U.S.
SECURITIES AND EXCHANGE COMMISSION

Washington,
D.C. 20549



Form
10-Q



(Mark
One)



☒
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For
the quarterly period ended June 30, 2017



☐ TRANSITION
REPORT UNDER SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934



For
the transition period from ______________ to ______________



Commission
File Number: 333-121787



HPIL
HOLDING

(Exact
name of registrant as specified in its charter)



|Nevada                              |  | 30-0868937             
|----------------------------------- |  | -----------------------
|(State
    or other jurisdiction of |  | (I.R.S.
    Employer   
|incorporation
    or organization)  |  | Identification
    No.)



3738
Coach Cove, Sanford, MI 48657




(Address of principal executive offices)



(248)
750-1015




(Registrant’s
telephone number, including area code)



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



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



|Large
    accelerated filer | ☐                                                   | Accelerated
    filer         | ☐
|--------------------------- | --------------------------------------------------- | ----------------------------- | -
|Non-accelerated
    filer   | ☐
    (Do not check if a smaller reporting company) | Smaller
    reporting company | ☒
|                            | Emerging
    growth company                         | ☐                            



If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



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



As
of August 24, 2017, there were 65,969,150 shares of common stock, par value $0.0001, issued and outstanding.



















HPIL
HOLDING



FORM
10-Q



INDEX



|                                   | Page                                                                                 
|---------------------------------- | -------------------------------------------------------------------------------------
|PART
    I – FINANCIAL INFORMATION |                                                                                      
|                                   |                                                                                      
|Item 1.                            | Unaudited Condensed Financial Statements                                             
|Item 2.                            | Management’s Discussion and Analysis of Financial
Condition and Results of Operations
|Item 3.                            | Quantitative and Qualitative Disclosures About Market
Risk                           
|Item 4.                            | Controls and Procedures                                                              
|                                   |                                                                                      
|PART
    II – OTHER INFORMATION    |                                                                                      
|                                   |                                                                                      
|Item 1.                            | Legal Proceedings                                                                    
|Item 1A.                           | Risk Factors                                                                         
|Item 2.                            | Unregistered Sales of Equity Securities and Use of Proceeds                          
|Item 3.                            | Defaults Upon Senior Securities                                                      
|Item 4.                            | Mine Safety Disclosures                                                              
|Item 5.                            | Other Information                                                                    
|Item 6.                            | Exhibits                                                                             
|SIGNATURES                         | 22                                                                                   












PART
I – FINANCIAL INFORMATION



Item
1. Financial Statements.



HPIL Holding

UNAUDITED CONDENSED INTERIM BALANCE
SHEETS



|                                                                                                                                                                                               |  | As of    |             |   | As of        |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | ----------- | - | ------------ | -
|                                                                                                                                                                                               |  | June 30, |             |   | December 31, |  
|                                                                                                                                                                                               |  | 2017     |             |   | 2016         |  
|                                                                                                                                                                                               |  |          |             |   |              |  
|ASSETS                                                                                                                                                                                        
|                                                                                                                                                                                               |  |          |             |   |              |  
|Current Assets:                                                                                                                                                                                |  |          |             |   |              |  
|Cash                                                                                                                                                                                           |  | $        | 1,312       |   |              | $
|Accounts receivable (Note 4)                                                                                                                                                                   |  |          | 71,319      |   |              |  
|Total current Assets                                                                                                                                                                           |  |          | 72,631      |   |              |  
|                                                                                                                                                                                               |  |          |             |   |              |  
|Other Assets:                                                                                                                                                                                  |  |          |             |   |              |  
|Brand license (Note 5)                                                                                                                                                                         |  |          | 7,520       |   |              |  
|Total other Assets                                                                                                                                                                             |  |          | 7,520       |   |              |  
|                                                                                                                                                                                               |  |          |             |   |              |  
|Total Assets                                                                                                                                                                                   |  | $        | 80,151      |   |              | $
|                                                                                                                                                                                               |  |          |             |   |              |  
|LIABILITIES
AND STOCKHOLDERS’ DEFICIT                                                                                                                                                         
|                                                                                                                                                                                               |  |          |             |   |              |  
|Current Liabilities:                                                                                                                                                                           |  |          |             |   |              |  
|Accounts payable and accrued expenses                                                                                                                                                          |  | $        | 63,213      |   |              | $
|Advances from stockholder (Note 4)                                                                                                                                                             |  |          | 25,150      |   |              |  
|Advances from officer (Note 4)                                                                                                                                                                 |  |          | -           |   |              |  
|Advance from investor                                                                                                                                                                          |  |          | 315         |   |              |  
|Convertible promissory notes (Note 6)                                                                                                                                                          |  |          | 556,429     |   |              |  
|Conversion option derivative liability (Note 7)                                                                                                                                                |  |          | 757,934     |   |              |  
|Total current Liabilities                                                                                                                                                                      |  | $        | 1,403,041   |   |              | $
|                                                                                                                                                                                               |  |          |             |   |              |  
|                                                                                                                                                                                               |  |          |             |   |              |  
|Stockholders’ Deficit:                                                                                                                                                                         |  |          |             |   |              |  
|Common stock par value $0.0001; 400,000,000 shares authorized; 50,969,150 issued and outstanding
    at June 30, 2017 (Note 3) 47,308,000 issued and outstanding at December 31, 2016 (Note 3) |  |          | 5,097       |   |              |  
|Additional paid-in capital                                                                                                                                                                     |  |          | 9,520,522   |   |              |  
|Accumulated deficit                                                                                                                                                                            |  |          | (10,848,509 | ) |              |  
|Total Stockholders’ Deficit                                                                                                                                                                    |  |          | (1,322,890  | ) |              |  
|                                                                                                                                                                                               |  |          |             |   |              |  
|Total Liabilities and Stockholders' Deficit                                                                                                                                                    |  | $        | 80,151      |   |              | $
|Going Concern (Note 1)                                                                                                                                                                         |  |          |             |   |              |  
|Subsequent Events (Note 8)                                                                                                                                                                     |  |          |             |   |              |  



