QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2016
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California
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33-0984450
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☒
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TABLE OF CONTENTS
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Page
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements
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Condensed Balance Sheets as of September 30, 2016 and December 31, 2015
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2
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Condensed Statements of Operations for the three months and nine months ended September 30, 2016 and September 30, 2015
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3
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|
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Condensed Statements of Cash Flows for the nine months ended September 30, 2016 and September 30, 2015
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4
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Notes to the Condensed Financial Statements
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5
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Item 2. Management's Discussion and Analysis of the Financial Condition and Results of Operations
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12
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
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16
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Item 4. Controls and Procedures
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16
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PART II - OTHER INFORMATION
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|
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Item 1. Legal Proceedings
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17
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Item 1A. Risk Factors
|
17
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|
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
17
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|
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Item 3. Defaults Upon Senior Securities
|
17
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Item 5. Other Information
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17
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Item 6. Exhibits
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18
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|
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September 30,
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December 31,
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|||||||
2016
|
2015
|
|||||||
(unaudited)
|
||||||||
ASSETS
|
||||||||
CURRENT ASSETS
|
||||||||
Cash
|
$
|
6,805
|
$
|
105,846
|
||||
Accounts receivable, net
|
31,913
|
30,835
|
||||||
Accounts receivable - related parties
|
3,375
|
17,257
|
||||||
Inventory, net
|
1,995,384
|
2,107,463
|
||||||
Prepaid expense
|
5,324
|
6,050
|
||||||
Costs in excess of billings
|
21,242
|
-
|
||||||
Deposits
|
31,694
|
19,745
|
||||||
Total Current Assets
|
2,095,737
|
2,287,196
|
||||||
FIXED ASSETS, net
|
38,351
|
59,151
|
||||||
OTHER ASSETS
|
||||||||
Intellectual property, net
|
-
|
281
|
||||||
Other noncurrent assets
|
-
|
14,280
|
||||||
Total Other Assets
|
-
|
14,561
|
||||||
TOTAL ASSETS
|
$
|
2,134,088
|
$
|
2,360,908
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
CURRENT LIABILITIES
|
||||||||
Accounts payable and accrued expenses
|
$
|
340,837
|
$
|
145,207
|
||||
Accrued management compensation
|
213,875
|
189,163
|
||||||
Accounts payable - related parties
|
10,519
|
7,591
|
||||||
Customer deposits
|
118,896
|
230,349
|
||||||
Total Current Liabilities
|
684,127
|
572,310
|
||||||
Total Liabilities
|
684,127
|
572,310
|
||||||
STOCKHOLDERS' EQUITY
|
||||||||
Common stock, 125,000,000 shares authorized no par value
|
||||||||
20,281,082 and 19,981,082 shares issued and outstanding,
|
||||||||
respectively
|
8,411,411
|
8,291,411
|
||||||
Additional paid-in capital
|
11,595,554
|
11,346,599
|
||||||
Accumulated deficit
|
(18,557,004
|
)
|
(17,849,412
|
)
|
||||
Total Stockholders' Equity
|
1,449,961
|
1,788,598
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$
|
2,134,088
|
$
|
2,360,908
|
||||
The accompanying notes are an integral part of these condensed financial statements.
