Attached files

file filename
EX-32.2 - HPIL HOLDINGexhibit322-10kdecember312016.htm
EX-32.1 - HPIL HOLDINGexhibit321-10kdecember312016.htm
EX-31.2 - HPIL HOLDINGexhibit312-10kdecember312016.htm
EX-31.1 - HPIL HOLDINGexhibit311-10kdecember312016.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(mark one)

 

[ x ]Annual Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

                                                                                         

For the fiscal year ended December 31, 2016

 

or

 

[  ]Transition Report Pursuant to 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)

 

Nevada

30-0868937

(State or other jurisdiction

(I.R.S. Employer

of incorporation or organization)

Identification No.)

 

3738 Coach Cove, Sanford, MI 48657   

(Address of Principal Executive Offices)(Zip Code)

 

(248) 750-1015

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

None

(Title of Class)

 

Securities registered pursuant to Section 12(g) of the Act:

 

None

(Title of Class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes    ¨          No     

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes    x          No     ¨ 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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     

 

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    ¨          No     


 

 

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

x

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ¨ 

Accelerated filer ¨ 

Non-accelerated filer     ¨  (Do not check if smaller reporting company)

Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.)

Yes    ¨          No     

 

The aggregate market value of the registrant's voting and non-voting common stock held by non-affiliates of the registrant as of June 30, 2016, the last day of the registrant’s most recently completed second fiscal quarter during the fiscal year represented by this Annual Report, was $8,142,800.  This value was computed by reference to the price at which the registrant’s common stock was last sold as of June 30, 2016, and excludes the market value of the registrant’s voting and non-voting common stock beneficially owned by the directors and executive officers of the registrant and known holders of 10% or more of the common stock of the registrant.  These determinations and the underlying assumptions should not be deemed to constitute an admission that all directors and executive officers of the registrant and known holders of 10% or more of the common stock of the registrant are, in fact, affiliates of the registrant, or that there are no other persons who may be deemed to be affiliates of our company.  Further information concerning shareholdings of our directors and executive officers and beneficial owners of more than 5% of the registrant’s outstanding common stock is included in Part III, Item 12 of this Annual Report on Form 10-K.

 

As of July 11, 2017, the registrant had 50,969,150 shares of Common Stock, $0.0001 par value, issued and outstanding.

 

NO DOCUMENTS INCORPORATED BY REFERENCE

 


 

 

HPIL Holding

 

2016 FORM 10-K ANNUAL REPORT

 

TABLE OF CONTENTS

 

 

 

Page

PART I

 

1

ITEM 1.

Business

1

ITEM 1A.

Risk Factors

8

ITEM 1B.

Unresolved Staff Comments

8

ITEM 2.

Properties

8

ITEM 3.

Legal Proceedings

8

ITEM 4.

Mine Safety Disclosures

9

PART II

 

9

ITEM 5.

Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities

9

ITEM 6.

Selected Financial Data

11

ITEM 7.

Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

11

ITEM 7A.

Quantitative And Qualitative Disclosures About Market Risk

13

ITEM 8.

Consolidated Financial Statements And Supplementary Data

14

ITEM 9.

Changes In And Disagreements With Accountants On Accounting And Financial Disclosure

35

ITEM 9A. 

Controls And Procedures

35

ITEM 9B.

Other Information

36

PART III

 

36

ITEM 10.

Directors, Executive Officers And Corporate Governance

36

ITEM 11.

Executive Compensation

39

ITEM 12.

Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters

40

ITEM 13.

Certain Relationships And Related Transactions, And Director Independence

41

ITEM 14.

Principal Accounting Fees And Services

41

PART IV

 

42

ITEM 15

Exhibits, Financial Statement Schedules

43

 


 

 

PART I

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This 2016 Annual Report on Form 10-K, including the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” contains “forward-looking statements” that include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation and availability of resources.  These forward-looking statements include, without limitation, statements regarding: proposed new products or services; our statements concerning litigation or other matters; statements concerning projections, predictions, expectations, estimates or forecasts for our business, financial and operating results and future economic performance; statements of management’s goals and objectives; trends affecting our financial condition, results of operations or future prospects; our financing plans or growth strategies; and other similar expressions concerning matters that are not historical facts.  Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes” and “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements.

 

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, that performance or those results will be achieved. Forward-looking statements are based on information available at the time they are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause these differences include, but are not limited to:

 

·        our inability to raise additional funds to support operations and capital expenditures;

 

·        our inability to achieve greater and broader market acceptance of our products and services in existing and new market segments;

 

·        our inability to achieve manufacturing and distribution of our products and scaling and delivery of our services in efficient manners;

 

·        our inability to successfully compete against existing and future competitors;

 

·        our inability to manage and maintain the growth of our business;

 

·        our inability to protect our intellectual property rights; and

 

·        other factors discussed under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.”

 

               Forward-looking statements speak only as of the date they are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws.  If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

 

ITEM 1.

BUSINESS

 

With respect to this discussion, the terms “we” “us” “our” and the “Company” refer to HPIL Holding and its consolidated subsidiaries.

 

(a)

Business Background.

 

HPIL Holding 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.

 

(b)

Historical Transactions.

 

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 May 19, 2017, the Company entered into an addendum to the Brand License Agreement (the “Addendum”) with the WTFSKF whereby the Company acquired the television, radio and internet rights to the WTFSKF World Karate Championship and the International Karate Gasshuku as further described in Subsequent Events, Note 9 to the Financial Statements.  Due to the decrease in the Company’s common stock, and other factors related to the agreements with the WTFSKF, the value of the Brand License Agreement has been impaired by $6,798,080, as further described in Note 6 to the Financial Statements. The Company has considered and taken note of Section 350-30-35, the Subsequent Measurement Section that provides guidance on an entity’s subsequent measurement and subsequent recognition of an item. Situations that may result in subsequent changes to the carrying amount include impairment, credit losses, fair value adjustments, depreciation and amortization, and so forth. The Company has also taken note of Section 350-30-50, the Disclosure Section that provides guidance regarding the disclosure in the notes to the financial statements. In some cases, disclosure may relate to disclosure on the face of the financial statements.  

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.

 

On, August 12, 2016, the Company and Kodiak Capital Group, LLC (“KCG”) executed an Equity Purchase Agreement (the “Equity Purchase Agreement”). The Company and KCG also entered into a Registration Rights Agreement dated August 12, 2016 (the “Registration Agreement”, and together with the Equity Purchase Agreement, the “Agreements”).  Pursuant to the Equity Purchase Agreement, the Company, at its sole and exclusive option, may issue and sell to KCG, from time to time as provided therein, and KCG would purchase from the Company shares of the Company’s common stock (“Shares”) equal to a value of up to $5,000,000. Pursuant to the Registration Agreement, the Company has agreed to provide certain registration rights under the Equity Act of 1933, as amended, and applicable state laws with respect to all Shares issued in connection with the Equity Purchase Agreement.  Subject to the terms and conditions of the Equity Purchase Agreement, the Company, at its sole and exclusive option, may issue and sell to KCG, and KCG shall purchase from the Company, the Shares upon the Company’s delivery of written notices to KCG. The aggregate maximum amount of all purchases that KCG shall be obligated to make under the Equity Purchase Agreement shall not exceed $5,000,000. Once a written notice is received by KCG, it shall not be terminated, withdrawn or otherwise revoked by the Company.  The purchase price per share for each purchase of Shares to be paid by KCG shall be 70% 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 Equity Purchase Agreement).  KCG 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).

 

Additionally, on June 28, 2016, upon the signing of the Term Sheet (“Term Sheet”) related to the Equity Purchase Agreement, the Company issued to KCG a Convertible Promissory Note (the “Note”) in the principal amount of $215,000 as payment of a commitment fee to induce KCG to enter into the Agreements.  The Note is due in full on or before January 28, 2017.  The Company may prepay this Note in whole or in part at any time following at least 15 and no more than 60 days’ advance written notice to the Holder, provided that the Holder shall retain all rights of conversion until the date of repayment, notwithstanding the pendency of any prepayment notice.  KCG has the right to convert all or any portion of the note balance at any time at a conversion price per share of 50% of the Current Market Price (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. Upon an Event of Default (as defined in the Note), the principal amount increases to $250,000 and the conversion price shall decrease to 25% of the Current Market Price (as defined and calculated pursuant to the Note).

 

 

(c)

Material Transactions and Other Significant Business Transactions Overview.

 

Described in this section (c) are the business transactions entered into by the Company during the three months ended December 31, 2016, that we consider significant or material.

 

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.

 

On, December 27, 2016, the Company and Kodiak Capital Group, LLC (“KCG”) executed an Amended and Restated Equity Purchase Agreement (the “Amended Equity Purchase Agreement” which amends the original Equity Purchase Agreement with KCG dated August 12, 2016. The Amended Equity Purchase Agreement restates and makes minor revisions to the Equity Purchase Agreement, such as correcting the stated capitalization of the Company and extending the term of the Equity Purchase Agreement.  

 

On December 27, 2016, the Company and KCG entered an Amendment and Waiver (the “Amendment and Waiver”), pursuant to which KCG waived certain defaults of the Company under the Note and amended the Note to delete a default provision requiring the Company to file a registration statement by a certain date, amend a default provision to reflect the Company’s listing on the OTCPink market, and extend the maturity date to July 28, 2017. The Original Equity Purchase Agreement, Amended Equity Purchase Agreement, Registration Agreement, Term Sheet, Note, and Amendment and Waiver contain other provisions customary to transactions of this nature.

 

The foregoing descriptions of the Original Equity Purchase Agreement, Amended Equity Purchase Agreement, Registration Agreement, Term Sheet, Note, and Amendment and Waiver are qualified in their entirety by reference to the Original Equity Purchase Agreement, Amended Equity Purchase Agreement, Registration Agreement, Term Sheet, Note, and Amendment and Waiver, which were attached as Exhibits to the Current Report of the Company filed on December 27, 2016.

