10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:   September 30, 2017

Commission File Number     000-53955

OMNITEK ENGINEERING CORP.

 (Exact name of Registrant as specified in its charter)

California	330984450
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1333 Keystone Way, #101, Vista, California 92081

 (Address of principal executive offices, Zip Code)

(760) 591-0089

 (Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒   No ☐

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes ☒   No ☐

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 definitions of "large accelerated filer,"  "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller Reporting Company	☒
Emerging growth company	☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☒

As of November 8, 2017, the Registrant had 20,281,082 shares of its no par value Common Stock outstanding

TABLE OF CONTENTS
	Page
PART I - FINANCIAL INFORMATION
Item 1.       Financial Statements
Condensed Balance Sheets as of September 30, 2017 and December 31, 2016	4
Condensed Statements of Operations for the three and nine months ended September 30, 2017 and September 30, 2016	5
Condensed Statements of Cash Flows for the nine months ended September 30, 2017 and September 30, 2016	6
Notes to the Condensed Financial Statements	7
Item 2.       Management's Discussion and Analysis of the Financial Condition and Results of Operations	13
Item 3.       Quantitative and Qualitative Disclosures about Market Risk	17
Item 4.       Controls and Procedures	17
PART II - OTHER INFORMATION
Item 1.       Legal Proceedings	18
Item 1A.    Risk Factors	18
Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.       Defaults Upon Senior Securities	18
Item 5.       Other Information	18
Item 6.       Exhibits	18

Page 2

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS 

Page 3

OMNITEK ENGINEERING CORP.

Condensed Balance Sheets

	September 30,		December 31,
	2017		2016
	(unaudited)
ASSETS
CURRENT ASSETS
Cash	$	44,444	$	17,782
Accounts receivable, net		28,457		28,159
Accounts receivable - related parties		7,654		7,005
Inventory, net		1,898,755		1,869,900
Prepaid expense		-		5,324
Costs and estimated earnings in excess of billings		-		30,973
Deposits		41,330		21,716
Total Current Assets		2,020,640		1,980,859
FIXED ASSETS, net		13,245		31,839
OTHER ASSETS
Other noncurrent assets		14,280		14,280
Total Other Assets		14,280		14,280
TOTAL ASSETS	$	2,048,165	$	2,026,978
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	288,185	$	325,255
Accrued management compensation		437,897		314,788
Accounts payable - related parties		75,311		18,373
Billings in excess of costs and estimated earnings		30,000		-
Customer deposits		265,594		87,114
Total Current Liabilities		1,096,987		745,530
Total Liabilities		1,096,987		745,530
STOCKHOLDERS' EQUITY
Common stock, 125,000,000 shares authorized    no par value 20,281,082 shares issued    and outstanding		8,411,411		8,411,411
Additional paid-in capital		11,841,050		11,620,841
Accumulated deficit		(19,301,283)		(18,750,804)
Total Stockholders' Equity		951,178		1,281,448
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,048,165	$	2,026,978

The accompanying notes are an integral part of these financial statements.

Page 4

OMNITEK ENGINEERING CORP.

Condensed Statements of Operations (unaudited)

		For the Three Months Ended September 30 2017		For the Three Months Ended September 30 2016		For the Nine Months Ended September 30 2017		For the Nine Months Ended September 30 2016
REVENUES	$	263,572	$	354,533	$	795,018	$	930,755
REVENUES, related parties		12,669		517		19,192		16,193
Total Revenues		276,241		355,050		814,210		946,948
COST OF GOODS SOLD		158,358		200,894		456,765		521,387
GROSS MARGIN		117,883		154,156		357,445		425,561
OPERATING EXPENSES
General and administrative		240,477		306,535		789,618		960,789
Research and development		18,978		57,402		92,667		151,706
Depreciation and amortization		6,147		6,617		18,594		21,081
Total Operating Expenses		265,602		370,554		900,879		1,133,576
LOSS FROM OPERATIONS		(147,719		(216,398)		(543,434)		(708,015)
OTHER INCOME (EXPENSE)
Other income		-		200		-		5,574
Interest expense		(2,130)		(1,711)		(6,245)		(4,351)
Total Other Income (Expense)		(2,130)		(1,511)		(6,245)		1,223
LOSS BEFORE INCOME TAXES		(149,849)		(217,909)		(549,679)		(706,792)
INCOME TAX EXPENSE		-		-		800		800
NET LOSS	$	(149,849)	$	(217,909)	$	(550,479)	$	(707,592)
BASIC AND DILUTED LOSS PER SHARE	$	(0.01)	$	(0.01)	$	(0.03)	$	(0.04)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING -BASIC AND DILUTED		20,281,082		20,273,473		20,281,082		20,095,681

The accompanying notes are an integral part of these financial statements.

Page 5

OMNITEK ENGINEERING CORP.

Condensed Statements of Cash Flows (unaudited)

		For the Nine Months Ended September 30 2017		For the Nine Months Ended September 30 2016
OPERATING ACTIVITIES
Net loss	$	(550,479)	$	(707,592)
Adjustments to reconcile net loss to net cash  used in operating activities:
Amortization and depreciation expense		18,594		21,081
Options and warrants		120,209		148,955
Common stock issued for services		-		20,000
Changes in operating assets and liabilities:
Accounts receivable		(298)		(1,078)
Accounts receivable–related parties		(649)		13,882
Costs and estimated earnings in excess of billings		30,973		(21,242)
Deposits		(19,614)		2,331
Prepaid expense		5,325		726
Inventory		(28,855)		112,080
Accounts payable and accrued expenses		(37,070)		195,629
Customer deposits		178,479		(111,453)
Accounts payable-related parties		56,938		2,928
Billings in excess of costs and estimated earnings		30,000		-
Accrued management compensation		223,109		124,712
Net Cash Provided by (Used in) Operating Activities		26,662		(199,041)
INVESTING ACTIVITIES
Net Cash Provided by Investing Activities		-		-
FINANCING ACTIVITIES
Proceeds from stock sale		-		100,000
Net Cash Provided by Financing Activities		-		100,000
NET INCREASE (DECREASE) IN CASH		26,662		(99,041)
CASH AT BEGINNING OF YEAR		17,782		105,846
CASH AT END OF PERIOD	$	44,444	$	6,805
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
CASH PAID FOR:
Interest	$	5,721	$	1,711
Income taxes	$	800	$	800
NON CASH INVESTING AND FINANCING ACTIVITIES
Options issued for accrued salary	$	100,000	$	-

The accompanying notes are an integral part of these financial statements.