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





1








HPIL Holding

UNAUDITED CONDENSED INTERIM
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)



|                                                                                       |  | For the Three |               |   | For the Three |   |            | For the Six  |  |   | For the Six  |  
|-------------------------------------------------------------------------------------- |  | ------------- | ------------- | - | ------------- | - | ---------- | ------------ |  | - | ------------ | -
|                                                                                       |  | Months Ended  |               |   | Months Ended  |   |            | Months Ended |  |   | Months Ended |  
|                                                                                       |  | June 30,      |               |   | June 30,      |   |            | June 30,     |  |   | June 30,     |  
|                                                                                       |  | 2017          |               |   | 2016          |   |            | 2017         |  |   | 2016         |  
|                                                                                       |  |               |               |   |               |   |            |              |  |   |              |  
|Expenses:                                                                              |  |               |               |   |               |   |            |              |  |   |              |  
|General and administrative (Note 4)                                                    |  | $             | 63,804        |   |               | $ | 14,680     |              |  | $ | 97,514       |  
|Total expenses                                                                         |  |               | 63,804        |   |               |   | 14,680     |              |  |   | 97,514       |  
|                                                                                       |  |               |               |   |               |   |            |              |  |   |              |  
|Other income (expense):                                                                |  |               |               |   |               |   |            |              |  |   |              |  
|Accretion expense (Note 6)                                                             |  |               | (244,099      | ) |               |   | -          |              |  |   | (376,547     | )
|Gain (loss) on change in fair value of conversion option derivative liability (Note 7) |  |               | 1,595,288     |   |               |   | -          |              |  |   | (190,867     | )
|                                                                                       |  |               |               |   |               |   |            |              |  |   |              |  
|Net income (loss) and comprehensive income (loss) available to common shareholders     |  | $             | 1,287,385     |   |               | $ | (14,680    | )            |  | $ | (664,928     | )
|                                                                                       |  |               |               |   |               |   |            |              |  |   |              |  
|Common shares                                                                          |  |               |               |   |               |   |            |              |  |   |              |  
|Outstanding - Basic                                                                    |  |               | 50,191,247    |   |               |   | 47,308,000 |              |  |   | 50,191,247   |  
|Outstanding - Diluted                                                                  |  |               | 1,298,518,694 |   |               |   | 47,308,000 |              |  |   | 50,191,247   |  
|                                                                                       |  |               |               |   |               |   |            |              |  |   |              |  
|Net income (loss) available to common shareholders                                     |  |               |               |   |               |   |            |              |  |   |              |  
|Outstanding - Basic                                                                    |  | $             | 0.02          |   |               | $ | (0.00      | )            |  | $ | (0.01        | )
|Outstanding - Diluted                                                                  |  | $             | (0.00         | ) |               | $ | (0.00      | )            |  | $ | (0.01        | )



