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:  March 31, 2018

Commission File Number     000-53955

OMNITEK ENGINEERING CORP.

 (Exact name of Registrant as specified in its charter)

California	33-0984450
(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 May 11, 2018, 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 March 31, 2018 (unaudited) and December 31, 2017	3
Condensed Statements of Operations for the three months ended March 31, 2018 and March 31, 2017 (unaudited)	4
Condensed Statements of Cash Flows for the three months ended March 31, 2018 and and March 31, 2017 (unaudited)	5
Notes to the Condensed Financial Statements	6
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	17
Item 1A.    Risk Factors	17
Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.       Defaults Upon Senior Securities	17
Item 5.       Other Information	18
Item 6.       Exhibits	18

Page 2

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS 

OMNITEK ENGINEERING CORP.

Condensed Balance Sheets

		March 31, 2018		December 31, 2017
		(unaudited)
ASSETS
CURRENT ASSETS
Cash	$	11,522	$	23,279
Accounts receivable, net		27,116		7,984
Accounts receivable - related parties		7,752		3,440
Inventory, net		1,512,779		1,554,656
Prepaid expense		20,250		-
Deposits		22,012		17,385
Total Current Assets		1,601,431		1,606,744
FIXED ASSETS, net		3,272		7,253
OTHER ASSETS
Other noncurrent assets		14,280		14,280
Total Other Assets		14,280		14,280
TOTAL ASSETS	$	1,618,983	$	1,628,277
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	361,728	$	358,032
Accrued management compensation		432,084		406,841
Accounts payable - related parties		125,836		114,321
Notes payable - related parties		15,000		15,000
Convertible notes payable - related parties		15,000		15,000
Contract liabilities		30,000		30,000
Customer deposits		238,781		212,410
Total Current Liabilities		1,218,429		1,151,604
Total Liabilities		1,218,429		1,151,604
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		11,874,334		11,852,363
Accumulated deficit		(19,885,191)		(19,787,101)
Total Stockholders' Equity		400,554		476,673
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,618,983	$	1,628,277

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

Page 3

OMNITEK ENGINEERING CORP.

Condensed Statements of Operations (unaudited)

		For the Three Months Ended March 31, 2018		For the Three Months Ended March 31, 2017
REVENUES	$	359,530	$	289,424
REVENUES, related parties		-		2,230
Total Revenues		359,530		291,654
COST OF GOODS SOLD		204,492		152,613
GROSS MARGIN		155,038		139,041
OPERATING EXPENSES
General and administrative		220,530		300,122
Research and development		26,802		39,884
Depreciation and amortization		3,981		6,224
Total Operating Expenses		251,313		346,230
LOSS FROM OPERATIONS		(96,275)		(207,189)
OTHER INCOME (EXPENSE)
Interest expense		(2,765)		(1,852)
Other income		950		-
Total Other Income (Expense)		(1,815)		(1,852)
LOSS BEFORE INCOME TAXES		(98,090)		(209,041)
INCOME TAX EXPENSE		-		-
NET LOSS	$	(98,090)	$	(209,041)
BASIC AND DILUTED LOSS PER SHARE	$	(0.00)	$	(0.01)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED		20,281,082		20,281,082
The accompanying notes are an integral part of these financial statements.

Page 4

OMNITEK ENGINEERING CORP.

Condensed Statements of Cash Flows (unaudited)

		For the Three Months Ended March 31, 2018		For the Three Months Ended March 31, 2017
OPERATING ACTIVITIES
Net loss	$	(98,090)	$	(209,041)
Adjustments to reconcile net loss to net cash used by operating activities:
Amortization and depreciation expense		3,981		6,224
Obsolete inventory adjustment		25,000		-
Options and warrants granted		21,971		69,533
Changes in operating assets and liabilities:
Accounts receivable		(19,132)		(9,979)
Accounts receivable–related parties		(4,312)		(3,277)
Deposits		(4,627)		(2,301)
Prepaid Expense		(20,250)		5,324
Contract liabilities		-		14,516
Inventory		16,876		20,020
Accounts payable and accrued expenses		3,696		(15,340)
Customer deposits		26,371		(389)
Accounts payable-related parties		11,515		24,364
Accrued management compensation		25,244		102,813
Net Cash Provided by (Used in) Operating Activities		(11,757)		2,467
INVESTING ACTIVITIES
Net cash from Investing Activities		-		-
FINANCING ACTIVITIES
Net cash from Financing Activities		-		-
NET CHANGE IN CASH		(11,757)		2,467
CASH AT BEGINNING OF YEAR		23,279		17,782
CASH AT END OF PERIOD	$	11,522	$	20,249
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
CASH PAID FOR:
Interest	$	2,284	$	1,852
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 5

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2018

(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 March 31, 2018 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, 2017 audited financial statements.  The results of operations for the periods ended March 31, 2018 and 2017 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.

New Revenue Recognition Standard

In May 2014, the FASB issued ASU 2014-09, which provides a single conprehensive accounting standard for revenue recognition for contracts with customers and supersedes current industry-specific guidance, including ASC 605-35. The new standard requires companies to recognize revenue when control of promised goods or services is transferred to customers at an amount that reflects the consideration to which the company expects to be entitled in exchange for the goods or services. The new model requires companies to identify contractural performance obligations and determine whether revenue should be recognized at a point in time or over time for each of these obligations. The new standard also significantly expands disclosure requirements regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

We adopted the new standard on January 1, 2018 (“Adoption Date”), using the modified retrospective method, which provides for a cumulative effect adjustment to beginning 2018 retained earnings for those uncompleted contracts impacted by the adoption of the new standard. The changes to the method and/or timing of our revenue recognition associated with our adoption of the new standard primarily relate to long-term engine development contracts. We will continue to recognize these contracts over time utilizing the cost to cost measure of progress under the new standard, consistent with our historical accouting treatment for these contracts. Due to the low level of backlog at December 31, 2017 for our contracts impacted by the new standard, no adjustment to beginning 2018 retained earnings resulted from the adoption of the new standard.

See Note 3 for additional discussion of our revenue recognition accounting policies and expanded disclosures required by the new standard.