 

The Company and KCG entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) on December 27, 2016, pursuant to which the Company sold to KCG a convertible promissory note in the amount of $60,000 for a purchase price of $50,000.  Pursuant to the Securities Purchase Agreement, the Company issued to KCG a 15% Convertible Note (the “December Note”) in the principal amount of $60,000.  The December Note accrues interest at the rate of 15% per year and is due in full on or before December 27, 2017.  The Company may prepay this Note in whole at any time prior to 6 months from the issue date on at least 5 Trading Days (as defined in the December Note) but not more than 10 Trading Days notice, provided that the Holder shall retain all rights of conversion until the date of repayment, notwithstanding the pendency of any prepayment notice.  KCG has the right to convert all or any portion of the note balance at any time at a conversion price per share of forty percent (40%) lowest sale price for the Company’s Common Stock during the thirty (30) consecutive Trading Days immediately preceding the Conversion Date (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 Securities Purchase Agreement and December Note contain other provisions customary to transactions of this nature. The foregoing descriptions of the Securities Purchase Agreement and December Note are qualified in their entirety by reference to the Securities Purchase Agreement and December Note, which were attached as Exhibits to the Current Report of the Company filed on December 27, 2016. An event of default with KCG that occurred in the first Quarter is noted in Note 9 – Subsequent Events.

 


 

 

(d)

Business of Issuer.

 
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 2016, 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 3 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.

 


 

 

 

Employees

 

We have commenced only limited operations; therefore, we have no full-time employees.  Our officers, Louis Bertoli and Nitin Amersey, and our directors, Louis Bertoli, Nitin Amersey, John B. Mitchell, and John Dunlap, III provide services to us on an as-needed basis.  When we commence full operations, we will need to hire full-time management and administrative support staff.

 

Research and Development Expenses                                           

 

We have not incurred any expenses with respect to research and development activities up to this point in time.

 

Government Regulation and Standards

 

We are not specifically aware at this time of any existing or probable government regulations that might affect the operation of our business.

 

Environmental Laws

 

We have not incurred and do not anticipate incurring any expenses associated with environmental laws.  We have not yet and do not currently expect to make significant capital expenditures in order to comply with applicable environmental laws and regulations.  We cannot predict with certainty our future capital expenditure requirements because of continually changing compliance standards and environmental technology.  We do not have insurance coverage for environmental liabilities and do not anticipate obtaining such coverage in the future unless needed due to new or evolved business plans.

 

Reports to Security Holders

 

We will be a reporting company and will comply with the requirements of the Exchange Act.  We will file quarterly and annual reports and other information with the SEC, and we will send a copy of our annual report together with audited consolidated financial statements to each of our shareholders.

 

The public may read and copy any materials the Company files with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov.

 

ITEM 1A.

RISK FACTORS

 

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

 

ITEM 1B.

UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 2.

PROPERTIES

 

We do not currently lease or own any real property.  We currently maintain our corporate offices at 3738 Coach Cove, Sanford, MI 48657, a space provided by Nitin Amersey, our CFO.  Mr. Amersey does not charge a rental fee and there is no lease or other written agreement associated with the use of this space. 

 

We are not presently subject to competitive conditions for property and currently have no property to insure.  We have no policy with respect to investments in real estate or interests in real estate and no policy with respect to investments in real estate mortgages.  Further, we have no policy with respect to investments in securities of or interests in persons primarily engaged in real estate activities.

 

ITEM 3.

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 4.

MINE SAFETY DISCLOSURES

 

Not Applicable.

 

PART II

 

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Market Information

 

Before we effectuated the merger on October 7, 2009 (as described herein in the Business Background Section), we traded on the OTC Bulletin Board under the name TNT Designs, Inc. and trade symbol “TNTD”.  After the merger and change in name and business the Company traded on the OTC Bulletin Board under the trade symbol “TRHG”.  On February 23, 2010, TRHG was delisted from the OTC Bulletin Board due to non-timely filings of periodic reports and was subsequently quoted on the Pink Sheets.  From the time of the Company name change on May 22, 2012 (as described herein in the Business Background Section), until April 14, 2016, our Common Stock traded on the OTCQB Market under the symbol “HPIL.” On April 14, 2016, to focus more on the development of our business, we decided to temporarily cease voluntary filing of periodic reports with the Securities and Exchange Commission and transitioned to filing periodic reports through the OTC Disclosure & News Service pursuant to the Pink Basic Disclosure Guidelines.  Therefore, since April 14, 2016, we have traded on the OTC Pink Market under the symbol “HPIL.”  Because we have been operating under our new trade symbol for a relatively short duration of time and have only commenced limited operations of our new business and have generated limited revenue from the new business, there has been limited market activity up to this point in time. The following table sets forth, for the periods indicated, the high and low bid information for our Common Stock as determined from sporadic quotations on the OTC Markets.  The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

 

Year Ended December 31, 2016

High

Low

First Quarter

$

2.00

$

2.00

Second Quarter

$

2.00

$

1.50

Third Quarter

$

1.50

$

1.50

Fourth Quarter

$

1.54

$

1.30

 

Security Holders

 

As of July 11, 2017, there were 50,969,150 common shares outstanding which were held by approximately 422 stockholders of record.

 

Dividends

 

We have never declared or paid any cash dividends on our common stock and we do not anticipate paying any cash dividends in the foreseeable future.  We currently intend to retain all of our future earnings to finance the growth and development of our business.

 

Transfer Agent

 

VStock Transfer, LLC, is currently serving as our transfer agent.  Our prior transfer agent, Bay City Transfer Agency and Registrar, Inc., served until replaced by VStock November 9, 2016.

 

Common Stock

 

We are authorized to issue 400,000,000 shares of common stock with a par value of $0.0001, of which 50,969,150 shares are issued and outstanding as of July 11, 2017.  Each holder of our shares of our common stock is entitled to one (1) vote per share on all matters to be voted upon by the stockholders, including the election of directors.  The holders of shares of


 

 

common stock have no preemptive, conversion, subscription or cumulative voting rights.  There is no provision in our Articles of Incorporation or By-laws that would delay, defer or prevent a change in control of our Company.

 

Preferred Stock

 

We currently have no preferred stock authorized or outstanding. 

 

Prior to April 18, 2016, we were authorized to issue 100,000,000 shares of preferred stock. 25,000,000 shares of our preferred stock were designated as Series 1, Class P-1 stock with a par value of $8.75 per share, and the other 75,000,000 shares of preferred stock were designated as Series 1, Class P-2 stock with a par value of $7.00 per share.  However, on April 19, 2016, we filed Amendment Articles with the Nevada Secretary of State to cancel the preferred stock effective as of April 18, 2016.  There were no shares of preferred stock issued and outstanding as of the date of cancellation and no shares of preferred stock were authorized or outstanding as of December 31, 2016. 

 

Recent Sales of Unregistered Securities

 

The Company sold the following unregistered securities during the three months ended December 31, 2016:

 

On June 28, 2016, the Company issued to KCG a Convertible Promissory Note (the “KCG Note”) in the principal amount of $215,000 as payment of a commitment fee to induce KCG to enter into the Agreements.  The Note is due in full on or before January 28, 2017.  The Company may prepay this Note in whole or in part at any time following at least 15 and no more than 60 days’ advance written notice to the Holder, provided that the Holder shall retain all rights of conversion until the date of repayment, notwithstanding the pendency of any prepayment notice.  KCG has the right to convert all or any portion of the note balance at any time at a conversion price per share of 50% of the Current Market Price (as defined and calculated pursuant to the Note). On December 27, 2016, the Company and KCG entered an Amendment and Waiver (the “Amendment and Waiver”), pursuant to which KCG waived certain defaults of the Company under the Note and amended the Note to delete a default provision requiring the Company to file a registration statement by a certain date, amend a default provision to reflect the Company’s listing on the OTCPink market, and extend the maturity date to July 28, 2017. The Original Equity Purchase Agreement, Amended Equity Purchase Agreement, Registration Agreement, Term Sheet, Note, and Amendment and Waiver contain other provisions customary to transactions of this nature.

 

On November 9, 2016, the Company issued to GPL a Convertible Promissory Note (the “GPL Note”) in the principal amount of $250,000 as payment of a commitment fee to induce GPL to enter into the Securities Purchase Agreement. 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. 

 

On December 9, 2016, the Company issued to GPL a Convertible Promissory Note (the “5K Note”) in the principal amount of $5,000 in exchange for $5,000 in cash. The Note accrues interest at the rate of 12% per annum and is due in full on or before June 9, 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 50% 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. 

 

On December 27, 2016, the Company sold to KCC a convertible promissory note in the amount of $60,000 for a purchase price of $50,000 (the “December Note”). The December Note accrues interest at the rate of 15% per year and is due in full on or before December 27, 2017. The Company received only $45,000 on the December Note and this matter is a subject of dispute.  KCG has the right to convert all or any portion of the note balance at any time at a conversion price per share of forty percent (40%) lowest sale price for the Company’s Common Stock during the thirty (30) consecutive Trading Days immediately preceding the Conversion Date (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. 

 

On March 27, 2017, Kodiak Capital Group, LLC, (“KCG”) has claimed an event of default under a convertible promissory note in the principal amount of $215,000 issued by the company pursuant to the Company’s failure to deliver shares of the Company’s common stock pursuant to a conversion notice served on the company. KCG has also alleged various defaults with reference to a convertible promissory note in the principal amount of $60,000. As a result of these various alleged defaults KCG has sent the Company a claim in the sum of $2,608,572 as of March 27, 2017. KCG claims that the claim

 


 

 

amount continues to increase in accordance to the terms of the notes.  The Company is disputing the payment of the $215,000 note with Kodiak and is considering initiating an action against KCG for obtaining the note by fraudulent means and may claim damages as well. There is no litigation currently pending. Management believes that the money owed to KCC under the $60,000 Note may be offset by damages caused to the Company under the $215,000 Note. Furthermore, management disputes the value of KCC's claim.

 

ITEM 6.

SELECTED FINANCIAL DATA

 

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

 

ITEM 7.

