UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Amendment No. 1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the quarterly period ended March 31, 2010
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from to
Commission file number 000-15303
---------
LEO MOTORS, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3909667
--------------------------------------------------------------------------------
(State or other jurisdiction of (I. R. S. Employer Identification No.)
incorporation or organization)
291-1, Hasangok-dong, Hanam City, Gyeonggi-do, Republic of Korea 465-250
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code +82 31 796 8805
---------------
n/a
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [x] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [x]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
rule 12b-2 of the Exchange Act). Yes [ ] No [x]
The number of shares of the registrant's common stock outstanding as of March
31, 2010 was 31,613,115 shares.
LEO MOTORS, INC.
----------------
INDEX TO QUARTERLY REPORT ON FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE NO.
---------- ---------------------------------------------------- --------
Item 1. Consolidated Interim Financial Statements (Unaudited)
Consolidated Balance Sheets at
March 31, 2010 (unaudited) F-3
Consolidated Statements of Operations for
the three months ended March 31, 2010 (Unaudited) F-4
Consolidated Statement of Changes in Stockholder's Equity
for the three months ended March 31, 2010..................F-5
Consolidated Statement of Cash Flows for
the three months ended March 31, 2010 (Unaudited) F-6
Notes to Condensed Consolidated Interim Financial
Statements (unaudited) F-7
Item 2. Management's Discussion and Analysis 17
Item 3. Quantitative and Qualitative Disclosures About
Market Risk. 21
Item 4. Controls and Procedures 21
PART II. OTHER INFORMATION
---------- ----------------------------------------------------
Item 1. Legal Proceedings 22
Item 2. Unregistered Sales of Equity Securities and
Use of Proceeds 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits 23
Signatures 23
Page 2
PART I. FINANCIAL INFORMATION.
ITEM 1. CONDENSED CONSONSOLIDATED INTERIM FINANCIAL STATEMENTS
LEO MOTORS, INC.
(a development stage company)
CONSOLIDATED BALANCE SHEETS
March 31, 2010
MARCH 31, 2010 DECEMBER 31, 2010
---------------- -------------------
ASSETS (Unaudited) (Audited)
-----------------------------------------------------
CURRENT ASSETS
Cash $ 80,525 $ 499,025
Accounts Receivable - net 8,857 244,670
Short-term loan 240,735 -
Advance payments 191,176 -
Inventory 810,198 395,001
Prepaid costs and other current assets 113,402 151,067
---------------- -------------------
TOTAL CURRENT ASSETS 1,444,893 1,289,763
Fixed assets- net of accumulated depreciation 196,518 157,981
Intangible assets 1,368,538 -
Investment in a subsidiary 10,850,000 -
Deposit 88,407 107,640
---------------- -------------------
TOTAL OTHER ASSETS 12,503,463 265,621
---------------- -------------------
TOTAL ASSETS 13,948,356 1,555,384
================ ===================
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
-----------------------------------------------------
Commitments and Contingencies
CURRENT LIABILITIES
Short term borrowings $ 442,870 $ 428,229
Accounts payable and accrued expenses 97,937 433,004
Accrued payroll 300,000 -
Other payables 6,777 5,847
Taxes Payable -
Payments received in advance from customers 912,626 296,167
---------------- -------------------
TOTAL CURRENT LIABILITIES 1,760,210 1,163,247
Accrued severance benefits 62,695 30,030
---------------- -------------------
TOTAL LIABILIITIES 1,822,905 1,193,277
Minority interest 940,145 1,020,428
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, Authorized 100,000,000 Shares,
0.001 par value, 50,783,115 and 40,708,115 , shares
issued and outstanding as of March 31, 2010 and
December 31, 2009, respectively 50,783 40,708
Additional paid-in capital 19,262,835 3,964,160
Comprehensive income (Loss) 576,588 406,476
Deficit (8,704,900) (5,069,666)
---------------- -------------------
TOTAL STOCKHOLDERS' DEFICIT 11,185,306 (658,322)
---------------- -------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 13,948,356 $ 1,555,383
================ ===================
The notes are an integral part of these financial statements
F-3
LEO MOTORS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three months Ended March 31, 2010 and 2008
(Unaudited)
For the 3-Months Ended
March 31,
2010 2009
-------------- ------------
Sales $ 12,463 $ 359,881
-------------- ------------
TOTAL SALES 12,463 359,881
COST OF SALES 7,340 208,203
-------------- ------------
GROSS PROFIT 5,123 151,678
EXPENDITURES :
Salaries and benefits 4,476,891 26,214
Consulting and service fees 142,975 34,552
Selling , general and administrative 108,938 2,201,662
-------------- ------------
TOTAL EXPENDITURES 4,728,804 2,262,428
-------------- ------------
NET LOSS FROM OPERATIONS (4,723,681) (2,110,750)
OTHER INCOME & (EXPENSES)
Interest income 33 -
Interest expense (7,080) -
Non-operating income 2,261 15,703
Non-operating expense (54) -
-------------- ------------
Total Other Income & (Expenses) (4,840) 15,703
-------------- ------------
NET LOSS BEFORE INCOME TAX & BENEFIT (4,728,521) (2,095,047)
Current income taxes - -
Loss attributable to minority interest 1,093,287 -
-------------- ------------
NET LOSS $ (3,635,234) $(2,095,047)
============== ============
Comprehensive Loss:
Unrealized foreign currency transaction gain (loss) - (202)
-------------- ------------
COMPREHENSIVE INCOME (LOSS) $ (3,635,234) $(2,095,047)
============== ============
LOSS PER SHARE - BASIC & DILUTED (0.085) (0.066)
============== ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 42,917,282 31,613,115
============== ============
The notes are an integral part of these financial statements
F-4
LEO MOTORS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
For the three months Ended March 31, 2010 and 2008
Additional Accumulated Retained Total
Common Stock Paid in Comprehensive Earnings Stockholders'
Shares Amount Capital income(Loss) (Deficit) Equity
------------ -------- -------------- ------------- --------------- ------------
Balance, December 31, 2009 40,363,115 $ 40,708 $ 3,964,160 $ 406,476 $ (5,069,666) $ (658,322)
