10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:   September 30, 2019

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	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbols(s)	Name of each exchange on which registered
N/A

As of November 13, 2019, the Registrant had 20,839,865 shares of its no par value Common Stock outstanding.

TABLE OF CONTENTS
	Page
PART I - FINANCIAL INFORMATION
Item 1.       Financial Statements
Condensed Balance Sheets as of September 30, 2019 (unaudited) and December 31, 2018	3
Condensed Statements of Operations for the three and nine months ended September 30, 2019 and September 30, 2018 (unaudited)	4
Condensed Statements of Cash Flows for the nine months ended September 30, 2019 and September 30, 2018 (unaudited)	5
Condensed Statements of Stockholders’ Equity (Deficit) as of  September 30, 2019 (unaudited) and September 30, 2018 (unaudited)	6
Notes to the Condensed Financial Statements	7
Item 2.       Management's Discussion and Analysis of the Financial Condition and Results of Operations	18
Item 3.       Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.       Controls and Procedures	23
PART II - OTHER INFORMATION
Item 1.       Legal Proceedings	24
Item 1A.    Risk Factors	24
Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.       Defaults Upon Senior Securities	24
Item 5.       Other Information	24
Item 6.       Exhibits	25

Page 2

PART I.

FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS 

OMNITEK ENGINEERING CORP.
Condensed Balance Sheets
			September 30,		December 31,
			2019		2018
			(unaudited)
ASSETS
CURRENT ASSETS
	Cash		$	80,673	$	17,060
	Accounts receivable, net			10,691		13,442
	Accounts receivable - related parties			18,511		6,666
	Inventory, net			1,238,566		1,359,678
	Contract assets			13,221		12,772
	Deposits			6,566		5,811
		Total Current Assets		1,368,228		1,415,429
Property and equipment, net				1,945		2,376
OTHER ASSETS
	Other noncurrent assets			30,425		30,425
		Total Other Assets		30,425		30,425
		TOTAL ASSETS	$	1,400,598	$	1,448,230
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
	Accounts payable and accrued expenses		$	432,290	$	362,363
	Accrued management compensation			659,465		506,103
	Accounts payable - related parties			143,921		145,171
	Notes payable - related parties			32,000		15,000
	Convertible notes payable			60,000		100,000
	Contract liabilities			75,000		84,496
	Customer deposits			174,293		140,338
		Total Current Liabilities		1,576,969		1,353,471
		Total Liabilities		1,576,969		1,353,471
STOCKHOLDERS' EQUITY (DEFICIT)
	Common stock, 125,000,000 shares authorized no par value
	20,839,865 and 20,420,402 shares issued and outstanding,
	respectively			8,502,210		8,427,210
	Additional paid-in capital			11,990,115		11,923,056
	Accumulated deficit			(20,668,696)		(20,255,507)
		Total Stockholders' Equity (Deficit)		(176,371)		94,759
		TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	1,400,598	$	1,448,230
The accompanying notes are an integral part of these condensed unaudited financial statements.

Page 3

OMNITEK ENGINEERING CORP.
Condensed Statements of Operations (unaudited)
			For the Three		For the Three		For the Nine		For the Nine
			Months Ended		Months Ended		Months Ended		Months Ended
			September 30,		September 30,		September 30,		September 30,
			2019		2018		2019		2018
REVENUES			$	123,366	$	265,999	$	739,110	$	995,085
REVENUES, related parties				13,086		14,568		13,086		14,568
	Total revenues			136,452		280,567		752,196		1,009,653
COST OF GOODS SOLD				101,106		170,108		469,318		575,088
GROSS MARGIN				35,346		110,459		282,878		434,565
OPERATING EXPENSES
	General and administrative			179,942		184,374		599,708		618,680
	Research and development			27,512		29,315		79,980		81,885
	Depreciation and amortization			135		1,568		431		7,294
		Total Operating Expenses		207,589		215,257		680,119		707,859
LOSS FROM OPERATIONS				(172,243)		(104,798)		(397,241)		(273,294)
OTHER INCOME (EXPENSE)
	Other income			-		-		-		950
	Loss on Extinguishment of Debt			-		(32,963)		-		(32,963)
	Interest expense			(4,677)		(5,544)		(15,148)		(11,831)
		Total Other Income (Expense)		(4,677)		(38,507)		(15,148)		(43,844)
LOSS BEFORE INCOME TAXES				(176,920)		(143,305)		(412,389)		(317,138)
INCOME TAX EXPENSE				-		-		800		800
NET LOSS			$	(176,920)	$	(143,305)	$	(413,189)	$	(317,938)
BASIC AND DILUTED LOSS PER SHARE			$	(0.01)	$	(0.01)	$	(0.02)	$	(0.02)
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING
-BASIC AND DILUTED				20,424,961		20,411,316		20,421,938		20,324,970
The accompanying notes are an integral part of these condensed unaudited financial statements.

Page 4

OMNITEK ENGINEERING CORP.
Condensed Statements of Cash Flows (unaudited)
			For the Nine		For the Nine
			Months Ended		Months Ended
			September 30,		September 30,
			2019		2018
OPERATING ACTIVITIES
	Net loss		$	(413,189)	$	(317,938)
	Adjustments to reconcile net loss to
	net cash used in operating activities:
		Amortization and depreciation expense		431		7,294
		Options and warrants		42,059		32,458
		Inventory reserve		26,667		50,000
		Loss on extinguishment of debt		-		32,963
	Changes in operating assets and liabilities:
		Accounts receivable		2,751		(7,308)
		Accounts receivable–related parties		(11,845)		(2,873)
		Contract assets		(449)		-
		Deposits		(755)		(11,198)
		Inventory		94,445		52,760
		Accounts payable and accrued expenses		69,927		16,146
		Customer deposits		33,955		(71,131)
		Accounts payable-related parties		(1,250)		28,498
		Contract liabilities		(9,496)		(30,000)
		Accrued management compensation		153,362		105,262
		Net Cash Used in Operating Activities		(13,387)		(115,067)
INVESTING ACTIVITIES
	Purchase of property and equipment			-		(2,714)
		Net Cash Used in Investing Activities		-		(2,714)
FINANCING ACTIVITIES
	Proceeds from sale of option for future purchase of common stock			25,000		-
	Proceeds from related party payable			17,000		-
	Proceeds from sale of common stock			75,000		-
	Payments on convertible note payable			(40,000)		-
	Proceeds from convertible note payable			-		100,000
		Net Cash Provided by Financing Activities		77,000		100,000
		NET INCREASE (DECREASE) IN CASH		63,613		(17,781)
		CASH AT BEGINNING OF YEAR		17,060		23,279
		CASH AT END OF PERIOD	$	80,673	$	5,498
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
	CASH FLOW INFORMATION
	CASH PAID FOR:
		Interest	$	14,214	$	7,583
		Income taxes	$	800	$	800
NON CASH INVESTING AND FINANCING ACTIVITIES
	NON CASH FINANCING ACTIVITIES:
		Common stock issued for convertible note	$	-	$	15,799
The accompanying notes are an integral part of these condensed unaudited financial statements.

Page 5

OMNITEK ENGINEERING CORP.
Statements of Stockholders' Equity (Deficit)
					Additional					Total
	Common Stock				Paid-In		Accumulated			Stockholders'
	Shares	Amount			Capital		Deficit			Equity (Deficit)
Balance, January 1, 2019	20,420,402	$	8,427,210		$	11,923,056	$	(20,255,507)		$	94,759
Value of options issued for services	-		-			25,907		-			25,907
Net loss for the three months ended
March 31, 2019	-		-			-		(106,226)			(106,226)
Balance, March 31, 2019	20,420,402	$	8,427,210		$	11,948,963	$	(20,361,733)		$	14,440
Value of options issued for services	-		-			10,915		-			10,915
Net loss for the three months ended
June 30, 2019	-		-			-		(130,043)			(130,043)
Balance, June 30, 2019	20,420,402	$	8,427,210		$	11,959,878	$	(20,491,776)		$	(104,688)
Value of options issued for services	-		-		5,237			-		5,237
Sale of option for future purchase
of common stock	-		-		25,000			-		25,000
Sale of common stock	419,463		75,000		-			-		75,000
Net loss for the three months ended
September 30, 2019	-		-		-			(176,920)		(176,920)
Balance, September 30, 2019	20,839,865	$	8,502,210	$	11,990,115		$	(20,668,696)	$	(176,371)
The accompanying notes are an integral part of these condensed unaudited financial statements.

Page 6

OMNITEK ENGINEERING CORP.
Statements of Stockholders' Equity (Deficit) (CONTINUED)
				Additional				Total
	Common Stock			Paid-In		Accumulated		Stockholders'
	Shares	Amount		Capital		Deficit		Equity (Deficit)
Balance, January 1, 2018	20,281,082	$	8,411,411	$	11,852,363	$	(19,787,101)	$	476,673
Value of options issued for services	-		-		21,971		-		21,971
Net loss for the three months ended
March 31, 2018	-		-		-		(98,090)		(98,090)
Balance, March 31, 2018	20,281,082	$	8,411,411	$	11,874,334	$	(19,885,191)	$	400,554
Value of options issued for services	-		-		5,215		-		5,215
Net loss for the three months ended
June 30, 2018	-		-		-		(76,543)		(76,543)
Balance, June 30, 2018	20,281,082	$	8,411,411	$	11,879,549	$	(19,961,734)	$	329,226
Value of options issued for services	-		-		5,272		-		5,272
Conversion of Related Party
Note Payable	139,320		15,799		-		-		15,799
Loss on Extinguishment of Debt	-		-		32,963		-		32,963
Net loss for the three months ended
September 30, 2018	-		-		-		(143,305)		(143,305)
Balance, September 30, 2018	20,420,402	$	8,427,210	$	11,917,784	$	(20,105,039)	$	239,955
The accompanying notes are an integral part of these condensed unaudited financial statements.

Page 7

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

September 30, 2019

(unaudited)

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at September 30, 2019 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, 2018 audited financial statements.  The results of operations for the periods ended September 30, 2019 and 2018 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.

Revenue Recognition

In general, revenue is recognized when control of the promised goods is transferred to our customers, in an amount that reflects the consideration to which we expect to be entitled in exchange for the goods or services. In order to achieve that core principle, a five-step approach is applied: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue allocated to each performance obligation when we satisfy the performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account for revenue recognition.

We recognize revenue on various products and services as follows:

Products - The Company recognizes revenue from the sale of products (e.g., filters and engine components) as performance obligations are satisfied. This type of revenue is primarily generated from the sale of finished product to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks and rewards transfer (i.e., the performance obligation has been satisfied).

