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 June 30, 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 x 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 x

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

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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

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 August 17, 2017 was 174,559,116 shares.

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Item 1. Financial Statements. 

LEO MOTORS, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS EXPRESSED IN US DOLLAR)
	Balance at
		June 30, 2017		Dec 31, 2016
		(Unaudited)		(Audited)
Assets
Current Assets
Cash and cash equivalents	$	448,744	$	460,671
Accounts receivable		869,998		433,205
Inventories		1,293,887		1,088,298
Prepayment to suppliers		489,698		457,643
Other current assets		356,662		91,973
Total Current Assets		3,458,989		2,531,790
Fixed assets, net		240,510		129,157
Deposits and Other Assets		725,524		346,255
Intangible assets		40,583		88,503
Goodwill		2,613,486		2,613,486
Total Assets	$	7,079,093	$	5,709,191
Liabilities and  Equity (Deficit)
Current Liabilities:
Accounts payable	$	863,261	$	1,411,130
Accrued expenses		6,341,539		4,345,772
Advance from customers		169,294		386,624
Due to related parties		410,546		358,680
Taxes payable		186,642		29,635
Notes Payable current portion		274,984		268,824
Total Current Liabilities		8,246,267		6,800,665
Accrued retirement benefits		260,791		216,195
Other long term liabilities		492,951		72,851
Total Liabilities		9,000,008		7,089,711
Leo Motors, Inc. ("LEOM") Equity (Deficit):
Common stock ($0.001 par value; 300,000,000 shares authorized); 174,559,116  and 172,528,016 shares issued and outstanding at June 30,  2017 and December 31, 2016		174,559		172,528
Additional paid-in capital		21,641,983		21,411,832
Accumulated other comprehensive income		4,899,720		1,184,443
Accumulated loss		(34,341,025)		(29,776,217)
Total Equity (Deficit) Leo Motors, Inc.		(7,624,764)		(7,007,414)
Non-controlling interest		5,703,849		5,626,894
Total Equity (Deficit)		(1,920,914)		(1,380,520)
Total Liabilities and Equity(Deficit)	$	7,079,093	$	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)
	Three Months Ended June 30,				Six Months Ended June 30,
		2017		2016		2017		2016
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Revenues	$	433,992	$	806,456	$	832,943	$	1,552,162
Cost of Revenues		605,133		690,074		791,469		981,088
Gross Profit		(171,141)		116,382		41,474		571,074
Operating Expenses		3,108,804		1,008,491		5,614,273		1,917,351
Income(loss) from Continuing Operations		(3,279,945)		(892,109)		(5,572,799)		(1,346,277)
Other Income (Expenses)
Interest expense		(7,019)		(8,436)		(14,678)		(17,764)
Currency Gains (Losses)		116,664		(46,952)		9,308		(29,865)
Non-Operating (expense) income		91,055		78,119		112,197		66,362
Total Other Income (Expenses)	$	200,700	$	22,731	$	106,827	$	18,733
Income(loss) from Continuing Operations Before Income Taxes		(3,079,245)		(869,378)		(5,465,972)		(1,327,544)
Income Tax Expense		1,199		0		1,249		0
Net Income(Loss)	$	(3,080,444)	$	(869,378)	$	(5,467,221)	$	(1,327,544)
Income(loss) attributable to non-controlling interest	$	(172,481)	$	(51,235)	$	(902,414)	$	(86,890)
Net Income(Loss) Attributable To Leo Motors, Inc.		(2,907,964)		(818,143)		(4,564,808)		(1,240,654)
Other Comprehensive Income:
Net Income(Loss)	$	(3,080,444)	$	(869,378)	$	(5,467,221)	$	(1,327,544)
Unrealized foreign currency translation gain		(107,356)		97,510		66,667		175,630
Comprehensive Income (loss) Attributable to Leo Motors, Inc.	$	(3,187,800)	$	(771,868)	$	(5,400,544)	$	(1,151,914)
Net Loss per Common Share:
Basic	$	(0.02)	$	(0.01)	$	(0.03)	$	(0.01)
Diluted	$	(0.02)	$	(0.01)	$	(0.03)	$	(0.01)
Weighted Average Common Shares Outstanding:
Basic		173,551,978		161,878,686		172,979,055		161,878,686
Diluted		173,551,978		161,878,686		172,979,055		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 Six Months Ended June 30,
		2017		2016
		(Unaudited)		(Unaudited)
Cash flows from Operating Activities:
Net loss	$	(4,564,808)	$	(1,240,654)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		106,848		45,422
Foreign currency translation		-		175,630
Net loss attributed to NCI		902,414		86,890
Stock-based compensation		32,182		131,247
Changes in assets and liabilities:
Prepaid Expenses		(394)		-
Accounts Receivable		(247,177)		689,931
Inventories		(134,112)		(217,138)
Prepayment to suppliers		(7,859)		(186,625)
Other current assets		260,352		-
Other assets		(160,882)		(61,696)
Accounts payable, other payables and accrued expenses		897,741		(82,224)
Accrued retirement benefits		32,888		77,942
Advances from customers		10,581		(131,724)
Taxes payable		25,412		105,635
Net cash used in operating activities:		(4,651,643)		(781,144)
Cash flows from investing activities:
Purchase of property and equipment		(218,201)		(65,302)
Write off intangibles		47,920		-
Net cash provided(used) in investing activities:		(170,281)		(65,302)
Cash flows from financing activities:
Proceeds (payments) on notes payable / long term payables		426,260		186,946
Payments on notes payable		(9,923)		-
Proceeds on notes payable - related party		51,866		259,578
Other Comprehensive Income		3,715,277		-
Proceeds from issuance of stock & warrants		200,000		1,123,475
Net cash provided(used) by financing activities:		4,383,480		1,569,999
Effect of Foreign Exchange Rate on Cash		426,517		-
Net Increase in cash and cash equivalents:		(11,927)		723,553
Cash and cash equivalents - beginning of year		460,671		243,809
Cash and cash equivalents - end of period	$	448,744	$	967,362
Supplemental disclosure of cash flow activities:
Interest	$	14,678	$	9,328
Income taxes	$	-	$	-
Supplemental disclosures of non-cash activities:
Goodwill on Acquisition	$	-	$	660,928
Common stock issued for services	$	32,182	$	131,247

