, the Company incurred reimbursements for handling and storage expense of $Nil and $8,158, respectively, in relation to these services provided by MB Ingenia to HPIL HEALHCARE Inc. (formerly a wholly owned subsidiary of the Company that has been merged with and into the Company effective as of May 28, 2015).  For the three months ended September 30, 2016, and 2015, the Company incurred reimbursements for handling and storage expense of $Nil in relation to these services provided by MB Ingenia to HPIL HEALHCARE Inc.  For the nine months ended September 30, 2016, and 2015, the Company incurred research and developments costs of $Nil and $23,576, respectively, in relation to these services provided by MB Ingenia to HPIL HEALHCARE Inc.  For the three months ended September 30, 2016, and 2015, the Company incurred in research and developments costs of $Nil and $6,032, respectively, in relation to these services provided by MB Ingenia to HPIL HEALHCARE Inc.  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 SRL. Mr. Bertoli also serves as an executive officer and director of the Company. 

The Company entered into a two-year consulting agreement on July 20, 2009, with Amersey Investments LLC (“Amersey Investments”), a company controlled by a director and the CFO of the Company, Mr. Nitin Amersey.  Although the consulting agreement expired, Amersey Investments continued to provide office space, office identity and assist the Company with corporate, financial, administrative and management records on the same terms until July 31, 2015.  Mr. Amersey, as a director and officer, continues to provide and offer corporate office and records, at no cost.  For the nine months ended September 30, 2016 and 2015, the Company incurred expenses of $Nil and $35,000, respectively, in relation to these services. For the three months ended September 30, 2016 and 2015, the Company incurred expenses of $Nil and $5,000, respectively, in relation to these services.

The Company uses Bay City Transfer Agency & Registrar Inc. (“BCTAR”) to do its stock transfers, corporate services and Edgar filings.  Mr. Amersey is listed with the Securities and Exchange Commission as a control person of BCTAR.  For the nine months ended September 30, 2016 and 2015, the Company incurred expenses of $2,710 and $10,127, respectively, in relation to these services.  For the three months ended September 30, 2016 and 2015, the Company incurred expenses of $Nil and $1,739, respectively, in relation to these services. 

The Company used the services of Freeland Venture Resources LLC, for Edgar filings and consulting services until April 14, 2016.  Mr. Amersey is a control person in Freeland Venture Resources LLC.   For the nine months ended September 30, 2016 and 2015, the Company incurred expenses of $Nil and $5,585, respectively, in relation to these services.  For the three months ended September 30, 2016 and 2015, the Company incurred expenses of $Nil and $150, respectively, in relation to these services.

The Company used the services of Cheerful Services International Inc. (“Cheerful”) for corporate press releases and consulting services until April 14, 2016.  Cheerful is owned by Mr. Amersey’s children.  For the nine months September 30, 2016 and 2015, the Company incurred expenses of $Nil and $9,439, respectively, in relation to these services.  For the three months September 30, 2016 and 2015, the Company incurred expenses of $Nil in relation to these services.

NOTE 6 – BRAND LICENSE

The Company, entered into a Brand License Agreement (the “Brand License Agreement”), dated December 29, 2014, with WTFSKF.  Pursuant to the Brand License Agreement, WTFSKF has granted to the Company 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, the Company will pay to WTFSKF an ongoing License Fee.  Additionally, the Company issued to WTFSKF 752,000 shares of treasury common stock (the “Shares”) of the Company in accordance with the Brand License Agreement. WTFSKF has agreed to provide to the Company 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, the Company may require WTFSKF to either return the Shares or pay to the Company the market value of the Shares at the time of the execution of the Brand License Agreement (approximately $6,805,600), if the Company 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 September 30, 2016, as the Brand License Agreement does not commence until 2018.