Contracts – Revenues are recognized as performance obligations are satisfied over time (also known as percentage-of-completion method), measured by either achievement of milestones or the ratio of costs incurred up to a given date to estimated total costs for each contract. Contract costs include all direct material, labor, subcontract and other costs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, estimated profitability and associated change orders and claims, including those changes arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income and are recognized in the period in which the revisions are determined.  

Page 8

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

September 30, 2019

(unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority

of Omnitek’s contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct.

Performance Obligations Satisfied Over Time

Revenues for Omnitek’s long-term contracts that satisfy the criteria for over time recognition (formerly known as percentage-of-completion method) is recognized as the work progresses. The majority of the revenue is derived from long-term engine development agreements that typically span between 12 to 24 months. Omnitek’s long-term contracts will continue to be recognized over time because our typical contract is for a customized asset with no alternative use and generally the Company has a right to payment for work completed to date. Under the new revenue standard, the cost-to-cost measure of progress continues to best depict the transfer of control of assets to the customer, which occurs as the Company incurs costs. Contract costs include labor and material. Revenue from products and services transferred to customers over time accounted for 6% and 0% of revenue for the periods ended September 30, 2019 and 2018, respectively.

Performance Obligations Satisfied at a Point in Time

Revenue from product sales is recognized at a point in time. These sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risk and rewards transfer. Upon fulfilment of the performance obligation, the customer is provided an invoice demonstrating transfer of control to the customer. Revenue from goods and services transferred to customers at a point in time accounted for 94% and 100% of revenue for the periods ended September 30, 2019 and 2018, respectively.

Assurance-type warranties are the only warranties provided by the Company and, as such, Omnitek does not recognize revenue on warranty-related work. Omnitek generally provides a one-year warranty for products that it sells. Warranty claims historically have been insignificant.

Pre-contract costs are generally not incurred by the Company

Contract Estimates

Accounting for long-term contracts involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, Omnitek estimates the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognizes that profit over the life of the contract.  

Variable Consideration 

The transaction price for contracts may include variable consideration, which includes increases to transaction price for approved and unapproved change orders, claims and incentives, and reductions to transaction price for liquidated damages. Variable consideration historically has been insignificant.  

Page 9

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

September 30, 2019

(unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Disaggregation of Revenue

The following table presents Omnitek’s revenues disaggregated by region and product type for the three months ended September 30, 2019 and September 30, 2018:

		For the three months ended September 30,				For the three months ended September 30,
			2019				2018
		Consumer	Long-term			Consumer	Long-term
Segments		Products	Contract	Total		Products	Contract	Total
Domestic	$	99,423	-	99,423	$	108,160	-	108,160
International		37,029	-	37,029		172,407	-	172,407
	$	136,452	-	136,452	$	280,567	-	280,567
Filters	$	35,478	-	35,478	$	180,549	-	180,549
Components		100,974	-	100,974		100,018	-	100,018
Engineering Services		-	-	-		-	-	-
	$	136,452	-	136,452	$	280,567	-	280,567

The following table presents Omnitek’s revenues disaggregated by region and product type for the nine months ended September 30, 2019 and September 30, 2018:

		For the nine months ended September 30,				For the nine months ended September 30,
			2019				2018
		Consumer	Long-term			Consumer	Long-term
Segments		Products	Contract	Total		Products	Contract	Total
Domestic	$	320,349	-	320,349	$	414,373	-	414,373
International		387,373	44,474	431,847		595,280	-	595,280
	$	707,722	44,474	752,196	$	1,009,653	-	1,009,653
Filters	$	452,728	-	452,728	$	622,165	-	622,165
Components		254,994	-	254,994		387,488	-	387,488
Engineering Services		-	44,474	44,474		-	-	-
	$	707,722	44,474	752,196	$	1,009,653	-	1,009,653

Page 10

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

September 30, 2019

(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 materials and is located in Vista, California, consisting of the following:

	September 30,		December 31,
Location : Vista, CA	2019		2018
Raw materials	$	933,579	$	948,060
Finished goods		1,077,699		1,147,052
Inventory in transit		-		10,611
Allowance for obsolete inventory		(772,712)		(746,045)
Total	$	1,238,566	$	1,359,678

The Company has established an allowance for obsolete inventory.  Expense for obsolete inventory was $26,667 and $50,000, for the periods ended September 30, 2019 and September 30, 2018, respectively

Property and Equipment

Property and equipment at September 30, 2019 and December 31, 2018 consisted of the following:

	September 30,		December 31,
	2019		2018
Production equipment	$	64,673	$	64,673
Computers/Office equipment		28,540		28,540
Tooling equipment		12,380		12,380
Leasehold Improvements		42,451		42,451
Less: accumulated depreciation		(146,099)		(145,668)
Total	$	1,945	$	2,376

Depreciation expense for the periods ended September 30, 2019 and September 30, 2018 was $431 and $7,294, 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 2,970,140 and 2,563,473 stock options  that would have been included in the fully diluted earnings per share as of September 30, 2019 and September 30, 2018, 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

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

Page 11

OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

September 30, 2019

(unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized.

Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of September 30, 2019 and December 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 2012.

Liquidity and Going Concern

Historically, the Company has incurred net losses and negative cash flows from operations.  As of September 30, 2019, the Company had an accumulated deficit of $20,668,696 and total stockholders’ deficit of $176,371.  At September 30, 2019, the Company had current assets of $1,368,228 including cash of $80,673, and current liabilities of $1,576,969, resulting in negative working capital of $208,741. For the nine months ended September 30, 2019, the Company reported a net loss of $413,189 and net cash used by operating activities of $13,387. Management believes that based on its operating plan, the projected sales for 2019, 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 significant 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.     

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-2 - Leases (Topic 842), which significantly amends the way companies are required to account for leases.  Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company adopted this update as of January 1, 2019 using the modified retrospective transition method and prior periods have not been restated. The Company has not entered into any leases subject to the new guidance since January 1, 2019.

In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployees Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the scope of Topic 718 (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. With the adoption of ASU 2018-07, the accounting for share-based payments to nonemployees and employees will be substantially the same. ASU 2018-07 is effective for public companies for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The Company adopted the standard on January 1, 2019. This standard did not have a material impact on the Company’s financial statements and related disclosures.

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OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

September 30, 2019

(unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements

The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.

NOTE 3 - CONTRACT ASSETS AND LIABILITIES

The timing of revenue recognition, billings and cash collections results in billed accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts (contract assets) on the balance sheet. For Omnitek’s long-term contracts, amounts are generally billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, Omnitek sometimes receives advances or deposits from its customers, before revenue is recognized, resulting in billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities).

The table below reconciles the net excess billings to the amounts included in the balance sheets at those dates:

	September 30,		December 31,
	2019		2018
Contract assets	$	13,221	$	12,772
Contract liabilities	$	(75,000)	$	(84,496)
Net amount of contract liabilities in excess of contract assets	$	(61,779)	$	(71,724)

NOTE 4 – COMMITMENTS

Effective September 1, 2019, the Company entered into the Fourth Amendment to the Lease for its facility, reducing the size of the leased space to 21,786 square feet and extending the lease term to August 31, 2020, at which time a new lease extension has to be negotiated.  Effective as of September 1, 2019, the base rent is reduced to $14,161 per month, plus a reduced charge for common area maintenance expenses (CAM) reflecting the reduced square footage.  The security deposit amount of $14,000 remained the same.  Additionally, the amendment calls for payment of past due rents of $89,454, as of September 1, 2019, as follows:

(a)An initial payment of $22,363 on or before September 1, 2019 

(b)Monthly installments of $10,000 thereafter, until such time as the past due rent has been paid in full. 

NOTE 5 - RELATED PARTY TRANSACTIONS

Accounts Receivable – Related Parties

The Company holds a non-controlling interest in various distributors in exchange for use of the Company’s name and logo. As of September 30, 2019, the Company owned a 15% interest in Omnitek Engineering Thailand Co. Ltd. and a 20% interest in Omnitek Peru S.A.C.  As of September 30, 2019 and December 31, 2018, the Company was owed $18,511 and $6,666, respectively, by related parties for the purchase of products and services.

Accounts Payable – Related Parties

The Company regularly incurs expenses that are paid to related parties and purchases goods and services from related parties. As of September 30, 2019 and December 31, 2018, the Company owed related parties (primarily for

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OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

September 30, 2019

(unaudited)

NOTE 5 - RELATED PARTY TRANSACTIONS (CONTINUED)

services performed by a company controlled by a board member) for such expenses, goods and services in the amounts of $143,921 and $145,171, respectively.

Accrued Management Compensation

For the periods ended September 30, 2019 and December 31, 2018, the Company’s president and chief financial officer were due amounts for services performed for the Company.  

As of September 30, 2019 and December 31, 2018 the accrued management fees consisted of the following:

	September 30,			December 31,
	2019			2018
Amounts due to the president		$	506,889		$	399,296
Amounts due to the chief financial officer			152,576			106,807
Total		$	659,465		$	506,103

NOTE 6 - NOTE PAYABLE - RELATED PARTY TRANSACTIONS

Note Payable – Related Party

On September 11, 2019 the Company borrowed $12,000 from a board member.  The loan was evidenced by an unsecured promissory note which bears simple interest at the rate of 8% per annum. The principal amount of the note and all accrued interest is due and payable on or before December 11, 2019.

On May 28, 2019 the Company issued a promissory note for $5,000 to the Company’s CEO. 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 December 31, 2019.

On January 19, 2017 the Company issued a promissory note for $15,000 to the Company’s CEO. 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, 2020.

As of September 30, 2019 and December 31, 2018 Note Payable – Related Party consisted of the following:

	September 30,			December 31,
	2019			2018
Note payable, related party		$	32,000		$	15,000
Total		$	32,000		$	15,000

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OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

September 30, 2019

(unaudited)

NOTE 7 - CONVERTIBLE NOTE PAYABLE

On June 15, 2018 the Company entered into a Securities Purchase Agreement with an accredited investor, under which the investor purchased a Secured Convertible Promissory Note from the Company in the principal amount of $100,000. Under the terms of the Note simple interest will accrue at a rate of 10% per annum. The note will automatically mature and be due and payable on the eighteen (18) month anniversary. The Company shall make principal payments under the Note in the amount of $5,000 per month, beginning on the seventh month anniversary and continuing each month thereafter through the maturity date. Also commencing on the seventh month anniversary of the Note, the Company shall make interest payments under this Note based on the unpaid principal balance. The Note is secured by the inventory of the Company in accordance with a Security Agreement executed concurrently with the Note and UCC-1 Financing Statement perfecting said security interest.  The Note includes a

conversion feature wherein, under certain circumstances, the Lender may request a portion of the principal repayment be converted and payable in restricted shares of the Company’s Common Stock at the lesser of five cents ($0.05) per share or 90% of the average closing price calculated over the prior 20 trading days, but not less than $.025 per share. The floor of $0.025 per share prevents the embedded conversion option from qualifying for derivative accounting under ASC 815-15 “Derivative and Hedging”.

