Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 11, 2018 | |
Details | ||
Registrant Name | OMNITEK ENGINEERING CORP. | |
Registrant CIK | 1,404,804 | |
SEC Form | 10-Q | |
Period End date | Mar. 31, 2018 | |
Fiscal Year End | --12-31 | |
Trading Symbol | omtk | |
Tax Identification Number (TIN) | 330,984,450 | |
Number of common stock shares outstanding | 20,281,082 | |
Filer Category | Smaller Reporting Company | |
Current with reporting | Yes | |
Voluntary filer | No | |
Well-known Seasoned Issuer | No | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Contained File Information, File Number | 000-53955 | |
Entity Incorporation, State Country Name | California | |
Entity Address, Address Line One | 1333 Keystone Way, #101 | |
Entity Address, City or Town | Vista | |
Entity Address, State or Province | California | |
Entity Address, Postal Zip Code | 92,081 | |
City Area Code | 760 | |
Local Phone Number | 591-0089 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash | $ 11,522 | $ 23,279 |
Accounts receivable, net | 27,116 | 7,984 |
Accounts receivable - related parties | 7,752 | 3,440 |
Inventory, net | 1,512,779 | 1,554,656 |
Prepaid expense | 20,250 | 0 |
Deposits | 22,012 | 17,385 |
Total Current Assets | 1,601,431 | 1,606,744 |
FIXED ASSETS, net | 3,272 | 7,253 |
OTHER ASSETS | ||
Other noncurrent assets | 14,280 | 14,280 |
Total Other Assets | 14,280 | 14,280 |
TOTAL ASSETS | 1,618,983 | 1,628,277 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 361,728 | 358,032 |
Accrued management compensation | 432,084 | 406,841 |
Accounts payable - related parties | 125,836 | 114,321 |
Notes payable - related parties | 15,000 | 15,000 |
Convertible notes payable - related parties | 15,000 | 15,000 |
Contract liabilities | 30,000 | 30,000 |
Customer deposits | 238,781 | 212,410 |
Total Current Liabilities | 1,218,429 | 1,151,604 |
Total Liabilities | 1,218,429 | 1,151,604 |
STOCKHOLDERS' EQUITY | ||
Common stock, 125,000,000 shares authorized; no par value; 20,281,082 shares issued and outstanding | 8,411,411 | 8,411,411 |
Additional paid-in capital | 11,874,334 | 11,852,363 |
Accumulated deficit | (19,885,191) | (19,787,101) |
Total Stockholders' Equity | 400,554 | 476,673 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 1,618,983 | $ 1,628,277 |
Condensed Balance Sheets - Pare
Condensed Balance Sheets - Parenthetical - shares | Mar. 31, 2018 | Dec. 31, 2017 |
Details | ||
Common Stock, Shares Authorized | 125,000,000 | 125,000,000 |
Common Stock, Shares, Issued | 20,281,082 | 20,281,082 |
Common Stock, Shares, Outstanding | 20,281,082 | 20,281,082 |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Details | ||
REVENUES | $ 359,530 | $ 289,424 |
REVENUES, related parties | 0 | 2,230 |
Total Revenues | 359,530 | 291,654 |
COST OF GOODS SOLD | 204,492 | 152,613 |
GROSS MARGIN | 155,038 | 139,041 |
OPERATING EXPENSES | ||
General and administrative | 220,530 | 300,122 |
Research and development | 26,802 | 39,884 |
Depreciation and amortization | 3,981 | 6,224 |
Total Operating Expenses | 251,313 | 346,230 |
LOSS FROM OPERATIONS | (96,275) | (207,189) |
OTHER INCOME (EXPENSE) | ||
Interest expense | (2,765) | (1,852) |
Other income | 950 | 0 |
Total Other Income (Expense) | (1,815) | (1,852) |
LOSS BEFORE INCOME TAXES | (98,090) | (209,041) |
INCOME TAX EXPENSE | 0 | 0 |
NET LOSS | $ (98,090) | $ (209,041) |
BASIC AND DILUTED LOSS PER SHARE | $ 0 | $ (0.01) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED | 20,281,082 | 20,281,082 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
OPERATING ACTIVITIES | ||
Net loss | $ (98,090) | $ (209,041) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Amortization and depreciation expense | 3,981 | 6,224 |
Obsolete inventory adjustment | 25,000 | 0 |
Options and warrants granted | 21,971 | 69,533 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (19,132) | (9,979) |
Accounts receivable-related parties | (4,312) | (3,277) |
Deposits | (4,627) | (2,301) |
Prepaid Expense | (20,250) | 5,324 |
Contract liabilities | 0 | 14,516 |
Inventory | 16,876 | 20,020 |
Accounts payable and accrued expenses | 3,696 | (15,340) |
Customer deposits | 26,371 | (389) |
Accounts payable-related parties | 11,515 | 24,364 |
Accrued management compensation | 25,244 | 102,813 |
Net Cash Provided by (Used in) Operating Activities | (11,757) | 2,467 |
INVESTING ACTIVITIES | ||
Net cash from Investing Activities | 0 | 0 |
FINANCING ACTIVITIES | ||
Net cash from Financing Activities | 0 | 0 |
NET CHANGE IN CASH | (11,757) | 2,467 |
CASH AT BEGINNING OF YEAR | 23,279 | 17,782 |
CASH AT END OF PERIOD | 11,522 | 20,249 |
CASH PAID FOR: | ||
Interest | 2,284 | 1,852 |
NON CASH INVESTING AND FINANCING ACTIVITIES | ||
