leo10k03262014.htm

ITEM 1A. RISK FACTORS

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.

Risks Related to Our Business

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:

•	we may be required to replace product or otherwise compensate customers for costs incurred or damages caused by defective or incompatible product, and

•	we may encounter adverse publicity, which could cause a decrease in sales of our products.

The limited availability of raw materials or supplies could materially adversely affect our business, results of operations or financial condition.

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.

Our proprietary rights may not adequately protect our intellectual property and product candidates and if we cannot obtain adequate protection of our intellectual property and product candidates, we may not be able to successfully market our product candidates.

Our commercial success will depend in part on obtaining and maintaining intellectual property protection for our technologies and product candidates. We will only be able to protect our technologies and product candidates from unauthorized use by third parties to the extent that valid and enforceable patents cover them, or that other market exclusionary rights apply.

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.

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In addition, others may independently develop similar or alternative compounds and technologies that may be outside the scope of our intellectual property. Should third parties obtain patent rights to similar compounds or technology, this may have an adverse effect on our business.

If we fail to attract and retain senior management, consultants, advisors and scientific and technical personnel, our product development and commercialization efforts could be impaired.

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.

In addition, we believe that we will need to recruit additional executive management and scientific and technical personnel. There is currently intense competition for skilled executives and employees with relevant scientific and technical expertise, and this competition is likely to continue. The inability to attract and retain sufficient scientific, technical and managerial personnel could limit or delay our product development efforts, which would adversely affect the development of our product candidates and commercialization of our potential products and growth of our business.

We expect to expand our research, development, clinical research and marketing capabilities and, as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

We expect to have significant growth in expenditures, the number of our employees and the scope of our operations, in particular with respect to those potential products that we elect to commercialize independently or together with others. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to train qualified personnel. Due to our limited resources, we may not be able to effectively manage the expansion of our operations or train additional qualified personnel. The physical expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plan or disrupt our operations.

We have a history of losses and expect to continue to incur losses and may not achieve or maintain profitability.

We expect to incur additional losses for at least the next several years and cannot be certain that we will ever achieve profitability. As a result, our business is subject to all of the risks inherent in the development of a new business enterprise, such as the risk that we may not obtain substantial additional capital needed to support the expenses of developing our technology and commercializing our potential products; develop a market for our potential products; and/or attract and retain qualified management, technical and scientific staff.

Risks Related to Doing Business in Korea

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

The 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 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 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.

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Escalations in tensions with North Korea could have an adverse effect on us.

Relations between Korea and North Korea have been tense throughout Korea’s modern history. The level of tension between the two Koreas has fluctuated and may increase abruptly as a result of current and future events. In recent years, there have been heightened security concerns stemming from North Korea’s nuclear weapon and long-

range missile programs and increased uncertainty regarding North Korea’s actions and possible responses from the international community. In December 2002, North Korea removed the seals and surveillance equipment from its Yongbyon nuclear power plant and evicted inspectors from the United Nations International Atomic Energy Agency. In January 2003, North Korea renounced its obligations under the Nuclear Non-Proliferation Treaty. Since the renouncement, Korea, the United States, North Korea, China, Japan and Russia have held numerous rounds of six party multi-lateral talks in an effort to resolve issues relating to North Korea’s nuclear weapons program.

There can be no assurance that the level of tension on the Korean peninsula will not escalate in the future. Any further increase in tensions, which may occur, for example, if North Korea experiences a leadership crisis, high-level contacts break down or military hostilities occur, could have a material adverse effect on our operations and the market value of our common stock.

You may not be able to enforce a judgment of a foreign court against us.

A significant portion of the assets of our directors and officers named in this Form 10-K and substantially all of our assets are located in Korea. As a result, it may not be possible for you to enforce against them or us in the United States judgments obtained in United States courts based on the civil liability provisions of the federal securities laws of the United States. 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.

Risks Related to Our Industry

Our competitors may develop products that are less expensive, safer or more effective, which may diminish or eliminate the commercial success of any potential products that we may commercialize.

If our competitors market products that are less expensive, safer or more effective than our future products developed from our product candidates, or that reach the market before our product candidates, we may not achieve commercial success. The market may choose to continue utilizing the existing products for any number of reasons, including familiarity with or pricing of these existing products. The failure of any of our product candidates to compete with products marketed by our competitors would impair our ability to generate revenue, which would have a material adverse effect on our future business, financial condition and results of operations.

We expect to compete with several companies and our competitors may:

	•	develop and market products that are less expensive or more effective than our future products;

	•	commercialize competing products before we or our partners can launch any products developed from our product candidates;

	•	operate larger research and development programs or have substantially greater financial resources than we do;

	•	initiate or withstand substantial price competition more successfully than we can;

	•	have greater success in recruiting skilled technical and scientific workers from the limited pool of available talent;

	•	more effectively negotiate third-party licenses and strategic relationships; and

	•	take advantage of acquisition or other opportunities more readily than we can.

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Risks Related to Our Common Stock

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:

	•	failure or discontinuation of any of our research;

	•	delays in establishing new strategic relationships;

	•	delays in the development or commercialization of our potential products;

	•	market conditions and issuance of new or changed securities analysts' reports or recommendations;

	•	actual and anticipated fluctuations in our financial and operating results;

	•	developments or disputes concerning our intellectual property or other proprietary rights;

	•	introduction of technological innovations or new commercial products by us or our competitors;

	•	issues in manufacturing our potential products;

	•	third-party healthcare reimbursement policies;

	•	litigation or public concern about the safety of our product candidates; and

	•	additions or departures of key personnel.

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.

We have not and do not anticipate paying any dividends on 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.

We are subject to the reporting requirements of federal securities laws, this can be expensive and may divert resources from other projects, thus impairing its ability grow.

We are subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other federal securities laws, including compliance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC (including reporting of the Merger) and furnishing audited reports to stockholders will cause our expenses to be higher than they would have been if we had remained privately held.

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If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our Common Stock.

Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. As a result, our small size and any current internal control deficiencies may adversely affect our financial condition, results of operation and access to capital. We have not performed an in-depth analysis to determine if historical un-discovered failures of internal controls exist, and may in the future discover areas of our internal control that need improvement.

Public company compliance may make it more difficult to attract and retain officers and directors.

The Sarbanes-Oxley Act and new rules subsequently implemented by the SEC have required changes in corporate governance practices of public companies. As a public company, we expect these new rules and regulations to increase our compliance costs in 2014 and beyond and to make certain activities more time consuming and costly. As a public company, we also expect that these new rules and regulations may make it more difficult and expensive for us to obtain director and officer liability insurance in the future and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers.