See accompanying notes to consolidated financial statements

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LEO MOTORS, INC.

NOTES TO CONSOLIDATED FIANCIAL STATEMENTS

June 30, 2017

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 (“Leozone”), 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, 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 (“Leo 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 with PDI 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 Trading”) 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.

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The Company acquired Leo AIC Co., Ltd. (“Leo AIC”)(formerly known as Lelcon) on June 3, 2016, which became a subsidiary of the Company. 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 (“Leo Members”). 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.

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 Leo Korea, LGM, Leo Factory 1, Leo Factory 2, Leo Trading, Leo Members, and Leo AIC. The Company has significant control of all subsidiaries through 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.

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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 June 30, 2017, the Company has impaired goodwill on three of its acquisitions reflected by their recurring losses for those entities.

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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.

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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 subsidiaries is the Korean Won (“KRW”). The subsidiaries 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.

NOTE 3 - 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 $410,546 at June 30, 2017 and $358,680 at December 31, 2016. There are no other related party transactions.

NOTE 4 - 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 June 30, 2017 and December 31, 2016, the balance of payments received in advance was $169,294 and $386,624, respectively.

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NOTE 5 - GOING CONCERN

As reported in the consolidated financial statements, the Company has accumulated deficits of $34,341,025 as of June 30, 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.

NOTE 6 - 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	$	75,000
2018		0
2019 and beyond		0
Total Commitment	$	75,000

(b) Loss Contingencies

The company currently has no loss contingencies.

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NOTE 7 - INVENTORIES

Inventories consist of the following:

		June 30, 2017		Dec 31, 2016
		US$		US$
Raw material	$	68,013	$	420,768
Work in process		797,026		155,778
Finished goods		428,848		511,752
	$	1,293,887	$	1,088,298

NOTE 8 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

		June 30, 2017		Dec 31, 2016
Vehicles	$	159,224	$	87,218
Tools		78,912		71,818
Office		216,495		179,791
Facility equipment		302,565		202,168
Total property and equipment		757,196		540,995
Accumulated depreciation		(516,686)		(411,838)
Property and equipment, net	$	240,510	$	129,157

Depreciation expense for the six months ended June 30, 2017 and 2016 amounted to $106,848 and $45,422, respectively.

NOTE 9 - SHORT TERM BORROWINGS AND NOTES PAYABLE

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

At June 30, 2017 and December 31, 2016, the Company had short term borrowings of $274,984 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.

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As of June 30, 2017, the major components of our notes and borrowings consisted of the following:

		June 30, 2017		Dec 31, 2016
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.77%
interest only payable monthly and secured by the Company.	$	47,765	$	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.		87,578		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.		61,304		86,648
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.77
interest only payable monthly.		46,819		34,406
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 9.24
interest only payable monthly.		31,518		31,193
Total Liabilities		274,984		268,824
Less current portion		274,984		268,824
Long term debt	$	0	$	0

NOTE 10 - 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. The Company added to the value of its intangibles in the six months ended June 30, 2017 with development costs associated with its intangibles.

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		June 30, 2017		Dec 31, 2016
Patents	$	40,306	$	88,226
Trademarks		277		277
Goodwill		3,717,931		3,717,931
Intangible assets		3,758,514		3,806,434
Less impairments		(1,104,445)		(1,104,445)
Intangible assets, net	$	2,654,069	$	2,701,989

NOTE 11 - EQUITY

In the six months ended June 30, 2017, the Company sold 2,000,000 shares of common stock for $200,000.

The Company issued 192,638 shares of common stock, with a fair market value of $32,182, for compensation.