Options issued for accrued salary | $ 0 | $ 100,000 |
Note 1 - Condensed Financial St
Note 1 - Condensed Financial Statements | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Note 1 - Condensed Financial Statements | NOTE 1 - CONDENSED FINANCIAL STATEMENTS The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2018 and for all periods presented herein, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2017 audited financial statements. The results of operations for the periods ended March 31, 2018 and 2017 are not necessarily indicative of the operating results for the full years. |
Note 2 - Significant Accounting
Note 2 - Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Note 2 - Significant Accounting Policies | NOTE 2 SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. New Revenue Recognition Standard In May 2014, the FASB issued ASU 2014-09, which provides a single conprehensive accounting standard for revenue recognition for contracts with customers and supersedes current industry-specific guidance, including ASC 605-35. The new standard requires companies to recognize revenue when control of promised goods or services is transferred to customers at an amount that reflects the consideration to which the company expects to be entitled in exchange for the goods or services. The new model requires companies to identify contractural performance obligations and determine whether revenue should be recognized at a point in time or over time for each of these obligations. The new standard also significantly expands disclosure requirements regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We adopted the new standard on January 1, 2018 (Adoption Date), using the modified retrospective method, which provides for a cumulative effect adjustment to beginning 2018 retained earnings for those uncompleted contracts impacted by the adoption of the new standard. The changes to the method and/or timing of our revenue recognition associated with our adoption of the new standard primarily relate to long-term engine development contracts. We will continue to recognize these contracts over time utilizing the cost to cost measure of progress under the new standard, consistent with our historical accouting treatment for these contracts. Due to the low level of backlog at December 31, 2017 for our contracts impacted by the new standard, no adjustment to beginning 2018 retained earnings resulted from the adoption of the new standard. See Note 3 for additional discussion of our revenue recognition accounting policies and expanded disclosures required by the new standard. NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Inventory Inventory is stated at the lower of cost or market. The Companys inventory consists of finished goods and raw material and is located in Vista, California, consisting of the following: Location : Vista, CA March 31, 2018 December 31, 2017 Raw materials $ 980,490 $ 990,945 Finished goods 1,179,466 1,185,888 Work in progress 26,432 26,432 Allowance for obsolete inventory (673,609) (648,609) Total $ 1,512,779 $ 1,554,656 The Company has established an allowance for obsolete inventory. Expense for obsolete inventory was $25,000 and $305,458, for the periods ended March 31, 2018 and December 31, 2017, respectively. Property and Equipment Property and equipment at March 31, 2018 and December 31, 2017 consisted of the following: March 31, December 31, 2018 2017 Production equipment $ 61,960 $ 61,960 Computers/Office equipment 28,540 28,540 Tooling equipment 12,380 12,380 Leasehold Improvements 42,451 42,451 Less: accumulated depreciation (142,059) (138,078) Total $ 3,272 $ 7,253 Depreciation expense for the periods ended March 31, 2018 and March 31, 2017 was $3,981 and $6,224, respectively. Basic and Diluted Loss per Share The computation of basic earnings per share of common stock is based on the weighted average number of shares outstanding during the periods presented. The computation of fully diluted earnings per share includes common stock equivalents outstanding at the balance sheet date. The Company had 2,690,973 and 2,379,723 stock options and warrants that would have been included in the fully diluted earnings per share as of March 31, 2018 and December 31, 2017, respectively. However, the common stock equivalents were not included in the computation of the loss per share computation because they are anti dilutive. NOTE 2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Taxes The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes ("Topic 740"), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of March 31, 2018 and December 31, 2017 the Company had no accrued interest or penalties related to uncertain tax positions. The Company files an income tax return in