Page 6

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

September 30, 2017

(unaudited)

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, 2017 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, 2016 audited financial statements.  The results of operations for the periods ended September 30, 2017 and 2016 are not necessarily indicative of the operating results for the full years.

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.

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:

	September 30,		December 31,
Location : Vista, CA	2017		2016
Raw materials	$	1,003,613	$	965,821
Finished goods		1,211,721		1,247,230
Work in process		26,572		-
Allowance for obsolete inventory		(343,151)		(343,151)
Total	$	1,898,755	$	1,869,900

The Company has established an allowance for obsolete inventory.  Expense for obsolete inventory was $-0- and $-0-, for the periods ended September 30, 2017 and September 30, 2016, respectively.

Page 7

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

September 30, 2017

(unaudited)

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property and Equipment

Property and equipment at September 30, 2017 and December 31, 2016 consisted of the following:

	September 30,		December 31,
	2017		2016
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		(132,086)		(113,492)
Total	$	13,245	$	31,839

Depreciation expense for the nine month periods ended September 30, 2017 and September 30, 2016 was $18,594 and $21,081, 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 2,406,806 stock options and warrants that would have been included in the fully diluted earnings per share as of September 30, 2017. However, the common stock equivalents were not included in the loss per share computation because they are anti-dilutive.    

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.

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, 2017 and December 31, 2016 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 2012.

Page 8

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

September 30, 2017

(unaudited)

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Going Concern

Historically, the Company has incurred net losses and negative cash flows from operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The Company may raise additional operating capital through the sale of debt or equity securities. Management believes that with sufficient working capital, from financing activities or from sales of the Company’s products, the Company will be able to meet its obligations and continue as a going concern. However, there is no assurance that the Company will be successful in its plan.

NOTE 3 – COSTS AND ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS

Billing practices for our contracts are governed by the contract terms of each project based on progress toward completion approved by the owner, achievement of milestones or pre-agreed schedules. Billings do not necessarily correlate with revenue recognized under the percentage-of-completion method of accounting. The current liability, “Billings in excess of costs and estimated earnings,” represents billings in excess of revenues recognized. The current asset, “Costs and estimated earnings in excess of billings,” represents revenues recognized in excess of amounts billed to the customer, which are usually billed during normal billing processes following achievement of contractural requirements.  

The two tables below set forth the costs incurred and earnings accrued on uncompleted contracts compared with the billings on those contracts through September 30, 2017 and December 31, 2016 and reconcile the net excess billings to the amounts included in the balance sheets at those dates.

	September 30,			December 31,
	2017			2016
Cost incurred on uncompleted contracts		$	-		$	100,335
Estimated earnings			-			52,138
			-			152,473
Billings on uncompleted contracts			(30,000)			(121,500)
Costs incurred and estimated earnings over (under) billings on uncompleted contracts			(30,000)			30,973

Included in the accompanying balance sheets under the following captions:

	September 30,			December 31,
	2017			2016
Costs and estimated earnings in excess of billings on uncompleted contracts		$	-		$	30,973
Billings in excess of costs and estimated earnings on uncompleted contracts			(30,000)			-
Net amount of costs and estimated earnings on uncompleted contracts above (below) billings		$	(30,000)		$	30,973

Page 9

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

September 30, 2017

(unaudited)

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 September 30, 2017, 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, 2017 and December 31, 2016, the Company was owed $7,654 and $7,005, 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, 2017 and December 31, 2016, the Company owed related parties for such expenses, goods and services in the amounts of $75,311 and $18,373, respectively.

Accrued Management Expenses

For the periods ended September 30, 2017 and December 31, 2016, the Company’s president, chief financial officer and vice president were due amounts for services performed for the Company.  

As of September 30, 2017 and December 31, 2016 the accrued management fees consisted of the following:

	September 30,			December 31,
	2017			2016
Amounts due to the president		$	284,322		$	210,257
Amounts due to the chief financial officer			72,818			35,962
Amounts due to the vice president			80,757			68,569
Total		$	437,897		$	314,788

NOTE 5 -  STOCK OPTIONS AND WARRANTS

During the nine months ended September 30, 2017 and 2016, the Company granted 350,000 and 250,000 options for services, respectively. During the nine months ended September 30, 2017 and 2016, the Company recognized expense of $120,209 and $148,955, 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 $34,163. During the nine months ended September 30, 2017 and 2016, the Company granted 555,556 and 470,000 options to the CEO for accrued compensation, respectively. 

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 Non-Qualified Stock Options to employees and consultants at its discretion. As of September 30, 2017 the Company has a total of 815,000 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, 2017 the Company has a total of 1,875,556 options issued under the plan. During the nine months ended September 30, 2017 and 2016 the Company issued -0- and -0- warrants, respectively.

Page 10

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

September 30, 2017

(unaudited)

NOTE 5 -  STOCK OPTIONS AND WARRANTS (CONTINUED)

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:

	September 30, 2017	September 30, 2016
Expected volatility	105%	87%
Expected dividends	0%	0%
Expected term	7 Years	7 Years
Risk-free interest rate	2.22%	1.52%

A summary of the status of the options and warrants granted at September 30, 2017 and December 31, 2016 and changes during the periods then ended is presented below:  

	September 30,			December 31,
	2017			2016
			Weighted-Average			Weighted-Average
	Shares		Exercise Price	Shares		Exercise Price
Outstanding at beginning of year	4,510,313	$	2.81	3,890,313	$	3.28
Granted	905,556		0.18	720,000		0.28
Exercised	-		-	-		-
Expired or cancelled	(2,775,313)		3.84	(100,000)		2.74
Outstanding at end of period	2,640,556		0.83	4,510,313		2.81
Exercisable	2,406,806	$	0.84	4,222,813	$	2.93

