Registration No. 333-

 

Approximate date of commencement of proposed sale to the public:  As soon as practicable after the effective date of this Registration Statement.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.  x

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨

 

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.  (Check one):

 

 

 

 

CALCULATION OF REGISTRATION FEE

 

TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED		AMOUNT TO BE REGISTERED (1)				PROPOSED MAXIMUM OFFERING PRICE PER SHARE (2)				PROPOSED MAXIMUM AGGREGATE OFFERING PRICE (1)				AMOUNT OF REGISTRATION FEE
Shares of common stock, $0. 001 par value			35,100,000(3)			$	0.14			$	4,914,000			$	494.84
Shares of common stock, $0. 001 par value, underlying convertible debenture			7,900,000 (4)			$	0.14			$	1,106,000			$	111.37
Total			43,000,000							$	6,020,000			$	606.21	*

 

 

 

 

 

 

*The Registrant previously paid the filing fee in connection with a previous filing, since withdrawn, of a Registration Statement, Registration No. 333-211973.

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine.

 

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

LEO MOTORS, INC.

 

 

43,000,000

Shares of

Common stock

 

This prospectus relates to the sale by the selling stockholders identified herein of up to 43,000,000 shares of common stock of Leo Motors, Inc. (the "Company").

 

BOU Trust is deemed to be an "underwriter" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), in connection with the resale of the 35,045,784 shares that it is offering in this prospectus, although it may not sell those shares pursuant to Rule 144 of the Securities Act. The prices at which the selling stockholders may sell shares will be determined by the prevailing market price for the shares or in privately negotiated transactions. We will not receive any proceeds from the sale of these shares by the selling stockholders.  All expenses of registration incurred in connection with this offering are being borne by us, but all selling and other expenses incurred by the selling stockholders will be borne by the selling stockholders.

 

Our common stock is quoted on the OTCQB and trades under the symbol "LEOM."  On  September 21 , 2016, the last reported sale price of our common stock as reported on the OTCQB was $0. 14 per share. All amounts herein are in thousands, except for share and per share data.

 

We are an "emerging growth company" as that term is used in the Jumpstart Our Business Startups Act of 2012, and, as such, have elected to comply with certain reduced public company reporting requirements. 

 

Investing in our common stock is highly speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties in the section entitled "Risk Factors" within this prospectus before making a decision to purchase our stock.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

The date of this prospectus is  September [●], 2016.

 

 

TABLE OF CONTENTS

 

	Page
Prospectus Summary	2
Risk Factors	4
Special Note Regarding Forward Looking Statements	10
Use of Proceeds	10
Market for Our Common stock and Related Stockholder Matters	11
Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Business	17
Management	21
Executive Compensation	23
Certain Relationships and Related Transactions	24
Security Ownership of Certain Beneficial Owners and Management	25
Selling Stockholders	25
Description of Securities	27
Plan of Distribution	27
Legal Matters	28
Experts	28
Where You Can Find Additional Information	29
Index to Financial Statements	30

 

You should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

 

For investors outside the United States, we have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus outside of the United States.

 

This prospectus includes estimates, statistics and other industry and market data that we obtained from industry publications, research, surveys and studies conducted by third parties and publicly available information. Such data involves a number of assumptions and limitations and contains projections and estimates of the future performance of the industries in which we operate that are subject to a high degree of uncertainty. This prospectus also includes data based on our own internal estimates. We act and believe that the information provided in this prospectus is true and accurate.

 

 

Prospectus Summary

 

This summary highlights information contained in other parts of this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in our securities and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. You should read the entire prospectus carefully, especially the section entitled "Risk Factors" and our consolidated financial statements and related notes, before deciding to buy our securities. Unless otherwise stated, all references to "us," "our," "we," "Leo Motors," "LEOM," the "Company" and similar designations refer to Leo Motors, Inc. and, depending on the context, its subsidiaries.

 

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

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.

Revenues for the year ended December 31, 2015 were 4,299,187 compared to 693,096 for the year ended December 31, 2014.  Revenues for the three months ended June 30, 2016 were $806,456 compared to $1,408,968 for the three months ended June 30, 2015, a decrease of $602,512. The Company is continuing to expand its locations and sales for the year to date period even though the quarterly comparison is lower.  The net loss for the year ended December 31, 2015 was 4,490,972 compared to 4,480,544 for the year ended December 31, 2014. The net loss for the three months ending June 30, 2016 decreased to $869,378 from $1,055,800 for the three months ending June 30, 2015, a decrease of $186,422.

As reported in the consolidated financial statements included herewith, the Company has accumulated deficits of $25,404,609 as of December 31, 2015 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.

 

 

(1) The number of issued and outstanding shares of the Company's common stock as of August 31 , 2016.

(2)  The number of issued and outstanding shares after this offering, assuming the conversion and draw down, in full, of the shares underlying the convertible debentures and the ELOC, respectively, as they pertain to the selling stockholders.  

 

The amount for each purchase of the Shares as designated by the Company in the applicable draw down notices shall be equal to the lesser of (i) 4.99% of the then-current shares outstanding or (ii) the previous 10-day average trading volume of the draw down shares multiplied by 3. There shall be a minimum draw down investment amount of $25,000 and a maximum draw down investment amount of $1,000,000. The purchase price for the Shares to be paid by the Investor shall be the average of the lowest two (2) VWAPS during 5 consecutive Trading Days following the delivery by the Company of a notice plus a 5% discount.   "VWAP" means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time).

By way of example, if the share price calculated based on the average of the two lowest VWAPS was $0.075, the purchase price would be, after a 5% discount, $0.0712. Further, if the 10-day average trading volume was 300,000, the total number of shares for that purchase would be 300,000 multiplied by 3, or 900,000, assuming that this number is less than 4.99% of the shares outstanding.  The drawdown amount in this example would be $64,080 or 900,000 shares at a purchase price of $0.0712 per share.

 

There are substantial risks to investors as a result of the issuance of shares of our common stock under the ELOC. These risks include dilution of stockholders, significant decline in our stock price and our inability to draw sufficient funds when needed.

In order to fund a notice for funding pursuant to the ELOC (a "Drawdown Notice"), BOU Trust will periodically purchase our common stock under the ELOC and will, in turn, sell such shares to investors in the market at the market price on a best efforts basis, subject to certain conditions. This may cause our stock price to decline, which will require us to issue increasing numbers of common shares to BOU Trust to raise the same amount of funds, as our stock price declines.

 

Drawdown Amount Required
		100% of		25% Decrease		50% Decrease		75% Decrease
		Current Stock		in Stock Price		in Stock Price		in Stock Price
		Price (1)		(1)		(1)		(1)
Total No. of Shares Required to Raise $10,000,000(1)			71,428,572		5,238,096		142,857,143		285,714,286
(1) Based on a price of $0.14 per share.

 

Based on the above chart, the sale of stock under the first will be limited, resulting in significantly less capital than the $10,000,000 capital commitment. There are no assurances that the price of common stock will appreciate, depreciate, or remain at the same price as a result of stock sales under this Agreement, however, if there is a 25% to 75% decline in stock value pricing, the Company may only receive a portion of the $10,000,000 available.

 

The Company understands and acknowledges that the number of shares issuable upon purchases pursuant to this ELOC will increase in certain circumstances including, but not necessarily limited to, the circumstance wherein the trading price of the Common Stock declines during the Draw Down Pricing Period. The Company's executive officers and directors have studied and fully understand the nature of the transactions contemplated by this ELOC and recognize that they have a potential dilutive effect on the shareholders of the Company. The Board of Directors of the Company has concluded, in its good faith business judgment, and with full understanding of the implications, that such issuance is in the best interests of the Company. The Company specifically acknowledges that, subject to such limitations as are expressly set forth in the ELOC, its obligation to issue shares upon purchases pursuant to this ELOC is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.  We determined the amount of $10,000,000 as we require large sums of financing for our staged growth and in order to allow the greatest possible flexibility under the ELOC.

