Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 27, 2015 | Jun. 30, 2014 | |
Document and Entity Information | |||
Entity Registrant Name | Omnitek Engineering Corp | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Entity Central Index Key | 1404804 | ||
Current Fiscal Year End Date | -19 | ||
Entity Common Stock, Shares Outstanding | 19,981,082 | ||
Entity Public Float | $23,474,096 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Entity Incorporation, Date of Incorporation | 9-Oct-01 | ||
Trading Symbol | OMTK |
Balance_Sheets
Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
CURRENT ASSETS | ||
Cash | $498,782 | $1,057,836 |
Accounts receivable, net | 56,059 | 38,261 |
Accounts receivable - related parties | 15,092 | 33,369 |
Inventory, net | 2,333,781 | 2,225,868 |
Prepaid expense | 4,200 | 21,474 |
Deposits | 92,779 | 62,973 |
Short-term investments, net | 917,248 | |
Total Current Assets | 3,000,693 | 4,357,029 |
FIXED ASSETS, net | 88,715 | 118,460 |
OTHER ASSETS | ||
Intellectual property, net | 1,345 | 2,872 |
Other noncurrent assets | 14,280 | |
Total Other Assets | 15,625 | 2,872 |
TOTAL ASSETS | 3,105,033 | 4,478,361 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 84,385 | 91,744 |
Accrued management compensation | 102,096 | 189,466 |
Accounts payable - related parties | 3,600 | 1,475 |
Customer deposits | 345,844 | 222,072 |
Total Current Liabilities | 535,925 | 504,757 |
Total Liabilities | 535,925 | 504,757 |
STOCKHOLDERS' EQUITY | ||
Common stock, 125,000,000 shares authorized no par value 19,979,582 and 19,759,582 shares issued and outstanding, respectively | 8,289,911 | 8,201,311 |
Additional paid-in capital | 11,121,502 | 10,785,771 |
Accumulated deficit | -16,842,305 | -15,013,478 |
Total Stockholders' Equity | 2,569,108 | 3,973,604 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $3,105,033 | $4,478,361 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Statement of Financial Position | ||
Common Stock, par or stated value | ||
Common Stock, shares authorized | 125,000,000 | 125,000,000 |
Common Stock, shares issued | 19,979,582 | 19,759,582 |
Common Stock, shares outstanding | 19,979,582 | 19,759,582 |
Statements_of_Operations
Statements of Operations (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement | ||
Revenues | $1,443,665 | $986,601 |
Revenues - related parties | 42,153 | 65,917 |
Total Revenues | 1,485,818 | 1,052,518 |
COST OF GOODS SOLD | 852,358 | 703,630 |
GROSS MARGIN | 633,460 | 348,888 |
OPERATING EXPENSES | ||
General and administrative | 1,870,533 | 1,712,636 |
Research and development expense | 600,091 | 292,228 |
Depreciation and amortization expense | 49,976 | 22,206 |
Total Operating Expenses | 2,520,600 | 2,027,070 |
LOSS FROM OPERATIONS | -1,887,140 | -1,678,182 |
OTHER INCOME (EXPENSE) | ||
Change in fair value of derivative liability | -1,909,298 | |
Other income | 13,646 | |
Interest expense | -13 | |
Interest income | 45,467 | 64,807 |
Total Other Income (Expense) | 59,113 | -1,844,504 |
LOSS BEFORE INCOME TAXES | -1,828,027 | -3,522,686 |
INCOME TAX EXPENSE | 800 | 800 |
NET LOSS | ($1,828,827) | ($3,523,486) |
BASIC AND DILUTED LOSS PER SHARE | ($0.09) | ($0.18) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING BASIC AND DILUTED | 19,816,240 | 19,750,787 |
Statements_of_Stockholders_Equ
Statements of Stockholders' Equity (USD $) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Stockholders' Equity, beginning of period, Value at Dec. 31, 2012 | $8,196,061 | $4,364,204 | ($11,489,992) | $1,070,273 |
Stockholders' Equity, beginning of period, Shares at Dec. 31, 2012 | 19,749,582 | |||
Value of options and warrants issued for services | 314,467 | 314,467 | ||
Exercise of warrants and options for cash, Value | 5,250 | 5,250 | ||
Exercise of warrants and options for cash, Shares | 10,000 | |||
Reversal of derivative liability (as restated) | 6,107,100 | 6,107,100 | ||
Net loss | -3,523,486 | -3,523,486 | ||
Stockholders' Equity, end of period, Value at Dec. 31, 2013 | 8,201,311 | 10,785,771 | -15,013,478 | 3,973,604 |
Stockholders' Equity, end of period, Shares at Dec. 31, 2013 | 19,759,582 | |||
Value of options and warrants issued for services | 335,731 | 335,731 | ||
Exercise of warrants and options for cash, Value | 88,600 | 88,600 | ||
Exercise of warrants and options for cash, Shares | 220,000 | |||
Net loss | -1,828,827 | -1,828,827 | ||
Stockholders' Equity, end of period, Value at Dec. 31, 2014 | $8,289,911 | $11,121,502 | ($16,842,305) | $2,569,108 |
Stockholders' Equity, end of period, Shares at Dec. 31, 2014 | 19,979,582 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
OPERATING ACTIVITIES | ||
Net loss | ($1,828,827) | ($3,523,486) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Amortization and depreciation expense | 32,731 | 22,206 |
Amortization of premium on investments | 17,245 | 34,424 |
Change in fair value of derivative liability | 1,909,298 | |
Options and warrants granted | 335,731 | 314,467 |
Changes in operating assets and liabilities: | ||
Accounts receivable | -17,798 | 82,285 |
Accounts receivable-related parties | 18,277 | -6,914 |
Deposits | -29,806 | 268,787 |
Prepaid Expense | 2,997 | -14,034 |
Inventory | -107,913 | -1,092,273 |
Accounts payable and accrued expenses | -7,359 | -225,364 |
Customer deposits | 123,772 | 37,963 |
Accounts payable-related parties | 2,125 | 1,475 |
Accrued management compensation | -87,370 | -75,251 |
Net Cash Used in Operating Activities | -1,546,195 | -2,266,417 |
INVESTING ACTIVITIES | ||
Maturity of short-term investments | 900,000 | 250,000 |
Purchase of property and equipment | -1,459 | -123,758 |
Net Cash Provided by Investing Activities | 898,541 | 126,242 |
FINANCING ACTIVITIES | ||
Exercise of warrants and options for cash | 88,600 | 5,250 |
Net Cash Provided by Financing Activities | 88,600 | 5,250 |
NET INCREASE (DECREASE) IN CASH | -559,054 | -2,134,925 |
CASH AT BEGINNING OF YEAR | 1,057,836 | 3,192,761 |
CASH AT END OF PERIOD | 498,782 | 1,057,836 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS | ||
CASH PAID FOR: Interest | ||
CASH PAID FOR: Income taxes | 800 | 800 |
NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Derivative liability | $6,107,100 |
Note_1_Organization_and_Busine
Note 1- Organization and Business Activity | 12 Months Ended |
Dec. 31, 2014 | |
Notes | |
Note 1- Organization and Business Activity | NOTE 1- ORGANIZATION AND BUSINESS ACTIVITY |
Omnitek Engineering, Corp. (Omnitek) was incorporated on October 9, 2001 as a California corporation. Omnitek develops and supplies new natural gas engine and advanced engine management systems for gaseous fuels and is the manufacturer of a proprietary technology used to convert old or new diesel engines to operate on natural gas, propane or hydrogen. Omnitek began operations on October 10, 2001, and was a spin-off from Nology Engineering, Inc. |
