Leo Motors, Inc. - FORM 10-Q

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EX-31.1 - Leo Motors, Inc.	ex_31-1.htm
EX-31.2 - Leo Motors, Inc.	ex_31-2.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 30, 2012

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)

Delaware		95-3909667
(State or other jurisdiction of incorporation or organization)		(I. R. S. Employer Identification No.)

1291-1, Hasangok-dong, Hanam City, Gyeonggi-do, Republic of Korea		465-250
(Address of principal executive offices)		(Zip Code)

+83 31 796 8870

(Registrant’s telephone number, including area code)

n/a

(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 o

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

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

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 December 31, 2012 was 50,833,115 shares.

QUARTERLY REPORT ON FORM 10-Q

for the Quarter ended March 31, 2012

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1.
Financial Statements

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Operations and Comprehensive Income

Condensed Consolidated Statements of Cash Flows

Notes to Condensed Consolidated Financial Statements

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

Item 3.
Quantitative and Qualitative Disclosures about Market Risk

Item 4.
Controls and Procedures

PART II - OTHER INFORMATION

Item 1.
Legal Proceedings

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

Item 3.
Defaults Upon Senior Securities

Item 4.
(Removed and Reserved)

Item 5.
Other Information

Item 6.
Exhibit

Signatures

Part I. Financial Information

Balance Sheets
Statements of Operations
Statement of Cash Flows
Notes to Financial Statements

LEO MOTORS, INC.
Consolidated Balance Sheets

ASSETS

	As of March 31			As of Dec. 31
	2012			2011
CURRENT ASSETS	(Unaudited)			(Audited)
Cash	$	9,691		$	880
Accounts Receivable-net of allowance of $ 8,780 and $ 8,394 ,respectively		40,985			86,244
Inventory		355,198			252,584
Short-term loans		-			196,066
Prepaid purchase		168,408			163,185
Prepaid costs and other current assets		6,457			2,505

TOTAL CURRENT ASSETS		580,739			701,464


Fixed assets- net of accumulated depreciation		44,330			48,751
Deposit		95,906			95,906
Other non-current assets		56,905			56,905
Long -term investment in B&T Corp		4,934,779			4,959,779

TOTAL OTHER ASSETS		5,131,920			5,161,341
TOTAL ASSETS	$	5,712,659		$	5,862,805

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Commitments and Contingencies

CURRENT LIABILITIES
Short term borrowings	$	451,475		$	433,651
Accounts payable and accrued expenses		15,747			20,425
Other payables		1,025,564			995,658
Payments received in advance from customers		86,766			86,766
Related party payable		1,434,583			1,434,583
Corporation and business taxes payable		263,254			263,254

TOTAL CURRENT LIABILITIES		3,277,389			3,234,337

Accrued severance benefits		46,294			52,378

TOTAL LIABILIITIES		3,323,683			3,286,715

STOCKHOLDERS' EQUITY

Common stock, Authorized 200,000,000 Shares, $0.001 par value,50,833,115 shares issued and outstanding, as of March 31, 2012 and December 31, 2011, respectively		50,233			50,233
Additional paid-in capital		10,774,996			10,774,996
Accumulated comprehensive income (loss)		435,888			470,876
Deficit		(10,086,829	)		(9,934,703	)

TOTAL STOCKHOLDERS' EQUITY ATTRIBUTABLE TO LEO MOTORS, INC.		1,174,288			1,361,402

Noncontrolling interest		1,214,688			1,214,688

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	5,712,659		$	5,862,805

See Notes to Financial Statements

LEO MOTORS, INC.
Consolidated Statements of Operations (Unaudited)

	For the 3-months ended
	March 31			March 31
	2012			2011

Sales	$	5,782			248,178

TOTAL SALES		5,782			248,178
COST OF SALES		4,166			178,838

GROSS PROFIT		1,616			69,340

EXPENDITURES :
Officer compensation paid in stock
Salaries and benefits					-
Consulting and service fees					-
Selling , general and administrative		149,536			126,026
Research and Development
Bad debt
Depreciation
Amortization

TOTAL EXPENDITURES		149,536			126,026

NET LOSS FROM OPERATIONS		(147,920	)		(56,686	)