Page 6

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2018

(unaudited)

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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:

Location : Vista, CA		March 31, 2018		December 31, 2017
Raw materials	$	980,490	$	990,945
Finished goods		1,179,466		1,185,888
Work in progress		26,432		26,432
Allowance for obsolete inventory		(673,609)		(648,609)
Total	$	1,512,779	$	1,554,656

The Company has established an allowance for obsolete inventory.  Expense for obsolete inventory was $25,000 and $305,458, for the periods ended March 31, 2018 and December 31, 2017, respectively.

Property and Equipment

Property and equipment at March 31, 2018 and December 31, 2017 consisted of the following:

	March 31,		December 31,
	2018		2017
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		(142,059)		(138,078)
Total	$	3,272	$	7,253

Depreciation expense for the periods ended March 31, 2018 and March 31, 2017 was $3,981 and $6,224, 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 2,690,973 and 2,379,723 stock options and warrants that would have been included in the fully diluted earnings per share as of March 31, 2018 and December 31, 2017, respectively.  However, the common stock equivalents were not included in the computation of the loss per share computation because they are anti dilutive.  

Page 7

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2018

(unaudited)

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 March 31, 2018 and December 31, 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 2012.

Liquidity and Going Concern

Historically, the Company has incurred net losses and negative cash flows from operations.  As of March 31, 2018, the Company had an accumulated deficit of $19,885,191 and total stockholders’ equity of $400,554.  At March 31, 2018, the Company had current assets of $1,601,431 including cash of $11,522, and current liabilities of $1,218,429, resulting in working capital of $383,002. For 2017, the Company reported a net loss of $1,036,297 and net cash used by operating activities of $24,503. Management believes that based on its operating plan, the projected sales for 2018, combined with funds available from its working capital will be sufficient to fund operations for the next twelve months.  However, there can be no assurance that operations and operating cash flows will continue at the current levels or improve in the near future. Whether, and when, the Company can attain profitability and positive cash flows from operations is uncertain. The Company is also uncertain whether it can raise additional capital. These uncertainties cast substantial doubt upon the Company’s ability to continue as a going concern. Our financial statements have been prepared on a going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of operations. The financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts or the amounts or classification of liabilities should we be unable to continue as a going concern.     

NOTE 3 – CONTRACT ASSETS AND LIABILITIES

Under ASC Topic 606, performanace obligations are a critical step in revenue recognition. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recoginzed as revenue when, or as, the performation obligation is satisfied. We measure transfer of control of the performance obligation utilizing the cost-to-cost measure of progress, with cost of revenue including direct costs, such as materials and labor. Under the cost-to-cost approach, the use of estimated costs to complete each performance obligation is a significant variable in the process of determining recognized revenue and a signficant factor in the accounting for such performance obligations. The timing of when we bill our customers is generally dependent upon advance billings terms, milestone billings based on completion of certain phases of the work or when services are provided or products are shipped. Projects with

Page 8

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2018

(unaudited)

NOTE 3 – CONTRACT ASSETS AND LIABILITIES (Continued)

performance obligations recognized over time that have costs and estimated earnings recognized to date in excess of of cumulative billings, are reported on our Balance Sheets as contract assets. Projects with performance obligations recognized over time that have cumulative billings in excess of costs and estimated earnings recognized to date, are reported on our Balance Sheets as contract liabilities.  

The two tables below set forth thet costs incurred and earnings accrued on uncompleted contracts compared with the billings on those contracts through March 31, 2018 and December 31, 2017 and reconcile the net excess billings to the amounts included in the balance sheets at those dates.

	March 31,			December 31,
	2018			2017
Cost incurred on uncompleted contracts		$	-		$	-
Estimated earnings			-			-
			-			-
Billings on uncompleted contracts			(30,000)			(30,000)
Contract liabilities			(30,000)			(30,000)

Included in the accompanying balance sheets under the following captions:

	March 31,			December 31,
	2018			2017
Contract assets		$	-		$	-
Contract liabilities			(30,000)			(30,000)
Net contract liabilities		$	(30,000)		$	(30,000)

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 March 31, 2018, the Company owned a 15% interest in Omnitek Engineering Thailand Co. Ltd. and a 20% interest in Omnitek Peru S.A.C.  As of March 31, 2018 and December 31, 2017, the Company was owed $7,752 and $3,440, 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 March 31, 2018 and December 31, 2017, the Company owed related parties for such expenses, goods and services in the amounts of $125,836 and $114,321, respectively.

Page 9

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2018

(unaudited)

NOTE 4 - RELATED PARTY TRANSACTIONS (Continued)

Accrued Management Expenses

For the periods ended March 31, 2018 and December 31, 2017, the Company’s president and chief financial officer were due amounts for services performed for the Company.  

As of March 31, 2018 and December 31, 2017 the accrued management fees consisted of the following:

	March 31,			December 31,
	2018			2017
Amounts due to the president		$	343,912		$	321,796
Amounts due to the chief financial officer			88,172			85,045
Total		$	432,084		$	406,841

NOTE 5 – NOTE PAYABLE - RELATED PARTY TRANSACTIONS

Convertible Notes – Related Party

On November 7, 2017 the Company issued a convertible promissory note for $15,000 to a related party. The note has an annual interest rate of 8% and is unsecured. The principal amount of the note and all accrued interest is due and payable on or before July 7, 2018. The note has a conversion feature, wherein, at the lender’s option, at the maturity date the lender may convert the remaining unpaid principal balance and any unpaid accrued interest into shares of the Company’s common stock. The number of shares of common stock to be issued upon such conversion shall be equal to the quotient obtained by dividing (i) the remaining unpaid principal balance and any unpaid accrued interest of this note by (ii) 90% of the average closing price of the common stock of the Company, for five trading days before the maturity date. Due to this provision, the Company considered whether the imbedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging.” As the note isn’t convertible until maturity, no derivative liability was recognized as of March 31, 2018.

As of March 31, 2018 and December 31, 2017 Convertible Notes – Related Party consisted of the following:

	March 31,			December 31,
	2018			2017
Convertible note, related party		$	15,000		$	15,000
Total		$	15,000		$	15,000

Note Payable – Related Party

On January 19, 2017 the Company issued a promissory note for $15,000 to a related party. The note has an annual interest rate of 5% and is unsecured. The principal amount of the note and all accrued interest is due and payable on or before January 19, 2019.