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For the Three
|
For the Three
|
For the Nine
|
For the Nine
|
|||||||||||||
Months Ended
|
Months Ended
|
Months Ended
|
Months Ended
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|||||||||||||
September 30
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September 30
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September 30
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September 30
|
|||||||||||||
2016
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2015
|
2016
|
2015
|
|||||||||||||
REVENUES
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$
|
354,533
|
$
|
426,296
|
$
|
930,755
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$
|
1,453,362
|
||||||||
REVENUES, related parties
|
517
|
11,882
|
16,193
|
26,701
|
||||||||||||
COST OF GOODS SOLD
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200,894
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245,419
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521,387
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766,067
|
||||||||||||
GROSS MARGIN
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154,156
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192,759
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425,561
|
713,996
|
||||||||||||
OPERATING EXPENSES
|
||||||||||||||||
General and administrative
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306,535
|
385,209
|
960,789
|
1,133,102
|
||||||||||||
Research and development expense
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57,402
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71,962
|
151,706
|
238,201
|
||||||||||||
Depreciation and amortization expense
|
6,617
|
7,526
|
21,081
|
23,050
|
||||||||||||
Total Operating Expenses
|
370,554
|
464,697
|
1,133,576
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1,394,353
|
||||||||||||
LOSS FROM OPERATIONS
|
(216,398
|
)
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(271,938
|
)
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(708,015
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)
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(680,357
|
)
|
||||||||
OTHER INCOME (EXPENSE)
|
||||||||||||||||
Other income
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200
|
-
|
5,574
|
3,934
|
||||||||||||
Interest expense
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(1,711
|
)
|
(40
|
)
|
(4,351
|
)
|
(212
|
)
|
||||||||
Interest income
|
-
|
6
|
-
|
21
|
||||||||||||
Total Other Income (Expense)
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(1,511
|
)
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(34
|
)
|
1,223
|
3,743
|
||||||||||
LOSS BEFORE INCOME TAXES
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(217,909
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)
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(271,972
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)
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(706,792
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)
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(676,614
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)
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||||||||
INCOME TAX EXPENSE
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-
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-
|
800
|
800
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||||||||||||
NET LOSS
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$
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(217,909
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)
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$
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(271,972
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)
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$
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(707,592
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)
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$
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(677,414
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)
|
||||
BASIC AND DILUTED LOSS PER SHARE
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$
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(0.01
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)
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$
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(0.01
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)
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$
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(0.04
|
)
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$
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(0.03
|
)
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||||
WEIGHTED AVERAGE NUMBER
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||||||||||||||||
OF COMMON SHARES OUTSTANDING -
|
||||||||||||||||
BASIC AND DILUTED
|
20,273,473
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19,981,082
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20,095,681
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19,980,934
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For the Nine
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For the Nine
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|||||||
Months Ended
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Months Ended
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|||||||
September 30,
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September 30,
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|||||||
2016
|
2015
|
|||||||
OPERATING ACTIVITIES
|
||||||||
Net loss
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$
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(707,592
|
)
|
$