OTHER INCOME & (EXPENSES)
Investment loss - B&T Corp.
Interest income
Interest expense
Non-operating income		3,953			4,787
Non-operating expense		(8,159	)		(9,113	)

Total Other Income & (Expenses)		(4,206	)		(4,326	)


NET LOSS BEFORE INCOME TAX & BENEFIT & NONCONTROLLING INTEREST		(152,126	)		(61,012	)

Income tax, net of tax benefits					-

NET LOSS		(152,126	)		(61,012	)

Net loss attributable to noncontrollling interest		34,988			14,032

NET INCOME (LOSS) ATTRIBUTABLE TO LEO MOTORS, INC.	$	(117,138	)		(46,980	)

COMPREHENSIVE INCOME (LOSS);

NET LOSS		(152,126	)		(61,032	)

Unrealized foreign currency transaction gain (loss)					-

COMPREHENSIVE INCOME (LOSS)	$	(152,126	)		(61,032	)

LOSS PER SHARE - BASIC & DILUTED					(0.001	)

WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING					50,833,115

See Notes to Financial Statements

LEO MOTORS, INC.
Consolidated Statements of Cash Flows (Unaudited)

	For the 3-months ended
	March 31			March 31
	2012			2011

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(152,126	)		(61,012	)
Adjustments to reconcile net loss to net cash provided by operating activities :
Accounting for Non-controlling interest
Stock issued for compensation
Depreciation		4,421			-
Foreign currency translation		(34,988	)		-
Change in long-term investment		25,000			55,432
Changes in working capital:

(Increase) decrease in inventory		(102,614	)		(147,321	)
(Increase) decrease in accounts receivable		45,259			(9,061	)
(Increase) decrease in short term loans		196,066			196,066
(Increase) decrease in advance payment
(Increase) decrease in deposit/prepaid		(9,175	)		(5,725	)
Increase (decrease) in accrued salary
Increase (decrease) in accounts payables and accrued expenses		(4,678	)		18,129
Increase (decrease) in other payable		29,906			(79,566	)
Payments in advance from customers					17,097
Increase (decrease) in accrued warranty expense
Increase (decrease) in taxes payable					4,274
Increase (decrease) in accrued severance benefits		(6,084	)

Net Cash Provided by (Used in) Operating Activities		(9,013	)		(11,687	)


CASH FLOWS FROM INVESTING ACTIVITIES
Increase (decrease) in short-term loan		17,824			(71,562	)
Acquisition of intangible assets					-
Purchase of fixed assets					(912	)
Outlay for deposit					(4,521	)
Increase in other non-current assets					(10,900	)

Net Cash Provided by (Used in) Investing Activities		17,824			(87,895	)


CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowing
Advances from related parties (Debt reduction related party)		-			33,335
Increase in minority interest
Issuance of common stocks

Net Cash flows from financing activities		-			33,335



Net Increase (Decrease) in Cash		8,811			(66,247	)

Cash at the Beginning of the period		880			71,192

Cash at the End of the period	$	9,691			4,945

Supplemental Cash Flow Disclosures:

Acquisition of interest in a company paid in common stocks	$	-		$	-
Compensation paid in stock		-			-
Issuance of stock for acquistion and compensation		-			-
Cash paid during the priod for interst		-			-
Cash paid during year for taxes		-			-

See Notes to Financial Statements

LEO MOTORS, INC.

Notes to the Consolidated Financial Statements

March 31, 2012

(Unaudited)

1. UNAUDITED INFORMATION

The consolidated balance sheet of Leo Motors Inc. (the “Company”) as of March 31, 2012, and the consolidated statements of operations and cash flows for the three months ended March 31, 2012 and 2011, have not been audited. However, in the opinion of management, such information includes all adjustments (consisting only of normal recurring adjustments) which are necessary to properly reflect the financial position of the Company as of March 31, 2012, and the results of operations for the three-months ended March 31, 2012 and 2011.

Certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, although management believes that the disclosures are adequate to make the information presented not misleading. Interim period results are not necessarily indicative of the results to be achieved for an entire year. These financial statements should be read in conjunction with the financial statements and notes to financial statements included in the Company’s consolidated financial statements as filed on Form 10-K for the year ended December 31, 2011.