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





2








HPIL Holding

UNAUDITED CONDENSED
INTERIM STATEMENTS OF CASH FLOWS





|                                                                       |  | For the Six  |          |   | For the Six  |  
|---------------------------------------------------------------------- |  | ------------ | -------- | - | ------------ | -
|                                                                       |  | Months Ended |          |   | Months Ended |  
|                                                                       |  | June 30,     |          |   | June 30,     |  
|                                                                       |  | 2017         |          |   | 2016         |  
|                                                                       |  |              |          |   |              |  
|OPERATING ACTIVITIES:                                                  |  |              |          |   |              |  
|Net loss                                                               |  | $            | (664,928 | ) |              | $
|Adjustment for non-cash items:                                         |  |              |          |   |              |  
|Accretion expense                                                      |  |              | 376,547  |   |              |  
|Loss on change in fair value of conversion option derivative liability |  |              | 190,867  |   |              |  
|Accrued interest                                                       |  |              | 13,872   |   |              |  
|Adjustments for changes in working capital:                            |  |              |          |   |              |  
|Accounts receivable                                                    |  |              | (66,319  | ) |              |  
|Accounts payable and accrued expenses                                  |  |              | 4,509    |   |              |  
|NET CASH USED IN OPERATING ACTIVITIES                                  |  | $            | (145,538 | ) |              | $
|                                                                       |  |              |          |   |              |  
|FINANCING ACTIVITIES:                                                  |  |              |          |   |              |  
|Proceeds from convertible notes payable                                |  | $            | 160,000  |   |              | $
|(Repayment to) advance from stockholder                                |  |              | (9,782   | ) |              |  
|Repayment to officer                                                   |  |              | (3,500   | ) |              |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES:                             |  | $            | 146,718  |   |              | $
|                                                                       |  |              |          |   |              |  
|NET INCREASE (DECREASE) IN CASH                                        |  | $            | 1,180    |   |              | $
|                                                                       |  |              |          |   |              |  
|CASH - BEGINNING OF PERIOD                                             |  |              | 132      |   |              |  
|                                                                       |  |              |          |   |              |  
|CASH - END OF PERIOD                                                   |  | $            | 1,312    |   |              | $



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





3






HPIL
Holding

NOTES
TO UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS

FOR
THE SIX MONTHS ENDED JUNE 30, 2017 AND 2016



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.
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.



The
concentration of the Company has become the consulting services and the development of products related to the Brand License Agreement
(see Note 5 for further discussion of the Brand License Agreement). As of June 30, 2017, the Company has yet to commence substantial
operations. Expenses incurred from February 17, 2004 (date of inception) through June 30, 2017, 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 unaudited condensed interim 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 unaudited condensed interim 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 5) 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
2 – SIGNIFICANT ACCOUNTING POLICIES



Basis
of Presentation



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



Unaudited
Condensed Interim Financial Statements



These
unaudited condensed interim financial statements have been prepared on the same basis as the annual financial statement and should
be read in conjunction with those annual financial statements filed on Form 10-K for the year ended December 31, 2016. In the
opinion of management, these unaudited condensed interim financial statements reflect adjustments, necessary to present fairly
the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations
for such periods are not necessarily indicative of the results for a full year or for any future period.



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.





4






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 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.



Impairment
of Long-Lived Assets



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



Research
and Development



The
Company is engaged in research and development in respect to the Company’s Brand License Agreement with World Traditional
Fudokan Shotokan Karate-Do Federation, a worldwide karate federation based in Switzerland (“WTFSKF”). 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 5 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 June 30,
2017, and 2016, as the Brand License Agreement does not become effective until 2018.



Net
Loss Per Share



Basic
loss per share is computed by dividing net loss and comprehensive 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
conversion of the convertible debt provided the result is not anti-dilutive.



Recently
Adopted 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’s adoption of this standard did not have a significant impact on the unaudited
interim 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’s adoption of this standard did not have a significant impact on
the unaudited interim financial statements.





5






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’s adoption of this standard did not have a significant impact on the unaudited interim
financial statements.



Recently
Issued Accounting Pronouncements



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 unaudited
condensed interim financial statements. The Company is currently evaluating the impact of the new standard on its 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 unaudited condensed interim 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 unaudited condensed interim statement of cash flows.



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



NOTE
3 – CAPITAL STOCK



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.





6






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 6)
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 6) in the principal amount of
$250,000 as payment of a commitment fee to induce GPL to enter into the Agreements.



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 $40,800 convertible notes held by KCG during the
period ended March 31, 2017.



On
August 14, 2017, the Company filed a Certificate of Amendment with the Nevada Secretary of State increasing the Company’s
authorized stock to ten billion, seven hundred three million (10,703,000,000) which consist of: (a) Three Million Ten (3,000,010)
shares of preferred stock, par value $0.0001 per share (the “Preferred Stock”); and (b) Ten billion, six hundred ninety-nine
million, nine hundred ninety-nine thousand, nine hundred ninety (10,699,999,990) shares of common stock, par value $0.0001 per
share (the “Common Stock”). In addition, Certificates of Designation for Series A preferred stock and Series B preferred
stock were filed with the Nevada Secretary of State on August 14, 2017 (the “Designations”). Pursuant to the Designations,
a total of 10 shares of the Corporation’s Preferred Stock was authorized as a series known as Series A Preferred Stock,
par value $0.0001 per share (the “Series A Stock”) and a total of 3,000,000 shares of the Corporation’s Preferred
Stock was authorized as a series known as Series B Preferred Stock, par value $0.0001 per share (the “Series B Stock”).
The designations set forth the voting rights, dividend rights, conversion rights, dividend entitlements and other rights and obligations
of the Common, Preferred A and Preferred B Classes of Stock, each in accordance with the Company’s Form14C
filing made on April 20, 2017.