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(677,414
|
)
|
||
Adjustments to reconcile net loss to
|
||||||||
net cash used by operating activities:
|
||||||||
Amortization and depreciation expense
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21,081
|
23,050
|
||||||
Fair value of options and warrants vested
|
148,955
|
176,895
|
||||||
Common stock issued for services
|
20,000
|
1,500
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
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(1,078
|
)
|
6,303
|
|||||
Accounts receivable–related parties
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13,882
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(5,383
|
)
|
|||||
Deposits
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2,331
|
68,507
|
||||||
Prepaid Expense
|
726
|
(1,850
|
)
|
|||||
Inventory
|
112,080
|
128,445
|
||||||
Costs in excess of billings
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(21,242
|
)
|
-
|
|||||
Accounts payable and accrued expenses
|
195,629
|
57,904
|
||||||
Customer deposits
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(111,453
|
)
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(140,574
|
)
|
||||
Accounts payable-related parties
|
2,928
|
15,267
|
||||||
Accrued management compensation
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124,712
|
54,279
|
||||||
Net Cash Used in Operating Activities
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(199,041
|
)
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(293,071
|
)
|
||||
INVESTING ACTIVITIES
|
||||||||
Net Cash Provided by Investing Activities
|
-
|
-
|
||||||
FINANCING ACTIVITIES
|
||||||||
Proceeds from stock sale
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100,000
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-
|
||||||
Net Cash Provided by Financing Activities
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100,000
|
-
|
||||||
NET DECREASE IN CASH
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(99,041
|
)
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(293,071
|
)
|
||||
CASH AT BEGINNING OF YEAR
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105,846
|
498,782
|
||||||
CASH AT END OF PERIOD
|
$
|
6,805
|
$
|
205,711
|
||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
|
||||||||
CASH PAID FOR:
|
||||||||
Interest
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$
|
1,711
|
$
|
-
|
||||
Income taxes
|
$
|
800
|
$
|
800
|
September 30,
|
December 31,
|
|||||||
Location : Vista, CA
|
2016
|
2015
|
||||||
Raw materials
|
$
|
1,047,695
|
$
|
1,093,890
|
||||
Finished goods
|
1,197,205
|
1,263,089
|
||||||
Allowance for obsolete inventory
|
(249,516
|
)
|
(249,516
|
)
|
||||
Total
|
$
|
1,995,384
|
$
|
2,107,463
|
September 30,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
Production equipment
|
$
|
61,960
|
$
|
61,960
|
||||
Computers/Office equipment
|
28,540
|
28,540
|
||||||
Tooling equipment
|
12,380
|
12,380
|
||||||
Leasehold Improvements
|
42,451
|
42,451
|
||||||
Less: accumulated depreciation
|
(106,980
|
)
|
(86,180
|
)
|
||||
Total
|
$
|
38,351
|
$
|
59,151
|
|
September 30,
|
December 31,
|
||||||
|
2016
|
2015
|
||||||
Cost incurred on uncompleted contracts
|
$
|
84,820
|
$
|
–
|
||||
Estimated earnings
|
27,922
|
–
|
||||||
112,742
|
–
|
|||||||
Less billings to date
|
(91,500
|
)
|
–
|
|||||
Costs in excess of billings
|
$
|
21,242
|
$
|
–
|
||||
|
September 30,
|
December 31,
|
||||||
|
2016
|
2015
|
||||||
Amounts due to the president
|
$
|
149,681
|
$
|
148,719
|
||||
Amounts due to the vice president
|
64,194
|
40,444
|
||||||
Total
|
$
|
213,875
|
$
|
189,163
|
September 30, 2016
|
September 30, 2015
|
|||||||
Expected volatility
|
87
|
%
|
76
|
%
|
||||
Expected dividends
|
0
|
%
|
0
|
%
|
||||
Expected term
|
7 Years
|
7 Years
|
||||||
Risk-free interest rate
|
1.52
|
%
|
1.89
|
%
|
September 30,
|
December 31,
|
|||||||||||||||
2016
|
2015
|
|||||||||||||||
Weighted-Average
|
Weighted-Average
|
|||||||||||||||
Shares
|
Exercise Price
|
Shares
|
Exercise Price
|
|||||||||||||
Outstanding at beginning of year
|
3,740,313
|
$
|
3.38
|
3,515,313
|
$
|
3.56
|
||||||||||
Granted
|
720,000
|
0.28
|
225,000
|
0.85
|
||||||||||||
Exercised
|
-
|
-
|
-
|
-
|
||||||||||||
Expired or cancelled
|
(100,000
|
)
|
2.74
|
-
|
-
|
|||||||||||
Outstanding at end of period
|
4,360,313
|
2.88
|
3,740,313
|
3.38
|
||||||||||||
Exercisable
|
4,186,563
|
$
|
2.94
|
3,414,063
|
$
|
3.52
|
Range of Exercise Prices
|
Number Outstanding
|
Weighted-Average Remaining Contractual Life
|
Number Exercisable
|
Weighted-Average Exercise Price
|
|||||||||||
$
|
0.01-0.99
|
895,000
|
6.43 years
|
817,917
|
$
|
0.34
|
|||||||||
$
|
1.00-1.99
|
215,000
|
2.38 years
|
205,000
|
1.40
|
||||||||||
$
|
2.00-2.99
|
530,000
|
2.99 years
|
443,333
|
2.51
|
||||||||||
$
|
3.00-3.99
|
2,720,313
|
0.52 years
|
2,720,313
|
3.88
|
||||||||||
$
|
0.01-3.99
|
4,360,313
|
2.13 years
|
4,186,563
|
$
|
2.92
|
ITEM 2 | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Exhibit
|
|
Number
|
Description of Exhibit
|
|
|
3.1
|
Amended and Restated Articles of Incorporation(1)
|
3.2
|
Amended and Restated By-Laws Adopted July 12, 2012 (2)
|
31.01
|
CEO certification pursuant to Section 302 of the Sarbanes – Oxley Act of 2002 (3)
|
31.02
|
CFO certification pursuant to Section 302 of the Sarbanes – Oxley Act of 2002 (3)
|
32.01
|
CEO and CFO certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (3)
|
101
|
The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 formatted in Extensible Business Reporting Language ("XBRL"): (i) the balance sheets (unaudited); (ii) the statements of operations (unaudited); (iii) the statements of cash flows (unaudited); and, (iv) related notes.
|
(1) | Previously filed on Form on Form 10 on April 27, 2010 |
(2) | Previously filed on Form 8-K on August 2, 2012 |
(3) | Filed herewith |
|
Omnitek Engineering Corp.
