10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

or

o       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ________________ 

Commission file number 000-53525

Leo Motors, Inc.

(Exact name of registrant as specified in its charter)

Nevada	814108026
(State or other jurisdiction of incorporation or organization)	(I. R. S. Employer Identification No.)

ES Tower 7F, Teheranro 52 Gil 17, Gangnamgu, Seoul, Rep. of Korea	06212
(Address of principal executive offices)	(Zip Code)

+ 82-70-4699-3585

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  

Yes o No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 o  No o

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

Large accelerated filer  o	Accelerated filer  o
Non-accelerated filer  o  (Do not check if a smaller reporting company)	Smaller Reporting Company  x
	Emerging growth company o

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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 to Section 7(a)(2)(B) of the Securities Act. o

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes o  No  x

The number of shares of the registrant’s common stock outstanding as of May 5, 2017 was 172,528,016 shares.

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 Item 1. Financial Statements. 

LEO MOTORS, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS EXPRESSED IN US DOLLAR)
	Balance at
		03/31/2017		12/31/2016
		(Unaudited)		(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	500,185	$	460,671
Accounts receivable		584,467		433,205
Inventories		1,301,577		1,088,298
Prepayment to suppliers		529,342		457,643
Other current assets		39,115		91,973
Total Current Assets		2,954,686		2,531,790
Fixed assets, net		265,722		129,157
Deposit		346,255		346,255
Intangible assets		88,503		88,503
Goodwill		2,613,486		2,613,486
Total Assets	$	6,268,652	$	5,709,191
Liabilities and  Equity(Deficit)
Current Liabilities:
Accounts payable	$	1,494,212	$	1,411,130
Accrued expenses		4,659,802		4,345,772
Advance from customers		79,941		386,624
Due to related parties		843,925		358,680
Taxes payable		85,428		29,635
Notes Payable current portion		248,803		268,824
Total Current Liabilities		7,412,111		6,800,665
Accrued retirement benefits		250,686		216,195
Other long term liabilities		73,583		72,851
Total Liabilities		7,736,380		7,089,711
Commitments (Note 8)		-		-
Leo Motors, Inc.("LEOM") Equity(Deficit):
Common stock ($0.001 par value; 300,000,000 shares authorized); 172,689,554  and 172,528,016 shares issued and outstanding at March 31,  2017 and December 31, 2016		172,690		172,528
Additional paid-in capital		21,431,054		21,411,832
Accumulated other comprehensive income		1,291,799		1,184,443
Accumulated loss		(31,433,061)		(29,776,217)
Total Equity(Deficit) Leo Motors, Inc.		(8,537,518)		(7,007,414)
Non-controlling interest		7,069,790		5,626,894
Total Equity(Deficit)		(1,467,728)		(1,380,520)
Total Liabilities and Equity(Deficit)	$	6,268,652	$	5,709,191

"See accompanying notes to consolidated financial statements"

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LEO MOTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS EXPRESSED IN US DOLLAR)
	For the Three Months Ended
	March 31,
		2017		2016
		(Unaudited)		(Unaudited)
Revenues	$	398,951	$	745,706
Cost of Revenues		186,336		291,014
Gross Profit		212,615		454,692
Operating Expenses		2,612,825		908,860
Income(loss) from Continuing Operations		(2,400,210)		(454,168)
Other Income (Expenses)
Interest expense		(7,659)		(9,328)
Non-Operating (expense) income		21,142		5,330
Total Other Income (Expenses)		13,483		(3,998)
Income(loss) from Continuing Operations Before Income Taxes		(2,386,727)		(458,166)
Income Tax Expense		50		0
Net Income(Loss)	$	(2,386,777)	$	(458,166)
Income(loss) attributable to non-controlling interest	$	(729,933)	$	(35,655)
Net Income(Loss) Attributable To Leo Motors, Inc.		(1,656,844)		(422,511)
Other Comprehensive Income:
Net Income(Loss)	$	(2,386,777)	$	(458,166)
Unrealized foreign currency translation gain		107,356		78,120
Comprehensive Income(loss) Attributable to Leo Motors, Inc.	$	(2,279,421)	$	(380,046)
Net Loss per Common Share:
Basic	$	(0.01)	$	(0.00)
Diluted	$	(0.01)	$	(0.00)
Weighted Average Common Shares Outstanding:
Basic	$	172,581,682	$	161,878,686
Diluted	$	172,581,682	$	161,878,686

"See accompanying notes to consolidated financial statements"

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LEO MOTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS EXPRESSED IN US DOLLAR)
	For the Three Months Ended March 31,
		2017		2016
		(Unaudited)		(Unaudited)
Cash flows from Operating Activities:
Net loss	$	(1,656,844)	$	(422,511)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		37,042		20,864
Foreign currency translation		107,356		78,120
Net loss attributed to NCI		(729,933)		(35,655)
Stock-based compensation		19,385		115,938
Changes in assets and liabilities:
Accounts Receivable		(151,262)		549,667
Inventories		(213,279)		(341,814)
Prepayment to suppliers		(71,699)		(103,316)
Other assets		52,858		(166,966)
Accounts payable, other payables and accrued expenses		397,112		(266,880)
Accrued retirement benefits		34,491		3,570
Advances from customers		(305,951)		(299,046)
Taxes payable		55,793		55,567
Net cash used in operating activities:		(2,424,931)		(812,462)
Cash flows from investing activities:
Investment in assets		(173,647)		(23,444)
Payments on deposits		0		(404)
Net cash provided(used) in investing activities:		(173,647)		(23,848)
Cash flows from financing activities:
Proceeds on notes payable		0		32,373
Payments on notes payable		(20,021)		(7,661)
Proceeds on notes payable - related party		485,284		0
Payments on notes payable - related party		0		(3,509)
Proceeds from investments NCI		2,172,829		186,973
Proceeds from issuance of stock & warrants		0		515,199
Net cash provided(used) by financing activities:		2,638,092		723,375
Net Increase in cash and cash equivalents:		39,514		(112,935)
Cash and cash equivalents - beginning of year		460,671		243,809
Cash and cash equivalents - end of period	$	500,185	$	130,874
Supplemental disclosure of cash flow activities:
Interest	$	35,309	$	9,328
Income taxes	$	0	$	0
Supplemental disclosures of non cash activities:
Common stock issued for services	$	19,385	$	115,938

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"See accompanying notes to consolidated financial statements

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NOTE 1 - COMPANY BACKGROUND

Leo Motors, Inc. (the “Company” or “we”) is currently in development, assembly and sales of the energy storage devices and electric vehicle components.

The Company was originally incorporated in California as N. Org., Inc. on December 12, 1983. The Company then underwent several name changes from Natural Organics Corporation to Classic Auto Accessories of North America and then to FCR Automotive Group, Inc. On September 20, 2004, the Company reincorporated  in  Delaware by merging into FCR Group, Inc.,  a  Delaware Automotive corporation,  which  was  organized  on  September  8, 2004. On July  26,  2005,  the  Company acquired Shinil Precision Co., Ltd., a Korean Company,  as  its  operating  business  and on July 18, 2005, changed its name to Shinil  Precision Machinery, Inc. to reflect its anticipated new business. Upon failure of certain terms  and  conditions  of  the acquisition agreement, the Company  returned the shares of Shinil and recovered and cancelled the Company's shares  issued  in  the  acquisition. In 2012, the Company changed its domicile to Nevada.

The Company had been dormant since 1989, and consummated a reverse merger on November 12, 2007 with Leozone Inc., a South Korean company, which is the maker of electrical transportation devices. The merger essentially exchanges shares in Leo Motors, Inc. for shares in Leozone. As this is a reverse merger the accounting treatment of such is that of a combination of the two entities with the activity of Leozone, Inc. the surviving entity, going forward. The financial statements reflect the activity for all periods presented as if the merger had occurred January 1, 2007. Leozone has continued to operate as a separate subsidiary Leo Motors Co. Ltd. of Korea since that time.

On February 11, 2010, the Company acquired 50% of Leo B&T Corp., a South Korean corporation (“B&T”), from two shareholders of B&T in exchange for 7,000,000 shares of the Company’s common stock. Our ownership in B&T was reduced to 30% in 2011. Additionally, this investment was written down as impairment expense during 2011 and the remaining investment was exchanged in 2012 for a return of Leo Motors stock.

On November 10, 2012, the Company signed an agreement withPDI C&D/RDC SPRL Inc. ("PDI"), an affiliate of PDI Global LLC, a major architectural design company in the U.S., to supply an independent solar power system grafted with the Company’s E-Box power storage device for a housing project in the Democratic Republic of the Congo ("DRC"). The Company will have a 10% interest in the overall project. This project has incurred an impairment charge as details in these footnotes.

On July 1, 2014, the Company acquired all of the outstanding common stock of LGM Co. Ltd., a corporation incorporated in the Republic of Korea (“LGM”), from LGM’s shareholders, which represents 813,747 shares of LGM common stock, in exchange for 47,352,450 shares of the Company's common stock pursuant to the Share Swap Agreement entered into by and between LGM and the Company. Upon closing of the Share Swap Agreement, LGM became a wholly-owned subsidiary of the Company.

On March 31, 2015, the Company acquired 50% interest in each of Leo Motors Factory, Inc. (“Leo Factory 1”) and Leo Motors Factory 2, Inc. (“Leo Factory 2”) which are auto repair shops that specialize in repairing hand-made luxury cars such as Ferrari, Lamborghini, Bentley, Porsche, and Rolls Royce. The Company also acquired 50% interest in Leo Trading Inc. (formerly Erum Motors, Inc.) (“Leo Trade”) specializing in the trading of luxury cars. These acquired entities will be presented on a consolidated basis as the parent company has significant control of the business through the Board of Directors which can decide decisions split on strictly on common share ownership percentages.

The Company acquired Leo AIC (formerly known as Lelcon) on June 3, 2016. With the acquisition, the Company was engaged in connected car and artificial intelligence (AI) related businesses for a smart city. On March 8, 2017, the Company acquired 100% of a startup corporation owned by its director called Leo Members, Inc. This new wholly owned subsidiary then exchanged interest with Leo Motors in Leo Factory 1, Leo Factory 2, and Leo Trading in a common control transaction.

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Certain information and disclosures normally included in the notes to financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission, although the Company believes the disclosure is adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2016.

NOTE 2 - POLICIES

This summary of significant account policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and the notes are the representation of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to U.S. generally accepted accounting principles (“USGAAP”) and have been consistently applied in the preparation of the financial statements.

Basis of Presentation and Consolidation

These financial statements and related notes are expressed in US dollars. The Company’s fiscal year-end is December 31. The consolidated financial statements include the financial statements of the Leo Motors Co. Ltd. Korea, LGM Co. LTD, Leo Factory Motors #1, Leo Factory Motors #2, Leo Trading, Leo Members, Inc., and Leo AIC. The company has significant control of all subsidiaries thru direct as well as indirect stock ownership and voting board control from parent board members at the subsidiary level.  All inter-company transactions and balances have been eliminated upon consolidation.

 Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 Fair Value of Financial Instruments

For certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable inventory and prepaid expenses, accounts payable and deferred revenues, the carrying amounts approximate fair value due to their short maturities.

Revenue Recognition

The Company follows the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements”. In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company.

The Company generates revenue from the delivery of goods and records revenues when the sales are completed, already collected or collectability is reasonably assured, there is no future obligation and there is remote chance of future claim or refund to the customers.

Revenue is recognized when risk of ownership and title pass to the buyer, generally upon the delivery of professional services. Pricing is fixed and determinable according to the Company’s published brochures and price lists.

Accounts Receivables

Accounts receivables of the Company are reviewed to determine if their carrying value has become impaired.  The Company considers the assets to be impaired if the balances are greater than one-year old. Management regularly

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reviews accounts receivable and will establish an allowance for potentially uncollectible amounts when appropriate. When accounts are written off, they will be charged against the allowance.

Receivables are not collateralized and do not bear interest.

Cash Equivalents

For purposes of reporting cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalent.

Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which is generally 3 to 10 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

The Company will periodically evaluate whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. We use an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

Intangible and Long Lived Assets

The Company follows ASC 360-10, “Property, Plant, and Equipment,” which established a “primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. Through March 31, 2017, the Company has impaired goodwill on three of its acquisitions reflected by their recurring losses for those entities.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC 740-10, “Accounting for Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year; and, (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

9

ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken on a tax return. Under ASC 740-10, a tax benefit from an uncertain tax position taken or expected to be taken may be recognized only if it is “more likely than not” that the position is sustainable upon examination, based on its technical merits. The tax benefit of a qualifying position under ASC 740-10 would equal the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all the relevant information. A liability (including interest and penalties, if applicable) is established to the extent a current benefit has been recognized on a tax return for matters that are considered contingent upon the outcome of an uncertain tax position. Related interest and penalties, if any, are included as components of income tax expense and income taxes payable.

Loss per Share

Basic earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of both common and preferred stock outstanding for the period.

Inventory

Inventory consist mostly of items purchased as finished goods and used in the repair of automobiles and boats and are recorded at cost and is valued using the first in, first out method.

