PART I

ITEM 1.

BUSINESS.

Incorporation and History of HPT Group

HPT Group was originally incorporated in Florida on June 18, 2010, under the name “Big Clix Corp.”  The principal business office of HPT Group is located at 1000 Jorie Blvd. Suite 250, Oak Brook, IL, 60523.  The telephone number is (404) 974-9910.  Our website is located at http://www.HydroPhi.com.

On September 25, 2013, pursuant to the terms of that certain Agreement and Plan of Merger, as amended, HPT Group acquired HydroPhi Technologies, Inc., a Delaware corporation (“HydroPhi”), in a reverse merger transaction with HydroPhi becoming our wholly-owned subsidiary.  The Company operated as a non-active, shell company (as the term “shell company” is defined by the SEC) and filed its reports with the SEC as a shell company until the filing of a Current Report on Form 8-K on September 25, 2013.  On October 2, 2013, our corporate name was changed to “HydroPhi Technologies Group, Inc.” to better reflect the operations of the combined companies.

On November 23, 2015, HPT Group entered into that certain Stock Purchase Agreement, pursuant to which HPT Group would acquire and merge with Pro Star Freight Systems, Inc. (“PSF”) and Pro Star Trucking Center, Inc. (“PTC”), with HPT Group remaining the surviving entity and each of PSF and PTC becoming HPT Group’s wholly-owned subsidiaries.  The closing of the acquisition of PSF and PTC was effective as of March 1, 2016.

The common stock of HPT Group traded in the over the counter market under the symbol “BCLX” until October 2, 2013.  The common stock of HPT Group currently trades under the symbol “HPTG,” and its price and volume are reported by the OTC Markets.

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Overview of our Business

HydroPlant™ Clean Energy Solutions

Our business develops, manufactures and sells a proprietary HydroPlant™ technology system using water-based clean energy technology that is engineered and functionally designed to provide fuel savings and reduced greenhouse gas emissions with retrofit capability into standard vehicle engines in a broad spectrum of industry where rising fuel costs and emission regulations are driving the development of new technologies to control operating expenses.  We believe that a focus on the logistics and bus segments of the transportation industry will be the most productive in establishing acceptance of our technology and products.  Then, if and as we are able to establish our brand and gain acceptance within these markets, we plan to expand into additional market segments including the lighter truck classifications, marine and agriculture segments and the stationary power generation equipment segment.  We believe that HydroPlant™ will have additional applications in the future, such as in off-grid power generation, where there is reliance on diesel and similar types of internal combustion engines for the generation of electricity.

The HydroPlant™ operation is performed “on-demand” and “on-board” a vehicle or other unit, providing a clean “power-on-demand” alternative.  The Hydrolyzer™ unit within the HydroPlant™ system is attached to the engine and splits water molecules into ionized hydrogen and oxygen gases and their radicals. The hydrogen and oxygen gases, once introduced into the engine’s combustion chambers, acts as a fuel additive to help enhance engine performance because the gases cause the existing fuel source to burn more completely and, thus, cleanly.  The increased performance use of the primary fuel has the benefit of reducing the operating expense because more energy is derived from the fuel and of reducing carbon emissions thereby helping to reduce greenhouse gases introduced into the atmosphere as well as meeting emission standards where applicable.  The HydroPlant™ system also eliminates the requirement for the vehicle or unit to carry high pressure hydrogen gas or liquid gas storage cylinders to supply the same gases, which can be dangerous in the event of an accident, and eliminates the need for charging stations and distribution infrastructure.  We believe that this approach helps make HydroPlant™ a practical, safe and affordable solution.

Transportation, Delivery and Logistics

Beginning subsequent to 2015, we also provide surface transportation (including long-haul freight transportation), delivery and logistics services that can be retrofitted with our HydroPlant™ technology system to a diverse group of customers and consumers throughout the continental United States. Our operation is based in Oak Brook, Illinois. These service offerings include transportation of full-truckload containerized freight, which we directly transport utilizing owner-operated vehicles, third party contracted vehicles or our company-controlled revenue equipment with independent contractor drivers.  We do not currently have standing arrangements with the major North American rail carriers to transport freight in containers or trailers.  We also have the capability to provide customized freight movement, revenue equipment, labor, systems and delivery services tailored to meet individual customers’ requirements, particularly to service long-term contracts.  We do not typically utilize third-party carriers or provide stand-alone transportation and logistics services.  In addition to full-load, dry-van operations, we may rely on unrelated outside carriers to provide flatbed, refrigerated, less-than-truckload and other specialized equipment, drivers, and services.

Our operations consist of 120 independent truck operators and a total of 45 semi-trailers (of which 30 are owned and 15 are leased) consisting of 53’ dry vans hauling dry goods only. We believe operating with seasoned revenue equipment reduces cost relative to the major national carriers, while maintaining relatively low maintenance capital expenditures, along with excellent customer service.