NOTE 2 - BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Company Business

Company is currently in development, assembly and sales of the specialized electric vehicle.

Background

Leo Motors, Inc, Inc (the "Company") was originally incorporated as Classic Auto Accessories, a California Corporation on July 2, 1986. The Company then underwent several name changes from FCR Automotive Group, Inc. to Shini Precision Machinery, Inc. to Simco America Inc. and then to Leo Motors. The Company had been dormant since 1989, and effectuated a reverse merger on November 12, 2007 with Leozone Inc., a South Korean Company, which is the maker of electrical transportation devices. The merger essentially exchanges shares in Leo Motors, Inc. for shares in Leozone. As this is a reverse merger the accounting treatment of such is that of a combination of the two entities with the activity of Leozone, Inc. the surviving entity, going forward. The financial statements reflect the activity for all periods presented as if the merger had occurred January 1, 2007.

On February 11, 2010, the Company acquired 50% of Leo B&T Corp.,(“B&T”) a Korean Corporation, from two shareholders of B&T in exchange for 7,000,000 shares of the Company’s common stock.

NOTE 3 - SUMMAY OF SIGNIFICANT ACCOUNTING POLICIES

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

Basis of Presentation and Consolidation

These financial statements and related notes are expressed in US dollars. The Company’s fiscal year-end is December 31. The consolidated financial statements include the financial statements of the Leo Motors Co. Ltd. Korea where the Company is controlling shareholders with 57.69 % at the end of March 31, 2012 and 2011, respectively. 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.

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

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.

Recent Accounting Pronouncements and Impact of New Accounting Standards

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position, or cash flow.

NOTE 4 - EARNINGS PER SHARE

Basic earnings per share are calculated by dividing net loss by the weighted average number of common shares outstanding during the period.

NOTE 5 - DUE TO RELATED PARTY

The company is indebted to its officer for advances. Repayment is on demand without interest. The balance at March 31, 2012 was $ 1,434,583.

NOTE 6 - PAYMENTS RECEIVED IN ADVANCE

The Company during the periods received payments from potential customers, or deposits, on future orders. The Company's policy is to record these payments as a liability until the product is completed and shipped to the customer at which the Company recognizes revenue. As of March 31, 2012 and 2011, the balance of payments received in advance was $ 86,766 and $ 561,321, respectively.

NOTE 7 – SUBSEQUENT EVENTS

There is no reportable subsequent event.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Amendment No. 5 to our Form 10 Registration Statement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). These forward-looking statements are generally located in the material set forth under the headings “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Business”, “Properties” but may be found in other locations as well. These forward-looking statements are subject to risks and uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. You should not unduly rely on these statements. Factors, risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, among others,

	our growth strategies;
	anticipated trends in our business;

	our ability to make or integrate new technologies; our liquidity and ability to finance our research and development, and commercialization strategies;
	market conditions in the electric vehicle, battery storage and related component industry; the timing, cost and procedure for developing new products;

	the impact of government regulation;
	estimates regarding future net revenues from the sale of our technology and the present value thereof; planned capital expenditures (including the amount and nature thereof);

	increases in the demand for electric vehicles and “green” technology in the future;
	estimates, plans and projections relating to the commercialization of our technologies;

our financial position, business strategy and other plans and objectives for future operations.

We identify forward-looking statements by use of terms such as “may,” “will,” “expect,” “anticipate,” “estimate,” “hope,” “plan,” “believe,” “predict,” “envision,” “intend,” “will,” “continue,” “potential,” “should,” “confident,” “could” and similar words and expressions, although some forward-looking statements may be expressed differently. You should be aware that our actual results could differ materially from those contained in the forward-looking statements. You should consider carefully the statements under the “Risk Factors” section of this report and other sections of this report which describe factors that could cause our actual results to differ from those set forth in the forward-looking statements, and the following factors:

	the possibility that our technology commercialization may involve unexpected costs;
	the volatility in world demand for electric vehicles and “green” technologies;

	the accuracy of internally estimated market demand for our products and technologies;
	the ability to survive as a going concern on limited capital;

	the availability and costs of raising sufficient working capital;
	environmental and development risks;

	competition;
	the inability to realize expected value from technology research and development;

	the ability of our management team to execute its plans to meet its goals; and
	other economic, competitive, governmental, legislative, regulatory, geopolitical and technological factors that may negatively impact our businesses, operations and pricing.