As of March 31, 2018 and December 31, 2017 Note Payable – Related Party consisted of the following:

	March 31,			December 31,
	2018			2017
Note payable, related party		$	15,000		$	15,000
Total		$	15,000		$	15,000

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OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2018

(unaudited)

NOTE 6 -  STOCK OPTIONS AND WARRANTS

During the three months ended March 31, 2018 and 2017, the Company granted 590,000 and 350,000 options for services, respectively. During the three months ended March 31, 2018 and 2017, the Company recognized expense of $21,971 and $69,533, respectively, for options and warrants that vested during the periods pursuant to ASC Topic 718. As of March 31, 2018 total remaining amount of compensation expense to be recognized in future periods is $40,409. During the three months ended March 31, 2018 and 2017, the Company granted -0- and 555,556 options to the CEO for accrued compensation, respectively. As of March 31, 2018 and 2017, the total instrinsic value of ouststanding stock options was $-0- and $-0-, respectively.  

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 March 31, 2018 the Company has a total of 815,000 options issued under the 2011 Plan. On September 11, 2015 the Board of Directors adopted the Omnitek Engineering Corp. 2015 Long Term Incentive Plan (the “2015 Plan”), under which 2,500,000 shares of the Company’s Common Stock were reserved for issuance of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of March 31, 2018 the Company has a total of 2,165,556 options issued under the 2015 Plan. In October 2017, the Company’s shareholders approved its 2017 Long-Term Incentive Plan (the “2017 Plan”). Under the 2017 plan, the Company may issue up to 5,000,000 shares of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of March 31, 2018, the Company has a total of 300,000 options issued under the 2017 Plan. During the three months ended March 31, 2018 and 2017 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:

	March 31, 2018	March 31, 2017
Expected volatility	150 %	105 %
Expected dividends	0 %	0 %
Expected term	7 Years	7 Years
Risk-free interest rate	2.46 %	2.22 %

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OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2018

(unaudited)

NOTE 6 -  STOCK OPTIONS AND WARRANTS (continued)

A summary of the status of the options and warrants granted at March 31, 2018 and December 31, 2017 and changes during the periods then ended is presented below:  

	March 31,			December 31,
	2018			2017
			Weighted-Average			Weighted-Average
	Shares		Exercise Price	Shares		Exercise Price
Outstanding at beginning of year	2,600,556	$	0.82	4,510,313	$	2.81
Granted	590,000		0.07	905,556		0.18
Exercised	-		-	-		-
Expired or cancelled	-		-	(2,815,313)		3.81
Outstanding at end of period	3,190,556		0.68	2,600,556		0.82
Exercisable	2,690,973	$	0.75	2,354,723	$	0.84

A summary of the status of the options and warrants outstanding at March 31, 2018 is presented below:

Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Number Exercisable	Weighted-Average Exercise Price
$0.01-0.99	2,540,556	5.55 years	2,040,973	0.24
$1.00-1.99	125,000	1.30 years	125,000	1.18
$2.00-2.99	525,000	1.51 years	525,000	2.52
$0.01-3.99	3,190,556	4.72 years	2,690,973	$0.73

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OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2018

(unaudited)

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 March 31, 2018 and 2017

Revenues were $359,530 for the three months ended March 31, 2018 compared with $291,654 for the three months ended March 31, 2017, an increase of $67,876. The results for the period reflect increased sales of conversion kits in Turkey and India.

Cost of sales was $204,492 for the three months ended March 31, 2018 compared with $152,613 for the three months ended March 31, 2017, an increase of $51,879. Our gross margin percentage was 43% for the three months ended March 31, 2018 compared with 48% in the same period in 2017.

Operating expenses for the three months ended March 31, 2018 were $251,313 compared with $346,230 in the same period in 2017, a decrease of $94,917 or 27%. The overall decrease in operating expenses is primarily attributable to a reduction in options and warrants expense, which was $21,971 for the three months ended March 31, 2018 compared with $69,533 for the three months ended March 31, 2017. General and administrative expense for the three months ended March 31, 2018 was $220,530 compared with $300,122 for the three months ended March 31, 2017.  Major components of general and administrative expenses for the three months ended March 31, 2018 were professional fees of $29,538, rent expense of $27,378, and salary and wages of $77,936. This compares to professional fees of $20,629, rent expense of $32,962 and salaries and wages of $102,986 for the three months ended March 31, 2017.  For the three months ended March 31, 2018 research and development outlays were decreased to $26,802 compared with $39,884 for the three months ended March 31, 2017.

Our net loss for the three months ended March 31, 2018 was $98,090, or ($0.00) per share, compared with a net loss of $209,041, or ($0.01) per share, for the three months ended March 31, 2017.  The decreased net loss was primarily due to higher revenues and lower general and administrative expense during the three months ended March 31, 2018 over the same period a year earlier.

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OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2018

(unaudited)

Results for the three months ended March 31, 2018 reflect the impact of non-cash expenses, including the value of options and warrants granted in the amount of $21,971 and depreciation and amortization of $3,981.  For the three month period ended March 31, 2017 non-cash expenses included options and warrants granted in the amount of $69,533 and depreciation and amortization of $6,224.

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 March 31, 2018, our current liabilities totaled $1,218,429 and our current assets totaled $1,601,431, resulting in positive working capital of $383,002 and a current ratio of 1.31.  

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 $19,885,191 at March 31, 2018, 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. Management believes that based in its operating plan, the projected sales for 2018, combined with funds available from its working capital will be sufficient to fund operations for the next twelve months. However, there can be no assurance that operations and operating cash flows will continue at the current levels or improve in the near future. Whether, and when, the Company can attain profitability and positive cash flows from operations is uncertain. The Company is also uncertain whether it can raise additional capital. These uncertainties cash substantial doubt upon the Company’s ability to continue as a going concern.

Operating Activities

We realized a negative cash flow from operations of $11,757 for the three months ended March 31, 2018 compared with a positive cash flow of $2,467 during the three months ended March 31, 2017.  

Included in the operating loss of $98,090 for the three months ended March 31, 2018 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 $21,971 and depreciation and amortization of $3,981.  Excluding these non-cash amounts and interest expense of $2,765, our adjusted EBITDA for the three months ended March 31, 2018 was a loss of $44,373.

Off-Balance Sheet Arrangements

None.

Page 14

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2018

(unaudited)

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.

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.

Contract assets and liabilities

The timing of when we bill our customers is generally dependent upon advance billings terms, milestone billings based on completion of certain phases of the work or when services are provided or products are shipped. Projects with performance obligations recognized over time that have costs and estimated earnings recognized to date in excess of the cumulative billings, are reported on our Balance Sheets as contract assets. Projects with performance obligations recognized over time that have cumulative billings in excess of costs and estimated earnings recognized to date, are reported on our Balance Sheets as contract liabilities.