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

 

(a)

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, intellectual properties and technologies.  Our principal business objective for the next twelve (12) months will be to begin exploitation of our Brand License Agreement (as discussed in Item 1, sections (b) and (d) above and to continue to investigate potential business opportunities. 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, 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 fiscal year ended December 31, 2016, net cash used in operating activities was $(49,081) compared with $(439,603) used in operating activities for the fiscal year ended December 31, 2015. The cash flow used in operating activities in the fiscal year ended December 31, 2016, was primarily the result of incurred operating expenses. The cash flow used in operating activities in the fiscal year ended December 31, 2015, was primarily the result of incurred operating expenses and the disposition of our interest in HREM.  

 

Net cash provided by investing activities. During the fiscal year ended December 31, 2016 and 2015, net cash provided by investing activities was $Nil. The Company did not engage in any activities generating or using cash flow that it classified as investing activities in the fiscal year ended December 31, 2016, and 2015.  

 

Net cash provided by financing activities.  During the fiscal year ended December 31, 2016, net cash provided by financing activities was $43,747 compared with $Nil by financing activities for the fiscal year ended December 31, 2015. The cash flow provided by financing activities in the fiscal year ended December 31, 2016, was primarily attributable to advances from stockholder, officer and investor. The Company did not engage in any activities generating or using cash flow that it classified as financing activities in the fiscal year ended December 31, 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 December 31, 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, 2016 and 2015 contained an emphasis of a matter paragraph stating this uncertainty. The consolidated financial statements accompanying this Annual 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 (discussed in Item 1, section (b) above) and the Product Reseller Agreement.  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 1, section (c) above).  The Company had negative working capital of $757,369 as of December 31, 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 2016, the Company took steps to 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 December 31, 2017.  Moreover, the Company’s Chief Financial Officer, who is also the Company’s Corporate Secretary and Treasurer and a Director and stockholder of the Company, 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.

 

(b)

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 1, section (b) above)

 

Comparison of Fiscal Year Ended December 31, 2016 to Fiscal Year Ended December 31, 2015.

 

Consulting Revenue.  Consulting revenue decreased to $Nil for the fiscal year ended December 31, 2016, from $35,000 the fiscal year ended December 31, 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 $111,161 for the fiscal year ended December 31, 2016, from $421,895 for the fiscal year ended December 31, 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

 

Commitment Fees.  Commitment Fees increased to $465,000 for the fiscal year ended December 31, 2016, from $Nil for the fiscal year ended December 31, 2015.  The increase in commitment fees is primarily related to an increase in commitment fees for the Company’s financing activities with Kodiak and GPL.

 

Research and Development Costs.  Research and development costs decreased to $Nil for the fiscal year ended December 31, 2016, from $48,581 for the fiscal year ended December 31, 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 the fiscal year ended December 31, 2016, from $5,027 the fiscal year ended December 31, 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 fiscal year ended December 31, 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 1, section (b) above).

 

Impairment of Brand License.  Impairment of brand license increased to $6,798,080 for the fiscal year ended December 31, 2016, from $Nil for the fiscal year ended December 31, 2015.  The increase in impairment of brand license is related to a decrease in the price per share of the Company’s common stock (from $9.05 per share, the fair value of the stock when issued on December 29, 2014, to $0.01 per share, the value of the Company’s stock on the date impairment was determined). The Company has also considered and taken note of Section 350-30-35, the Subsequent Measurement Section


 

 

that provides guidance on an entity’s subsequent measurement and subsequent recognition of an item. Situations that may result in subsequent changes to the carrying amount include impairment, credit losses, fair value adjustments, depreciation and amortization, and so forth. The Company has also taken note of Section 350-30-50, the Disclosure Section that provides guidance regarding the disclosure in the notes to the financial statements. In some cases, disclosure may relate to disclosure on the face of the financial statements.    

 

Disposition of Unconsolidated Affiliate.  Disposition of unconsolidated affiliate decreased to $Nil for the fiscal year ended December 31, 2016, from $347,844 for the fiscal year ended December 31, 2015. The decrease in disposition of unconsolidated affiliate is primarily related to the Company’s disposition of its ownership in HREM (32 quotas representing 32% prior to divesting) during the fiscal year ended December 31, 2015 (see subsection (b) of Item 1 for additional information regarding this transaction).

 

Accretion Expense. Accretion expense increase to $109,234 for the fiscal year ended December 31, 2016, from $Nil for the fiscal year ended December 31, 2015. The increase of accretion expense is discussed in Note 9 to the Financial Statements.

 

Loss on change in Fair Value of conversion option derivative liability. Loss on change in fair value of conversion option derivative increase to $68,814 for the fiscal year ended December 31, 2016, from $Nil for the fiscal year ended December 31, 2015. The increase of loss on change in fair value of conversion option derivative is discussed in Note 10 to the Financial Statements.

 

Net Loss.  For the fiscal year ended December 31, 2016, we incurred a net loss of $(7,552,289) as compared to a net loss of $(92,659) for the fiscal year ended December 31, 2015.  The increase in net loss was primarily a result of an increase of impairment of brand license of $6,798,080, and an increase of commitment fees of $465,000 for the fiscal year ended December 31, 2016, related to financing activities. The increase in total expenses from $475,503 for the fiscal year ended December 31, 2015, to $576,161 for the fiscal year ended December 31, 2016, was primarily a result of the commitment fees incurred in 2016, and increased efficiencies in general and administrative expense.

 

(c)

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.

 

(d)

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 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

ITEM 8.

CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and Stockholders of HPIL Holding:

 

We have audited the accompanying consolidated balance sheets of HPIL Holding (the “Company”) as of December 31, 2016 and 2015 and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity (deficiency), and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility  is  to  express  an  opinion  on  these  consolidated  financial  statements  based  on  our  audits. 

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of HPIL Holding as of December 31, 2016 and 2015 and the results of its operations and its cash flows for the years then ended, in conformity  with  accounting  principles  generally  accepted  in  the  United  States  of  America. 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.  As discussed in Note 1 to the consolidated financial statements, the Company has incurred continuing losses and negative cash flows from operations. These conditions raise substantial doubt about Company’s ability to continue as a going concern.  Management’s plans regarding these matters are also described in Note 1.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Description: MNP signature 

 

Chartered Professional Accountants

Licensed Public Accountants

 

Mississauga, Ontario

July 11, 2017

Description: MNP_logoLLP343C.jpg 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

HPIL Holding

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

   

As of

 

As of

   

December 31,

 

December 31,

   

2016

 

2015

         

ASSETS

         

Current Assets:

       

Cash

$

132

$

5,466

Accounts receivable

 

50,000

 

-

Total current Assets

 

50,132

 

5,466

         

Other Assets:

       

Brand license (Note 6)

 

7,520

 

6,805,600

Total other Assets

 

7,520

 

6,805,600

         

Total Assets

$

57,652

$

6,811,066

         

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

         

Current Liabilities:

       

Accounts payable and accrued expenses

$

58,790

$

8,626

Advances from stockholder (Note 5)

 

34,932

 

-

Advances from officer (Note 6)

 

3,500

 

-

Advance from investor

 

315

 

-

Convertible promissory notes (Note 9)

 

202,296

 

-

Conversion option derivative liability (Note 10)

 

507,668

 

-

Total current Liabilities

 

807,501

 

8,626

         

Total Liabilities

 

807,501

 

8,626

 

 

 

 

 

Stockholders’ (Deficit) Equity:

       

Preferred stock, series 1, class P-1 par value $8.75;

       

25,000,000 shares authorized at December 31, 2015;

       

Nil issued, outstanding and authorized at December 31, 2016 (Note 3)

 

-

 

-

Preferred stock, series 1, class P-2 par value $7.00;

       

75,000,000 shares authorized at December 31, 2015;

       

Nil issued, outstanding and authorized at December 31, 2016 (Note 3)

 

-

 

-

Common stock par value $0.0001; 400,000,000 shares authorized;

       

47,308,000 issued and outstanding

       

at December 31, 2016 and December 31, 2015 (Note 3)

 

4,731

 

4,731

Additional paid-in capital

 

9,429,001

 

9,429,001

Accumulated deficit

 

(10,183,581)

 

(2,631,292)

Total Stockholders’ (Deficit) Equity

 

(749,849)

 

6,802,440

         

Total Liabilities and Stockholders' (Deficit) Equity

$

57,652

$

6,811,066

Going Concern (Note 1)

       

Subsequent Events (Note 11)

       

 

 

 

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

 


 

 

HPIL Holding

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 

 

 

 

 

   

For the

 

For the

   

Year Ended

 

Year Ended

   

December 31,

 

December 31,

   

2016

 

2015

         

Consulting revenue (Note 4)

$

-

$

35,000

         

Expenses:

       

General and administrative (Note 5)

 

111,161

 

421,895

Commitment fees (Note 3)

 

465,000

 

-

Research and development (Note 5)

 

-

 

48,581

Equity loss in unconsolidated affiliate

 

-

 

5,027

Impairment of brand license (Note 6)

 

6,798,080

 

-

Total expenses

 

7,374,241

 

475,503

         

Other income (expense):

       

Accretion expense (Note 9)

 

(109,234)

 

 

Loss on change in Fair Value of conversion option derivative liability (Note 10)

 

(68,814)

 

 

Disposition of unconsolidated affiliate (Note 3)

 

-

 

347,844

         

Net loss available to common shareholders

 

(7,552,289)

 

(92,659)

         

Common shares

       

Outstanding - Basic and diluted

 

47,308,000

 

56,991,986

         

Net loss per common shares

       

Outstanding - Basic and diluted

$

(0.16)

$

(0.00)

 

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

 


 

 

HPIL Holding

 

CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT) EQUITY

 

 

 

 

Preferred Stock

 

Preferred Stock

 

       

Additional

     

Total

 

Series 1, Class P-1

 

Series 1, Class P-2

 

Common Stock

 

Paid-In

 

Accumulated

 

Stockholders'

 

Shares

 

Value

 

Shares

 

Value

 

Shares

 

Value

 

Capital

 

Deficit

 

(Deficit) Equity

       

 

     

 

                 

Balance

as of December 31, 2014

-

$

-

 