The limited trading market for our common stock results in limited liquidity for shares of our common stock and significant volatility in our stock price.

Although prices for our shares of common stock are quoted on the Pink OTC Markets (“OTCQB”), there is little current trading and no assurance can be given that an active public trading market will develop or, if developed, that it will be sustained. The OTCQB is generally regarded as a less efficient and less prestigious trading market than other national markets. There is no assurance if or when our common stock will be quoted on another more prestigious exchange or market. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders. The absence of an active trading market reduces the liquidity of our common stock.

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.

Our Common Stock is currently deemed a “penny stock,” which makes it more difficult for our investors to sell their shares.

Our Common Stock is subject to the “penny stock” rules adopted under Section 15(g) of the Exchange Act. The penny stock rules generally apply to companies whose common stock is not listed on The Nasdaq Stock Market or other national securities exchange and trades at less than $4.00 per share, other than companies that have had average revenue of at least $6,000,000 for the last three years or that have tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. If our securities are subject to the penny stock rules, investors will find it more difficult to dispose of our securities.

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Offers or availability for sale of a substantial number of shares of our Common Stock may cause the price of our Common Stock to decline.

If our stockholders sell substantial amounts of our Common Stock in the public market upon the expiration of any statutory holding period, under Rule 144, or issued upon the exercise of outstanding options or 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.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We operate out of an office, workshop and warehouse building located at 291-1, Hasangok-dong, Hanam City, Gyeonggi-do, Republic of Korea 465-250. The lease is for one-year, renewable annually, and the operating rent is approximately $40,000 annually for the office/warehouse in total.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

Our common stock is quoted in United States on the OTCQB, maintained by the OTC Markets Group. There can be no assurance that a regular trading market will develop or if developed, may not be sustained. The following table sets forth, for the calendar periods indicated the range of the high and low last reported of the Company’s common stock, as reported by the OTCQB. The quotations represent inter-dealer prices without retail mark-ups, mark-downs or commissions, and may not necessarily represent actual transactions. The quotations may be rounded for presentation.

MARKET PRICE

Period	High		Low
First Quarter 2013	$	0.19	$	0.0565
Second Quarter 2013	$	0.15	$	0.06
Third Quarter 2013	$	0.095	$	0.027
Fourth Quarter 2013	$	0.16	$	0.0225

Period	High		Low
First Quarter 2012	$	0.52	$	0.13
Second Quarter 2012	$	0.95	$	0.17
Third Quarter 2012	$	0.43	$	0.16
Fourth Quarter 2012	$	0.28	$	0.11

As of March 11, 2014, we had approximately 903 stockholders of record.

Transfer Agent

Our transfer agent is Madison Stock Transfer, Inc., Brooklyn, New York.

Dividend Policy

The Company has not issued any dividends on the common stock to date, and does not intend to issue any dividends on the common stock in the near future. We currently intend to use all profits to further the growth and development of the Company.

Unregistered Sales of Equity Securities

During the year ended December 31, 2013, and in the subsequent period through the date hereof the Company made the following issuances of unregistered securities:

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On March 1, 2013 we issued 248,756 shares to Asher Enterprises, Inc. in conversion of outstanding debt in the amount of $15,000.00. This issuance was intended to be exempt from the registration requirements pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended.

On March 8, 2013 we issued 265,018 shares to Asher Enterprises, Inc. in conversion of outstanding debt in the amount of $15,000.00. This issuance was intended to be exempt from the registration requirements pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended.

On March 19, 2013 we issued 404,558 shares to Asher Enterprises, Inc. in conversion of outstanding debt in the amount of $12,500.00. This issuance was intended to be exempt from the registration requirements pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended.

On May 28, 2013 we issued 2,000,000 shares for consulting services. 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 November 1, 2013, we issued 2,651,706 shares to Joung Dai Lee as compensation. 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.

In March 2013, we issued 4,000,000 shares to Vynewood Group Limited in conversion of outstanding debt in the amount of $200,000.00. This issuance was intended to be exempt from the registration requirements pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended.

On November 4, 2013 we issued 1,000,000 shares to Darrin M. Ocasio for consulting services. 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 November 26, 2013 we issued 500,000 shares to Princeton Research, Inc. for consulting services. 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 January 9, 2012 we issued 77,000 shares for consulting services. 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, 2012 we issued 115,500 shares for consulting services. 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 March 16, 2012 we issued 325,000 shares for consulting services. 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 May 14, 2012 we issued 1,000,000 shares for consulting services. 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 June 20, 2012, we issued 3,300,000 shares to members of our management team as compensation and services fees for consultants. 2,000,000 shares were issued to Co-CEO Jung Yong “John” Lee. 500,000 shares were issued to Co-CEO Jun Heng Park. 500,000 shares were issued to Director Jeong youl Choi. 300,000 shares were issued to advisor Hak-Kyum Kim. 500,000 shares were issued for service fees. 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 June 20, 2012 we issued 500,000 shares for consulting services. 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.

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On September 21, 2012, we issued 385,000 shares to employees as compensation. 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 October 24, 2012 we issued 182,039 shares to Asher Enterprises, Inc. in conversion of outstanding debt in the amount of $15,000.00. This issuance was intended to be exempt from the registration requirements pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended.

On October 26, 2012 we issued 208,447 shares to Asher Enterprises, Inc. in conversion of outstanding debt in the amount of $13,000.00. This issuance was intended to be exempt from the registration requirements pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended.

On November 9, 2012 we issued 189,155 shares to Asher Enterprises, Inc. in conversion of outstanding debt in the amount of $15,000.00. This issuance was intended to be exempt from the registration requirements pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended.

On November 27, 2012 we issued 238,367 shares to Asher Enterprises, Inc. in conversion of outstanding debt in the amount of $15,000.00. This issuance was intended to be exempt from the registration requirements pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended.

ITEM 6. SELECTED FINANCIAL DATA

Not required by smaller reporting companies.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

This report contains forward-looking statements. These forward-looking statements include, without limitation, statements containing the words “believes,” “anticipates,” “expects,” “intends,” “projects,” “will,” and other words of similar import or the negative of those terms or expressions. Forward-looking statements in this report include, but are not limited to, expectations of future levels of research and development spending, general and administrative spending, levels of capital expenditures and operating results, sufficiency of our capital resources, our intention to pursue and consummate strategic opportunities available to us, including sales of certain of our assets. Forward-looking statements subject to certain known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to those described in “Risk Factors” of the reports filed with the Securities and Exchange Commission.

SPECIAL NOTICE ABOUT GOING CONCERN AUDIT OPINION

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

This Management’s Discussion and Analysis should be read in conjunction with the financial statements included in this Annual Report on Form 10-K (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.