Note_2_Significant_Accounting_
Note 2 - Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2014 | |
Notes | |
Note 2 - Significant Accounting Policies | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES |
a. Accounting Methods | |
The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a December 31, year-end. | |
b. Cash and Cash Equivalents | |
For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. | |
c. 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. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. Allowance for doubtful accounts for the years ended December 31, 2014 and 2013 was $15,000 and $15,000, respectively. Additionally, bad debt expense for the years ended December 31, 2014 and 2013 was $6,489 and $1,196 respectively. | |
d. Basic and Diluted Loss Per Share | |
The computation of basic earnings per share of common stock is based on the weighted average number of shares outstanding during the periods presented. The computation of fully diluted earnings per share includes common stock equivalents outstanding at the balance sheet date. The Company had 0 and 2,087,137 stock options and warrants that would have been included in the fully diluted earnings per share as of December 31, 2014 and 2013, respectively. However, the common stock equivalents were not included in the computation of the loss per share computation because they are anti-dilutive. | |
e. Property and Equipment | |
Property and equipment are recorded at cost. Depreciation and amortization are calculated on the straight-line method over the shorter of the lease term or the estimated useful lives of the assets ranging from three to five years. | |
f. Newly Issued Accounting Pronouncements | |
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position or financial statements. | |
g. Provision For Income Taxes | |
The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes ("Topic 740"), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. | |
Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. | |
At the adoption date of November 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of December 31, 2014, the Company had no accrued interest or penalties related to uncertain tax positions. The Company files an income tax return in the U.S. federal jurisdiction and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2008. | |
h. 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. | |
i. Fair Value of Financial Instruments | |
ASC 820, “Fair Value Measurements and Disclosures” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: | |
Level 1 - Quoted prices in active markets for identical assets or liabilities; | |
Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and | |
Level 3 - Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing. | |
The Company’s Level 2 financial liabilities consist of the derivative liability of the Company’s warrants issued to investors for cash and to consultants for services. There is no current market for these securities such that the determination of fair value requires significant judgment or estimation. The Company used a multinomial lattice model which incorporates transaction details such as Company stock price, contractual terms, default provisions, maturity, risk free rates, as well as assumptions about future financings, volatility, and holder behavior as of the date of issuance and each balance sheet date through December 31, 2013. | |
j. Advertising | |
The Company follows the policy of charging the costs of advertising to expense as incurred. During the year ended December 31, 2014 and 2013, the Company expensed $28,748 and $35,800, respectively. | |
k. Revenue Recognition | |
The Company recognizes revenue from the sale of new engines for use with compressed natural gas and engine components to convert existing engines to compressed natural gas use. Revenue is recognized when persuasive evidence of an arrangement exists; products have been shipped; pricing has been determined; and collection of the resulting receivable is reasonably assured. | |
l. Concentration of Risks | |
Customers | |
During the year ended December 31, 2014, eight customers accounted for approximately 56% of sales. | |
During the year ended December 31, 2013, eight customers accounted for approximately 55% of sales. | |
Suppliers | |
During the year ended December 31, 2014, four suppliers accounted for 42% of products purchased. | |
During the year ended December 31, 2013, four suppliers accounted for 55% of products purchased. | |
m. 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 will recognize the impairment immediately. No impairment expense was recognized as of December 31, 2014. | |
n. Research and Development | |
The Company expenses the costs of researching and developing its products during the period incurred. During the years ended December 31, 2014 and 2013, the Company incurred research and development expenses of $600,091 and $292,228, respectively. | |
o. Liquidity | |
Historically, the Company has incurred net losses and negative cash flows from operations. As of December 31, 2014, the Company had an accumulated deficit of $16,842,305 and total stockholders’ equity of $2,569,108. At December 31, 2014, the Company had current assets of $3,000,693 including cash of $498,782, and current liabilities of $535,925, resulting in working capital of $2,464,768. For 2014, the Company reported a net loss of $1,828,827 and net cash used by operating activities of $1,546,195. Management believes that based on its fiscal year 2015 operating plan, including cost control measures and the projected sales for 2015, 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. If the Company is unable to obtain profitable operations and positive operating cash flows, it may require additional funding or be forced to scale back its development plans or to significantly reduce or terminate operations. | |
p. Stock- Based Compensation | |
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. | |
q. Held to Maturity Investments | |
During the three months ended June 30, 2012, the Company purchased various corporate bonds. The Company intends to hold the bonds to maturity. Accordingly, the Company has recorded and is amortizing the premium on the bonds over the remaining life. During the year ended December 31, 2014, the Company received proceeds of $900,000 from bonds that matured during the period. During the year ended December 31, 2014 and 2013 the Company had correlating amortization expense of $17,245 and $34,424, respectively. |
Note_3_Inventory
Note 3 - Inventory | 12 Months Ended | ||
Dec. 31, 2014 | |||
Notes | |||
Note 3 - Inventory | NOTE 3 - INVENTORY | ||
Inventory is stated at the lower of cost or market. | |||
The Company’s inventory consists of finished goods and raw material and is located in Vista, California at December 31, 2014 and 2013 consisted of the following: | |||