Common stocks issued for
compensation, February 8, 2010 3,075,000 3,075 4,455,675 4,458,750
Common stocks issued for
acquisition of Leo BnT Co. Ltd. 7,000,000 7,000 10,843,000 10,850,000
Foreign currency translation
adjustment 170,112 170,112
Net loss for the 3-months period
ended March 31, 2010 (3,635,234) (3,635,234)
------------ -------- -------------- ------------- --------------- ------------
Balance, March 31, 2009 50,783,115 $ 50,783 $ 19,262,835 $ 576,588 $ (8,704,900) $11,185,306
============ ======== ============== ============= =============== ============
The notes are an integral part of these financial statements
F-5
LEO MOTORS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three months Ended March 31, 2010 and 2008
For the 3-Months ended
March 31,
2010 2009
-------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (3,635,234) $(2,095,047)
Adjustments to reconcile net loss to net cash provided by
operating activities :
Depreciation 19,839 4,750
Compensation paid 4,458,750 2,166,667
Comprehensive loss 170,112 (216,174)
*(Increase) decrease in inventory (415,197) 30,803
*(Increase) decrease in accounts receivable 235,813 (32,560)
*(Increase) decrease in advance payments (191,176) -
*(Increase) decrease in prepaid costs and other
current assets 37,665 855
Increase (decrease) in accounts payables and
accrued expenses (335,067) -
Increase (decrease) in other payable 929 -
Increase (decrease) in advance from customers 616,459 (303,750)
Increase (decrease) in taxes payable - 35,123
Increase (decrease) in accrued payroll and severance benefits 332,665 -
-------------- ------------
Net Cash Provided by (Used in) Operating Activities 1,295,558 (409,333)
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in short-term loans (240,735) -
Acquisition of property, plant and equipment (58,376) -
Proceeds from related party - 546,807
Change in rent deposit 19,233 -
Acquisition of intangible assets (1,368,538) -
-------------- ------------
Net Cash Provided by (Used in) Investing Activities (1,648,416) 546,807
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowing, net of repayment
during the period 14,641 -
Debt reduction related party - -
Increase in minority interest (80,283) -
-------------- ------------
Net Cash flows from financing activities 65,642 -
Effect of exchange rate on cash - -
Net Increase (Decrease) in Cash (418,500) 137,474
Reconciliation - (13,144)
Cash at the Beginning of the period 499,025 32,181
-------------- ------------
CASH AT THE END OF THE PERIOD $ 80,525 $ 156,511
============== ============
Supplemental Cash Flow Disclosures:
Acquisition of interest in a company paid for in common stock (10,850,000) -
Compensation paid in common stocks 4,458,750 -
Issuance of common stock for acquisition and compensation 15,308,750 -
Cash paid during year for interest 7,080 -
Cash paid during year for taxes - -
The notes are an integral part of these financial statements
F-6
LEO MOTORS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
NOTE 1 - BACKGROUND
Company Business
-----------------
Company is currently in development, assembly and sales of the specialized
electric vehicle.
Background
----------
Leo Motors, Inc, Inc. (the "Company") was originally incorporated as Classic
Auto Accessories, a California Corporation on July 2, 1986. The Company then
underwent several name changes from FCR Automotive Group, Inc. to Shini
Precision Machinery, Inc. to Simco America Inc. and then to Leo Motors. The
Company had been dormant since 1989, and effectuated a reverse merger on
November 12, 2007 with Leozone Inc., a South Korean Company, which is the maker
of electrical transportation devices. The merger essentially exchanges shares in
Leo Motors, Inc. for shares in Leozone. As this is a reverse merger the
accounting treatment of such is that of a combination of the two entities with
the activity of Leozone, Inc. the surviving entity, going forward.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant account policies of the Company is presented to
assist in understanding the Company's financial statements. The financial
statements and the notes are the representation of the Company's management, who
are responsible for their integrity and objectivity. These accounting policies
conform to U.S. generally accepted accounting principles ("USGAAP") and have
been consistently applied in the preparation of the financial statements.
Basis of Presentation and Consolidation
-------------------------------------------
These financial statements and related notes are expressed in US dollars. The
Company's fiscal year-end is December 31. The consolidated financial statements
include the financial statements of the Company, its wholly owned subsidiaries.
All inter-company transactions and balances have been eliminated upon
consolidation.
Use of Estimates
------------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
---------------------------------------
For certain of the Company's financial instruments, including cash and cash
equivalents, accounts receivable inventory and prepaid expenses, accounts
payable and deferred revenues, the carrying amounts approximate fair value due
to their short maturities.
F-7
Revenue Recognition
--------------------
The Company follows the guidance of the Securities and Exchange Commission's
Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial
Statements". In general, the Company records revenue when persuasive evidence of
an arrangement exists, services have been rendered or product delivery has
occurred, the sales price to the customer is fixed or determinable, and
collectability is reasonably assured. The following policies reflect specific
criteria for the various revenues streams of the Company:
The Company generates revenue from the delivery of goods and records revenues
when the sales are completed, already collected or collectability is reasonably
assured, there is no future obligation and there is remote chance of future
claim or refund to the customers.
Revenue from periodic maintenance agreements is generally recognized ratably
over the respective maintenance periods provided no significant obligations
remain and collectability of the related receivable is probable.
Revenue from the performance of services is recognized upon completion of the
service.