As of September 30, 2019 and December 31, 2018 Convertible Note Payable consisted of the following:

	September 30,			December 31,
	2019			2018
Convertible note payable		$	60,000		$	100,000
Total		$	60,000		$	100,000

NOTE 8 - STOCK OPTIONS

During the nine months ended September 30, 2019 and 2018, the Company granted 450,000 and 590,000 options for services, respectively. During the nine months ended September 30, 2019 and 2018, the Company recognized expense of $42,059 and $32,458, respectively, for options and warrants that vested during the periods pursuant to ASC Topic 718. Total remaining amount of compensation expense to be recognized in future periods is $14,741.

On August 3, 2011 the Board of Directors adopted the Omnitek Engineering Corp. 2011 Long-term Incentive Plan (the “2011 Plan”), under which 1,000,000 shares of Company’s Common Stock were reserved for issuance of both Incentive Stock Options to employees only and and Non-Qualified Stock Options to employees and consultants at its discretion. As of September 30, 2019 the Company has a total of 550,000 options issued under the 2011 P lan. On September 11, 2015 the Board of Directors adopted the Omnitek Engineering Corp. 2015 Long Term Incentive Plan (the “2015 Plan”), under which 2,500,000 shares of the Company’s Common Stock were reserved for issuance of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of September 30, 2018 the Company has a total of 2,065,556 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 September 30, 2019, the Company has a total of 750,000 options issued under the 2017 Plan.  During the nine months ended September 30, 2019 and 2018 the Company issued  -0- and -0- warrants, respectively.

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OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

September 30, 2019

(unaudited)

NOTE 8 - STOCK OPTIONS (CONTINUED)

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

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

	September 30, 2019	September 30, 2018
Expected volatility	142 %	150 %
Expected dividends	0 %	0 %
Expected term	7 Years	7 Years
Risk-free interest rate	2.01 %	2.46 %

A summary of the status of the options granted at September 30, 2019 and December 31, 2018 and changes during the periods then ended is presented below:  

	September 30,			December 31,
	2019			2018
			Weighted-Average			Weighted-Average
	Shares		Exercise Price	Shares		Exercise Price
Outstanding at beginning of year	2,965,556	$	0.63	2,600,556	$	0.82
Granted	450,000		0.08	590,000		0.07
Exercised	-		-	-		-
Expired or cancelled	(50,000)		2.25	(225,000)		1.33
Outstanding at end of period	3,365,556		0.53	2,965,556		0.63
Exercisable	2,970,140	$	0.56	2,556,390	$	0.67

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OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

September 30, 2019

(unaudited)

NOTE 8 - STOCK OPTIONS (CONTINUED)

A summary of the status of the options outstanding at September 30, 2019 is presented below:

Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Number Exercisable	Weighted-Average Exercise Price
$0.01-0.99	2,890,556	4.43 years	2,495,140	0.21
$1.00-1.99	75,000	0.43 years	75,000	1.37
$2.00-2.99	400,000	0.08 years	400,000	2.56
$0.01-2.99	3,365,556	3.83 years	2,970,140	$0.56

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

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

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

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

Results of Operations

For the three months ended September 30, 2019 and 2018

Revenues were $136,452 for the three months ended September 30, 2019 compared with $280,567 for the three months ended September 30, 2018, a decrease of $144,115. The decrease is primarily attributable to a reduction in filter sales as principal customers depleted their existing inventory levels.

Cost of sales was $101,106 for the three months ended September 30, 2019 compared with $170,108 for the three months ended September 30, 2018, a decrease of $69,002. Our gross margin percentage was 26% for the three months ended September 30, 2019 compared with 39% in the same period in 2018. The lower margin for the three months ended September 30, 2019 relates primarily to the application of effectively fixed cost of sales costs (manufacturing labor and overhead) being applied to a lower revenue base.  

Operating expenses for the three months ended September 30, 2019 were $207,589 compared with $215,257 in the same period in 2018, a decrease of $7,668 or 4%. General and administrative expense for the three months ended September 30, 2019 was $179,942 compared with $184,374 for the three months ended September 30, 2018.  Major components of general and administrative expenses for the three months ended September 30, 2019 were professional fees of $11,831, rent expense of $38,349, and salary and wages of $67,822. This compares to professional fees of $11,195, rent expense of $36,818 and salaries and wages of $64,124 for the three months ended September 30, 2018.  For the three months ended September 30, 2019 research and development outlays were decreased to $27,512 compared with $29,315 for the three months ended September 30, 2018.

Our net loss for the three months ended September 30, 2019 was $176,920, or ($0.01) per share, compared with a net loss of $143,305, or ($0.01) per share, for the three months ended September 30, 2018.  The increased net loss was primarily due to reduced filter sales as principal customers depleted their existing inventory levels.

Results for the three months ended September 30, 2019 reflect the impact of non-cash expenses, including the value of options granted in the amount of $5,237 and depreciation and amortization of $135.  For the three month period a year earlier non-cash expenses included options and warrants granted in the amount of $5,272, depreciation and amortization of $1,568 and loss on settlement of debt of $32,963.

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For the nine months ended September 30, 2019 and 2018

Revenues decreased to $752,196 for the nine months ended September 30, 2019 from $1,009,653 for the nine months ended September 30, 2018, a decrease of $257,457 or 25%. The decrease is primarily attributable to a reduction in filter sales as principal customers depleted their existing inventory levels.

Our cost of sales decreased to $469,318 for the nine months ended September 30, 2019 from $575,088 for the nine months ended September 30, 2018, a decrease of $105,770. Our gross margin was 38% for the nine months ended September 30, 2019 compared to 43% in 2018. The lower margin for the nine months ended September 30, 2019 relates primarily to the application of effectively fixed cost of sales costs (manufacturing labor and overhead) being applied to a lower revenue base.  

Our operating expenses for the nine months ended September 30, 2019 were $680,119 compared to $707,859 in 2018, a decrease of $27,740 or 4%.  General and administrative expense for the nine months ended September 30, 2019 was $599,708 as compared to $618,680 for the nine months ended September 30, 2018. Major components of general and administrative expenses for the nine months ended September 30, 2019 were professional fees of $55,270, rent expense of $118,084 and salary and wages of $201,449. This compares to professional fees of $53,324, rent expense of $93,900, and salary and wages of $214,525 for the nine months ended September 30, 2018. The decrease in salary and wages for the current period is due primarily to a reduction in officers’ salaries. Research and development outlays were decreased to $79,980 for the nine months ended September 30, 2019 compared to $81,885 for the nine months ended September 30, 2018.  

Our net loss for the nine months ended September 30, 2019 was $413,189, or $(0.02) per share, compared to a net loss of $317,938, or $(0.02) per share, for the nine months ended September 30, 2018. The increased net loss was primarily due to reduced filter sales as principal customers depleted their existing inventory levels.  

Results for the nine months ended September 30, 2019 reflect the impact of non-cash expenses, including the value of options granted in the amount of $42,059, depreciation and amortization of $431 and inventory reserve adjustment of $26,667. For the nine-month period a year earlier, non-cash expenses included the value of options granted of $32,458, depreciation and amortization of $7,294, inventory reserve adjustment of $50,000 and loss on settlement of debt of $32,963.

Liquidity and Capital Resources

Overview

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

At September 30, 2019, our current liabilities totaled $1,576,969 and our current assets totaled $1,368,228, resulting in negative working capital of $208,741.  

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 of 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 $20,668,696 at September 30, 2019, of which $5,604,135 is a direct result of derivative expense and change in fair

Page 19

value of derivative liability, which occurred during the year ended December 31, 2013, and is unrelated to our operations or cash flow.

Operating Activities

We realized a negative cash flow from operations of $13,387 for the nine months ended September 30, 2019 compared with a negative cash flow of $115,067 during the nine months ended September 30, 2018.  

Included in the operating loss of $397,241 for the nine months ended September 30, 2019 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 granted in the amount of $42,059, depreciation and amortization of $431 and the inventory reserve adjustment of $26,667. 

Financing Activities

We realized a positive cash flow from financing activities of $77,000 for the nine months ended September 30, 2019 compared with positive cash flow of $100,000 for the nine months ended September 30, 2018. The positive cash flow for the nine months ended September 30, 2019 relates primarily to proceeds from the sale of common stock. The positive cash flow for the nine months ended September 30, 2018 relates to proceeds from the convertible note payable.  

Off-Balance Sheet Arrangements

None.

Critical Accounting Policies and Estimates

Accounting Method and Use of Estimates

The Company's financial statements are prepared using the accrual method of accounting. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Areas where significant estimates are required include the following:

Accounts Receivable

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

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.

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Contract assets and liabilities

The timing of revenue recognition, billings and cash collections results in billed accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts (contract assets) on the balance sheet. For Omnitek’s long-term contracts, amounts are generally billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, Omnitek sometimes receives advances or deposits from its customers, before revenue is recognized, resulting in billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities). 

Revenue Recognition

In general, revenue is recognized when control of the promised goods is transferred to our customers, in an amount that reflects the consideration to which we expect to be entitled in exchange for the goods or services. In order to achieve that core principle, a five-step approach is applied: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue allocated to each performance obligation when we satisfy the performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account for revenue recognition.

We recognize revenue on various products and services as follows:

Products - The Company recognizes revenue from the sale of products (e.g., filters and engine components) as performance obligations are satisfied. This type of revenue is primarily generated from the sale of finished product to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks and rewards transfer (i.e., the performance obligation has been satisfied).

Contracts – Revenues are recognized as performance obligations are satisfied over time (also known as percentage-of-completion method), measured by either achievement of milestones or the ratio of costs incurred up to a given date to estimated total costs for each contract. Contract costs include all direct material, labor, subcontract and other costs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, estimated profitability and associated change orders and claims, including those changes arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income and are recognized in the period in which the revisions are determined.  

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of Omnitek’s contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct.

Performance Obligations Satisfied Over Time

Revenues for Omnitek’s long-term contracts that satisfy the criteria for over time recognition (formerly known as percentage-of-completion method) is recognized as the work progresses. The majority of the revenue is derived from long-term engine development agreements that typically span between 12 to 24 months. Omnitek’s long-term contracts will continue to be recognized over time because our typical contract is for a customized asset with no alternative use and generally the Company has a right to payment for work completed to date. Under the new revenue standard, the cost-to-cost measure of progress continues to best depict the transfer of control of assets to the customer, which occurs as the Company incurs costs. Contract costs include labor and material. Revenue from products and services transferred to customers over time accounted for 6% and 0% of revenue for the periods ended September 30, 2019 and 2018, respectively.