December 31, | December 31, | ||
Location : Vista, CA | 2014 | 2013 | |
Raw materials | $1,122,270 | $1,191,550 | |
Finished goods | 1,403,946 | 1,621,201 | |
In transit | 46,835 | 23,269 | |
Allowance for obsolete inventory | -239,270 | -610,152 | |
Total | $2,333,781 | $2,225,868 | |
The Company has established an allowance for obsolete inventory. Expense for obsolete inventory was $15,822 and $10,426, for the periods ended December 31, 2014 and December 31, 2013, respectively. |
Note_4_Property_and_Equipment
Note 4 - Property and Equipment | 12 Months Ended | ||
Dec. 31, 2014 | |||
Notes | |||
Note 4 - Property and Equipment | NOTE 4 - PROPERTY AND EQUIPMENT | ||
Property and equipment at December, 2014 and 2013 consisted of the following: | |||
December 31, | December 31, | ||
2014 | 2013 | ||
Production equipment | $61,960 | $60,501 | |
Computers/Office equipment | 28,540 | 28,540 | |
Tooling equipment | 12,380 | 12,380 | |
Leasehold Improvements | 42,451 | 42,451 | |
Less: accumulated depreciation | -56,616 | -25,412 | |
Total | $88,715 | $118,460 | |
Depreciation expense for the years ended December 31, 2014 and 2013 was $31,204 and $19,858, respectively. |
Note_5_Intellectual_Property
Note 5 - Intellectual Property | 12 Months Ended | ||
Dec. 31, 2014 | |||
Notes | |||
Note 5 - Intellectual Property | NOTE 5 - INTELLECTUAL PROPERTY | ||
The Company’s patents and trademarks at December 31, 2014 and 2013 were as follows: | |||
December 31, | December 31, | ||
2014 | 2013 | ||
Patents | $42,295 | $42,295 | |
Trademarks | 1,920 | 1,920 | |
Intellectual property and customer list | 474,000 | 474,000 | |
Less: accumulated amortization | -516,870 | -515,343 | |
Total | $1,345 | $2,872 | |
Amortization expense for the years ended December 31, 2014 and 2013 was $1,527 and $2,348, respectively. |
Note_6_Customer_Deposits
Note 6 - Customer Deposits | 12 Months Ended |
Dec. 31, 2014 | |
Notes | |
Note 6 - Customer Deposits | NOTE 6 - CUSTOMER DEPOSITS |
The Company may require a customer deposit from domestic and international customers. As of December 31, 2014 and 2013 the Company had customer deposits of $345,844 and $222,072, respectively. |
Note_7_Commitments
Note 7 - Commitments | 12 Months Ended | ||
Dec. 31, 2014 | |||
Notes | |||
Note 7 - Commitments | NOTE 7 - COMMITMENTS | ||
As of December 31, 2014 and 2013, the Company had outstanding purchase commitments for inventory totaling $227,781 and $91,566, respectively. Of these amounts, the Company had made prepayments of $227,781 as of December 31, 2014 and $34,542 as of December 31, 2013 and had commitments for future cash outlays for inventory totaling $111,772 and $57,024, respectively. | |||
On January 10, 2013, the Company entered into an operating lease for its operating facilities in California. | |||
Future payment obligations under the terms of the operating lease are as follows: | |||
2015 | $148,071 | ||
2016 | 152,515 | ||
2017 | 157,080 | ||
Total | $457,666 | ||
Note_8_Related_Party_Transacti
Note 8 - Related Party Transactions | 12 Months Ended | ||
Dec. 31, 2014 | |||
Notes | |||
Note 8 - Related Party Transactions | NOTE 8 - RELATED PARTY TRANSACTIONS | ||
Accounts Receivable – Related Parties | |||
The Company holds a non-controlling interest in various distributors in exchange for use of the Company’s name and logo. As of December 31, 2014, the Company owned a 15% interest in Omnitek Engineering Thailand Co. Ltd. and a 20% interest in Omnitek Peru S.A.C. As of December 31, 2014 and December 31, 2013, the Company was owed $15,092 and $33,369, respectively, by related parties for the purchase of products and services. Revenue recognized from related parties for the years ended December 31, 2014 and 2013 was $42,153 and $65,917 respectively. | |||
Accounts Payable – Related Parties | |||
For the periods ended December 31, 2014 and 2013 the Company’s independent Directors and related company, Nology Engineering, Inc., were due amounts for goods or services in the amount of $3,600 and $1,475 respectively. | |||
Accrued Management Expenses | |||
During the periods ended December 31, 2014 and December 31, 2013, the Company’s president and vice president were due amounts for services performed for the Company. | |||
As of December 31, 2014 and December 31, 2013 the accrued management fees consisted of the following: | |||
December 31, | December 31, | ||
2014 | 2013 | ||
Amounts due to the president | $78,527 | $133,397 | |
Amounts due to the vice president | 23,569 | 56,069 | |
Total | $102,096 | $189,466 | |
Note_9_Derivative_Liabilty
Note 9 - Derivative Liabilty | 12 Months Ended | ||
Dec. 31, 2014 | |||
Notes | |||
Note 9 - Derivative Liabilty | NOTE 9 – DERIVATIVE LIABILTY | ||
FASB ASC 820 defines fair value, establishes a framework for measuring fair value under U.S. generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under FASB ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, with the first two inputs considered observable and the last input considered unobservable, that may be used to measure fair value as follows: | |||
· | Level one - Quoted market prices in active markets for identical assets or liabilities; | ||
· | Level two - Inputs, other than level one inputs, that are either directly or indirectly observable; and | ||
· | Level three - Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. | ||
Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The Company has one liability measured at fair value on a recurring basis, which consists of a derivative liability on certain warrants (see NOTE 10). As of December 31, 2013 this derivative liability had an estimated fair value of $0. The Company has no assets that are measured at fair value on a recurring basis. | |||
The following table presents information about our derivative liability, which was our only financial instrument measured at fair value on a recurring basis using significant inputs other than level one inputs that are either directly or indirectly observable (Level 2) as of December 31, 2013: | |||
Balance at December 31, 2012 | $4,197,802 | ||
New Derivative Liability | - | ||
Total (gains) losses included in earnings | 1,909,298 | ||
Closing of liability | -6,107,100 | ||
Balance at December 31, 2013 | $- | ||
The fair value of this derivative liability was calculated using the multinomial lattice model. These models are based on future projections of the various potential outcomes. The features in the notes that were analyzed and incorporated into the model included the conversion feature with the reset provisions; redemption provisions; and the default provisions. Assumptions used to calculate the fair value of the derivative liability were as follows: | |||
December 31, 2013 | |||
Expected term in years | 4.27 -5.00 years | ||
Risk-free interest rates | 0.62-0.90% | ||
Volatility | 260-281% | ||
Dividend yield | 0% | ||