Accounts receivables of the Company are reviewed to determine if their carrying
value has become impaired. The Company considers the assets to be impaired if
the balances are greater than six months old. Management regularly reviews
accounts receivable and will establish an allowance for potentially
uncollectible amounts when appropriate. When accounts are written off, they
will be charged against the allowance. Receivables are not collateralized and
do not bear interest.
The Company anticipates adopting a warranty and return policy granting a one
year limited warranty. The policy will warrant that the products will be free
from defects in material and workmanship and meet Seller's published
specifications at the time of shipment under normal use and regular service and
maintenance. The Company is evaluating the accounting treatment for product
returns and warranties and will provide an allowance at the time of sale.
Concentration of Credit Risk
Financial instruments which subject the Company to concentrations of credit risk
include cash and cash equivalents.
The Company maintains its cash in well-known banks selected based upon
management's assessment of the bank's financial stability. Balances may
periodically exceed the $250,000 federal depository insurance limit; however,
the Company has not experienced any losses on deposits. The Company extends
credit based on an evaluation of the customer's financial condition, generally
without collateral. Exposure to losses on receivables is principally dependent
on each customer's financial condition. The Company monitors its exposure for
credit losses and maintains allowances for anticipated losses, as required.
Accounts Receivables
---------------------
Accounts receivables of the Company are reviewed to determine if their carrying
value has become impaired.
F-8
The Company considers the assets to be impaired if the balances are greater than
one-year old. Management regularly reviews accounts receivable and will
establish an allowance for potentially uncollectible amounts when appropriate.
When accounts are written off, they will be charged against the allowance.
Receivables are not collateralized and do not bear interest.
Concentration of Credit Risk
-------------------------------
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of cash, cash equivalents and trade accounts
receivable. The Company places its cash with high credit quality financial
institutions in Korea. The Company has not experienced any losses in such bank
accounts through March 31, 2010. At March 31, 2010, our bank deposits were
$80,278.
The Company extends credit based on an evaluation of the customer's financial
condition, generally without collateral. Exposure to losses on receivables is
principally dependent on each customer's financial condition. The Company
monitors its exposure for credit losses and maintains allowances for anticipated
losses, as required.
Cash Equivalents
-----------------
For purposes of reporting cash flows, the Company considers all short-term
investments with an original maturity of three months or less to be cash
equivalent.
Fixed Assets
-------------
Fixed assets are stated at cost, less accumulated depreciation. Depreciation is
provided principally on the straight-line method over the estimated useful lives
of the assets, which is generally 3 to 10 years. The cost of repairs and
maintenance is charged to expense as incurred. Expenditures for property
betterments and renewals are capitalized. Upon sale or other disposition of a
depreciable asset, cost and accumulated depreciation are removed from the
accounts and any gain or loss is reflected in other income (expense).
The Company will periodically evaluate whether events and circumstances have
occurred that may warrant revision of the estimated useful lives of fixed assets
or whether the remaining balance of fixed assets should be evaluated for
possible impairment. We use an estimate of the related undiscounted cash flows
over the remaining life of the fixed assets in measuring their recoverability.
Comprehensive Income
---------------------
The Company follows ASC Topic 220 Comprehensive Income, formerly Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income,"
which establishes standards for the reporting and display of comprehensive
income and its components in the financial statements.
The functional currency of the Company is the Korean Won. Assets and
liabilities are translated to U.S. Dollars at the period-end exchange rates
($.000885740) and ($0.00023014) respectively and revenues and expenses are
translated at weighted average exchange rates for the period, which was
(.000874065) and (.0006959899) respectively. Resulting translation adjustments
are recorded as a component of stockholders' equity in other comprehensive
income (loss).
F-9
Advertising Costs
------------------
Advertising costs are expensed as incurred.
Income Taxes
-------------
The Company accounts for income taxes under ASC Topic 740, formerly SFAS 109,
"Accounting for Income Taxes." Under the asset and liability method, deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. Deferred tax assets and liabilities are adjusted for
the effects of changes in tax laws and rates on the date of enactment. ASC
Topic 740 also requires that uncertain tax positions are evaluated in a two-step
process whereby (1) it is determined whether it is more likely than not that the
tax positions will be sustained based on the technical merits of the position
and (2) for those tax positions that meet the more-likely-than-not recognition
threshold, the largest amount of tax benefit that is greater than fifty percent
likely of being realized upon ultimate settlement with the related tax authority
would be recognized
Loss per Share
----------------
In accordance with ASC Topic 260 formerly SFAS No. 128, "Earnings Per Share,"
the basic income / (loss) per common share is computed by dividing net income /
(loss) available to common stockholders by the weighted average number of common
shares outstanding. Diluted income per common share is computed similar to
basic income per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive.
Consulting and Service Fees
------------------------------
Consulting and Service Fees consist of accounting, legal, and professional fees
and for the period, most of it was paid in common stock.
Research and Development
--------------------------
According to Statement of Financial Accounting Standards No 2, research and
product development costs are expensed as incurred.
Stock-Based Compensation
-------------------------
The Company has adopted ASC Topic 718, formerly SFAS No. 123, "Accounting for
Stock-Based Compensation," which establishes and encourages the use of the fair
value based method of accounting for stock-based compensation arrangements under
which compensation cost is determined using the fair value of stock-based
compensation determined as of the date of grant and is recognized over the
periods in which the related services are rendered. For stock based
compensation the Company recognizes an expense in accordance with SFAS No. 123
and values the equity securities based on the fair value of the security on the
date of grant. Stock option awards are valued using the Black-Scholes
option-pricing model.