RISK FACTORS

 

There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any of these risks actually occur, our business, financial condition or results of operation may be materially adversely affected. In such case, the trading price of our common stock could decline and investors could lose all or part of their investment.

  

Discussion of our business and operations included in this prospectus should be read together with the risk factors set forth below. They describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties, together with other factors described elsewhere in this report, have the potential to affect our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner.  New risks may emerge at any time, and we cannot predict those risks or estimate the extent to which they may affect our financial performance. Each of the risks described below could adversely impact the value of our securities.  These statements, like all statements in this report, speak only as of the date of this prospectus (unless another date is indicated), and we undertake no obligation to update or revise the statements in light of future developments.

 

We cannot assure you that we will be successful in commercializing any of the Company's products or if any of our products are commercialized, that they will be profitable for the Company.

 

The Company generates limited revenue from operations upon which an evaluation of our prospects can be made.  The Company's prospects must be considered keeping in mind the risks, expenses and difficulties frequently encountered in the establishment of a new business in a constantly changing industry.  There can be no assurance that the Company will be able to achieve profitable operations in the foreseeable future, if at all.

 

The Company has identified a number of specific risk areas that may affect our operations and results in the future:

 

Investing in our Common Stock involves a high degree of risk. You should carefully consider the risks described below with all of the other information included in this prospectus before making an investment decision. If any of the possible adverse events described below actually occurs, our business, results of operations or financial condition would likely suffer. In such an event, the market price of our Common Stock could decline and you could lose all or part of your investment.

Products that fail to meet specifications, are defective, or that are otherwise incompatible with end uses could impose significant costs on us.

Products that do not meet specifications or that contain, or are perceived by our customers to contain, defects or that are otherwise incompatible with end uses could impose significant costs on us or otherwise materially adversely affect our business, results of operations or financial condition. If problems with nonconforming, defective or incompatible products occur after we have shipped such products, we could be adversely affected in several ways, including the following:

 

Our operations require raw materials that meet exacting standards. We generally have multiple sources of supply for our raw materials. However, only a limited number of suppliers are capable of delivering certain raw materials that meet our standards. Shortages may occur from time to time in the future. In addition, disruptions in transportation lines could delay our receipt of raw materials. Lead times for the supply of raw materials have been extended in the past. If our supply of raw materials is disrupted or our lead times extended, our business, results of operations or financial condition could be materially adversely affected.

The patent positions of companies, like ours, can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in such companies' patents has emerged to date in the United States. The general patent environment outside the United States also involves significant uncertainty. Accordingly, we cannot predict the breadth of claims that may be allowed or that the scope of these patent rights would provide a sufficient degree of future protection that would permit us to gain or keep our competitive advantage with respect to these products and technology.

 

 

Our performance is substantially dependent on the performance of our senior management and key scientific and technical personnel. The loss of the services of any member of our senior management or our scientific or technical staff may significantly delay or prevent the development of our product candidates and other business objectives by diverting management's attention to transition matters and identification of suitable replacements, if any, and could have a material adverse effect on our business, operating results and financial condition.

 

 

We qualify as an emerging growth company.

As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, enacted in April 2012. An "emerging growth company" may take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:

- being permitted to present only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations in this prospectus;

- not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended;

- reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and

- exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We may use these provisions until the last day of our fiscal year following the fifth anniversary of the closing of our initial public offering. However, if certain events occur prior to the end of such five-year period, including if we become a "large accelerated filer," our annual gross revenue exceed $1.0 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period.

 

The movement of the Korean Won against the U.S. dollar and other currencies may have a material adverse effect on us.

 

The Korean Won has fluctuated significantly against major currencies in recent years, especially as a result of the recent global financial crisis and the relatively speedy recovery of Korean economy therefrom.  The depreciation of the Won against U.S. dollar and other foreign currencies typically results in a material increase in the cost of fuel and equipment purchased from overseas and the cost of servicing our foreign currency-denominated debt as the prices for substantially all of the fuel materials and a significant portion of the equipment we purchase are stated in currencies other than the Won, generally in U.S. dollars. As a result, any significant depreciation of Won against the U.S. dollar or other major foreign currencies will have a material adverse effect on our profitability and results of operations

A significant portion of the assets of our directors and officers named in this Prospectus, and substantially all of our assets are located in Korea. As a result, it may not be possible for you to enforce judgments, against either our assets or us, obtained in United States based on the civil liability provisions of the United States federal securities laws. There is doubt as to the enforceability in Korea, either in original actions or in actions for enforcement of judgments of United States courts, of civil liabilities predicated on the United States federal securities laws.

 

The stock market, particularly in recent years, has experienced significant volatility. Factors that could cause this volatility in the market price of our Common Stock include:

 

 

 

These and other external factors may cause the market price and demand for our Common Stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of Common Stock and may otherwise negatively affect the liquidity of our Common Stock. In the past, when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock. If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management.

The market price of our stock is likely to be highly volatile because for some time there will likely be a thin trading market for the stock, which causes trades of small blocks of stock to have a significant impact on our stock price.  As a result of the lack of trading activity, the quoted price for our common stock on the OTCQB is not necessarily a reliable indicator of its fair market value.  Further, if we cease to be quoted, holders of our common stock would find it more difficult to dispose of, or to obtain accurate quotations as to the market value of, our common stock, and the market value of our common stock would likely decline.

 

You may experience dilution of your ownership interests because of the future issuance of additional shares of our common stock.

 

In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders.  We may issue additional shares of our common stock or other securities that are convertible into or exercisable for our common stock in connection with hiring or retaining employees, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes.  The future issuance of any such additional shares of our common stock may create downward pressure on the trading price of the common stock. We will need to raise additional capital in the near future to meet our working capital needs, and there can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with these capital raising efforts, including at a price (or exercise or conversion prices) below the price an investor paid for stock.  

There are substantial risks associated with the ELOC with BOU Trust which could contribute to the decline of the price of our Common Shares and have a dilutive impact on our existing stockholders.

In order to obtain needed capital, we entered into the ELOC with BOU Trust. The sale of our Common Shares pursuant to the ELOC will have a dilutive impact on our stockholders. We believe BOU Trust intends to promptly re-sell the Common Shares that we sell to it under the ELOC. Such resales could cause the market price of our Common Shares to decline significantly. Any subsequent sales by us to BOU Trust under the ELOC may, to the extent of any such decline, require us to issue a greater number of Common Shares to BOU Trust in exchange for each dollar of such subsequent sale. Under these circumstances our existing stockholders would experience greater dilution. The sale of Common Shares under the ELOC could encourage short sales by third parties which could contribute to the further decline of the price of our Common Stock.

 

You could lose all of your investment.

 

An investment in our securities is speculative and involves a high degree of risk. Potential investors should be aware that the value of an investment in the Company may go down as well as up. In addition, there can be no certainty that the market value of an investment in the Company will fully reflect its underlying value. You could lose your entire investment.

 

Offers or availability for sale of a substantial number of shares of our common stock, for example, in connection with the 43,000,000 shares registered for resale herein, may cause the price of our common stock to decline.

 

If our stockholders sell substantial amounts of our common stock in the public market, including upon the expiration of any statutory holding period under Rule 144 or registration for resale, or issued upon the exercise of warrants, it could create a circumstance commonly referred to as an "overhang" and in anticipation of which the market price of our common stock could fall.  The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.  As of  August 31 , 2016, we have 163,816,458 shares of common stock issued and outstanding. Following the effectiveness of the registration statement of which this prospectus forms a part, 43,000,000 shares of common stock will be immediately available for resale assuming the full amount available pursuant to the equity line of credit underlying this Prospectus is drawn down.  Only those shares underlying the convertible debentures and those shares already drawn down, if any, from the equity line of credit, subject to the 4.99% limitation, will be immediately available.  It is possible that the full amount allowed pursuant to the equity line of credit will never be drawn down and available for resale.