In addition to the assumptions above, the Company also takes into consideration whether or not the Company would participate in another round of financing and if that financing is registered or not and what that stock price would be for the financing at that time. The Company adjusted the derivative liability for changes in fair value until the derivative function matured on December 31, 2013. |
Note_10_Stockholders_Equity
Note 10 - Stockholders' Equity | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Notes | ||||||
Note 10 - Stockholders' Equity | NOTE 10 – STOCKHOLDERS’ EQUITY | |||||
Common Stock | ||||||
On October, 11 2014 the Company issued 200,000 shares of its common stock in consideration of the capital contribution of $75,000 upon the exercise of warrants. | ||||||
On July 16, 2014 the Company issued 20,000 shares of its common stock in consideration of the capital contribution of $13,600 upon the exercise of stock options. | ||||||
On November 20, 2013 the Company issued 10,000 shares of its common stock in consideration of the capital contribution of $5,250 upon the exercise of stock options. | ||||||
Options and Warrants | ||||||
During the years ended December 31, 2014 and 2013, the Company granted 115,000 and 175,000 options for services, respectively. During the years ended December 31, 2014 and 2013, respectively, the Company recognized expense of $335,731 and $314,467 related to options that vested during the years, respectively, pursuant to ASC Topic 718. The total remaining amount of compensation expense to be recognized in future periods is $465,420. | ||||||
In April 2007, the Company’s shareholders approved its 2006 Long-Term Incentive Plan (“the 2006 Plan”). Under the 2006 plan, the Company may issue up to 10,000,000 shares of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of December 31, 2014 the remaining 2,590,000 options previously issued under the plan expired. On August 3, 2011 the Board of Directors adopted the Omnitek Engineering Corp. 2011 Long-term Incentive Plan (the “2011 Plan”), under which 1,000,000 shares of Company’s Common Stock were reserved for issuance of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of December 31, 2014 the Company has a total of 790,000 options issued under the plan. | ||||||
A summary of the status of the options and warrants granted at December 31, 2014 and December 31, 2013 and changes during the years then ended is presented below: | ||||||
December 31, | December 31, | |||||
2014 | 2013 | |||||
Weighted-Average | Weighted-Average | |||||
Shares | Exercise Price | Shares | Exercise Price | |||
Outstanding at beginning of year | 6,250,313 | $2.30 | 6,085,313 | $2.29 | ||
Granted | 115,000 | 1.95 | 175,000 | 2.42 | ||
Exercised | -220,000 | 0.4 | -10,000 | 0.53 | ||
Expired or cancelled | -2,630,000 | 0.77 | - | - | ||
Outstanding at end of year | 3,515,313 | 3.56 | 6,250,313 | 2.3 | ||
Exercisable | 3,199,896 | $3.67 | 5,803,230 | $2.28 | ||
A summary of the status of the options and warrants outstanding at December 31, 2014 is presented below: | ||||||
Range of Exercise Prices | Weighted-Average Remaining Contractual Life | |||||
Number Outstanding | Number Exercisable | Weighted-Average Exercise Price | ||||
$1.01-2.00 | 165,000 | 3.76 years | 145,000 | 3.62 | ||
$2.01-3.00 | 630,000 | 4.89 years | 334,583 | 4.76 | ||
$3.01-4.00 | 2,720,313 | 2.27 years | 2,720,313 | 2.27 | ||
$1.01-4.00 | 3,515,313 | 2.81 years | 3,199,896 | $2.59 | ||
Note_11_Income_Taxes
Note 11 - Income Taxes | 12 Months Ended | ||
Dec. 31, 2014 | |||
Notes | |||
Note 11 - Income Taxes | NOTE 11 – INCOME TAXES | ||
The provision (benefit) for income taxes for the year ended December 31, 2014 and 2013 consists of the following: | |||
December 31, | December 31, | ||
2014 | 2013 | ||
Federal | |||
Current | $- | $- | |
Deferred | - | - | |
State | |||
Current | 800 | 800 | |
Deferred | - | - | |
$800 | $800 | ||
Net deferred tax assets consist of the following components as of December 31, 2014 and 2013: | |||
December 31, | December 31, | ||
2014 | 2013 | ||
Deferred tax assets: | |||
Net operating loss carryover | $5,348,732 | $4,370,287 | |
Depreciation | -105,327 | -124,818 | |
Research and development carry forward | 136,465 | 136,465 | |
Related party accruals | 130,538 | 130,538 | |
Inventory reserve | 244,063 | 242,522 | |
Allowance for doubtful accounts | 33,605 | 33,605 | |
Accrued compensation | 51,957 | 17,742 | |
Deferred tax liabilities: | |||
Valuation allowance | -5,840,033 | -4,806,341 | |
Net deferred tax asset | $- | $- | |
The income tax provision differs from the amount of income tax determined by applying the estimated U.S. federal and state income tax rates of 39% to pretax income from continuing operations for the year ended December 31, 2014 and 2013 due to the following: | |||
December 31, | December 31, | ||
2014 | 2013 | ||
Book loss | ($713,243) | ($629,533) | |
Meals and entertainment | 240 | 235 | |
State tax deduction | 312 | - | |
Related party expense | - | - | |
Stock/Options for services | 130,935 | 122,654 | |
Depreciation | 19,491 | -30,364 | |
Accrued compensation | 34,215 | -29,348 | |
Inventory reserve | 1,541 | -6,777 | |
Research and development | - | - | |
Change in valuation allowance | 1,033,692 | - | |
Net operating loss carryover | -506,383 | 573,133 | |
Income Tax Expense | $800 | $- | |
At December 31, 2014, the Company had net operating loss carry forwards of approximately $5,348,732 through 2034. No tax benefit has been reported in the December 31, 2014 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years. |
Note_12_Subsequent_Events
Note 12 - Subsequent Events | 12 Months Ended |
Dec. 31, 2014 | |
Notes | |
Note 12 - Subsequent Events | NOTE 12 - SUBSEQUENT EVENTS |
In accordance with ASC 855-10, the Company’s management reviewed all material events through the date of this report. Included below are those material subsequent events. | |
On January 28, 2015, the company issued 1,500 shares of common stock to three independent Directors, 500 each, in lieu of $500 cash payment for attendance at a Board Meeting. The shares issued were valued at a price of $1.00 per share, representing 100% of the closing price on January 28, 2015. | |
On February 12, 2015, the company received a deposit payment for approximately $137,813 toward the purchase of a natural gas power generator that will be supplied to a customer in Queretaro, Mexico. | |
Note_2_Significant_Accounting_1
Note 2 - Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Policies | |
A. Accounting Methods | a. Accounting Methods |
The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a December 31, year-end. | |
B. Cash and Cash Equivalents | b. Cash and Cash Equivalents |
For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. | |