Stock-Based Compensation

SFAS No. 123, “Accounting for Stock-Based Compensation,” establishes and encourages the use of the fair value based method of accounting for stock-based compensation arrangements under which compensation cost is determined using the fair value of stock-based compensation determined as of the date of grant and is recognized over the periods in which the related services are rendered. For stock based compensation the Company recognizes an expense in accordance with SFAS No. 123 and values the equity securities based on the fair value of the security on the date of grant. Stock option awards are valued using the Black-Scholes option-pricing model.

Reclassifications

Certain reclassifications have been made to prior year balances to conform to the current year presentation.

Foreign Currency Translation And Comprehensive Income

The reporting currency of the Company is the US$. The functional currency of the parent company is the US$ and the functional currency of the Company’s operating subsidiary is Korean Won (“KRW”). The subsidiary’s results of operations and cash flows are translated at average exchange rates during the year, assets and liabilities are translated at the unified exchange rate at the end of the year, and equity is translated at historical exchange rates. Translation adjustments resulting from the process of translating the functional currency financial statements into US$ are included in determining comprehensive income. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. The Company does not enter any material transaction in foreign currencies and accordingly, transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.

Recent Accounting Pronouncements

The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change. The

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Company currently does not have any recent accounting pronouncements that they are studying and feel may be applicable.

NOTE 3 - EARNINGS PER SHARE

The Company reports basic and diluted earnings per share (EPS) according to the provisions of ASC Topic 260, which requires the presentation of basic EPS and, for companies with complex capital structures, diluted EPS. Basic EPS excludes dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income (loss) available to common stockholders, adjusted by other changes in income or loss that would result from the assumed conversion of those potential common shares, by the weighted number of common shares and common share equivalents (unless their effect is antidilutive) outstanding. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be antidilutive. Thus, these equivalents are not included in the calculation of diluted loss per share, resulting in basic and diluted loss per share being equal.

The following is a reconciliation of the computation for basic and diluted EPS for the quarters ended March 31, 2017 and 2016:

		For the periods ended
		3/31/2017		3/31/2016
Net Income(Loss)	$	(2,386,777)	$	(458,166)
Weighted-average common stock Outstanding -  basic		172,581,682		161,878,686
Equivalents
Stock options		-		-
Warrants		-		-
Convertible Notes		-		-
Weighted-average common shares outstanding-  Diluted		172,581,682		161,878,686

NOTE 4 - DUE TO RELATED PARTY

The company is indebted to its officer for advances. There are various advances and repayments throughout the periods in small amounts. They are all short term in nature and provide working capital to the various subsidiaries. Repayment is on demand without interest. The balance was $843,925 at March 31, 2017 and $358,680 at December 31, 2016. There are no other related party transactions.

NOTE 5 - PAYMENTS RECEIVED IN ADVANCE

The Company during the periods received payments from potential customers, or deposits, on future orders. The Company’s policy is to record these payments as a liability until the product is completed and shipped to the customer at which the Company recognizes revenue. As of March 31, 2017 and December 31, 2016, the balance of payments received in advance was $79,941 and $386,624, respectively.

NOTE 6 - GOING CONCERN

As reported in the consolidated financial statements, the Company has accumulated deficits of $31,433,061 as of March 31, 2017 and its current liabilities exceeded its current assets. These negative trends have been consistent over the last few years except for asset sales.

These factors create uncertainty about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable and to create operations that contribute capital from normal operations. If the Company cannot obtain adequate capital it could be forced to cease operations.

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In order to continue as a going concern, develop and generate revenues and achieve a profitable level of operations, the Company will need, among other things, additional capital resources. Management's plans to obtain such resources for the  Company  include  (1) raising additional capital through sales of common stock, (2) converting  promissory notes into  common  stock  and (3) entering into acquisition agreements  with profitable  entities  with   significant   operations.   In   addition, management is continually seeking to streamline its operations and expand the business through a variety of industries, including real estate and financial management.

However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations.  The accompanying   consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

(a) Lease Commitments

The Company leases its office space in Ha-Nam City in Korea which expires on December 31, 2017. The minimum obligations under such commitments for the years ending December 31, 2017 through December 31, 2019 are listed on the table below.

For the Year Ending		Amount
2017	$	112,500
2018		0
2019 and beyond		0
Total Commitment	$	112,500

(b) Loss Contingencies

The company currently has no loss contingencies.

NOTE 8 - INVENTORIES

Inventories consist of the following:

		31-Mar-17		31-Dec-16
		US$		US$
Raw material	$	115,239	$	420,768
Work in process		44,427		155,778
Finished goods		1,141,911		511,752
	$	1,301,577	$	1,088,298

NOTE 9 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

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Property and equipment consisted of the following:		31-Mar-17		31-Dec-16
Vehicles	$	164,141	$	87,218
Tools		71,818		71,818
Office		191,832		179,791
Facility equipment		286,811		202,168
Total property and equipment		714,602		540,995
Accumulated depreciation		(448,880)		(411,838)
Property and equipment, net	$	265,722	$	129,157

Depreciation expense for the three months ended March 31, 2017 and 2016 amounted to $37,042 and $20,864, respectively.

NOTE 10 - SHORT TERM BORROWINGS AND NOTES PAYABLE

The Company continues to fund itself through borrowing and equity sales until sales return to historical levels.

At March 31, 2017 and December 31, 2016, the Company had short term borrowings of $248,803 and $268,824. The notes are short term working capital advances that have been advanced to their Korean Subsidiary from various local parties. These advances are due on demand, interest free and unsecured.

As of March 31, 2017, the major components of our notes and borrowings consisted of the following:

		3/31/17		12/31/16
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.21%
interest only payable monthly and secured by the Company.	$	47,845	$	47,258
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.28%
interest only payable monthly.		53,698		69,319
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 13.00%
interest only payable monthly and secured by the Company.		80,548		86,648
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.30
interest only payable monthly.		39,862		34,406
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 9.14
interest only payable monthly.		26,849		31,193
Total Liabilities		248,803		268,824
Less current portion		248,803		268,824
Long term debt	$	0	$	0

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NOTE 11 - INCOME TAXES

The Company has experienced losses during most years since its inception. As a result, it has incurred no Federal income tax. The Internal Revenue Code allows net operating losses (NOL’s) to be carried forward and applied against future profits for a period of twenty years; an NOL of $32,162,994 had accumulated at March 31, 2017 on U.S. operations and has been carried forward. The potential tax benefit of the NOL’s has been recognized on the books of the Company, and is offset by a valuation allowance.

Under current accounting guidance, recognition of deferred tax assets is permitted unless it is more likely than not that the assets will not be realized. The Company has recorded deferred tax assets using statutory rates, as presented below. The valuation reserve increased by $811,504 during the quarter ended March 31, 2017.

	3/31/2017	12/31/2016
Opening Balance	(29,776,217)	(24,564,383)
Current	(2,386,777)	(5,211,834)
Ending NOL	(32,162,994)	(29,776,217)

	Total	Total
Deferred Tax Assets	(10,935,418)	(10,123,914)
Realization Allowance	10,935,418	10,123,914
Balance Recognized	$                      -	$                      -

The effective tax rate is as follows:

Statutory Federal Rate	34%
Effect of Valuation Allowance	(34%)
Effective Rate	0%

NOTE 12 - INTANGIBLE ASSETS

The Company accounts for its long-lived assets in accordance with Accounting Standards Codification (“ASC”) Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.”  ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate.  The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition.  If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.  The Company increased goodwill as a result of its 2016 first quarter acquisition by $612,445 but also impaired the goodwill on its 2015 acquisitions. The company has retained the goodwill from its LGM acquisition which has substantial market value assets in excess of carrying cost.

14

		31-Mar-17		31-Dec-16
Patents	$	88,226	$	88,226
Trademarks		277		277
Goodwill		3,717,931		3,717,931
Intangible assets		3,806,434		3,806,434
Less impairments		(1,104,445)		(1,104,445)
Intangible assets, net	$	2,701,989	$	2,701,989

NOTE 13 - SEGMENT INFORMATION

ASC Topic 280 requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. During the quarters ended March 31, 2017 and 2016, the Company operated in one reportable business segment: the sale and manufacture of specialized electric vehicle. The Company's reportable segment is a strategic business unit that offers its product.

NOTE 14 - ACQUISITIONS

On March 29, 2015, the Company acquired a 50% interest in each of Leo Motors Factory 1 and 2 which are auto repair shops that specialize in repairing hand-made luxury cars such as Ferrari, Lamborghini, Bentley, Porsche, and Rolls Royce. The Company also acquired a 50% interest in Leo Trade specializing in trading luxury cars.  

The consolidation of these acquisitions is presented below.

15

Leo Motors consolidation		LEO Motors	LEO Motors	LGM	LEO Motors	LEO Motors	LEO Trade	ELIM	Consolidated
31-Mar-15		US	Korea		Factory 1	Factory 2	(f/k/a/ Erum)	ENTRIES	Statements
All numbers shown in  US Dollars								DR(CR)	3/31/2015
ASSETS
Cash and cash equivalents	$	374	67853	211,957	91,187	2914	92173	0	466,458
Accounts receivable		0	0	476,777	8,754	48,425	418,422	0	952,378
Inventories		0	0	295,159	0	0	0	0	295,159
Prepayment to suppliers		0	137,236	160,484	0	0	0	0	297,720
Other current assets		0	7,297	57,403	1,595	125,212	36,685	0	228,192
Total Current Assets		374	212,386	1,201,780	101,536	176,551	547,280		2,239,907
Fixed assets, net		6,744	10,530	16,846	63,683	88,181	0	0	185,984
Deposit		0	46,234	22,637	4,804	145,196	9,025	0	227,896
Intangible assets		0	63,831	0	0	0	0	0	63,831
Goodwill		0	0	0	0	0	0	3,057,003	3,057,003
Investment in subsidiaries		8,089,368	0	0	0	0	0	-8,089,368	0
Total Non-Current Assets		8,096,112	120,595	39,483	68,487	233,377	9,025		3,534,714
Total Assets	$	8,096,486	332,981	1,241,263	170,023	409,928	556,305	-5,032,365	5,774,621
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	1,139,889	1,060,342	291,900	97,840	307,112	416,183	0	3,313,266
Short term borrowings		0	256,392	183,245	32,052	0	0	0	471,689
Advance from customers		0	30,381	9,141	0	4,513	0	0	44,035
Due to related parties		0	116,617	0	0	0	0	0	116,617
Taxes payable		0	137,780	10,673	13,559	78,783	226	0	241,021
Notes Payable current portion		0	0	0	0	0	353,747	0	353,747
Total Current Liabilities		1,139,889	1,601,512	494,959	143,451	390,408	770,156		4,540,375
Long Term Notes		0	36,698	117,075	0	173,928	0	0	327,701
Accrued severance benefits		0	2,075	0	0	0	0	0	2,075
Total Liabilities		1,139,889	1,640,285	612,034	143,451	564,336	770,156		4,870,151
Stockholders' Equity:
Common stock		154,144	2,831,276	284,870	90,253	135,379	180,505	-3,522,283	154,144
Additional paid-in capital		21,253,084	1,831,184	1,285,902	0	0	0	-4,973,230	19,396,940
Accumulated other comprehensive income		277,678	225,403	4,893	0	0	0	0	507,974
Accumulated loss		-14,728,309	-6,195,167	-946,436	-63,681	-289,787	-394,356	733,773	-21,883,963
Total Stockholders' Deficit attributable to LEO MOTORS, INC.		6,956,597	-1,307,304	629,229	26,572	-154,408	-213,851		-1,824,905
Non-controlling interest		0	0	0	0	0	0	2,729,375	2,729,375
Total Stockholders' Deficit		6,956,597	-1,307,304	629,229	26,572	-154,408	-213,851		904,470
Total Liabilities and Stockholders' Deficit	$	8,096,486	332,981	1,241,263	170,023	409,928	556,305	-5,032,365	5,774,621

16

On June 3, 2016, the Company acquired a 50% interest in Leo AIC (formerly known as Lelcon) and with the acquisition, the Company was engaged in connected car and artificial intelligence (AI) related businesses for a smart city. The consolidation of these acquisitions is presented below.