Page 11

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

September 30, 2017

(unaudited)

NOTE 5 -  STOCK OPTIONS AND WARRANTS (CONTINUED)

A summary of the status of the options and warrants outstanding at September 30, 2017 is presented below:

Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Number Exercisable	Weighted-Average Exercise Price
$0.01-0.99	1,950,556	5.68 years	1,723,473	0.26
$1.00-1.99	165,000	1.85 years	165,000	1.29
$2.00-2.99	525,000	2.01 years	518,333	2.52
$0.01-2.99	2,640,556	4.71 years	2,406,806	$0.82

NOTE 6 -  SUBSEQUENT EVENTS

On October 27, 2017 the shareholders approved the Omnitek Engineering Corp. 2017 Long-Term Incentive Plan, under which 5,000,000 shares of Company’s common stock were reserved for issuance of both Incentive Stock Options to employees only and Nonstatutory Stock Options to employees and consultants at its discretion.

Page 12

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

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes to the financial statements included elsewhere in this periodic report.  Some of the statements under “Management’s Discussion and Analysis,” “Description of Business” and elsewhere herein may include forward-looking statements which reflect our current views with respect to future events and financial performance. These statements include forward-looking statements both with respect to us specifically and the alternative fuels engines industry in general. Statements which include the words “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “will,” and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise. The safe harbor provisions of the federal securities laws do not apply to any forward-looking statements contained in this registration statement. 

All forward-looking statements address such matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statements you read herein reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our written and oral forward-looking statements attributable to us or individuals acting on our behalf and such statements are expressly qualified in their entirety by this paragraph.

Results of Operations

For the three months ended September 30, 2017 and 2016

Revenues were $276,241 for the three months ended September 30, 2017 compared with $355,050 for the three months ended September 30, 2016, a decrease of $78,809. The decrease is primarily attributable to the recognition of long-term contract revenues.

Cost of sales was $158,358 for the three months ended September 30, 2017 compared with $200,894 for the three months ended September 30, 2016, a decrease of $42,536. Our gross margin percentage was 43% for the three months ended September 30, 2017 and 43% for the same period in 2016.

Operating expenses for the three months ended September 30, 2017 were $265,602 compared with $370,554 in the same period in 2016, a decrease of $104,952 or 28%. General and administrative expense for the three months ended September 30, 2017 was $240,477 compared with $306,535 for the three months ended September 30, 2016.  Major components of general and administrative expenses for the three months ended September 30, 2017 were professional fees of $14,730, rent expense of $25,746, and salary and wages of $104,018. This compares to professional fees of $13,129, rent expense of $23,568 and salaries and wages of $140,226 for the three months ended September 30, 2016.  For the three months ended September 30, 2017 research and development outlays were decreased to $18,978 compared with $57,402 for the three months ended September 30, 2016. The decrease reflects a reduction in active research and development projects.

Our net loss for the three months ended September 30, 2017 was $149,849, or ($0.01) per share, compared with a net loss of $217,909, or ($0.01) per share, for the three months ended September 30, 2016.  The decreased net loss was primarily due to reduced general and administrative expenses during the three months ended September 30, 2017 over the same period a year earlier.

Page 13

Results for the three months ended September 30, 2017 reflect the impact of non-cash expenses, including the value of options and warrants granted in the amount of $25,476 and depreciation and amortization of $6,147.  For the three month period a year earlier non-cash expenses included options and warrants granted in the amount of $30,887 and depreciation and amortization of $6,617.

For the nine months ended September 30, 2017 and 2016

Revenues decreased to $814,210 for the nine months ended September 30, 2017 from $946,948 for the nine months ended September 30, 2016, a decrease of $132,738 or 14%, attributable to reduced customer demand.

Our cost of sales decreased to $456,765 for the nine months ended September 30, 2017 from $521,387 for the nine months ended September 30, 2016, a decrease of $64,622. Our gross margin was 44% for the nine months ended September 30, 2017 compared to 45% in 2016.

Our operating expenses for the nine months ended September 30, 2017 were $900,879 compared to $1,133,576 in 2016, a decrease of $232,697 or 21%.  General and administrative expense for the nine months ended September 30, 2017 was $789,618 as compared to $960,789 for the nine months ended September 30, 2016. Major components of general and administrative expenses for the nine months ended September 30, 2017 were professional fees of $45,629, rent expense of $83,538 and salary and wages of $308,187. This compares to professional fees of $65,107, rent expense of $71,639, and salary and wages of $381,588 for the nine months ended September 30, 2016. Research and development outlays were decreased to $92,667 for the nine months ended September 30, 2017 compared to $151,706 for the nine months ended September 30, 2016. The decrease reflects a reduction in active research and development projects.

Our net loss for the nine months ended September 30, 2017 was $550,479, or ($0.03) per share, compared to a net loss of $707,592, or ($0.04) per share, for the nine months ended September 30, 2016. The decreased loss was the result of reductions in both general and administrative expenses and research and development expenses.

Results for the nine months ended September 30, 2017 reflect the impact of non-cash expenses, including the value of options and warrants granted in the amount of $120,209 and depreciation and amortization of $18,594. For the nine-month period a year earlier, non-cash expenses for the value of options and warrants granted were $148,955 and depreciation and amortization of $21,081.

Liquidity and Capital Resources

Overview

Our primary sources of liquidity are cash provided by operating activities and available working capital. Additionally, from time to time we may raise funds from the equity capital markets to fund our research and development programs, expansion of our business and general operations.

At September 30, 2017, our current liabilities totaled $1,096,987 and our current assets totaled $2,020,640, resulting in positive working capital of $923,653 and a current ratio of 1.84.  

