UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended	June 30, 2011

or

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from		to

Commission file number 000-53525

Delaware	95-3909667
(State or other jurisdiction of incorporation or organization)	(I. R. S. Employer Identification No.)
1291-1, Hasangok-dong, Hanam City, Gyeonggi-do, Republic of Korea	465-250
(Address of principal executive offices)	(Zip Code)

757-766-6100

(Registrant’s telephone number, including area code)

n/a

(Former name, former address and former fiscal year, if changed since last report)

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

The number of shares of the registrant’s common stock outstanding as of August 15, 2011 was 50,833,115 shares.

QUARTERLY REPORT ON FORM 10-Q

for the Quarter ended June 30, 2011

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

3

Item 1.

Financial Statements

3

 

Condensed Consolidated Balance Sheets

3

 

Condensed Consolidated Statements of Operations and Comprehensive Income

 4

 

Condensed Consolidated Statements of Cash Flows

5

Notes to Condensed Consolidated Financial Statements

6

Item 2.

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

13

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

14

Item 4.

Controls and Procedures

14

PART II - OTHER INFORMATION

15

Item 1.

Legal Proceedings

15

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

15

Item 3.

Defaults Upon Senior Securities

15

Item 4.

(Removed and Reserved)

15

Item 5.

Other Information

15

Item 6.

Exhibit

15

Signatures

16

Page 2

Part I.  Financial Information

Item 1.  Financial Statements

The Accompanying Notes are an Integral Part of these Financial Statements

Page 3

The Accompanying Notes are an Integral Part of these Financial Statements

Page 4

LEO MOTORS, INC.
Consolidated Statements of Cash Flows
(Unaudited)
		For the 6 Months Ended
		June 30,		June 30,
		2011		2010
Cash Flows From Operating Activities
Net loss	$	(332,337)	$	(2,628,236)
Adjustments to reconcile net loss to net cash provided by operating activities :
Accounting for non-controlling interest				(181,300)
Stock issued for compensation		-		2,250,000
Depreciation		21,496		53,950
Foreign currency translation		572		988,414
Loss on disposition of property and equipment		-		130
Change in long-term investment		-		-
Changes in working capital:
(Increase) decrease in inventory		(285,385)		(1,944,253)
(Increase)  decrease in accounts receivable		(12,648)		232,293
(Increase)  decrease in short term loans		-		-
(Increase)  decrease in advance payment		-		-
(Increase)  decrease in deposit/prepaid		(2,843)		(1,401,747)
Increase (decrease) in accrued salary		-		-
Increase (decrease) in accounts payables and accrued expenses		30,929		216,473
Increase (decrease) in other payable		521,973		305,684
Payments in advance from customers		12,525		2,661,941
Increase (decrease) in accrued warranty expense		-		-
Increase  (decrease) in taxes payable		-		-
Increase (decrease) in accrued severance benefits		(2,150)		(3,407)
Increase (decrease) in other liabilities		30,274		-
Net Cash Provided by (Used in) Operating Activities		(17,594)		549,942
Cash Flows From Investing Activities
Increase (decrease) in short-term loan		-		-
Investment in net equity interest		-		(5,500,000)
Acquisition of intangible assets		-		-
Purchase (Disposition) of fixed assets		14,949		-
Outlay for or deposit refunded		7,485		(57,419)
Increase in other non-current assets		(2,843)		-
Net Cash Provided by (Used in) Investing Activities		19,591		(5,557,419)
Cash Flows From Financing Activities
Stock issued for investment in net equity interest		-		5,500,000
Proceeds (repaid) from short-term borrowing		(57,867)		(15,108)
Advances from related parties (Debt reduction related party)		-		-
Increase in minority interest		-		35,433
Issuance of common stock		-		-
Net Cash flows from financing activities		(57,867)		5,520,325
Net Increase (Decrease) in Cash		(55,870)		512,848
Cash at the Beginning of the period		71,192		499,025
Cash at the End of the period	$	15,322	$	1,011,873

Page 5

LEO MOTORS, INC.
Consolidated Statements of Cash Flows (Cont’d)
(Unaudited)
		For the 6 Months Ended
		June 30,		June 30,
		2011		2010
Supplemental  Cash Flow Disclosures:
Acquisition of interest in a company paid in common stock	$	-	$	-
Compensation paid in stock		-		-
Issuance of stock for acquisition  and compensation		-		-
Cash paid during the period for interest		-		-
Cash paid during year for taxes		14,487		-

The Accompanying Notes are an Integral Part of these Financial Statements

Page 6

LEO MOTORS, INC.