 

Investor relations activities, nominal "float" and supply and demand factors may affect the price of our stock.

 

The Company may utilize various techniques such as non-deal road shows and investor relations campaigns in order to create investor awareness for the Company.  These campaigns may include personal, video and telephone conferences with investors and prospective investors in which our business practices are described.  The Company may provide compensation to investor relations firms and pay for newsletters, websites, mailings and email campaigns that are produced by third-parties based upon publicly-available information concerning the Company. The Company does not intend to review or approve the content of such analysts' reports or other materials based upon analysts' own research or methods.  Investor relations firms should generally disclose when they are compensated for their efforts, but whether such disclosure is made or complete is not under our control.   In addition, investors in the Company may, from time to time, also take steps to encourage investor awareness through similar activities that may be undertaken at the expense of the investors.  Investor awareness activities may also be suspended or discontinued which may impact the trading market our common stock.

 

The SEC and FINRA enforce various statutes and regulations intended to prevent manipulative or deceptive devices in connection with the purchase or sale of any security and carefully scrutinize trading patterns and company news and other communications for false or misleading information, particularly in cases where the hallmarks of "pump and dump" activities may exist, such as rapid share price increases or decreases. We, and our shareholders, may be subjected to enhanced regulatory scrutiny due to the small number of holders who initially will own the registered shares of our common stock publicly available for resale. The Supreme Court has stated that manipulative action is a term of art connoting intentional or willful conduct designed to deceive or defraud investors by controlling or artificially affecting the price of securities. Often times, manipulation is associated by regulators with forces that upset the supply and demand factors that would normally determine trading prices.

 

BOU Trust will pay less than the then-prevailing market price of our common stock, which could cause the price of our common stock to decline.

 

Our common stock to be issued under the ELOC will be purchased at a five percent (5%) discount to the lowest two (2) VWAPS during 5 consecutive Trading Days following the delivery by the Company of a notice.

BOU Trust has a financial incentive to sell our shares immediately upon receiving the shares to realize the profit between the discounted price and the market price. If BOU Trust sells our shares, the price of our common stock may decrease. If our stock price decreases, BOU Trust may have a further incentive to sell such shares. Accordingly, the discounted sales price may cause the price of our common stock to decline.

We are registering an aggregate of 35,045,784 shares of common stock to be issued under the equity line of credit. The sale of such shares could depress the market price of our common stock.

 

We are registering an aggregate of 43,000,000 shares of common stock under the registration statement of which this prospectus forms a part for issuance, a part of which is pursuant to the equity line of credit. The sale of these shares into the public market by BOU Trust could depress the market price of our common stock.

 

We may not have access to the full amount under the equity line of credit.

 

For the two consecutive trading days prior to  September 21 , 2016, the closing price of our common stock was $0. 18 and $0.182 . There is no assurance that the market price of our common stock will increase or remain the same substantially in the near future. The entire commitment under the equity line of credit is $10,000,000. The aggregate number of shares of common stock necessary to raise the entire $10,000,000 at $. 14 per share is 71,428,572. We may not have access to the remaining commitment under the equity line of credit unless the market price of our common stock increases or remains stable. The Company's executive officers and directors fully recognize that the Company may not provide them access to the full line of credit.

 

Our common stock price may decline by our draw on our equity line of credit.

 

Pursuant to the ELOC, when we deem it necessary, we may raise capital through the private sale of our common stock to BOU Trust. Because the sales price is lower than the prevailing market price of our common stock, to the extent that the put right is exercised, your ownership interest will be diluted in direct proportion.

 

There may not be a sufficient price of our common stock to permit us to acquire adequate funds, which may adversely affect our liquidity.

The ELOC provides that the number of shares sold pursuant to each Notice plus the shares held by BOU Trust at that time shall not exceed 4.99% of the issued and outstanding shares of common stock of the Company. If the price our common stock is too low, it is possible that we may not be permitted to draw the full amount of proceeds of the drawdown request, which may not provide adequate funding for our planned operations and may materially decrease our liquidity.

 

We may draw on our equity line of credit to the extent that a change of control occurs.

 

The Company may continue to make drawdown requests while the Selling Stockholder holds shares of common stock or sells shares to a specific party, thereby causing such purchasing party to gain control of the Company. This could jeopardize the execution of the Company's business plan and may disrupt operations. The Company does not anticipate making drawdown requests under this scenario.

 

Draw Downs under the ELOC may cause dilution to existing shareholders.

BOU Trust has committed to purchase up to $10,000,000 worth of shares of our common stock. From time to time during the term of the ELOC, and at our sole discretion, we may present BOU Trust with a Draw Down Notice requiring BOU Trust to purchase shares of our common stock. The purchase price to be paid by BOU Trust will be at a 5% discount of the Market Price of our common stock.  We will be entitled to put to BOU Trust on each Draw Down Notice date such number of shares of common stock as equal to the lesser of (i) 4.99% of the then-current shares outstanding or (ii) the previous 10-day average trading volume of the draw down shares multiplied by 3; provided that the number of shares to be purchased by BOU Trust shall not exceed the number of such shares that, when added to the number of shares of our common stock then beneficially owned by BOU Trust, would exceed 4.99% of the number of shares of our common stock outstanding. As a result, our existing shareholders will experience immediate dilution upon the purchase of any of the shares by BOU Trust. The issue and sale of the shares under the ELOC may also have an adverse effect on the market price of the common shares. BOU Trust may resell some, if not all, of the shares that we issue to it under the ELOC and such sales could cause the market price of the common stock to decline significantly. To the extent of any such decline, any subsequent puts would require us to issue and sell a greater number of shares to BOU Trust in exchange for each dollar of the put amount. Under these circumstances, the existing shareholders of our company will experience greater dilution. The effect of this dilution may, in turn, cause the price of our common stock to decrease further, both because of the downward pressure on the stock price that would be caused by a large number of sales of our shares into the public market by BOU Trust, and because our existing stockholders may disagree with a decision to sell shares to BOU Trust at a time when our stock price is low, and may in response decide to sell additional shares, further decreasing our stock price.

Draw Down Amount				Price to be Paid by BOU Trust				Number of Shares to be Issued
$	25,000			$	0.11				227,273

Accordingly, there would be dilution of an additional 48,702 shares issued due to the lower stock price of $0.12 per share. 

 

 

We may not be able to access credit.

 

We face the risk that we may not be able to access credit, either from lenders or suppliers.  Failure to access credit from any of these sources could have a material adverse effect on our business, financial condition, results of operations and future prospects.

 

We may not be able to maintain effective internal controls.

 

If we fail to maintain the adequacy of our internal accounting controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an on-going basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.  Failure to achieve and maintain an effective internal control environment could cause us to face regulatory action and also cause investors to lose confidence in our reported financial information, either of which could have a material adverse effect on our business, financial condition, results of operations and future prospects. 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains forward-looking statements. Such statements include statements regarding our expectations, hopes, beliefs or intentions regarding the future, including but not limited to statements regarding our market, strategy, competition, development plans (including acquisitions and expansion), financing, revenues, operations, and compliance with applicable laws. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. Factors that could cause actual results to differ materially from such forward-looking statements include the risks described in greater detail in the following paragraphs. All forward-looking statements in this document are made as of the date hereof, based on information available to us as of the date hereof, and we assume no obligation to update any forward-looking statement. Market data used throughout this prospectus is based on published third party reports or the good faith estimates of management, which estimates are based upon their review of internal surveys, independent industry publications and other publicly available information.