We also operate full service truck repair centers for Pro Star truck operators only, located in Illinois and Indiana. Servicing is limited to smaller repairs that can be completed in one day and do not generally include engine overhauls or more significant multi-day repairs.  These truck repair centers also source and distribute high volume products for customers, such as tires.

We operate and manage a 24-hour dispatch service based in Oak Brook, Illinois, a significant portion of which is outsourced overseas in Belgrade and Niš, Serbia. This results in cost savings of approximately 75% in labor costs over operating a full scale dispatch service in the United States.  A Serbian dispatch service helps in better communication with the significant number of independent drivers that have emigrated from Serbia.

Business Development and Marketing

HydroPlant™ Clean Energy Solutions

Our recent marketing efforts have concentrated on Mexico and Poland, which are located in territories that are covered by regional distribution and license arrangements.  To date, we have introduced our system to several potential customers for testing in Class 6, 7 and 8 vehicles, such as buses and trucks. The testing has been conducted in real-traffic, city and country road conditions.  These potential customers have reported back to us favorable test results.  Additionally, we are also pursuing other fleet owners and

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logistics companies with similarly rated vehicles who may also want to perform testing or move directly to orders.  To date, we have only sold a limited number of units based on the need of potential customers to perform their testing requirements.  We expect that several of the potential customers will have order time frames that will be extended over a longer term, as their funding is related to public service contracts or they are themselves in the public sector.  Several of the other potential customers are private companies, and therefore we would expect the length of time to finalize purchase orders will be more expeditious, but to date we have not received any orders from these potential customers.

Transportation, Delivery and Logistics

We generally market our transportation, delivery and logistics service offerings through a nationwide sales and marketing network coordinated by our dispatch department with the support of management.  In accordance with our typical arrangements, we bill the broker or the customer directly for all transportation services provided.

Manufacturing and Supplies

HydroPlant™ Clean Energy Solutions

The Company has limited manufacturing capacity in its facilities in Doraville, Georgia.  To date, a large part of the systems produced have been manufactured at this facility.  The Company also has an outsource relationship with a European-based manufacturer which has reviewed the assembly and manufacturing protocols and that is CE-compliant, ISO-certified and trained in the assembly of the HydroPlant™ unit, which we believe could fully assume the manufacturing process of the system with little delay.  There is no formal written agreement with this supplier as our needs to date have been fulfilled on a purchase order basis.  As sales increase, we anticipate that we will outsource more of our product manufacturing requirements, either on a contract basis or through joint venture partners and licensees that have manufacturing capacity themselves.  Generally, it is intended that manufacturing will be located in those regions where there is logistical practicality or need to meet the demands of a particular distributor or group of distributors, timeliness, shipping economies and manufacturing costs.

Certain of the components in the HydroPlant™ unit are generally available stock items, which will be supplied by contract suppliers to our specifications while other components will be provided by generic manufacturers.  We believe there are adequate providers in both categories of suppliers.

Intellectual Property

We have filed a provisional application with the United States Patent and Trademark Office for an apparatus and control unit for the regulation and method of disbursing hydrogen and oxygen, which has been assigned application number #61659606.  No assurance can be given that we will be awarded the patent.  In the future, we plan on filing additional applications for other aspects of our technology.

The Company has several trademarks in use at this time, including “HydroPlant” and “The New H in Hybrid”.  As the business develops, we plan to develop more specific trademarks for our products and seek registration of those marks with government authorities for their protection.

Seasonality

We do not expect to experience significant seasonality in our HydroPlant™ business segment.  However, with respect to our transportation, delivery and logistics business segment, we typically have slightly higher freight volumes experienced during August through early November as retailers stock their shelves for the holiday shopping season. The same retail seasonality of slack first quarter demand also reflects on the freight transportation industry, which is also coincident with weather related disruptions.

Customers

HydroPlant™ Clean Energy Solutions

For the nine-months ended December 31, 2015 and the year ended March 31, 2015, one customer, Energia Vehicular Limpia S.A. de C.V., a Mexican transportation logistics company (“Energia”), accounted for 100% and 100% of our consolidated revenues, respectively.  We have had only a few customers, and they have only purchased systems on a limited basis, largely for testing purposes.  Therefore there is no assurance that the Company will place commercial levels of systems with, and generate meaningful sales revenues from, any other customers.