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Performance Obligations Satisfied at a Point in Time

Revenue from product sales is recognized at a point in time. These sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risk and rewards transfer. Upon fulfilment of the performance obligation, the customer is provided an invoice demonstrating transfer of control to the customer. Revenue from goods and services transferred to customers at a point in time accounted for 94% and 100% of revenue for the periods ended September 30, 2019 and 2018, respectively.

Assurance-type warranties are the only warranties provided by the Company and, as such, Omnitek does not recognize revenue on warranty-related work. Omnitek generally provides a one-year warranty for products that it sells. Warranty claims historically have been insignificant.

Pre-contract costs are generally not incurred by the Company.

Contract Estimates

Accounting for long-term contracts involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, Omnitek estimates the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognizes that profit over the life of the contract.

Variable Consideration 

The transaction price for contracts may include variable consideration, which includes increases to transaction price for approved and unapproved change orders, claims and incentives, and reductions to transaction price for liquidated damages. Variable consideration historically has been insignificant.  

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-2 - Leases (Topic 842), which significantly amends the way companies are required to account for leases.  Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company adopted this update as of January 1, 2019 using the modified retrospective transition method and prior periods have not been restated. The Company has not entered into any leases subject to the new guidance since January 1, 2019.

In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployees Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the scope of Topic 718 (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. With the adoption of ASU 2018-07, the accounting for share-based payments to nonemployees and employees will be substantially the same. ASU 2018-07 is effective for public companies for annual and interim periods beginning after December 15, 2018, with early adoption permitted. In management’s opinion, ASU 2018-07 will not have a material impact on the Company’s financial statements and related disclosures.

Recent Accounting Pronouncements

The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.

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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, as a result of the material weakness described below, our disclosure controls and procedures were not effective as of September 30, 2019. The material weakness, which relates to internal control over financial reporting, that was identified is: due to our small size, we do not have a proper segregation of duties in certain areas of our financial reporting process. This control deficiency, which is pervasive in nature, results in a reasonable possibility that material misstatements of the financial statements will not be prevented or detected on a timely basis.

Changes in Internal Controls

  There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2019 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Page 23

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 

On September 30, 2019, the Company issued 419,463 restricted shares of common stock to G. On global Investments S.R.L., at a price of $0.1788 per share for aggregate consideration of $75,000 representing the Tranche  1 payment pursuant to the Securities Purchase Agreement dated September 6, 2019.

No underwriters were used. The shares were issued pursuant to an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Act’). The investor is an “Accredited Investor” as defined under Rule 501 of Regulation D of the Act and has such knowledge and experience and possessed such information as it deemed necessary to make an informed investment decision.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES 

None

ITEM 5.  OTHER INFORMATION 

Entry Into a Material Definitive Agreement

On January 19, 2019 the Company and Werner Funk, President and CEO, agreed to a one-year extension of the $15,000 related party note payable due to Mr. Funk. The extended due date is January 19, 2020.

Effective September 1, 2019, the Company entered into the Fourth Amendment to the Lease for its facility, reducing the size of the leased space to 21,786 square feet and extending the lease term to August 31, 2020, at which time a new lease extension has to be negotiated.  Effective as of September 1, 2019, the base rent is reduced to $14,161 per month, plus a reduced charge for common area maintenance expenses (CAM) reflecting the reduced square footage.  The security deposit amount of $14,000 remained the same.  Additionally, the amendment calls for payment of past due rents of $89,454, as of September 1, 2019, as follows:

(a)An initial payment of $22,363 on or before September 1, 2019 

(b)Monthly installments of $10,000 thereafter, until such time as the past due rent has been paid in full. 

On September 11, 2019 the Company borrowed $12,000 from a director of the Company.  The loan is evidenced by an unsecured promissory note which bears simple interest at the rate of 8% per annum. The principal amount of the note and all accrued interest is due and payable on or before December 11, 2019.

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ITEM 6.  EXHIBITS 

(a)Documents filed as part of this Report. 

1. Financial Statements.  The condensed unaudited Balance Sheet of Omnitek Engineering Corp. as of September 30, 2019 and the audited balance sheet as of December 31, 2018, the condensed unaudited Statements of Operations for the three and nine month periods ended September 30, 2019 and 2018, and the condensed unaudited Statements of Cash Flows for the nine month periods ended September 30, 2019 and 2018, and the condensed unaudited Statements of Stockholders’ Equity (Deficit) as of September 30, 2019 and 2018, 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 September 30, 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 25

SIGNATURES

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

	Omnitek Engineering Corp.
Dated: November 13, 2019
		By: Werner Funk
		Its: Chief Executive Officer Principal Executive Officer
Dated: November 13, 2019			/s/ Richard L. Miller
			By: Richard L. Miller
			Its: Chief Financial Officer Principal Financial Officer

Page 26

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 September 30, 2019 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. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: 

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

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

 

Dated: November 13, 2019___________________________ 

By:  Werner Funk 

Its:  Chief Executive Officer, 

President and Secretary

Dated: November 13, 2019/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. 

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NOTE 8 - STOCK OPTIONS : Schedule of Assumptions Used (Details)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Text Block [Abstract]
Expected volatility	142.00%	150.00%
Expected dividends	0.00%	0.00%
Expected term	7 years	7 years
Risk-free interest rate	2.01%	2.46%

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES: Income Taxes (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Disclosure Text Block [Abstract]
Accrued interest and penalties	$ 0	$ 0

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES: Inventory: Schedule of Inventory (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Text Block [Abstract]
Raw materials	$ 933,579	$ 948,060
Finished goods	1,077,699	1,147,052
Inventory in transit	0	10,611
Allowance for obsolete inventory	(772,712)	(746,045)
Total	$ 1,238,566	$ 1,359,678

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NOTE 8 - STOCK OPTIONS (Tables)

9 Months Ended

Sep. 30, 2019

Table Text Block Supplement [Abstract]

Schedule of Assumptions Used to Estimate the Fair Values of Stock Options Granted

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

	September 30, 2019	September 30, 2018
Expected volatility	142 %	150 %
Expected dividends	0 %	0 %
Expected term	7 Years	7 Years
Risk-free interest rate	2.01 %	2.46 %

Schedule of Stock Options

A summary of the status of the options granted at September 30, 2019 and December 31, 2018 and changes during the periods then ended is presented below:

	September 30,			December 31,
	2019			2018
			Weighted-Average			Weighted-Average
	Shares		Exercise Price	Shares		Exercise Price
Outstanding at beginning of year	2,965,556	$	0.63	2,600,556	$	0.82
Granted	450,000		0.08	590,000		0.07
Exercised	-		-	-		-
Expired or cancelled	(50,000)		2.25	(225,000)		1.33
Outstanding at end of period	3,365,556		0.53	2,965,556		0.63
Exercisable	2,970,140	$	0.56	2,556,390	$	0.67

Summary of the Status of the Options

A summary of the status of the options outstanding at September 30, 2019 is presented below:

Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Number Exercisable	Weighted-Average Exercise Price
$0.01-0.99	2,890,556	4.43 years	2,495,140	0.21
$1.00-1.99	75,000	0.43 years	75,000	1.37
$2.00-2.99	400,000	0.08 years	400,000	2.56
$0.01-2.99	3,365,556	3.83 years	2,970,140	$0.56

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NOTE 1 - CONDENSED FINANCIAL STATEMENTS

9 Months Ended

Sep. 30, 2019

Disclosure Text Block [Abstract]

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at September 30, 2019 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, 2018 audited financial statements. The results of operations for the periods ended September 30, 2019 and 2018 are not necessarily indicative of the operating results for the full years.

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Condensed Balance Sheets (unaudited) (Parenthetical) - $ / shares	Sep. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Common Stock, par or stated value	$ 0	$ 0
Common Stock, shares authorized	125,000,000	125,000,000
Common Stock, shares issued	20,839,865	20,420,402
Common Stock, shares outstanding	20,839,865	20,420,402

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES: Liquidity and Going Concern (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
Text Block [Abstract]
Accumulated deficit	$ (20,668,696)		$ (20,668,696)				$ (20,255,507)
Total Stockholders' Equity	(176,371)	$ 239,955	(176,371)	$ 239,955	$ (104,688)	$ 14,440	94,759	$ 329,226	$ 400,554	$ 476,673
Total Current Assets	1,368,228		1,368,228				1,415,429
Cash	80,673	5,498	80,673	5,498			17,060			$ 23,279
Total Current Liabilities	1,576,969		1,576,969				$ 1,353,471
Working Capital	(208,741)		(208,741)
NET LOSS	$ (176,920)	$ (143,305)	(413,189)	(317,938)
Net Cash Used in Operating Activities			$ (13,387)	$ (115,067)

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NOTE 5 - RELATED PARTY TRANSACTIONS : Schedule of Related Party Transactions (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Accrued management compensation	$ 659,465	$ 506,103
President
Accrued management compensation	506,889	399,296
Chief Financial Officer
Accrued management compensation	$ 152,576	$ 106,807

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NOTE 7 - CONVERTIBLE NOTE PAYABLE: Convertible Note Payable (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Disclosure Text Block [Abstract]
Convertible note payable	$ 60,000	$ 100,000
Total	$ 60,000	$ 100,000

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NOTE 3 - CONTRACT ASSETS AND LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2019

Disclosure Text Block [Abstract]

Schedule of Costs in Excess of Billings

The table below reconciles the net excess billings to the amounts included in the balance sheets at those dates:

	September 30,		December 31,
	2019		2018
Contract assets	$	13,221	$	12,772
Contract liabilities	$	(75,000)	$	(84,496)
Net amount of contract liabilities in excess of contract assets	$	(61,779)	$	(71,724)

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NOTE 7 - CONVERTIBLE NOTE PAYABLE

9 Months Ended

Sep. 30, 2019

Disclosure Text Block [Abstract]

NOTE 7 - CONVERTIBLE NOTE PAYABLE

NOTE 7 - CONVERTIBLE NOTE PAYABLE

On June 15, 2018 the Company entered into a Securities Purchase Agreement with an accredited investor, under which the investor purchased a Secured Convertible Promissory Note from the Company in the principal amount of $100,000. Under the terms of the Note simple interest will accrue at a rate of 10% per annum. The note will automatically mature and be due and payable on the eighteen (18) month anniversary. The Company shall make principal payments under the Note in the amount of $5,000 per month, beginning on the seventh month anniversary and continuing each month thereafter through the maturity date. Also commencing on the seventh month anniversary of the Note, the Company shall make interest payments under this Note based on the unpaid principal balance. The Note is secured by the inventory of the Company in accordance with a Security Agreement executed concurrently with the Note and UCC-1 Financing Statement perfecting said security interest. The Note includes a

conversion feature wherein, under certain circumstances, the Lender may request a portion of the principal repayment be converted and payable in restricted shares of the Company’s Common Stock at the lesser of five cents ($0.05) per share or 90% of the average closing price calculated over the prior 20 trading days, but not less than $.025 per share. The floor of $0.025 per share prevents the embedded conversion option from qualifying for derivative accounting under ASC 815-15 “Derivative and Hedging”.