7






NOTE
4 – RELATED PARTY TRANSACTIONS AND BALANCES



The
Company has advances payable to its current majority shareholder totaling $25,150 as of June 30, 2017, and $34,932 as of December
31, 2016. During the six months ended June 30, 2017, $9,782 were reimbursed to the Company’s current majority shareholder.
During the three months ended June 30, 2017, $150 were advanced to the Company’s current majority shareholder. These advances
were made to be used for working capital. These advances are unsecured, non-interest bearing and due on demand.



The
Company had advances payable to its current Chief Financial Officer, who is also the Company’s Corporate Secretary, Treasurer,
Director and stockholder, totaling $Nil as of June 30, 2017, and $3,500 as of December 31, 2016. These advances were made to be
used for working capital. During the six months ended June 30, 2017, $Nil were reimbursed to the Company’s current Chief
Financial Officer. During the three months ended March 31, 2017, $3,500 were reimbursed to the Company’s current Chief Financial
Officer. These advances are unsecured, non-interest bearing and due on demand. During the six months ended June 30, 2017, the
Company advanced funds to the Chief Financial Officer, totaling $38,064, and $Nil as of December 31, 2016, which are included
in accounts receivable in the unaudited condensed interim balance sheets. During the three months ended June 30, 2017, the Company
advanced funds to its current Chief Financial Officer totaling $7,000, which are included in accounts receivable in the unaudited
condensed interim balance sheets. These receivables are non-interest bearing and due on demand.



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 six months ended June 30, 2017, and 2016, the Company incurred expenses of $Nil and $2,710, respectively,
in relation to these services. For the three months ended June 30, 2017, and 2016, the Company incurred expenses of $Nil and $1,479,
respectively, in relation to these services. The Company has receivables from BCTAR, totaling $27,000 as of June 30, 2017, and
$Nil as of December 31, 2016, which are included in accounts receivable in the unaudited condensed interim balance sheets. During
the three months ended June 30, 2017, the Company advanced funds to BCTAR totaling $13,000, which are included in accounts receivable
in the unaudited condensed interim balance sheets. These receivables are non-interest bearing and due on demand.



NOTE
5 – 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, 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, 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.





8






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 has simply
recognized the potential of it losing the Brand License due to factors beyond its control and based on this risk has reassessed
the value of the Brand License to be the recoverable amount of the potential return of shares during the year ended December 31,
2016. 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 during the
period ended June 30, 2017 and the year ended December 31, 2016, as the Brand License Agreement is not effective until 2018. As
a result, an impairment loss of $NIL (December 31, 2016- $6,798,080) is included in the unaudited condensed interim 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.



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”).



NOTE
6 – 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 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 5K 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 5K 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.





9






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 “June Note”) in the principal amount of $215,000 as payment of a
commitment fee to induce KCG to enter into the Agreements. The June Note is due in full on or before January 28, 2017. The Company
may prepay this June 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 June 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 June Note), which is
adjustable in accordance with the June Note terms in the event certain capital reorganization, merger, or liquidity events of
the Company as further described in the June Note. Upon an Event of Default (as defined in the June 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 June Note). During the period ended June 30, 2017, the June Note is in default and the principal of the June Note was increased
to $250,000 and the conversion price was 25% of the Current Market Price.



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 December Note), which is adjustable in accordance with
the December Note terms in the event certain capital reorganization, merger, or liquidity events of the Company as further described
in the December Note.



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. 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 Power Up 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 Power Up Note terms in the event certain capital reorganization, merger, or liquidity events of the Company
as further described in the Power Up Note.





10






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 GPL 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 GPL Note
terms in the event certain capital reorganization, merger, or liquidity events of the Company as further described in the GPL
Note. On May 24, 2017, the Company amended the GPL Note to be issued on May 24, 2017 and mature on November 24, 2017.



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 Auctus Note terms in the event
certain capital reorganization, merger, or liquidity events of the Company as further described in the Auctus 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. The claimed defaults are the result of KCG’s
inability to sell the Company’s common stock under Rule 144 due to the Company’s then delinquent filings. 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. 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.



The
Company is late in filing it’s 10Q for the second quarter of 2017. Its Convertible Promissory Notes are in Default as a
result of the late filing.