NOTE 12 – SUBSEQUENT EVENTS

On August 1, 2017, the Company acquired 15.66% of Leo Kartrena, Inc. (“Leo Kartrena”). The Company invested an aggregate of Two Hundred Sixty Million (260,000,000 KRW) South Korean Won (approximately $226,000 USD), or Seven Hundred (700 KRW) South Korean Won (approximately $0.61 USD per share), to Leo Kartrena in consideration for the issuance of Three Hundred Seventy One Thousand Four Hundred Twenty Eight (371,428) shares of Leo Kartrena’s common stock. Leo Kartrena is an electric Go Kart development company which will use the battery swappable electric Go Kart developed by LGM. As its Go Kart venues develop, Leo Kartrena will be a significant client of LGM and Leo Motors, Inc.  

14

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, as amended on June 14, 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 June 30, 2017 compared with the three months ended June 30, 2017 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. ("Leo Korea") on July 1, 2006.  Through Leo Korea, 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.  Leo Korea operates through four unincorporated divisions: new product R&D, post R&D development such as product testing, production, and sales.

15

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

The Company was previously actively engaged in the process of development and production of Electric Power Train Systems ("EPTS") encompassing electric scooters, electric sedans/SUVs/sports cars, and electric buses/trucks as well as several models of EV. Our EPTS can replace internal combustion engines ("ICEs").  Company began sales of EPTS to auto makers and agricultural machinery manufacturers.

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 an 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 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 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.

16

The Company acquired Leo AIC Co., Ltd. (“Leo AIC”) (formerly known as Lelcon) on June 3, 2016 and it became a subsidiary of the Company. With the acquisition, the Company was engaged in connected car and artificial intelligence (AI) related businesses for 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 Motors Factory, Inc. (“Leo Factory 1”) and Leo Motors Factory 2, Inc. (“Leo Factory 2”), and Leo Trading. Leo Members will start used luxury car trading business through affiliation with car repairing garages (car centers) in Korea. Leo Members is developing 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 acquired 15.66% of the total outstanding shares of Leo Kartrena, Inc. (“Leo Kartrena”) by investing 260 million Korea Won (approx. US& 226,000). Leo Kartrena is an electric Go Kart development company which will use the battery swappable electric Go Kart developed by LGM Co., Ltd. (“LGM”), a subsidiary of the Company,. As its Go Kart venues develop, Leo Kartrena will be a significant client of LGM and Leo Motors, Inc.

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 70-4699-3585. Our web site address is www.leomotors.com. Information contained in or accessible through our website does not constitute part of this Annual Report on Form 10-Q.

Recent Business Developments

On April 19, 2017, LGM 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.

On May 8, 2017, Leo AIC entered into a joint venture company agreement with Lan Zhou Xinqu Zhonghan Chanye Jingji Fazhan Gongsi Co., Ltd., a company established and existing under the laws of the People’s Republic of China, to establish a joint venture in China, to develop, manufacture and sell street lamps and products for a “smart” city. Pursuant to the JV Agreement, the JV will have a registered capital of RMB 100,000,000 (approximately $14.5 million), with LZC owning 51% and Leo AIC owning 49%.

On August 1, 2017, the Company acquired 15.66% of Leo Kartrena. The Company invested an aggregate of Two Hundred Sixty Million (260,000,000 KRW) South Korean Won (approximately $226,000 USD), or Seven Hundred (700 KRW) South Korean Won (approximately $0.61 USD per share), to Leo Kartrena in consideration for the issuance of Three Hundred Seventy One Thousand Four Hundred Twenty Eight (371,428) shares of Leo Kartrena’s common stock (the “Investment Shares”). Leo Kartrena is an electric Go Kart development company which will use the battery swappable electric Go Kart developed by LGM. As its Go Kart venues develop, Leo Kartrena will be a significant client of LGM and Leo Motors, Inc.  

17

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.

The three and six months ended June 30, 2017 compared to the three and six months ended June 30, 2016

Revenue

Our revenue for the three months ended June 30, 2017 was $433,992 compared to $806,456 for the three months ended June 30, 2016 due to the decrease of the sales of Leo Factory 1, Leo Factory 2, Leo Trading and LGM.

For the six months ended June 30, 2017 revenue was $832,943 compared to $1,552,162 for the six months ended June 30, 2016. The decrease was due to the decrease of sales in LGM, Leo Trading, Leo Factory 1 and Leo Factory 2. The Company is in the process of adjusting its product line to benefit from its new subsidiary relationships.

Cost of Revenues

Cost of revenue decreased to $605,133 or 139% for the three months ended June 30, 2017 from $690,074 or 86% for the three months ended June 30, 2016.  For the six months ended June 30, 2017 cost of revenue was $791,469 or 95% compared to $981,088 or 63% for the six months ended June 30, 2017. This increase in cost of sales percentage was due to the increase of overhead costs for the market developments from Leo AIC and LGM.