C. Accounts Receivable | c. 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. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. Allowance for doubtful accounts for the years ended December 31, 2014 and 2013 was $15,000 and $15,000, respectively. Additionally, bad debt expense for the years ended December 31, 2014 and 2013 was $6,489 and $1,196 respectively. | |
D. Basic and Diluted Loss Per Share | d. Basic and Diluted Loss Per Share |
The computation of basic earnings per share of common stock is based on the weighted average number of shares outstanding during the periods presented. The computation of fully diluted earnings per share includes common stock equivalents outstanding at the balance sheet date. The Company had 0 and 2,087,137 stock options and warrants that would have been included in the fully diluted earnings per share as of December 31, 2014 and 2013, respectively. However, the common stock equivalents were not included in the computation of the loss per share computation because they are anti-dilutive. | |
E. Property and Equipment | e. Property and Equipment |
Property and equipment are recorded at cost. Depreciation and amortization are calculated on the straight-line method over the shorter of the lease term or the estimated useful lives of the assets ranging from three to five years. | |
F. Newly Issued Accounting Pronouncements | f. Newly Issued Accounting Pronouncements |
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position or financial statements. | |
G. Provision For Income Taxes | g. Provision For Income Taxes |
The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes ("Topic 740"), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. | |
Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. | |
At the adoption date of November 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of December 31, 2014, the Company had no accrued interest or penalties related to uncertain tax positions. The Company files an income tax return in the U.S. federal jurisdiction and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2008. | |
H. Estimates | h. 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. | |
I. Fair Value of Financial Instruments | i. Fair Value of Financial Instruments |
ASC 820, “Fair Value Measurements and Disclosures” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: | |
Level 1 - Quoted prices in active markets for identical assets or liabilities; | |
Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and | |
Level 3 - Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing. | |
The Company’s Level 2 financial liabilities consist of the derivative liability of the Company’s warrants issued to investors for cash and to consultants for services. There is no current market for these securities such that the determination of fair value requires significant judgment or estimation. The Company used a multinomial lattice model which incorporates transaction details such as Company stock price, contractual terms, default provisions, maturity, risk free rates, as well as assumptions about future financings, volatility, and holder behavior as of the date of issuance and each balance sheet date through December 31, 2013. | |
J. Advertising | j. Advertising |
The Company follows the policy of charging the costs of advertising to expense as incurred. During the year ended December 31, 2014 and 2013, the Company expensed $28,748 and $35,800, respectively. | |
K. Revenue Recognition | k. Revenue Recognition |
The Company recognizes revenue from the sale of new engines for use with compressed natural gas and engine components to convert existing engines to compressed natural gas use. Revenue is recognized when persuasive evidence of an arrangement exists; products have been shipped; pricing has been determined; and collection of the resulting receivable is reasonably assured. | |
L. Concentration of Risks | l. Concentration of Risks |
Customers | |
During the year ended December 31, 2014, eight customers accounted for approximately 56% of sales. | |
During the year ended December 31, 2013, eight customers accounted for approximately 55% of sales. | |
Suppliers | |
During the year ended December 31, 2014, four suppliers accounted for 42% of products purchased. | |
During the year ended December 31, 2013, four suppliers accounted for 55% of products purchased. | |
M. Long - Lived Assets | m. 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 will recognize the impairment immediately. No impairment expense was recognized as of December 31, 2014. | |
N. Research and Development | n. Research and Development |
The Company expenses the costs of researching and developing its products during the period incurred. During the years ended December 31, 2014 and 2013, the Company incurred research and development expenses of $600,091 and $292,228, respectively. | |
O. Liquidity | o. Liquidity |
Historically, the Company has incurred net losses and negative cash flows from operations. As of December 31, 2014, the Company had an accumulated deficit of $16,842,305 and total stockholders’ equity of $2,569,108. At December 31, 2014, the Company had current assets of $3,000,693 including cash of $498,782, and current liabilities of $535,925, resulting in working capital of $2,464,768. For 2014, the Company reported a net loss of $1,828,827 and net cash used by operating activities of $1,546,195. Management believes that based on its fiscal year 2015 operating plan, including cost control measures and the projected sales for 2015, 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. If the Company is unable to obtain profitable operations and positive operating cash flows, it may require additional funding or be forced to scale back its development plans or to significantly reduce or terminate operations. | |
P. Stock- Based Compensation | p. Stock- Based Compensation |
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. | |
Q. Held To Maturity Investments | q. Held to Maturity Investments |
During the three months ended June 30, 2012, the Company purchased various corporate bonds. The Company intends to hold the bonds to maturity. Accordingly, the Company has recorded and is amortizing the premium on the bonds over the remaining life. During the year ended December 31, 2014, the Company received proceeds of $900,000 from bonds that matured during the period. During the year ended December 31, 2014 and 2013 the Company had correlating amortization expense of $17,245 and $34,424, respectively. |
Note_3_Inventory_Schedule_of_I
Note 3 - Inventory: Schedule of Inventory (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Tables/Schedules | |||
Schedule of Inventory | The Company’s inventory consists of finished goods and raw material and is located in Vista, California at December 31, 2014 and 2013 consisted of the following: | ||
December 31, | December 31, | ||
Location : Vista, CA | 2014 | 2013 | |
Raw materials | $1,122,270 | $1,191,550 | |
Finished goods | 1,403,946 | 1,621,201 | |
In transit | 46,835 | 23,269 | |