Page 14

We have no firm commitments or obligations for capital expenditures.  However, substantial discretionary expenditures may be required to enable us to conduct existing and planned product research, design, development, manufacturing, marketing and distribution of our products. We may need to raise additional capital to facilitate growth and support our long-term product development, manufacturing, and marketing programs. The Company has no established bank-financing arrangements. Therefore, it is possible that we need to seek additional financing through subsequent future public or private sales of our securities, including equity securities. We may also seek funding for the development, manufacturing, and marketing of our products through strategic partnerships and other arrangements with corporate partners. There can be no assurance, however, that such collaborative arrangements or additional funds will be available when needed, or on terms acceptable to us, if at all. If adequate funds are not available, we may be required to curtail one or more of our research and development programs.

We have historically incurred significant losses, which have resulted in a total accumulated deficit of $19,301,283 at September 30, 2017, of which $5,604,135 is a direct result of derivative expense and change in fair value of derivative liability and is unrelated to our operations or cash flow.

Operating Activities

We realized a positive cash flow from operations of $26,662 for the nine months ended September 30, 2017 compared with a negative cash flow of $199,041 during the nine months ended September 30, 2016.  

Included in the net loss of $550,479 for the nine months ended September 30, 2017 are non-cash expenses, which are not a drain on our capital resources.  During the period, these non-cash expenses include the value of options and warrants granted in the amount of $120,209 and depreciation and amortization of $18,594.  Excluding these non-cash amounts, our adjusted EBITDA for the nine months ended September 30, 2017 would be a loss of $411,676.

Off-Balance Sheet Arrangements

None.

Critical Accounting Policies and Estimates

Accounting Method and Use of Estimates

The Company's financial statements are prepared using the accrual method of accounting. 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. Areas where significant estimates are required include the following:

Accounts Receivable

Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts.

Page 15

Inventory

Inventory is stated at the lower of cost or market. The Company’s inventory consists of finished goods and raw materials. The Company identifies items in its inventory that have not been sold in a timely manner. Accordingly, the Company has established an allowance for the cost of such obsolete inventory.

Long-lived assets

The Company assesses the recoverability of its long lived assets annually and whenever circumstances would indicate that there may be an impairment. The Company compares the estimated undiscounted future cash flows to the carrying value of the long lived assets to determine if an impairment has occurred. In the event that an impairment has occurred, the Company recognizes the impairment immediately.

Costs and Estimated Earnings and Billings on Completed Contracts

Billing practices for our contracts are governed by the contract terms of each project based on progress toward completion approved by the owner, achievement of milestones or pre-agreed schedules. Billings do not necessarily correlate with revenue recognized under the percentage-of-completion method of accounting. The current liability, “Billings in excess of costs and estimated earnings on uncompleted contracts,” represents billings in excess of revenues recognized. The current asset, “Costs and estimated earnings in excess of billings on uncompleted contracts,” represents revenues recognized in excess of amounts billed to the customer, which are usually billed during normal billing processes following achievement of contractual requirements.

Income Taxes

The Company accounts for income taxes in accordance with Accounting Standards Codification 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. The Company uses historical experience to determine the likelihood of realization of deferred tax liabilities and assets.

Revenue Recognition

Products - The Company recognizes revenue from the sale of new engines for use with compressed natural gas, engine components to convert existing engines to compressed natural gas use and components for the maintenance of natural gas engines.  Revenues are recognized when all of the following have occurred: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the price is fixed or determinable and (iv) the ability to collect is reasonably assured. These criteria are generally satisfied at the time of shipment when risk of loss and title passes to the customer.

Contracts – Revenues are recognized on the percentage-of-completion method, measured by either achievement of milestones or the ratio of costs incurred up to a given date to estimated total costs for each contract. Contract costs include all direct material, labor, subcontract and other costs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Our contracts generally take 12 to 24 months to complete. 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. The current asset, “Costs and estimated earnings in excess of billings,” represents revenues recognized in excess of amounts billed to the customer, which are usually billed during normal billing processes following achievement of contractual requirements.   

Page 16

Accounting for 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.

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, 2017, 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.

At September 30, 2017, the Company had net operating loss carry forwards of approximately $5,772,304 through 2034. No tax benefit has been reported in the September 30, 2017 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.

Recently Issued 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.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Page 17

Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of September 30, 2017.

Changes in Internal Controls

  There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS 

We are not a party to any pending legal proceeding.  No federal, state or local governmental agency is presently contemplating any proceeding against the Company.  No director, executive officer or affiliate of the Company or owner of record or beneficially of more than five percent of the Company's common stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.

ITEM 1A.   RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS 

There were no unregistered sales of equity securities during the period covered by this report.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

(a)Documents filed as part of this Report. 

1. Financial Statements.  The condensed unaudited Balance Sheet of Omnitek Engineering Corp. as of September 30, 2017 and the audited balance sheet as of December 31, 2016, the condensed unaudited Statements of Operations for the three and nine month periods ended September 30, 2017 and 2016, and the condensed unaudited Statements of Cash Flows for the nine month periods ended September 30, 2017 and 2016, together with the notes thereto, are included in this Quarterly Report on Form 10-Q. 

Page 18

3. Exhibits. The following exhibits are either filed as a part hereof or are incorporated by reference. Exhibit numbers correspond to the numbering system in Item 601 of Regulation S-K. 

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, 2017 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 

Page 19

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Omnitek Engineering Corp.
Dated: November 8, 2017
		By: Werner Funk
		Its: Chief Executive Officer Principal Executive Officer
Dated: November 8, 2017			/s/ Richard L. Miller
			By: Richard L. Miller
			Its: Chief Financial Officer Principal Financial Officer

Page 20

EX-31.01

Exhibit 31.01

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14

I, Werner Funk, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Omnitek Engineering Corp.; 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;  

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;  

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have, for the small business issuer and have:  

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

(c)         Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)         Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5.I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):  

(a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date:  November 8, 2017	___________________________________
	By: Werner Funk
	Its: President and Secretary

EX-31.02

Exhibit 31.02

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a-14

I, Richard Miller, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Omnitek Engineering Corp.; 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;  

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;  

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have, for the small business issuer and have:  

(a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)         Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)         Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5.I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):  

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and, 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.  

Date:  November 8, 2017	/s/ Richard Miller
	By: Richard Miller
	Its: Chief Financial Officer

EX-32.01

 Exhibit 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Omnitek Engineering Corp. (the “Company”) on Form 10-Q for the period ending June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Werner Funk, Chief Executive Officer and I, Richard Miller, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: 

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. 