LEO MOTORS, INC.
CONSOLIDATED PRO FORMA BALANCE SHEETS
BALANCE AT MARCH 31, 2016
UNAUDITED
(AMOUNTS EXPRESSED IN US DOLLAR)
		Leo Motors		LELC		Pro Forma		Pro Forma
		4/1/2016		4/1/2016		AJE		Consolidated
Assets
Current Assets
Cash and cash equivalents	$	130,874	$	998			$	131,872
Accounts Receivable		1,015,447		14,031				1,029,478
Inventories		838,785		37,879				876,664
Prepayment to suppliers		382,545		0				382,545
Stockholder loans		0		129,066				129,066
Other current assets		199,073		2,905				201,978
Total Current Assets		2,566,724		184,879				2,751,603
Fixed assets, net		142,137		33,242				175,379
Deposit		346,255		0				346,255
Other non-current assets		87,275		1,228				88,503
Investments		500,000		0	$	-500,000		0
Goodwill		3,057,003		0		470,559		3,527,562
Total Assets	$	6,699,394	$	219,349			$	6,889,302
Liabilities and Equity(Deficit)
Current Liabilities:
Accounts payable and accrued expenses	$	3,748,487	$	50,193			$	3,798,680
Current portion notes payable		264,158		85,034				349,192
Advance from customers		496,385		0				496,385
Due to related parties		136,887		0				136,887
Taxes payable		155,151		4,429				159,580
Total Current Liabilities		4,801,068		139,656				4,940,724
Accrued retirement benefits		96,518		0				96,518
Other long term liabilities		196,579		0				196,579
Long term debt net of current portion		95,599		0				95,599
Total Liabilities		5,189,764		139,656				5,329,420
Commitments		-		-
Leo Motors, Inc. ("LEOM") Equity(Deficit):
Common stock ($0.001 par value; 300,000,000 shares authorized); 163,198,512 shares issued and outstanding at March 31, 2016		164,614		169,348		-169,348		164,614
Additional paid-in capital		21,488,871		0				21,488,871
Accumulated other comprehensive income		1,329,240		1,805				1,331,045
Accumulated loss		-25,827,119		-91,460		55,233		-25,863,346
Total Equity(Deficit) Leo Motors, Inc.		-2,844,394		79,693				-2,878,816
Non-controlling interest		4,354,024		0		84,674		4,438,698
Total Equity(Deficit)		1,509,630		79,693				1,475,208
Total Liabilities and Equity(Deficit)	$	6,699,394	$	219,349		0	$	6,804,628
"See accompanying notes to consolidated financial statements"

17

On March 8, 2017, the Company acquired 100% of a startup corporation owned by its director called Leo Members, Inc. which was not a significant acquisition. This new wholly owned subsidiary then exchanged interest with Leo Motors in Leo Factory 1, Leo Factory 2, and Leo Trading in a common control transaction, leaving Leo Motors, Inc. still in control of all the subsidiaries. Since the new subsidiary was wholly owned, and recorded at book value, its acquisition of our interest in other subsidiaries resulted in no current or past changes that would have had to be reflected in pro forma statements. As a result of this, no pro forma statements have been presented here.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

Certain statements in this Management's Discussion and Analysis ("MD&A"), 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. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "would," "expect," "intend," "could," "estimate," "should," "anticipate," or "believe," and similar expressions.  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. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.  Readers should carefully review the risk factors and related notes included under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission on April 17, 2017.

The following MD&A is intended to help readers understand the results of our operation and financial condition, and is provided as a supplement to, and should be read in conjunction with, our Interim Unaudited Financial Statements and the accompanying Notes to Interim Unaudited Financial Statements under Part 1, Item 1 of this Quarterly Report on Form 10-Q.

Growth and percentage comparisons made herein generally refer to the three months ended March 31, 2017 compared with the three months ended March 31, 2016 unless otherwise noted. Unless otherwise indicated or unless the context otherwise requires, all references in this document to "we, "us, "our," the "Company," and similar expressions refer to Leo Motors, Inc., and depending on the context, its subsidiaries.

SPECIAL NOTICE ABOUT GOING CONCERN AUDIT OPINION

OUR AUDITOR HAS ISSUED AN OPINION EXPRESSING DOUBT AS TO OUR ABILITY TO CONTINUE IN BUSINESS AS A GOING CONCERN.  YOU SHOULD READ THIS QUARTERLY REPORT ON FORM 10-Q WITH THE “GOING CONCERN” ISSUES IN MIND.

This Management’s Discussion and Analysis should be read in conjunction with the financial statements included in this Quarterly Report on Form 10-Q (the “Financial Statements”).  The financial statements have been prepared in accordance with generally accepted accounting policies in the United States (“GAAP”).  Except as otherwise disclosed, all dollar figures included therein and in the following management discussion and analysis are quoted in United States dollars.

Overview

Leo Motors, Inc. (the "Company") is a Nevada Corporation incorporated on September 8, 2004.  The Company established a wholly-owned operating subsidiary in Korea named Leo Motors Co. Ltd. ("Leozone") on July 1, 2006.  Through Leozone, the Company is engaged in the research and development ("R&D") of multiple products, prototypes, and conceptualizations based on proprietary, patented and patent pending electric power generation, drive train and storage technologies.  Leozone operates through four unincorporated divisions: new product research & development ("R&D"), post R&D development such as product testing, production, and sales.

18

The Company's products include (i) E-Box electric energy storage system for solar and wind power generation devices; and (ii) EV components that integrate electric batteries with electric motors such as EV Controllers that use a mini-computer to control torque drive.

On March 8, 2017, the Company acquired Leo Members, Inc. (“Leo Members”) which integrates Leo Factory 1 and 2, and Leo Trade. Leo Members will start in the used luxury car trading business through an affiliation with car repairing garages (car centers) in Korea. Leo Members is developing a used car recommendation solution including car history tracking using AIC’s vehicle diagnosing manager, financing through fintech financing services provided by its affiliated financial company, and connected repairing services.

The Company has developed eight EPTS of increasing power rating: 3kW, 5kW, 7.5kW, 15kW, 30kW, 60kW, 120kW, and 240kW systems.  Each EPTS consists of a motor, a controller, and a battery power pack with a battery management system ("BMS").

The Company has successfully converted existing models of small cars (ICEs under 2,000cc), and also a 24 seat bus.  The Company has begun marketing its 60kW power train kits (for compact passenger cars and small trucks) and its 120kW kits (for ICE passenger cars, buses, and trucks under 5,000cc). The Company has developed a 240kW kit (for up to 10,000cc buses and trucks) as well, and is attempting to locate a strategic partner to fund the testing and production.

The specific goals of the Company over the next twelve months include:

· Focus on the capitalization of the Company;

· Focus on the sale of the E-Boats, connected EV’s, intelligent poles, and smart parking tower system and E-Box;

· Business development in China and in America by establishing a joint venture companies;

· Continue with R&D of our EV's, E-Boats, connected car, products for smart cities and related products as capital permits.

The E-Box can be used as an energy supplying device in an emergency situations or as a energy storage device for use by the military; municipal and industry; corporate; solar/wind power storage; electric coolers and heaters; yachts or small ships. The E-Box is offered in three power classes: 1kw, 3kw and 5kw.  E-Boxes for 10kw and 550kw will be developed in the future.  The E-Box is environmentally friendly with high energy density due to the use of lithium-polymer battery.  The E-Box uses a multiple cell voltage balancing system via a battery management system ("BMS").

The Company is developing new battery exchange system using its patented cartridge battery exchange system which will solve the cost barriers of the electric vehicle to make them less expensive than their Internal Combustion Engine (ICE) counterparts and to help solve battery charging problems. With evolutionary batter exchange system, the Company's EV's can exchange battery within one minute using simple and low cost equipment. This technology can be best used in fleet managed vehicles such as city buses, taxis, and garbage trucks because it can be used any road sides. The Company is developing EV Ecosystem using connected car solution to provide the battery swap services for fleet operators such as rental cars, public companies, delivery companies, and post offices.

19

The Company acquired Leo AIC (formerly known as Lelcon) on June 3, 2016. With the acquisition, the Company was engaged in connected car and artificial intelligence (AI) related businesses for a smart city. Leo AIC has developed tele-diagnosing and tele-operation system for cars and things such as smart street lights and intelligent parking tower system. Leo AIC has been selling these systems and products to several cities in China and in Korea. Solutions from Leo AIC will be provided to EV’s and E-Boats provided by the Company, thus, all vehicles are connected to the cloud server and AI, thus they provide organized battery swap services as well as better riding experiences.

The Company acquired Leo Members, Inc. (“Leo Members”) which integrates Leo Factory 1 and 2, and Leo Trade. Leo Members will start in the used luxury car trading business through an affiliation with car repairing garages (car centers) in Korea. Leo Members is developing a used car recommendation solution including car history tracking using AIC’s vehicle diagnosing manager, financing through fintech financing services provided by its affiliated financial company, and connected repairing services.

Our principal executive offices are located at ES Tower 7F, Teheranro 52 Gil 17, Gangnamgu, Seoul 06212 Republic of Korea and our telephone number is +82 70-4699-3583. Our web site address is www.leomotors.com. Information contained in or accessible through our website does not constitute part of this Quarterly Report on Form 10-Q.

Recent Business Developments

On March 8, 2017, the Company acquired 100% of Leo Members which integrates Leo Factory 1 and 2, and Leo Trade. Leo Members will start in the used luxury car trading and repairing businesses. Based on the connected car platform, Leo Members is developing prescriptive car care and trading services.

On April 19, 2017, LGM Co., Ltd., a subsidiary of the Company, entered a contract with SOH, Inc. ("SOH") for sales of electric passenger boats. The total contract amount is approximately $6.3 million for nine public boats for tourists, including four 12 seaters, three 20 seaters, and two 50 seaters to SOH. The details of the order from SOH are subject to change when the manufacturing process begins.

Liquidity and Capital Resources

Our liquidity and capital resources are limited. Accordingly, our ability to initiate our plan of operations and continue as a going concern is currently dependent on our ability to either generate significant new revenues or raise external capital.

Results of Operations - For the Three Months Ended March 31, 2017

Revenues

Sales for the three months ended March 31, 2017 were $398,951 compared to $745,706 for the three months ended March 31, 2016, a decrease of $346,755. The Company is in the process of adjusting its product line to benefit from its new subsidiary relationships.

General and Administrative Expenses

Expenses for the period quarter consisted of the following:

20

	For the Three Months Ended
	March 31,			March 31,
Total General and Administrative Expenses:	2017			2016
Salaries and Benefits		$	1,047,134		$	366,121
Consulting and Service Fees			383,412			155,938
Selling, General and Administrative			1,182,279			386,801
Total		$	2,612,825		$	908,860

Salaries and Benefits consist of total of common stock issued to our executive officers as compensation for their services as officers of the Company and cash compensation paid to our employees during the year and the cost of all benefits provided to our employees.

Consulting and Service Fees consist of consist of accounting, legal, and professional fees.

Selling, General and Administrative consists of travel expenses, entertainment expenses, communication expenses, utilities, taxes & dues, depreciation expenses, rent, repairs, vehicle maintenance, ordinary development expenses, shipping, education & training, printing, storage, advertising, insurance, office supplies and expense, payroll expenses, investor referral fees and other miscellaneous expenses.

Other Income (Expenses)

During the three months ended March 31, 2017, we incurred $13,483 in net other income, compared to $(3,998) in other expenses for the three months ended march 31, 2017, an increase of $17,48M.

Net Income (Loss)

The net loss for the three months ending March 31, 2017 increased to $(2,386,727) from $(458,166) for the three months ending March 31, 2016, an increase of $1,928,611. As outlined above the Company has had very limited sales as it restructures its product lines.

Liquidity and Capital Resources

Our liquidity and capital resources are limited. Accordingly, our ability to initiate our plan of operations and continue as a going concern is currently dependent on our ability to either generate significant new revenues or raise external capital through additional borrowing or the sale of additional equity.

The Company’s total current assets at March 31, 2017 were $2,954,686 and total current liabilities were $7,736,380.  Significant losses from operations have been incurred since inception and there is an accumulated deficit of $31,433,061 as of March 31, 2017.  Continuation as a going concern is dependent upon attaining capital to achieve profitable operations while maintaining current fixed expense levels.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that 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 that is material to investors.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk. 

As a smaller reporting company, as that term is defined in Item 10(f)(1) of Regulation S-K, we are not required to provide information required by this Item.

21

Item 4. Controls and Procedures. 

As of the end of the quarterly period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and our principal financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our chief executive officer and our principal financial officer concluded that our disclosure controls and procedures are not effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. There was no change in our internal controls or in other factors that could affect these controls during our last fiscal year that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our co-CEOs and our CFO, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our co-CEOs and our CFO concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective such that material information required to be disclosed is made known to management and others, as appropriate, to allow timely decision regarding required disclosure and that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our co-CEOs and CFO, as appropriate to allow timely decisions regarding required disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Management’s Annual Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

Our management, with the participation of the co-CEOs, evaluated the effectiveness of the Company’s internal control over financial reporting as of March 31, 2017. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Tread way Commission (COSO) in Internal Control — Integrated Framework. Based on this evaluation, our management, with the participation of the co-CEOs, concluded that, as of March 31, 2017, our internal control over financial reporting was ineffective and there are material weaknesses in our internal control over financial reporting.

A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses relate to the limited number of persons responsible for the recording and reporting of financial information, the lack of separation of financial reporting duties, and the limited size of our management team in general. We  are  in  the  process evaluating methods of improving our internal control  over  financial reporting, including the possible addition of financial reporting  staff  and  the  increased  separation  of  financial  reporting responsibility, and intend to implement such steps as are necessary and possible to  correct  these  material  weaknesses.

22

This quarterly report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permits us to provide only management’s report in this quarterly report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fourth quarter of the year ended March 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1.  Legal Proceedings.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business.  We are not currently aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition, or operating results.

Item 1A.  Risk Factors.

There have been no changes to the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

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

None.

Item 3.  Defaults upon Senior Securities. 

None.

Item 4.  Mine Safety Disclosures. 

Not Applicable.

Item 5.  Other Information. 

None.

Item 6.   Exhibits. 

The following exhibits are filed as part of this quarterly report on Form 10-Q:

Exhibit No.	Description
31.1	Certification of Co-Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of Co-Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.3	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of the Co-Principal Executive Officers and the Chief Financial Officer pursuant to 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 Calculation Linkbase Document*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB	XBRL Taxonomy Label Linkbase Document*
101.PRE	XBRL Taxonomy Presentation Linkbase Document*

*Filed herewith.