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We entered into a master distribution and marketing agreement with Energia to launch marketing, sales and installation of our system in Class 7 and 8 trucks in Mexico and Brazil.  The master distribution and marketing agreement is for a term of three years, and may be extended for two additional years unless earlier terminated.  In April 2014 the Company and Energia amended the agreement to add consulting and advisory services to be provided by the Company to the distributor for an 18-month period beginning April 1, 2014.  Energia is obliged to use its best effort to promote and sell the systems.  The agreement may be terminated for default of a material term, which would include the sales objectives and other performance requirements of the distributor, change in control, bankruptcy and criminal violation of applicable laws of or by the contracting party.

On April 3, 2014, we entered into a marketing agreement for Europe through an affiliated company, HydroPhi Technologies Europe S.A. (“HTEurope”), which provided the Company with 21% of the capital of HTEurope in exchange for a distribution arrangement that included all of Europe, with an initial marketing focus of Poland and Eastern Europe.   Under the distribution agreement, we granted HTEurope the exclusive right to market and distribute the HydroPlant™ system in Europe for five years, subject to automatic renewal after the first five years if certain conditions are met.  In exchange, HTEurope agreed to pay the Company $10,000 as the initial consideration for the grant of the distribution arrangement; $490,000 upon the successful testing of our system in a potential fleet customer located in the distribution zone; and $500,00 upon reaching a total sales of $2,500,000, the balance of the license fee for the distribution arrangement. The distribution agreement further required HTEurope to purchase a minimum of the HydroPlant™ system once it achieved an initial capital raise. HTEurope has not reached any of the target thresholds under this arrangement and this arrangement is not expected to continue or to be fulfilled. As of the date of this report, we do not expect any amounts to be paid under this agreement.

Transportation, Delivery and Logistics

With the acquisition of PSF and PTC, the Company gained a diverse set of customer relationships managed by an outsourced dispatch department.  These relationships produce the end customers, of which our major clients include C.H. Robinson, All Coyote, and UPS.

Competition

HydroPlant™ Clean Energy Solutions

We currently believe there is no directly competing company that offers integrated water-based, clean energy products and retrofitting for use with the internal combustion engine.  However, there are some companies that have or may be broadly working in the area of hydrogen-based technologies.  Some of these companies, and others yet to be identified, may be able to develop alternate technologies that will compete with or supplant our HydroPlant™ product.  The general business of energy use improvement attracts many potential entrants, and in the future there may be strong competitors or competitors that will compete with us in the future, in general or in selected markets.

Transportation, Delivery and Logistics

We compete with other transportation service companies primarily in terms of price, on-time pickup and delivery service, availability and type of equipment capacity, and availability of carriers for logistics services.  The freight transportation market in which we operate is frequently referred to as highly fragmented and competitive.  We compete with other intermodal marketing companies; other full-load carriers that utilize railroads for a portion of the transportation service; to a certain extent, some railroads directly; customers’ private fleets; other private fleet outsourcing companies; equipment leasing companies; local and regional delivery service providers; and some truckload carriers.  While we compete with thousands of smaller carriers on a regional basis, only a limited number of companies represent competition in all markets across the country.

Research and Development

The Company has used a portion of its financial resources for research, technology development and patent protection and expects to continue to spend financial and other resources to develop product enhancements, to strengthen in-house research and development, to enrich current and develop new intellectual property, and to introduce new versions of current products and new products.  In the nine-months ended December 31, 2015 and the fiscal year ended March 31, 2015, the Company spent $174,717 and $395,462, respectively, on research and development.

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Regulation

Our operations as a for-hire motor carrier are subject to regulation by the U.S. Department of Transportation (DOT) and the Federal Motor Carrier Safety Administration (FMCSA), and certain business is also subject to state rules and regulations.  The DOT periodically conducts reviews and audits to ensure our compliance with federal safety requirements, and we report certain accident and other information to the DOT.

Employees

At the date of this report, we have two employees; the majority of our workforce being independent contractors consisting of 120 independent truck operators and other independent contractors providing a variety of services to the Company including operations, accounting, transportation, delivery and logistics business segments. We also outsource additional labor overseas in Belgrade and Niš, Serbia.  None of the employees are represented by unions or covered by any collective bargaining agreement, and we believe we have good employee relations.  In the future, we expect to expand our management employees for financial compliance and marketing.

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advantage of future opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, operating results and financial condition.

We have a substantial amount of debt outstanding which is convertible into a number of shares in excess of the number of shares currently outstanding, and such debt carries certain conversion and protective provisions which may be detrimental to new investors.

We have obtained recent financing through the sale of debt instruments convertible into common stock, at the option of the note holders, at a conversion rate which is at a substantial discount to the market price of the common stock on the date of conversion.  Additionally, some of this debt was issued at a discount to the principal amount. We have granted the debt holders various protective provisions, including a right of first refusal on future financings.  The existence of such a large amount of debt and its various conversion and protective provisions may act to deter other investors from investing in the Company.  The substantial number of shares which may be issued will result in dilution to current investors.  All of the outstanding debt amount is due within the next twelve months, which will require the Company to raise new funds to pay off the debt or renegotiate the current debt terms. There can be no assurance that the Company will be able to raise new funds or renegotiate the current debt, in which case the Company may have to take action to obtain debt relief or protection, curtail operations or cease operations. In such case, investors will lose all or a portion of their investment.