 

Dated: November 8, 2017___________________________ 

By:  Werner Funk 

Its:  Chief Executive Officer, 

President and Secretary

Dated: November 8, 2017/s/ Richard Miller 

___________________________ 

By: Richard Miller 

Its:  Chief Financial Officer  

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. 

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 08, 2017
Details
Registrant Name	OMNITEK ENGINEERING CORP.
Registrant CIK	0001404804
SEC Form	10-Q
Period End date	Sep. 30, 2017
Fiscal Year End	--12-31
Trading Symbol	omtk
Tax Identification Number (TIN)	330984450
Number of common stock shares outstanding		20,281,082
Filer Category	Smaller Reporting Company
Current with reporting	Yes
Voluntary filer	No
Well-known Seasoned Issuer	No
Amendment Flag	false
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Contained File Information, File Number	000-53955
Entity Incorporation, State Country Name	California
Entity Address, Address Line One	1333 Keystone Way, #101
Entity Address, City or Town	Vista
Entity Address, State or Province	California
Entity Address, Postal Zip Code	92081
City Area Code	760
Local Phone Number	591-0089

XML

Condensed Balance Sheets - USD ($)	Sep. 30, 2017	Dec. 31, 2016
CURRENT ASSETS
Cash	$ 44,444	$ 17,782
Accounts receivable, net	28,457	28,159
Accounts receivable - related parties	7,654	7,005
Inventory, net	1,898,755	1,869,900
Prepaid expense	0	5,324
Costs and estimated earnings in excess of billings	0	30,973
Deposits	41,330	21,716
Total Current Assets	2,020,640	1,980,859
FIXED ASSETS, net	13,245	31,839
OTHER ASSETS
Other noncurrent assets	14,280	14,280
Total Other Assets	14,280	14,280
TOTAL ASSETS	2,048,165	2,026,978
CURRENT LIABILITIES
Accounts payable and accrued expenses	288,185	325,255
Accrued management compensation	437,897	314,788
Accounts payable - related parties	75,311	18,373
Billings in excess of costs and estimated earnings	30,000	0
Customer deposits	265,594	87,114
Total Current Liabilities	1,096,987	745,530
Total Liabilities	1,096,987	745,530
STOCKHOLDERS' EQUITY
Common stock, 125,000,000 shares authorized no par value 20,281,082 shares issued and outstanding	8,411,411	8,411,411
Additional paid-in capital	11,841,050	11,620,841
Accumulated deficit	(19,301,283)	(18,750,804)
Total Stockholders' Equity	951,178	1,281,448
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 2,048,165	$ 2,026,978

XML

Condensed Balance Sheets - Parenthetical - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Details
Common Stock, Shares Authorized	125,000,000	125,000,000
Common Stock, No Par Value	$ 0	$ 0
Common Stock, Shares, Issued	20,281,082	20,281,082
Common Stock, Shares, Outstanding	20,281,082	20,281,082

XML

Condensed Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Details
REVENUES	$ 263,572	$ 354,533	$ 795,018	$ 930,755
REVENUES, related parties	12,669	517	19,192	16,193
Total Revenues	276,241	355,050	814,210	946,948
COST OF GOODS SOLD	158,358	200,894	456,765	521,387
GROSS MARGIN	117,883	154,156	357,445	425,561
OPERATING EXPENSES
General and administrative	240,477	306,535	789,618	960,789
Research and development	18,978	57,402	92,667	151,706
Depreciation and amortization	6,147	6,617	18,594	21,081
Total Operating Expenses	265,602	370,554	900,879	1,133,576
LOSS FROM OPERATIONS	(147,719)	(216,398)	(543,434)	(708,015)
OTHER INCOME (EXPENSE)
Other income	0	200	0	5,574
Interest expense	(2,130)	(1,711)	(6,245)	(4,351)
Total Other Income (Expense)	(2,130)	(1,511)	(6,245)	1,223
LOSS BEFORE INCOME TAXES	(149,849)	(217,909)	(549,679)	(706,792)
INCOME TAX EXPENSE	0	0	800	800
NET LOSS	$ (149,849)	$ (217,909)	$ (550,479)	$ (707,592)
BASIC AND DILUTED LOSS PER SHARE	$ (0.01)	$ (0.01)	$ (0.03)	$ (0.04)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING -BASIC AND DILUTED	20,281,082	20,273,473	20,281,082	20,095,681

XML

Condensed Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
OPERATING ACTIVITIES
Net loss	$ (550,479)	$ (707,592)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization and depreciation expense	18,594	21,081
Options and warrants	120,209	148,955
Common stock issued for services	0	20,000
Changes in operating assets and liabilities:
Accounts receivable	(298)	(1,078)
Accounts receivable-related parties	(649)	13,882
Costs and estimated earnings in excess of billings	30,973	(21,242)
Deposits	(19,614)	2,331
Prepaid expense	5,325	726
Inventory	(28,855)	112,080
Accounts payable and accrued expenses	(37,070)	195,629
Customer deposits	178,479	(111,453)
Accounts payable-related parties	56,938	2,928
Billings in excess of costs and estimated earnings	30,000	0
Accrued management compensation	223,109	124,712
Net Cash Provided by (Used in) Operating Activities	26,662	(199,041)
INVESTING ACTIVITIES
Net Cash Provided by Investing Activities	0	0
FINANCING ACTIVITIES
Proceeds from stock sale	0	100,000
Net Cash Provided by Financing Activities	0	100,000
NET INCREASE (DECREASE) IN CASH	26,662	(99,041)
CASH AT BEGINNING OF YEAR	17,782	105,846
CASH AT END OF PERIOD	44,444	6,805
CASH PAID FOR:
Interest	5,721	1,711
Income taxes	800	800
NON CASH INVESTING AND FINANCING ACTIVITIES
Options issued for accrued salary	$ 100,000	$ 0

XML

Note 1 - Condensed Financial Statements

9 Months Ended

Sep. 30, 2017

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, 2017 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, 2016 audited financial statements.  The results of operations for the periods ended September 30, 2017 and 2016 are not necessarily indicative of the operating results for the full years.