 

You should review carefully the section entitled "Risk Factors" within this prospectus for a discussion of these and other risks that relate to our business and investing in shares of our common stock.

 

USE OF PROCEEDS

 

The selling stockholders will receive all of the proceeds from the sale of the shares offered by them under this prospectus. We will not receive any proceeds from the sale of the shares by the selling stockholders covered by this prospectus. We will not receive any proceeds upon conversion of the convertible debentures into shares of our common stock.  We will receive proceeds from our initial sale of shares to BOU Trust.

 

MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

 

 

Our Common stock is traded on the OTCQB under the symbol "LEOM." 

 

The following table sets forth the high and low last reported sales prices of our Common stock for each quarterly period to date during 2015, 2014, and 2013.

 

		High				Low
2013:
Fourth quarter		$	0.078			$	0.078
Third quarter			0.0385				0.0385
Second quarter			0.10				0.072
First quarter			0.099				0.085

		High				Low
2014:
Fourth quarter		$	0.081			$	0.053
Third quarter			0.0705				0.067
Second quarter			0.045				0.0375
First quarter			0.08				0.07

2015:		High				Low
Fourth quarter		$	0.311			$	0.289
Third quarter			0.39				0.37
Second quarter			0.43				0.41
First quarter			0.071				0.07

On September 21 , 2016, the Company's Common stock closed on the OTCQB at $0. 14 per share.

 

As of August 31 , 2016, there were 955 stockholders of record of our common stock.

 

 

We have paid no dividends on our common stock to date and it is not anticipated that any dividends will be paid to holders of our common stock in the foreseeable future. While our future dividend policy will be based on the operating results and capital needs of the business, it is currently anticipated that any earnings will be retained to finance our future expansion and for the implementation of our business plan. As an investor, you should take note of the fact that a lack of a dividend can further affect the market value of our stock, and could significantly affect the value of any investment in our Company.

 

 

No option grants were issued during the year ended December 31, 2015. Further reference is made to the information contained in the Equity Compensation Plan table contained in this prospectus.

 

 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATION

 

This discussion should be read in conjunction with the other sections of this prospectus, including "Risk Factors," "Description of Business" and the Financial Statements attached hereto pursuant and the related exhibits. The various sections of this discussion contain a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this prospectus. See "Special Note on Forward-Looking Statements." Our actual results may differ materially. All amounts in this discussion are in thousands, except for share and per share data.

 

The following discussion and analysis of our results of operations and financial condition should be read in conjunction with (i) our unaudited interim condensed consolidated financial statements and related notes for the three and six months ended  June 30 , 2016 and 2015 (ii) audited financial statements for the fiscal years ended December 31, 2015 and 2014 and the notes thereto and (iii) the section entitled "Business," included elsewhere in this prospectus. Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

  

 

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

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 Electric Vehicle ("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:

The Company has marketed electric fishing boats with 120 kW power trains. The 120W power train boat was registered to the National Federation of Fisheries Cooperatives as the first marketable electric boat product in Korea. With the registration, our customers of electric fishing boats can receive a government subsidy when they purchase the 120kW power train boat from us. On May 4, 2016, the Company sold its first fishing boat to the Korean government. The Korean government is renting the Company's electric fishing boats to the fishermen who are interested in electrifying their fishing boats.

Liquidity and Capital Resources

 

 

 

Revenues

Sales for the three months ended June 30, 2016 were $806,456 compared to $1,408,968 for the three months ended June 30, 2015, a decrease of $602,512. The Company is continuing to expand its locations and sales for the year to date period even though the quarterly comparison is lower.

General and Administrative Expenses

Expenses for the period quarter consisted of the following:

 

	For the Three Months Ended
	June 30,				June 30,
Total General and Administrative Expenses:	2016				2015
Salaries and Benefits		$	358,638			$	909,747
Consulting and Service Fees			51,698				401,940
Selling, General and Administrative			598,155				511,746
Total		$	1,008,491			$	1,823,433

 

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.

 

Other Income (Expenses)

Net Income (Loss)

Expenses for the six months ended June 30, 2016 and June 30, 2015 consisted of the following:

 

Liquidity and Capital Resources

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.

 

 

Revenues

  

Sales for the year ended December 31, 2015 were $4,299,187 compared to $693,096 for the year ended December 31, 2014, reflecting an increase of $3,606,091. Most of this is revenue increase from our newly acquired subsidiaries Leo Motors Factory 1, Leo Motors Factory 2, and Leo Trading which generated $3,800,518 in the current year and none in 2014.

Cost of Sales

Costs of sales were $3,275,587 for the year ended December 31, 2015 compared to $379,066 for the year ending December 31, 2014, reflecting the cost of sales generated in our newly acquired subsidiaries Leo Motors Factory 1, Leo Motors Factory 2, and Leo Trading which generated $2,772,078 in the current year and none in 2014.

 

During the year ended December 31, 2015, we incurred $5,421,508 in expenses, compared to $3,468,599 in the period ended December 31, 2014. With three additional operating subsidiaries in 2015 the increase in expenses for this current year is attributable to an increase in salaries and benefits as well as increased research and development expenses in 2015 as the company continues to explore new products. The detail is provided in the table below.

  

Expenses for the fiscal year 2015 and 2014 consisted of the following:

 

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

 

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

 

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

Other Income (Expenses)

During the year ended December 31, 2013 the company had net non-operating expense of $362,062 and for the year ended December 31, 2012 net non-operating income of $1,058,582, a decrease of $1,420,644. During the 2012 fiscal year the Company had a net non-operating income largely from the result of the forgiveness of debt for $1,309,028.  There was also stock sold for a profit of $52,893. These gains were offset in part by interest expense of $136,775 in 2013 and $197,634 in 2012 and miscellaneous items.

Liquidity and Capital Resources

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

The Company's total assets at December 31, 2014 were $1,395,845 and total current liabilities were $4,298,455, all of which were current.  Significant losses from operations have been incurred since inception and there is an accumulated deficit of $(21,357,211) as of December 31, 2014.  Continuation as a going concern is dependent upon attaining capital to achieve profitable operations while maintaining current fixed expense levels.

 

Off-Balance Sheet Arrangements

 

None.

 

 

The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Certain accounting policies have a significant impact on amounts reported in the financial statements. A summary of those significant accounting policies can be found elsewhere in this registration statement.

 

Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The notes to the consolidated financial statements describe our significant accounting policies used in the preparation of the consolidated financial statements. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. We continually evaluate our critical accounting policies and estimates.

 

We believe the critical accounting policies listed below reflect significant judgments, estimates and assumptions used in the preparation of our consolidated financial statements.

 

Intangible assets

 

Estimates of future cash flows and timing of events for evaluating long-lived assets for impairment are based upon management's judgment. If any of our intangible or long-lived assets are considered to be impaired, the amount of impairment to be recognized is the excess of the carrying amount of the assets over its fair value. Applicable long-lived assets are amortized or depreciated over the shorter of their estimated useful lives, the estimated period that the assets will generate revenue, or the statutory or contractual term in the case of patents. Estimates of useful lives and periods of expected revenue generation are reviewed periodically for appropriateness and are based upon management's judgment.

 

 Goodwill

 

Goodwill represents the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. The Company is required to perform impairment reviews at each of its reporting units annually and more frequently in certain circumstances.

 

In accordance with ASC 350-20 "Goodwill," the Company is able to make a qualitative assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying amount before applying the two-step goodwill impairment test. If the Company concludes that it is more likely than not that the fair value of a reporting unit is not less than its carrying amount it is not required to perform the two-step impairment test for that reporting unit.