Notes to the Consolidated Financial Statements

June 30, 2011

(Unaudited)

NOTE 1 – BASIS OF PRESENTATION

The consolidated balance sheet of Leo Motors Inc. (the “Company”) as of June 30, 2011, and the consolidated statements of operations and cash flows for the three and six months ended June 30, 2011, have not been audited. However, in the opinion of management, such information includes all adjustments (consisting only of normal recurring adjustments) which are necessary to properly reflect the financial position of the Company as of June 30, 2011, and the results of operations for the three and six months ended June 30, 2011.

Certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, although management believes that the disclosures are adequate to make the information presented not misleading.  Interim period results are not necessarily indicative of the results to be achieved for an entire year.  These financial statements should be read in conjunction with the financial  statements and notes to financial statements included in the Company’s consolidated financial statements as filed on Form 10-K for the year ended December 31, 2010.

NOTE 2 – NATURE OF OPERATIONS

Company Business

The Company, through its operating subsidiary Leo Motors, Co. Ltd., a Korean Company (“Leozone”), is in the business of developing and marketing Electric Vehicles (“EVs”) and EV components.  The Company’s current operations consist of testing and developing production capability of EV Power Train Systems as well as several models of EV.

Corporate Background

Leo Motors, Inc, Inc (the "Company") was originally incorporated as Classic Auto Accessories, a California Corporation on July 2, 1986.  The Company then underwent several name changes from FCR Automotive Group, Inc. to Shinil Precision Machinery, Inc. to Simco America Inc. and then to Leo Motors. The Company had been dormant since 1989, and on November 12, 2007 acquired Leozone (then Leozone Co., Ltd.) as its operating company. The acquisition exchanged shares in Leo Motors, Inc. for shares in Leozone.  As this is a reverse acquisition the accounting treatment is that of a combination of the two entities with the activity of Leozone prior to the acquisition, and Leo Motors, Inc. going forward. The financial statements reflect the activity for all periods presented as if the acquisition had occurred January 1, 2007.

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

Page 7

NOTE 3 – SUMMAY OF SIGNIFICANT ACCOUNTING POLICIES

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

Basis of Presentation and Consolidation

These financial statements and related notes are expressed in US dollars. The Company’s fiscal year end is December 31. The consolidated financial statements include the financial statements of the Leo Motors Co. Ltd., a Korean Company, where the Company is the controlling shareholder.  All inter-company transactions and balances have been eliminated upon consolidation.

Use of Estimates

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

Fair Value of Financial Instruments

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

Revenue Recognition

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

·

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

·

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

Accounts Receivables

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

Page 8

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

Receivables are not collateralized and do not bear interest.  

Cash Equivalents

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

Fixed Assets

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

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

Income Taxes

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

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

Page 9

Loss per Share

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

Stock-Based Compensation

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

Recent Accounting Pronouncements and Impact of New Accounting Standards

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

NOTE 4 – EARNINGS PER SHARE

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

NOTE 5 – INVENTORY

The Company accounts for its inventory under the FIFO method and lower of cost or market method of costing.  The company's inventory consists of parts for the electric transportation industry. As of June 30, 2011 and 2010, inventory consisted of:

		At June 30,
		2011			2011
Raw materials	$	1,141,274		$	975,301
Work-in-process		218,659			99,531
Finished goods		10,285			10,002
	$	1,370,218		$	1,084,834
Reserve for slow moving and obsolete goods		(30,000)			(30,000)
TOTAL	$	1,340,218		$	1,054,834

Page 10

NOTE 6 – DUE TO RELATED PARTY

The company is indebted to its officer for advances. Repayment is on demand without interest. The balance at June 30, 2011 was $ 1,073,477.

NOTE 7 – PAYMENTS RECEIVED IN ADVANCE

The Company during the periods received payments from potential customers, or deposits, on future orders. The Company's policy is to record these payments as a liability until the product is completed and shipped to the customer at which the Company recognizes revenue. As of June 30, 2011 and 2010, the balance of payments received in advance was $ 556,749 and $ 544,224.

NOTE 8 – CAPITAL STOCK  

The Company issued 7,000,000 shares to acquire 50 % of Leo B & T Corp. in February 2010, valued at $0.79 per share resulting in purchase price paid in the amount of $5,500,000.  On February 8 2010, 3,000,000 shares as compensation paid to officers which was valued at $0.75 per share.  The remaining 125,000 shares were for consulting fees and IR services paid in stock with price ranging from $0.48 to $1.45 per share.

The Company has only one class of stock, common stock.  For the years ended December 31, 2010 and 2009, the Company issued 10,125,000 and 9,095,000 shares, respectively.  Shares issued for services were recognized as consulting and service fees.