**Furnished herewith.

23

SIGNATURES

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

	Leo Motors, Inc.
May 12, 2017	By:	/s/ Jun Heng Park
		Jun Heng Park
		Co-Chief Executive Officer (Principal Executive Officer)
May 12, 2017	By:	/s/ Shi Chul Kang
		Shi Chul Kang
		Co-Chief Executive Officer (Principal Executive Officer)
May 12, 2017	By:	/s/ Jeong Youl Choi
		Jeong Youl Choi
		Chief Financial Officer (Principal Financial and Accounting Officer)

24

EX-31

Exhibit 31.1

CERTIFICATION

I, Jun Heng Park, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Leo Motors, Inc. (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the Company’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: May 12, 2017

By:	/s/ Jun Heng Park
	Jun Heng Park
	Co-Chief Executive Officer
	(Principal Executive Officer)

EX-31

Exhibit 31.2

CERTIFICATION

I, Shi Chul Kang, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Leo Motors, Inc. (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the Company’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: May 12, 2017

By:	/s/ Shi Chul Kang
	Shi Chul Kang
	Co-Chief Executive Officer
	(Principal Executive Officer)

EX-31

Exhibit 31.3

CERTIFICATION

I, Jeong Youl Choi, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Leo Motors, Inc. (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the Company’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: May 12, 2017

By:	/s/ JeongYoul Choi
	JeongYoul Choi
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32

Exhibit 32.1

CERTIFICATION

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Jun Heng Park, the Co-Chief Executive Officer of Leo Motors, Inc. (the “Registrant”), Shi Chul Kang, the Co-Chief Executive Officer of the Registrant, and Jeong Youl Choi, the Chief Financial Officer of the Registrant, each hereby certifies that, to the best of his knowledge:

1. The Registrant’s Quarterly Report on Form 10-Q for the period ended March 31, 2017, to which this Certification is attached as Exhibit 32.1 (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and 

2. The information contained in the Report fairly presents, in all material respects, the financial condition of the Registrant at the end of the period covered by the Report and results of operations of the Registrant for the periods covered by the Report. 

Date: May 12, 2017

By:	/s/ Jun Heng Park
	Jun Heng Park
	Co-Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Shi Chul Kang
	Shi Chul Kang
	Co-Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Jeong Youl Choi
	Jeong Youl Choi
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 05, 2017
Details
Registrant Name	Leo Motors, Inc.
Registrant CIK	0001356564
SEC Form	10-Q
Period End date	Mar. 31, 2017
Fiscal Year End	--12-31
Trading Symbol	leom
Tax Identification Number (TIN)	814108026
Number of common stock shares outstanding		172,528,016
Filer Category	Smaller Reporting Company
Current with reporting	Yes
Voluntary filer	No
Well-known Seasoned Issuer	No
Amendment Flag	false
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Contained File Information, File Number	000-53525
Entity Incorporation, State Country Name	Nevada
Entity Address, Address Line One	ES Tower 7F, Teheranro 52 Gil 17
Entity Address, City or Town	Gangnamgu, Seoul
Entity Address, Country	Rep. of Korea
Entity Address, Postal Zip Code	06212
City Area Code	82-70
Local Phone Number	4699-3585

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Current Assets
Cash and cash equivalents	$ 500,185	$ 460,671
Accounts receivable	584,467	433,205
Inventories	1,301,577	1,088,298
Prepayment to suppliers	529,342	457,643
Other current assets	39,115	91,973
Total Current Assets	2,954,686	2,531,790
Fixed assets, net	265,722	129,157
Deposit	346,255	346,255
Intangible assets	88,503	88,503
Goodwill	2,613,486	2,613,486
Total Assets	6,268,652	5,709,191
Current Liabilities:
Accounts payable	1,494,212	1,411,130
Accrued expenses	4,659,802	4,345,772
Advance from customers	79,941	386,624
Due to related parties	843,925	358,680
Taxes payable	85,428	29,635
Notes Payable current portion	248,803	268,824
Total Current Liabilities	7,412,111	6,800,665
Accrued retirement benefits	250,686	216,195
Other long term liabilities	73,583	72,851
Total Liabilities	7,736,380	7,089,711
Commitments (Note 8)	0	0
Leo Motors, Inc.('LEOM') Equity(Deficit):
Common stock ($0.001 par value; 300,000,000 shares authorized); 172,689,554 and 172,528,016 shares issued and outstanding at March 31, 2017 and December 31, 2016	172,690	172,528
Additional paid-in capital	21,431,054	21,411,832
Accumulated other comprehensive income	1,291,799	1,184,443
Accumulated loss	(31,433,061)	(29,776,217)
Total Equity(Deficit) Leo Motors, Inc.	(8,537,518)	(7,007,414)
Non-controlling interest	7,069,790	5,626,894
Total Equity(Deficit)	(1,467,728)	(1,380,520)
Total Liabilities and Equity(Deficit)	$ 6,268,652	$ 5,709,191

XML

CONSOLIDATED BALANCE SHEETS - Parenthetical - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Details
Common Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	300,000,000	300,000,000
Common Stock, Shares, Issued	172,689,554	172,528,016
Common Stock, Shares, Outstanding	172,689,554	172,528,016

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Details
Revenues	$ 398,951	$ 745,706
Cost of Revenues	186,336	291,014
Gross Profit	212,615	454,692
Operating Expenses	2,612,825	908,860
Income(loss) from Continuing Operations	(2,400,210)	(454,168)
Other Income (Expenses)
Interest expense	(7,659)	(9,328)
Non-Operating (expense) income	21,142	5,330
Total Other Income (Expenses)	13,483	(3,998)
Income(loss) from Continuing Operations Before Income Taxes	(2,386,727)	(458,166)
Income Tax Expense	50	0
Net Income(Loss)	(2,386,777)	(458,166)
Income(loss) attributable to non-controlling interest	(729,933)	(35,655)
Net Income(Loss) Attributable To Leo Motors, Inc.	(1,656,844)	(422,511)
Other Comprehensive Income:
Net Income(Loss)	(2,386,777)	(458,166)
Unrealized foreign currency translation gain	107,356	78,120
Comprehensive Income(loss) Attributable to Leo Motors, Inc.	$ (2,279,421)	$ (380,046)
Net Loss per Common Share:
Basic	$ (0.01)	$ (0.00)
Diluted	$ (0.01)	$ (0.00)
Weighted Average Common Shares Outstanding:
Basic	172,581,682	161,878,686
Diluted	172,581,682	161,878,686

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from Operating Activities:
Net loss	$ (1,656,844)	$ (422,511)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	37,042	20,864
Foreign currency translation	107,356	78,120
Net loss attributed to NCI	(729,933)	(35,655)
Stock-based compensation	19,385	115,938
Changes in assets and liabilities:
Accounts Receivable	(151,262)	549,667
Inventories	(213,279)	(341,814)
Prepayment to suppliers	(71,699)	(103,316)
Other assets	52,858	(166,966)
Accounts payable, other payables and accrued expenses	397,112	(266,880)
Accrued retirement benefits	34,491	3,570
Advances from customers	(305,951)	(299,046)
Taxes payable	55,793	55,567
Net cash used in operating activities:	(2,424,931)	(812,462)
Cash flows from investing activities:
Investment in assets	(173,647)	(23,444)
Payments on deposits	0	(404)
Net cash provided(used) in investing activities:	(173,647)	(23,848)
Cash flows from financing activities:
Proceeds on notes payable	0	32,373
Payments on notes payable	(20,021)	(7,661)
Proceeds on notes payable - related party	485,284	0
Payments on notes payable - related party	0	(3,509)
Proceeds from investments NCI	2,172,829	186,973
Proceeds from issuance of stock & warrants	0	515,199
Net cash provided(used) by financing activities:	2,638,092	723,375
Net Increase in cash and cash equivalents:	39,514	(112,935)
Cash and cash equivalents - beginning of year	460,671	243,809
Cash and cash equivalents - end of period	500,185	130,874
Supplemental disclosure of cash flow activities:
Interest	35,309	9,328
Income taxes	0	0
Supplemental disclosures of non cash activities:
Common stock issued for services	$ 19,385	$ 115,938

XML

Note 1 - Company Background

3 Months Ended

Mar. 31, 2017

Notes

Note 1 - Company Background

NOTE 1 - COMPANY BACKGROUND

Leo Motors, Inc. (the “Company” or “we”) is currently in development, assembly and sales of the energy storage devices and electric vehicle components.

The Company was originally incorporated in California as N. Org., Inc. on December 12, 1983. The Company then underwent several name changes from Natural Organics Corporation to Classic Auto Accessories of North America and then to FCR Automotive Group, Inc. On September 20, 2004, the Company reincorporated  in  Delaware by merging into FCR Group, Inc.,  a  Delaware Automotive corporation,  which  was  organized  on  September  8, 2004. On July  26,  2005,  the  Company acquired Shinil Precision Co., Ltd., a Korean Company,  as  its  operating  business  and on July 18, 2005, changed its name to Shinil  Precision Machinery, Inc. to reflect its anticipated new business. Upon failure of certain terms  and  conditions  of  the acquisition agreement, the Company  returned the shares of Shinil and recovered and cancelled the Company's shares  issued  in  the  acquisition. In 2012, the Company changed its domicile to Nevada.

The Company had been dormant since 1989, and consummated a reverse merger on November 12, 2007 with Leozone Inc., a South Korean company, which is the maker of electrical transportation devices. The merger essentially exchanges shares in Leo Motors, Inc. for shares in Leozone. As this is a reverse merger the accounting treatment of such is that of a combination of the two entities with the activity of Leozone, Inc. the surviving entity, going forward. The financial statements reflect the activity for all periods presented as if the merger had occurred January 1, 2007. Leozone has continued to operate as a separate subsidiary Leo Motors Co. Ltd. of Korea since that time.

On February 11, 2010, the Company acquired 50% of Leo B&T Corp., a South Korean corporation (“B&T”), from two shareholders of B&T in exchange for 7,000,000 shares of the Company’s common stock. Our ownership in B&T was reduced to 30% in 2011. Additionally, this investment was written down as impairment expense during 2011 and the remaining investment was exchanged in 2012 for a return of Leo Motors stock.

On November 10, 2012, the Company signed an agreement withPDI C&D/RDC SPRL Inc. ("PDI"), an affiliate of PDI Global LLC, a major architectural design company in the U.S., to supply an independent solar power system grafted with the Company’s E-Box power storage device for a housing project in the Democratic Republic of the Congo ("DRC"). The Company will have a 10% interest in the overall project. This project has incurred an impairment charge as details in these footnotes.

On July 1, 2014, the Company acquired all of the outstanding common stock of LGM Co. Ltd., a corporation incorporated in the Republic of Korea (“LGM”), from LGM’s shareholders, which represents 813,747 shares of LGM common stock, in exchange for 47,352,450 shares of the Company's common stock pursuant to the Share Swap Agreement entered into by and between LGM and the Company. Upon closing of the Share Swap Agreement, LGM became a wholly-owned subsidiary of the Company.

On March 31, 2015, the Company acquired 50% interest in each of Leo Motors Factory, Inc. (“Leo Factory 1”) and Leo Motors Factory 2, Inc. (“Leo Factory 2”) which are auto repair shops that specialize in repairing hand-made luxury cars such as Ferrari, Lamborghini, Bentley, Porsche, and Rolls Royce. The Company also acquired 50% interest in Leo Trading Inc. (formerly Erum Motors, Inc.) (“Leo Trade”) specializing in the trading of luxury cars. These acquired entities will be presented on a consolidated basis as the parent company has significant control of the business through the Board of Directors which can decide decisions split on strictly on common share ownership percentages.

The Company acquired Leo AIC (formerly known as Lelcon) on June 3, 2016. With the acquisition, the Company was engaged in connected car and artificial intelligence (AI) related businesses for a smart city. On March 8, 2017, the Company acquired 100% of a startup corporation owned by its director called Leo Members, Inc. This new wholly owned subsidiary then exchanged interest with Leo Motors in Leo Factory 1, Leo Factory 2, and Leo Trading in a common control transaction.

Certain information and disclosures normally included in the notes to financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission, although the Company believes the disclosure is adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2016.

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Note 2 - Policies

3 Months Ended

Mar. 31, 2017

Notes

Note 2 - Policies

NOTE 2 - POLICIES

This summary of significant account policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and the notes are the representation of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to U.S. generally accepted accounting principles (“USGAAP”) and have been consistently applied in the preparation of the financial statements.

Basis of Presentation and Consolidation

These financial statements and related notes are expressed in US dollars. The Company’s fiscal year-end is December 31. The consolidated financial statements include the financial statements of the Leo Motors Co. Ltd. Korea, LGM Co. LTD, Leo Factory Motors #1, Leo Factory Motors #2, Leo Trading, Leo Members, Inc., and Leo AIC. The company has significant control of all subsidiaries thru direct as well as indirect stock ownership and voting board control from parent board members at the subsidiary level.  All inter-company transactions and balances have been eliminated upon consolidation.

 Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 Fair Value of Financial Instruments

For certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable inventory and prepaid expenses, accounts payable and deferred revenues, the carrying amounts approximate fair value due to their short maturities.