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

Page 15

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2018

(unaudited)

maintenance of natural gas engines.  In accordance with the new revenue recognition standards under ASC Topic 606, revenues are recognized when all of the following steps have been satisfied: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue when (or as) performance obligations are satisfied. These criteria are generally satisfied at the time of shipment when risk of loss and title passes to the customer.

Contracts – Under ASC Topic 606, the same five steps that apply to our sales of products also apply to our long-term contracts. For long-term contract revenue recognition, the concept of performance obligations is of particular significance. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. We generally measure transfer of control of the performance obligation utilizing the cost-to-cost measure of progress, with cost of revenue including direct costs, such as materials and labor. Under the cost-to-cost approach, the use of estimated costs to complete each performance obligation is a significant variable in the process of determining recognized revenue and a significant factor in accounting for such performance obligations. See “Contract assets and liabilities” for a description of the balance sheet accounts used for long-term contract accounting.   

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 March 31, 2018, 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 March 31, 2018, the Company had net operating loss carry forwards of approximately $6,239,260through 2034. No tax benefit has been reported in the March 31, 2018 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.

Page 16

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2018

(unaudited)

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.

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 March 31, 2018.

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 March 31, 2018 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

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

Page 17

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2018

(unaudited)

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 March 31, 2018 and the audited balance sheet as of December 31, 2017, the condensed unaudited Statements of Operations for the three month periods ended March 31, 2018 and 2017, and the condensed unaudited Statements of Cash Flows for the three month periods ended March 31, 2018 and 2017, together with the notes thereto, are included in this Quarterly Report on Form 10-Q. 

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 March 31, 2018 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 18

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2018

(unaudited)

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: May 11, 2018
		By: Werner Funk
		Its: Chief Executive Officer Principal Executive Officer
Dated: May 11, 2018			/s/ Richard L. Miller
			By: Richard L. Miller
			Its: Chief Financial Officer Principal Financial Officer

Page 19

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 March 31, 2018 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: May 11, 2018___________________________ 

By:  Werner Funk 

Its:  Chief Executive Officer, 

President and Secretary

Dated: May 11, 2018/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	3 Months Ended
	Mar. 31, 2018	May 11, 2018
Details
Registrant Name	OMNITEK ENGINEERING CORP.
Registrant CIK	0001404804
SEC Form	10-Q
Period End date	Mar. 31, 2018
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	2018
Document Fiscal Period Focus	Q1
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 ($)	Mar. 31, 2018	Dec. 31, 2017
CURRENT ASSETS
Cash	$ 11,522	$ 23,279
Accounts receivable, net	27,116	7,984
Accounts receivable - related parties	7,752	3,440
Inventory, net	1,512,779	1,554,656
Prepaid expense	20,250	0
Deposits	22,012	17,385
Total Current Assets	1,601,431	1,606,744
FIXED ASSETS, net	3,272	7,253
OTHER ASSETS
Other noncurrent assets	14,280	14,280
Total Other Assets	14,280	14,280
TOTAL ASSETS	1,618,983	1,628,277
CURRENT LIABILITIES
Accounts payable and accrued expenses	361,728	358,032
Accrued management compensation	432,084	406,841
Accounts payable - related parties	125,836	114,321
Notes payable - related parties	15,000	15,000
Convertible notes payable - related parties	15,000	15,000
Contract liabilities	30,000	30,000
Customer deposits	238,781	212,410
Total Current Liabilities	1,218,429	1,151,604
Total Liabilities	1,218,429	1,151,604
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	11,874,334	11,852,363
Accumulated deficit	(19,885,191)	(19,787,101)
Total Stockholders' Equity	400,554	476,673
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 1,618,983	$ 1,628,277

XML

Condensed Balance Sheets - Parenthetical - shares	Mar. 31, 2018	Dec. 31, 2017
Details
Common Stock, Shares Authorized	125,000,000	125,000,000
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
	Mar. 31, 2018	Mar. 31, 2017
Details
REVENUES	$ 359,530	$ 289,424
REVENUES, related parties	0	2,230
Total Revenues	359,530	291,654
COST OF GOODS SOLD	204,492	152,613
GROSS MARGIN	155,038	139,041
OPERATING EXPENSES
General and administrative	220,530	300,122
Research and development	26,802	39,884
Depreciation and amortization	3,981	6,224
Total Operating Expenses	251,313	346,230
LOSS FROM OPERATIONS	(96,275)	(207,189)
OTHER INCOME (EXPENSE)
Interest expense	(2,765)	(1,852)
Other income	950	0
Total Other Income (Expense)	(1,815)	(1,852)
LOSS BEFORE INCOME TAXES	(98,090)	(209,041)
INCOME TAX EXPENSE	0	0
NET LOSS	$ (98,090)	$ (209,041)
BASIC AND DILUTED LOSS PER SHARE	$ (0.00)	$ (0.01)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED	20,281,082	20,281,082

XML

Condensed Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
OPERATING ACTIVITIES
Net loss	$ (98,090)	$ (209,041)
Adjustments to reconcile net loss to net cash used by operating activities:
Amortization and depreciation expense	3,981	6,224
Obsolete inventory adjustment	25,000	0
Options and warrants granted	21,971	69,533
Changes in operating assets and liabilities:
Accounts receivable	(19,132)	(9,979)
Accounts receivable-related parties	(4,312)	(3,277)
Deposits	(4,627)	(2,301)
Prepaid Expense	(20,250)	5,324
Contract liabilities	0	14,516
Inventory	16,876	20,020
Accounts payable and accrued expenses	3,696	(15,340)
Customer deposits	26,371	(389)
Accounts payable-related parties	11,515	24,364
Accrued management compensation	25,244	102,813
Net Cash Provided by (Used in) Operating Activities	(11,757)	2,467
INVESTING ACTIVITIES
Net cash from Investing Activities	0	0
FINANCING ACTIVITIES
Net cash from Financing Activities	0	0
NET CHANGE IN CASH	(11,757)	2,467
CASH AT BEGINNING OF YEAR	23,279	17,782
CASH AT END OF PERIOD	11,522	20,249
CASH PAID FOR:
Interest	2,284	1,852
NON CASH INVESTING AND FINANCING ACTIVITIES
Options issued for accrued salary	$ 0	$ 100,000

XML

Note 1 - Condensed Financial Statements

3 Months Ended

Mar. 31, 2018

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 March 31, 2018 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, 2017 audited financial statements.  The results of operations for the periods ended March 31, 2018 and 2017 are not necessarily indicative of the operating results for the full years.