NOTE 7 – PRODUCT RESELLER AGREEMENT

The Company entered into a Mutual Termination Agreement (the “Mutual Termination Agreement”) with WTFSKF on December 5, 2015. Pursuant to the Mutual Termination Agreement, the parties terminated a certain Product Reseller Agreement (the “Product Reseller Agreement”) entered into between HPIL HEALTHCARE Inc. and WTSKF on October 9, 2014, pursuant to which, beginning in 2017, the HPIL HEALTHCARE Inc. was to supply its IFLOR Stimulating Massage Device - Standard Version to WTFSKF for resale exclusively at WTFSKF-sanctioned events and through the WTFSKF members and their official affiliates.  The termination of the Product Reseller Agreement was mutual, without recourse or the incurrence of penalty by either party thereto, and effective on December 5, 2015.  HPIL HEALTHCARE Inc., formerly a wholly owned subsidiary of the Company, was merged with and into the Company effective as of May 28, 2015, as a result of which the Company succeeded to and assumed all rights and obligations of HPIL HEALTHCARE Inc., including those arising from the Product Reseller Agreement.

NOTE 8 – SUBSEQUENT EVENTS

On November 9, 2016, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with GPL Ventures, LLC (“GPL”).  The Company and GPL also entered into a Registration Rights Agreement dated November 9, 2016 (the “Registration Agreement”, and together with the Securities Purchase Agreement, the “Agreements”). Pursuant to the Securities Purchase Agreement, the Company, at its sole and exclusive option, may issue and sell to GPL, from time to time as provided therein, and GPL would purchase from the Company shares of the Company’s common stock (“Shares”) equal to a value of up to $5,600,000.  Pursuant to the Registration Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and applicable state laws with respect to all Shares issued in connection with the Securities Purchase Agreement. Subject to the terms and conditions of the Securities Purchase Agreement, the Company, at its sole and exclusive option, may issue and sell to GPL, and GPL shall purchase from the Company, the Shares upon the Company’s delivery of written notices to GPL. The aggregate maximum amount of all purchases that GPL shall be obligated to make under the Securities Purchase Agreement shall not exceed $5,600,000. Once a written notice is received by GPL, it shall not be terminated, withdrawn or otherwise revoked by the Company.  GPL is not obligated to purchase any Shares unless and until the Company has registered the Shares pursuant to a registration statement on Form S-1 (or on such other form as is available to the Company), which is required to be effective within 11 months of the execution of the Agreements. Pursuant to the Securities Purchase Agreement, each purchase of Shares must be in an amount equal to at least $100,000 and is capped at the lesser of (i) $175,000 or (ii) 200% of the average daily trading volume as calculated pursuant to the Securities Purchase Agreement.  The purchase price per share for each purchase of Shares to be paid by GPL shall be 80% of the lowest trading price (or if there are no recorded trades, the lowest closing price) during the Valuation Period (as defined and calculated pursuant to the Securities Purchase Agreement).

Additionally, on November 9, 2016, the Company issued to GPL a Convertible Promissory Note (the “Note”) in the principal amount of $250,000 as payment of a commitment fee to induce GPL to enter into the Agreements.  The Note accrues interest at the rate of 5% per annum and is due in full on or before July 30, 2017.  The Note also prohibits prepayment of the principal.  GPL has the right to convert all or any portion of the note balance at any time at a conversion price per share of 75% of the lowest Trading Price during the Valuation Period (as defined and calculated pursuant to the Note), which is adjustable in accordance with the Note terms in the event certain capital reorganization, merger, or liquidity events of the Company as further described in the Note. The forgoing descriptions of the Securities Purchase Agreement, Registration Agreement, and Note are qualified in their entirety by reference to the respective documents, which were attached as Exhibits to the Current Report of the Company filed on November 14, 2016.

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”, “estimates”, “intends”, “strategy”, “plan”, “may”, “will”, “would”, “will be”, “will continue”, “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 (“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, the Company changed its business plan to focus on making investments in companies, whether public or private enterprises, in differing business sectors.  This business plan 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 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.

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 February 22, 2013, the Company 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 the Company owns the patents rights.  The name of the initial product utilizing the patents rights is “IFLOR, Stimulating Massage Device” (the “IFLOR Device”), which the Company had 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.  The Company sold the patent rights related to the IFLOR Business to GIOTOS Limited on December 9, 2015 (see below in this section (b) for a full description of this transaction).

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 continued to follow the terms of the cooperation agreement until December 5, 2015, the effective date of termination of the cooperation agreement pursuant to the Company’s notice sent to WTFSKF on November 4, 2015.