As of September 30, 2019 and December 31, 2018 Convertible Note Payable consisted of the following:

	September 30,			December 31,
	2019			2018
Convertible note payable		$	60,000		$	100,000
Total		$	60,000		$	100,000

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NOTE 8 - STOCK OPTIONS (Details) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Dec. 31, 2017	Sep. 11, 2015	Aug. 03, 2011
Granted	450,000	590,000
Expense recognized for options and warrants vested	$ 42,059	$ 32,458
Total remaining amount of compensation expense to be recognized in future periods	$ 14,741
Shares outstanding	3,365,556	2,965,556	2,965,556	2,600,556
Warrant
Granted	0	0
2017 Long Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	5,000,000
Shares outstanding	750,000
Employee Stock Option
Granted	250,000	590,000
Employee Stock Option | 2011 Long-Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized						1,000,000
Shares outstanding	550,000
Employee Stock Option | 2015 Long Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized					2,500,000
Shares outstanding		2,065,556

XML

NOTE 3 - CONTRACT ASSETS AND LIABILITIES: Net excess billings (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Notes to Financial Statements
Contract assets	$ 13,221	$ 12,772
Contract liabilities	(75,000)	(84,496)
Net amount of contract liabilities in excess of Contract assets	$ (61,779)	$ (71,724)

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NOTE 6 - NOTES PAYABLE - RELATED PARTY TRANSACTIONS (Details) - Notes Payable Related Party - USD ($)		1 Months Ended
	Oct. 11, 2019	May 28, 2019	Jan. 19, 2018
Chief Executive Officer [Member]
Promissory note		$ 5,000	$ 15,000
Debt Instrument, Interest Rate During Period		5.00%	5.00%
Debt Instrument, Maturity Date		Dec. 31, 2019	Jan. 19, 2020
Board Member
Promissory note	$ 12,000
Debt Instrument, Interest Rate During Period	8.00%
Debt Instrument, Maturity Date	Dec. 11, 2019

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2019

Disclosure Text Block [Abstract]

Schedule of Disaggregation of Revenue

The following table presents Omnitek’s revenues disaggregated by region and product type for the three months ended September 30, 2019 and September 30, 2018:

		For the three months ended September 30,				For the three months ended September 30,
			2019				2018
		Consumer	Long-term			Consumer	Long-term
Segments		Products	Contract	Total		Products	Contract	Total
Domestic	$	99,423	-	99,423	$	108,160	-	108,160
International		37,029	-	37,029		172,407	-	172,407
	$	136,452	-	136,452	$	280,567	-	280,567
Filters	$	35,478	-	35,478	$	180,549	-	180,549
Components		100,974	-	100,974		100,018	-	100,018
Engineering Services		-	-	-		-	-	-
	$	136,452	-	136,452	$	280,567	-	280,567

The following table presents Omnitek’s revenues disaggregated by region and product type for the nine months ended September 30, 2019 and September 30, 2018:

		For the nine months ended September 30,				For the nine months ended September 30,
			2019				2018
		Consumer	Long-term			Consumer	Long-term
Segments		Products	Contract	Total		Products	Contract	Total
Domestic	$	320,349	-	320,349	$	414,373	-	414,373
International		387,373	44,474	431,847		595,280	-	595,280
	$	707,722	44,474	752,196	$	1,009,653	-	1,009,653
Filters	$	452,728	-	452,728	$	622,165	-	622,165
Components		254,994	-	254,994		387,488	-	387,488
Engineering Services		-	44,474	44,474		-	-	-
	$	707,722	44,474	752,196	$	1,009,653	-	1,009,653

Schedule of Inventory

The Company’s inventory consists of finished goods and raw materials and is located in Vista, California, consisting of the following:

	September 30,		December 31,
Location : Vista, CA	2019		2018
Raw materials	$	933,579	$	948,060
Finished goods		1,077,699		1,147,052
Inventory in transit		-		10,611
Allowance for obsolete inventory		(772,712)		(746,045)
Total	$	1,238,566	$	1,359,678

Schedule of Property and Equipment

Property and equipment at September 30, 2019 and December 31, 2018 consisted of the following:

	September 30,		December 31,
	2019		2018
Production equipment	$	64,673	$	64,673
Computers/Office equipment		28,540		28,540
Tooling equipment		12,380		12,380
Leasehold Improvements		42,451		42,451
Less: accumulated depreciation		(146,099)		(145,668)
Total	$	1,945	$	2,376

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NOTE 6 - NOTES PAYABLE - RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2019

Disclosure Text Block [Abstract]

NOTE 6 - NOTE PAYABLE - RELATED PARTY TRANSACTIONS

NOTE 6 - NOTE PAYABLE - RELATED PARTY TRANSACTIONS

Note Payable – Related Party

On September 11, 2019 the Company borrowed $12,000 from a board member. The loan was evidenced by an unsecured promissory note which bears simple interest at the rate of 8% per annum. The principal amount of the note and all accrued interest is due and payable on or before December 11, 2019.

On May 28, 2019 the Company issued a promissory note for $5,000 to the Company’s CEO. 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 December 31, 2019.

On January 19, 2017 the Company issued a promissory note for $15,000 to the Company’s CEO. 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, 2020.

As of September 30, 2019 and December 31, 2018 Note Payable – Related Party consisted of the following:

	September 30,			December 31,
	2019			2018
Note payable, related party		$	32,000		$	15,000
Total		$	32,000		$	15,000

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NOTE 8 - STOCK OPTIONS : Schedule of Stock Options and Warrants, Activity (Details) - $ / shares	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Text Block [Abstract]
Outstanding at beginning of year	2,965,556	2,600,556
Outstanding, Weighted Average Exercise Price at beginning of year	$ 0.63	$ 0.82
Granted	450,000	590,000
Granted, Weighted Average Exercise Price	$ 0.08	$ 0.07
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	0	0
Exercised, Weighted Average Exercise	$ 0.00	$ 0.00
Expired or cancelled	(50,000)	(225,000)
Expired or cancelled, Weighted Average Exercise Price	$ 2.25	$ 1.33
Outstanding at end of year	3,365,556	2,965,556
Outstanding, Weighted Average Exercise Price at end of year	$ 0.53	$ 0.63
Exercisable	2,970,140	2,556,390
Exercisable, Weighted Average Exercise Price	$ 0.56	$ 0.67

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES: Inventory (Details) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Text Block [Abstract]
Expense for Obsolete Inventory	$ 26,667	$ 50,000

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Note 7 - CONVERTIBLE NOTE PAYABLE (Tables)

9 Months Ended

Sep. 30, 2019

Table Text Block Supplement [Abstract]

Schedule of Convertible Note payable

As of September 30, 2019 and December 31, 2018 Convertible Note Payable consisted of the following:

	September 30,			December 31,
	2019			2018
Convertible note payable		$	60,000		$	100,000
Total		$	60,000		$	100,000

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES: Basic and Diluted Loss Per Share (Details) - shares	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Text Block [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2,970,140	2,563,473

XML

Condensed Statements of Cash Flows (unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
OPERATING ACTIVITIES
Net loss	$ (413,189)	$ (317,938)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization and depreciation expense	431	7,294
Options and warrants	42,059	32,458
Inventory reserve	26,667	50,000
Loss on extinguishment of debt	0	32,963
Changes in operating assets and liabilities:
Accounts receivable	2,751	(7,308)
Accounts receivable-related parties	(11,845)	(2,873)
Contract assets	(449)
Deposits	(755)	(11,198)
Inventory	94,445	52,760
Accounts payable and accrued expenses	69,927	16,146
Customer deposits	33,955	(71,131)
Accounts payable-related parties	(1,250)	28,498
Contract liabilities	(9,496)	(30,000)
Accrued management compensation	153,362	105,262
Net Cash Used in Operating Activities	(13,387)	(115,067)
INVESTING ACTIVITIES
Purchase of property and equipment	0	(2,714)
Net Cash Used in Investing Activities	0	(2,714)
FINANCING ACTIVITIES
Proceeds from sale of option for future purchase of common stock	25,000	0
Proceeds from related party note payable	17,000	0
Proceeds from sale of common stock	75,000	0
Payments on convertible note payable	(40,000)	0
Proceeds from convertible note payable	0	100,000
Net Cash Provided by Financing Activities	77,000	100,000
NET INCREASE (DECREASE) IN CASH	63,613	(17,781)
CASH AT BEGINNING OF YEAR	17,060	23,279
CASH AT END OF PERIOD	80,673	5,498
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
Cash paid for: Interest	14,214	7,583
Cash paid for: Income taxes	800	800
NON CASH FINANCING ACTIVITIES:
Common stock issued for convertible note	$ 0	$ 15,799

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Condensed Balance Sheets (unaudited) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
CURRENT ASSETS
Cash	$ 80,673	$ 17,060
Accounts receivable, net	10,691	13,442
Accounts receivable - related parties	18,511	6,666
Inventory, net	1,238,566	1,359,678
Contract assets	13,221	12,772
Deposits	6,566	5,811
Total Current Assets	1,368,228	1,415,429
Property and equipment, net	1,945	2,376
OTHER ASSETS
Other noncurrent assets	30,425	30,425
Total Other Assets	30,425	30,425
TOTAL ASSETS	1,400,598	1,448,230
CURRENT LIABILITIES
Accounts payable and accrued expenses	432,290	362,363
Accrued management compensation	659,465	506,103
Accounts payable - related parties	143,921	145,171
Notes payable - related parties	32,000	15,000
Convertible notes payable	60,000	100,000
Contract liabilities	75,000	84,496
Customer deposits	174,293	140,338
Total Current Liabilities	1,576,969	1,353,471
Total Liabilities	1,576,969	1,353,471
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, 125,000,000 shares authorized no par value 20,839,865 and 20,420,402 shares issued and outstanding, respectively	8,502,210	8,427,210
Additional paid-in capital	11,990,115	11,923,056
Accumulated deficit	(20,668,696)	(20,255,507)
Total Stockholders' Equity (Deficit)	(176,371)	94,759
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$ 1,400,598	$ 1,448,230

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NOTE 5 - RELATED PARTY TRANSACTIONS (Tables)

9 Months Ended

Sep. 30, 2019

Table Text Block Supplement [Abstract]

Schedule of Accrued Management Fees

As of September 30, 2019 and December 31, 2018 the accrued management fees consisted of the following:

	September 30,			December 31,
	2019			2018
Amounts due to the president		$	506,889		$	399,296
Amounts due to the chief financial officer			152,576			106,807
Total		$	659,465		$	506,103

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NOTE 8 - STOCK OPTIONS

9 Months Ended

Sep. 30, 2019

Disclosure Text Block [Abstract]

NOTE 8 - STOCK OPTIONS

NOTE 8 - STOCK OPTIONS

During the nine months ended September 30, 2019 and 2018, the Company granted 450,000 and 590,000 options for services, respectively. During the nine months ended September 30, 2019 and 2018, the Company recognized expense of $42,059 and $32,458, respectively, for options and warrants that vested during the periods pursuant to ASC Topic 718. Total remaining amount of compensation expense to be recognized in future periods is $14,741.