Revenue Recognition

The Company follows the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements”. In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company.

The Company generates revenue from the delivery of goods and records revenues when the sales are completed, already collected or collectability is reasonably assured, there is no future obligation and there is remote chance of future claim or refund to the customers.

Revenue is recognized when risk of ownership and title pass to the buyer, generally upon the delivery of professional services. Pricing is fixed and determinable according to the Company’s published brochures and price lists.

Accounts Receivables

Accounts receivables of the Company are reviewed to determine if their carrying value has become impaired.  The Company considers the assets to be impaired if the balances are greater than one-year old. Management regularly

reviews accounts receivable and will establish an allowance for potentially uncollectible amounts when appropriate. When accounts are written off, they will be charged against the allowance.

Receivables are not collateralized and do not bear interest.

Cash Equivalents

For purposes of reporting cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalent.

Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which is generally 3 to 10 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

The Company will periodically evaluate whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. We use an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

Intangible and Long Lived Assets

The Company follows ASC 360-10, “Property, Plant, and Equipment,” which established a “primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. Through March 31, 2017, the Company has impaired goodwill on three of its acquisitions reflected by their recurring losses for those entities.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC 740-10, “Accounting for Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year; and, (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken on a tax return. Under ASC 740-10, a tax benefit from an uncertain tax position taken or expected to be taken may be recognized only if it is “more likely than not” that the position is sustainable upon examination, based on its technical merits. The tax benefit of a qualifying position under ASC 740-10 would equal the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all the relevant information. A liability (including interest and penalties, if applicable) is established to the extent a current benefit has been recognized on a tax return for matters that are considered contingent upon the outcome of an uncertain tax position. Related interest and penalties, if any, are included as components of income tax expense and income taxes payable.

Loss per Share

Basic earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of both common and preferred stock outstanding for the period.

Inventory

Inventory consist mostly of items purchased as finished goods and used in the repair of automobiles and boats and are recorded at cost and is valued using the first in, first out method.

Stock-Based Compensation

SFAS No. 123, “Accounting for Stock-Based Compensation,” establishes and encourages the use of the fair value based method of accounting for stock-based compensation arrangements under which compensation cost is determined using the fair value of stock-based compensation determined as of the date of grant and is recognized over the periods in which the related services are rendered. For stock based compensation the Company recognizes an expense in accordance with SFAS No. 123 and values the equity securities based on the fair value of the security on the date of grant. Stock option awards are valued using the Black-Scholes option-pricing model.

Reclassifications

Certain reclassifications have been made to prior year balances to conform to the current year presentation.

Foreign Currency Translation And Comprehensive Income

The reporting currency of the Company is the US$. The functional currency of the parent company is the US$ and the functional currency of the Company’s operating subsidiary is Korean Won (“KRW”). The subsidiary’s results of operations and cash flows are translated at average exchange rates during the year, assets and liabilities are translated at the unified exchange rate at the end of the year, and equity is translated at historical exchange rates. Translation adjustments resulting from the process of translating the functional currency financial statements into US$ are included in determining comprehensive income. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. The Company does not enter any material transaction in foreign currencies and accordingly, transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.

Recent Accounting Pronouncements

The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change. The

Company currently does not have any recent accounting pronouncements that they are studying and feel may be applicable.

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Note 3 - Earnings Per Share

3 Months Ended

Mar. 31, 2017

Notes

Note 3 - Earnings Per Share

The Company reports basic and diluted earnings per share (EPS) according to the provisions of ASC Topic 260, which requires the presentation of basic EPS and, for companies with complex capital structures, diluted EPS. Basic EPS excludes dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income (loss) available to common stockholders, adjusted by other changes in income or loss that would result from the assumed conversion of those potential common shares, by the weighted number of common shares and common share equivalents (unless their effect is antidilutive) outstanding. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be antidilutive. Thus, these equivalents are not included in the calculation of diluted loss per share, resulting in basic and diluted loss per share being equal. The following is a reconciliation of the computation for basic and diluted EPS for the quarters ended March 31, 2017 and 2016:

		For the periods ended
		3/31/2017		3/31/2016
Net Income(Loss)	$	(2,386,777)	$	(458,166)
Weighted-average common stock Outstanding -  basic		172,581,682		161,878,686
Equivalents
Stock options		-		-
Warrants		-		-
Convertible Notes		-		-
Weighted-average common shares outstanding-  Diluted		172,581,682		161,878,686

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Note 4 - Due To Related Party

3 Months Ended

Mar. 31, 2017

Notes

Note 4 - Due To Related Party

NOTE 4 - DUE TO RELATED PARTY

The company is indebted to its officer for advances. There are various advances and repayments throughout the periods in small amounts. They are all short term in nature and provide working capital to the various subsidiaries. Repayment is on demand without interest. The balance was $843,925 at March 31, 2017 and $358,680 at December 31, 2016. There are no other related party transactions.

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Note 5 - Payments Received in Advance

3 Months Ended

Mar. 31, 2017

Notes

Note 5 - Payments Received in Advance

NOTE 5 - PAYMENTS RECEIVED IN ADVANCE

The Company during the periods received payments from potential customers, or deposits, on future orders. The Company’s policy is to record these payments as a liability until the product is completed and shipped to the customer at which the Company recognizes revenue. As of March 31, 2017 and December 31, 2016, the balance of payments received in advance was $79,941 and $386,624, respectively.

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Note 6 - Going Concern

3 Months Ended

Mar. 31, 2017

Notes

Note 6 - Going Concern

NOTE 6 - GOING CONCERN

As reported in the consolidated financial statements, the Company has accumulated deficits of $31,433,061 as of March 31, 2017 and its current liabilities exceeded its current assets. These negative trends have been consistent over the last few years except for asset sales.

These factors create uncertainty about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable and to create operations that contribute capital from normal operations. If the Company cannot obtain adequate capital it could be forced to cease operations.

In order to continue as a going concern, develop and generate revenues and achieve a profitable level of operations, the Company will need, among other things, additional capital resources. Management's plans to obtain such resources for the  Company  include  (1) raising additional capital through sales of common stock, (2) converting  promissory notes into  common  stock  and (3) entering into acquisition agreements  with profitable  entities  with   significant   operations.   In   addition, management is continually seeking to streamline its operations and expand the business through a variety of industries, including real estate and financial management.

However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations.  The accompanying   consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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Note 7 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2017

Notes

Note 7 - Commitments and Contingencies

NOTE 7 - COMMITMENTS AND CONTINGENCIES

(a) Lease Commitments

The Company leases its office space in Ha-Nam City in Korea which expires on December 31, 2017. The minimum obligations under such commitments for the years ending December 31, 2017 through December 31, 2019 are listed on the table below.

For the Year Ending		Amount
2017	$	112,500
2018		0
2019 and beyond		0
Total Commitment	$	112,500

(b) Loss Contingencies

The company currently has no loss contingencies.

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Note 8 - Inventories

3 Months Ended

Mar. 31, 2017

Notes

Note 8 - Inventories

NOTE 8 - INVENTORIES

Inventories consist of the following:

		31-Mar-17		31-Dec-16
		US$		US$
Raw material	$	115,239	$	420,768
Work in process		44,427		155,778
Finished goods		1,141,911		511,752
	$	1,301,577	$	1,088,298

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Note 9 - Property and Equipment

3 Months Ended

Mar. 31, 2017

Notes

Note 9 - Property and Equipment

NOTE 9 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

Property and equipment consisted of the following:		31-Mar-17		31-Dec-16
Vehicles	$	164,141	$	87,218
Tools		71,818		71,818
Office		191,832		179,791
Facility equipment		286,811		202,168
Total property and equipment		714,602		540,995
Accumulated depreciation		(448,880)		(411,838)
Property and equipment, net	$	265,722	$	129,157

Depreciation expense for the three months ended March 31, 2017 and 2016 amounted to $37,042 and $20,864, respectively.

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Note 10 - Short Term Borrowings and Notes Payable

3 Months Ended

Mar. 31, 2017

Notes

Note 10 - Short Term Borrowings and Notes Payable

NOTE 10 - SHORT TERM BORROWINGS AND NOTES PAYABLE

The Company continues to fund itself through borrowing and equity sales until sales return to historical levels.

At March 31, 2017 and December 31, 2016, the Company had short term borrowings of $248,803 and $268,824. The notes are short term working capital advances that have been advanced to their Korean Subsidiary from various local parties. These advances are due on demand, interest free and unsecured.

As of March 31, 2017, the major components of our notes and borrowings consisted of the following:

		3/31/17		12/31/16
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.21%
interest only payable monthly and secured by the Company.	$	47,845	$	47,258
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.28%
interest only payable monthly.		53,698		69,319
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 13.00%
interest only payable monthly and secured by the Company.		80,548		86,648
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.30
interest only payable monthly.		39,862		34,406
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 9.14
interest only payable monthly.		26,849		31,193
Total Liabilities		248,803		268,824
Less current portion		248,803		268,824
Long term debt	$	0	$	0

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Note 11 - Income Taxes

3 Months Ended

Mar. 31, 2017

Notes

Note 11 - Income Taxes

NOTE 11 - INCOME TAXES

The Company has experienced losses during most years since its inception. As a result, it has incurred no Federal income tax. The Internal Revenue Code allows net operating losses (NOL’s) to be carried forward and applied against future profits for a period of twenty years; an NOL of $32,162,994 had accumulated at March 31, 2017 on U.S. operations and has been carried forward. The potential tax benefit of the NOL’s has been recognized on the books of the Company, and is offset by a valuation allowance.

Under current accounting guidance, recognition of deferred tax assets is permitted unless it is more likely than not that the assets will not be realized. The Company has recorded deferred tax assets using statutory rates, as presented below. The valuation reserve increased by $811,504 during the quarter ended March 31, 2017.

	3/31/2017	12/31/2016
Opening Balance	(29,776,217)	(24,564,383)
Current	(2,386,777)	(5,211,834)
Ending NOL	(32,162,994)	(29,776,217)

	Total	Total
Deferred Tax Assets	(10,935,418)	(10,123,914)
Realization Allowance	10,935,418	10,123,914
Balance Recognized	$                      -	$                      -

The effective tax rate is as follows:

Statutory Federal Rate	34%
Effect of Valuation Allowance	(34%)
Effective Rate	0%

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Note 12 - Intangible Assets

3 Months Ended

Mar. 31, 2017

Notes

Note 12 - Intangible Assets

NOTE 12 - INTANGIBLE ASSETS

The Company accounts for its long-lived assets in accordance with Accounting Standards Codification (“ASC”) Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.”  ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate.  The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition.  If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.  The Company increased goodwill as a result of its 2016 first quarter acquisition by $612,445 but also impaired the goodwill on its 2015 acquisitions. The company has retained the goodwill from its LGM acquisition which has substantial market value assets in excess of carrying cost.

		31-Mar-17		31-Dec-16
Patents	$	88,226	$	88,226
Trademarks		277		277
Goodwill		3,717,931		3,717,931
Intangible assets		3,806,434		3,806,434
Less impairments		(1,104,445)		(1,104,445)
Intangible assets, net	$	2,701,989	$	2,701,989

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Note 13 - Segment Information

3 Months Ended

Mar. 31, 2017

Notes

Note 13 - Segment Information

NOTE 13 - SEGMENT INFORMATION

ASC Topic 280 requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. During the quarters ended March 31, 2017 and 2016, the Company operated in one reportable business segment: the sale and manufacture of specialized electric vehicle. The Company's reportable segment is a strategic business unit that offers its product.

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Note 14 - Acquisitions

3 Months Ended

Mar. 31, 2017

Notes

Note 14 - Acquisitions

On March 29, 2015, the Company acquired a 50% interest in each of Leo Motors Factory 1 and 2 which are auto repair shops that specialize in repairing hand-made luxury cars such as Ferrari, Lamborghini, Bentley, Porsche, and Rolls Royce. The Company also acquired a 50% interest in Leo Trade specializing in trading luxury cars.  

The consolidation of these acquisitions is presented below.