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 worked 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. Subsequently, the Company notified Social Art World Ltd. of the termination of the cooperation agreement on November 4, 2015, and consequently the cooperation agreement between the parties was terminated effective December 5, 2015.

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 worked 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 (eventually executing a new cooperation agreement on substantially the same terms in October 2014) until December 5, 2015, the effective date of termination of the cooperation agreement pursuant to the Company’s notice sent to TrueSkill Energen Pvt. Ltd. on November 4, 2015. The Company’s CFO is also the Chairman of the Board of TrueSkill Energen Pvt. Ltd.

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. The cooperation agreement with 2Evolution Studios expired according to its terms on August 30, 2015; however, the parties continued to work together without an agreement in place and following substantially the terms of the cooperation agreement until December 5, 2015, the effective date of termination of the cooperation agreement pursuant to the Company’s notice sent to 2Evolution Studios on November 4, 2015.

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 the Company. Subsequently, the Company notified MB Ingenia SRL of the termination of the cooperation agreement on November 4, 2015, and consequently the cooperation agreement between the parties was terminated effective December 5, 2015.

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 worked cooperatively to develop and expand potential projects. Subsequently, the Company notified ECOVAL & CO. SRL or the termination of the cooperation agreement on November 4, 2015, and consequently the cooperation agreement between the parties was terminated effective December 5, 2015.

On December 29, 2014, the Company, entered into a Brand License Agreement (the “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 (the “License”) to use certain logos, names, and marks of WTFSKF (the “Marks”) and manufacture and sell certain products (clothing, accessories and certain sporting goods) bearing the Marks (the “Products”).  Pursuant to the Brand License Agreement, in consideration for the License, beginning in 2018, the Company will pay to WTFSKF an ongoing license fee equal to 5% of the revenues from sales of the Products (the “License Fee”).  Additionally, the Company issued to WTFSKF 752,000 shares of treasury common stock of the Company (the “Shares”; the Shares and the License Fee are collectively referred to as the “License Consideration”) in accordance with the Brand License Agreement.  WTFSKF has agreed to provide to the Company 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, the Company may require WTFSKF to either return the Shares or pay to the Company the market value of the Shares at the time of the execution of the Brand License Agreement (approximately $6,805,600), if the Company 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 pursuant to the terms of the thereof.

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 worked cooperatively to develop and expand potential projects. Subsequently, the Company notified GINARES GROUP AG of the termination of the cooperation agreement on November 4, 2015, and consequently the cooperation agreement between the parties was terminated effective December 5, 2015.

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 worked cooperatively to develop and expand potential projects. Subsequently, the Company notified COEUS TECHNOLOGY Inc. of the termination of the cooperation agreement on November 4, 2015, and consequently the cooperation agreement between the parties was terminated effective December 5, 2015.

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 worked cooperatively to develop and expand potential projects. Subsequently, the Company notified ARBORWIND LLC of the termination of the cooperation agreement on November 4, 2015, and consequently the cooperation agreement between the parties was terminated effective December 5, 2015.