11






On
June 28, 2016, November 9, 2016, December 9, 2016, December 27, 2016, February 17, 2017, April 11, 2017, and May 10, 2017, the
Company recorded a discount on the various convertible promissory notes. This discount is amortized using the effective interest
rate method at an interest rate of 58.70%, 100.04%, 132.66%, 48.38%, 96.16%, 105.71%, and 46.38% for the June 28, 2016, November
9, 2016, December 9, 2016, December 27, 2016, February 17, 2017, April 11, 2017, and May 10, 2017, Notes, respectively, over the
term of the Notes.



|                                                                                 |  | Period ended  |         
|-------------------------------------------------------------------------------- |  | ------------- | --------
|                                                                                 |  | June 30, 2017 |         
|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 
|Face value of February 17, 2017, promissory note payable                         |  |               | 33,000  
|Face value of June 28, 2016, promissory note payable converted into common stock |  |               | (40,800 
|Face value of April 11, 2017, promissory note payable                            |  |               | 10,000  
|Face value of May 10, 2017, promissory note payable                              |  |               | 72,000  
|Discount on promissory notes payable                                             |  |               | (110,486
|Accretion of discount on promissory notes payable                                |  |               | 376,547 
|Accrued interest                                                                 |  |               | 13,872  
|Balance June 30, 2017                                                            |  | $             | 556,429 



During
the six months ended June 30, 2017, accretion of discount of the various convertible promissory notes amounted to $376,547 (June
30, 2016 - $Nil).



During
the three months ended June 30, 2017, accretion of discount of the various convertible promissory notes amounted to $244,099 (June
30, 2016 - $Nil).



During
the six months ended June 30, 2017, interest expense on the various convertible promissory notes amounted to $13,872 (June 30,
2016 - $Nil).



During
the three months ended June 30, 2017, interest expense on the various convertible promissory notes amounted to $7,967 (June 30,
2016 - $Nil).



NOTE
7 – 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 June 30, 2017, and December 31,
2016, using a binomial lattice model, with changes in the fair value charged or credited, as applicable, to the unaudited condensed
interim statements of operations and comprehensive loss.





12






The
inputs into the binomial lattice model for each issuance and at June 30, 2017, March 31, 2017 and December 31, 2016, are as follows:







|                  |  | Closing share price |        |  | Conversion 
price |   |                  | Risk free rate |  |  | Expected volatility |   |  | Dividend yield |     |   | Expected life
|----------------- |  | ------------------- | ------ |  | ----------------- | - | ---------------- | -------------- |  |  | ------------------- | - |  | -------------- | --- | - | -------------
|June 28, 2016     |  | $                   | 2.50   |  |                   | $ | 1.25             |                |  |  | 0.45                | % |  |                | 118 | % |              
|November 9, 2016  |  | $                   | 1.60   |  |                   | $ | 1.20             |                |  |  | 0.72                | % |  |                | 118 | % |              
|December 9, 2016  |  | $                   | 1.60   |  |                   | $ | 0.80             |                |  |  | 0.85                | % |  |                | 118 | % |              
|December 27, 2016 |  | $                   | 1.60   |  |                   | $ | 0.64             |                |  |  | 0.89                | % |  |                | 118 | % |              
|December 31, 2016 |  | $                   | 1.60   |  |                   | $ | 0.64- $1.20      |                |  |  | 0.85                | % |  |                | 118 | % |              
|February 17, 2017 |  | $                   | 0.02   |  |                   | $ | 0.01             |                |  |  | 1.27                | % |  |                | 118 | % |              
|March 31, 2017    |  | $                   | 0.02   |  |                   | $ | 0.00- $0.01      |                |  |  | 1.27                | % |  |                | 118 | % |              
|April 11, 2017    |  | $                   | 0.0121 |  |                   | $ | 0.005            |                |  |  | 1.20                | % |  |                | 118 | % |              
|May 10, 2017      |  | $                   | 0.01   |  |                   | $ | 0.003            |                |  |  | 1.20                | % |  |                | 118 | % |              
|June 30, 2017     |  | $                   | 0.0009 |  |                   | $ | 0.0018 - $0.0048 |                |  |  | 1.20                | % |  |                | 118 | % |              



The
fair value of the conversion option derivative liability, as determined using the binomial lattice model, was $757,934 at June
30, 2017, $2,271,221 at March 31, 2017 ($507,668 – December 31, 2016). The change in the fair value of the conversion option
derivative liability of $190,867 was primarily due to a decrease in the price of the Company’s common stock, and was recorded
as a loss in the unaudited condensed interim statement of operations and comprehensive loss for the period ended June 30, 2017.