the U.S. federal jurisdiction and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2012. Liquidity and Going Concern Historically, the Company has incurred net losses and negative cash flows from operations. As of March 31, 2018, the Company had an accumulated deficit of $19,885,191 and total stockholders equity of $400,554. At March 31, 2018, the Company had current assets of $1,601,431 including cash of $11,522, and current liabilities of $1,218,429, resulting in working capital of $383,002. For 2017, the Company reported a net loss of $1,036,297 and net cash used by operating activities of $24,503. Management believes that based on its operating plan, the projected sales for 2018, combined with funds available from its working capital will be sufficient to fund operations for the next twelve months. However, there can be no assurance that operations and operating cash flows will continue at the current levels or improve in the near future. Whether, and when, the Company can attain profitability and positive cash flows from operations is uncertain. The Company is also uncertain whether it can raise additional capital. These uncertainties cast substantial doubt upon the Companys ability to continue as a going concern. Our financial statements have been prepared on a going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of operations. The financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts or the amounts or classification of liabilities should we be unable to continue as a going concern. |
Note 3 - Contract Assets and Li
Note 3 - Contract Assets and Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Note 3 - Contract Assets and Liabilities | NOTE 3 CONTRACT ASSETS AND LIABILITIES Under ASC Topic 606, performanace obligations are a critical step in revenue recognition. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recoginzed as revenue when, or as, the performation obligation is satisfied. We measure transfer of control of the performance obligation utilizing the cost-to-cost measure of progress, with cost of revenue including direct costs, such as materials and labor. Under the cost-to-cost approach, the use of estimated costs to complete each performance obligation is a significant variable in the process of determining recognized revenue and a signficant factor in the accounting for such performance obligations. The timing of when we bill our customers is generally dependent upon advance billings terms, milestone billings based on completion of certain phases of the work or when services are provided or products are shipped. Projects with NOTE 3 CONTRACT ASSETS AND LIABILITIES (Continued) performance obligations recognized over time that have costs and estimated earnings recognized to date in excess of of cumulative billings, are reported on our Balance Sheets as contract assets. Projects with performance obligations recognized over time that have cumulative billings in excess of costs and estimated earnings recognized to date, are reported on our Balance Sheets as contract liabilities. The two tables below set forth thet costs incurred and earnings accrued on uncompleted contracts compared with the billings on those contracts through March 31, 2018 and December 31, 2017 and reconcile the net excess billings to the amounts included in the balance sheets at those dates. March 31, December 31, 2018 2017 Cost incurred on uncompleted contracts $ - $ - Estimated earnings - - - - Billings on uncompleted contracts (30,000) (30,000) Contract liabilities (30,000) (30,000) Included in the accompanying balance sheets under the following captions: March 31, December 31, 2018 2017 Contract assets $ - $ - Contract liabilities (30,000) (30,000) Net contract liabilities $ (30,000) $ (30,000) |
Note 4 - Related Party Transact
Note 4 - Related Party Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Note 4 - Related Party Transactions | NOTE 4 - RELATED PARTY TRANSACTIONS Accounts Receivable Related Parties The Company holds a non-controlling interest in various distributors in exchange for use of the Companys name and logo. As of March 31, 2018, the Company owned a 15% interest in Omnitek Engineering Thailand Co. Ltd. and a 20% interest in Omnitek Peru S.A.C. As of March 31, 2018 and December 31, 2017, the Company was owed $7,752 and $3,440 , respectively, by related parties for the purchase of products and services. Accounts Payable Related Parties The Company regularly incurs expenses that are paid to related parties and purchases goods and services from related parties. As of March 31, 2018 and December 31, 2017, the Company owed related parties for such expenses, goods and services in the amounts of $125,836 and $114,321 , respectively. NOTE 4 - RELATED PARTY TRANSACTIONS (Continued) Accrued Management Expenses For the periods ended March 31, 2018 and December 31, 2017, the Companys president and chief financial officer were due amounts for services performed for the Company. As of March 31, 2018 and December 31, 2017 the accrued management fees consisted of the following: March 31, December 31, 2018 2017 Amounts due to the president $ 343,912 $ 321,796 Amounts due to the chief financial officer 88,172 85,045 Total $ 432,084 $ 406,841 |