XML

Note 2 - Significant Accounting Policies

3 Months Ended

Mar. 31, 2018

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.

New Revenue Recognition Standard

In May 2014, the FASB issued ASU 2014-09, which provides a single conprehensive accounting standard for revenue recognition for contracts with customers and supersedes current industry-specific guidance, including ASC 605-35. The new standard requires companies to recognize revenue when control of promised goods or services is transferred to customers at an amount that reflects the consideration to which the company expects to be entitled in exchange for the goods or services. The new model requires companies to identify contractural performance obligations and determine whether revenue should be recognized at a point in time or over time for each of these obligations. The new standard also significantly expands disclosure requirements regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

We adopted the new standard on January 1, 2018 (“Adoption Date”), using the modified retrospective method, which provides for a cumulative effect adjustment to beginning 2018 retained earnings for those uncompleted contracts impacted by the adoption of the new standard. The changes to the method and/or timing of our revenue recognition associated with our adoption of the new standard primarily relate to long-term engine development contracts. We will continue to recognize these contracts over time utilizing the cost to cost measure of progress under the new standard, consistent with our historical accouting treatment for these contracts. Due to the low level of backlog at December 31, 2017 for our contracts impacted by the new standard, no adjustment to beginning 2018 retained earnings resulted from the adoption of the new standard.

See Note 3 for additional discussion of our revenue recognition accounting policies and expanded disclosures required by the new standard.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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:

Location : Vista, CA		March 31, 2018		December 31, 2017
Raw materials	$	980,490	$	990,945
Finished goods		1,179,466		1,185,888
Work in progress		26,432		26,432
Allowance for obsolete inventory		(673,609)		(648,609)
Total	$	1,512,779	$	1,554,656

The Company has established an allowance for obsolete inventory.  Expense for obsolete inventory was $25,000 and $305,458, for the periods ended March 31, 2018 and December 31, 2017, respectively.

Property and Equipment

Property and equipment at March 31, 2018 and December 31, 2017 consisted of the following:

	March 31,		December 31,
	2018		2017
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		(142,059)		(138,078)
Total	$	3,272	$	7,253

Depreciation expense for the periods ended March 31, 2018 and March 31, 2017 was $3,981 and $6,224, 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 2,690,973 and 2,379,723 stock options and warrants that would have been included in the fully diluted earnings per share as of March 31, 2018 and December 31, 2017, respectively.  However, the common stock equivalents were not included in the computation of the loss per share computation because they are anti dilutive. 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 March 31, 2018 and December 31, 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 2012.

Liquidity and Going Concern

Historically, the Company has incurred net losses and negative cash flows from operations.  As of March 31, 2018, the Company had an accumulated deficit of $19,885,191 and total stockholders’ equity of $400,554.  At March 31, 2018, the Company had current assets of $1,601,431 including cash of $11,522, and current liabilities of $1,218,429, resulting in working capital of $383,002. For 2017, the Company reported a net loss of $1,036,297 and net cash used by operating activities of $24,503. Management believes that based on its operating plan, the projected sales for 2018, combined with funds available from its working capital will be sufficient to fund operations for the next twelve months.  However, there can be no assurance that operations and operating cash flows will continue at the current levels or improve in the near future. Whether, and when, the Company can attain profitability and positive cash flows from operations is uncertain. The Company is also uncertain whether it can raise additional capital. These uncertainties cast substantial doubt upon the Company’s ability to continue as a going concern. Our financial statements have been prepared on a going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of operations. The financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts or the amounts or classification of liabilities should we be unable to continue as a going concern.     

XML

Note 3 - Contract Assets and Liabilities

3 Months Ended

Mar. 31, 2018

Notes

Note 3 - Contract Assets and Liabilities

NOTE 3 – CONTRACT ASSETS AND LIABILITIES

Under ASC Topic 606, performanace obligations are a critical step in revenue recognition. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recoginzed as revenue when, or as, the performation obligation is satisfied. We measure transfer of control of the performance obligation utilizing the cost-to-cost measure of progress, with cost of revenue including direct costs, such as materials and labor. Under the cost-to-cost approach, the use of estimated costs to complete each performance obligation is a significant variable in the process of determining recognized revenue and a signficant factor in the accounting for such performance obligations. The timing of when we bill our customers is generally dependent upon advance billings terms, milestone billings based on completion of certain phases of the work or when services are provided or products are shipped. Projects with

NOTE 3 – CONTRACT ASSETS AND LIABILITIES (Continued)

performance obligations recognized over time that have costs and estimated earnings recognized to date in excess of of cumulative billings, are reported on our Balance Sheets as contract assets. Projects with performance obligations recognized over time that have cumulative billings in excess of costs and estimated earnings recognized to date, are reported on our Balance Sheets as contract liabilities.   

The two tables below set forth thet costs incurred and earnings accrued on uncompleted contracts compared with the billings on those contracts through March 31, 2018 and December 31, 2017 and reconcile the net excess billings to the amounts included in the balance sheets at those dates.

	March 31,			December 31,
	2018			2017
Cost incurred on uncompleted contracts		$	-		$	-
Estimated earnings			-			-
			-			-
Billings on uncompleted contracts			(30,000)			(30,000)
Contract liabilities			(30,000)			(30,000)

Included in the accompanying balance sheets under the following captions:

	March 31,			December 31,
	2018			2017
Contract assets		$	-		$	-
Contract liabilities			(30,000)			(30,000)
Net contract liabilities		$	(30,000)		$	(30,000)

XML

Note 4 - Related Party Transactions

3 Months Ended

Mar. 31, 2018

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 March 31, 2018, the Company owned a 15% interest in Omnitek Engineering Thailand Co. Ltd. and a 20% interest in Omnitek Peru S.A.C.  As of March 31, 2018 and December 31, 2017, the Company was owed $7,752 and $3,440, 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 March 31, 2018 and December 31, 2017, the Company owed related parties for such expenses, goods and services in the amounts of $125,836 and $114,321, respectively.