On August 3, 2011 the Board of Directors adopted the Omnitek Engineering Corp. 2011 Long-term Incentive Plan (the “2011 Plan”), under which 1,000,000 shares of Company’s Common Stock were reserved for issuance of both Incentive Stock Options to employees only and and Non-Qualified Stock Options to employees and consultants at its discretion. As of September 30, 2019 the Company has a total of 550,000 options issued under the 2011 P lan. On September 11, 2015 the Board of Directors adopted the Omnitek Engineering Corp. 2015 Long Term Incentive Plan (the “2015 Plan”), under which 2,500,000 shares of the Company’s Common Stock were reserved for issuance of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of September 30, 2018 the Company has a total of 2,065,556 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 September 30, 2019, the Company has a total of 750,000 options issued under the 2017 Plan. During the nine months ended September 30, 2019 and 2018 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:

	September 30, 2019	September 30, 2018
Expected volatility	142 %	150 %
Expected dividends	0 %	0 %
Expected term	7 Years	7 Years
Risk-free interest rate	2.01 %	2.46 %

A summary of the status of the options granted at September 30, 2019 and December 31, 2018 and changes during the periods then ended is presented below:

	September 30,			December 31,
	2019			2018
			Weighted-Average			Weighted-Average
	Shares		Exercise Price	Shares		Exercise Price
Outstanding at beginning of year	2,965,556	$	0.63	2,600,556	$	0.82
Granted	450,000		0.08	590,000		0.07
Exercised	-		-	-		-
Expired or cancelled	(50,000)		2.25	(225,000)		1.33
Outstanding at end of period	3,365,556		0.53	2,965,556		0.63
Exercisable	2,970,140	$	0.56	2,556,390	$	0.67

A summary of the status of the options outstanding at September 30, 2019 is presented below:

Range of Exercise Prices	Number Outstanding	Weighted-Average Remaining Contractual Life	Number Exercisable	Weighted-Average Exercise Price
$0.01-0.99	2,890,556	4.43 years	2,495,140	0.21
$1.00-1.99	75,000	0.43 years	75,000	1.37
$2.00-2.99	400,000	0.08 years	400,000	2.56
$0.01-2.99	3,365,556	3.83 years	2,970,140	$0.56

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NOTE 4 - COMMITMENTS

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

NOTE 4 - COMMITMENTS

NOTE 4 – COMMITMENTS

Effective September 1, 2019, the Company entered into the Fourth Amendment to the Lease for its facility, reducing the size of the leased space to 21,786 square feet and extending the lease term to August 31, 2020, at which time a new lease extension has to be negotiated. Effective as of September 1, 2019, the base rent is reduced to $14,161 per month, plus a reduced charge for common area maintenance expenses (CAM) reflecting the reduced square footage. The security deposit amount of $14,000 remained the same. Additionally, the amendment calls for payment of past due rents of $89,454, as of September 1, 2019, as follows:

(a)       An initial payment of $22,363 on or before September 1, 2019

(b) Monthly installments of $10,000 thereafter, until such time as the past due rent has been paid in full.

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NOTE 5 - RELATED PARTY TRANSACTIONS (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Accounts receivable - related parties	$ 18,511	$ 6,666
Accounts payable - related parties	$ 143,921	$ 145,171
Omnitek Peru SAC
Noncontrolling Interest, Ownership Percentage by Parent	20.00%
Omnitek Engineering Thailand Co Ltd
Noncontrolling Interest, Ownership Percentage by Parent	15.00%

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NOTE 7 - CONVERTIBLE NOTE PAYABLE (Details) - Secured Convertible Promissory Note - USD ($)	9 Months Ended
	Sep. 30, 2019	Jun. 15, 2018
Debt Instrument, Face Amount		$ 100,000
Debt Instrument, Interest Rate, Stated Percentage		10.00%
Debt Instrument, Periodic Payment	$ 5,000
Debt Instrument, Convertible, Conversion Price	$ 0.025
Debt Instrument, Description	The note will automatically mature and be due and payable on the eighteen (18) month anniversary. The Company shall make principal payments under the Note in the amount of $5,000 per month
Debt Instrument, Convertible, Conversion Price	The Note includes a may request a portion of the principal repayment be converted and payable in restricted shares of the Company’s Common Stock at the lesser of five cents ($0.05) per share or 90% of the average closing price calculated over the prior 20 trading days, but not less than $.025 per share.

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Condensed Statements of Operations (unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Statement [Abstract]
REVENUES	$ 123,366	$ 265,999	$ 739,110	$ 995,085
REVENUES, related parties	13,086	14,568	13,086	14,568
Total revenues	136,452	280,567	752,196	1,009,653
COST OF GOODS SOLD	101,106	170,108	469,318	575,088
GROSS MARGIN	35,346	110,459	282,878	434,565
OPERATING EXPENSES
General and administrative	179,942	184,374	599,708	618,680
Research and development	27,512	29,315	79,980	81,885
Depreciation and amortization	135	1,568	431	7,294
Total Operating Expenses	207,589	215,257	680,119	707,859
LOSS FROM OPERATIONS	(172,243)	(104,798)	(397,241)	(273,294)
OTHER INCOME (EXPENSE)
Other income	0	0	0	950
Loss on Extinguishment of Debt		(32,963)	0	(32,963)
Interest expense	(4,677)	(5,544)	(15,148)	(11,831)
Total Other Income (Expense)	(4,677)	(38,507)	(15,148)	(43,844)
LOSS BEFORE INCOME TAXES	(176,920)	(143,305)	(412,389)	(317,138)
INCOME TAX EXPENSE	0	0	800	800
NET LOSS	$ (176,920)	$ (143,305)	$ (413,189)	$ (317,938)
BASIC AND DILUTED LOSS PER SHARE	$ (0.01)	$ (0.01)	$ (0.02)	$ (0.02)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED	20,424,961	20,411,316	20,421,938	20,324,970

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2019

Disclosure Text Block [Abstract]

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.

Revenue Recognition

In general, revenue is recognized when control of the promised goods is transferred to our customers, in an amount that reflects the consideration to which we expect to be entitled in exchange for the goods or services. In order to achieve that core principle, a five-step approach is applied: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue allocated to each performance obligation when we satisfy the performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account for revenue recognition.

We recognize revenue on various products and services as follows:

Products - The Company recognizes revenue from the sale of products (e.g., filters and engine components) as performance obligations are satisfied. This type of revenue is primarily generated from the sale of finished product to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks and rewards transfer (i.e., the performance obligation has been satisfied).

Contracts – Revenues are recognized as performance obligations are satisfied over time (also known as percentage-of-completion method), measured by either achievement of milestones or the ratio of costs incurred up to a given date to estimated total costs for each contract. Contract costs include all direct material, labor, subcontract and other costs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, estimated profitability and associated change orders and claims, including those changes arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income and are recognized in the period in which the revisions are determined.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of Omnitek’s contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. 

Performance Obligations Satisfied Over Time

Revenues for Omnitek’s long-term contracts that satisfy the criteria for over time recognition (formerly known as percentage-of-completion method) is recognized as the work progresses. The majority of the revenue is derived from long-term engine development agreements that typically span between 12 to 24 months. Omnitek’s long-term contracts will continue to be recognized over time because our typical contract is for a customized asset with no alternative use and generally the Company has a right to payment for work completed to date. Under the new revenue standard, the cost-to-cost measure of progress continues to best depict the transfer of control of assets to the customer, which occurs as the Company incurs costs. Contract costs include labor and material. Revenue from products and services transferred to customers over time accounted for 6% and 0% of revenue for the periods ended September 30, 2019 and 2018, respectively.

Performance Obligations Satisfied at a Point in Time

Revenue from product sales is recognized at a point in time. These sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risk and rewards transfer. Upon fulfilment of the performance obligation, the customer is provided an invoice demonstrating transfer of control to the customer. Revenue from goods and services transferred to customers at a point in time accounted for 94% and 100% of revenue for the periods ended September 30, 2019 and 2018, respectively.

Assurance-type warranties are the only warranties provided by the Company and, as such, Omnitek does not recognize revenue on warranty-related work. Omnitek generally provides a one-year warranty for products that it sells. Warranty claims historically have been insignificant. 

Pre-contract costs are generally not incurred by the Company

Contract Estimates

Accounting for long-term contracts involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, Omnitek estimates the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognizes that profit over the life of the contract.

Variable Consideration

The transaction price for contracts may include variable consideration, which includes increases to transaction price for approved and unapproved change orders, claims and incentives, and reductions to transaction price for liquidated damages. Variable consideration historically has been insignificant.