We derive a significant portion of our revenue from a few major customers, the loss of which could have a materially adverse effect on our business.

A significant portion of our revenue is generated from a few major customers. In the nine-month period ended December 31, 2015 and the fiscal year ended March 31, 2015, Energia accounted for 100% and 100%, respectively, of our total revenue. Our agreement with Energia is for a term of three years, and may be extended for two additional years unless earlier terminated for default of a material term, which would include the sales objectives and other performance requirements of the distributor, change in control, bankruptcy and criminal violation of applicable laws of or by the contracting party. As a multi-year contract, the rates we charge may not remain advantageous.  With the acquisition of PSF and PTC, the Company added several major customers in the transportation, delivery and logistics business segment including C.H. Robinson, All Coyote and UPS.

In response to economic conditions and capital markets, supply and demand in our industry, our performance, our customers’ internal initiatives or other factors, our customers may reduce or eliminate their use of our services, or threaten to do so to gain pricing or other concessions from us. Our customers’ financial difficulties can negatively impact our results of operations and financial condition, especially if our customers were to delay or default on payments to us. A reduction in or termination of our services by our major customers could have a materially adverse effect on our business and operating results.

We are dependent on the continued services and on the performance of our senior management and other key personnel.

The loss of the services of any of our executive officers or other key employees could have a material adverse effect on our business, operating results and financial condition. We do not currently have employment contracts with any of our executive officers or key employees. Although we anticipate entering into employment contracts with our key personnel, we expect these will be at-will employment agreements with severance, non-competition and confidentiality provisions and other rights typically associated with such agreements. We also depend on our ability to identify, attract, hire, train, retain and motivate other highly skilled technical, managerial, sales, marketing and customer service personnel. Competition for such personnel is intense, and there can be no assurance that we will be able to successfully attract, assimilate or retain sufficiently qualified personnel. The failure to attract and retain necessary technical, managerial, sales, marketing and customer service personnel could have a material adverse effect on our business, operating results and financial condition.

We may have difficulty managing our growth.

We have begun to expand our operations, and depending on our financial resources, we expect to grow our sales and marketing capabilities, to continue research and development activities and to expand our administrative operations. This expansion is expected to place a significant strain on our management, operational and financial resources. To manage any further growth, we will be required to improve existing, and implement new, operational, customer service and financial systems, procedures and controls and expand, train and manage our growing employee base. We also will be required to expand our finance, administrative and operations staff. There can be no assurance that our current and planned personnel, systems, procedures and controls will be adequate to support our anticipated growth, that management will be able to hire, train, retain, motivate and manage required personnel or that our management will be able to successfully identify, manage and exploit existing and potential market opportunities. If we are unable to manage growth effectively, there could be a material adverse effect on our business, operating results and financial condition.

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Failure to expand our operations, both domestically and internationally, could significantly affect our ability to increase revenue.

We intend to expand our operations in the United States and to enter selected non-United States markets.  We expect to commit time and development resources to customizing our products for selected markets and to developing sales and support channels. In addition to the uncertainty regarding our international presence, there are difficulties and risks inherent in doing business internationally, including, but not limited to:

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Potential costs of customizing products for international markets;

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Multiple and conflicting regulations and unexpected changes in regulatory requirements;

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Exchange controls;

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Import and export restrictions and tariffs;

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Difficulties in staffing and managing international operations;

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Longer payment cycles;

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Greater difficulty or delay in accounts receivable collection;

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Potentially adverse tax consequences; and

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Political and economic instability.

In addition, our ability to expand our business into some countries may require modification of our products, including in particular national language support. To the extent that international sales are denominated in U.S. dollars, an increase or decrease in the value of the United States dollar relative to other currencies could make our products more expensive or less expensive, respectively, and, therefore, potentially less competitive in certain international markets. To the extent that future international sales are denominated in foreign currency, our operating results will be subject to risks associated with foreign currency fluctuations. As we increase our international sales, our total revenue may also be affected to a greater extent by seasonal fluctuations resulting from lower sales that typically occur during summer months in Europe and other parts of the world.  There can be no assurance that our efforts to expand domestically or to enter new international markets will be successful and expending time and development resources to pursue such efforts could have a material adverse effect on our business, operating results and financial condition.

Risks Related to the Industry

Our business is subject to general economic and business factors affecting the trucking industry that are largely out of our control, any of which could have a materially adverse effect on our operating results.