NOTE 4 - RELATED PARTY TRANSACTIONS (Continued)

Accrued Management Expenses

For the periods ended March 31, 2018 and December 31, 2017, the Company’s president and chief financial officer were due amounts for services performed for the Company.  

As of March 31, 2018 and December 31, 2017 the accrued management fees consisted of the following:

	March 31,			December 31,
	2018			2017
Amounts due to the president		$	343,912		$	321,796
Amounts due to the chief financial officer			88,172			85,045
Total		$	432,084		$	406,841

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Note 5 - Note Payable - Related Party Transactions

3 Months Ended

Mar. 31, 2018

Notes

Note 5 - Note Payable - Related Party Transactions

NOTE 5 – NOTE PAYABLE - RELATED PARTY TRANSACTIONS

Convertible Notes – Related Party

On November 7, 2017 the Company issued a convertible promissory note for $15,000 to a related party. The note has an annual interest rate of 8% and is unsecured. The principal amount of the note and all accrued interest is due and payable on or before July 7, 2018. The note has a conversion feature, wherein, at the lender’s option, at the maturity date the lender may convert the remaining unpaid principal balance and any unpaid accrued interest into shares of the Company’s common stock. The number of shares of common stock to be issued upon such conversion shall be equal to the quotient obtained by dividing (i) the remaining unpaid principal balance and any unpaid accrued interest of this note by (ii) 90% of the average closing price of the common stock of the Company, for five trading days before the maturity date. Due to this provision, the Company considered whether the imbedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging.” As the note isn’t convertible until maturity, no derivative liability was recognized as of March 31, 2018.

As of March 31, 2018 and December 31, 2017 Convertible Notes – Related Party consisted of the following:

	March 31,			December 31,
	2018			2017
Convertible note, related party		$	15,000		$	15,000
Total		$	15,000		$	15,000

Note Payable – Related Party

On January 19, 2017 the Company issued a promissory note for $15,000 to a related party. The note has an annual interest rate of 5% and is unsecured. The principal amount of the note and all accrued interest is due and payable on or before January 19, 2019.

As of March 31, 2018 and December 31, 2017 Note Payable – Related Party consisted of the following:

	March 31,			December 31,
	2018			2017
Note payable, related party		$	15,000		$	15,000
Total		$	15,000		$	15,000

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Note 6 - Stock Options and Warrants

3 Months Ended

Mar. 31, 2018

Notes

Note 6 - Stock Options and Warrants

NOTE 6 -  STOCK OPTIONS AND WARRANTS

During the three months ended March 31, 2018 and 2017, the Company granted 590,000 and 350,000 options for services, respectively. During the three months ended March 31, 2018 and 2017, the Company recognized expense of $21,971 and $69,533, respectively, for options and warrants that vested during the periods pursuant to ASC Topic 718. As of March 31, 2018 total remaining amount of compensation expense to be recognized in future periods is $40,409. During the three months ended March 31, 2018 and 2017, the Company granted -0- and 555,556 options to the CEO for accrued compensation, respectively. As of March 31, 2018 and 2017, the total instrinsic value of ouststanding stock options was $-0- and $-0-, respectively.                           

                        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 March 31, 2018 the Company has a total of 815,000 options issued under the 2011 Plan. On September 11, 2015 the Board of Directors adopted the Omnitek Engineering Corp. 2015 Long Term Incentive Plan (the “2015 Plan”), under which 2,500,000 shares of the Company’s Common Stock were reserved for issuance of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of March 31, 2018 the Company has a total of 2,165,556 options issued under the 2015 Plan.  In October 2017, the Company’s shareholders approved its 2017 Long-Term Incentive Plan (the “2017 Plan”). Under the 2017 plan, the Company may issue up to 5,000,000 shares of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion.  As of March 31, 2018, the Company has a total of 300,000 options issued under the 2017 Plan.  During the three months ended March 31, 2018 and 2017 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:

	March 31, 2018	March 31, 2017
Expected volatility	150 %	105 %
Expected dividends	0 %	0 %
Expected term	7 Years	7 Years
Risk-free interest rate	2.46 %	2.22 %

NOTE 6 -  STOCK OPTIONS AND WARRANTS (continued)

A summary of the status of the options and warrants granted at March 31, 2018 and December 31, 2017 and changes during the periods then ended is presented below: 

	March 31,			December 31,
	2018			2017
			Weighted-Average			Weighted-Average
	Shares		Exercise Price	Shares		Exercise Price
Outstanding at beginning of year	2,600,556	$	0.82	4,510,313	$	2.81
Granted	590,000		0.07	905,556		0.18
Exercised	-		-	-		-
Expired or cancelled	-		-	(2,815,313)		3.81
Outstanding at end of period	3,190,556		0.68	2,600,556		0.82
Exercisable	2,690,973	$	0.75	2,354,723	$	0.84

A summary of the status of the options and warrants outstanding at March 31, 2018 is presented below:

Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Number Exercisable	Weighted-Average Exercise Price
$0.01-0.99	2,540,556	5.55 years	2,040,973	0.24
$1.00-1.99	125,000	1.30 years	125,000	1.18
$2.00-2.99	525,000	1.51 years	525,000	2.52
$0.01-3.99	3,190,556	4.72 years	2,690,973	$0.73

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Note 2 - Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2018

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.

New Revenue Recognition Standard

New Revenue Recognition Standard

In May 2014, the FASB issued ASU 2014-09, which provides a single conprehensive accounting standard for revenue recognition for contracts with customers and supersedes current industry-specific guidance, including ASC 605-35. The new standard requires companies to recognize revenue when control of promised goods or services is transferred to customers at an amount that reflects the consideration to which the company expects to be entitled in exchange for the goods or services. The new model requires companies to identify contractural performance obligations and determine whether revenue should be recognized at a point in time or over time for each of these obligations. The new standard also significantly expands disclosure requirements regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

We adopted the new standard on January 1, 2018 (“Adoption Date”), using the modified retrospective method, which provides for a cumulative effect adjustment to beginning 2018 retained earnings for those uncompleted contracts impacted by the adoption of the new standard. The changes to the method and/or timing of our revenue recognition associated with our adoption of the new standard primarily relate to long-term engine development contracts. We will continue to recognize these contracts over time utilizing the cost to cost measure of progress under the new standard, consistent with our historical accouting treatment for these contracts. Due to the low level of backlog at December 31, 2017 for our contracts impacted by the new standard, no adjustment to beginning 2018 retained earnings resulted from the adoption of the new standard.