Allowance for obsolete inventory | -239,270 | -610,152 | |
Total | $2,333,781 | $2,225,868 |
Note_4_Property_and_Equipment_
Note 4 - Property and Equipment: Schedule of Property and Equipment (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Tables/Schedules | |||
Schedule of Property and Equipment | Property and equipment at December, 2014 and 2013 consisted of the following: | ||
December 31, | December 31, | ||
2014 | 2013 | ||
Production equipment | $61,960 | $60,501 | |
Computers/Office equipment | 28,540 | 28,540 | |
Tooling equipment | 12,380 | 12,380 | |
Leasehold Improvements | 42,451 | 42,451 | |
Less: accumulated depreciation | -56,616 | -25,412 | |
Total | $88,715 | $118,460 |
Note_5_Intellectual_Property_S
Note 5 - Intellectual Property: Schedule of Intellectual Property (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Tables/Schedules | |||
Schedule of Intellectual Property | The Company’s patents and trademarks at December 31, 2014 and 2013 were as follows: | ||
December 31, | December 31, | ||
2014 | 2013 | ||
Patents | $42,295 | $42,295 | |
Trademarks | 1,920 | 1,920 | |
Intellectual property and customer list | 474,000 | 474,000 | |
Less: accumulated amortization | -516,870 | -515,343 | |
Total | $1,345 | $2,872 |
Note_7_Commitments_Schedule_of
Note 7 - Commitments: Schedule of Future Minimum Rental Payments for Operating Leases (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Tables/Schedules | |||
Schedule of Future Minimum Rental Payments for Operating Leases | Future payment obligations under the terms of the operating lease are as follows: | ||
2015 | $148,071 | ||
2016 | 152,515 | ||
2017 | 157,080 | ||
Total | $457,666 |
Note_8_Related_Party_Transacti1
Note 8 - Related Party Transactions: Schedule of Related Party Transactions (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Tables/Schedules | |||
Schedule of Related Party Transactions | As of December 31, 2014 and December 31, 2013 the accrued management fees consisted of the following: | ||
December 31, | December 31, | ||
2014 | 2013 | ||
Amounts due to the president | $78,527 | $133,397 | |
Amounts due to the vice president | 23,569 | 56,069 | |
Total | $102,096 | $189,466 |
Note_9_Derivative_Liabilty_Fai
Note 9 - Derivative Liabilty: Fair Value of Derivative Liabilities Measured on Recurring Basis (Tables) | 12 Months Ended | |
Dec. 31, 2014 | ||
Tables/Schedules | ||
Fair Value of Derivative Liabilities Measured on Recurring Basis | The following table presents information about our derivative liability, which was our only financial instrument measured at fair value on a recurring basis using significant inputs other than level one inputs that are either directly or indirectly observable (Level 2) as of December 31, 2013: | |
Balance at December 31, 2012 | $4,197,802 | |
New Derivative Liability | - | |
Total (gains) losses included in earnings | 1,909,298 | |
Closing of liability | -6,107,100 | |
Balance at December 31, 2013 | $- | |
Note_9_Derivative_Liabilty_Fai1
Note 9 - Derivative Liabilty: Fair Value Inputs, Derivative Liability (Tables) | 12 Months Ended | |
Dec. 31, 2014 | ||
Tables/Schedules | ||
Fair Value Inputs, Derivative Liability | The fair value of this derivative liability was calculated using the multinomial lattice model. These models are based on future projections of the various potential outcomes. The features in the notes that were analyzed and incorporated into the model included the conversion feature with the reset provisions; redemption provisions; and the default provisions. Assumptions used to calculate the fair value of the derivative liability were as follows: | |
December 31, 2013 | ||
Expected term in years | 4.27 -5.00 years | |
Risk-free interest rates | 0.62-0.90% | |
Volatility | 260-281% | |
Dividend yield | 0% | |
Note_10_Stockholders_Equity_Sc
Note 10 - Stockholders' Equity: Schedule of Stock Options and Warrants, Activity (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Tables/Schedules | |||||
Schedule of Stock Options and Warrants, Activity | A summary of the status of the options and warrants granted at December 31, 2014 and December 31, 2013 and changes during the years then ended is presented below: | ||||
December 31, | December 31, | ||||
2014 | 2013 | ||||
Weighted-Average | Weighted-Average | ||||
Shares | Exercise Price | Shares | Exercise Price | ||
Outstanding at beginning of year | 6,250,313 | $2.30 | 6,085,313 | $2.29 | |
Granted | 115,000 | 1.95 | 175,000 | 2.42 | |
Exercised | -220,000 | 0.4 | -10,000 | 0.53 | |
Expired or cancelled | -2,630,000 | 0.77 | - | - | |
Outstanding at end of year | 3,515,313 | 3.56 | 6,250,313 | 2.3 | |
Exercisable | 3,199,896 | $3.67 | 5,803,230 | $2.28 | |
Note_10_Stockholders_Equity_Su
Note 10 - Stockholders' Equity: Summary of the Status of the Options and Warrants Outstanding (Tables) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Tables/Schedules | ||||||
Summary of the Status of the Options and Warrants Outstanding | A summary of the status of the options and warrants outstanding at December 31, 2014 is presented below: | |||||
Range of Exercise Prices | Weighted-Average Remaining Contractual Life | |||||
Number Outstanding | Number Exercisable | Weighted-Average Exercise Price | ||||
$1.01-2.00 | 165,000 | 3.76 years | 145,000 | 3.62 | ||
$2.01-3.00 | 630,000 | 4.89 years | 334,583 | 4.76 | ||
$3.01-4.00 | 2,720,313 | 2.27 years | 2,720,313 | 2.27 | ||
$1.01-4.00 | 3,515,313 | 2.81 years | 3,199,896 | $2.59 | ||
Note_11_Income_Taxes_Schedule_
Note 11 - Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Tables/Schedules | |||
Schedule of Components of Income Tax Expense (Benefit) | The provision (benefit) for income taxes for the year ended December 31, 2014 and 2013 consists of the following: | ||
December 31, | December 31, | ||
2014 | 2013 | ||
Federal | |||
Current | $- | $- | |
Deferred | - | - | |
State | |||
Current | 800 | 800 | |
Deferred | - | - | |
$800 | $800 | ||
Note_11_Income_Taxes_Schedule_1
Note 11 - Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Tables/Schedules | |||
Schedule of Deferred Tax Assets and Liabilities | Net deferred tax assets consist of the following components as of December 31, 2014 and 2013: | ||
December 31, | December 31, | ||
2014 | 2013 | ||
Deferred tax assets: | |||
Net operating loss carryover | $5,348,732 | $4,370,287 | |
Depreciation | -105,327 | -124,818 | |
Research and development carry forward | 136,465 | 136,465 | |
Related party accruals | 130,538 | 130,538 | |
Inventory reserve | 244,063 | 242,522 | |
Allowance for doubtful accounts | 33,605 | 33,605 | |
Accrued compensation | 51,957 | 17,742 | |
Deferred tax liabilities: | |||
Valuation allowance | -5,840,033 | -4,806,341 | |
Net deferred tax asset | $- | $- | |
Note_11_Income_Taxes_Schedule_2
Note 11 - Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Tables/Schedules | |||