The truckload industry is highly cyclical, and our business is dependent on a number of factors that may have a negative impact on our results or operations, many of which are beyond our control.  We believe that some of the most significant of these factors are economic changes that affect supply and demand in transportation markets such as:

Economic conditions that decrease shipping demand or increase the supply of available tractors and trailers can exert downward pressure on rates and equipment utilization, thereby decreasing asset productivity. The risks associated with these factors are heightened when the U.S. economy is weakened. Some of the principal risks during such times, which risks we experienced during prior recessionary times, are as follows:

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We also are subject to potential increases in various costs and other events that are outside of our control that could materially reduce our profitability if we are unable to increase our rates sufficiently. Such cost increases include, but are not limited to, fuel and energy prices, taxes and interest rates, tolls, license and registration fees, insurance premiums, revenue equipment and related maintenance costs, and healthcare and other benefits for our employees. We could be affected by strikes or other work stoppages at our service centers or at customer, port, border, or other shipping locations. Changing impacts of regulatory measures could impair our operating efficiency and productivity, decrease our revenues and profitability, and result in higher operating costs. In addition, declines in the resale value of revenue equipment can also affect our profitability and cash flows. From time to time, various federal, state, or local taxes may also increase, including taxes on fuels. We cannot predict whether, or in what form, any such cost increase or event could occur. In addition, we cannot predict future economic conditions, fuel price fluctuations, or how consumer confidence could be affected by actual or threatened armed conflicts or terrorist attacks, government efforts to combat terrorism, military action against a foreign state or group located in a foreign state, or heightened security requirements. Enhanced security measures could impair our operating efficiency and productivity and result in higher operating costs. The occurrence of any of the foregoing factors, events or circumstances could have a material adverse effect on our business, operating results and financial condition.

may become competitors in the future. Certain of our competitors may be able to negotiate alliances with strategic partners on more favorable terms than we are able to negotiate. Many of our competitors may also have well established relationships with our potential customers. As a result of these and other factors, we may not be able to compete effectively with current or future competitors, which could adversely affect our revenues and operating results.

Our future success depends upon customers accepting and supporting new clean energy solutions, and their ability to fund their operations.

To date, because our system is a new product, we have had limited acceptance of the HydroPlant™ technology. Our product is undergoing extensive testing by several of our current potential users. Our initial product placement and beta testing have been mostly in the transportation industry, and to date has been on a very limited basis. Many of our potential customers themselves are early stage and growth companies with limited operating histories and limited resources. As a result, they may be required to raise funds through public or private financings, strategic relationships, borrowings or other arrangements to be able to sustain their operations and be in a position to purchase and use the HydroPlant™ technology. Therefore, we may have difficulty in establishing a market for the HydroPlant™ technology and our products, and to the extent we do achieve market acceptance and sales, we may experience a delay in being paid for our products or may not be paid at all.

The strategic relationships that we may be able to develop and on which we may come to rely on may not be successful.

We will seek to develop strategic relationships with supply chain companies and regional providers and others to enhance the efforts of our market penetration, business development, implementation, critical component manufacturing, variable and direct sales force. These relationships are expected to, but may not, succeed. Furthermore, we intend to develop additional strategic relationships in the future with numerous other companies. There can be no assurance that these relationships will develop and mature, or that any of our existing relationships will be successful or that potential competitors will not develop more substantial relationships with attractive partners. Our inability to successfully implement our strategy of building valuable strategic relationships could harm our business.

We could be subject to product liability claims relating to our customers’ critical business operations.

Any failure in a customer’s platform or trading application could result in a claim for substantial damages against us, regardless of our responsibility for such failure. Although we maintain general liability insurance, there can be no assurance that such coverage will continue to be available on reasonable terms or will be adequate to indemnify us for all liability that may be imposed on us. Safety perceptions may deter future use of our products. A fundamental requirement of using water-based involves perceptions of handling hydrogen and oxygen. We cannot be certain that any inadequate practice of instructions or use by our customers will not compromise the designed safety envelope. Any instance of such an occurrence may lead to an uncalled for market perception deterring future use of our products. We may be required to incur significant costs to protect against safety perceptions and further improvements.

Delays in getting patents issued by the USPTO could result in delays in recognizing revenues.

We will continue to pursue our patent application currently pending before the USPTO and we intend to continue to apply for additional patents in the future. Patent applications have been increasing each year and we believe it is resulting in longer delays in obtaining approval of pending patent applications. The application delays could cause delays in recognizing revenue from these patents and could cause us to miss opportunities to license patents before other competing technologies are developed or introduced into the market.

Intellectual property claims against us can be costly and could impair our business.