F-10
Foreign Currency Translation
------------------------------
Transactions and balances originally denominated in U.S. dollars are presented
at their original amounts. Transactions and balances in other currencies are
converted into U.S. dollars in accordance with ASC Topic 830-20, formerly SFAS
No. 52, "Foreign Currency Translation", and are included in determining net
income or loss.
The Company's reporting currency is the U.S. dollar. The functional currency of
the Company's Korean subsidiaries is the Korean Won (KRW). For foreign
operations with the local currency as the functional currency, assets and
liabilities are translated from the local currencies into U.S. dollars at the
exchange rate prevailing at the balance sheet date and weighted average rates of
exchange for the period for revenues, costs, and expenses. Net gains and losses
resulting from foreign exchange transactions are included in the consolidated
statements of operations. The cumulative translation adjustment and effect of
exchange rate changes on cash at March 31, 2010 was $576,588. Translation
adjustments resulting from the process of translating the local currency
financial statements into U.S. dollars are included in determining accumulated
comprehensive loss. As of March 31, 2010 and for the period then ended, the
exchange rate for the local currency, KRW was $ 1 USD for 1,129 and 1,144 KRW,
respectively.
Recent Accounting Pronouncements
--------------------------------
In April 2009, the FASB released ASC Topic 820, formerly FSP SFAS 157-4,
Determining Fair Value When Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly ("SFAS No. 157-4"). SFAS No. 157-4 supersedes SFAS No. 157-3. SFAS No.
157-4 provides guidance on how to determine the fair value of assets and
liabilities when the volume and level of activity for the asset/liability has
significantly decreased. SFAS No. 157-4 also provides guidance on identifying
circumstances that indicate a transaction is not orderly. In addition, SFAS No.
157-4 requires disclosure in interim and annual periods of the inputs and
valuation techniques used to measure fair value and a discussion of changes in
valuation techniques. SFAS No. 157-4 is effective for interim and annual periods
ending after June 15, 2009 (June 30, 2009 for the Company) and shall be applied
prospectively. SFAS No. 157-4 does not have a material impact on the preparation
of and disclosures in the Company's financial statements.
In May 2009, the FASB issued ASC Topic 855-10-5, formerly SFAS No. 165,
Subsequent Events ("SFAS No. 165"). SFAS No. 165 establishes general standards
of accounting for and disclosures of events that occur after the balance sheet
date but before financial statements are issued or are available to be issued.
It requires entities to disclose the date through which it has evaluated
subsequent events and the basis for that date. SFAS No. 165 is effective for
interim and annual periods ending after June 15, 2009. The Company adopted SFAS
No. 165 on June 30, 2009 (see note 10 in the notes to the financial statements
included in this Report on Form 10-K).
In June 2009, the FASB issued an amendment of ASC Topic 860, formerly SFAS No.
166, Accounting for Transfers of Financial Assets, an amendment of FASB
Statement No. 140 ("SFAS No. 166"). The objective of SFAS No. 166 is to improve
the relevance, representational faithfulness, and comparability of the
information that a reporting entity provides in its financial statements about a
transfer of financial assets; the effects of a transfer on its financial
position, financial performance, and cash flows; and a transferor's continuing
involvement, if any, in transferred financial assets. SFAS No. 166 removes the
concept of a qualifying special-purpose entity from Statement 140 and removes
the exception from applying FASB Interpretation No. 46, Consolidation of
Variable Interest Entities, to qualifying special-purpose entities.
Additionally, SFAS No. 166 defines the term participating interest to establish
specific conditions for reporting a transfer of a portion of a financial asset
as a sale, and also requires that a transferor recognize and initially measure
at fair value all assets obtained (including a transferor's
F-11
beneficial interest) and liabilities incurred as a result of a transfer of
financial assets accounted for as a sale. SFAS No. 166 is effective for fiscal
periods ending after November 15, 2009 (January 1, 2010 for the Company). The
Company is currently evaluating the impacts and disclosures related to SFAS No.
166.
In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation
No. 46(R) ("SFAS No. 167"). SFAS No. 167 amends guidance in Interpretation 46
(R) for determining whether an entity is a variable interest entity in addition
to subjecting enterprises to a number of other requirements including, among
other things: (i) requiring an enterprise to perform an analysis to determine
whether the enterprise's variable interest or interests give it a controlling
financial interest in a variable interest entity and specifies the
characteristics the primary beneficiary of a variable interest entity must have
to be designated as such; (ii) requiring an enterprise to assess whether it has
an implicit financial responsibility to ensure that a variable interest entity
operates as designed when determining whether it has the power to direct the
activities of the variable interest entity that most significantly impact the
entity's economic performance; (iii) requiring the ongoing reassessments of
whether an enterprise is the primary beneficiary of a variable interest entity;
(iv) the elimination of the quantitative approach previously required for
determining the primary beneficiary of a variable interest entity, and (v)
adding an additional reconsideration event for determining whether an entity is
a variable interest entity when any changes in facts and circumstances occur
such that investors of the equity investment at risk, as a group, lose the power
from voting or similar rights of the investment to direct the activities of the
entity that have the most significant impact on the entity's economic
performance. SFAS No. 167 is effective for fiscal and interim periods ending
after November 15, 2009 (January 1, 2010 for the Company). The Company is
currently evaluating the impacts and disclosures related to SFAS No. 167.
In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles, a
replacement of FASB Statement No. 162 ("SFAS No. 168"). SFAS No. 168 establishes
the FASB Accounting Standards Codification as the source of authoritative
accounting principles recognized by FASB to be applied by nongovernmental
entities in the preparation of financial statements in conformity with GAAP.
SFAS No. 168 is effective for fiscal and interim periods ending after September
15, 2009 (September 30, 2009 for the Company). The Company is currently
evaluating the impacts and disclosures related to SFAS No. 168.