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Overview

Leo Motors, Inc. is a Nevada Corporation incorporated on September 8, 2004. The Company established a wholly-owned operating subsidiary in Korea named Leo Motors, Co. Ltd. on July 1, 2006. Through the subsidiary the Company is engaged in the research and development (“R&D”) of multiple products, prototypes and conceptualizations based on proprietary, patented and patent pending electric power generation, drive train and storage technologies. Leo Motors, Co. Ltd. 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 (i) E-Box electric energy storage system for solar and wind power generation devices; (ii) EV components that integrate electric batteries with electric motors such as EV Controllers that use a mini-computer to control torque drive.

Leo Motors, Inc. (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:

· Focus on the capitalization of the Company;

· Focus on the sale of the e-Box;

· Complete the build out of the manufacturing plant for the e-Box;

· Continue with R&D of our EV’s and related products as capital permits.

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

Recent Business Developments

The Company has focused its development, marketing and sales efforts on the E-Box. The E-Box is an electric power storage box ranging from 3kW to 50kW for use in homes.

In 2012, the Company had agreed to a contract to provide solar module e-Box systems to sustainable housing projects in the Democratic Republic of Congo. The solar module system would be independent of the grid, solely relying on renewable solar energy as a source of electric power. Although the product has completed required testing, the delivery of the product has been delayed due to slow development in the project construction. Due to political/regional instability in the DRC, the execution of this contract is not guaranteed.

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The Company has also recently acquired a small share (2.84%) of LGM Co., Ltd. in Korea to penetrate the electric boat market. LGM is a company focusing on developing electric boats. In coming months, the Company is planning to work more closely with LGM and acquire more ownership as its capital permits.

Results of Operations for the Twelve Months Ended December 31, 2013 compared to the Twelve Months Ended Decembers 31, 2012

Sales for the year ended December 31, 2013 were $0 compared to $25,605 for the year ended December, 2012. Costs of sales were $0 and gross profit was $0 in the year ended December 31, 2013 compared to $23,786 as costs of sales and gross profit of $1,819 in the same period in 2012.The decrease in sales for the most recent fiscal year is attributable to decrease in the sales of merchandise reflecting current market conditions. The Company is currently involved in projects designed to expand its reach into new markets.

Operating Expenses

During the year ended December 31, 2013, we incurred $882,541 in expenses, compared to $2,925,023 in the period ended December 31, 2012. The increase in expenses for this current year is attributable to a decrease in salaries and benefits as detailed in the table below. With zero sales in the current year the company dramatically scaled back wages. Selling, general and administrative cost remained relatively stable between 2013 and 2012.

Expenses for the fiscal year 2013 and 2012 consisted of the following:

	Year Ended
Expenses:	December 31, 2013		December 31 2012

Salaries and Benefits	$	358,381	$	1,410,525
Consulting and Service Fees	$	276,513	$	652,140
Research and Development	$	65,070	$	212,587
Selling, General and Administrative	$	182,577	$	649,771

Total	$	882,541	$	2,925,023

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 were 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.

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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, 2013 were $258,958 and total current liabilities were $1,653,390, all of which were current. Significant losses from operations have been incurred since inception and there is an accumulated deficit of $(16,878,568) as of December 31, 2013. 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.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

None.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements are included herein commencing on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

Effective August 14, 2012 the Company dismissed its former certified public accountant Stan Jeong-Ha Lee, CPA, (“SL”) effective immediately. On August 14, 2012, the Company engaged John Scrudato CPA (“Scrudato”) as its registered independent public accountant. We decided to hire Scrudato in the hopes that it would expedite bringing the Company current in its filings with the SEC. The decision to appoint Scrudato and dismiss SL were approved by the Board of Directors of the Company.

Other than the disclosure of uncertainty regarding the ability for us to continue as a going concern, SL’s reports on the financial statements of the Company for the year ended December 31, 2011 did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles. In connection with the audit and review of the financial statements of the Company through March 31, 2012, there were no disagreements on any matter of accounting principles or practices, financial statement disclosures, or auditing scope or procedures, which disagreements if not resolved to their satisfaction would have caused them to make reference in connection with SL’s opinion to the subject matter of disagreement.

The Company engaged Scrudato effective August 14, 2012 to review its Form 10-Q for the second quarter ended June 30, 2012. At this time, there have been no prior discussions with Scrudato concerning internal controls and other accounting matters with respect to all accounting matters prior to matters concerning the 10-Q for the second quarter ended June 30, 2012, or any other matter or reportable events listed in Items 304(a)(2)(i) and (ii) of Regulation S-K.

SL invoiced the Company on July 20, 2012 for $32,642.34 for new services rendered to the Company beginning January 11, 2012 through July 20, 2012. The Company previously paid SL approximately $48,000 on account for past services of which $8,267.00 was credited towards the new services invoiced on July 20, 2012. Inclusive in the $32,642.50 invoice from SL dated July 20, 2012 was $5,000 due in connection with work on the Company’s 10-Q for the 2nd quarter ended June 30, 2012 which following

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SL’s dismissal on August 14, 2012 was reviewed by Scrudato. The Company does not dispute the $32,642.34 due SL, but it is unable to pay this amount at this time.

ITEM 9A. CONTROLS AND PROCEDURES

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

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

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

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

Our management, with the participation of the CEO, evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on this evaluation, our management, with the participation of the CEO, concluded that, as of December 31, 2013, our internal control over financial reporting was ineffective and there are material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

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

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

Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the fourth quarter of the year ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTOR AND EXECUTIVE OFFICER SUMMARY

The following persons are our executive officers and directors as of March 31, 2014, and hold the positions set forth opposite their respective names.

NAME OF DIRECTOR OR OFFICER	AGE	POSITION

Jun Heng Park	46	Co-Chief Chief Executive Officer, President and Co-Chairman
Shi Chul (Robert) Kang	53	Co-Chief Executive Officer and Co-Chairman
Thomas Cheong	47	Chief Financial Officer and Director
Jeong youl Choi	47	Director

EXECUTIVE OFFICER AND DIRECTOR BIOS

Jun Heng Park – Co-Chief Executive Officer, President and Co-Chairman

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 as 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 his business degree from George Brown College, Toronto, Canada.

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

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.

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Thomas Cheong – Chief Financial Officer

Mr. Cheong has a broad spectrum of experiences including management, finance, marketing, international sales with a strong background in IT. Prior to his positions with the Company, he spent the past eleven years in key management positions at RNTS Media, Unitech, CCMedia, Netpia, CKGlobal, FineFuture and HackersLab in Korea. He holds a Bachelor of Science in Computer Science from McMaster University, Canada, and Master of International Business Studies from University of South Carolina.

