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NOTE 8 - STOCK OPTIONS AND WARRANTS

3 Months Ended

Mar. 31, 2022

During the three months ended March 31, 2022 and 2021, the Company granted -0- and 400,000 options for services, respectively. During the three months ended March 31, 2022 and 2021, the Company recognized expense of $2,562 and $11,283, respectively, for options that vested during the periods pursuant to ASC Topic 718. As of March 31, 2022 total remaining amount of compensation expense to be recognized in future periods is

$20,182.

On August 3, 2011 the Board of Directors adopted the Omnitek Engineering Corp. 2011 Long-term Incentive Plan (the “2011 Plan”), under which 1,000,000 shares of Company’s Common Stock were reserved for issuance of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of March 31, 2022 the Company has a total of 75,000 options issued under the 2011 Plan. On September 11, 2015 the Board of Directors adopted the Omnitek Engineering Corp. 2015 Long Term Incentive Plan (the “2015 Plan”), under which 2,500,000 shares of the Company’s Common Stock were reserved for issuance of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of March 31, 2022 the Company has a total of 1,915,556 options issued under the 2015 Plan. In October 2017, the Company’s shareholders approved its 2017 Long-Term Incentive Plan (the “2017 Plan”). Under the 2017 plan, the Company may issue up to 5,000,000 shares of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of March 31, 2022, the Company has a total of 1,300,000 options issued under the 2017 Plan. During the three months ended March 31, 2022 and 2021 the Company issued -0- and -0- warrants, respectively.

The Company recognizes compensation expense for stock-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value. The Company estimates the fair value of stock options using a Black-Scholes option pricing model which requires management to make estimates for certain assumptions regarding risk-free interest rate, expected life of options, expected volatility of stock and expected dividend yield of stock. When determining expected volatility, the Company considers the historical performance of the Company’s stock, as well as implied volatility. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant, based on the options’ expected term. The expected term of the options is based on the Company’s evaluation of option holders’ exercise patterns and represents the period of time

NOTE 8 - STOCK OPTIONS AND WARRANTS (Continued)

that options are expected to remain unexercised. The Company uses historical data to estimate the timing and amount of forfeitures.

The following table presents the assumptions used to estimate the fair values of the stock options granted:

	March 31, 2022	March 31, 2021
Expected volatility	N/A	201 %
Expected dividends	N/A	0 %
Expected term	N/A	7 Years
Risk-free interest rate	N/A	1.2 %

A summary of the status of the options and warrants granted at March 31, 2022 and December 31, 2021 and changes during the periods then ended is presented below:

	March 31,			December 31,
	2022			2021
			Weighted-Average			Weighted-Average
	Shares		Exercise Price	Shares		Exercise Price
Outstanding at beginning of year	3,290,556	$	0.19	2,890,556	$	0.20
Granted	-		-	400,000		0.11
Exercised	-		-	-		-
Expired or cancelled	-		-	-		-
Outstanding at end of period	3,290,556		0.19	3,290,556		0.19
Exercisable	3,173,889		0.19	3,065,556	$	0.19

A summary of the status of the options and warrants outstanding at March 31, 2022 is presented below:

Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Number Exercisable	Weighted-Average Exercise Price

$0.01-0.99	3,290,556	2.71 years	3,173,889	0.19