See Note 3 for additional discussion of our revenue recognition accounting policies and expanded disclosures required by the new standard.

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:

Location : Vista, CA		March 31, 2018		December 31, 2017
Raw materials	$	980,490	$	990,945
Finished goods		1,179,466		1,185,888
Work in progress		26,432		26,432
Allowance for obsolete inventory		(673,609)		(648,609)
Total	$	1,512,779	$	1,554,656

The Company has established an allowance for obsolete inventory.  Expense for obsolete inventory was $25,000 and $305,458, for the periods ended March 31, 2018 and December 31, 2017, respectively.

Property and Equipment

Property and Equipment

Property and equipment at March 31, 2018 and December 31, 2017 consisted of the following:

	March 31,		December 31,
	2018		2017
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		(142,059)		(138,078)
Total	$	3,272	$	7,253

Depreciation expense for the periods ended March 31, 2018 and March 31, 2017 was $3,981 and $6,224, 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 2,690,973 and 2,379,723 stock options and warrants that would have been included in the fully diluted earnings per share as of March 31, 2018 and December 31, 2017, respectively.  However, the common stock equivalents were not included in the computation of 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 March 31, 2018 and December 31, 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 2012.

Going Concern

Liquidity and Going Concern

Historically, the Company has incurred net losses and negative cash flows from operations.  As of March 31, 2018, the Company had an accumulated deficit of $19,885,191 and total stockholders’ equity of $400,554.  At March 31, 2018, the Company had current assets of $1,601,431 including cash of $11,522, and current liabilities of $1,218,429, resulting in working capital of $383,002. For 2017, the Company reported a net loss of $1,036,297 and net cash used by operating activities of $24,503. Management believes that based on its operating plan, the projected sales for 2018, combined with funds available from its working capital will be sufficient to fund operations for the next twelve months.  However, there can be no assurance that operations and operating cash flows will continue at the current levels or improve in the near future. Whether, and when, the Company can attain profitability and positive cash flows from operations is uncertain. The Company is also uncertain whether it can raise additional capital. These uncertainties cast substantial doubt upon the Company’s ability to continue as a going concern. Our financial statements have been prepared on a going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of operations. The financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts or the amounts or classification of liabilities should we be unable to continue as a going concern.     

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Note 2 - Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2018

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:

Location : Vista, CA		March 31, 2018		December 31, 2017
Raw materials	$	980,490	$	990,945
Finished goods		1,179,466		1,185,888
Work in progress		26,432		26,432
Allowance for obsolete inventory		(673,609)		(648,609)
Total	$	1,512,779	$	1,554,656

Schedule of Property and Equipment

Property and equipment at March 31, 2018 and December 31, 2017 consisted of the following:

	March 31,		December 31,
	2018		2017
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		(142,059)		(138,078)
Total	$	3,272	$	7,253

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Note 3 - Contract Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Costs in Excess of Billings

	March 31,			December 31,
	2018			2017
Cost incurred on uncompleted contracts		$	-		$	-
Estimated earnings			-			-
			-			-
Billings on uncompleted contracts			(30,000)			(30,000)
Contract liabilities			(30,000)			(30,000)

Contract, Asset and Liability

Included in the accompanying balance sheets under the following captions:

	March 31,			December 31,
	2018			2017
Contract assets		$	-		$	-
Contract liabilities			(30,000)			(30,000)
Net contract liabilities		$	(30,000)		$	(30,000)

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Note 4 - Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Accrued Management Fees

As of March 31, 2018 and December 31, 2017 the accrued management fees consisted of the following:

	March 31,			December 31,
	2018			2017
Amounts due to the president		$	343,912		$	321,796
Amounts due to the chief financial officer			88,172			85,045
Total		$	432,084		$	406,841

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Note 5 - Note Payable - Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Convertible Notes, Related Party

As of March 31, 2018 and December 31, 2017 Convertible Notes – Related Party consisted of the following:

	March 31,			December 31,
	2018			2017
Convertible note, related party		$	15,000		$	15,000
Total		$	15,000		$	15,000

Schedule of Note Payable Related Party

As of March 31, 2018 and December 31, 2017 Note Payable – Related Party consisted of the following:

	March 31,			December 31,
	2018			2017
Note payable, related party		$	15,000		$	15,000
Total		$	15,000		$	15,000

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Note 6 - Stock Options and Warrants (Tables)

3 Months Ended

Mar. 31, 2018

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:

	March 31, 2018	March 31, 2017
Expected volatility	150 %	105 %
Expected dividends	0 %	0 %
Expected term	7 Years	7 Years
Risk-free interest rate	2.46 %	2.22 %

Schedule of Stock Options and Warrants, Activity

A summary of the status of the options and warrants granted at March 31, 2018 and December 31, 2017 and changes during the periods then ended is presented below: 

	March 31,			December 31,
	2018			2017
			Weighted-Average			Weighted-Average
	Shares		Exercise Price	Shares		Exercise Price
Outstanding at beginning of year	2,600,556	$	0.82	4,510,313	$	2.81
Granted	590,000		0.07	905,556		0.18
Exercised	-		-	-		-
Expired or cancelled	-		-	(2,815,313)		3.81
Outstanding at end of period	3,190,556		0.68	2,600,556		0.82
Exercisable	2,690,973	$	0.75	2,354,723	$	0.84

Summary of the Status of the Options and Warrants Outstanding

A summary of the status of the options and warrants outstanding at March 31, 2018 is presented below:

Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Number Exercisable	Weighted-Average Exercise Price
$0.01-0.99	2,540,556	5.55 years	2,040,973	0.24
$1.00-1.99	125,000	1.30 years	125,000	1.18
$2.00-2.99	525,000	1.51 years	525,000	2.52
$0.01-3.99	3,190,556	4.72 years	2,690,973	$0.73

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Note 2 - Significant Accounting Policies: Inventory: Schedule of Inventory (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Details
Raw materials	$ 980,490	$ 990,945
Finished goods	1,179,466	1,185,888
Work in progress	26,432	26,432
Allowance for obsolete inventory	(673,609)	(648,609)
Total	$ 1,512,779	$ 1,554,656

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Note 2 - Significant Accounting Policies: Inventory (Details) - USD ($)		3 Months Ended
	Dec. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Details
Obsolete inventory adjustment	$ 305,458	$ 25,000	$ 0