|
|
|
|
|
|
|
|
|
|
|
|
||
Dated: November 10, 2016
|
|
|
|
By: Werner Funk
|
|
|
Its: Chief Executive Officer
Principal Executive Officer
|
|
|
|
|
|
|
|
|
|
|
Dated: November 10, 2016
|
/s/ Richard L. Miller
|
|
|
By: Richard L. Miller
|
|
|
Its: Chief Financial Officer
Principal Financial Officer
|
|
|
|
Dated: November 10, 2016
|
___________________________
|
By: Werner Funk
|
|
Its: Chief Executive Officer,
|
|
|
President and Secretary
|
Dated: November 10, 2016
|
/s/ Richard Miller
|
|
___________________________
|
||
By: Richard Miller
|
||
Its: Chief Financial Officer
|
Dated: November 10, 2016
|
___________________________
|
By: Werner Funk
|
|
Its: Chief Executive Officer,
|
|
|
President and Secretary
|
Dated: November 10, 2016
|
/s/ Richard Miller
|
___________________________
|
|
By: Richard Miller
|
|
Its: Chief Financial Officer
|
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 07, 2016 |
|
Document and Entity Information | ||
Entity Registrant Name | Omnitek Engineering Corp. | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Entity Central Index Key | 0001404804 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 20,281,082 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | omtk |
Condensed Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position | ||
Common Stock, par or stated value | $ 0 | $ 0 |
Common Stock, shares authorized | 125,000,000 | 125,000,000 |
Common Stock, shares issued | 20,281,082 | 19,981,082 |
Common Stock, shares outstanding | 20,281,082 | 19,981,082 |
Condensed Statements of Operations - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Statement | ||||
REVENUES | $ 354,533 | $ 426,296 | $ 930,755 | $ 1,453,362 |
REVENUES, related parties | 517 | 11,882 | 16,193 | 26,701 |
COST OF GOODS SOLD | 200,894 | 245,419 | 521,387 | 766,067 |
GROSS MARGIN | 154,156 | 192,759 | 425,561 | 713,996 |
OPERATING EXPENSES | ||||
General and administrative | 306,535 | 385,209 | 960,789 | 1,133,102 |
Research and development expense | 57,402 | 71,962 | 151,706 | 238,201 |
Depreciation and amortization expense | 6,617 | 7,526 | 21,081 | 23,050 |
Total Operating Expenses | 370,554 | 464,697 | 1,133,576 | 1,394,353 |
LOSS FROM OPERATIONS | (216,398) | (271,938) | (708,015) | (680,357) |
OTHER INCOME (EXPENSE) | ||||
Other income | 200 | 5,574 | 3,934 | |
Interest expense | (1,711) | (40) | (4,351) | (212) |
Interest income | 6 | 21 | ||
Total Other Income (Expense) | (1,511) | (34) | 1,223 | 3,743 |
LOSS BEFORE INCOME TAXES | (217,909) | (271,972) | (706,792) | (676,614) |
INCOME TAX EXPENSE | 800 | 800 | ||
NET LOSS | $ (217,909) | $ (271,972) | $ (707,592) | $ (677,414) |
BASIC AND DILUTED LOSS PER SHARE | $ (0.01) | $ (0.01) | $ (0.04) | $ (0.03) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED | 20,273,473 | 19,981,082 | 20,095,681 | 19,980,934 |
Note 1 - Condensed Financial Statements |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 1 - Condensed Financial Statements | NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at September 30, 2016 and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2015 audited financial statements. The results of operations for the periods ended September 30, 2016 and 2015 are not necessarily indicative of the operating results for the full years. |
Note 2 - Significant Accounting Policies |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||
Notes | |||||||||||||||||||||||||||||||||||||||||||
Note 2 - Significant Accounting Policies | NOTE 2 SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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.
Recent Accounting Pronouncements
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company's financial position, or statements.
Costs in Excess of Billings
Costs in excess of billings represent unbilled amounts earned and reimbursable under contracts. These amounts become billable according to the contract terms, which usually consider the passage of time, achievement of milestones or completion of the project. Generally, such unbilled amounts will be billed and collected over the next twelve months. Based on our historical experience, we generally consider the collection risk related to these amounts to be low. When events or conditions indicate that the amounts outstanding may become uncollectible, an allowance is estimated and recorded.
Inventory
Inventory is stated at the lower of cost or market. The Company's inventory consists of finished goods and raw material and is located in Vista, California, consisting of the following:
The Company has established an allowance for obsolete inventory. Expense for obsolete inventory was $-0- and $-0-, for the periods ended September 30, 2016 and September 30, 2015, respectively.
Property and Equipment
Property and equipment at September 30, 2016 and December 31, 2015 consisted of the following:
Depreciation expense for the nine month periods ended September 30, 2016 and September 30, 2015 was $20,800 and $22,173, respectively.