|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 27, 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    |  
|Origination of conversion option derivative liability on February 17, 2017                                               |  |   | 28,486     |  
|Value of conversion option derivative liability on June 28, 2016 convertible promissory note converted into common stock |  |   | (51,088    | )
|Loss on change in fair value of conversion option derivative liability, March 31, 2017                                   |  |   | 1,786,155  |  
|Balance, March 31, 2017                                                                                                  |  | $ | 2,271,221  |  
|Origination of conversion option derivative liability on April 11, 2017                                                  |  |   | 10,000     |  
|Origination of conversion option derivative liability on May 10, 2017                                                    |  |   | 72,000     |  
|Gain on change in fair value of conversion option derivative liability, June 30, 2017                                    |  |   | (1,595,287 | )
|Balance, June 30, 2017                                                                                                   |  | $ | 757,934    |  



NOTE
8 – SUBSEQUENT EVENTS



On
July 28, 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 February 28, 2018. 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.





13








On
July 31, 2017, GPL elected to convert part ($500.00) of the principal amount of the promissory note issued by the Company to GPL
dated December 9, 2016 in the amount of $5,000 into 5,000,000 shares of the Company’s common stock.



On
August 4, 2017, the Company and Jabro Funding (“Jabro”) entered into a Securities Purchase Agreement (the “Jabro
Securities Purchase Agreement”), pursuant to which the Company sold to Jabro a convertible promissory note in the amount
of $10,000 for a purchase price of $10,000. Pursuant to the Jabro Securities Purchase Agreement, the Company issued to Jabro a
12% Convertible Note (the “Jabro Note”) in the principal amount of $10,000. The Jabro Note accrues interest at the
rate of __% per year and is due in full on or before May 18, 2018. 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
Jabro Note. Jabro 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 Jabro 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
August 9, 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 March 9, 2018. 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
August 11, 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 $45,000. 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 $45,000. The Power Up 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 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
August 11, 2017, the Company and Auctus Funds, LLC (“Auctus”) amended their Securities Purchase Agreement dated May
10, 2017 (the “Auctus Securities Purchase Agreement”), to increase by $10,000 the total amount of the Promissory Note
from $72,000 to $82,000 in exchange for an additional $10,000 in cash.



The
Company appointed Olde Monmouthe Stock Transfer Co. Inc. as its new Transfer Agent on August 10th, 2017



On
August 14, 2017, the Company filed a Certificate of Amendment with the Nevada Secretary of State increasing the Company’s
authorized stock to ten billion, seven hundred three million (10,703,000,000) which consist of: (a) Three Million Ten (3,000,010)
shares of preferred stock, par value $0.0001 per share (the “Preferred Stock”); and (b) Ten billion, six hundred ninety-nine
million, nine hundred ninety-nine thousand, nine hundred ninety (10,699,999,990) shares of common stock, par value $0.0001 per
share (the “Common Stock”). In addition, Certificates of Designation for Series A preferred stock and Series B preferred
stock were filed with the Nevada Secretary of State on August 14, 2017 (the “Designations”). Pursuant to the Designations,
a total of 10 shares of the Corporation’s Preferred Stock was authorized as a series known as Series A Preferred Stock,
par value $0.0001 per share (the “Series A Stock”) and a total of 3,000,000 shares of the Corporation’s Preferred
Stock was authorized as a series known as Series B Preferred Stock, par value $0.0001 per share (the “Series B Stock”).
The designations set forth the voting rights, dividend rights, conversion rights, dividend entitlements and other rights and obligations
of the Common, Preferred A and Preferred B Classes of Stock, each in accordance with the Company’s Form14C
filing on April 20, 2017.



On
August 17, 2017 under a convertible promissory note for $45,000, the Company issued 10,000,000 restricted shares to the Power
Up Lending Group Ltd.





14








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



Forward
Looking Statements



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



Overview



HPIL
Holding (“we”, “us”, “our”, or the “Company”) is an early stage company originally
incorporated on February 17, 2004 in the state of Delaware under the name TNT Designs, Inc.
On October 7, 2009, we merged with and into Trim Nevada, Inc., a Nevada corporation, for the purpose of changing our domicile
from Delaware to Nevada. As part of the merger, we changed our name to Trim Holding Group. On May 22, 2012, we changed our name
to HPIL Holding to more fully reflect our current business operations. On July 18, 2012, the Company changed its business plan
to focus on making investments in companies, whether public or private enterprises, in differing business sectors.



Business
of the 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. The Company also evaluates intellectual properties and technologies
for potential acquisition.



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”). The Brand License Agreement will become operative in January of 2018.



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.





15






Our
principal business objective for the next twelve (12) months will be to begin exploitation of our Brand License Agreement 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 2 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.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Moreover,
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.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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 and to continue to investigate potential business opportunities.