Disaggregation of Revenue

The following table presents Omnitek’s revenues disaggregated by region and product type for the three months ended September 30, 2019 and September 30, 2018: 

		For the three months ended September 30,				For the three months ended September 30,
			2019				2018
		Consumer	Long-term			Consumer	Long-term
Segments		Products	Contract	Total		Products	Contract	Total
Domestic	$	99,423	-	99,423	$	108,160	-	108,160
International		37,029	-	37,029		172,407	-	172,407
	$	136,452	-	136,452	$	280,567	-	280,567
Filters	$	35,478	-	35,478	$	180,549	-	180,549
Components		100,974	-	100,974		100,018	-	100,018
Engineering Services		-	-	-		-	-	-
	$	136,452	-	136,452	$	280,567	-	280,567

The following table presents Omnitek’s revenues disaggregated by region and product type for the nine months ended September 30, 2019 and September 30, 2018:

		For the nine months ended September 30,				For the nine months ended September 30,
			2019				2018
		Consumer	Long-term			Consumer	Long-term
Segments		Products	Contract	Total		Products	Contract	Total
Domestic	$	320,349	-	320,349	$	414,373	-	414,373
International		387,373	44,474	431,847		595,280	-	595,280
	$	707,722	44,474	752,196	$	1,009,653	-	1,009,653
Filters	$	452,728	-	452,728	$	622,165	-	622,165
Components		254,994	-	254,994		387,488	-	387,488
Engineering Services		-	44,474	44,474		-	-	-
	$	707,722	44,474	752,196	$	1,009,653	-	1,009,653

Inventory

Inventory is stated at the lower of cost or market.  The Company’s inventory consists of finished goods and raw materials and is located in Vista, California, consisting of the following:

	September 30,		December 31,
Location : Vista, CA	2019		2018
Raw materials	$	933,579	$	948,060
Finished goods		1,077,699		1,147,052
Inventory in transit		-		10,611
Allowance for obsolete inventory		(772,712)		(746,045)
Total	$	1,238,566	$	1,359,678

The Company has established an allowance for obsolete inventory.  Expense for obsolete inventory was $26,667 and $50,000, for the periods ended September 30, 2019 and September 30, 2018, respectively

Property and Equipment

Property and equipment at September 30, 2019 and December 31, 2018 consisted of the following:

	September 30,		December 31,
	2019		2018
Production equipment	$	64,673	$	64,673
Computers/Office equipment		28,540		28,540
Tooling equipment		12,380		12,380
Leasehold Improvements		42,451		42,451
Less: accumulated depreciation		(146,099)		(145,668)
Total	$	1,945	$	2,376

Depreciation expense for the periods ended September 30, 2019 and September 30, 2018 was $431 and $7,294, 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 2,970,140 and 2,563,473 stock options that would have been included in the fully diluted earnings per share as of September 30, 2019 and September 30, 2018, 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

The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes ("Topic 740"), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized.

Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of September 30, 2019 and December 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 2012.

Liquidity and Going Concern

Historically, the Company has incurred net losses and negative cash flows from operations.  As of September 30, 2019, the Company had an accumulated deficit of $20,668,696 and total stockholders’ deficit of $176,371.  At September 30, 2019, the Company had current assets of $1,368,228 including cash of $80,673, and current liabilities of $1,576,969, resulting in negative working capital of $208,741. For the nine months ended September 30, 2019, the Company reported a net loss of $413,189 and net cash used by operating activities of $13,387. Management believes that based on its operating plan, the projected sales for 2019, 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 significant 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.      

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-2 - Leases (Topic 842), which significantly amends the way companies are required to account for leases. Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company adopted this update as of January 1, 2019 using the modified retrospective transition method and prior periods have not been restated. The Company has not entered into any leases subject to the new guidance since January 1, 2019.

In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployees Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the scope of Topic 718 (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. With the adoption of ASU 2018-07, the accounting for share-based payments to nonemployees and employees will be substantially the same. ASU 2018-07 is effective for public companies for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The Company adopted the standard on January 1, 2019. This standard did not have a material impact on the Company’s financial statements and related disclosures.

Recent Accounting Pronouncements

The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES: Property and Equipment: Schedule of Property and Equipment (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Less: accumulated depreciation	$ (146,099)	$ (145,668)
Total	1,945	2,376
Production Equipment
Property, Plant and Equipment, Gross	64,673	64,673
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: Revenue Recognition: Performance Obligations (Details)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Performance Obligations Satisfied Over Time [Member]
Revenue percentage	6.00%	0.00%
Performance Obligations Satisfied at a Point in Time [Member]
Revenue percentage	94.00%	100.00%

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NOTE 8 - STOCK OPTIONS: Summary of the Status of the Options and Warrants Outstanding (Details)	9 Months Ended
	Sep. 30, 2019 $ / 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	2,890,556
Weighted-Average Remaining Contractual Life	4 years 5 months 5 days
Number Exercisable | shares	2,495,140
Weighted-Average Exercise Price	$ 0.21
$1.00-1.99
Exercise Price Range, Lower Range Limit	1.00
Exercise Price Range, Upper Range Limit	$ 1.99
Number Outstanding | shares	75,000
Weighted-Average Remaining Contractual Life	5 months 5 days
Number Exercisable | shares	75,000
Weighted-Average Exercise Price	$ 1.37
$2.00-2.99
Exercise Price Range, Lower Range Limit	2.00
Exercise Price Range, Upper Range Limit	$ 2.99
Number Outstanding | shares	400,000
Weighted-Average Remaining Contractual Life	29 days
Number Exercisable | shares	400,000
Weighted-Average Exercise Price	$ 2.56
$0.01-2.99
Exercise Price Range, Lower Range Limit	0.01
Exercise Price Range, Upper Range Limit	$ 2.99
Number Outstanding | shares	3,365,556
Weighted-Average Remaining Contractual Life	3 years 9 months 29 days
Number Exercisable | shares	2,970,140
Weighted-Average Exercise Price	$ 0.56

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NOTE 3 - CONTRACT ASSETS AND LIABILITIES

9 Months Ended

Sep. 30, 2019

Disclosure Text Block [Abstract]

NOTE 3 - Contract Assets And Liabilities

NOTE 3 - CONTRACT ASSETS AND LIABILITIES

The timing of revenue recognition, billings and cash collections results in billed accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts (contract assets) on the balance sheet. For Omnitek’s long-term contracts, amounts are generally billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, Omnitek sometimes receives advances or deposits from its customers, before revenue is recognized, resulting in billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities).

The table below reconciles the net excess billings to the amounts included in the balance sheets at those dates:

	September 30,		December 31,
	2019		2018
Contract assets	$	13,221	$	12,772
Contract liabilities	$	(75,000)	$	(84,496)
Net amount of contract liabilities in excess of contract assets	$	(61,779)	$	(71,724)

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Statements of Stockholders' Equity (Deficit) (Unaudited) - USD ($)	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Stockholders' Equity, beginning of period, Value at Dec. 31, 2017	$ 8,411,411	$ 11,852,363	$ (19,787,101)	$ 476,673
Stockholders' Equity, beginning of period, Shares at Dec. 31, 2017	20,281,082
Value of options issued for services		21,971		21,971
Net loss			(98,090)	(98,090)
Stockholders' Equity, end of period, Value at Mar. 31, 2018	$ 8,411,411	11,874,334	(19,885,191)	400,554
Stockholders' Equity, end of period, Shares at Mar. 31, 2018	20,281,082
Stockholders' Equity, beginning of period, Value at Dec. 31, 2017	$ 8,411,411	11,852,363	(19,787,101)	476,673
Stockholders' Equity, beginning of period, Shares at Dec. 31, 2017	20,281,082
Sale of option for future purchase of common stock				0
Conversion of Related Party Note Payable, Value				15,799
Loss on Extinguishment of Debt				32,963
Stockholders' Equity, end of period, Value at Sep. 30, 2018	$ 8,427,210	11,917,784	(20,105,039)	239,955
Stockholders' Equity, end of period, Shares at Sep. 30, 2018	20,420,402
Stockholders' Equity, beginning of period, Value at Mar. 31, 2018	$ 8,411,411	11,874,334	(19,885,191)	400,554
Stockholders' Equity, beginning of period, Shares at Mar. 31, 2018	20,281,082
Value of options issued for services		5,215		5,215
Net loss			(76,543)	(76,543)
Stockholders' Equity, end of period, Value at Jun. 30, 2018	$ 8,411,411	11,879,549	(19,961,734)	329,226
Stockholders' Equity, end of period, Shares at Jun. 30, 2018	20,281,082
Value of options issued for services		5,272		5,272
Conversion of Related Party Note Payable, Value	$ 15,799			15,799
Conversion of Related Party Note Payable, Shares	139,320
Loss on Extinguishment of Debt		32,963		32,963
Net loss			(143,305)	(143,305)
Stockholders' Equity, end of period, Value at Sep. 30, 2018	$ 8,427,210	11,917,784	(20,105,039)	239,955
Stockholders' Equity, end of period, Shares at Sep. 30, 2018	20,420,402
Stockholders' Equity, beginning of period, Value at Dec. 31, 2018	$ 8,427,210	11,923,056	(20,255,507)	94,759
Stockholders' Equity, beginning of period, Shares at Dec. 31, 2018	20,420,402
Value of options issued for services		25,907		25,907
Net loss			(106,226)	(106,226)
Stockholders' Equity, end of period, Value at Mar. 31, 2019	$ 8,427,210	11,948,963	(20,361,733)	14,440
Stockholders' Equity, end of period, Shares at Mar. 31, 2019	20,420,402
Stockholders' Equity, beginning of period, Value at Dec. 31, 2018	$ 8,427,210	11,923,056	(20,255,507)	94,759
Stockholders' Equity, beginning of period, Shares at Dec. 31, 2018	20,420,402
Sale of option for future purchase of common stock				25,000
Conversion of Related Party Note Payable, Value				0
Loss on Extinguishment of Debt				0
Stockholders' Equity, end of period, Value at Sep. 30, 2019	$ 8,502,210		(20,668,696)	(176,371)
Stockholders' Equity, end of period, Shares at Sep. 30, 2019	20,839,865
Stockholders' Equity, beginning of period, Value at Mar. 31, 2019	$ 8,427,210	11,948,963	(20,361,733)	14,440
Stockholders' Equity, beginning of period, Shares at Mar. 31, 2019	20,420,402
Value of options issued for services		10,915		10,915
Net loss			(130,043)	(130,043)
Stockholders' Equity, end of period, Value at Jun. 30, 2019	$ 8,427,210	11,959,878	(20,491,776)	(104,688)
Stockholders' Equity, end of period, Shares at Jun. 30, 2019	20,420,402
Value of options issued for services		237		237
Sale of option for future purchase of common stock		$ 25,000		25,000
Sale of common stock, Value	$ 75,000			75,000
Sale of common stock, Shares	419,463
Loss on Extinguishment of Debt
Net loss			(176,920)	(176,920)
Stockholders' Equity, end of period, Value at Sep. 30, 2019	$ 8,502,210		$ (20,668,696)	$ (176,371)
Stockholders' Equity, end of period, Shares at Sep. 30, 2019	20,839,865

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 13, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	Omnitek Engineering Corp.
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Amendment Flag	false
Entity Central Index Key	0001404804
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		20,839,865
Entity Filer Category	Non-accelerated Filer
Entity's Reporting Status Current	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Interactive Data Current	Yes
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity File Number	000-53955
Entity Incorporation, State Country Code	CA
Entity Address, Address Line One	1333 Keystone Way, #101
Entity Address, City or Town	Vista
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92081
City Area Code	760
Local Phone Number	591-0089

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES: Property and Equipment (Details) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Text Block [Abstract]
Depreciation expense	$ 431	$ 7,294

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES : Revenue Recognition: Disaggregation of Revenue (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Consumer Products	$ 136,452	$ 280,567	$ 707,722	$ 1,009,653
Long-term Contract	0	0	44,474	0
Revenues	123,366	265,999	739,110	995,085
Domestic
Consumer Products	99,423	108,160	320,349	414,373
Long-term Contract	0	0	0	0
Revenues	99,423	108,160	320,349	414,373
International
Consumer Products	37,029	172,407	387,373	595,280
Long-term Contract	0	0	44,474	0
Revenues	37,029	172,407	431,847	595,280
Filters
Consumer Products	35,478	180,549	452,728	622,165
Long-term Contract	0	0	0	0
Revenues	35,478	180,549	452,728	622,165
Components
Consumer Products	100,974	100,018	254,994	387,488
Long-term Contract	0	0	0	0
Revenues	100,974	100,018	254,994	387,488
Engineering Services
Consumer Products	0	0	0	0
Long-term Contract	0	0	44,474	0
Revenues	$ 0	$ 0	$ 44,474	$ 0

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2019

Policy Text Block [Abstract]

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.