On October 26, 2012, the Company, through HPIL REAL ESTATE 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 Purchase Agreement with Daniel Haesler (“Haesler”), pursuant to which the Company acquired from Haesler 32 quotas of Haesler Real Estate Management SA (“HREM”) representing 32% of the outstanding ownership in HREM, in exchange for 350,000 shares of common stock of the Company, which was valued at $297,500 at the time of the Quota Purchase Agreement. On September 17, 2015, the Company and Haesler entered into an Amendment Agreement, pursuant to which the Company agreed to return to Haesler 16 quotas of HREM, representing 16% of the outstanding ownership in HREM. In exchange for the 16 quotas of HREM, Haesler agreed to return to the Company 175,000 shares of common stock of the Company, which was valued at $175,000 at the time of the Amendment Agreement, based on the trading price of the Company’s stock on September 17, 2015.  On September 17, 2015, the Company returned the quotas to Haesler, and on September 22, 2015, Haesler returned the common stock of the Company to the treasury of the Company.  As a result of the closing of the Amendment Agreement, the Company’s ownership in HREM was reduced from 32% of the outstanding ownership of HREM to 16% of the outstanding ownership of HREM.  On November 15, 2015, the Company and Haesler entered into a Second Amendment Agreement, pursuant to which the Company agreed to return to Haesler 16 quotas of HREM, representing 16% of the outstanding ownership in HREM.  In exchange for the 16 quotas of HREM, Haesler agreed to return to the Company 175,000 shares of common stock of the Company, which was valued at $183,750 at the time of the Second Amendment Agreement, based on the trading price of the Company’s stock on November 15, 2015.  On December 2, 2015, the Company returned the quotas to Haesler, and on December 8, 2015, Haesler returned the common stock of the Company to the treasury of the Company. As a result of the closing of the Second Amendment Agreement, the Company’s ownership in HREM was reduced from 16% of the outstanding ownership of HREM to 0% of the outstanding ownership of HREM.  The preceding descriptions of the Purchase Agreement, the First Amendment Agreement, and the Second Amendment Agreement are incomplete and qualified in their entirety by reference to the complete text of the Purchase Agreement, the First Amendment Agreement, and the Second Amendment Agreement, respectively.  The Purchase Agreement was attached as an Exhibit to the Current Report of the Company filed November 1, 2012.  The First Amendment Agreement was attached as an Exhibit to the Current Report of the Company filed September 22, 2015.  The Second Amendment Agreement was attached as an Exhibit to the Current Report of the Company filed November 18, 2015.

On December 5, 2015, the Company entered into a Mutual Termination Agreement (the “Mutual Termination Agreement”) with WTFSKF. Pursuant to the Mutual Termination Agreement, the parties terminated a certain Product Reseller Agreement (the “Product Reseller Agreement”) entered into between HPIL HEALTHCARE Inc. and WTSKF on October 9, 2014, pursuant to which, beginning in 2017, HPIL HEALTHCARE Inc. was to supply its IFLOR Stimulating Massage Device - Standard Version to WTFSKF for resale exclusively at WTFSKF-sanctioned events and through the WTFSKF members and their official affiliates.  The termination of the Product Reseller Agreement was mutual, without recourse or the incurrence of penalty by either party thereto, and effective on December 5, 2015.  HPIL HEALTHCARE Inc., formerly a wholly owned subsidiary of the Company, was merged with and into the Company effective as of May 28, 2015, as a result of which the Company succeeded to and assumed all rights and obligations of HPIL HEALTHCARE Inc., including those arising from the Product Reseller Agreement. The preceding descriptions of the Mutual Termination Agreement and Product Reseller Agreement are incomplete and qualified in their entirety by reference to the complete text of the Mutual Termination Agreement and Product Reseller Agreement, respectively, which were included as exhibits to previously filed Current Reports of the Company on Form 8-K on December 9, 2015.

On December 9, 2015, the Company entered into an Asset Purchase and Sale Agreement (the “Asset Agreement”) with GIOTOS Limited, a private limited company organized in the United Kingdom (“GIOTOS”). Pursuant to the Asset Agreement, the Company sold, assigned, conveyed and delivered certain patent rights and other related business processes and know-how related to the IFLOR Device (collectively, the “IFLOR Business”) and certain additional assets related to the IFLOR Business (collectively, the “Additional IFLOR Business”; the Additional IFLOR Business together with the IFLOR Business and Intellectual Property, the “IFLOR Asset”) to GIOTOS, in consideration for 10,040,000 shares of the Company common stock (the “Purchase Price”) transferred from GIOTOS to the Company.  The portion of the Purchase Price allocated as consideration for the IFLOR Business was 9,615,500 shares, and the portion of the Purchase Price allocated as consideration for the Additional IFLOR Business was 424,500 shares.  The Asset Agreement was closed on December 9, 2015, at which time, pursuant to the Asset Agreement, the Company executed and delivered an assignment of the IFLOR Asset to GIOTOS, and GIOTOS transferred the full amount of the Purchase Price to the Company and complete cancellation of the shares composing the Purchase Price on December 16, 2015. Immediately prior to the transaction consummated by the Asset Agreement, GIOTOS owned 50,000,000 shares of the Company common stock. Additionally, GIOTOS is majority owned and operated by Louis Bertoli, who is the Company’s Chairman of the Board and the President and Chief Executive Officer. As of the date of the Asset Agreement, the shares of the company common stock were quoted at $1.30 per share (the “Current Stock Price”), making the total value of the Purchase Price equal to $13,052,000. The Company determined the amount of the Purchase Price by adding the fair value of the IFLOR Business as of the date was acquired by the Company in 2012 ($12,500,000), as determined by a third-party valuation of the IFLOR Business conducted in 2013 divided by the Current Stock Price, plus the total amount of funds actually expended by the Company in developing the Additional IFLOR Assets ($551,850) divided by the Current Stock Price (the portion of the Purchase Price allocated to each of the IFLOR Business and Additional IFLOR Assets was determined in the same manner). Mr. Bertoli, as an interested director, did not participate in the approval of the Asset Agreement and the Purchase Price by the Board of Directors of the Company.  The foregoing summary of the Asset Agreement is not complete and is qualified in its entirety by reference to the complete text of the Asset Agreement, which was filed as an exhibit to the Company’s Current Report on Form 8-K on December 14, 2015.

