Leo Motors Inc. (OTCMKTS:LEOM), which develops, assembles and sells energy storage devices and electric vehicle (EV) components, surprised the market in August 2017. The market pushed up the share price from $0.10 to $0.15. To what did the market react? Have a look at the share price action before we give you all the details about this company and its recent developments.
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Business
Leo Motors, Inc.
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Leo Motors Inc. commenced its current business in September 2004. The company was founded on July 2, 1986, but it served different business purpose at that time. It owns a subsidiary in Korea that was founded on July 1, 2006. This subsidiary is used to do research and development on electric power generation, drive train and storage technologies. The following is a list of the products that we could find in the last 10-K:
•E-Box electric energy storage system for solar and wind power generation devices
• EV components that integrate electric batteries with electric motors, such as EV Controllers, which use a mini-computer to control torque drive.
Large amount of business transactions to acquire patents
The company has been growing inorganically since it merged with Leozone Inc., a South Korean Company, on November 12, 2007. The following is a list of the companies acquired:
•On February 11, 2010, the company acquired 50% of Leo B&T Corp., another Korean entity. It used 7,000,000 shares of the company’s common stock to finance the acquisition.
•On July 1, 2014, LGM Co. Ltd., which was another company headquartered in the Republic of Korea, was also bought. 47,352,450 shares were used to acquire this other business.
•On March 31, 2015, Leo Motors Factory 1, Leo Motors Factory 2 and Leo Trading were acquired (50% of the outstanding common stock). These three companies are subsidiaries of LEOM.
•On June 3, 2016, Leo AIC was purchased to acquire connected car and artificial intelligence assets.
•On March 8, 2017, 100% of Leo Members, Inc. (Factory 1 and 2, and Leo Trade) were acquired.
The following is a short list of the patents acquired and developed. We could count at total amount of 54 patents.
Registration date Registration number Name Country
2015.08.31 1550568 motor control system of boat Rep. of Korea
2015.04.27 1517017 battery cooling system and boat using it Rep. of Korea
2015.02.11 1494524 battery connection system Rep. of Korea
2014.11.11 1462575 REFRIGERATING APPARATUS FOR REFERIGERATING VEHICLE Rep. of Korea
2014.11.11 1462576 REFRIGERATING APPARATUS FOR REFERIGERATING VEHICLE 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
2012.4.17 1140345 Electric vehicle power development apparatus Rep. of Korea
2012.11.26 1206784 Zinc-air fuel cell system, and control method for the same Rep. of Korea
2012.10.05 1187829 Zinc-air fuel cell assembly having zinc oxide secession means Rep. of Korea
2012.10.05 1187866 Zinc-air fuel cell reaction cell structure Rep. of Korea
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Recent Developments
On August 7, 2017, the company announced that it had hired several underwriters for “a potential initial public offering (IPO)” of LGM Co., Ltd., which is a subsidiary of LEOM. LGM president, Jun Hee Won, was quoted:
“The Company is seeking to raise up to $50 million from the IPO, but that figure is still subject to approval from shareholders. We hope to list on the KOSDAQ [Korea Stock Exchange] by November 2018.” Source
In our opinion, if this transaction takes place, LEOM would obtain cash. Consequently, its common stock would be pushed up. We believe that the market reacted very well to this news. Have a look at the share price after the announcement:
Additionally, on August 16, 2017, the market got to know that a Memorandum of Understanding had been signed with Shanghai Bosster IMP & EXP Co., Ltd., which may become a non-exclusive distributor in China. In our opinion, the fact that new companies want to distribute the company’s products is very positive. It shows the recognition that LEOM has obtained in Asia. The following was said about this new partner:
“Shanghai Bosster, a boat propellant system provider with more than 300 dealers in China, will provide LGM’s electric propellant systems to the tourism authority of the Kalajun National Park in China. Kalajun Lake in the National Park is to be one of the 5A grade tourism destination, like the Tiananmen Square in Beijing.” Source
Regarding the filings received by the market. On August 1, 2017, the company made another investment. Two Hundred Sixty Million (260,000,000 KRW) South Korean Won (approximately $226,000 USD) were invested in Leo Kartrena, Inc., a South Korean corporation. 15.66% of this company is owned now by LEOM.
Conclusion
The company has shown significant amount of transactions in its business history. We need to see the company sell its products in China and the US, but the fact that other distributor companies are interested in the company’s products is a good sign. Finally, the most interesting thing that happened recently is the upcoming IPO of LGM Co., Ltd., which may bring cash to finance the future operations of the parent company. We need to be alert on how the underwriters perform, as the result of this transaction can move the share price quite a bit. To sum up, follow the next announcements closely.