In August 2009, the FASB issued Accounting Standards Update ("ASU") 2009-05,
Fair Value Measurements and Disclosures - Measuring Liabilities at Fair Value
(amendments to ASC Topic 820, Fair Value Measurements and Disclosures). ASU
2009-05 provides clarification that in circumstances in which a quoted price in
an active market for the identical liability is not available, a reporting
entity is required to measure fair value using certain techniques. ASU 2009-05
also clarifies that when estimating the fair value of a liability, a reporting
entity is not required to include a separate input or adjustment to other inputs
relating to the existence of a restriction that prevents the transfer of a
liability. ASU 2009-05 also clarifies that both a quoted price in an active
market for the identical liability at the measurement date and the quoted price
for the identical liability when traded as an asset in an active market when no
adjustments to the quoted price of the asset are required are Level 1 fair value
measurements. ASU 2009-05 is effective for interim and annual periods beginning
after August 27, 2009. The Company adopted this guidance on November 1, 2009
which did not have a material impact on its financial position, results of
operations or cash flows.
In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and
Disclosures - Improving Disclosures about Fair Value Measurements (amendments to
ASC Topic 820, Fair Value Measurements and Disclosures). ASU 2010-06 amends the
disclosure requirements related to recurring and nonrecurring measurements. The
guidance requires new disclosures on the transfer of assets and liabilities
between Level 1 (quoted prices in active market for identical assets or
liabilities) and Level 2
F-12
(significant other observable inputs) of the fair value measurement hierarchy,
including the reasons and the timing of the transfers. Additionally, the
guidance requires a roll forward of activities on purchases, sales, issuance,
and settlements of the assets and liabilities measured using significant
unobservable inputs (Level 3 fair value measurements). The guidance is effective
for interim and annual periods beginning after December 15, 2009. The adoption
of ASU 2010-06 is not expected to have a material impact on the Company's
financial position, results of operations or cash flow.
In February 2010, the FASB issued ASU 2010-09, Subsequent Events: Amendments to
Certain Recognition and Disclosure Requirements (amendments to ASC Topic 855,
Subsequent Events). ASU 2010-09 clarifies that subsequent events should be
evaluated through the date the financial statements are issued. In addition,
this update no longer requires a filer to disclose the date through which
subsequent events have been evaluated. This guidance is effective for financial
statements issued subsequent to February 24, 2010. The Company adopted this
guidance on this date, which did not have a material impact on its financial
position, results of operations or cash flows.
IMPACT OF NEW ACCOUNTING STANDARDS
The Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company's results of
operations, financial position, or cash flow.
NOTE 3 - EARNINGS PER SHARE
Basic loss per share are calculated by dividing net loss by the weighted average
number of common shares outstanding during the period.
NOTE 4 - ACCOUNTS RECEIVABLE
The Company recognizes a receivable on sales of parts and electrical motor
equipment. The March 31, 2010 balance of accounts receivable was $8,857, net of
reserve for doubtful accounts.
NOTE 5 - INVENTORY
The Company accounts for its inventory under the FIFO method and lower of cost
or market method of costing. The company's inventory consists of parts for the
electric transportation industry. As of March 31, 2010, the inventory consisted
of:
Raw materials $374,268
Finished goods 435,930
--------
TOTAL $810,198
========
F-13
NOTE 6 - FIXED ASSETS
The Company's fixed assets consist of the following:
Vehicles $78,970
Tools 32,472
Equipment, furniture , fixtures and equipment 149,493
--------
260,935
Less Accumulated Depreciation (64,417
--------
Net $196,518
========
The Company depreciates it assets over useful lives of between 3 and 7 years.
Depreciation expense was $19,839 for the period.
NOTE 7 - DUE TO RELATED PARTY
The company is indebted to its officer for advances. Repayment is on demand
without interest. The Company reduced this obligation by the issuance of
1,000,800 valued at $110,088 during 2008 and cash repayment in 2009.
NOTE 8 - PAYMENTS RECEIVED IN ADVANCE
The Company during the periods received payments from potential customers, or
deposits, on future orders. The Company's policy is to record these payments as
a liability until the product is completed and shipped to the customer at which
the Company recognizes revenue. As of March 31, 2010, the balance of payments
received in advance was $912,626.
NOTE 9-BANK LOAN
The Company is indebted to Shin Han Bank at March 31, 2010 for $442,870, payable
in May 2010, interest at 6.57 % per annum. The loan is secured by guarantee
issued by 'KIBO", a Korean government agency created to guarantee loans to
small-to-medium technology companies.
NOTE 10 - CAPITAL STOCK
Company is authorized to issue up to 100,000,000 common shares at $0.001 par
value. Total number of common shares issued and outstanding as of March 31, 2010
were 50,783,115 shares and 40,708,115 shares, December 31, 2009.
During the quarter ended March 31, 2010, 10,075,000 new shares were issued,
7,000,000 shares for the purchase of 50 % interest in Leo B & T Inc., valued at
$ 1.55 per share or $ 10,850,000, 3,000,000 shares for compensation and 75,000
shares for consulting service, latter two valued at $ 1.45 per share or $
4,458,750.
F-14
NOTE 11 - OPERATING RISK
(a) Concentration of credit risk
Financial instruments that potentially expose the Company to concentration of
credit risk consist primarily of cash. The Company places its cash with
financial institutions with high credit ratings.
(b) Country risk
Revenues of the Company are mainly derived from the sale in Korea. The Company
hopes to expand its operations to other Countries, however, such expansion has
not been commenced and there are no assurances that the Company will be able to
achieve such an expansion successfully. Therefore, a downturn or stagnation in
the economic environment of Korea could have a material adverse effect on the
Company's financial condition.
(c) Product risk
The Company might have to compete with larger companies who have greater funds
available for expansion, marketing, research and development and the ability to
attract more qualified personnel. There can be no assurance that Company will
remain competitive should this occur.