The Company did not enter in any transactions that it considers material or otherwise significant during the three months ended September 30, 2016.

HPIL Holding is a worldwide holding company. The Company is focused on investing in both private and public companies in differing business sectors. The Company does not restrict its potential candidate target companies to any specific business, industry or geographical location and, thus, acquires various types of business. Also, the Company evaluates intellectual properties and technologies for potential acquisition, with a particular interest in the healthcare and environmental quality sectors.

During 2015, we terminated various cooperation agreements and the Product Reseller Agreement and divested several of our existing investments, including the IFLOR Asset (as discussed in section (b) of this Item above).  We made these changes to reduce overall expenses related to these agreements and investments and sharpen the focus of our efforts on developing the Brand License Agreement and identifying and vetting potential alternative investments in an effort to increase the efficiency of deploying our resources.  The Company intends to continue to pursue its business plan of making investments in companies and intellectual properties and providing consulting service, and expects that it will continue on that business plan for the foreseeable future.  While the Company is not currently actively marketing any services or products, it will continue on its business plan of actively seeking investment opportunities for the foreseeable future.  Our ability to execute the current business plan may be adversely affected by a number of factors, some of which may include:

·        our inability to identify potential investment opportunities;

·        our inability to finance such investments on terms we believe are favorable to the Company;

·        our inability to negotiate acceptable or favorable terms for investment in identified opportunities;

·        our inability to adequately or accurately identify potential liability exposure and other risks related to investment opportunities;

·        our inability to effectively manage and incorporate new investments opportunities into the Company;

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

·        other factors, within or outside of our control, that may affect our ability to execute our business plan in an efficient manner, including, without limitation, acts of God, changes in applicable laws, or inability to engage the necessary or strategic business partners on satisfactory terms.

Moreover, the Company will continue to concentrate on the development of the Brand License Agreement (see section (b) of this Item above) until it will commence in 2018.  While the Company is still in the conceptual stages of the line of business that may be developed under the Brand License Agreement, we intend to explore potential manufacturing, distribution, and other strategic partnerships in connection with the Brand License Agreement.  Additionally, over the next approximately 11 months, we intend to take additional 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 or strategic business partners on satisfactory terms.

Liquidity and Capital Resources

We are an early stage company focused on developing our business of evaluating for potential investment or acquisition both private and public companies and intellectual properties and technologies in differing business sectors, including, without limitation Healthcare, Environmental Quality, Energy and Real Estate.  Our principal business objective for the next twelve (12) months will be to continue to develop our business plan of investing and providing related consulting services in these sectors, continue efforts to begin market and design evaluations of the Products related to the Brand License Agreement (as discussed in Item 2, sections (b) and (d) above).  During 2015, we terminated many of our underperforming agreements and investments to reduce the strain on our resources and redirect those resources to identifying and developing more promising investments.  As we have commenced only limited operations and have yet to reach full operations, particularly with respect to our current principal business objective, currently the Products related to the Brand License Agreement, we have not earned substantial revenues to date other than those revenues generated from two (2) consulting arrangements entered into during 2014, both of which were terminated in the first quarter of 2015.