Note 5 - Note Payable - Related
Note 5 - Note Payable - Related Party Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Note 5 - Note Payable - Related Party Transactions | NOTE 5 NOTE PAYABLE - RELATED PARTY TRANSACTIONS Convertible Notes Related Party On November 7, 2017 the Company issued a convertible promissory note for $15,000 to a related party. The note has an annual interest rate of 8% and is unsecured. The principal amount of the note and all accrued interest is due and payable on or before July 7, 2018. The note has a conversion feature, wherein, at the lenders option, at the maturity date the lender may convert the remaining unpaid principal balance and any unpaid accrued interest into shares of the Companys common stock. The number of shares of common stock to be issued upon such conversion shall be equal to the quotient obtained by dividing (i) the remaining unpaid principal balance and any unpaid accrued interest of this note by (ii) 90% of the average closing price of the common stock of the Company, for five trading days before the maturity date. Due to this provision, the Company considered whether the imbedded conversion option qualifies for derivative accounting under ASC 815-15 Derivatives and Hedging. As the note isnt convertible until maturity, no derivative liability was recognized as of March 31, 2018. As of March 31, 2018 and December 31, 2017 Convertible Notes Related Party consisted of the following: March 31, December 31, 2018 2017 Convertible note, related party $ 15,000 $ 15,000 Total $ 15,000 $ 15,000 Note Payable Related Party On January 19, 2017 the Company issued a promissory note for $15,000 to a related party. The note has an annual interest rate of 5% and is unsecured. The principal amount of the note and all accrued interest is due and payable on or before January 19, 2019. As of March 31, 2018 and December 31, 2017 Note Payable Related Party consisted of the following: March 31, December 31, 2018 2017 Note payable, related party $ 15,000 $ 15,000 Total $ 15,000 $ 15,000 |
Note 6 - Stock Options and Warr
Note 6 - Stock Options and Warrants | 3 Months Ended |
Mar. 31, 2018 | |
Notes | |
Note 6 - Stock Options and Warrants | NOTE 6 - STOCK OPTIONS AND WARRANTS During the three months ended March 31, 2018 and 2017, the Company granted 590,000 and 350,000 options for services, respectively. During the three months ended March 31, 2018 and 2017, the Company recognized expense of $21,971 and $69,533, respectively, for options and warrants that vested during the periods pursuant to ASC Topic 718. As of March 31, 2018 total remaining amount of compensation expense to be recognized in future periods is $40,409. During the three months ended March 31, 2018 and 2017, the Company granted -0- and 555,556 options to the CEO for accrued compensation, respectively. As of March 31, 2018 and 2017, the total instrinsic value of ouststanding stock options was $-0- and $-0-, respectively. On August 3, 2011 the Board of Directors adopted the Omnitek Engineering Corp. 2011 Long-term Incentive Plan (the 2011 Plan), under which 1,000,000 shares of Companys Common Stock were reserved for issuance of both Incentive Stock Options to employees only and and Non-Qualified Stock Options to employees and consultants at its discretion. As of March 31, 2018 the Company has a total of 815,000 options issued under the 2011 Plan. On September 11, 2015 the Board of Directors adopted the Omnitek Engineering Corp. 2015 Long Term Incentive Plan (the 2015 Plan), under which 2,500,000 shares of the Companys Common Stock were reserved for issuance of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of March 31, 2018 the Company has a total of 2,165,556 options issued under the 2015 Plan. In October 2017, the Companys shareholders approved its 2017 Long-Term Incentive Plan (the 2017 Plan). Under the 2017 plan, the Company may issue up to 5,000,000 shares of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of March 31, 2018, the Company has a total of 300,000 options issued under the 2017 Plan. During the three months ended March 31, 2018 and 2017 the Company issued -0- and -0- warrants, respectively. The Company recognizes compensation expense for stock-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value. The