We cannot predict whether third parties will assert claims of infringement against us, or whether any future assertions or prosecutions will harm our business. If we are forced to defend against any such claims, whether they are with or without merit or are determined in our favor, we may face costly litigation, diversion of technical and management personnel, or product shipment delays, any of which could adversely impact our business. As a result of such a dispute, we may have to develop non-infringing technology or enter into royalty or licensing agreements. Such royalty or licensing agreements, if required, may be unavailable on terms acceptable to us, if at all. If there is a successful claim of product infringement against us and we are unable to develop non-infringing technology or to license the infringed or similar technology on a timely basis, our business could be impaired.

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If the protection of our trademarks and other proprietary rights is inadequate, we could lose our proprietary rights and revenue.

Our success significantly depends on our proprietary HydroPlant™ technology. We rely on a combination of copyright, trademark and trade secret laws, employee and third-party non-disclosure and invention assignment agreements and other methods to protect our proprietary technology. Additionally, we have filed a U.S. provisional patent application relating to the disbursement of hydrogen and oxygen. Despite these precautions, it may be possible for unauthorized third parties to copy portions of our products or reverse engineer or obtain and use information that we regard as proprietary. Provisions in our license agreements with our customers protecting against unauthorized use, copying, transfer and disclosure of our licensed product may be unenforceable under the laws of specific jurisdictions and foreign countries. There can be no assurance that our efforts to obtain patent protection will be successful, or if successful, that any patent issued to us will be deemed enforceable or valid. For example, previous disclosures or activities unknown at present may be uncovered in the future and adversely impact our patent rights. In addition, the laws of some foreign countries do not protect proprietary rights to the same extent as do the laws of the United States. There can be no assurance that the steps taken by us to protect our proprietary rights will be adequate or that third parties will not infringe or misappropriate our trademarks, copyrights and similar proprietary rights.

Our products may require availability of components or known technology from third parties and their non-availability can impede our growth.

We source components and will continue to license/buy certain technology integral to our HydroPlant™ product from third parties. Our inability to acquire and maintain any third-party product licenses, or integrate the related third-party products into our products, could result in delays in product development until equivalent products can be identified, licensed and integrated. We cannot provide assurance that these licenses will continue to be available to us on commercially reasonable terms, if at all.

We rely significantly on our information technology systems, a disruption, failure or security breach of which could have a material adverse effect on our business.

We rely on information technology throughout all areas of our business to initiate, track, and complete customer orders; process financial and nonfinancial data; compile results of operations for internal and external reporting; and achieve operating efficiencies and growth. Our information technology systems may be susceptible to various interruptions, including equipment or network failures, failed upgrades or replacement of software, user error, power outages, natural disasters, cyber-attacks, terrorist attacks, computer viruses, hackers, or other security breaches. We have mitigated our exposure to these risks through the establishment and maintenance of technology security programs and disaster recovery plans, but these mitigating activities may not be sufficient. A significant disruption, failure or security breach in our information technology systems could have a material adverse effect on our business, which could include operational disruptions, loss of confidential information, external reporting delays or errors, legal claims, or damage to our business reputation.

We depend on third parties in the operation of our business.

We utilize independent contractors and third-party carriers to complete our services. These third parties are subject to regulatory requirements, which may have a significant impact on their operations, causing them to exit the transportation industry. Aside from when these third parties may use our trailing equipment to fulfill loads, we do not own the revenue equipment or control the drivers delivering these loads. The inability to obtain reliable third-party carriers and independent contractors could have a material adverse effect on our operating results and business growth.

Rapid changes in fuel costs could impact our periodic financial results.

Fuel costs can be very volatile. We have a fuel surcharge revenue program in place with the majority of our customers, which has historically enabled us to recover the majority of higher fuel costs. Most of these programs automatically adjust weekly depending on the cost of fuel. However, there can be timing differences between a change in our fuel cost and the timing of the fuel surcharges billed to our customers. In addition, we incur additional costs when fuel price increases cannot be fully recovered due to our engines being idled during cold or warm weather and empty or out-of-route miles that cannot be billed to customers. Rapid increases in fuel costs or shortages of fuel could have a material adverse effect on our operations or future profitability. As of December 31, 2015, we had no derivative financial instruments to reduce our exposure to fuel-price fluctuations.

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Insurance and claims expenses could significantly reduce our earnings.

Our future insurance and claims expenses might exceed historical levels, which could reduce our earnings. If the number or severity of claims for which we are self-insured increases, our operating results could be adversely affected. We have policies in place for 2016 with substantially the same terms as our 2015 policies for personal injury, property damage, workers’ compensation, and cargo loss or damage. If these expenses increase and we are unable to offset the increase with higher freight rates, our earnings could be materially and adversely affected.

We operate in a regulated industry, and increased direct and indirect costs of compliance with, or liability for violation of, existing or future regulations could have a material adverse effect on our business.