(d) Exchange risk
The Company cannot guarantee that the current exchange rate will remain steady,
therefore there is a possibility that the Company could post the same amount of
profit for two comparable periods and because of a fluctuating exchange rate
actually post higher or lower profit depending on exchange rate of Korean Won
were converted to U.S. dollars on that date. The exchange rate could fluctuate
depending on changes in the political and economic environments without notice.
(e) Key personnel risk
The Company's future success depends on the continued services of few
individuals and loss of one or several of their service would be detrimental to
the Company and could have an adverse effect on business development. The
Company does not currently maintain key man insurance on their life but plan to
implement in near future. Future success is also dependent on the ability to
identify, hire, train and retain other qualified managerial and other employees.
NOTE 12 - SEGMENT INFORMATION
The following information is presented in accordance with SFAS No. 131,
Disclosure about Segments of an Enterprise and Related Information. In period
ended March 31, 2010, the Company operated in a single reportable business
segment, sales of specialized electric vehicle.
The Company's reportable segments are strategic business units that offer
different products. The Company's reportable segments, although integral to the
success of the others, offer distinctly different products and services and
require different types of management focus. As such, these segments are managed
separately.
Condensed information with respect to these reportable business segments for the
period is as follows:
Sales from specialized electric vehicles $12,463
F-15
NOTE 13 - COMMITMENT AND CONTINGENCIES
13.1 Lease Commitments
Company leases its office space and assembly facilities in HaNam City in Korea
which expires on March 31, 2011 and its monthly minimum rental is $ 6,875.
The minimum obligations under such commitments for the years ending December 31
until its expiration are:
Year 2010 $82,500
Year 2011 $86,600
Year 2012 $91,000
Rental expense for the period ended March 31, 2010 was $9,178.
13.2 Litigation
The Company has no threatened, pending or unsettled litigation as of April 5,
2010, the date the financial statement is available for issuance.
NOTE 14 - SUBSEQUENT EVENTS
In May, 2010, the Company appointed M&M Corp as its exclusive Korean provider of
electric scooters. Upon entering the agreement, M&M paid the Company
400,000,000 Korean Won for the order of 170 units of e-scooters. On April 2,
2010, M&M placed a definitive order for 1,170 units for 4.2 billion Korean Won
(approximately $3.73 Million US), and has advanced a down payment of 300 billion
Korean Won (approximately $2.66 million US).
NOTE 15-GOING CONCERN
As shown in the accompanying financial statements, the Company incurred a net
loss of $3,635,234 during the quarter ended March 31, 2010, and as of that date,
the Company has a deficit of $8,704,900. Those factors create an uncertainty
about the Company's ability to continue as a going concern. Management of the
Company has developed a plan to continue as a going concern by focusing on
increasing short term revenues from sales of its e-Bikes and EV conversion
services. In April, 2010 the Company received its first large scale order for
its EVs, which upon fulfillment will generate the Company's first significant
revenues from its main plan of operation. See Note 14 above.
The ability of the Company to continue as a going concern is dependent on
attaining profitable operations and the success of its business plan. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
NOTE 16 - ACQUISION OF A BUSINESS AND PRO FORMA CONDENSED COMBINED BALANCE
SHEETS AND STATEMENT OF OPERATIONS
On February 11, 2010, the Company entered into an agreement to purchase 50 % of
Leo B&T Co. Ltd. from two shareholders of B&T in exchange for 7,000,000 shares
of the company's common stock
F-16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING STATEMENTS: STATEMENTS ABOUT OUR FUTURE EXPECTATIONS ARE
"FORWARD-LOOKING STATEMENTS" AND ARE NOT GUARANTEES OF FUTURE PERFORMANCE. WHEN
USED HEREIN, THE WORDS "MAY," "WILL," "SHOULD," "ANTICIPATE," "BELIEVE,"
"APPEAR," "INTEND," "PLAN," "EXPECT," "ESTIMATE," "APPROXIMATE," AND SIMILAR
EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE
STATEMENTS INVOLVE RISKS AND UNCERTAINTIES INHERENT IN OUR BUSINESS, INCLUDING
THOSE SET FORTH UNDER THE CAPTION "RISK FACTORS," IN THIS DISCLOSURE STATEMENT,
AND ARE SUBJECT TO CHANGE AT ANY TIME. OUR ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THESE FORWARD-LOOKING STATEMENTS. THIS FORM 10-Q DOES NOT HAVE
ANY STATUTORY SAFE HARBOR FOR THIS FORWARD LOOKING STATEMENT. WE UNDERTAKE NO
OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENT.
This Management's Discussion and Analysis should be read in conjunction with the
financial statements included in this Quarterly Report on Form 10-Q (the
"Financial Statements"). The financial statements have been prepared in
accordance with generally accepted accounting policies in the United States
("GAAP"). Except as otherwise disclosed, all dollar figures included therein
and in the following management discussion and analysis are quoted in United
States dollars.
OVERVIEW
Leo Motors, Inc. (the "Company") is currently in the process of producing and
selling its electric scooter models in Korea, which began in the first quarter
of this year, with a view to expanding our sales to Japan and other countries in
the near future. We are also currently marketing our power train for the
conversion of Internal Combustion Engine ("ICE") vehicles into Electric
Vehicles. We also have several other projects in various stages of development.
Our immediate term strategy is to develop the sales of our electric scooters and
EV conversion services in order to develop revenue streams and profitability.
Until we succeed in these regards, our other production-ready projects have been
placed on hold. Our recent success has enabled us to continue initial
development of some of our projects on a case-by-case basis.