Gross Profit

We had a gross profit (loss) of $(171,141) for the three months ended June 30, 2017 compared to a gross profit of $116,382 for the same period in 2016. The decrease in gross profit was due to the technology and development costs from LGM and Leo AIC.

We had a gross profit (loss) of $41,474 for the six months ended June 30, 2017 compared to a gross profit of $571,074 for the same period in 2016. The decrease in gross profit was due to the technology and development costs from LGM and Leo AIC.

Operating Expense

Total operating expenses for the three months ended June 30, 2017 were $3,108,804 compared to the operating cost for the three months ended June 30, 2016 of $1,008,491.  For the six months ended June 30, 2017 operating expense was $5,614,273 compared to $1,917,351 for the six months ended June 30, 2016. The increase was due to the increase of operating costs from Leo AIC.

Other Income (Expense)

Other expense for the three months ended June 30, 2017 was $200,700 compared to other expense for the three months ended June 30, 2016 of $22,731, the largest amount being caused by the change in currency losses due to a change in the exchange rates form one period to the next. Other expense for the six months ended June 30, 2017 was $106,827 compared to other expense for the six months ended June 30, 2016 of $18,733. The difference here was again substantially due to the fluctuation in exchange rates.

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Net Income (Loss)

Net loss for the three months ended June 30, 2017 was $(3,080,444) compared to a net loss of $(869,378) for the three months ended June 30, 2016. Net loss for the six months ended June 30, 2017 was $(5,467,221) compared to a net loss of $(1,327,544) for the six months ended June 30, 2016. 

Income (Loss) portion allocable to Non-Controlling Interest

The portion of net loss attributed to the Non-controlling interest was $(172,481) for the three months ended June 30, 2017 and was $(51,235) for the three months ended June 30, 2016. The portion of net loss for the six months ended June 30, 2017 was $(902,414) compared to $(86,890) for the six months ended June 30, 2016. 

Net Income (Loss) Attributable to Leo Motors, Inc. Shareholders

Net loss attributable to Leo Motors, Inc. shareholders for the three months ended June 30, 2017 was $(2,907,964) compared to a net loss attributable to Leo Motors, Inc. shareholders of $(818,143) for the three months ended June 30, 2016. Net loss attributable to Leo Motors, Inc. shareholders for the six months ended June 30, 2017 was $(4,564,808) compared to a net loss attributable to Leo Motors, Inc. shareholders of $(1,240,654) for the six months ended June 30, 2016. 

Liquidity and Capital Resources

The Company has cash of $448,744 at June 30, 2017. Our consolidated financial statements have been prepared assuming that the company will continue as a going concern.  As discussed in Note 6 to the consolidated financial statements, the Company has suffered recurring losses from operations and negative cash flows from operations the past two years.  These factors raise substantial doubt about its ability to continue as a going concern.  Management’s plans in regard to these matters are also described in Note 6.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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 June 30, 2017 were $3,458,989 and total current liabilities were $8,246,266. Significant losses from operations have been incurred since inception and there is an accumulated deficit of $34,341,015 as of June 30, 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.

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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 principal 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 principal 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 CEO 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 CEO 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 CEO 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 CEO, evaluated the effectiveness of the Company’s internal control over financial reporting as of June 30, 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 CEO, concluded that, as of June 30, 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.

20

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.

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 June 30, 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. 

During the six months ended June 30, 2017, and in the subsequent period through the date hereof the Company made the following issuances of unregistered securities:

Third Party Agreements

On May 16, 2017, the Company issued 300,000 shares for IR Consulting Services in Korea to Se Kiun Oh. This issuance was completed in accordance with Section 4(2) of the Securities Act in an offering without any public offering or distribution. These shares are restricted securities and include an appropriate restrictive legend.

21

Capital Increases

On May 18, 2017, the Company issued 2,000,000 shares to Eul Hyung Choi for his cash investment of US$200,000. This issuance was completed in accordance with Section 4(2) of the Securities Act in an offering without any public offering or distribution. These shares are restricted securities and include an appropriate restrictive legend. The proceeds were used for operation of the Company.

Cancellation

On May 16, 2017, the Company canceled 678,900 shares issued to Sang Hyun Shim based on the stock exchange agreement entered on May 2, 2014. Sang Hyun Shim did not fulfill the agreement. These shares were restricted securities.

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 Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of the Co-Chief 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.