Net cash (used in) operating activities.  During the nine months ended September 30, 2016, net cash used in operating activities was $(46,562) compared with $(414,925) used in operating activities for the nine months ended September 30, 2015.  The cash flow used in operating activities in the nine months ended September 30, 2016, and 2015 was primarily the result of incurred operating expenses without sufficient current revenue generating a net loss.

Investing activities.  The Company did not engage in any activities generating or using cash flow that it classified as investing activities during the nine months ended September 30, 2016, and 2015.

Net cash provided by financing activities.  During the nine months ended September 30, 2016, net cash provided by financing activities was $41,700 compared with $Nil provided by financing activities for the nine months ended September 30, 2015.  The cash flow provided by financing activities in the nine months ended September 30, 2016, was primarily the result of proceeds from advances from stockholder and advances from officer. The Company did not engage in any activities generating or using cash flow that it classified as financing activities in the nine months ended September 30, 2015.

In the course of its start-up activities, the Company has sustained operating losses and expects to incur an operating loss for the foreseeable future.  Expenses incurred from February 17, 2004, (date of inception) through September 30, 2016, 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 and uncertainties raise substantial doubt about the Company's 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, 2015, and 2014 contained an emphasis of a matter paragraph stating this uncertainty. The unaudited condensed consolidated financial statements accompanying this Quarterly Report have been prepared assuming that the Company will continue as a going concern.

During 2014, the Company entered into two (2) consulting agreements that provided a revenue stream of $35,000 per month.  The consulting agreements have since been mutually terminated by the Company and the counterparties thereto due to lack of ongoing need for the consulting services that were to be rendered under the agreements, allowing the Company to focus our full energy and effort on continuing to develop our core business plan and evaluating additional investment and acquisition opportunities.  Also during 2014, we entered into two (2) long term agreements with WTFSKF: the Brand License Agreement and the Product Reseller Agreement (each discussed in Item 2, section (b) above).  We expect to begin generating revenue from the Brand License Agreement during 2018.  The Product Reseller Agreement was mutually terminated on December 5, 2015 (discussed in Item 2, section (b) above).  The Company had negative working capital of $80,271 as of September 30, 2016.

The Company will continue targeting sources of additional financing and opportunities to produce profitable revenue streams, whether through sole or joint ventures, to provide continuation of its operations.  Additionally, during the latter half of its fiscal year 2015, the Company took steps to significantly reduce its expense load moving forward and is prepared to continue evaluating its expense load, if necessary, to determine whether any efficiency can be achieved prior to generation of revenues sufficient to support increased operations.  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 September 30, 2017.  Moreover, the Company’s Chief Financial Officer, who is also the Company’s Corporate Secretary and Treasurer and a Director and stockholder, has indicated his ability to provide financial support to the Company, should it be necessary.  Despite the aforementioned developments in the Company’s financial standing, 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 accompanying financial statements do not include any adjustments that may result from the outcome of this uncertainty.

Results of Operations

As the Company is an early stage company, it has commenced only limited operations and has yet to reach full operations; therefore, the Company has little operations to report at this time.  The Company’s main focus has been on the development of its 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), and the Product Reseller Agreement (which was terminated during the fourth quarter of 2015), and entering into the Brand License Agreement, pursuant to which the Company has 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, the Company has made no sales nor generated additional revenue and all expenses to date have related to the development of its business plan and other expenses related to the daily operations of a public company and beginning stages of business activities related to the Product and the IFLOR Asset (which the Company sold, as discussed in Item 2, section (b) above).

Comparison of Three Months Ended September 30, 2016, to Three Months Ended September 30, 2015.

General and Administrative Expenses.  General and administrative expenses decreased to $41,594 for the three months ended September 30, 2016, from $58,989 for the three months ended September 30, 2015. The decrease in general and administrative expenses is primarily related to increased expense efficiency resulting in lower professional fees and lower service and technical support. 