Company estimates the fair value of stock options using a Black-Scholes option pricing model which requires management to make estimates for certain assumptions regarding risk-free interest rate, expected life of options, expected volatility of stock and expected dividend yield of stock. When determining expected volatility, the Company considers the historical performance of the Companys 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 Companys evaluation of option holders exercise patterns and represents the period of time that options are expected to remain unexercised. The Company uses historical data to estimate the timing and amount of forfeitures. The following table presents the assumptions used to estimate the fair values of the stock options granted: March 31, 2018 March 31, 2017 Expected volatility 150 % 105 % Expected dividends 0 % 0 % Expected term 7 Years 7 Years Risk-free interest rate 2.46 % 2.22 % NOTE 6 - STOCK OPTIONS AND WARRANTS (continued) A summary of the status of the options and warrants granted at March 31, 2018 and December 31, 2017 and changes during the periods then ended is presented below: March 31, December 31, 2018 2017 Weighted-Average Weighted-Average Shares Exercise Price Shares Exercise Price Outstanding at beginning of year 2,600,556 $ 0.82 4,510,313 $ 2.81 Granted 590,000 0.07 905,556 0.18 Exercised - - - - Expired or cancelled - - (2,815,313) 3.81 Outstanding at end of period 3,190,556 0.68 2,600,556 0.82 Exercisable 2,690,973 $ 0.75 2,354,723 $ 0.84 A summary of the status of the options and warrants outstanding at March 31, 2018 is presented below: Range of Exercise Prices Number Outstanding Weighted-Average Remaining Contractual Life Number Exercisable Weighted-Average Exercise Price $0.01-0.99 2,540,556 5.55 years 2,040,973 0.24 $1.00-1.99 125,000 1.30 years 125,000 1.18 $2.00-2.99 525,000 1.51 years 525,000 2.52 $0.01-3.99 3,190,556 4.72 years 2,690,973 $0.73 |
Note 2 - Significant Accounti12
Note 2 - Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Policies | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
New Revenue Recognition Standard | New Revenue Recognition Standard In May 2014, the FASB issued ASU 2014-09, which provides a single conprehensive accounting standard for revenue recognition for contracts with customers and supersedes current industry-specific guidance, including ASC 605-35. The new standard requires companies to recognize revenue when control of promised goods or services is transferred to customers at an amount that reflects the consideration to which the company expects to be entitled in exchange for the goods or services. The new model requires companies to identify contractural performance obligations and determine whether revenue should be recognized at a point in time or over time for each of these obligations. The new standard also significantly expands disclosure requirements regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We adopted the new standard on January 1, 2018 (Adoption Date), using the modified retrospective method, which provides for a cumulative effect adjustment to beginning 2018 retained earnings for those uncompleted contracts impacted by the adoption of the new standard. The changes to the method and/or timing of our revenue recognition associated with our adoption of the new standard primarily relate to long-term engine development contracts. We will continue to recognize these contracts over time utilizing the cost to cost measure of progress under the new standard, consistent with our historical accouting treatment for these contracts. Due to the low level of backlog at December 31, 2017 for our contracts impacted by the new standard, no adjustment to beginning 2018 retained earnings resulted from the adoption of the new standard. See Note 3 for additional discussion of our revenue recognition accounting policies and expanded disclosures required by the new standard. |
Inventory | Inventory Inventory is stated at the lower of cost or market. The Companys inventory consists of finished goods and raw material and is located in Vista, California, consisting of the following: Location : Vista, CA March 31, 2018 December 31, 2017 Raw materials $ 980,490 $ 990,945 Finished goods 1,179,466 1,185,888 Work in progress 26,432 26,432 Allowance for obsolete inventory (673,609) (648,609) Total $ 1,512,779 $ 1,554,656 The Company has established an allowance for obsolete inventory. Expense for obsolete inventory was $25,000 and $305,458, for the periods ended March 31, 2018 and December 31, 2017, respectively. |