22

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.
August 21, 2017	By:	/s/ Shi Chul Kang
		Shi Chul Kang
		Co-Chief Executive Officer (Principal Executive Officer)
August 21, 2017	By:	/s/ Jun Heng Park
		Jun Heng Park
		Co-Chief Executive Officer (Executive Officer)
August 21, 2017	By:	/s/ Jeong Youl Choi
		Jeong Youl Choi
		Chief Financial Officer (Principal Financial and Accounting Officer)

23

EX-31.1

Exhibit 31.1

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: August 21, 2017

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

EX-31.2

Exhibit 31.2

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: August 21, 2017

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

EX-32.1

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, Shi Chul Kang, the Co-Chief Executive Officer of Leo Motors, Inc. (the “Registrant”), Jun Heng Park, 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 June 30, 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:

	Leo Motors, Inc.
August 21, 2017	By:	/s/ Shi Chul Kang
		Shi Chul Kang
		Co-Chief Executive Officer (Principal Executive Officer)
August 21, 2017	By:	/s/ Jun Heng Park
		Jun Heng Park
		Co-Chief Executive Officer (Executive Officer)
August 21, 2017	By:	/s/ Jeong Youl Choi
		Jeong Youl Choi
		Chief Financial Officer (Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 17, 2017
Details
Registrant Name	Leo Motors, Inc.
Registrant CIK	0001356564
SEC Form	10-Q
Period End date	Jun. 30, 2017
Fiscal Year End	--12-31
Trading Symbol	leom
Tax Identification Number (TIN)	814108026
Number of common stock shares outstanding		174,559,116
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	Q2
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 ($)	Jun. 30, 2017	Dec. 31, 2016
Current Assets
Cash and cash equivalents	$ 448,744	$ 460,671
Accounts receivable	869,998	433,205
Inventories	1,293,887	1,088,298
Prepayment to suppliers	489,698	457,643
Other current assets	356,662	91,973
Total Current Assets	3,458,989	2,531,790
Fixed assets, net	240,510	129,157
Deposits and Other Assets	725,524	346,255
Intangible assets	40,583	88,503
Goodwill	2,613,486	2,613,486
Total Assets	7,079,093	5,709,191
Current Liabilities:
Accounts payable	863,261	1,411,130
Accrued expenses	6,341,539	4,345,772
Advance from customers	169,294	386,624
Due to related parties	410,546	358,680
Taxes payable	186,642	29,635
Notes Payable current portion	274,984	268,824
Total Current Liabilities	8,246,267	6,800,665
Accrued retirement benefits	260,791	216,195
Other long term liabilities	492,951	72,851
Total Liabilities	9,000,008	7,089,711
Leo Motors, Inc. ('LEOM') Equity (Deficit):
Common stock ($0.001 par value; 300,000,000 shares authorized); 174,559,116 and 172,528,016 shares issued and outstanding at June 30, 2017 and December 31, 2016	174,559	172,528
Additional paid-in capital	21,641,983	21,411,832
Accumulated other comprehensive income	4,899,720	1,184,443
Accumulated loss	(34,341,025)	(29,776,217)
Total Equity (Deficit) Leo Motors, Inc.	(7,624,764)	(7,007,414)
Non-controlling interest	5,703,849	5,626,894
Total Equity (Deficit)	(1,920,914)	(1,380,520)
Total Liabilities and Equity(Deficit)	$ 7,079,093	$ 5,709,191

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CONSOLIDATED BALANCE SHEETS - Parenthetical - $ / shares	Jun. 30, 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	174,559,116	172,528,016
Common Stock, Shares, Outstanding	174,559,116	172,528,016

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Details
Revenues	$ 433,992	$ 806,456	$ 832,943	$ 1,552,162
Cost of Revenues	605,133	690,074	791,469	981,088
Gross Profit	(171,141)	116,382	41,474	571,074
Operating Expenses	3,108,804	1,008,491	5,614,273	1,917,351
Income(loss) from Continuing Operations	(3,279,945)	(892,109)	(5,572,799)	(1,346,277)
Other Income (Expenses)
Interest expense	(7,019)	(8,436)	(14,678)	(17,764)
Currency Gains (Losses)	116,664	(46,952)	9,308	(29,865)
Non-Operating (expense) income	91,055	78,119	112,197	66,362
Total Other Income (Expenses)	200,700	22,731	106,827	18,733
Income(loss) from Continuing Operations Before Income Taxes	(3,079,245)	(869,378)	(5,465,972)	(1,327,544)
Income Tax Expense	1,199	0	1,249	0
Net Income(Loss)	(3,080,444)	(869,378)	(5,467,221)	(1,327,544)
Income(loss) attributable to non-controlling interest	(172,481)	(51,235)	(902,414)	(86,890)
Net Income(Loss) Attributable To Leo Motors, Inc.	(2,907,964)	(818,143)	(4,564,808)	(1,240,654)
Other Comprehensive Income:
Net Income(Loss)	(3,080,444)	(869,378)	(5,467,221)	(1,327,544)
Unrealized foreign currency translation gain	(107,356)	97,510	66,667	175,630
Comprehensive Income (loss) Attributable to Leo Motors, Inc.	$ (3,187,800)	$ (771,868)	$ (5,400,544)	$ (1,151,914)
Net Loss per Common Share:
Basic	$ (0.02)	$ (0.01)	$ (0.03)	$ (0.01)
Diluted	$ (0.02)	$ (0.01)	$ (0.03)	$ (0.01)
Weighted Average Common Shares Outstanding:
Basic	173,551,978	161,878,686	172,979,055	161,878,686
Diluted	173,551,978	161,878,686	172,979,055	161,878,686