Research and Development Costs.  Research and development costs decreased to $Nil for the three months ended September 30, 2016, from $6,032 for the three months ended September 30, 2015.  The decrease in research and development costs is primarily related to a decrease in research and development costs for the Company’s former IFLOR Asset.

Disposition of Unconsolidated Affiliate.  Disposition of unconsolidated affiliate decreased to $Nil for the three months ended September 30, 2016, from $169,547 for the three months ended September 30, 2015.  The decreased in disposition of unconsolidated affiliate is primarily related to the gain recorded in connection with the Company’s disposition of 16 quotas in HREM during the three months ended September 30, 2015 (see subsection (b) of Item 2 for additional information regarding this transaction).

Net Income/(Loss).  For the three months ended September 30, 2016, we incurred a net loss of $(41,594) as compared to a net income of $104,526 for the three months ended September 30, 2015. The net loss for the three months ended September 30, 2016, was primarily a result of expenses incurred without generating sufficient revenue.  The variance in net income/(loss) over the periods was primarily the result of the one-time gain recorded in connection with the Company’s disposition of interest in an unconsolidated affiliated during the three months ended September 30, 2015, partially offset by a reduction in expenses from $65,021 for the three months ended September 30, 2015, to $41,594 for the three months ended September 30, 2016, due to increased expense efficiency. 

Comparison of Nine Months Ended September 30, 2016 to Nine Months Ended September 30, 2015.

Consulting Revenue.  Consulting revenue decreased to $Nil for the nine months ended September 30, 2016, from $35,000 for the nine months ended September 30, 2015.  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 decreased to $77,111 for the nine months ended September 30, 2016, from $417,841 for the nine months ended September 30, 2015.  The decrease in general and administrative expenses is primarily related to increased expense efficiency resulting in lower professional fees and lower service and technical support. 

Research and Development Costs.  Research and development costs decreased to $Nil for nine months ended September 30, 2016, from $48,581 for nine months ended September 30, 2015.  The decrease in research and development costs is primarily related to a decrease in research and development costs for the Company’s Brand License Agreement with WTFSKF and related to our former IFLOR Asset.

Equity Losses in Unconsolidated Affiliate.  Equity losses in unconsolidated affiliate decreased to $Nil for the nine months ended September 30, 2016, from $5,027 for the nine months ended September 30, 2015.  The decrease in equity losses in unconsolidated affiliate is primarily related to the Company’s divesting of its ownership in the affiliate during 2015. The equity losses in unconsolidated affiliate recorded for the nine months ended September 30, 2015, represents the Company’s proportionate shares of the affiliate’s losses during that period, prior to when the Company began divesting its ownership of the affiliate and ceased to have significant influence over the affiliate (which began about September 17, 2015, as discussed in Item 2, section (b) above).

Disposition of Unconsolidated Affiliate.  Disposition of unconsolidated affiliate decreased to $Nil for the nine months ended September 30, 2016, from $169,547 for the nine months ended September 30, 2015.  The decreased in disposition of unconsolidated affiliate is primarily related to the gain recorded in connection with the Company’s disposition of 16 quotas in HREM during the nine months ended September 30, 2015 (see subsection (b) of Item 2 for additional information regarding this transaction).

Net Loss.  For the nine months ended September 30, 2016, we incurred a net loss of $(77,111) as compared to a net loss of $(266,902) for the nine months ended September 30, 2015. The net loss for the nine months ended September 30, 2016, was primarily a result of expenses incurred without generating sufficient revenue.  The decrease in net loss was primarily a result of decreased total expenses due to increased expense efficiency partially offset by decreased consulting revenue due to the termination of consulting agreements during the first quarter of 2015 resulting in the cessation of revenues previously realized from those agreements, and the one-time gain recorded in connection with the Company’s disposition of interest in an unconsolidated affiliated during the nine months ended September 30, 2015.  The decrease in total expenses from $471,449 for the nine months ended September 30, 2015, to $77,111 for the nine months ended September 30, 2016, was primarily a result of decreases in accounting-related and professional fees and research and development costs related to the Company’s Brand License Agreement with WTFSKF and related to our former IFLOR Asset.

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 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.

Item 6. Exhibits.

INDEX TO EXHIBITS

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.