Jeong youl Choi – Director

Mr. Choi joined the Company in January of 2012. Mr. Choi was Chief Executive Officer of Neo solar, 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.

Family Relationships

There are no family relationships between any of our directors and our executive officers.

Involvement in Certain Legal Proceedings

To the Company’s knowledge, during the past ten (10) years, none of the Company’s directors, executive officers, promoters, control persons, or nominees has been:

·	the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

·	convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

·	subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

·	found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law

Code of Ethics

We have not adopted a code of ethics do 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.

Director independence

As all of the Company's directors are employees of the Company, the Company does not have any independent directors on its Board, as defined Nasdaq Stock Market.

Corporate Governance

The Company does not have a standing Nominating Committee. There have been no changes to the procedures whereby security holders may recommend nominees to the registrant's board of directors.

The Company does not have a standing Audit Committee. We do not have a financial expert serving on our board of directors.

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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that our officers and directors, and persons who own more than ten percent of a registered class of our equity securities, file reports of ownership and changes in ownership with the Securities and Exchange Commission and with any exchange on which the Company's securities are traded. Officers, directors and persons owning more than ten percent of such securities are required by Commission regulation to file with the Commission and furnish the Company with copies of all reports required under Section 16(a) of the Exchange Act. To our knowledge, based solely upon our review of the copies of such reports furnished to us, during the fiscal year ended December 31, 2013, all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with.

ITEM 11. EXECUTIVE COMPENSATION

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.”

Position	Year	Salary		Awards		Awards		Comp	Total
Jung Yong Lee (1)	2013	$	0	$	Nil	$	Nil	$	$
Former President, CEO	2012	$	200,000	$	Nil	$	Nil	$	$	200,000

Jun Heng Park (2)	2013	$	400,000	$	Nil	$	Nil	$	$
President and Co-CEO	2012	$	200,000	$	Nil	$	Nil	$	$	200,000

Ho Seok Lee (3)	2013	$	50,000	$	Nil	$	Nil	$	$
Former Chief Financial Officer	2012	$	100,000	$	Nil	$	Nil	$	$	100,000

Thomas Cheong (4)	2013	$	150,000	$	Nil	$	Nil	$	$
Chief Financial Officer	2012

Shi Chul Kang (5)	2013	$	70,000	$	Nil	$	Nil	$	$
Co-CEO	2012

(1) Jung Yong Lee was the Company's President and CEO from March 11, 2011 to March 20, 2013.

(2) Jun Heng Park was appointed the Company’s Co-CEO and Co-President on October 15, 2012.

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(3) Ho Seok Lee was the Company’s CFO from October 15, 2012 until July 24, 2013.

(4) Thomas Cheong was appointed the Company’s CFO on July 24, 2013.

(5) Shi Chul Kang was appointed Co-Ceo on November 4, 2013.

Employment Agreements with Executive Officers

On January 1, 2013, 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 June 1, 2013, CFO Thomas Cheong agreed to enter into a one year employment agreement with the Company. The agreed annual compensation is $300,000 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.

Outstanding Equity Awards at Fiscal Year End

The following table sets forth information with respect to grants of options to purchase our common stock to the named executive officers at December 31, 2013.

Options awards

Stock awards

Name

Number of

securities

underlying

unexercised

options (#)

exercisable

Number of

securities

underlying

unexercised

options (#)

unexercisable

Equity

incentive

plan

awards:

Number of

securities

underlying

unexercised

unearned

options (#)

Option

exercise

price ($)

Option

expiration

date

Number

of shares

or units

of stock

that have

not

vested (#)

Market

value of

shares of

units of

stock that

have not

vested ($)

Equity

incentive

plan

awards:

Number

unearned

shares,

units or

other

rights that

have not

vested (#)

Equity

incentive

plan

awards:

Market or

payout

value of

unearned

shares,

units or

other

rights

that have

not

vested ($)

Jung Yong

Lee

Jun Heng

Park

Ho Seok

Lee

Thomas Cheong

Shi Chul Kang

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Director Compensation

The following table sets forth certain information concerning compensation paid or accrued to our non-executive directors during the year ended December 31, 2013.

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								-
Ho Seok Lee								-
Jeong youl Choi								-
Thomas Cheong								-
Shi Chul Kang								-

Compensation Committee Interlocks and Insider Participation

We do not currently have a standing Compensation Committee. Our entire board of directors participated in deliberations concerning executive officer compensation.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows the beneficial ownership of our common stock as of March 11, 2014. 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 March 11, 2014;

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

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

IDENTITY OF PERSON OR GROUP	AMOUNT OF SHARES BENEFICIALLY OWNED		PERCENT OF SHARES BENEFICIALLY OWNED(1,2)			CLASS
Vynewood Group Limited
Shareholder	4,000,000		5.90%			Common

Jun Heng Park
Co-CEO and President		7,600,000		9.454	%	Common

Shi Chul Kang
Co-CEO		1,700,000		2.114	%	Common

Thomas Cheong
CFO / Director		1,500,000		1.866	%	Common

Jeong youl Choi
Director		3,600,000		4.478	%	Common

Officers and Directors as a group (4 persons)		14,400,000		17.912	%	Common

Jung Yong Lee
Former CEO and President		800,000		0.995	%	Common

(1) The percentage of shares owned is based on 80,383,662 shares being outstanding as of March 11, 2014. If the beneficially owned shares of any individual or group in the above table include any options, warrants, or other rights to purchase shares in the Company's stock, such right to purchase share is disclosed by footnote below and the percentage of shares owned includes such shares as if the right to purchase had been duly exercised.

(2) BENEFICIAL OWNERSHIP OF SECURITIES: Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, involving the determination of beneficial owners of securities, a beneficial owner of securities is person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has, or shares, voting power and/or investment power with respect to the securities, and any person who has the right to acquire beneficial ownership of the security within sixty days through means including the exercise of any option, warrant or conversion of a security.

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ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Except as set forth below, during the past three years, there have been no transactions, whether directly or indirectly, between the Company and any of its officers, directors or their family members.

The Company does not have any independent directors on its Board, as defined by the Nasdaq Stock Market.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table sets forth fees billed to us by our independent auditors for the years ended 2013 and 2012 for (i) services rendered for the audit of our annual financial statements and the review of our quarterly financial statements, (ii) services rendered that are reasonably related to the performance of the audit or review of our financial statements that are not reported as Audit Fees, and (iii) services rendered in connection with tax preparation, compliance, advice and assistance.