Leo Motors consolidation		LEO Motors	LEO Motors	LGM	LEO Motors	LEO Motors	LEO Trade	ELIM	Consolidated
31-Mar-15		US	Korea		Factory 1	Factory 2	(f/k/a/ Erum)	ENTRIES	Statements
All numbers shown in  US Dollars								DR(CR)	3/31/2015
ASSETS
Cash and cash equivalents	$	374	67853	211,957	91,187	2914	92173	0	466,458
Accounts receivable		0	0	476,777	8,754	48,425	418,422	0	952,378
Inventories		0	0	295,159	0	0	0	0	295,159
Prepayment to suppliers		0	137,236	160,484	0	0	0	0	297,720
Other current assets		0	7,297	57,403	1,595	125,212	36,685	0	228,192
Total Current Assets		374	212,386	1,201,780	101,536	176,551	547,280		2,239,907
Fixed assets, net		6,744	10,530	16,846	63,683	88,181	0	0	185,984
Deposit		0	46,234	22,637	4,804	145,196	9,025	0	227,896
Intangible assets		0	63,831	0	0	0	0	0	63,831
Goodwill		0	0	0	0	0	0	3,057,003	3,057,003
Investment in subsidiaries		8,089,368	0	0	0	0	0	-8,089,368	0
Total Non-Current Assets		8,096,112	120,595	39,483	68,487	233,377	9,025		3,534,714
Total Assets	$	8,096,486	332,981	1,241,263	170,023	409,928	556,305	-5,032,365	5,774,621
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	1,139,889	1,060,342	291,900	97,840	307,112	416,183	0	3,313,266
Short term borrowings		0	256,392	183,245	32,052	0	0	0	471,689
Advance from customers		0	30,381	9,141	0	4,513	0	0	44,035
Due to related parties		0	116,617	0	0	0	0	0	116,617
Taxes payable		0	137,780	10,673	13,559	78,783	226	0	241,021
Notes Payable current portion		0	0	0	0	0	353,747	0	353,747
Total Current Liabilities		1,139,889	1,601,512	494,959	143,451	390,408	770,156		4,540,375
Long Term Notes		0	36,698	117,075	0	173,928	0	0	327,701
Accrued severance benefits		0	2,075	0	0	0	0	0	2,075
Total Liabilities		1,139,889	1,640,285	612,034	143,451	564,336	770,156		4,870,151
Stockholders' Equity:
Common stock		154,144	2,831,276	284,870	90,253	135,379	180,505	-3,522,283	154,144
Additional paid-in capital		21,253,084	1,831,184	1,285,902	0	0	0	-4,973,230	19,396,940
Accumulated other comprehensive income		277,678	225,403	4,893	0	0	0	0	507,974
Accumulated loss		-14,728,309	-6,195,167	-946,436	-63,681	-289,787	-394,356	733,773	-21,883,963
Total Stockholders' Deficit attributable to LEO MOTORS, INC.		6,956,597	-1,307,304	629,229	26,572	-154,408	-213,851		-1,824,905
Non-controlling interest		0	0	0	0	0	0	2,729,375	2,729,375
Total Stockholders' Deficit		6,956,597	-1,307,304	629,229	26,572	-154,408	-213,851		904,470
Total Liabilities and Stockholders' Deficit	$	8,096,486	332,981	1,241,263	170,023	409,928	556,305	-5,032,365	5,774,621

On June 3, 2016, the Company acquired a 50% interest in Leo AIC (formerly known as Lelcon) and with the acquisition, the Company was engaged in connected car and artificial intelligence (AI) related businesses for a smart city. The consolidation of these acquisitions is presented below.

LEO MOTORS, INC.
CONSOLIDATED PRO FORMA BALANCE SHEETS
BALANCE AT MARCH 31, 2016
UNAUDITED
(AMOUNTS EXPRESSED IN US DOLLAR)
		Leo Motors		LELC		Pro Forma		Pro Forma
		4/1/2016		4/1/2016		AJE		Consolidated
Assets
Current Assets
Cash and cash equivalents	$	130,874	$	998			$	131,872
Accounts Receivable		1,015,447		14,031				1,029,478
Inventories		838,785		37,879				876,664
Prepayment to suppliers		382,545		0				382,545
Stockholder loans		0		129,066				129,066
Other current assets		199,073		2,905				201,978
Total Current Assets		2,566,724		184,879				2,751,603
Fixed assets, net		142,137		33,242				175,379
Deposit		346,255		0				346,255
Other non-current assets		87,275		1,228				88,503
Investments		500,000		0	$	-500,000		0
Goodwill		3,057,003		0		470,559		3,527,562
Total Assets	$	6,699,394	$	219,349			$	6,889,302
Liabilities and Equity(Deficit)
Current Liabilities:
Accounts payable and accrued expenses	$	3,748,487	$	50,193			$	3,798,680
Current portion notes payable		264,158		85,034				349,192
Advance from customers		496,385		0				496,385
Due to related parties		136,887		0				136,887
Taxes payable		155,151		4,429				159,580
Total Current Liabilities		4,801,068		139,656				4,940,724
Accrued retirement benefits		96,518		0				96,518
Other long term liabilities		196,579		0				196,579
Long term debt net of current portion		95,599		0				95,599
Total Liabilities		5,189,764		139,656				5,329,420
Commitments		-		-
Leo Motors, Inc. ("LEOM") Equity(Deficit):
Common stock ($0.001 par value; 300,000,000 shares authorized); 163,198,512 shares issued and outstanding at March 31, 2016		164,614		169,348		-169,348		164,614
Additional paid-in capital		21,488,871		0				21,488,871
Accumulated other comprehensive income		1,329,240		1,805				1,331,045
Accumulated loss		-25,827,119		-91,460		55,233		-25,863,346
Total Equity(Deficit) Leo Motors, Inc.		-2,844,394		79,693				-2,878,816
Non-controlling interest		4,354,024		0		84,674		4,438,698
Total Equity(Deficit)		1,509,630		79,693				1,475,208
Total Liabilities and Equity(Deficit)	$	6,699,394	$	219,349		0	$	6,804,628
"See accompanying notes to consolidated financial statements"

On March 8, 2017, the Company acquired 100% of a startup corporation owned by its director called Leo Members, Inc. which was not a significant acquisition. This new wholly owned subsidiary then exchanged interest with Leo Motors in Leo Factory 1, Leo Factory 2, and Leo Trading in a common control transaction, leaving Leo Motors, Inc. still in control of all the subsidiaries. Since the new subsidiary was wholly owned, and recorded at book value, its acquisition of our interest in other subsidiaries resulted in no current or past changes that would have had to be reflected in pro forma statements. As a result of this, no pro forma statements have been presented here.

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Note 2 - Policies (Policies)

3 Months Ended

Mar. 31, 2017

Policies

Basis of Presentation and Consolidation

Basis of Presentation and Consolidation

These financial statements and related notes are expressed in US dollars. The Company’s fiscal year-end is December 31. The consolidated financial statements include the financial statements of the Leo Motors Co. Ltd. Korea, LGM Co. LTD, Leo Factory Motors #1, Leo Factory Motors #2, Leo Trading, Leo Members, Inc., and Leo AIC. The company has significant control of all subsidiaries thru direct as well as indirect stock ownership and voting board control from parent board members at the subsidiary level.  All inter-company transactions and balances have been eliminated upon consolidation.

Use of Estimates

 Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

 Fair Value of Financial Instruments

For certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable inventory and prepaid expenses, accounts payable and deferred revenues, the carrying amounts approximate fair value due to their short maturities.

Revenue Recognition

Revenue Recognition

The Company follows the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements”. In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company.

The Company generates revenue from the delivery of goods and records revenues when the sales are completed, already collected or collectability is reasonably assured, there is no future obligation and there is remote chance of future claim or refund to the customers.

Revenue is recognized when risk of ownership and title pass to the buyer, generally upon the delivery of professional services. Pricing is fixed and determinable according to the Company’s published brochures and price lists.

Accounts Receivables

Accounts Receivables

Accounts receivables of the Company are reviewed to determine if their carrying value has become impaired.  The Company considers the assets to be impaired if the balances are greater than one-year old. Management regularly

reviews accounts receivable and will establish an allowance for potentially uncollectible amounts when appropriate. When accounts are written off, they will be charged against the allowance.

Receivables are not collateralized and do not bear interest.

Cash Equivalents

Cash Equivalents

For purposes of reporting cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalent.

Fixed Assets

Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which is generally 3 to 10 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

The Company will periodically evaluate whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. We use an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

Intangible and Long Lived Assets

Intangible and Long Lived Assets

The Company follows ASC 360-10, “Property, Plant, and Equipment,” which established a “primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. Through March 31, 2017, the Company has impaired goodwill on three of its acquisitions reflected by their recurring losses for those entities.

Income Taxes

Income Taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC 740-10, “Accounting for Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year; and, (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken on a tax return. Under ASC 740-10, a tax benefit from an uncertain tax position taken or expected to be taken may be recognized only if it is “more likely than not” that the position is sustainable upon examination, based on its technical merits. The tax benefit of a qualifying position under ASC 740-10 would equal the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all the relevant information. A liability (including interest and penalties, if applicable) is established to the extent a current benefit has been recognized on a tax return for matters that are considered contingent upon the outcome of an uncertain tax position. Related interest and penalties, if any, are included as components of income tax expense and income taxes payable.

Loss Per Share

Loss per Share

Basic earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of both common and preferred stock outstanding for the period.

Inventory

Inventory

Inventory consist mostly of items purchased as finished goods and used in the repair of automobiles and boats and are recorded at cost and is valued using the first in, first out method.

Stock-based Compensation

Stock-Based Compensation

SFAS No. 123, “Accounting for Stock-Based Compensation,” establishes and encourages the use of the fair value based method of accounting for stock-based compensation arrangements under which compensation cost is determined using the fair value of stock-based compensation determined as of the date of grant and is recognized over the periods in which the related services are rendered. For stock based compensation the Company recognizes an expense in accordance with SFAS No. 123 and values the equity securities based on the fair value of the security on the date of grant. Stock option awards are valued using the Black-Scholes option-pricing model.

Reclassifications

Reclassifications

Certain reclassifications have been made to prior year balances to conform to the current year presentation.

Foreign Currency Translation and Comprehensive Income

Foreign Currency Translation And Comprehensive Income

The reporting currency of the Company is the US$. The functional currency of the parent company is the US$ and the functional currency of the Company’s operating subsidiary is Korean Won (“KRW”). The subsidiary’s results of operations and cash flows are translated at average exchange rates during the year, assets and liabilities are translated at the unified exchange rate at the end of the year, and equity is translated at historical exchange rates. Translation adjustments resulting from the process of translating the functional currency financial statements into US$ are included in determining comprehensive income. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. The Company does not enter any material transaction in foreign currencies and accordingly, transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change. The

Company currently does not have any recent accounting pronouncements that they are studying and feel may be applicable.

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Note 3 - Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2017

Tables/Schedules

Schedule of Earnings Per Share, Basic and Diluted

The following is a reconciliation of the computation for basic and diluted EPS for the quarters ended March 31, 2017 and 2016:

		For the periods ended
		3/31/2017		3/31/2016
Net Income(Loss)	$	(2,386,777)	$	(458,166)
Weighted-average common stock Outstanding -  basic		172,581,682		161,878,686
Equivalents
Stock options		-		-
Warrants		-		-
Convertible Notes		-		-
Weighted-average common shares outstanding-  Diluted		172,581,682		161,878,686

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Note 7 - Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2017

Tables/Schedules

Schedule of Future Minimum Rental Payments for Operating Leases

The Company leases its office space in Ha-Nam City in Korea which expires on December 31, 2017. The minimum obligations under such commitments for the years ending December 31, 2017 through December 31, 2019 are listed on the table below.

For the Year Ending		Amount
2017	$	112,500
2018		0
2019 and beyond		0
Total Commitment	$	112,500

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Note 8 - Inventories (Tables)

3 Months Ended

Mar. 31, 2017

Tables/Schedules

Schedule of Inventories

Inventories consist of the following:

		31-Mar-17		31-Dec-16
		US$		US$
Raw material	$	115,239	$	420,768
Work in process		44,427		155,778
Finished goods		1,141,911		511,752
	$	1,301,577	$	1,088,298

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Note 9 - Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2017

Tables/Schedules

Property, Plant and Equipment

Property and equipment consisted of the following:

Property and equipment consisted of the following:		31-Mar-17		31-Dec-16
Vehicles	$	164,141	$	87,218
Tools		71,818		71,818
Office		191,832		179,791
Facility equipment		286,811		202,168
Total property and equipment		714,602		540,995
Accumulated depreciation		(448,880)		(411,838)
Property and equipment, net	$	265,722	$	129,157

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Note 10 - Short Term Borrowings and Notes Payable (Tables)

3 Months Ended

Mar. 31, 2017

Tables/Schedules

Schedule of Short-term Debt

As of March 31, 2017, the major components of our notes and borrowings consisted of the following:

		3/31/17		12/31/16
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.21%
interest only payable monthly and secured by the Company.	$	47,845	$	47,258
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.28%
interest only payable monthly.		53,698		69,319
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 13.00%
interest only payable monthly and secured by the Company.		80,548		86,648
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.30
interest only payable monthly.		39,862		34,406
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 9.14
interest only payable monthly.		26,849		31,193
Total Liabilities		248,803		268,824
Less current portion		248,803		268,824
Long term debt	$	0	$	0

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Note 11 - Income Taxes (Tables)

3 Months Ended

Mar. 31, 2017

Tables/Schedules

Schedule of Deferred Tax Assets

	3/31/2017	12/31/2016
Opening Balance	(29,776,217)	(24,564,383)
Current	(2,386,777)	(5,211,834)
Ending NOL	(32,162,994)	(29,776,217)

	Total	Total
Deferred Tax Assets	(10,935,418)	(10,123,914)
Realization Allowance	10,935,418	10,123,914
Balance Recognized	$                      -	$                      -

Schedule of Effective Income Tax Rate Reconciliation

The effective tax rate is as follows:

Statutory Federal Rate	34%
Effect of Valuation Allowance	(34%)
Effective Rate	0%

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Note 12 - Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2017

Tables/Schedules

Schedule of Intangible Assets and Goodwill

		31-Mar-17		31-Dec-16
Patents	$	88,226	$	88,226
Trademarks		277		277
Goodwill		3,717,931		3,717,931
Intangible assets		3,806,434		3,806,434
Less impairments		(1,104,445)		(1,104,445)
Intangible assets, net	$	2,701,989	$	2,701,989

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Note 14 - Acquisitions (Tables)

3 Months Ended

Mar. 31, 2017

Tables/Schedules

Schedule of Consolidated Assets, Liabilities, and Equity of Acquired Entities

The consolidation of these acquisitions is presented below.