 

Equity-based compensation

 

The Company recognizes compensation expense for all equity-based payments in accordance with ASC 718 "Compensation - Stock Compensation."  Under fair value recognition provisions, the Company recognizes equity-based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

 

Restricted stock awards are granted at the discretion of the Company. These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods, typically over an eighteen-month period (vesting on a straight-line basis). The fair value of a stock award is equal to the fair market value of a share of Company stock on the grant date.

 

The fair value of option award is estimated on the date of grant using the Black-Scholes option valuation model. The Black-Scholes option valuation model requires the development of assumptions that are input into the model. These assumptions are the expected stock volatility, the risk-free interest rate, the option's expected life, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is calculated based on the historical volatility of our Common stock over the expected option life and other appropriate factors. Risk-free interest rates are calculated based on continuously compounded risk-free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on our Common stock and does not intend to pay dividends on our Common stock in the foreseeable future. The expected forfeiture rate is estimated based on historical experience.

 

Determining the appropriate fair value model and calculating the fair value of equity-based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity-based payment awards represent management's best estimates, which involve inherent uncertainties and the application of management's judgment. As a result, if factors change and the Company uses different assumptions, our equity-based compensation could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If our actual forfeiture rate is materially different from our estimate, the equity-based compensation could be significantly different from what the Company has recorded in the current period.

 

The Company accounts for share-based payments granted to non-employees in accordance with ASC 505-40, "Equity Based Payments to Non-Employees."  The Company determines the fair value of the stock-based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.  If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty's performance is complete. The fair value of the equity instruments is re-measured each reporting period over the requisite service period.

Recent accounting pronouncements

 

In September 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-16, simplifying the Accounting for Measurement-Period Adjustments that eliminates the requirement to restate prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The new guidance does not change what constitutes a measurement period adjustment. The Company does not expect the adoption of this ASU to significantly impact the consolidated financial statements. In August 2015, the FASB issued ASU 2015-15 Interest- Imputation of Interest, final guidance that requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the debt liability rather than as an asset. This publication has been updated to reflect an SEC staff member's comment in June 2015 that the staff will not object to an entity presenting the cost of securing a revolving line of credit as an asset, regardless of whether a balance is outstanding. The Company does not expect the adoption of this ASU to significantly impact the consolidated financial statements.

In May 2015, the FASB issued ASU 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). This ASU removes, from the fair value hierarchy, investments which measure fair value using net asset value per share practical expedient. Instead, an entity is required to include those investments as a reconciling line item so that the total fair value amount of investments in the disclosure is consistent with the amount on the balance sheet. For public companies, this ASU is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendment should be applied retrospectively to all periods presented. The Company is expected to make the required changes to the fair value hierarchy disclosure as of the effective date of this new guidance.

 

In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). This ASU provides guidance about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the software license element of the arrangement should be accounted for consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the arrangement should be accounted for as a service contract. For public business entities, the amendments will be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2015-05 on our financial statements and disclosures.

 

BUSINESS

 

General

 

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

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").

 

 

On July 1, 2014, the Company acquired all of the outstanding common stock of LGM Co. Ltd., an electric boat company 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. Pursuant to the Agreement, LGM became a wholly-owned subsidiary of the Company.

The Company's products include (i) E-Box electric energy storage system for solar and wind power generation devices; (ii) EV components that integrate electric battery power packages with electric motors with EV Controllers that use a mini-computer to control torque drive, (iii) E-Boat power trains including motor, controller, and cartridge battery power packs.

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 (using ICEs under 2,000cc), and also a 24 seat bus. The Company has begun marketing its 60kW EPTS (for compact passenger cars and small trucks) and its 120kW EPTS (for passenger cars, buses, and trucks using under 5,000cc ICE). These EPTS will be produced on a custom order basis. The Company has developed a 240kW EPTS (buses and trucks using up to 10,000cc ICE) as well, and is attempting to locate a strategic partner to fund the testing and production.

Business Strategy

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

 

 

We have directed our marketing efforts of e-Box energy solutions to companies involved in the sustainable housing segment that requires efficient electric storage solutions based on wind and solar power.

The Company has marketed its 60kW EPTS (for compact passenger cars and small trucks) and its 120kW EPTS (for passenger cars, buses, and trucks using under 5,000cc ICE).

The primary market of the Company's electric fishing boat is Korea. The Korean government promotes the use of electric fishing boats for coastal environmental protection.

Competition

 

 

 

We currently have 45 employees to manage our ongoing operation, though it is expected that selective hires will be made.

 

We are not currently a party to any legal proceedings that, individually or in the aggregate, are deemed to be material to our financial condition or results of operations.

 

  

MANAGEMENT

 

  

Directors are elected based on experience, qualifications and in accordance with the Company's by-laws to serve until the next annual stockholders meeting and until their successors are elected in their stead.  Officers are appointed by the Board and hold office until their successors are chosen and qualified, until their death or until they resign or have been removed from office. All corporate officers serve at the discretion of the Board. There are no family relationships between any director or executive officer and any other director or executive officer of the Company.

 

Shi Chul (Robert) Kang – Co-Chief Executive Officer (Principal Executive Officer) and Director

Dr. Kang holds a Ph. D. degree in marketing and has worked in international advertising and corporate marketing areas for more than 30 years. He began his career at Oricom, the largest advertising agency in Korea and a McCann Ericson affiliate. He founded Ad Express and On&Off and managed the firms for 11 years. He served as president of Pico North Asian, a multinational global event marketing company in Hong Kong. Dr. Kang previously served as the Company's CEO and interim CFO from 2008 to 2011. Currently, he is working as the chairman of Talent Donation Consultant Association and Head Professor of Business Consultant Starter School of the City Government of Seoul. Dr. Kang will focus on business development and financing of Leo Motors.  Dr. Kang received his BS in literature from Korea University, his MA in advertising from University of Oregon, and his Ph. D. in marketing from Dongguk University in Korea. We believe Mr. Kang is qualified to serve on our Board of Directors because of his extensive corporate, advertising, and managerial experience.

 

Jun Heng Park – Co-Chief Executive Officer and Director

Mr. Park has been a director of the Company since October 15, 2012 and has led the Company with regards to its business planning and strategy since his appointment.  Mr. Park has managed several businesses, including Chief Executive Officer of the World Cyber Games in 2002.  Mr. Park was Chief Executive Officer of IAG KOREA Co. Ltd, Major Insurance Company in 2006.  Mr. Park was Chief Executive Officer of Unitech Co. Ltd., a computer assembly company in Korea from 2009 to 2010.  Mr. Park received his bachelor's degree at Centennial College, Toronto, Canada and has a business degree from George Brown College, Toronto, Canada. We believe Mr. Park is qualified to serve on our Board of Directors because of his extensive managerial experience.

Jeong Youl Choi – Chief Financial Officer and Director

Mr. Choi joined the Company in January of 2012.   Mr. Choi was Chief Executive Officer of Neo solar, a solar power company, from 2006 to 2007. Mr. Choi was Chief Executive Officer of Good EMG, total entertainment company, from 2007 to 2008.   Mr. Choi helped lead the A1 Grand prix Korea, World Motor Racing Challenge for National team, 2007 while at Good EMG. We believe Mr. Choi is qualified to serve on our Board of Directors because of his extensive managerial experience.  

 

Jun Hee Won – Director

Mr. Jun Hee Won has worked in Leo Motors as a Research Engineer since its inception in 2012. He holds a bachelor's degree in Aerospace and Electronic Engineering from Sejong University as well as a master's degree in Converging Technology from Hansung University. We believe that Mr. Jun is qualified to serve as a director because of his engineering and technical background.