XML

Note 2 - Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

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.

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:

	September 30,		December 31,
Location : Vista, CA	2017		2016
Raw materials	$	1,003,613	$	965,821
Finished goods		1,211,721		1,247,230
Work in process		26,572		-
Allowance for obsolete inventory		(343,151)		(343,151)
Total	$	1,898,755	$	1,869,900

The Company has established an allowance for obsolete inventory.  Expense for obsolete inventory was $-0- and $-0-, for the periods ended September 30, 2017 and September 30, 2016, respectively.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property and Equipment

Property and equipment at September 30, 2017 and December 31, 2016 consisted of the following:

	September 30,		December 31,
	2017		2016
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		(132,086)		(113,492)
Total	$	13,245	$	31,839

Depreciation expense for the nine month periods ended September 30, 2017 and September 30, 2016 was $18,594 and $21,081, 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 2,406,806 stock options and warrants that would have been included in the fully diluted earnings per share as of September 30, 2017. However, the common stock equivalents were not included in the loss per share computation because they are anti-dilutive.    

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.

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, 2017 and December 31, 2016 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 2012.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Going Concern

Historically, the Company has incurred net losses and negative cash flows from operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The Company may raise additional operating capital through the sale of debt or equity securities. Management believes that with sufficient working capital, from financing activities or from sales of the Company’s products, the Company will be able to meet its obligations and continue as a going concern. However, there is no assurance that the Company will be successful in its plan.

XML

Note 3 - Costs And Estimated Earnings And Billings On Uncompleted Contracts

9 Months Ended

Sep. 30, 2017

Notes

Note 3 - Costs And Estimated Earnings And Billings On Uncompleted Contracts

NOTE 3 – COSTS AND ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS

Billing practices for our contracts are governed by the contract terms of each project based on progress toward completion approved by the owner, achievement of milestones or pre-agreed schedules. Billings do not necessarily correlate with revenue recognized under the percentage-of-completion method of accounting. The current liability, “Billings in excess of costs and estimated earnings,” represents billings in excess of revenues recognized. The current asset, “Costs and estimated earnings in excess of billings,” represents revenues recognized in excess of amounts billed to the customer, which are usually billed during normal billing processes following achievement of contractural requirements.  

The two tables below set forth the costs incurred and earnings accrued on uncompleted contracts compared with the billings on those contracts through September 30, 2017 and December 31, 2016 and reconcile the net excess billings to the amounts included in the balance sheets at those dates.

	September 30,			December 31,
	2017			2016
Cost incurred on uncompleted contracts		$	-		$	100,335
Estimated earnings			-			52,138
			-			152,473
Billings on uncompleted contracts			(30,000)			(121,500)
Costs incurred and estimated earnings over (under) billings on uncompleted contracts			(30,000)			30,973

Included in the accompanying balance sheets under the following captions:

	September 30,			December 31,
	2017			2016
Costs and estimated earnings in excess of billings on uncompleted contracts		$	-		$	30,973
Billings in excess of costs and estimated earnings on uncompleted contracts			(30,000)			-
Net amount of costs and estimated earnings on uncompleted contracts above (below) billings		$	(30,000)		$	30,973

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Note 4 - Related Party Transactions

9 Months Ended

Sep. 30, 2017

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 September 30, 2017, 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, 2017 and December 31, 2016, the Company was owed $7,654 and $7,005, 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, 2017 and December 31, 2016, the Company owed related parties for such expenses, goods and services in the amounts of $75,311 and $18,373, respectively.

Accrued Management Expenses

For the periods ended September 30, 2017 and December 31, 2016, the Company’s president, chief financial officer and vice president were due amounts for services performed for the Company.  

As of September 30, 2017 and December 31, 2016 the accrued management fees consisted of the following:

	September 30,			December 31,
	2017			2016
Amounts due to the president		$	284,322		$	210,257
Amounts due to the chief financial officer			72,818			35,962
Amounts due to the vice president			80,757			68,569
Total		$	437,897		$	314,788

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Note 5 - Stock Options and Warrants

9 Months Ended

Sep. 30, 2017

Notes

Note 5 - Stock Options and Warrants

NOTE 5 -  STOCK OPTIONS AND WARRANTS

During the nine months ended September 30, 2017 and 2016, the Company granted 350,000 and 250,000 options for services, respectively. During the nine months ended September 30, 2017 and 2016, the Company recognized expense of $120,209 and $148,955, 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 $34,163. During the nine months ended September 30, 2017 and 2016, the Company granted 555,556 and 470,000 options to the CEO for accrued compensation, respectively. 

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 Non-Qualified Stock Options to employees and consultants at its discretion. As of September 30, 2017 the Company has a total of 815,000 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, 2017 the Company has a total of 1,875,556 options issued under the plan. During the nine months ended September 30, 2017 and 2016 the Company issued -0- and -0- warrants, respectively.

NOTE 5 -  STOCK OPTIONS AND WARRANTS (CONTINUED)

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:

	September 30, 2017	September 30, 2016
Expected volatility	105%	87%
Expected dividends	0%	0%
Expected term	7 Years	7 Years
Risk-free interest rate	2.22%	1.52%

A summary of the status of the options and warrants granted at September 30, 2017 and December 31, 2016 and changes during the periods then ended is presented below:  

	September 30,			December 31,
	2017			2016
			Weighted-Average			Weighted-Average
	Shares		Exercise Price	Shares		Exercise Price
Outstanding at beginning of year	4,510,313	$	2.81	3,890,313	$	3.28
Granted	905,556		0.18	720,000		0.28
Exercised	-		-	-		-
Expired or cancelled	(2,775,313)		3.84	(100,000)		2.74
Outstanding at end of period	2,640,556		0.83	4,510,313		2.81
Exercisable	2,406,806	$	0.84	4,222,813	$	2.93

NOTE 5 -  STOCK OPTIONS AND WARRANTS (CONTINUED)

A summary of the status of the options and warrants outstanding at September 30, 2017 is presented below:

Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Number Exercisable	Weighted-Average Exercise Price
$0.01-0.99	1,950,556	5.68 years	1,723,473	0.26
$1.00-1.99	165,000	1.85 years	165,000	1.29
$2.00-2.99	525,000	2.01 years	518,333	2.52
$0.01-2.99	2,640,556	4.71 years	2,406,806	$0.82

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Note 6 - Subsequent Events

9 Months Ended

Sep. 30, 2017

Notes

Note 6 - Subsequent Events

NOTE 6 -  SUBSEQUENT EVENTS

On October 27, 2017 the shareholders approved the Omnitek Engineering Corp. 2017 Long-Term Incentive Plan, under which 5,000,000 shares of Company’s common stock were reserved for issuance of both Incentive Stock Options to employees only and Nonstatutory Stock Options to employees and consultants at its discretion.