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from Operating Activities:
Net loss	$ (4,564,808)	$ (1,240,654)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	106,848	45,422
Foreign currency translation	0	175,630
Net loss attributed to NCI	902,414	86,890
Stock-based compensation	32,182	131,247
Changes in assets and liabilities:
Prepaid Expenses	(394)	0
Accounts Receivable	(247,177)	689,931
Inventories	(134,112)	(217,138)
Prepayment to suppliers	(7,859)	(186,625)
Other current assets	260,352	0
Other assets	(160,882)	(61,696)
Accounts payable, other payables and accrued expenses	897,741	(82,224)
Accrued retirement benefits	32,888	77,942
Advances from customers	10,581	(131,724)
Taxes payable	25,412	105,635
Net cash used in operating activities:	(4,651,643)	(781,144)
Cash flows from investing activities:
Purchase of property and equipment	(218,201)	(65,302)
Write off intangibles	47,920	0
Net cash provided(used) in investing activities:	(170,281)	(65,302)
Cash flows from financing activities:
Proceeds (payments) on notes payable / long term payables	426,260	186,946
Payments on notes payable	(9,923)	0
Proceeds on notes payable - related party	51,866	259,578
Other Comprehensive Income	3,715,277	0
Proceeds from issuance of stock & warrants	200,000	1,123,475
Net cash provided(used) by financing activities:	4,383,480	1,569,999
Effect of Foreign Exchange Rate on Cash	426,517	0
Net Increase in cash and cash equivalents:	(11,927)	723,553
Cash and cash equivalents - beginning of year	460,671	243,809
Cash and cash equivalents - end of period	448,744	967,362
Supplemental disclosure of cash flow activities:
Interest	14,678	9,328
Income taxes	0	0
Supplemental disclosures of non-cash activities:
Common stock issued for services	32,182	131,247
Goodwill on Acquisition	$ 0	$ 660,928

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Note 1 - Company Background

6 Months Ended

Jun. 30, 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 (“Leozone”), 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, 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 (“Leo 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 with PDI 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 Trading”) 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 Co., Ltd. (“Leo AIC”)(formerly known as Lelcon) on June 3, 2016, which became a subsidiary of the Company. 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 (“Leo Members”). 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

6 Months Ended

Jun. 30, 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 Leo Korea, LGM, Leo Factory 1, Leo Factory 2, Leo Trading, Leo Members, and Leo AIC. The Company has significant control of all subsidiaries through 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 June 30, 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 subsidiaries is the Korean Won (“KRW”). The subsidiaries 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 - Due To Related Party

6 Months Ended

Jun. 30, 2017

Notes

Note 3 - Due To Related Party

NOTE 3 - 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 $410,546 at June 30, 2017 and $358,680 at December 31, 2016. There are no other related party transactions.

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Note 4 - Payments Received in Advance

6 Months Ended

Jun. 30, 2017

Notes

Note 4 - Payments Received in Advance

NOTE 4 - 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 June 30, 2017 and December 31, 2016, the balance of payments received in advance was $169,294 and $386,624, respectively.

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Note 5 - Going Concern

6 Months Ended

Jun. 30, 2017

Notes

Note 5 - Going Concern

NOTE 5 - GOING CONCERN

As reported in the consolidated financial statements, the Company has accumulated deficits of $34,341,025 as of June 30, 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 6 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2017

Notes

Note 6 - Commitments and Contingencies

NOTE 6 - 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	$	75,000
2018		0
2019 and beyond		0
Total Commitment	$	75,000

(b) Loss Contingencies

The company currently has no loss contingencies.

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Note 7 - Inventories

6 Months Ended

Jun. 30, 2017

Notes

Note 7 - Inventories

NOTE 7 - INVENTORIES

Inventories consist of the following:

		June 30, 2017		Dec 31, 2016
		US$		US$
Raw material	$	68,013	$	420,768
Work in process		797,026		155,778
Finished goods		428,848		511,752
	$	1,293,887	$	1,088,298

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Note 8 - Property and Equipment

6 Months Ended

Jun. 30, 2017

Notes

Note 8 - Property and Equipment

NOTE 8 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

		June 30, 2017		Dec 31, 2016
Vehicles	$	159,224	$	87,218
Tools		78,912		71,818
Office		216,495		179,791
Facility equipment		302,565		202,168
Total property and equipment		757,196		540,995
Accumulated depreciation		(516,686)		(411,838)
Property and equipment, net	$	240,510	$	129,157

Depreciation expense for the six months ended June 30, 2017 and 2016 amounted to $106,848 and $45,422, respectively.