RECENT BUSINESS DEVELOPMENTS
Hilless Electric Scooter Sales
We have begun to mass produce, market, and sell our three models of electric
scooters: Hilless 1,3, and 5. Initially, we produced 100 units which were sold
out to the dealers who will sell our scooters in Korea, in Japan, and in the
U.S. In Korea, the company appointed M&M Corp., a publicly traded company
listed on KOSDAQ, a division of the Korea Exchange (KRX), as our exclusive
distributor in Korea. We have already received two definitive orders from M&M
and in each case have received up-front down payments for the orders. We
received 400,000,000 Korean won (approximately $300,000) from M&M as a down
payment for the definitive order of 170, and we received 3 billion Korean Won
(about $2.66 million) as down payment for the definitive order of 1,170 electric
scooters. The second order will be delivered by June 2010, for which we
anticipate total revenues of 4.2 billion Korean Won (approximately $3.73
million).
Page 17
These scooters were also presented to government organizations such as post
office and police, social organizations, bigger companies, and delivery
businesses. The company is collecting orders from these national providers.
In December, 2009 we participated in the 2009 International Motorcycle Show in
Long Beach, California to gauge US marketability of our scooters. We found that
the power system is highly competitive with other electric scooters, but we
should enhance the design and quality of non electric parts before our scooter
will be ready for a US launch.
EV Conversion Kit
We tested our EV conversion kit during September, 2009 and exhibited the kits in
Tokyo and Seoul, and have since sold kits and conversion services in Japan and
Korea. We must successfully enter into the mass market of the electric power
train in order to generate significant revenues from this project.
Leo B&T
On February 11, 2010, Leo Motors, Inc. (the "Company") acquired 50% of Leo B&T
Co. Ltd, a Korean Corporation ("Leo B&T"), from two shareholders of Leo B&T in
exchange for 7,000,000 shares of the Company's common stock. Leo B&T is an
electric bus and truck Company that will convert existing Internal Combustion
Engine buses and trucks into electric ones, and will make its own designs of
electric buses and trucks in the future.
Through Leo B&T, we have developed a full speed micro electric bus sized with 24
seats, using one 120 kW power train. An initial prototype has been developed
and successfully tested. The bus ran more than 65 mph, and demonstrated that it
can run more than 60 miles per single charge. Leo B&T's electric bus also did
not experience a loss of power despite high speeds and navigation of 30-degree
mountain roads. We intend to market this and other bus conversions and original
EV designs to governments and will not begin production without a definitive
order.
Other Projects
We have several other projects that have been placed on hold while we develop
sales from our electric scooters. As we have begun to generate significant
revenue from the scooters, we anticipate being able to continue some of these
projects on a case by case basis.
We have developed a power storage system for solar and wind powered houses and
buildings. We are waiting for additional orders from our Japanese dealer, LMJ,
before continuing with this project.
We are in the initial development stages of a canopied four wheel scooter. We
have studied the design and power system, and we plan to develop the prototype
beginning August, 2010.
We have also developed production ready models of various models of EV,
including the S 65 SUV and SKG electric car, which we currently are making
available on a pre-order basis only. We do not intend to produce inventory
without pre-orders. If we do not receive orders of these vehicles, we may
discontinue these projects and use our existing prototypes for demonstration of
our power trains.
We have started the development of a 240 kW controller and motor. The
controller is developed by our own researchers, and the motor is under
development by our supplier based on our design and
Page 18
requirements. With development of 240 kW motor and controller, we are going to
have 240kW power train which can be used in heavy duty buses and trucks.
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity requirements arise principally from our plans to develop EV
production capability, additional product development, and marketing costs.
Although in the future we intend to fund our liquidity requirements through a
combination of cash on hand and revenues from operations, during the period, the
Company had incurred $4,728,804 in expenses and had realized only $12,463 in
revenues. 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.
Our monthly operating cost including salaries and general expense is currently
approximately $65,000, as we focus on our e-Bikes and power trains. In April
2010 we received approximately $3 million in a down payment from our
distribution agreement in Korea; accordingly, we have already secured our annual
operating budget for 2010. However, in order to continue the projects we have
put on hold, we will require additional revenues or financing.
Despite being able to reach this stage in our development with limited funding,
the EV and general automotive industries are extremely capital intensive, and we
will need substantial additional financing in order to produce and sell our EVs.
Our anticipated minimum costs of implementing our current business plan are
summarized as follows:
e-Bikes
STEP ANTICIPATED COST ANTICIPATED START DATE
----------------------- ----------------- ----------------------
Initial Design $ N/A Completed
Initial Prototypes $ N/A Completed
Testing $ N/A Completed
Component Development $ N/A Completed
Production Capability $ N/A Completed
Production of Inventory $ 100,000 May 2010
Marketing & Sales $ 100,000 In process
----------------------- ----------------- ----------------------
TOTAL 200,000
Power Trains
STEP ANTICIPATED COST ANTICIPATED START DATE
----------------------- ----------------- ----------------------
Initial Design N/A Completed
Initial Prototypes $ 500,000 April 2010
Testing $ 500,000 May 2010
Production Capability $ 500,000 September 2010
Production of Inventory $ 100,000 December 2010
Marketing & Sales $ 100,000 In process
----------------------- ----------------- ----------------------
TOTAL 1,700,000
To date we have raised approximately $936,200 in equity financing, $200,000 in
November 2008, $417,000 in January 2009, and $119,200 in May 2009.