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Note 2 - Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

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.

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.

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:

	September 30,		December 31,
Location : Vista, CA	2017		2016
Raw materials	$	1,003,613	$	965,821
Finished goods		1,211,721		1,247,230
Work in process		26,572		-
Allowance for obsolete inventory		(343,151)		(343,151)
Total	$	1,898,755	$	1,869,900

The Company has established an allowance for obsolete inventory.  Expense for obsolete inventory was $-0- and $-0-, for the periods ended September 30, 2017 and September 30, 2016, respectively.

Property and Equipment

Property and Equipment

Property and equipment at September 30, 2017 and December 31, 2016 consisted of the following:

	September 30,		December 31,
	2017		2016
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		(132,086)		(113,492)
Total	$	13,245	$	31,839

Depreciation expense for the nine month periods ended September 30, 2017 and September 30, 2016 was $18,594 and $21,081, respectively.

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 2,406,806 stock options and warrants that would have been included in the fully diluted earnings per share as of September 30, 2017. However, the common stock equivalents were not included in the loss per share computation because they are anti-dilutive.    

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.

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, 2017 and December 31, 2016 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 2012.

Going Concern

Going Concern

Historically, the Company has incurred net losses and negative cash flows from operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The Company may raise additional operating capital through the sale of debt or equity securities. Management believes that with sufficient working capital, from financing activities or from sales of the Company’s products, the Company will be able to meet its obligations and continue as a going concern. However, there is no assurance that the Company will be successful in its plan.

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Note 2 - Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2017

Tables/Schedules

Schedule of 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:

	September 30,		December 31,
Location : Vista, CA	2017		2016
Raw materials	$	1,003,613	$	965,821
Finished goods		1,211,721		1,247,230
Work in process		26,572		-
Allowance for obsolete inventory		(343,151)		(343,151)
Total	$	1,898,755	$	1,869,900

Schedule of Property and Equipment

Property and equipment at September 30, 2017 and December 31, 2016 consisted of the following:

	September 30,		December 31,
	2017		2016
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		(132,086)		(113,492)
Total	$	13,245	$	31,839

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Note 3 - Costs And Estimated Earnings And Billings On Uncompleted Contracts (Tables)

9 Months Ended

Sep. 30, 2017

Tables/Schedules

Schedule of Costs in Excess of Billings

	September 30,			December 31,
	2017			2016
Cost incurred on uncompleted contracts		$	-		$	100,335
Estimated earnings			-			52,138
			-			152,473
Billings on uncompleted contracts			(30,000)			(121,500)
Costs incurred and estimated earnings over (under) billings on uncompleted contracts			(30,000)			30,973

Schedule of long term contracts

Included in the accompanying balance sheets under the following captions:

	September 30,			December 31,
	2017			2016
Costs and estimated earnings in excess of billings on uncompleted contracts		$	-		$	30,973
Billings in excess of costs and estimated earnings on uncompleted contracts			(30,000)			-
Net amount of costs and estimated earnings on uncompleted contracts above (below) billings		$	(30,000)		$	30,973

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Note 4 - Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2017

Tables/Schedules

Schedule of Accrued Management Fees

As of September 30, 2017 and December 31, 2016 the accrued management fees consisted of the following:

	September 30,			December 31,
	2017			2016
Amounts due to the president		$	284,322		$	210,257
Amounts due to the chief financial officer			72,818			35,962
Amounts due to the vice president			80,757			68,569
Total		$	437,897		$	314,788

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Note 5 - Stock Options and Warrants (Tables)

9 Months Ended

Sep. 30, 2017

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:

	September 30, 2017	September 30, 2016
Expected volatility	105%	87%
Expected dividends	0%	0%
Expected term	7 Years	7 Years
Risk-free interest rate	2.22%	1.52%

Schedule of Stock Options and Warrants, Activity

A summary of the status of the options and warrants granted at September 30, 2017 and December 31, 2016 and changes during the periods then ended is presented below:  

	September 30,			December 31,
	2017			2016
			Weighted-Average			Weighted-Average
	Shares		Exercise Price	Shares		Exercise Price
Outstanding at beginning of year	4,510,313	$	2.81	3,890,313	$	3.28
Granted	905,556		0.18	720,000		0.28
Exercised	-		-	-		-
Expired or cancelled	(2,775,313)		3.84	(100,000)		2.74
Outstanding at end of period	2,640,556		0.83	4,510,313		2.81
Exercisable	2,406,806	$	0.84	4,222,813	$	2.93

Summary of the Status of the Options and Warrants Outstanding

A summary of the status of the options and warrants outstanding at September 30, 2017 is presented below:

Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Number Exercisable	Weighted-Average Exercise Price
$0.01-0.99	1,950,556	5.68 years	1,723,473	0.26
$1.00-1.99	165,000	1.85 years	165,000	1.29
$2.00-2.99	525,000	2.01 years	518,333	2.52
$0.01-2.99	2,640,556	4.71 years	2,406,806	$0.82

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Note 2 - Significant Accounting Policies: Inventory: Schedule of Inventory (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Details
Raw materials	$ 1,003,613	$ 965,821
Finished goods	1,211,721	1,247,230
Work in process	26,572	0
Allowance for obsolete inventory	(343,151)	(343,151)
Total	$ 1,898,755	$ 1,869,900