Property and Equipment | Property and Equipment Property and equipment at March 31, 2018 and December 31, 2017 consisted of the following: March 31, December 31, 2018 2017 Production equipment $ 61,960 $ 61,960 Computers/Office equipment 28,540 28,540 Tooling equipment 12,380 12,380 Leasehold Improvements 42,451 42,451 Less: accumulated depreciation (142,059) (138,078) Total $ 3,272 $ 7,253 Depreciation expense for the periods ended March 31, 2018 and March 31, 2017 was $3,981 and $6,224, respectively. |
Basic and Diluted Loss Per Share | Basic and Diluted Loss per Share The computation of basic earnings per share of common stock is based on the weighted average number of shares outstanding during the periods presented. The computation of fully diluted earnings per share includes common stock equivalents outstanding at the balance sheet date. The Company had 2,690,973 and 2,379,723 stock options and warrants that would have been included in the fully diluted earnings per share as of March 31, 2018 and December 31, 2017, respectively. However, the common stock equivalents were not included in the computation of the loss per share computation because they are anti dilutive. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes ("Topic 740"), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of March 31, 2018 and December 31, 2017 the Company had no accrued interest or penalties related to uncertain tax positions. The Company files an income tax return in the U.S. federal jurisdiction and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2012. |
Going Concern | Liquidity and Going Concern Historically, the Company has incurred net losses and negative cash flows from operations. As of March 31, 2018, the Company had an accumulated deficit of $19,885,191 and total stockholders equity of $400,554. At March 31, 2018, the Company had current assets of $1,601,431 including cash of $11,522, and current liabilities of $1,218,429, resulting in working capital of $383,002. For 2017, the Company reported a net loss of $1,036,297 and net cash used by operating activities of $24,503. Management believes that based on its operating plan, the projected sales for 2018, combined with funds available from its working capital will be sufficient to fund operations for the next twelve months. However, there can be no assurance that operations and operating cash flows will continue at the current levels or improve in the near future. Whether, and when, the Company can attain profitability and positive cash flows from operations is uncertain. The Company is also uncertain whether it can raise additional capital. These uncertainties cast substantial doubt upon the Companys ability to continue as a going concern. Our financial statements have been prepared on a going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of operations. The financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts or the amounts or classification of liabilities should we be unable to continue as a going concern. |
Note 2 - Significant Accounti13
Note 2 - Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of Inventory | Inventory is stated at the lower of cost or market. The Companys inventory consists of finished goods and raw material and is located in Vista, California, consisting of the following: Location : Vista, CA March 31, 2018 December 31, 2017 Raw materials $ 980,490 $ 990,945 Finished goods 1,179,466 1,185,888 Work in progress 26,432 26,432 Allowance for obsolete inventory (673,609) (648,609) Total $ 1,512,779 $ 1,554,656 |
Schedule of Property and Equipment | Property and equipment at March 31, 2018 and December 31, 2017 consisted of the following: March 31, December 31, 2018 2017 Production equipment $ 61,960 $ 61,960 Computers/Office equipment 28,540 28,540 Tooling equipment 12,380 12,380 Leasehold Improvements 42,451 42,451 Less: accumulated depreciation (142,059) (138,078) Total $ 3,272 $ 7,253 |
Note 3 - Contract Assets and 14
Note 3 - Contract Assets and Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of Costs in Excess of Billings | March 31, December 31, 2018 2017 Cost incurred on uncompleted contracts $ - $ - Estimated earnings - - - - Billings on uncompleted contracts (30,000) (30,000) Contract liabilities (30,000) (30,000) |
Contract, Asset and Liability | Included in the accompanying balance sheets under the following captions: March 31, December 31, 2018 2017 Contract assets $ - $ - Contract liabilities (30,000) (30,000) Net contract liabilities $ (30,000) $ (30,000) |
Note 4 - Related Party Transa15
Note 4 - Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of Accrued Management Fees | As of March 31, 2018 and December 31, 2017 the accrued management fees consisted of the following: March 31, December 31, 2018 2017 Amounts due to the president $ 343,912 $ 321,796 Amounts due to the chief financial officer 88,172 85,045 Total $ 432,084 $ 406,841 |