Basic and Diluted Loss per Share
The computation of basic earnings per share of common stock is based on the weighted average number of shares outstanding during the periods presented. The computation of fully diluted earnings per share includes common stock equivalents outstanding at the balance sheet date. The Company had -0- and -0- stock options and warrants that would have been included in the fully diluted earnings per share as of September 30, 2016 and December 31, 2015, respectively.
Income Taxes
The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes ("Topic 740"), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized.
Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.
At the adoption date of November 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of September 30, 2016 and December 31, 2015 the Company had no accrued interest or penalties related to uncertain tax positions. The Company files an income tax return in the U.S. federal jurisdiction and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2008. |
Note 3 - Costs In Excess Of Billings |
9 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||
Notes | |||||||||||||||||||||||||
Note 3 - Costs In Excess Of Billings | NOTE 3 COSTS IN EXCESS OF BILLINGS
Costs in excess of billings at September 30, 2016 and December 31, 2015 consisted of the following:
|
Note 4 - Related Party Transactions |
9 Months Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | ||||||||||||||||
Notes | ||||||||||||||||
Note 4 - Related Party Transactions | NOTE 4 - RELATED PARTY TRANSACTIONS
Accounts Receivable Related Parties The Company holds a non-controlling interest in various distributors in exchange for use of the Company's name and logo. As of December 31, 2015, the Company owned a 15% interest in Omnitek Engineering Thailand Co. Ltd. and a 20% interest in Omnitek Peru S.A.C. As of September 30, 2016 and December 31, 2015, the Company was owed $3,375 and $17,257, respectively, by related parties for the purchase of products and services.
Accounts Payable Related Parties The Company regularly incurs expenses that are paid to related parties and purchases goods and services from related parties. As of September 30, 2016 and December 31, 2015, the Company owed related parties for such expenses, goods and services in the amounts of $10,519 and $7,591, respectively.
Accrued Management Expenses For the periods ended September 30, 2016 and December 31, 2015, the Company's president and vice president were due amounts for services performed for the Company. As of September 30, 2016 and December 31, 2015 the accrued management fees consisted of the following:
|
Note 5 - Stock Options and Warrants |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 5 - Stock Options and Warrants | NOTE 5 - STOCK OPTIONS AND WARRANTS
During the nine months ended September 30, 2016 and 2015, the Company granted 250,000 and 125,000 options for services, respectively. During the nine months ended September 30, 2016 and 2015, the Company recognized expense of $148,955 and $176,895, respectively, for options and warrants that vested during the periods pursuant to ASC Topic 718. Total remaining amount of compensation expense to be recognized in future periods is $131,209.
In April 2007, the Company's shareholders approved its 2006 Long-Term Incentive Plan ("the 2006 Plan"). Under the 2006 plan, the Company may issue up to 10,000,000 shares of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of December 31, 2014 the remaining 2,590,000 options previously issued under the plan expired. 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 and Non-Qualified Stock Options to employees and consultants at its discretion. As of September 30, 2016 the Company has a total of 915,000 options issued under the 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 September 30, 2016 the Company has a total of 820,000 options issued under the plan. During the nine months ended September 30, 2016 and 2015 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 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:
A summary of the status of the options and warrants granted at September 30, 2016 and December 31, 2015 and changes during the periods then ended is presented below:
|
Note 6 - Stockholders' Equity |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 6 - Stockholders' Equity | NOTE 6 STOCKHOLDERS' EQUITY
On June 13, 2016 the Company sold, to an unrelated party, 250,000 shares of restricted common stock at a price of $0.40 per share for an aggegrate sales price of $100,000. On July 15, 2016, the Company issued, to an unrelated party, 50,000 shares of restricted common stock at a price of $0.40 per share for services rendered. |
Note 7 - Subsequent Events |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 7 - Subsequent Events | NOTE 7 SUBSEQUENT EVENTS
In accordance with ASC 855-10, Company management reviewed all material events through the date of this report. There are no material subsequent events to report |