SERVICES	2013		2012
Audit fees	$	14,750	$	12,750
Audit-related fees
Tax fees
All other fees		7,500		7,500

Total fees	$	22,250	$	20,250

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Item 15. Exhibits, Financial Statement Schedules

Exhibit No.		Description
3.1		Amended Articles of Incorporation (Incorporated by reference to the Company’s Registration Statement on Form 10 filed on December 10, 2008)
3.2		Restates Bylaws (Incorporated by reference to the Company’s Registration Statement on Form 10 filed on December 10, 2008)
10.1		Purchase Agreement between Leo Motors, Inc. and PDI C&D/RDC SPRL, dated August 10, 2012 (incorporated by reference from the Company’s Quarterly Report on From 10-Q filed November 23, 2012)
10.2		Amendment to Purchase Agreement between Leo Motors, Inc. and PDI C&D/RDC SPRL, dated October 13, 2012 (incorporated by reference from the Company’s Quarterly Report on From 10-Q filed November 23, 2012)
10.3		2010 Employee Stock Option Plan (incorporated by reference from the Company’s Current Report on Form 8-K filed February 3, 2010)
10.4		Purchase Agreement between Leo Motors, Inc. and Leo BnT Co. Ltd. (incorporated by reference from the Company Current Report on Form 8-K filed on February 16, 2010)

10.5		Agreement between Leo Motors, Inc. and M&M Corp. dated March 26, 2010 (incorporated by reference from the Company’s Current Report on Form 8-K filed March 26, 2010)
10.6		Employment Agreement between Leo Motors, Inc. and Jung Yong Lee dated January 1, 2012 (incorporated by reference from the Company Annual Report on Form 10-K filed on April 16, 2013)
16.1		Former Certified Public Accountant Dismissal Letter (incorporated by reference from the Company’s Current Report on Form 8-K filed September 25, 2012)
21		List of Subsidiaries (Incorporated by reference to the Company's current report on Form 8-K filed with the Securities and Exchange Commission on May 16, 2011)
31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934
31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934
32.1*		Certification of Chief Executive Officer pursuant to Section 1350
32.2*		Certification of Chief Financial Officer pursuant to Section 1350
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extention Schema
101.CAL		XBRL Taxonomy Extention Calculation Linkbase
101.DEF		XBRL Taxonomy Extention Definition Linkbase
101.LAB		XBRL Taxonomy Extention Label Linkbase
101.PRE		XBRL Taxonomy Extention Presentation Linkbase

* Filed herewith

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SIGNATURES

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

	Leo Motors, Inc.

March 31, 2014	By:	/s/ Jun Heng Park
		Jun Heng Park
		Chief Executive Officer (Principal Executive Officer) and Director

March 31, 2014	By:	/s/ Thomas Cheong
		Thomas Cheong
		Chief Financial Officer (Principal Financial and Accounting Officer) and Director

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Jun Heng Park
Jun Heng Park	Co-Chief Executive Officer (Principal Executive Officer) and Director	March 31, 2014

/s/ Thomas Cheong
Thomas Cheong	Chief Financial Officer (Principal Financial and Accounting Officer) and Director	March 31, 2014

/s/ Shi Chul Kang		March 31, 2014
Shi Chul Kang	Co-Chief Executive Officer

/s/ Jeong youl Choi
Jeong youl Choi	Director	March 31, 2014

LEO MOTORS, INC.

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012 and 2011

(Audited)

CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-1

Consolidated Balance Sheets	F-2

Consolidated Statements of Operations and Comprehensive Income(Loss)	F-3

Consolidated Statements of Stockholders' Equity	F-4

Consolidated Statements of Cash Flows	F-5

Notes to Consolidated Financial Statements	F-6 to F-14

John Scrudato CPA

7 Valley View Drive

Califon, New Jersey 07830

(908)-534-0008

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Leo Motors, Inc.

We have audited the accompanying balance sheet of Leo Motors, Inc. and subsidiaries (“the Company”) as of December 31, 2013 and 2012, and the related statements of operations, stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal controls over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion based on our audit, the financial statements referred to above present fairly, in all material respects, the financial position of Leo Motors, Inc. and subsidiaries as of December 31, 2013 and 2012, and the results of its operations, stockholders' equity, and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 7, the Company has incurred significant losses since inception of $16,871,850. This and other factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note 7. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ John Scrudato CPA

Califon, New Jersey

March 20, 2014

F-1


LEO MOTORS, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS EXPRESSED IN US DOLLAR)

	Balance at
	12/31/2013				12/31/2012
	(Audited)				(Audited)
Assets
Current Assets
Cash and cash equivalents		$	1,774			$	430,307
Inventories			0				235,255
Prepayment to suppliers			197,973				303,457
Short term advances			4,900				0
Other current assets			563				600
Total Current Assets			205,210				969,619
Fixed assets, net			35,996				51,153
Deposit			76,321				76,091
Other non-current assets			63,831				57,166
Investments			762,000				270,000
Total Assets		$	1,143,358			$	1,424,029

Liabilities and Equity(Deficit)
Current Liabilities:
Accounts payable and accrued expenses		$	840,604			$	865,096
Short term borrowings			29,752				240,000
Advance from customers			435,439				445,455
Due to related parties			150,637				187,372
Taxes payable			143,210				158,388
Total Current Liabilities			1,599,642				1,896,311
Accrued retirement benefits			62,036				91,671
Total Liabilities			1,661,678				1,987,982
Commitments			-				-
Leo Motors, Inc.("LEOM") Equity(Deficit):
Common stock ($0.001 par value; 100,000,000 shares authorized); 67,833,662 and 56,763,623 shares issued and outstanding at December 31, 2013 and 2012.			67,834				56,764
Additional paid-in capital			13,290,081				12,564,656
Accumulated other comprehensive income			468,330				469,875
Accumulated loss			(16,871,850	)			(16,246,397	)
Total Equity(Deficit) Leo Motors, Inc.			(3,045,605	)			(3,155,102	)
Non-controlling interest			2,527,285				2,591,149
Total Equity(Deficit)			(518,320	)			(563,953	)
Total Liabilities and Equity(Deficit)		$	1,143,358			$	1,424,029

"See accompanying notes to consolidated financial statements"

F-2


LEO MOTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS EXPRESSED IN US DOLLAR)

	For the Years Ended December 31,
	2013			2012
	(Unaudited)			(Unaudited)
Revenues	$	0		$	25,605

Cost of Revenues		0			23,786

Gross Profit		0			1,819

Operating Expenses		875,901			2,925,023

Income(loss) from Continuing Operations		(875,901	)		(2,923,204	)

