Struggling power company Leo Motors Inc. (OTC: LEOM) has raised working capital funds by issuing three convertible promissory notes.

Hanam City, South Korea-based Leo Motors researches and develops electric power generation, drive train and storage-technology products. The company's products include E-Box, an electric energy storage system for solar- and wind-power generation devices, and parts that integrate electric batteries with electric motors. The company is registered in Nevada, and is marketing the E-Box in the U.S. and Japan.

The company announced in a filing with the U.S. Securities and Exchange Commission on Aug. 6 that it had raised money for working capital by issuing notes. The notes, which total $961,540, mature in three years, have a four percent interest. The notes are convertible into restricted shares of the company's stock three months after they were issued.

In March, Leo Motors' accountant, John Scrudato, pointed out substantial doubt regarding the company's ability to continue as a going concern, or without the threat of liquidation, because of the company's losses, according to an SEC filing.

As of Dec. 31, the company has about $259,000 in assets and about $1.65 million in liabilities. Leo Motors was also carrying a $16.9 million deficit. The company needed to achieve profitability or attract capital in order to stay in business, it said.

Leo Motors has a history of operating losses, and expects that to continue for several years. In 2013, the company reduced costs by cutting employee pay. Leo Motors spent about $1.4 million on employee pay for 2012, and spent only $358,381 in 2013. "With zero sales in the current year the company dramatically scaled back wages," the company says in an SEC filing.

The company generated no revenue in 2013, compared with $25,605 in revenue for 2012. The revenue decrease, according to the company, is because of a decrease in merchandise sales that reflects current market conditions. Leo Motors also pointed out that it plans to expand its reach to new markets.

In July, the company appointed Jeong Youl Choi as CFO, replacing former CFO Thomas Cheong, who resigned. Choi previously served as the CEO for one of the company's branches in Korea, and before that, worked as an independent financial consultant.

The company's plan for the future includes capitalization, selling the E-Box, building a manufacturing plant for the E-Box and developing other products.

Leo Motors also makes electric power train systems for electric scooters, cars and busses, which can replace internal combustion engines. The company said in a March 31 SEC filing that it is looking for a strategic partner to fund testing and production for those engines.

For the previous edition of Turnaround Tuesday, see "Struggling EveryWare Gets $20M PE Investment.

For more troubled companies, see Mergers & Acquisitions Distressed Company Watch List.

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