Page 19
To date we have raised approximately $2,340,000 in debt financing. This
includes the $1,500,000 advance from Mr. Lee in 2008 and an additional $440,000
loan from Mr. Lee in 2009. In addition, in May, 2009, the Company secured a
loan from Shin Han Bank for 500,000,000 Korean Won (approximately $400,000),
with a term of one year which can be extended under certain conditions. The
loan is guaranteed by KIBO Technology Fund, a non-profit Korean Government
institution whose purpose is to provide credit guarantees for new
technology-based enterprises, and to promote the growth of technologically
strong small and medium enterprises. We have no relationship to KIBO other than
the guarantee, and did not compensate KIBO for the guarantee. The loan is due
within one year. If we fail to repay the loan, it will be repaid by KIBO and
KIBO will seek the amounts from us; however, KIBO generally extends the payment
term by up to three years provided that the Company owns the original technology
and its management is stable. We will continue to explore additional debt
financing opportunities.
Accordingly we have obtained sufficient financing to implement our initial
business plan, but are currently seeking up to $10,000,000 in additional
financing in order to fully implement plans that have been placed on hole. In
addition to the above financing, we continue to negotiate with financial
institutions, venture capital firms, and individual investors among our business
contacts.
Despite receipt of approximately $3,000,000 in an advanced payment, there
continues to be doubt as to our ability to continue in the short term and long
term as a going concern. Our plan in the short term is to develop revenue
streams from e-Scooters and power train conversions. Our long term survival
will depend on the success of these initial plans operations and the generation
of significant recurring revenue. If our efforts should fail or fall short of
our goal, we will have to restructure our business plan in order to sustain our
operations. However, in that event we may be unable to implement our business
plan or continue operations.
In addition, the functional currency in our operations is the Korean Won, and we
conduct business or plan to conduct business in several other currencies,
including that of the US, the Philippines, and Thailand. Foreign currency
exchange rates are subject to significant fluctuation which could have a
material effect on our liquidity. For example, a material advance payment made
in Korean Won decreased in value from December 31, 2007 to December 31, 2008 by
over 25%. This represents a significant risk that assets we hold in foreign
currencies will lose value due to the change in exchange rates.
RESULTS OF OPERATIONS
Revenues
Sales for the three months ended March 31, 2010 were $12,436 compared to
$349,881 for the three months ended March 31, 2009. Costs of sales were $7,340
in the current period and compared to $208,203 in the same period last year. In
the three months ended March 31, 2010, we experienced a gross profit of $5,123,
compared to $151,678 in gross profit in the same period in 2009. Neither
period's sales represent sales from regular business, but rather sales of
samples and development services. We anticipate sales in the second quarter to
be significantly higher than in the first due to the recent sales to M&M Corp.
Expenses
During the three months ended March 31, 2010, we incurred $4,728,804 in
expenses, compared to $2,262,428 for the same period in 2009. The primary
increase was due to payment of consulting service fees and development costs. We
also hired R&D and sales staff as part of the implementation of our
Page 20
business. The company rented another building near its existing office to
operate its sales and administration division.
Expenses for the quarter consisted of the following:
THREE MONTHS THREE MONTHS
ENDED MARCH 31, ENDED MARCH 31,
EXPENSES: 2008 2007
---------------- ----------------
Salaries and Benefits $ 4,476,891 $ 26,214
Service Fees 142,975 34,552
General and Administrative 108,938 2,201,662
---------------- ----------------
Salaries and Benefits - consist of total cash compensation paid to our employees
during the year and the cost of all benefits provided to our employees. This
expense increased $4,450,677 or 16978% from the prior period. This increase is
due primarily payments made in stock to consultants and employees.
Consulting and Service Fees - consist of consist of accounting, legal, and
professional fees. This expense increased $108,423 or 314% from the prior
period. This increase is due primarily to the increased needs for our
consulting and service providers due to the increase in our operations. We
anticipate that this expense will continue to fluctuate significantly as we
continue to grow our sales, and begin to implement various other parts of our
business plan.
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. This expense decreased $2,092,724 or 95% from the prior
period. This decrease is due primarily to extraordinary expenditures in the
same period in the prior year. We anticipate that this expense will continue to
fluctuate, but will not increase significantly in 2010.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
ITEM 4. CONTROLS AND PROCEDURES.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our Chief Executive Officer and Interim Chief Financial Officer (the "Certifying
Officer") maintains a system of disclosure controls and procedures that is
designed to provide reasonable assurance that information, which is required to
be disclosed, is accumulated and communicated to management timely. Under the
supervision and with the participation of management, the Certifying Officer
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rule [13a-14(c)/15d-14(c)] under the
Exchange Act) within 45 days prior to the filing date of this report. Based
upon that evaluation, the Certifying Officer concluded that our disclosure
controls and procedures are not effective in timely alerting them to material
information relative to our company required to be disclosed in our periodic
filings with the SEC.
CHANGES IN INTERNAL CONTROLS
Page 21
There were no changes in our internal control over financial reporting during
the quarter ended March 31, 2010, that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
PART II: OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On February 3, 2010 we issued 3,000,000 shares to members of our management team
as compensation for their services. 2,000,000 shares were issued to our
president, Mr. Kang. 500,000 shares each were issued to Jung Yong Lee and Young
Il Kim. This issuance was completed in accordance with Section 4(2) of the
Securities Act in an offering without any public offering or distribution.
These shares are restricted securities and include an appropriate restrictive
legend.
On February 22, 2010 we issued 7,000,000 shares to purchase 50% of Leo B&T.
This issuance was completed in accordance with Section 4(2) of the Securities
Act in an offering without any public offering or distribution. These shares
are restricted securities and include an appropriate restrictive legend.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 - OTHER INFORMATION
None.
Page 22
ITEM 6 - EXHIBITS
The following exhibits are filed as part of this quarterly report on Form 10-Q:
31.1 Certification of Chief Executive Officer and Interim Chief Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer and Interim Chief Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: May 24, 2010 LEO MOTORS, INC.
(the registrant)
By: \s\Robert Kang
--------------
Robert Kang
Chief Executive Officer
and Interim Chief Financial Officer
Page 23