Other Income (Expenses)
Assets disposal gain, net		0			52,893
Debt Forgiveness		0			1,309,028
Interest expense		(136,775	)		(197,634	)
Non-Operating (expense) income		(225,287	)		(105,705	)

Total Other Income (Expenses)		(362,062	)		1,058,582

Income(loss) from Continuing Operations Before Income Taxes		(1,237,963	)		(1,864,622	)

Income Tax Expense		6,640			25,283

Net Income(Loss)	$	(1,244,603	)	$	(1,889,905	)

Income(loss) attributable to non-controlling interest	$	(612,432	)	$	(54,249	)

Net Income(Loss) Attributable To Leo Motors, Inc.		(632,171	)		(1,835,656	)

Other Comprehensive Income:
Net Income(loss)	$	(625,453	)	$	(1,835,656	)
Unrealized foreign currency translation gain		(1,545	)		(1,001	)

Comprehensive Income(loss) Attributable to Leo Motors, Inc.	$	(626,998	)	$	(1,836,657	)
Net Loss per Common Share:
Basic	$	(0.02	)	$	(0.04	)
Weighted Average Common Shares Outstanding:
Basic and Diluted	$	60,220,851		$	53,869,865

"See accompanying notes to consolidated financial statements"

F-3


LEO MOTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS EXPRESSED IN US DOLLAR)

	For the Years Ended December 31,
	2013			2012
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,244,603	)	$	(1,889,905	)
Adjustments to reconcile net loss to net cash
used in operating activities:

Depreciation and amortization		15,157			24,957
Share of loss of an unconsolidated affiliate		0			54,249
Debt discount		(53,748	)		0
Foreign currency translation		(1,545	)		(1,001	)
Forgiveness of debt		0			(479,383	)
Stock-based compensation		203,490			1,653,775
Changes in assets and liabilities:
Accounts receivable		0			86,244
Inventories		235,255			17,329
Prepayment to suppliers		105,484			55,794
Other current assets		(4,863	)		1,905
Accounts payable, other payables and accrued expenses		(78,613	)		(437,950	)
Accrued retirement benefits		(29,635	)		39,293
Advances from customers		(10,016	)		358,689
Taxes payable		(15,178	)		(104,866	)
Net cash used in operating activities:		(878,815	)		(620,870	)

Cash flows from investing activities:
Investment in equipment		0			(27,359	)
Return of deposit		0			483,741
Investments		(302,000	)		(270,000	)
Other Investments		(6,895	)		19,554
Net cash provided(used) in investing activities:		(308,895	)		205,936

Cash flows from financing activities:
Payments on notes		(36,735	)		(433,651	)
Proceeds from loans		247,344			382,416
Increase in minority interest		548,568			895,596
Net cash provided(used) by financing activities:		759,177			844,361

NET DECREASE IN CASH AND CASH EQUIVALENTS		(428,533	)		429,427

Cash and cash equivalents - beginning of year		430,307			880

Cash and cash equivalents - end of year	$	1,774		$	430,307


Interest	$	0		$	120,718
Income taxes	$	0		$	25,283
Supplemental disclosures of non cash activities:
Common stock issued for services	$	203,490		$	213,300
Debt forgiveness included as income	$	0		$	829,645
Common stock issued for investments	$	190,000		$	0
Conversion of debt for common stock	$	240,000		$	0

"See accompanying notes to consolidated financial statements"

F-4


LEO MOTORS, INC.
AUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended December 31, 2013 and 2012
(AMOUNTS EXPRESSED IN US DOLLAR)
																(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, 2011		50,233,115	$	50,233	$	10,774,996	$	(14,410,741	)	$	470,876		$	1,214,688		$	(1,899,948	)

Stock-based compensation		5,712,500		5,713		1,648,062		-			-			-			1,653,775

Stock Issued in payment of debt		818,008		818		141,598		-			-			-			142,416

Minority interest contributions		-		-		-		-			-			1,430,710			1,430,710

Net loss for the year 2012		-		-		-		(1,835,656	)		-			(54,249	)		(1,889,905	)

Foreign currency translation adjustment		-		-		-		-			(1,001	)					(1,001	)

Balance, December 31, 2012		56,763,623		56,764		12,564,656		(16,246,397	)		469,875			2,591,149			(563,953	)

Stock-based compensation		4,151,707		4,152		199,338		-			-			-			203,490

Stock Issued in payment of debt		2,918,332		2,918		346,805		-			-			-			349,723

Stock issued for Investment		4,000,000		4,000		186,000		-			-			-			190,000

Minority interest contributions		-		-		-		-			-			548,568			548,568

Net loss for the year 2013		-		-		-		(632,171	)		-			(612,432	)		(1,244,603	)

Foreign currency translation adjustment		-		-		-		-			(1,545	)					(1,545	)

Balance, December 31, 2013		67,833,662		67,834		13,296,799		(16,878,568	)		468,330			2,527,285			(518,320	)


See accompanying notes to consolidated financial statements

F-5

LEO MOTORS, INC.

Notes to the Consolidated Financial Statements

As of December 31, 2013 and 2012

(Audited)

NOTE 1 - COMPANY BACKGROUND

Company Business

Company is currently in development, assembly and sales of the energy storage devices and electric vehicle components.

Background

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

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

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 Leo Motors Co. Ltd. Korea where the Parent Company has significant control with a shareholders ownership percentage of 47.63 % at the end of December 31, 2012 and an ownership percentage of 51.42% at the end of 2011, respectively. All inter-company transactions and balances have been eliminated upon consolidation.

Use of Estimates

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

F-6

Fair Value of Financial Instruments

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

Revenue Recognition

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

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

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

Accounts Receivables

Accounts receivables of the Company are reviewed to determine if their carrying value has become impaired.

The Company considers the assets to be impaired if the balances are greater than one-year old. Management regularly reviews accounts receivable and will establish an allowance for potentially uncollectible amounts when appropriate. When accounts are written off, they will be charged against the allowance.

Receivables are not collateralized and do not bear interest.

Cash Equivalents

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

Fixed Assets

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

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

F-7

Intangible and Long Lived Assets

The Company follows ASC 360-10, “Property, Plant, and Equipment,” which established a “primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. Through December 31, 2011, the Company had not experienced impairment losses on its long-lived assets.

Income Taxes

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

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

Loss per Share

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

Stock-Based Compensation

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

F-8

Foreign Currency Translation And Comprehensive Income

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

Recent Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2010-06, Improving Disclosures about Fair Value Measurements (“ASU No. 2010-06”). The new standard addresses, among other things, guidance regarding activity in Level 3 fair value measurements. Portions of ASU No. 2010-06 that relate to the Level 3 activity disclosures became effective for the annual reporting period beginning after December 15, 2010. The adoption of this ASU did not have an impact on the Company’s consolidated financial statements.