Schedule of Effective Income Tax Rate Reconciliation | |||
December 31, | December 31, | ||
2014 | 2013 | ||
Book loss | ($713,243) | ($629,533) | |
Meals and entertainment | 240 | 235 | |
State tax deduction | 312 | - | |
Related party expense | - | - | |
Stock/Options for services | 130,935 | 122,654 | |
Depreciation | 19,491 | -30,364 | |
Accrued compensation | 34,215 | -29,348 | |
Inventory reserve | 1,541 | -6,777 | |
Research and development | - | - | |
Change in valuation allowance | 1,033,692 | - | |
Net operating loss carryover | -506,383 | 573,133 | |
Income Tax Expense | $800 | $- |
Note_1_Organization_and_Busine1
Note 1- Organization and Business Activity (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Details | |
Entity Incorporation, Date of Incorporation | 9-Oct-01 |
Trading Symbol | OMTK |
Note_2_Significant_Accounting_2
Note 2 - Significant Accounting Policies: C. Accounts Receivable (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Allowance For Doubtful Accounts | $15,000 | $15,000 |
Provision for Doubtful Accounts | $6,489 | $1,196 |
Note_2_Significant_Accounting_3
Note 2 - Significant Accounting Policies: D. Basic and Diluted Loss Per Share (Details) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 2,087,137 |
Note_2_Significant_Accounting_4
Note 2 - Significant Accounting Policies: E. Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Minimum | |
Property, Plant and Equipment, Useful Life | 3 years |
Maximum | |
Property, Plant and Equipment, Useful Life | 5 years |
Note_2_Significant_Accounting_5
Note 2 - Significant Accounting Policies: J. Advertising (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Advertising Expense | $28,748 | $35,800 |
Note_2_Significant_Accounting_6
Note 2 - Significant Accounting Policies: L. Concentration of Risks (Details) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Customer Concentration Risk | ||
Concentration Risk, Customer | eight customers | eight customers |
Concentration Risk, Percentage | 56.00% | 55.00% |
Supplier Concentration Risk | ||
Concentration Risk, Percentage | 42.00% | 55.00% |
Concentration Risk, Supplier | four suppliers | four suppliers |
Note_2_Significant_Accounting_7
Note 2 - Significant Accounting Policies: M. Long - Lived Assets (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Details | |
Asset Impairment Charges | $0 |
Note_2_Significant_Accounting_8
Note 2 - Significant Accounting Policies: N. Research and Development (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Research and development expense | $600,091 | $292,228 |
Note_2_Significant_Accounting_9
Note 2 - Significant Accounting Policies: O. Liquidity (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Details | |||
Accumulated deficit | ($16,842,305) | ($15,013,478) | |
Total Stockholders' Equity | 2,569,108 | 3,973,604 | 1,070,273 |
Total Current Assets | 3,000,693 | 4,357,029 | |
Cash | 498,782 | 1,057,836 | 3,192,761 |
Total Current Liabilities | 535,925 | 504,757 | |
Working Capital | 2,464,768 | ||
Net loss | -1,828,827 | -3,523,486 | |
Net Cash Used in Operating Activities | ($1,546,195) | ($2,266,417) |
Recovered_Sheet1
Note 2 - Significant Accounting Policies: Q. Held To Maturity Investments (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Proceeds from Maturity of Held-to-Maturity Securities | $900,000 | |
Amortization of premium on investments | $17,245 | $34,424 |
Note_3_Inventory_Schedule_of_I1
Note 3 - Inventory: Schedule of Inventory (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Details | ||
Raw materials | $1,122,270 | $1,191,550 |
Finished goods | 1,403,946 | 1,621,201 |
In transit | 46,835 | 23,269 |
Allowance for obsolete inventory | -239,270 | -610,152 |
Total | $2,333,781 | $2,225,868 |
Note_3_Inventory_Details
Note 3 - Inventory (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Expense for Obsolete Inventory | $15,822 | $10,426 |
Note_4_Property_and_Equipment_1
Note 4 - Property and Equipment: Schedule of Property and Equipment (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Less: accumulated depreciation | ($56,616) | ($25,412) |
Total | 88,715 | 118,460 |
Production Equipment | ||
Property, Plant and Equipment, Gross | 61,960 | 60,501 |
Computer Equipment | ||
Property, Plant and Equipment, Gross | 28,540 | 28,540 |
Tools, Dies and Molds | ||
Property, Plant and Equipment, Gross | 12,380 | 12,380 |
Leasehold Improvements | ||
Property, Plant and Equipment, Gross | $42,451 | $42,451 |
Note_4_Property_and_Equipment_2
Note 4 - Property and Equipment (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Depreciation expense | $31,204 | $19,858 |
Note_5_Intellectual_Property_S1
Note 5 - Intellectual Property: Schedule of Intellectual Property (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Details | ||
Patents | $42,295 | $42,295 |
Trademarks | 1,920 | 1,920 |
Intellectual property and customer list | 474,000 | 474,000 |
Less: accumulated amortization | -516,870 | -515,343 |
Total | $1,345 | $2,872 |
Note_5_Intellectual_Property_D
Note 5 - Intellectual Property (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Amortization expense | $1,527 | $2,348 |
Note_6_Customer_Deposits_Detai
Note 6 - Customer Deposits (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Details | ||
Customer deposits | $345,844 | $222,072 |
Note_7_Commitments_Details
Note 7 - Commitments (Details) (Inventories, USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Long-term Purchase Commitment, Amount | $227,781 | $91,566 |
Prepayments | ||
Long-term Purchase Commitment, Amount | 227,781 | 34,542 |
Future Cash Outlays | ||
Long-term Purchase Commitment, Amount | $111,772 | $57,024 |
Note_7_Commitments_Schedule_of1
Note 7 - Commitments: Schedule of Future Minimum Rental Payments for Operating Leases (Details) (USD $) | Dec. 31, 2014 |
Details | |
2015 | $148,071 |
2016 | 152,515 |
2017 | 157,080 |
Total | $457,666 |
Note_8_Related_Party_Transacti2
Note 8 - Related Party Transactions (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Accounts receivable - related parties | $15,092 | $33,369 |
Revenues - related parties | 42,153 | 65,917 |
Accounts payable - related parties | 3,600 | 1,475 |
Nology Engineering, Inc. | ||
Accounts payable - related parties | $3,600 | $1,475 |
Omnitek Engineering Thailand Co. Ltd. | ||
Noncontrolling Interest, Ownership Percentage by Parent | 15.00% | |
Omnitek Peru S.A.C. | ||
Noncontrolling Interest, Ownership Percentage by Parent | 20.00% |
Note_8_Related_Party_Transacti3
Note 8 - Related Party Transactions: Schedule of Related Party Transactions (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Accrued management compensation | $102,096 | $189,466 |
President | ||
Accrued management compensation | 78,527 | 133,397 |
Vice President | ||
Accrued management compensation | $23,569 | $56,069 |
Note_9_Derivative_Liabilty_Fai2