-

$

-

 

57,698,000

$

5,770

$

10,314,563

$

(2,538,633)

$

7,781,700

Cancellation common stock, disposition unconsolidated affiliate, at $1.00 per share (September 17, 2015)

-

 

-

 

-

 

-

 

(175,000)

 

(17)

 

(174,983)

 

-

 

(175,000)

Cancellation common stock, disposition unconsolidated affiliate, at $1.05 per share (November 15, 2015)

-

 

-

 

-

 

-

 

(175,000)

 

(18)

 

(183,732)

 

-

 

(183,750)

Cancellation common stock, disposition asset,

at par value per share

(December 9, 2015)

-

 

-

 

-

 

-

 

(10,040,000)

 

(1,004)

 

(526,847)

 

-

 

(527,851)

Net loss and comprehensive loss for 2015

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(92,659)

 

(92,659)

 

Balance

as of December 31, 2015

-

$

-

 

-

$

-

 

47,308,000

$

4,731

$

9,429,001

$

(2,631,292)

$

6,802,440

Net loss and comprehensive loss for 2016

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 

(7,552,289)

 

(7,552,289)

 

Balance

as of December 31, 2016

-

$

-

 

-

$

-

 

47,308,000

$

4,731

$

9,429,001

$

(10,183,581)

$

(749,849)

                                         

 

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

 


 

 

HPIL Holding

CONSOLIDATED STATEMENTS OF CASH FLOWS

 
       

For the

 

For the

       

Year Ended

 

Year Ended

       

December 31,

 

December 31,

       

2016

 

2015

OPERATING ACTIVITIES:

       
 

Net loss

$

(7,552,289)

$

(92,659)

 

Adjustment for non-cash item:

 

 

   
 

Equity loss from unconsolidated affiliate

 

-

 

5,027

 

Disposition of unconsolidated affiliate

 

-

 

(347,844)

 

Impairment of brand license

 

6,798,080

 

-

 

Commitment fees

 

465,000

 

-

 

Accretion expense

 

109,234

 

-

 

Loss on change in FV of conversion option derivative liability

 

68,814

 

-

 

Non-cash promotional expenses

 

-

 

13,661

 

Adjustments for changes in working capital:

 

 

   
   

Prepaid expenses

 

-

 

(17,221)

   

Accounts payable and accrued expenses

 

50,164

 

(35,009)

   

Convertible notes payable

 

11,916

 

-

NET CASH USED IN OPERATING ACTIVITIES

 

(49,081)

 

(439,603)

             

FINANCING ACTIVITIES:

       
 

Proceeds from convertible note payable

 

5,000

 

-

 

Advances from stockholder

 

34,932

 

-

 

Advances from officer

 

3,500

 

-

 

Advance from investor

 

315

 

-

NET CASH PROVIDED BY FINANCING ACTIVITIES:

 

43,747

 

-

   

-

       

NET (DECREASE) INCREASE IN CASH

 

(5,334)

 

(439,603)

             

CASH - BEGINNING OF YEAR

 

5,466

 

445,069

             

CASH - END OF YEAR

$

132

$

5,466

             

Non-Cash Transaction:

       
             

HPIL Holding common shares received as consideration in disposition of interest in unconsolidated affiliate

$

-

$

358,750

             

HPIL Holding common shares received as consideration in disposition of patents and related other assets

$

-

$

527,851

 

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

 


 

 

HPIL Holding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 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 was 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 December 31, 2016, the Company has yet to commence substantial operations. Expenses incurred from February 17, 2004 (date of inception) through December 31, 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 2017. 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 consolidated financial statements do not include any adjustments related to the recoverability and classification of the recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. All adjustments, consisting only of normal recurring items, considered necessary for fair presentation have been included in these consolidated financial statements.

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).


 

 

HPIL Holding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2016 AND 2015

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation and Basis of Presentation

 

These consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“GAAP”), and are expressed in United States dollars.  These consolidated 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.

 

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.

 

Use of Estimates

 

The preparation of consolidated financial statements, in conformity with US GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Significant estimates and assumptions made by the Company are related to the impairment assessment for long-lived assets and the fair value of the derivative liability. Actual results could differ from these estimates.

 

 


 

 

HPIL Holding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2016 AND 2015

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

 

Derivative Financial Instruments

 

The Company reviews the terms of convertible debt, equity instruments and other financing arrangements to determine whether there are embedded derivative instruments, including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument.

 

Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. To the extent that the initial fair values of the freestanding and/or bifurcated derivative instrument liabilities exceed the total proceeds received an immediate charge to income is recognized in order to initially record the derivative instrument liabilities at their fair value.

 

The discount from the face value of the convertible debt or equity instruments resulting from allocating some or all of the proceeds to the derivative instruments, together with the stated rate of interest on the instrument, is amortized over the life of the instrument through periodic charges to income, using the effective interest method.

 

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. If reclassification is required, the fair value of the derivative instrument, as of the determination date, is reclassified. Any previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed. Derivative instrument liabilities are classified in the consolidated balance sheets as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date.

 

Income Taxes

 

The Company accounts for income taxes whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company accounts for uncertain tax positions in accordance with ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes”. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial statements and applies to all federal or state income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement.

 

The Company’s tax returns are not currently under examination by the Internal Revenue Service (“IRS”) or state authorities.  All of the Company’s tax returns from inception to December 31, 2014, have been filed to the Internal Revenue Service (“IRS”) on June 3, 2015, and the Company’s tax return for the year ended December 31, 2015, has been filed to the IRS on September 15, 2016, and will be subject to examination by the IRS for up to three years after they are filed, and up to four years for the respective states. As of December 31, 2016, and 2015, there were no amounts that are required to be accrued in respect to uncertain tax positions.

 

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.

 

 


 

 

HPIL Holding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

 

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, 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. 

 

Intangible Assets

 

The Company entered into a brand license agreement (the “Brand License Agreement”) with WTFSKF.  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 sporting goods) bearing the Marks (see Note 6 for further discussion of the Brand License Agreement). The Company will amortize the License over the contractual life of the asset of 25 years. No amortization has been recognized as of December 31, 2016 and 2015, as the Brand License Agreement does not become effective until 2018.

 

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

 

Newly Adopted Accounting Pronouncements

 

In February 2015, the FASB issued ASU No. 2015-02, 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 has adopted this ASU No. 2015-02 as at and for the year ended December 31, 2016.  There was no material effect on the consolidated financial position or the consolidated statements of operations and comprehensive loss.

 


 

 

HPIL Holding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

 

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 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, 2017, 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 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: Classification of Certain Cash Receipts and Cash Payments”.  This ASU provides eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash    flows. ASU 2016-15 is effective for the fiscal year commencing after December 15, 2017. The Company is still assessing the impact that the adoption of ASU 2016-15 will have on the consolidated statement of cash flows.

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


 

 

HPIL Holding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

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.


 

 

HPIL Holding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

 

NOTE 3 – CAPITAL STOCK - CONTINUED

  

The Company entered into an Equity Purchase Agreement (the “Original Equity Purchase Agreement”) with Kodiak Capital Group, LLC (“KCG”) on August 12, 2016.  The Company and KCG executed an Amended and Restated Equity Purchase Agreement dated December 27, 2016 (the “Amended Equity Purchase Agreement”; together with the Original Equity Purchase Agreement, the “Equity Purchase Agreement”), which completely restates and makes minor revisions to the Original Equity Purchase Agreement, such as correcting the stated capitalization of the Company and extending the period of the Original Equity Purchase Agreement. The Company and KCG also entered into a Registration Rights Agreement dated August 12, 2016 (the “Registration Agreement”, and together with the Equity Purchase Agreement, the “Agreements”).  Pursuant to the Equity Purchase Agreement, the Company, at its sole and exclusive option, may issue and sell to KCG, from time to time as provided therein, and KCG would purchase from the Company shares of the Company’s common stock (“Shares”) equal to a value of up to $5,000,000.  Pursuant to the Registration Agreement, the Company has agreed to provide certain registration rights under the Equity Act of 1933, as amended, and applicable state laws with respect to all Shares issued in connection with the Equity Purchase Agreement.  Subject to the terms and conditions of the Equity Purchase Agreement, the Company, at its sole and exclusive option, may issue and sell to KCG, and KCG shall purchase from the Company, the Shares upon the Company’s delivery of written notices to KCG. In exchange of KCG signing the Securities Purchase Agreements, the Company issued to KCG a Convertible Promissory Note (Note 9) in the principal amount of $215,000 as payment of a commitment fee to induce KCG to enter into the Agreements. 

 

The aggregate maximum amount of all purchases that KCG shall be obligated to make under the Equity Purchase Agreement shall not exceed $5,000,000. Once a written notice is received by KCG, it shall not be terminated, withdrawn or otherwise revoked by the Company.  The purchase price per share for each purchase of Shares to be paid by KCG shall be 70% 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 Equity Purchase Agreement).  KCG 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).

 

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). In exchange of GPL signing the Securities Purchase Agreements, the Company issued to GPL a Convertible Promissory Note (Note 9) in the principal amount of $250,000 as payment of a commitment fee to induce GPL to enter into the Agreements.

 


 

 

HPIL Holding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

 

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 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.

 

 


 

 

HPIL Holding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

 

NOTE 5 – RELATED PARTY TRANSACTIONS AND BALANCES

  

The Company has advances payable to its current majority shareholder totaling $34,932 as of December 31, 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, Treasurer, Director and stockholder, totaling $3,500 as of December 31, 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 fiscal years ended December 31, 2016, and 2015, the Company incurred expenses of $Nil and $36,357, respectively, in relation to these services.  For the fiscal years ended December 31, 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), which are included in general and administrative expense.  For the fiscal years ended December 31, 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, which are included in general and administrative expense.  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 fiscal year ended December 31, 2016, and 2015, the Company incurred expenses of $Nil and $35,000, respectively, in relation to these services, which are included in general and administrative expense.