On March 5, 2010, the FASB issued ASU No. 2010-11 Derivatives and Hedging Topic 815 “Scope Exception Related to Embedded Credit Derivatives.” This ASU clarifies the guidance within the derivative literature that exempts certain credit related features from analysis as potential embedded derivatives requiring separate accounting. The ASU specifies that an embedded credit derivative feature related to the transfer of credit risk that is only in the form of subordination of one financial instrument to another is not subject to bifurcation from a host contract under ASC 815-15-25, “ Derivatives and Hedging — Embedded Derivatives — Recognition. ” All other embedded credit derivative features should be analyzed to determine whether their economic characteristics and risks are “clearly and closely related” to the economic characteristics and risks of the host contract and whether bifurcation is required. The ASU became effective for the Company on July 1, 2010. The adoption of this ASU did not have an impact on the Company’s consolidated financial statements.

In May 2011, the FASB issued ASU 2011-04 which was issued to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and IFRS. ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for Level 3 fair value measurements. This guidance is effective for the Company beginning on January 1, 2012. The adoption of ASU 2011-04 is not expected to significantly impact the Company’s consolidated financial statements.

In June 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-05, Presentation of Comprehensive Income . ASU 2011-05 revises the manner in which entities present comprehensive income in their financial statements. The new guidance removes the presentation options in Accounting Standards Codification (ASC) 220, Comprehensive Income , and requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The ASU does not change the items that must be reported in other comprehensive income. In December 2011, the FASB issued ASU 2011-12 which defers the requirement in ASU 2011-05 that companies present reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements. ASU 2011-05 is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2011, with early adoption permitted. The adoption of ASU 2011-05, as amended by ASU 2011-12, is not expected to significantly impact the Company’s consolidated financial statements.

In September 2011, the FASB issued ASU 2011-08 which provides an entity the option to first assess qualitative factors to determine whether it is necessary to perform the current two-step test for goodwill impairment. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. The revised standard is effective for the Company for its annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of ASU 2011-08 is not expected to significantly impact the Company’s consolidated financial statements.

F-9

NOTE 3 - EARNINGS PER SHARE

The Company reports basic and diluted earnings per share (EPS) according to the provisions of ASC Topic 260, which requires the presentation of basic EPS and, for companies with complex capital structures, diluted EPS. Basic EPS excludes dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income (loss) available to common stockholders, adjusted by other changes in income or loss that would result from the assumed conversion of those potential common shares, by the weighted number of common shares and common share equivalents (unless their effect is antidilutive) outstanding. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be antidilutive. Thus, these equivalents are not included in the calculation of diluted loss per share, resulting in basic and diluted loss per share being equal. The following is a reconciliation of the computation for basic and diluted EPS for the years ended December 31, 2013 and December 31, 2012:


	For the years ended
	12/31/2013			12/31/2012

Net Income (Loss)	$	(1,244,603	)	$	(1,889,905	)


Weighted-average common stock Outstanding - basic		60,220,851			53,869,865
Equivalents
Stock options		-			-
Warrants		-			-
Convertible Notes		1,439,655			1,180,440
Weighted-average common shares
outstanding- Diluted		61,660,506			55,060,305

NOTE 4 - DUE TO RELATED PARTY

The company is indebted to its officer for advances. Repayment is on demand without interest. The balance at December 31, 2013 was $150,637 and at December 31, 2012 was $ 187,372.

NOTE 5 - PAYMENTS RECEIVED IN ADVANCE

The Company during the periods received payments from potential customers, or deposits, on future orders. The Company’s policy is to record these payments as a liability until the product is completed and shipped to the customer at which the Company recognizes revenue. As of December 31, 2013 and December 31, 2012, the balance of payments received in advance was $197,973 and $ 303,457, respectively.

F-10

NOTE 6 - SUBSEQUENT EVENTS

There are no reportable subsequent events.

NOTE 7 - GOING CONCERN

As reported in the consolidated financial statements, the Company has accumulated deficits of $16,871,850 as of December 31, 2013. The Company's stockholders' deficit at December 31, 2013 was $518,320 and its current liabilities exceeded its current assets by $1,394,432 on December 31, 2013. 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 is unable to obtain adequate capital it could be forced to cease operations.

In order to continue as a going concern, develop and generate revenues and achieve a profitable level of operations, the Company will need, among other things, additional capital resources. Management's plans to obtain such resources for the Company include (1) raising additional capital through sales of common stock, (2) converting promissory notes into common stock and (3) entering into acquisition agreements with profitable entities with significant operations. In addition, management is continually seeking to streamline its operations and expand the business through a variety of industries, including real estate and financial management. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

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

NOTE 8 - COMMITMENTS AND CONTINGENCIES

(a) Lease Commitments

The Company leases its office space in Ha-Nam City in Korea which expires on December 31, 2016. The minimum obligations under such commitments for the years ending December 31, 2014 through December 31, 2016 are listed on the table below.


For the Year	Amount
Ending

2014	$	40,000
2015	$	40,000
2016	$	40,000
2017	$	0

Total Commitment	$	120,000

F-11

(b) Strategic Investment

On November 10, 2012 the Company and PDI C&D/RDC SPRL Inc. ("PDI"), an affiliate of PDI Global LLC, a major architectural design company in the U.S., have signed a contract to supply an independent solar power system grafted with Leo Motors' E-Box power storage device for a housing project in the Democratic Republic of the Congo ("DRC"). The Company has a commitment to raise $1,000,000 to fulfill its part of the contract for strategic investment. As of December 31, 2012 the company has invested $270,000 recorded as an investment using the cost method of accounting for their 10% interest in the project.

NOTE 9. INVENTORIES

Inventories at December 31, 2013 and 2012 consist of the following:


	31-Dec-13			31-Dec-12
	US$			US$
Raw material		$	0		$	230,582
Work in process			0			4,673
Finished goods			0			0
		$	0		$	235,255

Inventory was written down to $0 in 2013 due to obsolescence and a small fire destroying what was remaining as inventory.

F-12

NOTE 10 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31, 2013 and December 31, 2012:


	December 31,			December 31,
	2013			2012
Vehicles	$	7,581		$	7,581
Tools		12,906			12,906
Office		79,963			79,963
Facility equipment		95,132			95,132

Total property and equipment		195,582			195,582

Accumulated depreciation		(159,586	)		(144,429	)
Property and equipment, net	$	35,996		$	51,153

Depreciation expense for the years ended December 31, 2013 and 2012 amounted to $15,157 and $24,957, respectively.