Note 2 - Significant Accounting Policies (Policies) |
9 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||
Policies | |||||||||||||||||||||||||
Use of Estimates | Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company's financial position, or statements. |
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Costs in Excess of BillingsPolicyTextBlock | Costs in Excess of Billings
Costs in excess of billings represent unbilled amounts earned and reimbursable under contracts. These amounts become billable according to the contract terms, which usually consider the passage of time, achievement of milestones or completion of the project. Generally, such unbilled amounts will be billed and collected over the next twelve months. Based on our historical experience, we generally consider the collection risk related to these amounts to be low. When events or conditions indicate that the amounts outstanding may become uncollectible, an allowance is estimated and recorded. |
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Inventory | Inventory
Inventory is stated at the lower of cost or market. The Company's inventory consists of finished goods and raw material and is located in Vista, California, consisting of the following:
The Company has established an allowance for obsolete inventory. Expense for obsolete inventory was $-0- and $-0-, for the periods ended September 30, 2016 and September 30, 2015, respectively. |
||||||||||||||||||||||||
Property and Equipment | Property and Equipment
Property and equipment at September 30, 2016 and December 31, 2015 consisted of the following:
Depreciation expense for the nine month periods ended September 30, 2016 and September 30, 2015 was $20,800 and $22,173, respectively. |
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Basic and Diluted Loss Per Share | Basic and Diluted Loss per Share
The computation of basic earnings per share of common stock is based on the weighted average number of shares outstanding during the periods presented. The computation of fully diluted earnings per share includes common stock equivalents outstanding at the balance sheet date. The Company had -0- and -0- stock options and warrants that would have been included in the fully diluted earnings per share as of September 30, 2016 and December 31, 2015, respectively. |
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Income Taxes | Income Taxes
The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes ("Topic 740"), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized.
Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.
At the adoption date of November 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of September 30, 2016 and December 31, 2015 the Company had no accrued interest or penalties related to uncertain tax positions. The Company files an income tax return in the U.S. federal jurisdiction and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2008. |
Note 2 - Significant Accounting Policies (Tables) |
9 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||
Schedule of Inventory | The Company's inventory consists of finished goods and raw material and is located in Vista, California, consisting of the following:
|
||||||||||||||||||||||||
Schedule of Property and Equipment | Property and equipment at September 30, 2016 and December 31, 2015 consisted of the following:
|
Note 3 - Costs In Excess Of Billings (Tables) |
9 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||
Schedule of Costs in Excess of Billings | Costs in excess of billings at September 30, 2016 and December 31, 2015 consisted of the following:
|
Note 4 - Related Party Transactions (Tables) |
9 Months Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | ||||||||||||||||
Tables/Schedules | ||||||||||||||||
Schedule of Accrued Management Fees | As of September 30, 2016 and December 31, 2015 the accrued management fees consisted of the following:
|
Note 5 - Stock Options and Warrants (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assumptions Used to Estimate the Fair Values of Stock Options Granted | The following table presents the assumptions used to estimate the fair values of the stock options granted:
|
||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Options and Warrants, Activity | A summary of the status of the options and warrants granted at September 30, 2016 and December 31, 2015 and changes during the periods then ended is presented below:
|
||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Status of the Options and Warrants Outstanding |
|
Note 2 - Significant Accounting Policies: Inventory: Schedule of Inventory (Details) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Details | ||
Raw materials | $ 1,047,695 | $ 1,093,890 |
Finished goods | 1,197,205 | 1,263,089 |
Allowance for obsolete inventory | (249,516) | (249,516) |
Total | $ 1,995,384 | $ 2,107,463 |
Note 2 - Significant Accounting Policies: Inventory (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Details | ||