 

The Company used Bay City Transfer Agency & Registrar Inc. (“BCTAR”) to facilitate its stock transfers, corporate services and Edgar filings until November 9, 2016.  Mr. Amersey is listed with the Securities and Exchange Commission as a control person of BCTAR.  For the fiscal years ended December 31, 2016, and 2015, the Company incurred expenses of $2,710 and $9,682, respectively, in relation to these services, which are included in general and administrative expense.

 

The Company used the services of Freeland Venture Resources LLC, for Edgar filings and consulting services until April 14, 2016.  Mr. Amersey is a controlling shareholder in Freeland Venture Resources LLC.   For the fiscal years ended December 31, 2016, and 2015, the Company incurred expenses of $Nil and $8,040, respectively, in relation to these services which are included in general and administrative expense.

 

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 fiscal years ended December 31, 2016, and 2015, the Company incurred expenses of $Nil and $9,749, respectively, in relation to these services, which are included in general and administrative expense


 

 

HPIL Holding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

 

NOTE 6 – BRAND LICENSE

 

The Company, entered into a Brand License Agreement (the “Brand License Agreement”), dated December 29, 2014, with the World Traditional Fudokan Karate Do Federation (the “WTFSKF”). Under the Agreement: The “Licensed Brand and Trademarks” shall mean the brand, marks, logos, names, service marks, trademarks, trade names, unexpired patents, utility models, and applications identified below in this Note 6, and any other United States and foreign patents, utility models, and applications hereafter developed by the Licensor. The “Licensed Product(s)” shall mean the Licensor’s clothing, accessories and sporting goods, including basic sporting equipment and additional sporting merchandise, which are products covered, in whole or in part, by the Licensed Brand and Trademarks identified below in this Note 6 , and all modified, improved and derivative versions thereof manufactured by the Licensee after the Effective Date, and which are added to Exhibit B by agreement of the Parties. 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.

 

Impairment of Brand License Agreement

 

The Brand License of $6,805,600 was measured based on the fair value of the stock issued (on December 29, 2014, 752,000 common shares of HPIL Holding issued at $9.05 per share). Currently, based on the market value of the common shares, 752,000 shares would be equal to the value of $7,520 (752,000 common shares of HPIL Holding at $0.01 per share). In terms of measuring the Brand License on the value of the stock issued, the Company would have to write the value down to $7,520. Based on a qualitative assessment, the Company is uncertain of how its relationship with the WTFSKF will proceed in the future and thus based on this uncertainty, the Company deems it prudent to value the asset at the current market value of the stock held by the WTFSKF. The Company is simply recognizing the potential of it losing the Brand License due to factors beyond its control and based on this risk is reassessing the value of the Brand License to be the recoverable amount of the potential return of shares. Based on the Company assessment of the value of the Brand License, the Company has determined the fair value of the Brand License to be $7,520 (752,000 common shares of HPIL Holding at $0.01 per share). No amortization has been recognized as of December 31, 2016, as the Brand License Agreement is not effective until 2018. As a result, an impairment loss of $6,798,080 is included in the consolidated statements of loss and comprehensive loss. In the event of the Company losing the Brand License, the Company would seek to reacquire this stock and is thereby assessing the value of the Brand License at the value of the stock as determined by the market. The impairment loss does not necessarily impact on the future expected cash flow associated with the Brand License or with the Company’s intent or ability to renew or extend the Brand License Agreement. It simply recognizes the risk that the Company believes is extant.

 

 

 

 


 

 

HPIL Holding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

 

NOTE 6 – BRAND LICENSE - CONTINUED

 

Addendum to Brand License Agreement to Acquire Broadcast Rights

 

On May 19, 2017, the Company entered into an addendum to the Brand License Agreement (the “Addendum”) with the WTFSKF whereby the Company acquired the television, radio and internet rights to the WTFSKF World Karate Championship and the International Karate Gasshuku. The term of the agreement is for the life of the Brand License Agreement. The Addendum further enhances the ability of the Company to develop the market under the Brand License Agreement and the Addendum. However, the Company has chosen to follow a prudent and vigilant course of action in writing down the value of the Brand License. The Company has considered and taken note of Section 350-30-35, the Subsequent Measurement Section that provides guidance on an entity’s subsequent measurement and subsequent recognition of an item. Situations that may result in subsequent changes to the carrying amount include impairment, credit losses, fair value adjustments, depreciation and amortization, and so forth. The Company has also taken note of Section 350-30-50, the Disclosure Section that provides guidance regarding the disclosure in the notes to the financial statements. In some cases, disclosure may relate to disclosure on the face of the financial statements.

 

The Licensed Products

 

The Basic Licensed Products for Licensor’s affiliates (i.e. athletes, masters and leaders) shall mean: Kimono Karate, Complete Suit, Protection Woman/Man, Official Complete Suit, Hakama Complete Judge Suit, Embroidered Badge, Karate Belts Kyu / Dan, Official Complete Suit (all together “Basic Equipment”).

 

The Additional Licensed Products for Licensor’s affiliates (i.e. athletes, masters and leaders) and available for fans and amateurs, and for general costumers shall mean: Sport Suit, Running Top, Running Shorts, T-Shirts, Sport Shoes, Sport bag, Sport Cap, Cap, Gloves, Scarf, Socks, Karate Slippers, other products need to be approved by the Parties (all together “Additional Sporting Merchandise”).

 


 

 

HPIL Holding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

 

NOTE 7 – INCOME TAXES

 

The Company’s effective income tax rate of 0.0% differs from the federal statutory rate of 34% for the reason set forth below for the years ended December 31:

 

   

2016

 

2015

Income Taxes at the Statutory Rate

$

(2,567,800)

$

(31,500)

State and City Income Taxes

 

(302,100)

 

(3,700)

Change in Valuation Allowance

 

2,869,900

 

35,200

Total Income Tax

$

-

$

-

 

The following presents the components of the Company total income tax provision:

 

 

   

2016

 

2015

Current Expense

$

-

$

-

Deferred Benefit

 

(2,869,900)

 

(35,200)

Change in Valuation Allowance

 

2,869,900

 

35,200

Total

$

-

$

-

Deferred tax assets and liabilities reflect the net effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. The tax effect of primary temporary differences giving rise to the Company’s deferred tax assets for the years ended December 31, 2016 and 2015 are as follows:

 

 

 

2016

 

2015

Net Operating Losses

$

1,193,700

$

974,800

Brand License

 

2,583,300

 

-

Convertible Debt

 

67,600

 

-

Valuation Allowance

 

(3,844,600)

 

(974,800)

Total

$

-

$

-


 

The Company has recorded a valuation allowance to fully offset the net deferred assets based on the fact that the Company has not recognized taxable income since its inception. At December 31, 2016, the Company has deferred operating loss carry forwards totaling $3,141,450 that may be used to reduce future taxable income. The start-up expenses will begin to be amortized when the Company commences operations, and written off over a fifteen-year period.

 

NOTE 8 – PRODUCT RESELLER AGREEMENT

 

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, 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.


 

 

HPIL Holding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

 

NOTE 9 – CONVERTIBLE PROMISSORY NOTES

 

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.

On December 9, 2016, the Company issued to GPL a Convertible Promissory Note (the “Note”) in the principal amount of $5,000 in exchange for $5,000 in cash (the “5K Note”). The 5K Note accrues interest at the rate of 5% per annum and is due in full on or before June 9, 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 5K Note terms in the event certain capital reorganization, merger, or liquidity events of the Company as further described in the 5K Note.

 

On June 28, 2016, upon the signing of the Term Sheet (“Term Sheet”) related to the Equity Purchase Agreement, the Company issued to KCG a Convertible Promissory Note (the “Note”) in the principal amount of $215,000 as payment of a commitment fee to induce KCG to enter into the Agreements.  The Note is due in full on or before January 28, 2017.  The Company may prepay this Note in whole or in part at any time following at least 15 and no more than 60 days’ advance written notice to the Holder, provided that the Holder shall retain all rights of conversion until the date of repayment, notwithstanding the pendency of any prepayment notice.  KCG has the right to convert all or any portion of the note balance at any time at a conversion price per share of 50% of the Current Market Price (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. Upon an Event of Default (as defined in the Note), the principal amount increases to $250,000 and the conversion price shall decrease to 25% of the Current Market Price (as defined and calculated pursuant to the Note).

 

On December 27, 2016, the Company and KCG entered an Amendment and Waiver (the “Amendment and Waiver”), pursuant to which KCG waived certain defaults of the Company under the Note and amended the Note to delete a default provision requiring the Company to file a registration statement by a certain date, amend a default provision to reflect the Company’s listing on the OTCPink market, and extend the maturity date to July 28, 2017. The Original Equity Purchase Agreement, Amended Equity Purchase Agreement, Registration Agreement, Term Sheet, Note, and Amendment and Waiver contain other provisions customary to transactions of this nature.

 

On December 27, 2016, the Company and KCG entered into a Securities Purchase Agreement to which the Company sold to KCG a convertible promissory note in the amount of $60,000 for a purchase price of $50,000.  The Company issued to KCG a 15% Convertible Note (the “December Note”) in the principal amount of $60,000.  The December Note accrues interest at the rate of 15% per year and is due in full on or before December 27, 2017.  The Company may prepay this Note in whole at any time prior to 6 months from the issue date on at least 5 Trading Days (as defined in the December Note) but not more than 10 Trading Days notice, provided that the Holder shall retain all rights of conversion until the date of repayment, notwithstanding the pendency of any prepayment notice.  KCG has the right to convert all or any portion of the note balance at any time at a conversion price per share of forty percent (40%) lowest sale price for the Company’s Common Stock during the thirty (30) consecutive Trading Days immediately preceding the Conversion Date (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. 

 

On June 28, 2016, November 9, 2016, December 9, 2016 and December 27, 2016, the Company recorded a discount on the Notes.  This discount is amortized using the effective interest rate method at an interest rate of 58.70%, 100.04%, 132.66% and 48.38% for the June 28, 2016, November 9, 2016, December 9, 2016 and December 27, 2016 Notes, respectively, over the term of the Notes. 