The Company issued no shares during the six months ended June 30, 2011 or through the subsequent period through the date of this report.

The Company is authorized to issue 100,000,000 shares and as of June 30, 2011 and December 31, 2010, the Company has 50,833,115 shares issued and outstanding.

NOTE 9 – GOING CONCERN

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not established any profitable operations to cover its operating costs. The Company will engage in very limited activities without incurring any liabilities that must be satisfied in cash until a source of funding is secured or profitability is returned. The Company will offer noncash consideration and seek debt/equity lines as a means of financing its operations. If the Company is unable to obtain revenue producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially curtail or terminate its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders.

NOTE 10 – SUBSEQUENT EVENTS

Management has evaluated subsequent events, and the impact on the reported results and disclosures and determined that there have not been any events that would be required to be reflected in the financial statements or the notes.

Page 11

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

FORWARD LOOKING STATEMENTS:  STATEMENTS ABOUT OUR FUTURE EXPECTATIONS ARE "FORWARD-LOOKING STATEMENTS" AND ARE NOT GUARANTEES OF FUTURE PERFORMANCE.  WHEN USED HEREIN, THE WORDS "MAY," "WILL," "SHOULD," "ANTICIPATE," "BELIEVE," "APPEAR," "INTEND," "PLAN," "EXPECT," "ESTIMATE," "APPROXIMATE," AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INVOLVE RISKS AND UNCERTAINTIES INHERENT IN OUR BUSINESS, INCLUDING THOSE SET FORTH UNDER THE CAPTION "RISK FACTORS," IN THIS DISCLOSURE STATEMENT, AND ARE SUBJECT TO CHANGE AT ANY TIME.  OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THESE FORWARD-LOOKING STATEMENTS.  THIS FORM 10-Q DOES NOT HAVE ANY STATUTORY SAFE HARBOR FOR THIS FORWARD LOOKING STATEMENT. WE UNDERTAKE NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENT.

This Management’s Discussion and Analysis should be read in conjunction with the financial statements included in this Quarterly Report on Form 10-Q (the “Financial Statements”).  The financial statements have been prepared in accordance with generally accepted accounting policies in the United States (“GAAP”).  Except as otherwise disclosed, all dollar figures included therein and in the following management discussion and analysis are quoted in United States dollars.

Overview

Leo Motors, Inc. (the "Company") is currently in the process of development and production of Electric Power Train Systems (“EPTS”) encompassing electric scooters, electric sedans/SUVs/sports cars, and electric buses/trucks as well as several models of Electric Vehicle ("EV"). Our EPTS can replace internal combustion engines (“ICEs”).  We have begun sales of our EPTS to auto makers and agricultural machinery manufacturers.

During the last two years, we have been developing eight EPTS of increasing power rating: 3kW, 5kW, 7.5kW, 15kW, 30kW, 60kW, 120kW, and 240kW systems.  Each EPTS consists of a motor, a controller, and a battery power pack with a battery management system (“BMS”).

The Company has successfully converted existing models of small cars (ICEs under 2,000cc), and also a 24 seat bus.  The Company has begun marketing its 60kW power train kits (for compact passenger cars and small trucks) and its 120kW kits (for ICE passenger cars, buses, and trucks under 5,000cc). The Company has developed a 240kW kit (for up to 10,000cc buses and trucks) as well, and is attempting to locate a strategic partner to fund the testing and production.  

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

-

Market e-Boxes in USA, Japan and Australia

-

Developing mass production facilities for power trains and BMS

-

Finalizing the development of ZAFCG to be used in EV by September 2011, and developing mass production plant to produce ZAFCG by December 2011.

-

Finishing the development of the 240kW system by May 2011.

-

Developing large scale clients for our EPTS and components

Page 12

Recent Business Developments

In the last six months, the Company has been developing an electric car model for an auto manufacturer. We intend to finalize the working prototype during August 2011.  The development is at the request of the manufacturer and is not subject to any definitive agreement; however, we believe that the potential for sales of our EPTS upon successful development of the project outweighs the risk of undertaking the development.

The Company has delivered the electric tractor using max 60kW power train to Tong Yang, one of the major Agricultural Machinery Brands in Korea. After proper tests, Tong Yang may order 60kW EPTS and our engineering services.

We have developed and delivered an electric tractor at the request of Tong Yang using our 60kW EPTS.  After proper tests, Tong Yang may order 60kW EPTS and our engineering services.  This project is in the initial testing phase, and we do not have a definitive material agreement to sell our EPTS or conversion services at this time.

We have also developed the E-Box, electric power storage ranging from 3kW to 50kW for use in homes.  This project took on additional importance to the Company because of the unprecedented natural disaster in Japan.  Leo is marketing the device in the US and Japan and expects to begin sales in the third quarter of 2011.  