Seok Hoe – Director

Mr. Seok Hoe has worked as a programmer at Samsung since 2011. Mr. Seok also worked at Naver, Korea's largest portal site, as a content developer. Prior to Samsung, Mr. Seok served as Chief Technology Officer in various start up's including OneQ.com, C-Able, K-League, Summer Lane Communication, and Temple Littcher Entertainment. At Leo Motors, Mr. Seok is responsible for the development of fleet management solutions for electric public buses and delivery trucks. He holds a bachelor's degree in Computer Science from Korea Advanced Institute of Science, and master's degree in the Computer Science from Yonsei University. We believe that Mr. Jun is qualified to serve as a director because of his programming and executive background.

  

 

None.

 

 

To the best of our knowledge, during the past ten years, none of the following occurred with respect to any director, director nominee or executive officer:

 

 

 

 

 

 

 

 

 

 

 

We have not adopted a code of ethics to date. We are in the process of evaluating the standards of conduct necessary for the deterrence of malfeasance and the promotion of ethical conduct and accountability, and will determine whether a code of ethics is necessary based on our evaluation.

 

 

EXECUTIVE COMPENSATION

 

All amounts in this Executive Compensation section are in thousands, except for share and per share data.

 

SUMMARY COMPENSATION TABLE

The following table sets forth the annual and long-term compensation paid to our Chief Executive Officer and the other executive officers who earned more than $100,000 per year at the end of the last two completed fiscal years. We refer to all of these officers collectively as our named executive officers (our "Named Executive Officers" or "NEOs").

 

Officer	Year		Salary			Awards	Awards		Comp				Total
Jun Heng Park (1)	2015		$	400,000		$ Nil	$ Nil						$	400,000
	2014		$	400,000		$ Nil	$ Nil						$	400,000
Shi Chul Kang (2)	2015		$	400,000		$ Nil	$ Nil						$	400,000
	2014		$	400,000		$ Nil	$ Nil						$	400,000
Jeong Yoel Choi (3)	2015		$	300,000		$ Nil	$ Nil						$	300,000
	2014		$	300,000		$ Nil	$ Nil						$	300,000

 

(3) Jeong Youl Choi was appointed the Company's CFO on July 17, 2014.

 

 

On January 1, 2014, Co-CEO Jun Heng Park agreed to enter into a one year employment agreement with the Company. The agreed annual compensation is $400,000 for services.

On November 4, 2013, Co-CEO Shi Chul Kang agreed to enter into a one year employment agreement with the Company. The agreed annual compensation is $400,000 for services.

These agreements have been renewed, most recently as of December 1, 2015.

 

 

No option grants were issued during the year ended December 31, 2015. The table below provides information on our equity compensation plans as of December 31, 2015:

 

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

Plan category:

(a)

(b)

(c)

Equity compensation plans approved by security holders

-

$

-

$Nil

Equity compensation plans not approved by security holders

-

-

-

Total

-

-

Nil

 

 

The following table sets forth the compensation of persons who served as a member of our Board of Directors during all or part of 2015.

 

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Change in Pension Value and Nonqualified Deferred Compensation Earnings	All Other Compensation ($)	Total ($)
Jun Heng Park							Nil
Jeong Youl Choi							Nil
Shi Chul Kang							Nil

 

 

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

SEC rules require us to disclose any transaction or currently proposed transaction in which the Company is a participant and in which any related person has or will have a direct or indirect material interest involving the lesser of $120 or one percent (1%) of the average of the Company's total assets as of the end of last two completed fiscal years. A related person is any executive officer, director, nominee for director, or holder of 5% or more of the Company's common stock, or an immediate family member of any of those persons.

 

On June 25, 2012, the Company, through its subsidiary, Leomotors Korea, Inc., entered into a stock purchase agreement (the "Agreement") with Shi Chul Kang, the Company's current co-chief executive officer. At the time of the Agreement, Mr. Kang was not a related party of the Company.  He joined the Company as co-chief executive officer on November 1, 2013. However, the Company had failed to pay the full allotment due under the Agreement and is therefore indebted to its now current officer for advances. Repayment is on demand without interest. The balance was $140,396 at December 31, 2015 and $150,637 at December 31, 2014. 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following tables set forth certain information regarding beneficial ownership and voting power of the Common stock as of  August 31 , 2016, of:

 

 

 

"Beneficial ownership" here means direct or indirect voting or investment power over outstanding stock and stock which a person has the right to acquire now or within 60 days after  August 31 , 2016. See the accompanying footnotes to the tables below for more detailed explanations of the holdings. Except as noted, to our knowledge, the persons named in the tables beneficially own and have sole voting and investment power over all shares listed

 

The following table shows the beneficial ownership of our common stock as of December 31, 2015.  The table shows the amount of shares owned by:

(1)     each  person known to us who owns beneficially more than five percent of the  outstanding shares of any class of the Company's stock, based on the number of  shares  outstanding  as  of  December 31,  2015;

(2)     Each of the Company's Directors and Executive Officers; and

(3)     all  of  its  Directors  and  Executive  Officers  as  a  group.  

 

 

  

SELLING STOCKHOLDERS

 

Up to 43,000,000 shares of common stock are being offered by this prospectus, all of which are being registered for sale for the account of the selling stockholders and include the following:

 

 

 

Each of the transactions by which the selling stockholders acquired their securities from us was exempt under the registration provisions of the Securities Act.

 

The 43,000,000 shares of common stock referred to above are being registered to permit public sales of the shares, and the selling stockholders may offer the shares for resale from time to time pursuant to this prospectus.  The selling stockholders may also sell, transfer or otherwise dispose of all or a portion of their shares in transactions exempt from the registration requirements of the Securities Act or pursuant to another effective registration statement covering those shares. We may from time to time include additional selling stockholders in supplements or amendments to this prospectus.

 

The table below sets forth certain information regarding the selling stockholders and the shares of our common stock offered by them in this prospectus. The selling stockholders have not had a material relationship with us within the past three years other than as described above, in the footnotes to the table below or as a result of acquisition of other of our securities. None of the selling stockholders is a broker dealer or an affiliate of a broker dealer other than as described in the footnotes to the table below.

 

Beneficial ownership is determined in accordance with the rules of the SEC. The selling stockholders' percentage of ownership of our outstanding shares in the table below is based upon  163,816,458 shares of common stock issued and outstanding as of  August 31 , 2016.

 

 

 

* represents less than 1%.

 

 

 

DESCRIPTION OF SECURITIES

 

We have authorized capital stock consisting of 300,000,000 shares of common stock.

 

Common Stock

 

The holders of common stock are entitled to one vote per share.  Our certificate of incorporation does not provide for cumulative voting.  The holders of our common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of legally available funds.  Upon liquidation, dissolution or winding-up, the holders of our common stock are entitled to share ratably in all assets that are legally available for distribution.  The holders of our common stock have no preemptive, subscription, redemption or conversion rights.  Our common stock is listed and traded on the OTCQB exchange under the symbol "LEOM." 

Debentures

 

The Company also entered into a securities purchase agreement with an accredited investor (the "Investor") for the issuance of a series of convertible debentures (each a "Debenture," collectively, the "Debentures"). The shares of common stock underlying the Debentures are part of this Prospectus.  Each Debenture has a maturity date which is one year after the date of issuance and has an interest rate of ten (10%) percent per annum. Each Debenture is convertible into shares of the Company's Common Stock at any time after the sooner to occur of 180 days from the original issue date or when the shares issuable upon conversion of the Debenture have been registered on a registration statement that has been declared effective by the Securities and Exchange Commission and until the Debenture is no longer outstanding. The Debentures are convertible at a conversion price equal to the lower of (i) $0.50 per share or (ii) 70% of the lowest VWAP for the previous 20 trading days prior to conversion. The Company is permitted to prepay the Debentures at any time upon ten (10) days written notice to the Investor.

 

Stock Option Plans and Restricted Shares

 

2010 Stock Option Plan

 

The Company's board of directors established the 2010 Stock Incentive Plan (the "2010 Plan") on February 1, 2010. The Plan is administered by the board of directors, which determines the individuals to whom awards shall be granted as well as the type, terms and conditions of each award, the option price and the duration of each award.  