The DOT and various state agencies exercise broad powers over our freight transportation business, generally governing matters including authorization to engage in motor carrier service, equipment operation, safety, and financial reporting. We are audited periodically by the DOT to ensure that we are in compliance with various safety, hours-of-service, and other rules and regulations. If we were found to be out of compliance, the DOT could restrict or otherwise impact our operations.

With respect to our HydroPlant™ business segment, the laws governing energy transactions remain largely unsettled. The adoption or modification of laws or regulations relating to energy could harm our business, operating results and financial condition by increasing our costs and administrative burdens. It may take years to determine whether and how existing laws such as those governing intellectual property, privacy, libel, consumer protection and taxation apply. Laws and regulations directly applicable to clean energy carbon credits and/or commerce over the energy industry are becoming more diverse and prevalent in all global markets. We must comply with regulations in the United States and with any other regulations adopted by other countries where we do business. The growth and development of the market for online carbon credit trade may prompt calls for more stringent consumer protection laws, both in the United States and abroad, as well as new laws governing the taxation of energy commerce. Compliance with any newly adopted laws may prove difficult for us and may harm our business, operating results and financial condition.

Our operations are subject to various environmental laws and regulations, the violation of which could result in substantial fines or penalties.

We are subject to various environmental laws and regulations dealing with the handling of hazardous materials, underground fuel storage tanks, and discharge and retention of storm water. We operate in industrial areas, where truck terminals and other industrial activities are located and where groundwater or other forms of environmental contamination have occurred. Our operations involve the risks of fuel spillage or seepage, environmental damage, and hazardous waste disposal, among others. We also maintain bulk fuel storage and fuel islands at several of our facilities. If a spill or other accident involving hazardous substances occurs, or if we are found to be in violation of applicable laws or regulations, it could have a material adverse effect on our business and operating results. If we should fail to comply with applicable environmental regulations, we could be subject to substantial fines or penalties and to civil and criminal liability.

Risks Related to Our Common Stock

The Company has paid no cash dividends to date.

The Company has paid no cash dividends on its common stock to date.  Payment of dividends on the common stock is within the discretion of the board of directors and will depend upon the consolidated earnings, its capital requirements and financial condition, and other relevant factors.  The board of directors has indicated that it currently does not intend to declare any dividends on the common stock of HPT Group in the foreseeable future.

There is not an active market for our common stock and our stock price has been volatile and may continue to fluctuate widely.

We are providing no assurances of any kind or nature whatsoever that an active market for our common stock will ever develop. To date, there have been limited amounts of trading in our common stock and the price and volume has been volatile. Investors should understand that there may be no alternative exit strategy for them to recover or liquidate their investments in the common stock of HPT Group. Accordingly, investors must be prepared to bear the entire economic risk of an investment in the common stock for an indefinite period of time. If a market ever develops for our common stock, we anticipate that our then financial condition and operations will greatly impact the value of the stock, which may not reflect our business prospects.

15

There may be no liquid market for our common stock.

Even if a trading market develops over time, we cannot predict how liquid that market might become. The trading price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in price in response to various factors, some of which are beyond our control. These factors include:

·

Quarterly variations in our results of operations or those of our competitors;

·

Announcements by us or our competitors of acquisitions, new hardware and/or software products, significant contracts, commercial relationships or capital commitments;

·

Disruption or substantive changes to our operations;

·

Variations in our sales and earnings from period to period;

·

Commencement of, or our involvement in, litigation;

·

Any major change in our board or management;

·

Changes in governmental regulations or in the status of our regulatory approvals; and

·

General market conditions and other factors, including factors unrelated to our own operating performance.

In addition, the stock market in general has experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of public companies. Such fluctuations may be even more pronounced in the trading market shortly following this filing. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies.  This type of litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

The number of shares of common stock that may be sold by the holders of various convertible notes and a warrant may have an adverse effect on the public market of our stock.  Because of the large number of shares that may be issued on conversion or exercise of outstanding securities, there may be an adverse effect on the market because of the conversion and/or exercise.  Although there are limits on the holder’s conversion and exercise, investors may not regard these limits when evaluating our common stock available to be sold in the public market.  Therefore, there may be limited demand and excessive price and volume volatility.

We are subject to the reporting requirements of the United States securities laws, which will require expenditure of capital and other resources.

We are a public reporting company subject to the information and reporting requirements of the Securities Exchange Act of 1934 and other federal securities laws, including, without limitation, compliance with the Sarbanes-Oxley Act (“Sarbanes”). The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders will cause our expenses to be substantially higher than they would otherwise be if we were privately-held. It will be difficult, costly, and time-consuming for us to develop and implement internal controls and reporting procedures required by Sarbanes, and we will require additional staff and third-party assistance to develop and implement appropriate internal controls and procedures. If we fail to or are unable to comply with Sarbanes, we will not be able to obtain independent accountant certifications that Sarbanes requires publicly-traded companies to obtain.