NOTE 11 - INVESTMENTS

During 2013 the Company continued to fund our housing project in the republic of Congo. Our investment at December 31, 2013 was 720,000. On December 13, 2013, the Company has invested $42,000 and acquired 2.84% of LGM Co., Ltd. in Korea. (617,764 shares of common stock.) LGM is a company developing electric boats.

During 2012 the Company started its investment in a housing project in the Republic of the Congo which will use our E-Box power storage device. To date as of December 31, 2012, $270,000 had been invested with additional amounts to be added as described in note 8. This 10% interest has been recorded using the cost investment of accounting for investments.

NOTE 12 - SHORT TERM BORROWINGS

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

In 2013 the Company borrowed $83,500 in short term convertible notes. The terms of the note was for nine months with an 8% interest rate payable at any time during the note term. In addition to these notes $240,000 of short term convertible debt was exchanged for common stock during the year.

During the year 2012 the Company paid off the December 31, 2011 short term borrowings of $ 433,651 and borrowed additional short term funds. As of December 31, 2012 the total amount of our short term borrowings was $240,000. This was comprised of a $40,000 note was subsequently converted into 513,774 shares of common stock in March 2013 to satisfy that obligation. Another note for $200,000 comprised the remaining balance of that account. This note is for twelve months with a zero percent stated interest rate. Additionally, upon completion of the note term it can be converted for 666,666 shares of our common stock.

F-13

NOTE 13. SEGMENT INFORMATION

ASC Topic 280 requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. During the years ended December 31, 2013 and 2012, the Company operated in one reportable business segment: the sale and manufacture of specialized electric vehicle. The Company's reportable segment is a strategic business unit that offers its product.

F-14

Nevada		95-3909667
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)	Smaller reporting company [ X ]

		Page
PART I

Forward-Looking Statements
Item 1.	Business	1
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	14
Item 2.	Properties	14
Item 3.	Legal Proceedings	14
Item 4.	Mine Safety Disclosures	14

PART II

Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	15
Item 6.	Selected Financial Data	17
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 8.	Financial Statements and Supplementary Data	20
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	20
Item 9A.	Controls and Procedures	21
Item 9B.	Other Information	22

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	22
Item 11.	Executive Compensation	24
Item 12.	Security Ownership of Certain Beneficial Owners and Management and related stockholder matters	26
Item 13.	Certain Relationships and Related Transactions, and Director Independence	27
Item 14.	Principal Accounting Fees and Services	27

PART IV

Item 15.	Exhibits, Financial Statement Schedules	28

Signatures		29

Registration date	Registration number	Name	Country
2011.02.09	1015138	Battery stack assembly	Rep. of Korea
2011.01.05	1007554	Zinc-Air fuel cell stack assembly	Rep. of Korea
2011.04.05	1028758	Electric automobile driving mode automatic control method	Rep. of Korea
2012.06.27	1161613	Electric automobile driving mode control method	Rep. of Korea
2012.09.13	1184335	Motor	Rep. of Korea
2010.09.29	985521	Battery stack assembly	Rep. of Korea
2011.03.18	1024663	Zinc-Air fuel cell stack assembly	Rep. of Korea
2012.4.17	1140345	Electric vehicle power development apparatus	Rep. of Korea
2012.05.16	1148980	Electric vehicle battery charging apparatus	Rep. of Korea

2011.04.05	1028773	Electric vehicle powertrain gear apparatus	Rep. of Korea
2010.12.22	1004621	Motor magnetic position fixing apparatus	Rep. of Korea
2011.01.05	1007593	Car velocity control method to electric vehicle battery charging state	Rep. of Korea
2012.09.06	1182336	Cell voltage ballancing control method of battery management system	Rep. of Korea
2012.05.24	1151779	Electric vehicle motor cooling apparatus	Rep. of Korea
2011.04.05	1028755	Electric vehicle motor cooling apparatus	Rep. of Korea
2011.04.05	1028756	Power input control circuit for battery management system	Rep. of Korea
2007.02.07	682489	A Multi Motor Device for Electric Vehicle	Rep. of Korea
2010.08.11	977018	Zinc-air fuel cell reaction cell structure	Rep. of Korea
2010.11.09	994438	Zinc-air fuel cell electrolyte emission system	Rep. of Korea
2010.12.15	1002963	Zinc-air fuel cell assembly	Rep. of Korea
2012.07.02	1163537	Electric vehicle fuel cell duality system	Rep. of Korea
2012.07.25	1170001	Motor	Rep. of Korea
2010.08.11	976504	Zinc-air fuel cell assembly	Rep. of Korea
2012.06.07	1155993	Electric vehicle battery housing	Rep. of Korea
2010.12.15	1002965	Zinc-ball supplying apparatus	Rep. of Korea
2012.07.19	1168597	Zinc-ball supplying apparatus	Rep. of Korea
2012.05.24	1151783	Zinc-ball supplying apparatus	Rep. of Korea
2012.05.29	1152790	Zinc-ball supplying apparatus	Rep. of Korea
2012.05.29	1152793	Zinc-ball supplying apparatus	Rep. of Korea
2012.10.05	1187829	Zinc-air fuel cell assembly having zinc oxide secession means	Rep. of Korea
2012.07.19	1168598	Zinc-air fuel cell assembly of radial shape stack structure	Rep. of Korea
2012.04.30	1143406	Electric truck battery mounting structure	Rep. of Korea
2012.10.05	1187866	Zinc-air fuel cell reaction cell structure	Rep. of Korea
2012.10.05	1187870	Zinc-air fuel cell reaction cell unit enabling simultaneous supply and emission of zinc-ball	Rep. of Korea
2012.07.25	1170002	Battery stack assembly	Rep. of Korea
2010.12.10	1001982	Battery stack assembly	Rep. of Korea
2011.01.17	1010235	Zinc-air fuel cell assembly	Rep. of Korea
2011.01.17	1010236	Zinc-air fuel cell assembly	Rep. of Korea
2008.05.06	490413	Vehicle	Rep. of Korea
2010.07.30	831435	Hilless	Rep. of Korea
2012.09.26	0662002	Scooter	Rep. of Korea
2012.09.26	0662003	Scooter	Rep. of Korea
2012.09.26	0662004	Scooter	Rep. of Korea

2012.11.26	1206784	Zinc-air fuel cell system, and control method for the same	Rep. of Korea
2013.01.25	1228434	Zinc-air fuel cell assembly for ocean	Rep. of Korea
2013.01.25	1228435	Zinc-air fuel cell assembly for ocean	Rep. of Korea