 

No option grants were issued pursuant to the 2010 Plan during the three months ended  June 30 , 2016 and 2015, or in the year ended December 31, 2015 and 2014.  As of  August 31 , 2016, there were no options to purchase shares issued and outstanding under the 2010 Plan.

 

2016 Equity Incentive Plan

 

The Company's board of directors established the 2016 Equity Incentive Plan (the "2016 Plan") on June 7, 2016. The Plan is administered by the board of directors, which determines the individuals to whom awards shall be granted as well as the type, terms and conditions of each award, the option price and the duration of each award. To date, no option grants or other equity incentives have been issued pursuant to the 2016 Plan.

 

Restricted Shares - Directors, Officers, Employees and Non-Employees

 

As of  August 31 , 2016, the Company has 67,015,533 restricted shares issued and outstanding. The restricted shares are valued using the closing market price on the date of grant, and the compensation expense is recognized over their vesting period. The unvested shares are subject to forfeiture if the applicable recipient is not a director, officer and/or employee of the Company at the time the restricted shares are to vest.

 

 Indemnification of Directors and Officers

 

Under the Nevada Revised Statutes, a corporation has the power to indemnify any person who is made a party to any civil, criminal, administrative or investigative proceeding, other than an action by or in the right of the corporation, by reason of the fact that such person was a director, officer, employee or agent of the corporation, against expenses, including reasonable attorneys' fees, judgments, fines and amounts paid in settlement of any such actions; provided, however, in any criminal proceeding, the indemnified person shall have had no reason to believe the conduct committed was unlawful.

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Leo Motors, Inc. pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in such Act and is, therefore, unenforceable.

 

PLAN OF DISTRIBUTION

 

Each selling stockholder of the common stock and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on the OTCQB or any other stock exchange, market or trading facility on which the shares are traded or in private transactions; provided, however, that BOU Trust has agreed not to execute any short sales of the Company's common stock. These sales may be at fixed or negotiated prices. A selling stockholder may use any one or more of the following methods when selling shares:

 

 

 

The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

 

Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

 

In connection with the sale of the common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of the common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act, in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each selling stockholder has informed us that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the common stock. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).

 

Because selling stockholders may be deemed to be "underwriters" within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act, including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. BOU Trust is deemed to be an underwriter with respect to the 35,045,784 shares that it is offering in this prospectus.

 

Under applicable rules and regulations under the Securities Exchange Act of 1934, as amended, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the selling stockholders or any other person. We will make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

 

LEGAL MATTERS

 

Sichenzia Ross Friedman Ference LLP of New York, New York, will pass upon the validity of the shares of common stock offered by the selling stockholders under this prospectus.  

 

EXPERTS

 

The consolidated balance sheets of Leo Motors, Inc. and subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of operations, changes in stockholders' equity and cash flows for the years then ended were audited by Scrudato & Co., PA, an independent registered public accounting firm, as stated in their report which appears elsewhere herein in reliance on the report of such firm given upon their authority as experts in accounting and auditing.

 

WHERE YOU CAN FIND ADDITIONAL INFORMATION

 

We file annual, quarterly, and current reports, proxy statements and other information with the Securities and Exchange Commission ("SEC"). Our SEC filings are available to the public over the Internet at the SEC's web site at www.sec.gov and on the "Shareholder Information," "SEC Filings" page of our website at www.leomotors.com. Information on our web site is not part of this prospectus, and we do not desire to incorporate by reference such information herein. You may also read and copy any document we file with the SEC at the SEC's Public Reference Room at 100 F Street N.E., Washington, D.C. 20549. You can also obtain copies of the documents upon the payment of a duplicating fee to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC like us. Our SEC filings are also available to the public from the SEC's website at http://www.sec.gov.

 

This prospectus is part of the registration statement and does not contain all of the information included in the registration statement. Whenever a reference is made in this prospectus to any of our contracts or other documents, the reference may not be complete and, for a copy of the contract or document, you should refer to the exhibits that are a part of the registration statement.

  

This prospectus omits some information contained in the registration statement in accordance with SEC rules and regulations. You should review the information and exhibits included in the registration statement for further information about us and the securities we are offering. Statements in this prospectus concerning any document we filed as an exhibit to the registration statement or that we otherwise filed with the SEC are not intended to be comprehensive and are qualified by reference to these filings and documents. You should review the complete document to evaluate these statements.

 

 

 

INDEX TO FINANCIAL STATEMENTS

 

	Page
Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets – December 31, 2015 and 2014	F-2
Consolidated Statements of Operations – December 31, 2015 and 2014	F-3
Changes in Stockholders' Equity	F-4
Consolidated Statements of Cash Flows – December 31, 2015 and 2014	F-5
Notes to the Consolidated Financial Statements	F-6
Condensed Consolidated Balance Sheets – June 30, 2016 (unaudited) and December 31, 2015	F-14
Condensed Consolidated Statements of Operations – for the three and six months ended June 30, 2016 (unaudited) and 2015 (unaudited)	F-15
Condensed Consolidated Statements of Cash Flows – for the six months ended June 30, 2016 (unaudited) and 2015 (unaudited)	F-16
Notes to Condensed Consolidated Financial Statements	F-17

 

 

 

LEO MOTORS, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS EXPRESSED IN US DOLLAR)
		Balance at
		12/31/2015				12/31/2014
		(Audited)				(Audited)
Assets
Current Assets
Cash and cash equivalents		$	243,809			$	217,178
Accounts receivable			1,565,114				542,210
Inventories			496,971				279,783
Prepayment to suppliers			279,229				306,969
Other current assets			32,107				49,705
Total Current Assets			2,617,230				1,395,845
Fixed assets, net			163,001				38,620
Deposit			346,659				51,601
Intangible assets			63,831				63,831
Goodwill			3,057,003				2,444,558
Total Assets		$	6,247,724			$	3,994,455
Liabilities and Equity(Deficit)
Current Liabilities:
Accounts payable and accrued expenses		$	4,082,198			$	2,152,951
Short term borrowings			7,661				448,801
Advance from customers			795,431				40,951
Due to related parties			140,396				150,637
Taxes payable			99,584				159,478
Notes Payable current portion			49,397				526,257
Derivative liability			0				819,922
Total Current Liabilities			5,174,667				4,298,997
Accrued retirement benefits			92,948				2,150
Notes payable long term			273,646				145,316
Other long term liabilities			129,748				0
Total Liabilities			5,671,009				4,446,463
Commitments (Note 8)			-				-
Leo Motors, Inc.("LEOM") Equity(Deficit):
Common stock ($0.001 par value; 300,000,000 shares authorized); 158,948,604  and 138,624,206 shares issued and outstanding at December 31,  2015 and December 31, 2014			158,949				138,624
Additional paid-in capital			20,367,272				17,723,248
Accumulated other comprehensive income			1,251,120				511,229
Accumulated loss			(25,404,609	)			(21,357,211	)
Total Equity(Deficit) Leo Motors, Inc.			(3,627,268	)			(2,984,110	)
Non-controlling interest			4,203,983				2,532,102
Total Equity(Deficit)			576,715				(452,008	)
Total Liabilities and Equity(Deficit)		$	6,247,724			$	3,994,455
"See accompanying notes to consolidated financial statements"