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Note 2 - Significant Accounting Policies: Property and Equipment: Schedule of Property and Equipment (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Less: accumulated depreciation	$ (142,059)	$ (138,078)
Total	3,272	7,253
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 ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Details
Depreciation expense	$ 3,981	$ 6,224

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Note 2 - Significant Accounting Policies: Basic and Diluted Loss Per Share (Details) - shares	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Details
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2,690,973	2,379,723

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Note 2 - Significant Accounting Policies: Going Concern (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016
Details
Accumulated deficit	$ (19,885,191)		$ (19,787,101)
Total Stockholders' Equity	400,554		476,673
Total Current Assets	1,601,431		1,606,744
Cash	11,522	$ 20,249	23,279	$ 17,782
Total Current Liabilities	1,218,429		1,151,604
Working Capital	383,002
NET LOSS	(98,090)	(209,041)	(1,036,297)
Net Cash Provided by (Used in) Operating Activities	$ (11,757)	$ 2,467	$ (24,503)

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Note 3 - Contract Assets and Liabilities: Schedule of Costs in Excess of Billings (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Details
Cost incurred on uncompleted contracts	$ 0	$ 0
Estimated earnings	0	0
Billings on uncompleted contracts	(30,000)	(30,000)
Contract liabilities	$ (30,000)	$ (30,000)

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Note 3 - Contract Assets and Liabilities: Contract, Asset and Liability (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Details
Contract assets	$ 0	$ 0
Contract liabilities	(30,000)	(30,000)
Net contract liabilities	$ (30,000)	$ (30,000)

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Note 4 - Related Party Transactions (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Accounts receivable - related parties	$ 7,752	$ 3,440
Accounts payable - related parties	125,836	114,321
Nology Engineering Inc
Accounts payable - related parties	$ 125,836	$ 114,321
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 ($)	Mar. 31, 2018	Dec. 31, 2017
Accrued management compensation	$ 432,084	$ 406,841
President
Accrued management compensation	343,912	321,796
Chief Financial Officer
Accrued management compensation	$ 88,172	$ 85,045

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Note 5 - Note Payable - Related Party Transactions (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Nov. 07, 2017	Jan. 19, 2017
Related Party Convertible Note
Debt Instrument, Face Amount		$ 15,000
Debt Instrument, Interest Rate, Stated Percentage		8.00%
Debt Instrument, Maturity Date	Jul. 07, 2018
Debt Instrument, Convertible, Terms of Conversion Feature	The number of shares of common stock to be issued upon such conversion shall be equal to the quotient obtained by dividing (i) the remaining unpaid principal balance and any unpaid accrued interest of this note by (ii) 90% of the average closing price of the common stock of the Company, for five trading days before the maturity date.
Related Party Note Payable
Debt Instrument, Face Amount			$ 15,000
Debt Instrument, Interest Rate, Stated Percentage			5.00%
Debt Instrument, Maturity Date	Jan. 19, 2019

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Note 5 - Note Payable - Related Party Transactions: Schedule of Convertible Notes, Related Party (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Details
Convertible notes payable - related parties	$ 15,000	$ 15,000

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Note 5 - Note Payable - Related Party Transactions: Schedule of Note Payable Related Party (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Details
Notes payable - related parties	$ 15,000	$ 15,000

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Note 6 - Stock Options and Warrants (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016
Granted	590,000		905,556
Shares outstanding	3,190,556		2,600,556	4,510,313
Warrant
Granted	0	0
2011 Long Term Incentive Plan
Number of Shares Authorized	1,000,000
Shares outstanding	815,000
2015 Long Term Incentive Plan
Number of Shares Authorized	2,500,000
Shares outstanding	2,165,556
2017 Long Term Incentive Plan
Number of Shares Authorized	5,000,000
Shares outstanding	300,000
Chief Executive Officer
Granted	0	555,556
Options, Outstanding, Intrinsic Value	$ 0	$ 0
Options and Warrants
Allocated Share-based Compensation Expense	21,971	$ 69,533
Compensation Cost Not yet Recognized	$ 40,409

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Note 6 - Stock Options and Warrants: Schedule of Assumptions Used to Estimate the Fair Values of Stock Options Granted (Details)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Details
Expected volatility	150.00%	105.00%
Expected dividends	0.00%	0.00%
Expected term	7 years	7 years
Risk-free interest rate	2.46%	2.22%

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Note 6 - Stock Options and Warrants: Schedule of Stock Options and Warrants, Activity (Details) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Shares outstanding	2,600,556	4,510,313
Outstanding, Weighted Average Exercise Price	$ 0.82	$ 2.81
Granted	590,000	905,556
Granted, Weighted Average Exercise Price	$ 0.07	$ 0.18
Exercised, Weighted Average Exercise	$ 0	$ 0
Expired or cancelled	0	(2,815,313)
Expired or cancelled, Weighted Average Exercise Price	$ 0	$ 3.81
Shares outstanding	3,190,556	2,600,556
Outstanding, Weighted Average Exercise Price	$ 0.68	$ 0.82
Exercisable	2,690,973	2,354,723
Exercisable, Weighted Average Exercise Price	$ 0.75	$ 0.84
Common Stock
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	0	0

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Note 6 - Stock Options and Warrants: Summary of the Status of the Options and Warrants Outstanding (Details)	3 Months Ended
	Mar. 31, 2018 $ / 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	2,540,556
Weighted-Average Remaining Contractual Life	5 years 6 months 18 days
Number Exercisable | shares	2,040,973
Weighted-Average Exercise Price	$ 0.24
$1.00-1.99
Exercise Price Range, Lower Range Limit	1.00
Exercise Price Range, Upper Range Limit	$ 1.99
Number Outstanding | shares	125,000
Weighted-Average Remaining Contractual Life	1 year 3 months 18 days
Number Exercisable | shares	125,000
Weighted-Average Exercise Price	$ 1.18
$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	1 year 6 months 4 days
Number Exercisable | shares	525,000
Weighted-Average Exercise Price	$ 2.52
$0.01-3.99
Exercise Price Range, Lower Range Limit	0.01
Exercise Price Range, Upper Range Limit	$ 3.99
Number Outstanding | shares	3,190,556
Weighted-Average Remaining Contractual Life	4 years 8 months 19 days
Number Exercisable | shares	2,690,973
Weighted-Average Exercise Price	$ 0.73