Net
cash used in operating activities.During the six months ended June 30, 2017, net cash used in operating activities was $145,538
compared with $38,038 used in operating activities for the six months ended June 30, 2016. The cash flow used in operating activities
in the six months ended June 30, 2017, was primarily the result of financing accounts receivable and a reduction in payables and
accrued expenses. The cash flow used in operating activities in the six months ended June 30, 2016, was primarily the result of
incurred operating expenses without sufficient current revenue generating a net loss.





16






Net
cash used in investing activities. The Company did not engage in any activities generating or using cash flow that it classified
as investing activities during the six months ended June 30, 2017, and 2016.



Net
cash provided by financing activities. During the six months ended June 30, 2017, net cash provided by financing activities
was $146,718 compared with $34,700 by financing activities for the six months ended June 30, 2016. The cash flow provided by financing
activities in the six months ended June 30, 2017, was primarily attributable to an increase in notes payable. The cash flow provided
by financing activities in the six months ended June 30, 2016, was primarily the result of proceeds from advances from stockholder.



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. 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 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 unaudited condensed financial statements accompanying this Quarterly Report have been prepared assuming that the Company will
continue as a going concern. The Company had negative working capital of $1,330,410 as of June 30, 2017.



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 June 30, 2018. 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.



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, investigation of acquisition targets and beginning stages
of business activities related to the Brand License Agreement.



Comparison
of Three Months Ended June 30, 2017, to Three Months Ended June 30, 2016.



General
and Administrative Expenses. General and administrative expenses increased to $63,804 for the three months ended June 30,
2017, from $14,680 for the three months ended June 30, 2016. The increase in general and administrative expenses is primarily
related to an increase in consulting fees.



Accretion
Expense. Accretion expense increase to $244,099 for the three months ended June 30, 2017, from $Nil for three months ended
June 30, 2016. The increase of accretion expense is discussed in Note 6 to the Financial Statements.



Loss
on change in Fair Value of conversion option derivative liability. The gain on change in fair value of conversion option derivative
increase to $1,595,288 for the three months ended June 30, 2017, from $Nil for the three months ended June 30, 2016. The change
in fair value of conversion option derivative is discussed in Note 7 to the Financial Statements.



Net
Loss. For the three months ended June 30, 2017, we incurred a net income of $1,287,385 as compared to a net loss of $(14,680)
for the three months ended June 30, 2016. The net income was primarily a result of the gain on change in fair value of conversion
option derivative liability.





17






Comparison
of Six Months Ended June 30, 2017, to Six Months Ended June 30, 2016.



General
and Administrative Expenses. General and administrative expenses increased to $97,514 for the six months ended June 30, 2017,
from $35,517 for the six months ended June 30, 2016. The increase in general and administrative expenses is primarily related
to an increase in consulting fees.



Accretion
Expense. Accretion expense increase to $376,547 for the six months ended June 30, 2017, from $Nil for six months ended June
30, 2016. The increase of accretion expense is discussed in Note 6 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 $190,867 for the six months ended June 30, 2017, from $Nil for the six months ended June 30, 2016. The increase of
loss on change in fair value of conversion option derivative is discussed in Note 7 to the Financial Statements.



Net
Loss. For the six months ended June 30, 2017, we incurred a net loss of $664,928 as compared to a net loss of $35,517 for
the six months ended June 30, 2016. The net loss was primarily a result of the loss on change in fair value of conversion option
derivative liability and accretion expense. The increase in net loss was primarily the result of the increases in the loss on
change in fair value of conversion option derivative liability and accretion expense.



Off-Balance
Sheet Arrangements



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



Inflation



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



Item
3. Quantitative and Qualitative Disclosures About Market Risk.



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



Item
4. Controls and Procedures.



|(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-Q due to limited accounting and reporting personnel and a lack of segregation of duties due to limited
financial resources and the size of our Company. We will need to adopt additional disclosure controls and procedures prior to
commencement of material operations. Consistent therewith, on an on-going basis we will evaluate the adequacy of our controls
and procedures.



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



|(b) | Changes
    in internal control over financial reporting.
|--- | ---------------------------------------------------------



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





18






PART
II –OTHER INFORMATION



Item
1. Legal Proceedings.



Except
as described below regarding Nitin Amersey, the Company’s Chief Financial Officer, who is also the Company’s Corporate
Secretary and Treasurer and Director and stockholder (“Amersey”), 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.



Mr.
Amersey is the subject of an SEC order permanently enjoining him from being associated with any transfer agent, broker, dealer,
investment adviser, municipal securities dealer, municipal advisor, or nationally recognized statistical rating organization as
a result of the operations of Bay City Transfer Agency and Registrar, Inc. (“Bay City”).  The SEC did not
seek to bar Mr. Amersey from serving as an officer or director of a public company.