Revenue Recognition

Revenue Recognition

In general, revenue is recognized when control of the promised goods is transferred to our customers, in an amount that reflects the consideration to which we expect to be entitled in exchange for the goods or services. In order to achieve that core principle, a five-step approach is applied: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue allocated to each performance obligation when we satisfy the performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account for revenue recognition.

We recognize revenue on various products and services as follows:

Products - The Company recognizes revenue from the sale of products (e.g., filters and engine components) as performance obligations are satisfied. This type of revenue is primarily generated from the sale of finished product to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks and rewards transfer (i.e., the performance obligation has been satisfied).

Contracts – Revenues are recognized as performance obligations are satisfied over time (also known as percentage-of-completion method), measured by either achievement of milestones or the ratio of costs incurred up to a given date to estimated total costs for each contract. Contract costs include all direct material, labor, subcontract and other costs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, estimated profitability and associated change orders and claims, including those changes arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income and are recognized in the period in which the revisions are determined.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account in the new revenue standard. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of Omnitek’s contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. 

Performance Obligations Satisfied Over Time

Revenues for Omnitek’s long-term contracts that satisfy the criteria for over time recognition (formerly known as percentage-of-completion method) is recognized as the work progresses. The majority of the revenue is derived from long-term engine development agreements that typically span between 12 to 24 months. Omnitek’s long-term contracts will continue to be recognized over time because our typical contract is for a customized asset with no alternative use and generally the Company has a right to payment for work completed to date. Under the new revenue standard, the cost-to-cost measure of progress continues to best depict the transfer of control of assets to the customer, which occurs as the Company incurs costs. Contract costs include labor and material. Revenue from products and services transferred to customers over time accounted for 6% and 0% of revenue for the periods ended September 30, 2019 and 2018, respectively.

Performance Obligations Satisfied at a Point in Time

Revenue from product sales is recognized at a point in time. These sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risk and rewards transfer. Upon fulfilment of the performance obligation, the customer is provided an invoice demonstrating transfer of control to the customer. Revenue from goods and services transferred to customers at a point in time accounted for 94% and 100% of revenue for the periods ended September 30, 2019 and 2018, respectively.

Assurance-type warranties are the only warranties provided by the Company and, as such, Omnitek does not recognize revenue on warranty-related work. Omnitek generally provides a one-year warranty for products that it sells. Warranty claims historically have been insignificant. 

Pre-contract costs are generally not incurred by the Company

Contract Estimates

Accounting for long-term contracts involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, Omnitek estimates the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognizes that profit over the life of the contract.

Variable Consideration

The transaction price for contracts may include variable consideration, which includes increases to transaction price for approved and unapproved change orders, claims and incentives, and reductions to transaction price for liquidated damages. Variable consideration historically has been insignificant.

Disaggregation of Revenue

The following table presents Omnitek’s revenues disaggregated by region and product type for the three months ended September 30, 2019 and September 30, 2018:

		For the three months ended September 30,				For the three months ended September 30,
			2019				2018
		Consumer	Long-term			Consumer	Long-term
Segments		Products	Contract	Total		Products	Contract	Total
Domestic	$	99,423	-	99,423	$	108,160	-	108,160
International		37,029	-	37,029		172,407	-	172,407
	$	136,452	-	136,452	$	280,567	-	280,567
Filters	$	35,478	-	35,478	$	180,549	-	180,549
Components		100,974	-	100,974		100,018	-	100,018
Engineering Services		-	-	-		-	-	-
	$	136,452	-	136,452	$	280,567	-	280,567

The following table presents Omnitek’s revenues disaggregated by region and product type for the nine months ended September 30, 2019 and September 30, 2018:

		For the nine months ended September 30,				For the nine months ended September 30,
			2019				2018
		Consumer	Long-term			Consumer	Long-term
Segments		Products	Contract	Total		Products	Contract	Total
Domestic	$	320,349	-	320,349	$	414,373	-	414,373
International		387,373	44,474	431,847		595,280	-	595,280
	$	707,722	44,474	752,196	$	1,009,653	-	1,009,653
Filters	$	452,728	-	452,728	$	622,165	-	622,165
Components		254,994	-	254,994		387,488	-	387,488
Engineering Services		-	44,474	44,474		-	-	-
	$	707,722	44,474	752,196	$	1,009,653	-	1,009,653

Inventory

Inventory

Inventory is stated at the lower of cost or market.  The Company’s inventory consists of finished goods and raw materials and is located in Vista, California, consisting of the following:

	September 30,		December 31,
Location : Vista, CA	2019		2018
Raw materials	$	933,579	$	948,060
Finished goods		1,077,699		1,147,052
Inventory in transit		-		10,611
Allowance for obsolete inventory		(772,712)		(746,045)
Total	$	1,238,566	$	1,359,678

The Company has established an allowance for obsolete inventory.  Expense for obsolete inventory was $26,667 and $50,000, for the periods ended September 30, 2019 and September 30, 2018, respectively

Property and Equipment

Property and Equipment

Property and equipment at September 30, 2019 and December 31, 2018 consisted of the following:

	September 30,		December 31,
	2019		2018
Production equipment	$	64,673	$	64,673
Computers/Office equipment		28,540		28,540
Tooling equipment		12,380		12,380
Leasehold Improvements		42,451		42,451
Less: accumulated depreciation		(146,099)		(145,668)
Total	$	1,945	$	2,376

Depreciation expense for the periods ended September 30, 2019 and September 30, 2018 was $431 and $7,294, 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 2,970,140 and 2,563,473 stock options that would have been included in the fully diluted earnings per share as of September 30, 2019 and September 30, 2018, 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 September 30, 2019 and December 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 2012.

Liquidity and Going Concern

Liquidity and Going Concern

Historically, the Company has incurred net losses and negative cash flows from operations.  As of September 30, 2019, the Company had an accumulated deficit of $20,668,696 and total stockholders’ deficit of $176,371.  At September 30, 2019, the Company had current assets of $1,368,228 including cash of $80,673, and current liabilities of $1,576,969, resulting in negative working capital of $208,741. For the nine months ended September 30, 2019, the Company reported a net loss of $413,189 and net cash used by operating activities of $13,387. Management believes that based on its operating plan, the projected sales for 2019, 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 significant 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.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-2 - Leases (Topic 842), which significantly amends the way companies are required to account for leases. Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company adopted this update as of January 1, 2019 using the modified retrospective transition method and prior periods have not been restated. The Company has not entered into any leases subject to the new guidance since January 1, 2019.

In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployees Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the scope of Topic 718 (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. With the adoption of ASU 2018-07, the accounting for share-based payments to nonemployees and employees will be substantially the same. ASU 2018-07 is effective for public companies for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The Company adopted the standard on January 1, 2019. This standard did not have a material impact on the Company’s financial statements and related disclosures.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.

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NOTE 5 - RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2019

Disclosure Text Block [Abstract]

NOTE 5 - RELATED PARTY TRANSACTIONS

NOTE 5 - RELATED PARTY TRANSACTIONS

Accounts Receivable – Related Parties

The Company holds a non-controlling interest in various distributors in exchange for use of the Company’s name and logo. As of September 30, 2019, the Company owned a 15% interest in Omnitek Engineering Thailand Co. Ltd. and a 20% interest in Omnitek Peru S.A.C.  As of September 30, 2019 and December 31, 2018, the Company was owed $18,511 and $6,666, respectively, by related parties for the purchase of products and services.

Accounts Payable – Related Parties

The Company regularly incurs expenses that are paid to related parties and purchases goods and services from related parties. As of September 30, 2019 and December 31, 2018, the Company owed related parties (primarily for

services performed by a company controlled by a board member) for such expenses, goods and services in the amounts of $143,921 and $145,171, respectively.

Accrued Management Compensation

For the periods ended September 30, 2019 and December 31, 2018, the Company’s president and chief financial officer were due amounts for services performed for the Company.  

As of September 30, 2019 and December 31, 2018 the accrued management fees consisted of the following:

	September 30,			December 31,
	2019			2018
Amounts due to the president		$	506,889		$	399,296
Amounts due to the chief financial officer			152,576			106,807
Total		$	659,465		$	506,103

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NOTE 6 - NOTES PAYABLE - RELATED PARTY TRANSACTIONS (Tables)

9 Months Ended

Sep. 30, 2019

Table Text Block Supplement [Abstract]

Schedule of Note Payable Related Party

As of September 30, 2019 and December 31, 2018 Note Payable – Related Party consisted of the following:

	September 30,			December 31,
	2019			2018
Note payable, related party		$	32,000		$	15,000
Total		$	32,000		$	15,000

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NOTE 4 - COMMITMENTS (Details)	9 Months Ended
	Sep. 30, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Lease expiration date	Aug. 31, 2020
Base Rent	$ 14,161
Security deposit	$ 14,000
Rent payment description	Payment of past due rents of $89,454, as of September 1, 2019, as follows: (a) An initial payment of $22,363 on or before September 1, 2019. (b) Monthly installments of $10,000 thereafter, until such time as the past due rent has been paid in full.

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NOTE 6 - NOTES PAYABLE - RELATED PARTY TRANSACTIONS: Schedule of Note Payable Related Party (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Notes to Financial Statements
Note payable, related party	$ 32,000	$ 15,000
Total	$ 32,000	$ 15,000