 


 

 

HPIL Holding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

 

NOTE 9 – CONVERTIBLE PROMISSORY NOTES - CONTINUED

   

Year ended

 

 

December 31 ,2016

Face value of June 28, 2016 promissory note payable

$

215,000

Face value of November 9, 2016 promissory note payable

 

250,000

Face value of December 9, 2016 promissory note payable

 

5,000

Face value of December 27, 2016 promissory note payable

 

60,000

Total face value of promissory notes payable

 

530,000

Discount on promissory notes payable

 

(436,938)

Accretion of discount on promissory notes payable

 

109,234

Balance December 31, 2016

$

202,296

 

During the year ended December 31, 2016, accretion of discount of the Notes amounted to $109,234 (December 31, 2015 - $Nil).

 

During the year ended December 31, 2016, interest expense on the Notes amounted to $1,916 (December 31, 2015 - $Nil).

 

NOTE 10 – CONVERSION OPTION DERIVATIVE LIABILITY

The Company accounted for the conversion option of the Notes in accordance with ASC Topic 815 (“Derivatives and Hedging”), under which the conversion option meets the definition of a derivative instrument.

This conversion option derivative liability was measured at fair value on the dates of issue and at December 31, 2016 using a binomial lattice model, with changes in the fair value charged or credited, as applicable, to the consolidated statements of operations and comprehensive loss.

The inputs into the binomial lattice model for each issuance and at year end are as follows:

 

June 28,

November 9,

December 9,

December 27,

December 31,

2016

2016

2016

2016

2016

Closing share price

$2.50

$1.60

$1.60

$1.60

$1.60

Conversion price

$1.25

$1.20

$0.80

$0.64

$0.64- $1.20

Risk free rate

0.45%

0.72%

0.85%

0.89%

0.85%

Expected volatility

118%

118%

118%

118%

118%

Dividend yield

0%

0%

0%

0%

0%

Expected life

0.59 year

0.72 year

0.50 year

1 year

0.08 - 0.99 year

The fair value of the conversion option derivative liability, as determined using the binomial lattice model, was $438,854 at December 31, 2016. The change in the fair value of the conversion option derivative liability of $68,814 was primarily due to a decrease in the price of the Company’s common stock, and was recorded as a loss in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2016.

Conversion option derivative liability, beginning balance

$

-

Origination of conversion option derivative liability on June 28, 2016

 

215,000

Origination of conversion option derivative liability on November 9, 2016

 

158,854

Origination of conversion option derivative liability on December 9, 2016

 

5,000

Origination of conversion option derivative liability on December 31, 2016

 

60,000

Loss on change in fair value of conversion option derivative liability, December 31, 2016

 

68,814

Balance, December 31, 2016

$

507,668


 

 

HPIL Holding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

 

NOTE 11 – SUBSEQUENT EVENTS

 

On February 17, 2017, the Company and Power Up Lending Group, Ltd. (“Power Up”) entered into a Securities Purchase Agreement (the “Power Up Securities Purchase Agreement”), pursuant to which the Company sold to Power Up a convertible promissory note in the amount of $33,000 for a purchase price of $30,000.  Pursuant to the Power Up Securities Purchase Agreement, the Company issued to Power Up a 12% Convertible Note (the “Power Up Note”) in the principal amount of $33,000.  The Power Up Note accrues interest at the rate of 12% per year and is due in full on or before September 12, 2017.  The Company may prepay this Note in whole at any time prior to 6 months from the issue date on at least 3 Trading Days’ notice, subject to a variable prepayment penalty.  Power Up has the right to convert all or any portion of the note balance at any time at a conversion price per share of sixty-one percent (61%) of the average of the three (3) lowest sale price for the Company’s Common Stock during the fifteen (15) consecutive Trading Days immediately preceding the Conversion Date (as defined and calculated pursuant to the Power Up 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. 

 

On March 27, 2017, Kodiak Capital Group, LLC, (“KCG”) has claimed an event of default under a convertible promissory note in the principal amount of $215,000 issued by the company pursuant to the Company’s failure to deliver shares of the Company’s common stock pursuant to a conversion notice served on the company. KCG has also alleged various defaults with reference to a convertible promissory note in the principal amount of $60,000. As a result of these various alleged defaults KCG has sent the Company a claim in the sum of $2,608,572 as of March 27, 2017. KCG claims that the claim amount continues to increase in accordance to the terms of the notes.  The Company is disputing the payment of the $215,000 note with Kodiak and is considering initiating an action against KCG for obtaining the note by fraudulent means and may claim damages as well. Management believes that this claim has no merit. There is no litigation currently pending. The Company issued 3,661,150 shares of treasury common stock of the Company (the “Shares”) related to the conversion of convertible notes held by KCG amounting to $40,800 in the first quarter of 2017.

 

On April 11, 2017, the Company and GPL Ventures, LLC (“GPL”) entered into a Securities Purchase Agreement (the “GPL Securities Purchase Agreement”), pursuant to which the Company sold to GPL a convertible promissory note in the amount of $10,000 for a purchase price of $10,000.  Pursuant to the GPL Securities Purchase Agreement, the Company issued to GPL a 12% Convertible Note (the “GPL Note”) in the principal amount of $10,000.  The GPL Note accrues interest at the rate of 12% per year and is due in full on or before October 11, 2017.  The Company may prepay this Note in whole at any time prior to 30 days from the issue date on at least 3 Trading Days’ notice, upon payment of 125% of the outstanding balance of the GPL Note. GPL has the right to convert all or any portion of the note balance at any time at a conversion price per share of fifty percent (50%) lowest sale price for the Company’s Common Stock during the twenty (20) consecutive Trading Days immediately following the clearing of the converted shares (as defined and calculated in the GPL 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. 

 

On May 10, 2017, the Company and Auctus Funds, LLC (“Auctus”) entered into a Securities Purchase Agreement (the “Auctus Securities Purchase Agreement”), pursuant to which the Company sold to Auctus a convertible promissory note in the amount of $72,000 for a purchase price of $72,000.  Pursuant to the Auctus Securities Purchase Agreement, the Company issued to Auctus a 12% Convertible Note (the “Auctus Note”) in the principal amount of $72,000.  The Auctus Note accrues interest at the rate of 12% per year and is due in full on or before February 10, 2018.  The Company may prepay this Note in whole at any time prior to 60 days from the issue date on at least 5 Trading Days’ notice, upon payment of (i) 125% of the outstanding balance of the Auctus Note within 30 days of the issue date, or (ii) 130% of the outstanding balance of the Auctus Note if between 30 and 60 days after the issue date.  The Company shall have no prepayment right after 60 days.  Auctus has the right to convert all or any portion of the note balance at any time at a conversion price per share of thirty percent (30%) lowest sale price for the Company’s Common Stock during the twenty-five (25) consecutive Trading Days immediately preceding the Conversion Date (as defined and calculated pursuant to the Auctus 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. 


 

 

HPIL Holding

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

 

NOTE 11 – SUBSEQUENT EVENTS - CONTINUED

 

On May 19, 2017, the Company entered into an addendum to the Brand License Agreement (the “Addendum”) with the WTFSKF whereby the Company acquired the television, radio and internet rights to the WTFSKF World Karate Championship and the International Karate Gasshuku. The term of the agreement is for the life of the Brand License Agreement. The Addendum further enhances the ability of the Company to develop the market under the Brand License Agreement and the Addendum. However, the Company has chosen to follow a prudent and vigilant course of action in writing down the value of the Brand License. The Company has considered and taken note of Section 350-30-35, the Subsequent Measurement Section that provides guidance on an entity’s subsequent measurement and subsequent recognition of an item. Situations that may result in subsequent changes to the carrying amount include impairment, credit losses, fair value adjustments, depreciation and amortization, and so forth. The Company has also taken note of Section 350-30-50, the Disclosure Section that provides guidance regarding the disclosure in the notes to the financial statements. In some cases, disclosure may relate to disclosure on the face of the financial statements. The Brand License Agreement, including the Addendum, has been impaired on the books of the Company as discussed in Note 6 above.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

On April 16, 2015, the Company terminated the services of UHY, LLP (“UHY”) from its position as the Company’s independent registered public accounting firm. During the two most recent fiscal years, and through the date of our UHY’s dismissal, there were no disagreements on accounting and financial disclosures between the Company and UHY.

 

Our financial statements for the fiscal years ended December 31, 2015 and December 31, 2016, included in this report, have been audited by MNP, LLP (“MNP”). There have been no disagreements on accounting and financial disclosures with MNP through the date of this Form 10-K.

 

More information regarding this change may be found in the Company’s Current Report on Form 8-K filed April 21, 2015, and amended April 22, 2015.

 

ITEM 9A.

CONTROLS AND PROCEDURES

 

(a)

Evaluation of disclosure 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-K 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.

 

(b)

Management’s annual report on internal control over financial reporting.

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15 (f) and 15d- 15 (f) under the Exchange Act, for the Company.

 

Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could have a material effect on the financial statements.

 

Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements.  In addition, effective internal control at a point in time may become ineffective in future periods because of change in conditions or due to deterioration in the degree of compliance with our established policies and procedures.

 

A material weakness is a significant deficiency, or combination of significant deficiencies, that result in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

 

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of December 31, 2015, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on its evaluation under this framework, management concluded that our internal controls over financial reporting were ineffective as of December 31, 2016.

 

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2016, and identified the following material weaknesses:


 

 

 

Lack of Expertise.  There is a lack of expertise in the key functional areas of finance, accounting and financial reporting.

 

Lack of Segregation of Duties.  We have an inadequate number of personnel to properly implement control procedures.

 

Lack of Disclosure Controls.  There is a lack of disclosure controls to ensure adequate disclosures are made in our periodic filings.

 

Ineffective Oversight of Audit Committee.  The Audit Committee does not meet on a periodic basis.

 

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.

 

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit is the Company to provide only management’s report in the annual report.

 

(c)

Changes in internal control over financial reporting.

 

There were no changes in our internal control over financial reporting during the fiscal quarter ended December 31, 2016, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B.

OTHER INFORMATION

 

None.