Leo Motors consolidation		LEO Motors	LEO Motors	LGM	LEO Motors	LEO Motors	LEO Trade	ELIM	Consolidated
31-Mar-15		US	Korea		Factory 1	Factory 2	(f/k/a/ Erum)	ENTRIES	Statements
All numbers shown in  US Dollars								DR(CR)	3/31/2015
ASSETS
Cash and cash equivalents	$	374	67853	211,957	91,187	2914	92173	0	466,458
Accounts receivable		0	0	476,777	8,754	48,425	418,422	0	952,378
Inventories		0	0	295,159	0	0	0	0	295,159
Prepayment to suppliers		0	137,236	160,484	0	0	0	0	297,720
Other current assets		0	7,297	57,403	1,595	125,212	36,685	0	228,192
Total Current Assets		374	212,386	1,201,780	101,536	176,551	547,280		2,239,907
Fixed assets, net		6,744	10,530	16,846	63,683	88,181	0	0	185,984
Deposit		0	46,234	22,637	4,804	145,196	9,025	0	227,896
Intangible assets		0	63,831	0	0	0	0	0	63,831
Goodwill		0	0	0	0	0	0	3,057,003	3,057,003
Investment in subsidiaries		8,089,368	0	0	0	0	0	-8,089,368	0
Total Non-Current Assets		8,096,112	120,595	39,483	68,487	233,377	9,025		3,534,714
Total Assets	$	8,096,486	332,981	1,241,263	170,023	409,928	556,305	-5,032,365	5,774,621
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	1,139,889	1,060,342	291,900	97,840	307,112	416,183	0	3,313,266
Short term borrowings		0	256,392	183,245	32,052	0	0	0	471,689
Advance from customers		0	30,381	9,141	0	4,513	0	0	44,035
Due to related parties		0	116,617	0	0	0	0	0	116,617
Taxes payable		0	137,780	10,673	13,559	78,783	226	0	241,021
Notes Payable current portion		0	0	0	0	0	353,747	0	353,747
Total Current Liabilities		1,139,889	1,601,512	494,959	143,451	390,408	770,156		4,540,375
Long Term Notes		0	36,698	117,075	0	173,928	0	0	327,701
Accrued severance benefits		0	2,075	0	0	0	0	0	2,075
Total Liabilities		1,139,889	1,640,285	612,034	143,451	564,336	770,156		4,870,151
Stockholders' Equity:
Common stock		154,144	2,831,276	284,870	90,253	135,379	180,505	-3,522,283	154,144
Additional paid-in capital		21,253,084	1,831,184	1,285,902	0	0	0	-4,973,230	19,396,940
Accumulated other comprehensive income		277,678	225,403	4,893	0	0	0	0	507,974
Accumulated loss		-14,728,309	-6,195,167	-946,436	-63,681	-289,787	-394,356	733,773	-21,883,963
Total Stockholders' Deficit attributable to LEO MOTORS, INC.		6,956,597	-1,307,304	629,229	26,572	-154,408	-213,851		-1,824,905
Non-controlling interest		0	0	0	0	0	0	2,729,375	2,729,375
Total Stockholders' Deficit		6,956,597	-1,307,304	629,229	26,572	-154,408	-213,851		904,470
Total Liabilities and Stockholders' Deficit	$	8,096,486	332,981	1,241,263	170,023	409,928	556,305	-5,032,365	5,774,621

On June 3, 2016, the Company acquired a 50% interest in Leo AIC (formerly known as Lelcon) and with the acquisition, the Company was engaged in connected car and artificial intelligence (AI) related businesses for a smart city. The consolidation of these acquisitions is presented below.

LEO MOTORS, INC.
CONSOLIDATED PRO FORMA BALANCE SHEETS
BALANCE AT MARCH 31, 2016
UNAUDITED
(AMOUNTS EXPRESSED IN US DOLLAR)
		Leo Motors		LELC		Pro Forma		Pro Forma
		4/1/2016		4/1/2016		AJE		Consolidated
Assets
Current Assets
Cash and cash equivalents	$	130,874	$	998			$	131,872
Accounts Receivable		1,015,447		14,031				1,029,478
Inventories		838,785		37,879				876,664
Prepayment to suppliers		382,545		0				382,545
Stockholder loans		0		129,066				129,066
Other current assets		199,073		2,905				201,978
Total Current Assets		2,566,724		184,879				2,751,603
Fixed assets, net		142,137		33,242				175,379
Deposit		346,255		0				346,255
Other non-current assets		87,275		1,228				88,503
Investments		500,000		0	$	-500,000		0
Goodwill		3,057,003		0		470,559		3,527,562
Total Assets	$	6,699,394	$	219,349			$	6,889,302
Liabilities and Equity(Deficit)
Current Liabilities:
Accounts payable and accrued expenses	$	3,748,487	$	50,193			$	3,798,680
Current portion notes payable		264,158		85,034				349,192
Advance from customers		496,385		0				496,385
Due to related parties		136,887		0				136,887
Taxes payable		155,151		4,429				159,580
Total Current Liabilities		4,801,068		139,656				4,940,724
Accrued retirement benefits		96,518		0				96,518
Other long term liabilities		196,579		0				196,579
Long term debt net of current portion		95,599		0				95,599
Total Liabilities		5,189,764		139,656				5,329,420
Commitments		-		-
Leo Motors, Inc. ("LEOM") Equity(Deficit):
Common stock ($0.001 par value; 300,000,000 shares authorized); 163,198,512 shares issued and outstanding at March 31, 2016		164,614		169,348		-169,348		164,614
Additional paid-in capital		21,488,871		0				21,488,871
Accumulated other comprehensive income		1,329,240		1,805				1,331,045
Accumulated loss		-25,827,119		-91,460		55,233		-25,863,346
Total Equity(Deficit) Leo Motors, Inc.		-2,844,394		79,693				-2,878,816
Non-controlling interest		4,354,024		0		84,674		4,438,698
Total Equity(Deficit)		1,509,630		79,693				1,475,208
Total Liabilities and Equity(Deficit)	$	6,699,394	$	219,349		0	$	6,804,628
"See accompanying notes to consolidated financial statements"

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Note 1 - Company Background (Details) - shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2010	Dec. 31, 2011
Common Stock
Conversion of Stock, Shares Issued	47,352,450
Leo B T Corp
Noncash or Part Noncash Acquisition, Interest Acquired		5000.00%
Noncash or Part Noncash Acquisition, Noncash Financial or Equity Instrument Consideration, Shares Issued		7,000,000
Equity Method Investment, Ownership Percentage			3000.00%
PDI
Long Term Investment Percentage Of Investment Owned	1000.00%
LGM Co Ltd
Conversion of Stock, Shares Converted	813,747
Leo Motors Factory 1
Noncash or Part Noncash Acquisition, Interest Acquired	5000.00%
Leo Trade
Noncash or Part Noncash Acquisition, Interest Acquired	5000.00%
Leo Members, Inc
Noncash or Part Noncash Acquisition, Interest Acquired	10000.00%

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Note 3 - Earnings Per Share: Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($)		3 Months Ended
	Dec. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Details
Net Income(Loss)	$ (5,211,834)	$ (2,386,777)	$ (458,166)
Weighted-average common stock Outstanding - basic		172,581,682	161,878,686
Equivalents
Stock options		0	0
Warrants		0	0
Convertible Notes		0	0
Weighted-average common shares outstanding- Diluted		172,581,682	161,878,686

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Note 4 - Due To Related Party (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Due to related parties	$ 843,925	$ 358,680
Officer
Due to related parties	$ 843,925	$ 358,680

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Note 5 - Payments Received in Advance (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Details
Advance from customers	$ 79,941	$ 386,624

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Note 6 - Going Concern (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Details
Accumulated deficits	$ (31,433,061)	$ (29,776,217)

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Note 7 - Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Details)	Mar. 31, 2017 USD ($)
Details
2017	$ 112,500
2018	0
2019 and beyond	0
Total Commitment	$ 112,500

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Note 8 - Inventories: Schedule of Inventories (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Details
Raw material	$ 115,239	$ 420,768
Work in process	44,427	155,778
Finished goods	1,141,911	511,752
Inventories	$ 1,301,577	$ 1,088,298

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Note 9 - Property and Equipment: Property, Plant and Equipment (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Property and equipment consisted of the following:
Property, Plant and Equipment, Gross	$ 714,602	$ 540,995
Accumulated depreciation	(448,880)	(411,838)
Property and equipment, net	265,722	129,157
Tools
Property and equipment consisted of the following:
Property, Plant and Equipment, Gross	71,818	71,818
Office Equipment
Property and equipment consisted of the following:
Property, Plant and Equipment, Gross	191,832	179,791
Facility Equipment
Property and equipment consisted of the following:
Property, Plant and Equipment, Gross	286,811	202,168
Vehicles
Property and equipment consisted of the following:
Property, Plant and Equipment, Gross	$ 164,141	$ 87,218

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Note 9 - Property and Equipment (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Details
Depreciation	$ 37,042	$ 20,864

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Note 10 - Short Term Borrowings and Notes Payable (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Note 1
Short-term Debt	$ 248,803	$ 268,824

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Note 10 - Short Term Borrowings and Notes Payable: Schedule of Short-term Debt (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Total Liabilities	$ 248,803	$ 268,824
Less current portion	248,803	268,824
Long term debt	0	0
Note 3
Notes Payable to Bank	47,845	47,258
Note 4
Notes Payable to Bank	53,698	69,319
Note 5
Notes Payable to Bank	80,548	86,648
Note 6
Notes Payable to Bank	39,862	34,406
Note 7
Notes Payable to Bank	$ 26,849	$ 31,193

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Note 10 - Short Term Borrowings and Notes Payable: Schedule of Short-term Debt - Parenthetical (Details)	Mar. 31, 2017
Note 3
Debt Instrument, Interest Rate, Stated Percentage	321.00%
Note 4
Debt Instrument, Interest Rate, Stated Percentage	328.00%
Note 5
Debt Instrument, Interest Rate, Stated Percentage	1300.00%
Note 6
Debt Instrument, Interest Rate, Stated Percentage	330.00%
Note 7
Debt Instrument, Interest Rate, Stated Percentage	914.00%

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Note 11 - Income Taxes (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Details
Operating Loss Carryforwards	$ 32,162,994	$ 29,776,217	$ 24,564,383

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Note 11 - Income Taxes: Schedule of Deferred Tax Assets (Details) - USD ($)		3 Months Ended
	Dec. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Dec. 31, 2016
Details
Operating Loss Carryforwards		$ 29,776,217	$ 24,564,383
Operating Loss Carryforwards	$ 29,776,217	32,162,994	24,564,383	$ 32,162,994	$ 29,776,217
Net Income(Loss)	(5,211,834)	(2,386,777)	$ (458,166)
Operating Loss Carryforwards	$ 29,776,217	$ 32,162,994
Deferred Tax Assets				10,935,418	10,123,914
Realization Allowance				10,935,418	10,123,914
Balance Recognized				$ 0	$ 0

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Note 11 - Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details)	3 Months Ended
	Mar. 31, 2017
Details
Statutory Federal Rate	3400.00%
Effect of Valuation Allowance	(3400.00%)
Effective Rate	0.00%

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Note 12 - Intangible Assets (Details)	12 Months Ended
	Dec. 31, 2016 USD ($)
Details
Goodwill increased	$ 612,445

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Note 12 - Intangible Assets: Schedule of Intangible Assets and Goodwill (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Details
Patents	$ 88,226	$ 88,226
Trademarks	277	277
Goodwill	3,717,931	3,717,931
Intangible assets	3,806,434	3,806,434
Less impairments	(1,104,445)	(1,104,445)
Intangible assets, net	$ 2,701,989	$ 2,701,989

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Note 14 - Acquisitions (Details)	3 Months Ended
	Mar. 31, 2017
Leo Motors Factory 1
Noncash or Part Noncash Acquisition, Interest Acquired	5000.00%
Leo Trade
Noncash or Part Noncash Acquisition, Interest Acquired	5000.00%
Leo Members, Inc
Noncash or Part Noncash Acquisition, Interest Acquired	10000.00%