LEO MOTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS EXPRESSED IN US DOLLAR)
		For the Years Ended December 31,
		2015				2014
		(Audited)				(Audited)
Revenues		$	4,299,187			$	693,096
Cost of Revenues			3,275,587				379,066
Gross Profit			1,023,600				314,030
Operating Expenses			5,421,508				3,468,599
Income(loss) from Continuing Operations			(4,397,908	)			(3,154,569	)
Other Income (Expenses)
Interest expense			(319,054	)			(1,325,975	)
Non-Operating (expense) income			225,990				0
Total Other Income (Expenses)			(93,064	)			(1,325,975	)
Income(loss) from Continuing Operations Before Income Taxes			(4,490,972	)			(4,480,544	)
Income Tax Expense			0				0
Net Income(Loss)		$	(4,490,972	)		$	(4,480,544	)
Income(loss) attributable to non-controlling interest		$	(443,574	)		$	(4,817	)
Net Income(Loss) Attributable To Leo Motors, Inc.			(4,047,398	)			(4,485,361	)
Other Comprehensive Income:
Net Income(loss)		$	(4,490,972	)		$	(4,480,544	)
Unrealized foreign currency translation gain			739,891				(42,899	)
Comprehensive Income(loss) Attributable to Leo Motors, Inc.		$	(3,751,081	)		$	(4,523,443	)
Net Loss per Common Share:
Basic		$	(0.03	)		$	(0.05	)
Diluted		$	(0.03	)		$	(0.05	)
Weighted Average Common Shares Outstanding:
Basic		$	155,866,313			$	97,393,209
Diluted		$	155,866,313			$	98,056,098
"See accompanying notes to consolidated financial statements"

LEO MOTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS EXPRESSED IN US DOLLAR)
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 (AUDITED)
		Common Stock								Additional								Accumulated Other				Non-				Total
		Number of								Paid-in				Accumulated				Comprehensive				Controlling				Stockholders'
		Stocks				Amount				Capital				Loss				Income				Interest				Equity
Balance, December 31, 2013			67,833,662				67,834				13,290,081				(16,871,850	)			468,330				2,527,285				(518,320	)
Stock-based compensation			16,610,000				16,610				1,395,854				-				-				-				1,412,464
Stock Issued in payment of debt			5,965,990				5,965				278,678				-				-				-				284,643
Stock Issued for investment			45,977,264				45,978				2,758,635				-				-				-				2,804,613
Minority interest contributions			2,237,290				2,237				-				-				-				0				2,237
Net loss for the year 2014			-				-				-				(4,485,361	)			-				4,817				(4,480,544	)
Foreign currency translation adjustment			-				-				-				-				42,899								42,899
Balance, December 31, 2014			138,624,206			$	138,624			$	17,723,248			$	(21,357,211	)		$	511,229			$	2,532,102			$	(452,008	)
Stock-based compensation			20,324,398				20,325				1,795,065				-				-				-				1,815,390
Retirement of derivatives			-				-				819,922				-				-				-				819,922
Warrants issued for investment			-				-				29,037				-				-				-				29,037
Minority interest contributions			-				-				-				-				-				2,115,455				2,115,455
Net loss for the year 2014			-				-				-				(4,047,398	)			-				(443,574	)			(4,490,972	)
Foreign currency translation adjustment			-				-				-				-				739,891								739,891
Balance, December 31, 2015			158,948,604			$	158,949			$	20,367,272			$	(25,404,609	)		$	1,251,120			$	4,203,983			$	576,715

LEO MOTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS EXPRESSED IN US DOLLAR)
		For the Years Ended December 31,
		2015				2014
		(Audited)				(Audited)
Cash flows from Operating Activities:
Net loss		$	(4,490,972	)		$	(4,480,544	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			207,837				19,470
Loss on conversion of debt			0				24,376
Amortization debt discount			275,176				340,568
Foreign currency translation			739,891				42,899
Stock-based compensation			903,704				284,643
Gain on derivative liabilites			0				(5,607	)
Impairment of investment			0				762,000
Changes in assets and liabilities:
Accounts Receivable			(1,022,904	)			(542,210	)
Inventories			(217,188	)			(279,783	)
Prepayment to suppliers			27,740				(108,996	)
Other assets			17,598				(19,522	)
Accounts payable, other payables and accrued expenses			1,929,247				1,033,656
Accrued retirement benefits			90,798				(59,886	)
Advances from customers			883,658				(394,488	)
Taxes payable			(59,894	)			12,628
Net cash used in operating activities:			(715,309	)			(3,370,796	)
Cash flows from investing activities:
Investment in equipment			(332,218	)			(16,846	)
Payments on deposits			(295,058	)			0
Net cash provided(used) in investing activities:			(627,276	)			(16,846	)
Cash flows from financing activities:
Proceeds from notes payable			427,208				801,433
Payments on related party debt net			(10,241	)			0
Payments on notes payable			(441,140	)			0
Proceeds from issuance of stock & warrants			1,393,389				2,801,613
Net cash provided(used) by financing activities:			1,369,216				3,603,046
Net Increase in cash and cash equivalents:			26,631				215,404
Cash and cash equivalents - beginning of year			217,178				1,774
Cash and cash equivalents - end of year		$	243,809			$	217,178
Supplemental disclosure of cash flow activities:
Interest		$	43,878			$	0
Income taxes		$	0			$	4,817
Supplemental disclosures of non cash activities:
Conversion of derivative liability		$	819,922			$	569,584
Goodwill on acquisition		$	612,445			$	0
Conversion of debt for common stock		$	1,901,433			$	98,496
Common stock issued for services		$	903,704			$	284,643
"See accompanying notes to consolidated financial statements"

		For the periods ended
		12/31/2015				12/31/2014
Net Income (Loss)		$	(4,490,972	)		$	(4,480,544	)
Weighted-average common stock Outstanding -  basic			155,866,313				97,393,209
Equivalents
Stock options			-				0
Warrants			-				0
Convertible Notes			0				662,889
Weighted-average common shares
outstanding-  Diluted			155,866,313				98,056,098

For the Year Ending		Amount
2016		$	220,827
2017			101,249
2018 and beyond			0
Total Commitment		$	322,076

		31-Dec-15				31-Dec-14
Vehicles		$	146,268			$	7,581
Tools			95,771				12,906
Office			109,447				79,963
Facility equipment			210,502				157,966
Total property and equipment			561,988				258,416
Accumulated depreciation			(398,987	)			(219,796	)
Property and equipment, net		$	163,001			$	38,620

		12/31/15
Hana Bank six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.65%
interest only payable monthly and securred by the company.		$	45,505
Hana Bank six month note extended with 12 month term
renewable periods with a variable interest rate currently at 6.24%
interest only payable monthly.			75,775
Hana Bank six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.64%
interest only payable monthly and securred by the company.			46,800
KookMin Bank six month note extended with 12 month term
renewable periods with a variable interest rate currently at 3.28%
interest only payable monthly and securred by the company			85,245
Industrial Bank of Korea Bank four year note extended with 12 month
extension fully amortizing with a variable interest rate currently at 3.83%
payable monthly.			35,718
NH Bank six month note extended with 12 month term
renewable periods with a variable interest rate currently at 7.25%
interest only payable monthly.			34,000
Total Liabilities			323,043
Less current portion			49,397
Long tem debt		$	273,646

		Total
Deferred Tax Assets			8,637,567
Realization Allowance			(8,637,567	)
Balance Recognized		$	-

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

		31-Dec-15				31-Dec-14
Patents		$	63,554			$	63,554
Trademarks			277				277
Goodwill			3,057,003				2,444,558
Intangible assets			3,120,834				2,508,389
Less impairments			0				0
Intangible assets, net		$	3,120,834			$	2,508,389

				Fair Value Measurement Using
Carrying Value				Level 1				Level 2				Level 3				Total
		-0-				-				-				-0-				-0-
	$	-0-			$	-			$	-			$	-0-			$	-0-

		Derivative Liability
Fair value, December 31, 2014		$	819,922
Additions			-0-
Change in fair value			-0-
Transfers in and/or out of Level 3			(819,922	)
Fair value, December 31, 2015		$	-0-

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

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