Forward-looking statements speak only as of the date of this Amendment No. 5 to our Form 10 Registration Statement or the date of any document incorporated by reference in this report. Except to the extent required by applicable law or regulation, we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

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

These Company’s products include (a) Zinc Air Fuel Battery (“ZAFC”); (b) electric vehicles ("EV") such as cars, trucks, tractors and other commercial/military vehicles; (c) E-Bike or electric scooters; (d) EV components that integrate electric batteries with electric motors such as EV Controllers that use a mini-computer to control torque drive; and the (e) E-Box which is a electric energy storage system for solar and wind power generation devices.

Leo Motors, Inc. (the "Company") is currently 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 Electric Vehicle ("EV"). Our EPTS can replace internal combustion engines (“ICEs”). We have begun sales of our EPTS to auto makers and agricultural machinery manufacturers.

During the last two years, we have been developing 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:

·	Market e-Boxes in USA, Japan and Australia

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

Recent Business Developments

In the last six months, the Company has focused its marketing and sales efforts on the E-Box. The E-Box is a electric power storage box ranging from 3kW to 50kW for use in homes. This project took on additional importance to the Company because of the unprecedented natural disaster in Japan. Leo is marketing the device in the US and Japan. A recent sales order from a company in the USA in the third quarter of 2011 requires us to demonstrate “proof of concept”.

Liquidity and Capital Resources

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

Results of Operations

Revenues

Sales for the quarter ended March 31, 2012 were $5,782 compared to $248,178 for the quarter ended March 31, 2011. Costs of sales were $4,166 and gross profit was $1,616 in the quarter ended March 31, 2012 compared to $178,838 as costs of sales and gross profit of $69,340 in the same period in 2011.

Expenses

During the quarter ended March 31, 2012, we incurred $149,536 in expenses, compared to $126,026 in the period ended March 31, 2011.

Expenses for the period quarter consisted of the following:

	Three Months Ended
Expenses:	March 31, 2012		March 31, 2011
	$	-
Salaries and Benefits		0	$	0
Consulting and Service Fees		0		0
Selling, General and Administrative		149,536		126,026
Total	$	149,536	$	129,026

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

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

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

None.

ITEM 4. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer (the "Certifying Officer") maintains a system of disclosure controls and procedures that is designed to provide reasonable assurance that information, which is required to be disclosed, is accumulated and communicated to management timely. Under the supervision and with the participation of management, the Certifying Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule [13a-14(c)/15d-14(c)] under the Exchange Act) within 45 days prior to the filing date of this report. Based upon that evaluation, the Certifying Officer concluded that our disclosure controls and procedures are not effective in timely alerting them to material information relative to our company required to be disclosed in our periodic filings with the SEC.

CHANGES IN INTERNAL CONTROLS

During the Quarter ended March 30, 2012, there were no changes made to our internal controls over financial reporting that are reasonably likely to affect the reliability of those controls, or the accuracy of our financial reporting.

PART II: OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

The Company had entered to certain loan agreements as referenced in Note 7 of the Financial Statements for the Year Ended December 31, 2010, filed with the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2010 (incorporated herein by this reference). Facts have come to the Company’s attention that causes the Company to believe that the debts have been extinguished. However, the Company cannot offer any assurance that the holders of the debt will not seek to enforce rights that the holders believe they may have under the respective agreements. Our former law firm in the USA has an outstanding bill for approximately $25,000 which has not been satisfied.

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 – (Removed and Reserved)

ITEM 5 - OTHER INFORMATION

None.

ITEM 6 – EXHIBITS

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


No.		Description

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Acting Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Acting Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101		Interactive Data Files (XBRL)

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.

Dated May 21, 2012
		Leo Motors, Inc.
		(Registrant)

	By:	/s/ Jung Yong (John) Lee
		Jung Yong Lee
		Chief Executive Officer
		and Interim Chief Financial Officer

Leo Motors, Inc. - FORM 10-Q - May 21, 2012

Attached files

Leo Motors, Inc. Reports