 

PART III

 

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

 

Our current executive officers and directors and their ages are as follows:

 

Name

Age

Position(s)

Louis Bertoli

42

Chairman of the Board, President and CEO

Nitin Amersey

65

Director, CFO, Corporate Secretary and Treasurer

John B. Mitchell

67

Director

John Dunlap, III

58

Director

 

Set forth below is information relating to the business experience of each of our directors and executive officers.

 

Louis Bertoli, age 42, was appointed Chairman of the Board, Chief Executive Officer and President of the Company in June 2009. He also served as the Chairman of the Board, Chief Executive Officer and President of the Company’s wholly owned subsidiaries. Mr. Bertoli served as the Chief Financial Officer of the Company from April 2011 to March 2012.  He has over 12 years of experience in innovative technologies in the health care industries. He received a degree as a professional Surveyor in Brescia (Italy). Mr. Bertoli served as the Chief Executive Officer and President of MB Ingenia SRL (Italy), a private company, until November 2013. He served as the Chief Executive Officer, President and Director of GIOTOS Ltd. (UK), a private company until January 2017.

 

Nitin Amersey, age 65, was appointed Chief Financial Officer of the Company in March 2012, and serves as its Principal Accounting Officer.  In addition, Mr. Amersey previously served as our Chief Financial Officer from June 2009 through April of 2011.  Mr. Amersey has been the Director, Corporate Secretary and Treasurer of the Company since June 2009. He also served as the Chief Financial Officer and Director of the Company's wholly owned subsidiaries. He serves as the Chairman of TrueSkill Energen Pvt. Ltd. (India). He has over 43 years of experience in corporate management, international trade, marketing and corporate strategy. He is well versed in brand creation and management. Mr. Amersey has served in various capacities as an executive officer, director and chairman of companies operating in numerous industries. He continues to serve as a director of several companies, including OTC listed public companies. Additionally, he has extensive experience in textiles and fibers and has owned and managed farming operations, primarily focused in cotton. He has worked internationally in Canada, USA, India, the Caribbean and Japan. Mr. Amersey has a Master of Business Administration Degree from the University of Rochester (Rochester, N.Y.) and a Bachelor of Science in Business from Miami University (Oxford, Ohio). He graduated from Miami University as a member of Phi Beta Kappa and Phi Kappa Phi. Mr. Amersey also holds a Certificate of Director Education from the NACD Corporate Director's Institute.


 

 

 

John B. Mitchell, age 67, was appointed Director of the Company in May 2010. He is a Professor of Finance at Central Michigan University since 1975. Mr. Mitchell is also the Founder and President of the Chippewa Watershed Conservancy, a land trust operating in Clare, Isabella, Gratiot, Mecosta, and Montcalm counties of Michigan. Mr. Mitchell has authored or co-authored over 30 articles such as, “An Age-Based, Three-Dimensional Distribution Model Incorporating Sequence and Longevity Risks,” Journal of Financial Planning, 2012; “Retirement Withdrawals: Preventive Reductions and Risk Management,” Financial Services Review, 2011; “The Case for Flexible Retirement Planning,” Journal of Personal Finance, 2009; “Financial Implications of Accounting for Human Resources Using a Liability Model,” Journal of Human Resource Costing & Accounting, 2008; “Dynamic Retirement Withdrawal Planning,” Financial Services Review, 2006; “Citation Patterns in the Finance Literature,” Financial Management, 2001; and the “Stock Market Reaction to Plant Closings,” American Journal of Business, 1993.

 

John Dunlap, III, age 58, was appointed Director of the Company in May 2010. He currently owns Dunlap Group, a California-based advocacy and consulting firm, which opened in 2007 and largely represents advanced environmental technology firms throughout the globe. Mr. Dunlap has served in various capacities in the public sector, including service for four California Governors over the course of his 35 year career. He presently serves on the Board of Directors of Environmental Solutions Worldwide, Inc., where he has served since 2007. He previously served as President and CEO of the 20,000 member California Restaurant Association from 1998 to 2004. In 2003, he was appointed by California Governor Gray Davis to serve as Chairman of the Board of the State Compensation Insurance Fund. Mr. Dunlap also served five years in California Governor Pete Wilson's Administration as Chairman of the Board of the California Air Resources Board from 1994 to 1999, as well as serving as the Chief Deputy Director of the California Department of Toxic Substances Control from 1993 to 1994. Prior to his state service, Mr. Dunlap worked for the South Coast Air Quality Management District for over 11 years serving as Public Advisor. He also worked for California Congressman Jerry Lewis (R-Redlands), former House Appropriations Committee Chairman. Additionally, Mr. Dunlap served as a Commissioner and Executive Committee member of the California Travel and Tourism Commission under both California Governor's Arnold Schwarzenegger and Gray Davis, where he was involved in the planning and implementation of the state's tourism marketing and advertising program. Mr. Dunlap has been active with the California Travel Industry Association (CALTIA) serving as Chairman in 2002 and serving as the long-time Chair of their CALTIA Political Action Committee. Mr. Dunlap also has served on the Boards of the National Restaurant Association, the California Taxpayer's Association and the American Red Cross, as well as several privately held environmental companies.

 

Directors

 

Our bylaws authorize no less than one (1) and no more than eleven (11) directors.  We currently have set the number of Directors at four (4).

 

Term of Office

 

Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws.  Our officers are appointed by our board of directors and hold office until removed by the board.

 

Family Relationships

 

There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.

 

Significant Employees

 

We have no significant employees other than our officers.

 

Director or Officer Involvement in Certain Legal Proceedings

 

During the past five (5) years, none of the following occurred with respect to one of our present or former directors or executive officers: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or


 

 

executive officer either at the time of the bankruptcy or within two (2) years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of any competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

 

Director Independence

 

While we are not at this time required to have our board comprised of a majority of “independent directors” as we are not subject to the listing requirements of any national securities exchange or association, two (2) members of our board of directors (all members other than Louis Bertoli, our CEO, and Nitin Amersey, our CFO, Treasurer and Secretary) meet the definition of “independent” as promulgated by the rules and regulations of the American Stock Exchange.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Exchange Act requires a company’s directors, officers, and stockholders who beneficially own more than 10% of any class of equity securities of the Company registered pursuant to Section 12 of the Exchange Act (collectively referred to herein as the “Reporting Persons”), to file initial statements of beneficial ownership of securities and statements of changes in beneficial ownership of securities with respect to the company’s equity securities with the SEC.  All Reporting Persons are required by SEC regulation to furnish us with copies of all reports that such Reporting Persons file with the SEC pursuant to Section 16(a).  Based solely on our review of the copies of such reports and upon written representations of the Reporting Persons received by us, we believe that all Section 16(a) filing requirements applicable to such Reporting Persons have been met for 2016.

 

Committee of the Board of Directors

 

Our board of directors has established three (3) standing committees: (1) the Compensation Committee, (2) the Audit Committee and (3) the Nominating and Corporate Governance Committee. Each committee operates under a charter that has been approved by the board of directors and which will be available upon request to us.

 

Compensation Committee

 

Our board of directors has established a Compensation Committee, comprised of Mr. Dunlap and Mr. Mitchell.  All of the members of our Compensation Committee are independent directors. Our Compensation Committee is authorized, among other duties and powers as provided for in its Charter, to:

 

·        review and recommend the compensation arrangements for management, including the compensation for our chief executive officer;

·        establish and review general compensation policies with the objective of attracting and retaining superior talent, rewarding individual performance and achieving our financial goals;

·        review at least annually our policy regarding the frequency and schedule for equity awards to employee and directors and make recommendations to the board of directors of such changes as the Compensation Committee deems appropriate; and

·        annually review the compensation of directors and submit any recommendations for changes thereto to the board of directors.

 

Audit Committee

 

Our board of directors has established an Audit Committee, comprised of Mr. Mitchell and Mr. Dunlap.  Both of the members of our Audit Committee are independent directors. Mr. Mitchell serves as chairman of the Audit Committee.  Our board of directors has determined that Mr. Mitchell is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. Our Audit Committee is authorized, among other duties and powers as provided for in its Charter, to:

 

·        provide assistance to our board of directors in its oversight of the integrity of our accounting and financial reporting processes and of the audits of our financial statements;

·        provide assistance to our board of directors in its oversight of our compliance with legal and regulatory requirements;

·        provide assistance to our board of directors in its oversight of our outside auditor’s independence and qualifications;


 

 

·        provide assistance to the board of directors in its oversight of the performance of our internal audit function and outside auditors;

·        directly appoint, retain or terminate, compensate, and oversee and evaluate our outside auditors, and to approve all audit engagement fees and terms;

·        prior to the initial engagement of any public accounting firm to be our outside auditors, to obtain and review a written report from such firm regarding all relationships between such firm or its affiliates and the Company or persons in a financial reporting oversight role at the Company;

·        pre-approve and/or adopt policies governing audit committee pre-approval of, all audit services to be provided by our outside auditor;

·        pre-approve and/or adopt policies governing audit committee pre-approval of, all permitted non-audit services and related fees to be provided by the outside auditors;

·        review with management, our outside auditors and our internal auditors the adequacy of our internal controls, including computerized information system controls and security; and

·        review with management, our outside auditors and our internal auditors any related significant finding and recommendations of the outside auditors and/or the internal auditors together with management responses thereto.

 

Nominating and Corporate Governance Committee

 

Our board of directors has established a Nominating and Corporate Governance Committee, comprised of Mr. Dunlap and Mr. Mitchell, each of whom is an independent director of the Company.  Mr. Dunlap serves as chairman of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee is authorized, among other duties and powers as provided for in our Committee Authority and Responsibilities Policy to:

 

·        identify and nominate members of the board of directors;

·        oversee the evaluation of the board of directors and management;

·        evaluate and make recommendations to our board of directors concerning the size and structure of the board;

·        evaluate the performance of the members of the board of directors;

·        make recommendations to the board of directors as to the structure, composition and functioning of the board of directors and its committees; and

·        periodically review corporate governance trends and where appropriate, make recommendations to the Board of Directors on the governance of the Company.