In
the Initial Decision Release No. 1125, Administrative Proceeding File No. 3-17405, entered by the Court on April 20, 2017, the
Court found that Amersey, as a control person of Bay City, willfully aided and abetted and caused Bay City’s violations
of Exchange Act Section 17(a)(3), which requires a transfer agent to make and keep records and file reports prescribed as necessary
and appropriate; Section 17A(d)(1), which prohibits a transfer agent from engaging in any activity that contravenes rules prescribed
by the Commission; Rules 17Ac2-1 and 17Ac2-2, which require a transfer agent to file Forms TA-1 and TA-2; Rule 17Ad-4, which specifies
the recordkeeping procedures required of an exempt transfer agent, such as Bay City; Rule 17Ad-12, which requires a transfer agent
to take specific measures to safeguard any funds or securities in its possession; and Rule 17Ad-17, which requires specific bookkeeping
measures by a transfer agent with respect to lost security holders.  As a result, the Court ordered that:



(I)         Bay City Transfer Agency and Registrar, Inc., and Mr. Amersey, shall cease and desist from committing or causing violations,
and any future violations, of Sections 17(a)(3) and 17A(d)(1) of the Securities Exchange Act of 1934 and Exchange Act Rules
17Ac2-1, 17Ac2-2, 17Ad-4, 17Ad-12, and 17Ad-17.



(II)        the transfer agent registration of Bay City Transfer Agency and Registrar, Inc., is revoked; and



(III)       Mr. Amersey is permanently barred from being associated with any transfer agent, broker, dealer, investment adviser,
municipal securities dealer, municipal advisor, or nationally recognized statistical rating organization.



The
Initial Decision became a final decision and was effective as of June 15, 2017.



As
mitigating factors, the Court found that “The violations were not egregious in that they did not involve fraud, deceit,
or manipulation and did not cause harm to other persons or unjust enrichment to respondents” and that “Amersey has
no prior disciplinary history.” In addition, it also found that “On these facts, a civil money penalty is not required
and would, in view of the other sanctions ordered, amount to an unjustified punishment.” Furthermore, while Mr. Amersey
was the Control Person for Bay City Transfer Agency & Registrar Inc., Mr. Tom Curtis was President & CEO of Bay City Transfer
Agency & Registrar Inc. during all times relevant to the above violations referenced in the Initial Decision.



Item
1A. Risk Factors.



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



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



|(a) | Unregistered Sales of Equity Securities.
|--- | ----------------------------------------



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.





19






On
May 24, 2017, the Company issued to GPL a Convertible Promissory Note (the “Note”) in the principal amount of $10,000
in exchange for $10,000 in cash (the “10K Note”). The 10K Note accrues interest at the rate of 12% per annum and is
due in full on or before November 24, 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 10K Note terms in
the event certain capital reorganization, merger, or liquidity events of the Company as further described in the 10K Note.



The
issuances of stock set forth above in this Item 2 are exempt from the registration requirements of Section 5 of the Securities
Act of 1933 pursuant to Section 4(2) of the Act since the issuance of the shares did not involve any public offering.



|(b) | Use of Proceeds.
|--- | ----------------



Not
Applicable.



|(c) | Affiliated Purchases of Common Stock.
|--- | -------------------------------------



None.



Item
3. Defaults Upon Senior Securities.



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. The claimed defaults are the result of KCG’s
inability to sell the Company’s common stock under Rule 144 due to the Company’s then delinquent filings. 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. 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.



Item
4. Mine Safety Disclosures.



Not
applicable.



Item
5. Other Information.



None.





20






Item
6. Exhibits.



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                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                    
|†3.3    |  | Certificate of Amendment                                                                                                                                                                           
|        |  |                                                                                                                                                                                                    
|†4.1    |  | Certificate of Designation – Series A Preferred Stock                                                                                                                                              
|        |  |                                                                                                                                                                                                    
|†4.2    |  | Certificate of Designation – Series B Preferred Stock                                                                                                                                              
|        |  |                                                                                                                                                                                                    
|*10.1   |  | Addendum to Brand License Agreement entered into by and between HPIL Holding and World Traditional Fudokan Shotokan Karate-Do Federation on May 19, 2017.                                          
|        |  |                                                                                                                                                                                                    
|†10.2   |  | Securities Purchase Agreement, by and between the HPIL Holdings and Auctus Fund, LLC., dated May 10, 2017                                                                                          
|        |  |                                                                                                                                                                                                    
|†10.3   |  | Convertible Promissory Note, by and between the HPIL Holdings and Auctus Fund, LLC., dated May 10, 2017                                                                                            
|        |  |                                                                                                                                                                                                    
|†31.1   |  | 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 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                               





21






SIGNATURES



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



|                           | HPIL
    Holding
|-------------------------- | ----------------
|                           |                 
|                           | By:             
|                           |                 
|Dated:
    August 25, 2017 |                 





22