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Note 2 - Significant Accounting Policies: Inventory (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Details
Expense for Obsolete Inventory	$ 0	$ 0

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Note 2 - Significant Accounting Policies: Property and Equipment: Schedule of Property and Equipment (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Less: accumulated depreciation	$ (132,086)	$ (113,492)
Total	13,245	31,839
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

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Note 2 - Significant Accounting Policies: Property and Equipment (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Details
Depreciation expense	$ 18,594	$ 21,081

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Note 2 - Significant Accounting Policies: Basic and Diluted Loss Per Share (Details)	9 Months Ended
	Sep. 30, 2017 shares
Warrant
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2,406,806

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Note 3 - Costs And Estimated Earnings And Billings On Uncompleted Contracts: Schedule of Costs in Excess of Billings (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Details
Cost incurred on uncompleted contracts	$ 0	$ 100,335
Estimated earnings	0	52,138
Receivables, Long-term Contracts or Programs	0	152,473
Billings on uncompleted contracts	(30,000)	(121,500)
Billings in Excess of Cost	$ (30,000)	$ 30,973

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Note 3 - Costs And Estimated Earnings And Billings On Uncompleted Contracts: Schedule of long term contracts (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Details
Costs and estimated earnings in excess of billings on uncompleted contracts	$ 0	$ 30,973
Billings in excess of costs and estimated earnings	(30,000)	0
Billings in Excess of Cost	$ (30,000)	$ 30,973

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Note 4 - Related Party Transactions (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Accounts receivable - related parties	$ 7,654	$ 7,005
Accounts payable - related parties	75,311	18,373
Nology Engineering Inc
Accounts payable - related parties	$ 75,311	$ 18,373
Omnitek Engineering Thailand Co Ltd
Noncontrolling Interest, Ownership Percentage by Parent	15.00%
Omnitek Peru SAC
Noncontrolling Interest, Ownership Percentage by Parent	20.00%

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Note 4 - Related Party Transactions: Schedule of Accrued Management Fees (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Accrued management compensation	$ 437,897	$ 314,788
President
Accrued management compensation	284,322	210,257
Chief Financial Officer
Accrued management compensation	72,818	35,962
Vice President
Accrued management compensation	$ 80,757	$ 68,569

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Note 5 - Stock Options and Warrants (Details) - USD ($)		9 Months Ended		12 Months Ended
	Dec. 31, 2014	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Dec. 31, 2015	Sep. 11, 2015	Aug. 03, 2011	Apr. 30, 2007
Granted		905,556		720,000
Expense recognized for options and warrants vested		$ 120,209	$ 148,955
Total remaining amount of compensation expense to be recognized in future periods		$ 34,163
Options expired		2,775,313		100,000
Shares outstanding		2,640,556		4,510,313	3,890,313
Warrants, Granted		0	0
President
Granted		555,556	470,000
Employee Stock Option
Granted		350,000	250,000
Employee Stock Option | 2006 Long Term Incentive Plan
Number of Shares Authorized								10,000,000
Options expired	2,590,000
Employee Stock Option | 2011 Long Term Incentive Plan
Number of Shares Authorized							1,000,000
Shares outstanding		815,000
Employee Stock Option | 2015 Long Term Incentive Plan
Number of Shares Authorized						2,500,000
Shares outstanding		1,875,556

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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, 2017	Sep. 30, 2016
Details
Expected volatility	105.00%	87.00%
Expected dividends	0.00%	0.00%
Expected term	7 years	7 years
Risk-free interest rate	2.22%	1.52%

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Note 5 - Stock Options and Warrants: Schedule of Stock Options and Warrants, Activity (Details) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Shares outstanding	4,510,313	3,890,313
Outstanding, Weighted Average Exercise Price	$ 2.81	$ 3.28
Granted	905,556	720,000
Granted, Weighted Average Exercise Price	$ 0.18	$ 0.28
Exercised, Weighted Average Exercise	$ 0	$ 0
Expired or cancelled	(2,775,313)	(100,000)
Expired or cancelled, Weighted Average Exercise Price	$ 3.84	$ 2.74
Shares outstanding	2,640,556	4,510,313
Outstanding, Weighted Average Exercise Price	$ 0.83	$ 2.81
Exercisable	2,406,806	4,222,813
Exercisable, Weighted Average Exercise Price	$ 0.84	$ 2.93
Common Stock
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	0	0

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Note 5 - Stock Options and Warrants: Summary of the Status of the Options and Warrants Outstanding (Details)	9 Months Ended
	Sep. 30, 2017 $ / shares shares
$0.01-0.99
Exercise Price Range, Lower Range Limit	$ 0.01
Exercise Price Range, Upper Range Limit	$ 0.99
Number Outstanding | shares	1,950,556
Weighted-Average Remaining Contractual Life	5 years 8 months 4 days
Number Exercisable | shares	1,723,473
Weighted-Average Exercise Price	$ 0.26
$1.00-1.99
Exercise Price Range, Lower Range Limit	1.00
Exercise Price Range, Upper Range Limit	$ 1.99
Number Outstanding | shares	165,000
Weighted-Average Remaining Contractual Life	1 year 10 months 6 days
Number Exercisable | shares	165,000
Weighted-Average Exercise Price	$ 1.29
$2.00-2.99
Exercise Price Range, Lower Range Limit	2.00
Exercise Price Range, Upper Range Limit	$ 2.99
Number Outstanding | shares	525,000
Weighted-Average Remaining Contractual Life	2 years 3 days
Number Exercisable | shares	518,333
Weighted-Average Exercise Price	$ 2.52
$0.01-2.99
Exercise Price Range, Lower Range Limit	0.01
Exercise Price Range, Upper Range Limit	$ 2.99
Number Outstanding | shares	2,640,556
Weighted-Average Remaining Contractual Life	4 years 8 months 15 days
Number Exercisable | shares	2,406,806
Weighted-Average Exercise Price	$ 0.82

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Note 6 - Subsequent Events (Details)	Oct. 27, 2017 shares
2017 Long Term Incentive Plan | Subsequent Event
Number of Shares Authorized	5,000,000