Investor confidence and market price of our shares may be adversely impacted if we are unable to attest to the adequacy of the internal controls over our financial reporting, as required by Section 404 of the U.S. Sarbanes-Oxley Act of 2002.

The SEC, as directed by Section 404 of Sarbanes, adopted rules requiring public companies to include a report of management about their internal control structure and procedures for financial reporting in their annual reports on Form 10-K. The report must discuss the assessment by management of the effectiveness of the internal controls over financial reporting of the Company. We have reported in the Transition Report on Form 10-K, filed for the nine-month period ended December 31, 2015, that management concluded the internal controls and procedures were not effective to detect the inappropriate application of U.S. GAAP rules. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses. The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; and (3) ineffective controls over period end financial disclosure and reporting processes. This assessment could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our financial statements, which could negatively impact the market price of our shares and our ability to fund the Company. Although we have added a new controller to our staff, we believe these generally stated material weaknesses will continue until we are in a financial position to add the necessary staffing to address the above factors.

16

Because we are subject to the “Penny Stock” rules, the level of trading activity in our stock may be limited.

Our stock is subject to the regulations applicable to "Penny Stock." The regulations of the SEC promulgated under the Exchange Act require additional disclosure relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. The SEC regulations define penny stocks to be any non-NASDAQ equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Unless an exception is available, those regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a standardized risk disclosure schedule prepared by the SEC, to provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the purchaser’s account, to make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a stock that becomes subject to the penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage market investor interest in and limit the marketability of our common stock.

In addition to the "penny stock" rules promulgated by the SEC, the Financial Industry Regulatory Authority (FINRA) has adopted rules that require a broker-dealer, in recommending an investment to a customer, to have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.

Because future sales by our stockholders could cause the stock price to decline, our investors may lose money on their investment in our stock.

No predictions can be made of the effect, if any, that market sales of shares of our common stock or the availability of such shares for sale will have on the market price prevailing from time to time. Nevertheless, sales of significant amounts of our common stock could adversely affect the prevailing market price of the common stock, as well as impair our ability to raise capital through the issuance of additional equity securities.

State securities laws may limit secondary trading, which may restrict the states in which you can sell shares of our common stock.

You may not be able to resell the shares of common stock held in HPT Group in a state unless and until the shares of our common stock are qualified for secondary trading under the applicable securities laws of such state, or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in such state. There can be no assurance that we will be successful in registering or qualifying our common stock for secondary trading, or identifying an available exemption for secondary trading in our common stock in every state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, our common stock in any particular state, the shares of common stock could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the market for the common stock will be limited which could drive down the market price of our common stock and reduce the liquidity of the shares of our common stock and limit a stockholder's ability to resell shares of our common stock at all or at current market prices, which could increase a stockholder's risk of losing some or all of his investment.

If securities or industry analysts do not publish research or reports about our business, or publish inaccurate or unfavorable research reports about our business, our share price and trading volume could decline.

The trading market for our common stock will, to some extent, depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us should downgrade our shares or change their opinion of our business prospects, our share price would likely decline. If one or more of these analysts ceases coverage of our company or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

UNRESOLVED STAFF COMMENTS.

Not applicable.

ITEM 2.

PROPERTIES.

On April 1, 2016, the Company temporarily moved its corporate offices to the existing corporate offices of its recently acquired subsidiary, Pro Star Freight Systems, Inc. (“PSF”), in Bensenville, Illinois.  No lease agreement existed for the Bensenville, Illinois property.  On April 5, 2016, PSF signed a two-year lease for office space in Oak Brook, Illinois, which office space will be shared with the Company.

The Company’s recently acquired subsidiary, Pro Star Trucking Center, Inc. (“PTC”), owns a truck repair center located in Des Plains, Illinois, and on January 6, 2016, PSF purchased an additional one acre of land for the development of an additional truck repair center in Hammond, Indiana to be operated by PTC.

ITEM 3

LEGAL PROCEEDINGS.

From time to time, we may be involved in litigation relating to claims arising out of our operations in the ordinary course of business.  As of the date of this report, there are no pending or threatened legal proceedings to which HPT Group is a party or to which any of HPT Group’s property is subject that could reasonably be expected to have a material adverse effect on our business, operating results or financial condition.  There are no legal proceedings to which any of our directors, officers or affiliates, or any record or beneficial shareholder of more than 5% of our issued and outstanding capital stock, or any of their associates, is an adverse party to HPT Group or has a material interest adverse to HPT Group’s interest.

ITEM 4