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Note 14 - Acquisitions: Schedule of Consolidated Assets, Liabilities, and Equity of Acquired Entities (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015
Assets
Cash and cash equivalents	$ 500,185	$ 460,671	$ 130,874	$ 243,809
Accounts receivable	584,467	433,205
Inventories	1,301,577	1,088,298
Prepayment to suppliers	529,342	457,643
Other current assets	39,115	91,973
Total Current Assets	2,954,686	2,531,790
Fixed assets, net	265,722	129,157
Deposit	346,255	346,255
Intangible assets	88,503	88,503
Goodwill	2,613,486	2,613,486
Total Assets	6,268,652	5,709,191
Current Liabilities:
Advance from customers	79,941	386,624
Due to related parties	843,925	358,680
Taxes payable	85,428	29,635
Less current portion	248,803	268,824
Total Current Liabilities	7,412,111	6,800,665
Accrued severance benefits	250,686	216,195
Total Liabilities	7,736,380	7,089,711
Leo Motors, Inc.('LEOM') Equity(Deficit):
Common stock	172,690	172,528
Additional paid-in capital	21,431,054	21,411,832
Accumulated other comprehensive income	1,291,799	1,184,443
Accumulated loss	(31,433,061)	(29,776,217)
Total Equity(Deficit) Leo Motors, Inc.	(8,537,518)	(7,007,414)
Non-controlling interest	7,069,790	5,626,894
Total Equity(Deficit)	(1,467,728)	(1,380,520)
Total Liabilities and Equity(Deficit)	6,268,652	5,709,191
Current Assets
Notes Payable current portion	248,803	268,824
Other long term liabilities	73,583	72,851
Commitments (Note 8)	0	$ 0
Scenario, Adjustment
Assets
Goodwill	470,559
Investments in Subsidiaries	(0)
Leo Motors, Inc.('LEOM') Equity(Deficit):
Common stock	(0)
Accumulated loss	55,233
Non-controlling interest	84,674
Total Liabilities and Equity(Deficit)	0
Current Assets
Investments	(0)
Pro Forma
Assets
Cash and cash equivalents	131,872
Accounts receivable	1,029,478
Inventories	876,664
Prepayment to suppliers	382,545
Other current assets	201,978
Total Current Assets	2,751,603
Fixed assets, net	175,379
Deposit	346,255
Goodwill	3,527,562
Investments in Subsidiaries	0
Total Assets	6,889,302
Current Liabilities:
Accounts Payable and Accrued Liabilities, Current	3,798,680
Advance from customers	496,385
Due to related parties	136,887
Taxes payable	159,580
Less current portion	349,192
Total Current Liabilities	4,940,724
Accrued severance benefits	96,518
Total Liabilities	5,329,420
Leo Motors, Inc.('LEOM') Equity(Deficit):
Common stock	164,614
Additional paid-in capital	21,488,871
Accumulated other comprehensive income	1,331,045
Accumulated loss	(0)
Total Equity(Deficit) Leo Motors, Inc.	(0)
Non-controlling interest	4,438,698
Total Equity(Deficit)	1,475,208
Total Liabilities and Equity(Deficit)	6,804,628
Current Assets
Stockholder loans	129,066
Other Assets, Noncurrent	88,503
Investments	0
Notes Payable current portion	349,192
Other long term liabilities	196,579
Long-term Debt, Excluding Current Maturities	$ 95,599
Leo Motors US
Assets
Cash and cash equivalents					$ 374
Accounts receivable					0
Inventories					0
Prepayment to suppliers					0
Other current assets					0
Total Current Assets					374
Fixed assets, net					6,744
Deposit					0
Intangible assets					0
Goodwill					0
Investments in Subsidiaries					8,089,368
Total Non-Current Assets					8,096,112
Total Assets					8,096,486
Current Liabilities:
Accounts Payable and Accrued Liabilities, Current					1,139,889
Short-term Debt					0
Advance from customers					0
Due to related parties					0
Taxes payable					0
Less current portion					0
Total Current Liabilities					1,139,889
Long Term Notes					0
Accrued severance benefits					0
Total Liabilities					1,139,889
Leo Motors, Inc.('LEOM') Equity(Deficit):
Common stock					154,144
Additional paid-in capital					21,253,084
Accumulated other comprehensive income					277,678
Accumulated loss					(0)
Total Equity(Deficit) Leo Motors, Inc.					6,956,597
Non-controlling interest					0
Total Equity(Deficit)					6,956,597
Total Liabilities and Equity(Deficit)					8,096,486
Current Assets
Investments					8,089,368
Notes Payable current portion					0
Leo Motors Korea
Assets
Cash and cash equivalents					67,853
Accounts receivable					0
Inventories					0
Prepayment to suppliers					137,236
Other current assets					7,297
Total Current Assets					212,386
Fixed assets, net					10,530
Deposit					46,234
Intangible assets					63,831
Goodwill					0
Investments in Subsidiaries					0
Total Non-Current Assets					120,595
Total Assets					332,981
Current Liabilities:
Accounts Payable and Accrued Liabilities, Current					1,060,342
Short-term Debt					256,392
Advance from customers					30,381
Due to related parties					116,617
Taxes payable					137,780
Less current portion					0
Total Current Liabilities					1,601,512
Long Term Notes					36,698
Accrued severance benefits					2,075
Total Liabilities					1,640,285
Leo Motors, Inc.('LEOM') Equity(Deficit):
Common stock					2,831,276
Additional paid-in capital					1,831,184
Accumulated other comprehensive income					225,403
Accumulated loss					(0)
Total Equity(Deficit) Leo Motors, Inc.					(0)
Non-controlling interest					0
Total Equity(Deficit)					(0)
Total Liabilities and Equity(Deficit)					332,981
Current Assets
Investments					0
Notes Payable current portion					0
LGM Co Ltd
Assets
Cash and cash equivalents					211,957
Accounts receivable					476,777
Inventories					295,159
Prepayment to suppliers					160,484
Other current assets					57,403
Total Current Assets					1,201,780
Fixed assets, net					16,846
Deposit					22,637
Intangible assets					0
Goodwill					0
Investments in Subsidiaries					0
Total Non-Current Assets					39,483
Total Assets					1,241,263
Current Liabilities:
Accounts Payable and Accrued Liabilities, Current					291,900
Short-term Debt					183,245
Advance from customers					9,141
Due to related parties					0
Taxes payable					10,673
Less current portion					0
Total Current Liabilities					494,959
Long Term Notes					117,075
Accrued severance benefits					0
Total Liabilities					612,034
Leo Motors, Inc.('LEOM') Equity(Deficit):
Common stock					284,870
Additional paid-in capital					1,285,902
Accumulated other comprehensive income					4,893
Accumulated loss					(0)
Total Equity(Deficit) Leo Motors, Inc.					629,229
Non-controlling interest					0
Total Equity(Deficit)					629,229
Total Liabilities and Equity(Deficit)					1,241,263
Current Assets
Investments					0
Notes Payable current portion					0
Leo Motors Factory 1
Assets
Cash and cash equivalents					91,187
Accounts receivable					8,754
Inventories					0
Prepayment to suppliers					0
Other current assets					1,595
Total Current Assets					101,536
Fixed assets, net					63,683
Deposit					4,804
Intangible assets					0
Goodwill					0
Investments in Subsidiaries					0
Total Non-Current Assets					68,487
Total Assets					170,023
Current Liabilities:
Accounts Payable and Accrued Liabilities, Current					97,840
Short-term Debt					32,052
Advance from customers					0
Due to related parties					0
Taxes payable					13,559
Less current portion					0
Total Current Liabilities					143,451
Long Term Notes					0
Accrued severance benefits					0
Total Liabilities					143,451
Leo Motors, Inc.('LEOM') Equity(Deficit):
Common stock					90,253
Additional paid-in capital					0
Accumulated other comprehensive income					0
Accumulated loss					(0)
Total Equity(Deficit) Leo Motors, Inc.					26,572
Non-controlling interest					0
Total Equity(Deficit)					26,572
Total Liabilities and Equity(Deficit)					170,023
Noncash or Part Noncash Acquisition, Interest Acquired	5000.00%
Current Assets
Investments					0
Notes Payable current portion					0
Leo Motors Factory 2
Assets
Cash and cash equivalents					2,914
Accounts receivable					48,425
Inventories					0
Prepayment to suppliers					0
Other current assets					125,212
Total Current Assets					176,551
Fixed assets, net					88,181
Deposit					145,196
Intangible assets					0
Goodwill					0
Investments in Subsidiaries					0
Total Non-Current Assets					233,377
Total Assets					409,928
Current Liabilities:
Accounts Payable and Accrued Liabilities, Current					307,112
Short-term Debt					0
Advance from customers					4,513
Due to related parties					0
Taxes payable					78,783
Less current portion					0
Total Current Liabilities					390,408
Long Term Notes					173,928
Accrued severance benefits					0
Total Liabilities					564,336
Leo Motors, Inc.('LEOM') Equity(Deficit):
Common stock					135,379
Additional paid-in capital					0
Accumulated other comprehensive income					0
Accumulated loss					(0)
Total Equity(Deficit) Leo Motors, Inc.					(0)
Non-controlling interest					0
Total Equity(Deficit)					(0)
Total Liabilities and Equity(Deficit)					409,928
Current Assets
Investments					0
Notes Payable current portion					0
Leo Trade
Assets
Cash and cash equivalents					92,173
Accounts receivable					418,422
Inventories					0
Prepayment to suppliers					0
Other current assets					36,685
Total Current Assets					547,280
Fixed assets, net					0
Deposit					9,025
Intangible assets					0
Goodwill					0
Investments in Subsidiaries					0
Total Non-Current Assets					9,025
Total Assets					556,305
Current Liabilities:
Accounts Payable and Accrued Liabilities, Current					416,183
Short-term Debt					0
Advance from customers					0
Due to related parties					0
Taxes payable					226
Less current portion					353,747
Total Current Liabilities					770,156
Long Term Notes					0
Accrued severance benefits					0
Total Liabilities					770,156
Leo Motors, Inc.('LEOM') Equity(Deficit):
Common stock					180,505
Additional paid-in capital					0
Accumulated other comprehensive income					0
Accumulated loss					(0)
Total Equity(Deficit) Leo Motors, Inc.					(0)
Non-controlling interest					0
Total Equity(Deficit)					(0)
Total Liabilities and Equity(Deficit)					556,305
Noncash or Part Noncash Acquisition, Interest Acquired	5000.00%
Current Assets
Investments					0
Notes Payable current portion					353,747
Elim Entries
Assets
Cash and cash equivalents					0
Accounts receivable					0
Inventories					0
Prepayment to suppliers					0
Other current assets					0
Fixed assets, net					0
Deposit					0
Intangible assets					0
Goodwill					3,057,003
Investments in Subsidiaries					(0)
Total Assets					(0)
Current Liabilities:
Accounts Payable and Accrued Liabilities, Current					0
Short-term Debt					0
Advance from customers					0
Due to related parties					0
Taxes payable					0
Less current portion					0
Long Term Notes					0
Accrued severance benefits					0
Leo Motors, Inc.('LEOM') Equity(Deficit):
Common stock					(0)
Additional paid-in capital					(0)
Accumulated other comprehensive income					0
Accumulated loss					733,773
Non-controlling interest					2,729,375
Total Liabilities and Equity(Deficit)					(0)
Current Assets
Investments					(0)
Notes Payable current portion					$ 0
Lelcon Co Ltd
Assets
Cash and cash equivalents	$ 998
Accounts receivable	14,031
Inventories	37,879
Prepayment to suppliers	0
Other current assets	2,905
Total Current Assets	184,879
Fixed assets, net	33,242
Deposit	0
Goodwill	0
Investments in Subsidiaries	0
Total Assets	219,349
Current Liabilities:
Accounts Payable and Accrued Liabilities, Current	50,193
Advance from customers	0
Due to related parties	0
Taxes payable	4,429
Less current portion	85,034
Total Current Liabilities	139,656
Accrued severance benefits	0
Total Liabilities	139,656
Leo Motors, Inc.('LEOM') Equity(Deficit):
Common stock	169,348
Additional paid-in capital	0
Accumulated other comprehensive income	1,805
Accumulated loss	(0)
Total Equity(Deficit) Leo Motors, Inc.	79,693
Non-controlling interest	0
Total Equity(Deficit)	79,693
Total Liabilities and Equity(Deficit)	$ 219,349
Noncash or Part Noncash Acquisition, Interest Acquired	5000.00%
Current Assets
Stockholder loans	$ 129,066
Other Assets, Noncurrent	1,228
Investments	0
Notes Payable current portion	85,034
Other long term liabilities	0
Long-term Debt, Excluding Current Maturities	0
Commitments (Note 8)	0
Leo Motors
Assets
Cash and cash equivalents	130,874
Accounts receivable	1,015,447
Inventories	838,785
Prepayment to suppliers	382,545
Other current assets	199,073
Total Current Assets	2,566,724
Fixed assets, net	142,137
Deposit	346,255
Goodwill	3,057,003
Investments in Subsidiaries	500,000
Total Assets	6,699,394
Current Liabilities:
Accounts Payable and Accrued Liabilities, Current	3,748,487
Advance from customers	496,385
Due to related parties	136,887
Taxes payable	155,151
Less current portion	264,158
Total Current Liabilities	4,801,068
Accrued severance benefits	96,518
Total Liabilities	5,189,764
Leo Motors, Inc.('LEOM') Equity(Deficit):
Common stock	164,614
Additional paid-in capital	21,488,871
Accumulated other comprehensive income	1,329,240
Accumulated loss	(0)
Total Equity(Deficit) Leo Motors, Inc.	(0)
Non-controlling interest	4,354,024
Total Equity(Deficit)	1,509,630
Total Liabilities and Equity(Deficit)	6,699,394
Current Assets
Stockholder loans	0
Other Assets, Noncurrent	87,275
Investments	500,000
Notes Payable current portion	264,158
Other long term liabilities	196,579
Long-term Debt, Excluding Current Maturities	95,599
Commitments (Note 8)	$ 0