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Note 9 - Short Term Borrowings and Notes Payable

6 Months Ended

Jun. 30, 2017

Notes

Note 9 - Short Term Borrowings and Notes Payable

NOTE 9 - SHORT TERM BORROWINGS AND NOTES PAYABLE

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

At June 30, 2017 and December 31, 2016, the Company had short term borrowings of $274,984 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 June 30, 2017, the major components of our notes and borrowings consisted of the following:

		June 30, 2017		Dec 31, 2016
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.77%
interest only payable monthly and secured by the Company.	$	47,765	$	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.		87,578		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.		61,304		86,648
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.77
interest only payable monthly.		46,819		34,406
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 9.24
interest only payable monthly.		31,518		31,193
Total Liabilities		274,984		268,824
Less current portion		274,984		268,824
Long term debt	$	0	$	0

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Note 10 - Intangible Assets

6 Months Ended

Jun. 30, 2017

Notes

Note 10 - Intangible Assets

NOTE 10 - 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. The Company added to the value of its intangibles in the six months ended June 30, 2017 with development costs associated with its intangibles.

 

		June 30, 2017		Dec 31, 2016
Patents	$	40,306	$	88,226
Trademarks		277		277
Goodwill		3,717,931		3,717,931
Intangible assets		3,758,514		3,806,434
Less impairments		(1,104,445)		(1,104,445)
Intangible assets, net	$	2,654,069	$	2,701,989

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NOTE 11 - EQUITY

6 Months Ended

Jun. 30, 2017

Notes

NOTE 11 - EQUITY

NOTE 11 - EQUITY

In the six months ended June 30, 2017, the Company sold 2,000,000 shares of common stock for $200,000.

The Company issued 192,638 shares of common stock, with a fair market value of $32,182, for compensation.

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NOTE 12 - SUBSEQUENT EVENTS	6 Months Ended
	Jun. 30, 2017
Notes
NOTE 12 - SUBSEQUENT EVENTS	On August 1, 2017, the Company acquired 15.66% of Leo Kartrena, Inc. (“Leo Kartrena”). The Company invested an aggregate of Two Hundred Sixty Million (260,000,000 KRW) South Korean Won (approximately $226,000 USD), or Seven Hundred (700 KRW) South Korean Won (approximately $0.61 USD per share), to Leo Kartrena in consideration for the issuance of Three Hundred Seventy One Thousand Four Hundred Twenty Eight (371,428) shares of Leo Kartrena’s common stock. Leo Kartrena is an electric Go Kart development company which will use the battery swappable electric Go Kart developed by LGM. As its Go Kart venues develop, Leo Kartrena will be a significant client of LGM and Leo Motors, Inc.

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Note 2 - Policies (Policies)

6 Months Ended

Jun. 30, 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 Leo Korea, LGM, Leo Factory 1, Leo Factory 2, Leo Trading, Leo Members, and Leo AIC. The Company has significant control of all subsidiaries through 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 June 30, 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 subsidiaries is the Korean Won (“KRW”). The subsidiaries 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 6 - Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 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	$	75,000
2018		0
2019 and beyond		0
Total Commitment	$	75,000

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Note 7 - Inventories (Tables)

6 Months Ended

Jun. 30, 2017

Tables/Schedules

Schedule of Inventories

Inventories consist of the following:

		June 30, 2017		Dec 31, 2016
		US$		US$
Raw material	$	68,013	$	420,768
Work in process		797,026		155,778
Finished goods		428,848		511,752
	$	1,293,887	$	1,088,298

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Note 8 - Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2017

Tables/Schedules

Property, Plant and Equipment

Property and equipment consisted of the following:

		June 30, 2017		Dec 31, 2016
Vehicles	$	159,224	$	87,218
Tools		78,912		71,818
Office		216,495		179,791
Facility equipment		302,565		202,168
Total property and equipment		757,196		540,995
Accumulated depreciation		(516,686)		(411,838)
Property and equipment, net	$	240,510	$	129,157

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Note 9 - Short Term Borrowings and Notes Payable (Tables)

6 Months Ended

Jun. 30, 2017

Tables/Schedules

Schedule of Short-term Debt

As of June 30, 2017, the major components of our notes and borrowings consisted of the following:

		June 30, 2017		Dec 31, 2016
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.77%
interest only payable monthly and secured by the Company.	$	47,765	$	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.		87,578		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.		61,304		86,648
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.77
interest only payable monthly.		46,819		34,406
Bank loan six month note extended with 12 month term
renewable periods with a variable interest rate currently at 9.24
interest only payable monthly.		31,518		31,193
Total Liabilities		274,984		268,824
Less current portion		274,984		268,824
Long term debt	$	0	$	0

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Note 10 - Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2017

Tables/Schedules

Schedule of Intangible Assets and Goodwill

		June 30, 2017		Dec 31, 2016
Patents	$	40,306	$	88,226
Trademarks		277		277
Goodwill		3,717,931		3,717,931
Intangible assets		3,758,514		3,806,434
Less impairments		(1,104,445)		(1,104,445)
Intangible assets, net	$	2,654,069	$	2,701,989