Note 9 - Derivative Liabilty: Fair Value of Derivative Liabilities Measured on Recurring Basis (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Details | ||
Derivative Liability, Current | $0 | $4,197,802 |
New Derivative Liability | 0 | |
Total (gains)losses included in earnings | 1,909,298 | |
Closing of liability | ($6,107,100) |
Note_9_Derivative_Liabilty_Fai3
Note 9 - Derivative Liabilty: Fair Value Inputs, Derivative Liability (Details) | 12 Months Ended |
Dec. 31, 2013 | |
Dividend yield | 0.00% |
Minimum | |
Expected term in years | 4 years 3 months 7 days |
Risk-free interest rates | 0.62% |
Volatility | 260.00% |
Maximum | |
Expected term in years | 5 years |
Risk-free interest rates | 0.90% |
Volatility | 281.00% |
Note_10_Stockholders_Equity_De
Note 10 - Stockholders' Equity (Details) (USD $) | 12 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Apr. 30, 2007 | Aug. 03, 2011 | |
Exercise of warrants and options for cash, Value | $88,600 | $5,250 | |||
Granted | 115,000 | 175,000 | |||
Remaining amount of compensation expense to be recognized in future periods | 465,420 | ||||
Outstanding | 3,515,313 | 6,250,313 | 6,085,313 | ||
Employee Stock Option | |||||
Granted | 115,000 | 175,000 | |||
Allocated Share-based Compensation Expense | 335,731 | 314,467 | |||
Employee Stock Option | 2006 Long Term Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 10,000,000 | ||||
Outstanding | 2,590,000 | ||||
Employee Stock Option | 2011 Long Term Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 1,000,000 | ||||
Outstanding | 790,000 | ||||
Common Stock | |||||
Exercise of warrants and options for cash, Shares | 220,000 | 10,000 | |||
Exercise of warrants and options for cash, Value | 88,600 | 5,250 | |||
Common Stock | Warrant | |||||
Exercise of warrants and options for cash, Shares | 200,000 | ||||
Exercise of warrants and options for cash, Value | 75,000 | ||||
Common Stock | Equity Option | |||||
Exercise of warrants and options for cash, Shares | 20,000 | 10,000 | |||
Exercise of warrants and options for cash, Value | $13,600 | $5,250 |
Note_10_Stockholders_Equity_Sc1
Note 10 - Stockholders' Equity: Schedule of Stock Options and Warrants, Activity (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Outstanding at beginning of year | 6,250,313 | 6,085,313 |
Options, Outstanding, Weighted Average Exercise Price at beginning of year | $2.30 | $2.29 |
Granted | 115,000 | 175,000 |
Granted, Weighted Average Exercise Price | $1.95 | $2.42 |
Exercised, Weighted Average Exercise | $0.40 | $0.53 |
Expired or cancelled | -2,630,000 | |
Expired or cancelled, Weighted Average Exercise Price | $0.77 | |
Outstanding at end of year | 3,515,313 | 6,250,313 |
Options, Outstanding, Weighted Average Exercise Price at end of year | $3.56 | $2.30 |
Exercisable | 3,199,896 | 5,803,230 |
Exercisable, Weighted Average Exercise Price | $3.67 | $2.28 |
Common Stock | ||
Exercise of warrants and options for cash, Shares | 220,000 | 10,000 |
Note_10_Stockholders_Equity_Su1
Note 10 - Stockholders' Equity: Summary of the Status of the Options and Warrants Outstanding (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
$1.01 - 2.00 | |
Number Outstanding | 165,000 |
Weighted-Average Remaining Contractual Life | 3 years 9 months 4 days |
Number Exercisable | 145,000 |
Weighted-Average Exercise Price | $3.62 |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit | $1.01 |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit | $2 |
$2.01 - 3.00 | |
Number Outstanding | 630,000 |
Weighted-Average Remaining Contractual Life | 4 years 10 months 20 days |
Number Exercisable | 334,583 |
Weighted-Average Exercise Price | $4.76 |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit | $2.01 |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit | $3 |
$3.01 - 4.00 | |
Number Outstanding | 2,720,313 |
Weighted-Average Remaining Contractual Life | 2 years 3 months 7 days |
Number Exercisable | 2,720,313 |
Weighted-Average Exercise Price | $2.27 |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit | $3.01 |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit | $4 |
$1.01 - 4.00 | |
Number Outstanding | 3,515,313 |
Weighted-Average Remaining Contractual Life | 2 years 9 months 22 days |
Number Exercisable | 3,199,896 |
Weighted-Average Exercise Price | $2.59 |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit | $1.01 |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit | $4 |
Note_11_Income_Taxes_Schedule_3
Note 11 - Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Federal | ||
Current | ||
Deferred | ||
State | ||
Current | 800 | 800 |
Deferred | ||
Income Tax Expense (Benefit), Total | $800 | $800 |
Note_11_Income_Taxes_Schedule_4
Note 11 - Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred tax assets: | ||
Net operating loss carryover | $5,348,732 | $4,370,287 |
Depreciation | -105,327 | -124,818 |
Research and development carry forward | 136,465 | 136,465 |
Related party accruals | 130,538 | 130,538 |
Inventory reserve | 244,063 | 242,522 |
Allowance for doubtful accounts | 33,605 | 33,605 |
Accrued compensation | 51,957 | 17,742 |
Deferred tax liabilities: | ||
Valuation allowance | -5,840,033 | -4,806,341 |
Net deferred tax asset | $0 | $0 |
Note_11_Income_Taxes_Details
Note 11 - Income Taxes (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Details | |
Estimated US federal and state income tax rates | 39.00% |
Net Operating Loss Carryforwards | $5,348,732 |
Operating Loss Carryforwards, Expiration Date | 31-Dec-34 |
Note_11_Income_Taxes_Schedule_5
Note 11 - Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Details | ||
Book loss | ($713,243) | ($629,533) |
Meals and entertainment | 240 | 235 |
State tax deduction | 312 | 0 |
Related party expense | 0 | 0 |
Stock/Options for services | 130,935 | 122,654 |
Depreciation | 19,491 | -30,364 |
Accrued compensation | 34,215 | -29,348 |
Inventory reserve | 1,541 | -6,777 |
Research and development | 0 | 0 |
Change in valuation allowance | 1,033,692 | 0 |
Net operating loss carryover | -506,383 | 573,133 |
Income Tax Expense | $800 | $0 |
Note_12_Subsequent_Events_Deta
Note 12 - Subsequent Events (Details) (Subsequent Event, USD $) | 0 Months Ended | |
Feb. 12, 2015 | Jan. 28, 2015 | |
Deposits Received from Customers | $137,813 | |
Common Stock | ||
Development Stage Entities, Stock Issued, Shares, Issued for Cash | 1,500 | |
Share Price | $1 | |
Common Stock | Director | ||
Development Stage Entities, Stock Issued, Shares, Issued for Cash | 500 | |
Development Stage Entities, Stock Issued, Value, Issued for Cash | 500 | |
Common Stock | Director 2 | ||
Development Stage Entities, Stock Issued, Shares, Issued for Cash | 500 | |
Development Stage Entities, Stock Issued, Value, Issued for Cash | 500 | |
Common Stock | Director 3 | ||
Development Stage Entities, Stock Issued, Shares, Issued for Cash | 500 | |
Development Stage Entities, Stock Issued, Value, Issued for Cash | $500 |