 

We have no formal policy regarding board diversity.  Our Nominating and Corporate Governance Committee and board of directors may therefore consider a broad range of factors relating to the qualifications and background of nominees, which may include diversity, which is not only limited to race, gender or national origin.  Our Nominating and Corporate Governance Committee’s and board of directors’ priority in selecting board members is identification of persons who will further the interests of our stockholders through his or her established record of professional accomplishment, the ability to contribute positively to the collaborative culture among board members and professional and personal experiences and expertise relevant to our growth strategy.

 

Code of Ethics

 

On June 4, 2010, we adopted a code of ethics that applies to our officers, directors and employees.  We have filed a copy of our code of ethics as an exhibit to a previously filed registration statement.  The code of ethics remains in effect following the name change on May 8, 2012, and change of business plan on July 18, 2012.  You will be able to review these documents by accessing our public filings at the SEC’s website at www.sec.gov.  In addition, a copy of our code of ethics will be provided without charge upon written request to us by mail or on our website.  We intend to disclose any amendments to or waivers of certain provisions of our code of ethics in a current report on Form 8-K.

 

Related Persons Transactions Policy

 

On June 4, 2010, we adopted a written Related Party Transaction Policy for the review, approval and ratification of transactions involving the “related parties” of the Company.  The policy remains in effect following the name change on May 8, 2012, and change of business plan on July 18, 2012.  In each case, related parties includes directors and nominees for director, executive officers and immediate family members of the foregoing, as well as security holders known to beneficially own more than five percent of our common stock.  The policy covers any transaction, arrangement or relationship, or series of transactions, arrangements or relationships, in which we were, is or will be a participant and in which a related party has any direct or indirect interest.  The policy is administered by our board of directors.

 


 

 

ITEM 11.

EXECUTIVE COMPENSATION

 

From our incorporation on February 17, 2004 and subsequent merger and re-domicile on October 7, 2009, name change on May 8, 2012, and change of business plan on July 18, 2012, through fiscal year ending December 31, 2012, we did not compensate any of our officers, directors or employees. The Company did not compensate any of our officers, directors or employees for the fiscal year ending December 31, 2016, and 2015.

 

We have no employment agreements with any of our directors or executive officers.  We have no pension, health, annuity, bonus, insurance, stock options, profit sharing or similar benefit plans.

 

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, AND MANAGEMENT, AND RELATED STOCKHOLDER MATTERS

 

The following table lists, as of July 11, 2017, the number of shares of our common stock that are beneficially owned by (i) each person or entity known to us to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group.  Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission.  Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security.  The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days.  Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.

 

The percentages below are calculated based on 50,969,150 shares of our common stock and issued and outstanding as of July 11, 2017:

 

Name of Beneficial Owner

Amount of Common Stock Beneficially Owned

Percentage of Common Stock Beneficially Owned

Louis Bertoli (1)

43,220,000

84.80%

Nitin Amersey (2)

10,600

*

John B. Mitchell (3)

500

*

John Dunlap, III (4)

500

*

All directors and executive officers as a group (4 people)

43,231,600

84.82%

* Less than 1%

 

(1) Mr. Bertoli is our Chairman of the Board and the President and Chief Executive Officer of HPIL Holding.

 

(2) Mr. Amersey is a Director and the Chief Financial Officer, Corporate Secretary and Treasurer of HPIL Holding.  5,000 shares owned directly and 5,600 shares owned indirectly through Amersey Investments LLC.

 

(3) Mr. Mitchell is a Director of HPIL Holding.

 

(4) Mr. Dunlap is a Director of HPIL Holding.

 


 

 

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

 

The Company has advances payable to its current majority shareholder totaling $34,932 as of December 31, 2016.  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 $3,500 as of December 31, 2016. These advances were made to be used for working capital. These advances are unsecured, non-interest bearing and due on demand.

 

Since June 18, 2009¸ and until November 9, 2016, Bay City Transfer Agency and Registrar Inc. has acted as our transfer agent, and for corporate services and Edgar filings.  For the year ended December 31, 2016, the Company paid $2,710 to Bay City Transfer Agency and Registrar Inc. for services rendered. Mr. Amersey is listed with the Securities and Exchange Commission as a control person of Bay City Transfer Agency and Registrar Inc.

 

Except as otherwise indicated herein, there have been no related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-X.

 

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

 

The following table sets forth the aggregate fees billed to us by MNP, LLP, the Company’s independent registered public accounting firm during the fiscal year ended December 31, 2016, and 2015, and UHY, LLP, the Company’s prior independent registered public accounting firm, during the fiscal years ended December 31, 2016 and 2015:

 

 

2016

2015

Audit Fees (1)

$

40,564

$

61,496

Audit Related Fees (2)

 

 

 

 

Tax Fees (3)

 

6,226

 

37,720

All Other Fees (4)

 

 

 

 

Total Fees Paid to Auditor

$

46,790

$

99,216

 

(1) Audit fees consist of fees billed for professional services rendered for the audit of the Company’s annual financial statements and review of the interim consolidated financial statements included in quarterly reports and services in connection with statutory and regulatory filings or engagements.

 

(2) Audit-Related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements and are not reported under "Audit Fees".

 

(3) Tax fees consist of fees billed for professional services rendered for tax compliance, tax advice and tax planning (domestic and international). These services include assistance regarding federal, state and international tax compliance, acquisitions and international tax planning.

 

(4) There were no fees that were classified as All Other Fees as of the fiscal years ended December 31, 2016, and 2015.

 

Under the Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by our independent accountants must now be approved in advance by our Audit Committee to assure that such services do not impair the accountants’ independence from us.  The Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy (the “Policy”) which sets forth the procedures and the conditions pursuant to which services to be performed by the independent accountants are to be pre-approved.  Pursuant to the Policy, certain services described in detail in the Policy may be pre-approved on an annual basis together with pre-approved maximum fee levels for such services.  The services eligible for annual pre-approval consist of services that would be included under the categories of Audit Fees, Audit-Related Fees and Tax Fees in the above table as well as services for limited review of actuarial reports and calculations.  If not pre-approved on an annual basis, proposed services must otherwise be separately approved prior to being performed by independent accountants.  In addition, any services that receive annual pre-approval but exceed the pre-approved maximum fee level also will require separate approval by the entire Board acting as our Audit Committee prior to being performed.  The Audit Committee, may delegate authority to pre-approve audit and non-audit services to any member, but may not delegate such authority to management.  The tax services represent $6,226, or 13% of the total for audit related fees, tax fees and all other fees paid during the fiscal year ending December 31, 2016.


 

 

 

PART IV

 

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

(a)

1) The information required by this item is included in Item 8 of Part II of this annual report.

 

2) The information required by this item is included in Item 8 of Part II of this annual report.

 

3) Exhibits: See Index to Exhibits, which is incorporated by reference in this Item. The Exhibits listed in the accompanying Index to Exhibits are filed or incorporated by reference as part of this Annual Report.

 

(b)

Exhibits. See Index to Exhibits, which is incorporated by reference in this Item. The Exhibits listed in the accompanying Index to Exhibits are filed or incorporated by reference as part of this annual report.

 

(c)

Not applicable.

 

 


 

 

Index to Exhibits

                                                                                                                                                                                

Exhibit

 

Description

 

 

 

*2.1

 

Plan of Merger by and among HPIL Holding, HPIL HEALTHCARE Inc., HPIL ENERGYTECH Inc., HPIL WORLDFOOD Inc., HPIL REAL ESTATE Inc., HPIL GLOBALCOM Inc., and HPIL ART&CULTURE Inc. dated May 27, 2015

 

 

 

*3.1

 

Articles of Incorporation

 

 

 

*3.2

 

By-laws

 

 

 

*10.1

 

Brand License Agreement entered into by and between HPIL Holding and World Traditional Fudokan Shotokan Karate-Do Federation on December 29, 2014

 

 

 

*10.2

 

Addendum to Brand License Agreement entered into by and between HPIL Holding and World Traditional Fudokan Shotokan Karate-Do Federation on May 19, 2017.

 

*10.3

 

 

Securities Purchase Agreement, by and between the HPIL Holdings and GPL Ventures, LLC, dated November 9, 2016

*10.4

 

Equity Purchase Agreement, by and between the Company and KODIAK CAPITAL GROUP, LLC, dated August 12, 2016.

*10.5

 

 

*10.6

 

 

Amended and Restated Equity Purchase Agreement, by and between the Company and KODIAK CAPITAL GROUP, LLC, dated December 27, 2016.  

 

Securities Purchase Agreement, by and between the Company and KODIAK CAPITAL GROUP, LLC, dated December 27, 2016.

 

†31.1

 

Certification of our Chief Executive Officer pursuant to Rule 13(a)-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended

 

 

 

†31.2

 

Certification of our Chief Financial Officer pursuant to Rule 13(a)-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended

 

 

 

‡32.1

 

Certification of our Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

 

 

 

‡32.2

 

Certification of our Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

 

 

 

101.INS

 

XBRL Instance Document

 

 

 

101.SCH

 

XBRL Taxonomy Extension Schema Document

 

 

 

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

 

 

 

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document

 

 

 

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document

 

 

 

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

 

*

Included in previously filed reporting documents.

Filed herewith

Furnished herewith

 

 


 

 

Signatures

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

HPIL Holding

 

 

 

 

 

 

Dated: July 11, 2017

By: 

/s/ Louis Bertoli

 

 

Louis Bertoli

 

 

Director, CEO, President, and Chairman of the Board of Directors

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signatures

Title(s)

Date

/s/ Louis Bertoli

Louis Bertoli

Director, President, Chief Executive Officer (principal executive officer), and Chairman of the Board of Directors

July 11, 2017

 

 

/s/ Nitin Amersey

Nitin Amersey

Director, Chief Financial Officer (principal financial officer and principal accounting officer), Corporate Secretary and Treasurer

July 11, 2017

 

 

 

 

 

/s/ John B. Mitchell

Director

July 11, 2017

John B. Mitchell

 

 

 

 

 

 

/s/ John Dunlap, III

Director

July 11, 2017

John Dunlap, III