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Note 1 - Company Background (Details) - shares	3 Months Ended	6 Months Ended
	Mar. 31, 2010	Jun. 30, 2017	Dec. 31, 2011
Common Stock
Conversion of Stock, Shares Issued		47,352,450
Leo B T Corp
Noncash or Part Noncash Acquisition, Interest Acquired	50.00%
Noncash or Part Noncash Acquisition, Noncash Financial or Equity Instrument Consideration, Shares Issued	7,000,000
Equity Method Investment, Ownership Percentage			30.00%
PDI
Long Term Investment Percentage Of Investment Owned		10.00%
LGM Co Ltd
Conversion of Stock, Shares Converted		813,747
Leo Motors Factory 1
Noncash or Part Noncash Acquisition, Interest Acquired		50.00%
Leo Trade
Noncash or Part Noncash Acquisition, Interest Acquired		50.00%
Leo Members, Inc
Noncash or Part Noncash Acquisition, Interest Acquired		100.00%

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Note 3 - Due To Related Party (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Due to related parties	$ 410,546	$ 358,680
Officer
Due to related parties	$ 410,546	$ 358,680

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Note 4 - Payments Received in Advance (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Details
Advance from customers	$ 169,294	$ 386,624

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Note 5 - Going Concern (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Details
Accumulated deficits	$ (34,341,025)	$ (29,776,217)

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Note 6 - Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Details)	Jun. 30, 2017 USD ($)
Details
2017	$ 75,000
2018	0
2019 and beyond	0
Total Commitment	$ 75,000

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Note 7 - Inventories: Schedule of Inventories (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Details
Raw material	$ 68,013	$ 420,768
Work in process	797,026	155,778
Finished goods	428,848	511,752
Inventories	$ 1,293,887	$ 1,088,298

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Note 8 - Property and Equipment: Property, Plant and Equipment (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Property, Plant and Equipment, Gross	$ 757,196	$ 540,995
Accumulated depreciation	(516,686)	(411,838)
Property and equipment, net	240,510	129,157
Tools
Property, Plant and Equipment, Gross	78,912	71,818
Office Equipment
Property, Plant and Equipment, Gross	216,495	179,791
Facility Equipment
Property, Plant and Equipment, Gross	302,565	202,168
Vehicles
Property, Plant and Equipment, Gross	$ 159,224	$ 87,218

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Note 8 - Property and Equipment (Details) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Details
Depreciation	$ 106,848	$ 45,422

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Note 9 - Short Term Borrowings and Notes Payable (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Note 1
Short-term Debt	$ 274,984	$ 268,824

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Note 9 - Short Term Borrowings and Notes Payable: Schedule of Short-term Debt (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Total Liabilities	$ 274,984	$ 268,824
Less current portion	274,984	268,824
Long term debt	0	0
Note 3
Notes payable to bank	47,765	47,258
Note 4
Notes payable to bank	87,578	69,319
Note 5
Notes payable to bank	61,304	86,648
Note 6
Notes payable to bank	46,819	34,406
Note 7
Notes payable to bank	$ 31,518	$ 31,193

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Note 10 - Short Term Borrowings and Notes Payable: Schedule of Short-term Debt - Parenthetical (Details)	Jun. 30, 2017
Note 3
Debt Instrument, Interest Rate, Stated Percentage	3.77%
Note 4
Debt Instrument, Interest Rate, Stated Percentage	3.28%
Note 5
Debt Instrument, Interest Rate, Stated Percentage	13.00%
Note 6
Debt Instrument, Interest Rate, Stated Percentage	3.77%
Note 7
Debt Instrument, Interest Rate, Stated Percentage	9.24%

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Note 10 - Intangible Assets (Details)	12 Months Ended
	Dec. 31, 2016 USD ($)
Details
Goodwill increased	$ 612,445

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Note 10 - Intangible Assets: Schedule of Intangible Assets and Goodwill (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Details
Patents	$ 40,306	$ 88,226
Trademarks	277	277
Goodwill	3,717,931	3,717,931
Intangible assets	3,758,514	3,806,434
Less impairments	(1,104,445)	(1,104,445)
Intangible assets, net	$ 2,654,069	$ 2,701,989

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NOTE 11 - EQUITY (Details)	6 Months Ended
	Jun. 30, 2017 USD ($) shares
Stock Issued During Period, Value, New Issues | $	$ 200,000
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures | $	$ 32,182
Common Stock
Stock Issued During Period, Shares, New Issues | shares	2,000,000
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures | shares	192,638

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NOTE 12 - SUBSEQUENT EVENTS (Details) - Subsequent Event - Leo Kartrena, Inc.	Aug. 01, 2017 USD ($) $ / shares shares
Business Acquisition, Percentage of Voting Interests Acquired	15.66%
Stock Issued During Period, Value, Acquisitions | $	$ 226,000
Business Acquisition, Share Price | $ / shares	$ 0.61
Common Stock
Stock Issued During Period, Shares, Acquisitions | shares	371,428