Expense for Obsolete Inventory | $ 0 | $ 0 |
Note 2 - Significant Accounting Policies: Property and Equipment: Schedule of Property and Equipment (Details) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Less: accumulated depreciation | $ (106,980) | $ (86,180) |
Total | 38,351 | 59,151 |
Production Equipment | ||
Property, Plant and Equipment, Gross | 61,960 | 61,960 |
Computer Equipment | ||
Property, Plant and Equipment, Gross | 28,540 | 28,540 |
Tools, Dies and Molds | ||
Property, Plant and Equipment, Gross | 12,380 | 12,380 |
Leasehold Improvements | ||
Property, Plant and Equipment, Gross | $ 42,451 | $ 42,451 |
Note 2 - Significant Accounting Policies: Property and Equipment (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Details | ||
Depreciation expense | $ 20,800 | $ 22,173 |
Note 2 - Significant Accounting Policies: Basic and Diluted Loss Per Share (Details) - shares |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Details | ||
Incremental Common Shares Attributable to Dilutive Effect of Options and Warrants | 0 | 0 |
Note 2 - Significant Accounting Policies: Income Taxes (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Details | ||
Accrued Interest or penalties related to uncertain tax positions | $ 0 | $ 0 |
Note 3 - Costs In Excess Of Billings: Schedule of Costs in Excess of Billings (Details) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Details | ||
Cost incurred on uncompleted contracts | $ 84,820 | $ 0 |
Estimated earnings | 27,922 | 0 |
Receivables, Long-term Contracts or Programs | 112,742 | 0 |
Less billings to date | (91,500) | 0 |
Costs in excess of billings | $ 21,242 | $ 0 |
Note 4 - Related Party Transactions (Details) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Accounts receivable - related parties | $ 3,375 | $ 17,257 |
Accounts payable - related parties | 10,519 | 7,591 |
Nology Engineering Inc | ||
Accounts payable - related parties | $ 10,519 | $ 7,591 |
Omnitek Engineering Thailand Co. Ltd. | ||
Noncontrolling Interest, Ownership Percentage by Parent | 15.00% | |
Omnitek Peru S.A.C. | ||
Noncontrolling Interest, Ownership Percentage by Parent | 20.00% |
Note 4 - Related Party Transactions: Schedule of Accrued Management Fees (Details) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Accrued management compensation | $ 213,875 | $ 189,163 |
President | ||
Accrued management compensation | 149,681 | 148,719 |
Vice President | ||
Accrued management compensation | $ 64,194 | $ 40,444 |
Note 5 - Stock Options and Warrants (Details) - USD ($) |
9 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
Sep. 11, 2015 |
Dec. 31, 2014 |
Aug. 03, 2011 |
Apr. 30, 2007 |
|
Granted | 720,000 | 225,000 | |||||
Expense recognized for options and warrants vested | $ 148,955 | $ 176,895 | |||||
Total remaining amount of compensation expense to be recognized in future periods | $ 131,209 | ||||||
Outstanding | 4,360,313 | 3,740,313 | 3,515,313 | ||||
Warrants, Granted | 0 | 0 | |||||
Employee Stock Option | |||||||
Granted | 250,000 | 125,000 | |||||
Employee Stock Option | 2006 Long-Term Incentive Plan | |||||||
Number of Shares Authorized | 10,000,000 | ||||||
Outstanding | 2,590,000 | ||||||
Employee Stock Option | 2011 Long-Term Incentive Plan | |||||||
Number of Shares Authorized | 1,000,000 | ||||||
Outstanding | 915,000 | ||||||
Employee Stock Option | 2015 Long-Term Incentive Plan | |||||||
Number of Shares Authorized | 2,500,000 | ||||||
Outstanding | 820,000 |
Note 5 - Stock Options and Warrants: Schedule of Assumptions Used to Estimate the Fair Values of Stock Options Granted (Details) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Details | ||
Expected volatility | 87.00% | 76.00% |
Expected dividends | 0.00% | 0.00% |
Expected term | 7 years | 7 years |
Risk-free interest rate | 1.52% | 1.89% |
Note 5 - Stock Options and Warrants: Schedule of Stock Options and Warrants, Activity (Details) - $ / shares |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Outstanding at beginning of year | 3,740,313 | 3,515,313 |
Outstanding, Weighted Average Exercise Price at beginning of year | $ 3.38 | $ 3.56 |
Granted | 720,000 | 225,000 |
Granted, Weighted Average Exercise Price | $ 0.28 | $ 0.85 |
Exercised, Weighted Average Exercise | $ 0 | $ 0 |
Expired or cancelled | (100,000) | 0 |
Expired or cancelled, Weighted Average Exercise Price | $ 2.74 | $ 0 |
Outstanding at end of year | 4,360,313 | 3,740,313 |
Outstanding, Weighted Average Exercise Price at end of year | $ 2.88 | $ 3.38 |
Exercisable | 4,186,563 | 3,414,063 |
Exercisable, Weighted Average Exercise Price | $ 2.94 | $ 3.52 |
Common Stock | ||
Exercised | 0 | 0 |
Note 6 - Stockholders' Equity (Details) - USD ($) |
Jul. 15, 2016 |
Jun. 13, 2016 |
---|---|---|
Stock Issued During Period, Value, New Issues | $ 100,000 | |
Common Stock | ||
Stock Issued During Period, Shares, New Issues | 50,000 | 250,000 |
Share Price | $ 0.40 | $ 0.40 |
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