The Company also has developed its Zinc Air Fuel Cell Generator (“ZAFC”) to be used as range extender for EVs.  ZAFC was further developed to reduce size, weight and increase efficiency in order to move forward commercialization. The Company has successfully conducted the paid research from one of the largest oil field development companies, and found the opportunity that ZAFC can be used as a generator in many industrial sectors as well as backup generator for cars.

The Company appointed two marketing partners in 2011.  The Company entered into an agreement with Claessens Consulting Compagnie (“CCC”) in the Netherlands (http://www.cccompagnie.com).  CCC will represent Leo in Europe, Middle East and Russia, and will develop the markets in these regions.  And the Company started its business in Australia as it appointed Mr. Wayne Draper who is a management member of the Company.  Mr. Draper is developing Leo's e-Box and electric bike businesses in Australia.

The Company entered into a Memorandum of Understanding (“MOU”) to license its technology to Shenzhen Rui Li Da Shebei Limited (“SRLDS”), a Chinese company.  Pursuant to the MOU, Leo will share its 56 patented technologies with SRLDS, and SRLDS will pay approximately $6 million USD to Leo for the rights.  Using Leo’s technology, SRLDS will set up an Electric Vehicle (EV) manufacturing plant in Beijing, initially investing approximately $25 million USD.  Leo will also invest approximately $3 million USD to the new plant after receiving the $6 million USD from SRLDS.  When the new plant is operational, Leo will be able to supply the major components of the EV power train including high power electric motors, battery power packs with battery management system, and power controllers.  

Liquidity and Capital Resources

Our liquidity requirements arise principally from our plans to develop EV production capability, additional product development, and marketing costs.  Although in the future we intend to fund our liquidity requirements through a combination of cash on hand and revenues from operations, during the quarter ended June 30, 2011, the Company had realized a net loss of (206,052) from operations.  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.

Page 13

Our monthly operating cost including salaries and general expense is currently approximately $150,000, as we focus on our e-Bikes and power trains.  

Our long term survival will depend on the growth of our operations towards full scale manufacturing and sales of our EVs, which in turn will depend on our ability to raise sufficient financing.  If our fund raising efforts should fail or fall short of our goal, we will have to restructure our business plan in order to sustain our operations.  However, in that event we may be unable to implement our business plan or continue operations.

Results of Operations

Revenues

Sales for the Six Months ended June 30, 2011 were $252,555 compared to $566,622 for the Six Months ended June 30, 2010.  Costs of sales were $219,112 and gross profit was $33,443 in 2011 compared to $480,158 and $86,464 as costs of sales and gross profit in the same period in 2010.  Neither period’s sales represent sales from recurring business, but rather sales of samples and development services.  Our primary recurring business comes from sales of electric scooters to our Korean distributor, which occurred in mass in 2010 and did not recur in the first or second quarter of 2011.  

Expenses

During the six months ended June 30, 2011, we incurred $296,181 in expenses, compared to $3,159,080 in the period ended June 30 2010. The primary decrease was due to payment of Salaries and Benefits to the Board of Directors paid in Stock in February 2010.  Expenses in each category decreased due to the higher development costs in 2010.

Expenses for the period quarter consisted of the following:

	Six Months Ended
Expenses:	June 30, 2011		June 30, 2010
Officer compensation paid in stock	$ -		$ 2,250,000
Salaries and Benefits	176,805		249,004
Consulting and Service Fees	-		220,097
Selling, General and Administrative	119,376		439,979
Total	$ 296,181		$ 3,159,080

Officer compensation paid in stock – consists of common stock issued to our executive officers as compensation for their services as officers of the Company.

Salaries and Benefits – consist of total cash compensation paid to our employees during the year and the cost of all benefits provided to our employees.  

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.  

Page 14

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

None.

ITEM 4. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

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

CHANGES IN INTERNAL CONTROLS

During the Quarter ended June 30, 2011, there were no changes made to our internal controls over financial reporting that are reasonably likely to affect the reliability of those controls, or the accuracy of our financial reporting.  

PART II: OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

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

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

None.

Page 15

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 – (Removed and Reserved)

ITEM 5 - OTHER INFORMATION

None.

ITEM 6 – EXHIBITS

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

No.		Description
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Acting Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Acting Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101		Interactive Data Files (XBRL)

SIGNATURES

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

Dated August 22, 2011

Leo Motors, Inc.

(the registrant)

By: /s/ Jung Yong (John) Lee

Jung Yong Lee

Chief Executive Officer

and Interim Chief Financial Officer

Page 16