Note 5 - Note Payable - Relat16
Note 5 - Note Payable - Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of Convertible Notes, Related Party | As of March 31, 2018 and December 31, 2017 Convertible Notes Related Party consisted of the following: March 31, December 31, 2018 2017 Convertible note, related party $ 15,000 $ 15,000 Total $ 15,000 $ 15,000 |
Schedule of Note Payable Related Party | As of March 31, 2018 and December 31, 2017 Note Payable Related Party consisted of the following: March 31, December 31, 2018 2017 Note payable, related party $ 15,000 $ 15,000 Total $ 15,000 $ 15,000 |
Note 6 - Stock Options and Wa17
Note 6 - Stock Options and Warrants (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Tables/Schedules | |
Schedule of Assumptions Used to Estimate the Fair Values of Stock Options Granted | The following table presents the assumptions used to estimate the fair values of the stock options granted: March 31, 2018 March 31, 2017 Expected volatility 150 % 105 % Expected dividends 0 % 0 % Expected term 7 Years 7 Years Risk-free interest rate 2.46 % 2.22 % |
Schedule of Stock Options and Warrants, Activity | A summary of the status of the options and warrants granted at March 31, 2018 and December 31, 2017 and changes during the periods then ended is presented below: March 31, December 31, 2018 2017 Weighted-Average Weighted-Average Shares Exercise Price Shares Exercise Price Outstanding at beginning of year 2,600,556 $ 0.82 4,510,313 $ 2.81 Granted 590,000 0.07 905,556 0.18 Exercised - - - - Expired or cancelled - - (2,815,313) 3.81 Outstanding at end of period 3,190,556 0.68 2,600,556 0.82 Exercisable 2,690,973 $ 0.75 2,354,723 $ 0.84 |
Summary of the Status of the Options and Warrants Outstanding | A summary of the status of the options and warrants outstanding at March 31, 2018 is presented below: Range of Exercise Prices Number Outstanding Weighted-Average Remaining Contractual Life Number Exercisable Weighted-Average Exercise Price $0.01-0.99 2,540,556 5.55 years 2,040,973 0.24 $1.00-1.99 125,000 1.30 years 125,000 1.18 $2.00-2.99 525,000 1.51 years 525,000 2.52 $0.01-3.99 3,190,556 4.72 years 2,690,973 $0.73 |
Note 2 - Significant Accounti18
Note 2 - Significant Accounting Policies: Inventory: Schedule of Inventory (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Details | ||
Raw materials | $ 980,490 | $ 990,945 |
Finished goods | 1,179,466 | 1,185,888 |
Work in progress | 26,432 | 26,432 |
Allowance for obsolete inventory | (673,609) | (648,609) |
Total | $ 1,512,779 | $ 1,554,656 |
Note 2 - Significant Accounti19
Note 2 - Significant Accounting Policies: Inventory (Details) - USD ($) | Dec. 31, 2017 | Mar. 31, 2018 | Mar. 31, 2017 |
Details | |||
Obsolete inventory adjustment | $ 305,458 | $ 25,000 | $ 0 |
Note 2 - Significant Accounti20
Note 2 - Significant Accounting Policies: Property and Equipment: Schedule of Property and Equipment (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Less: accumulated depreciation | $ (142,059) | $ (138,078) |
Total | 3,272 | 7,253 |
Production Equipment | ||
Property, Plant and Equipment, Gross | 61,960 | 61,960 |
Computer Equipment | ||
Property, Plant and Equipment, Gross | 28,540 | 28,540 |
Tools, Dies and Molds | ||
Property, Plant and Equipment, Gross | 12,380 | 12,380 |
Leasehold Improvements | ||
Property, Plant and Equipment, Gross | $ 42,451 | $ 42,451 |
Note 2 - Significant Accounti21
Note 2 - Significant Accounting Policies: Property and Equipment (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Details | ||
Depreciation expense | $ 3,981 | $ 6,224 |
Note 2 - Significant Accounti22
Note 2 - Significant Accounting Policies: Basic and Diluted Loss Per Share (Details) - shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,690,973 | 2,379,723 |
Note 2 - Significant Accounti23
Note 2 - Significant Accounting Policies: Going Concern (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Details | ||||
Accumulated deficit | $ (19,885,191) | $ (19,787,101) | ||
Total Stockholders' Equity | 400,554 | 476,673 | ||
Total Current Assets | 1,601,431 | 1,606,744 | ||
Cash | 11,522 | $ 20,249 | 23,279 | $ 17,782 |
Total Current Liabilities | 1,218,429 | 1,151,604 | ||
Working Capital | 383,002 | |||
NET LOSS | (98,090) | (209,041) | (1,036,297) | |
Net Cash Provided by (Used in) Operating Activities | $ (11,757) | $ 2,467 | $ (24,503) |
Note 3 - Contract Assets and 24
Note 3 - Contract Assets and Liabilities: Schedule of Costs in Excess of Billings (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Details | ||
Cost incurred on uncompleted contracts | $ 0 | $ 0 |
Estimated earnings | 0 | 0 |
Billings on uncompleted contracts | (30,000) | (30,000) |
Contract liabilities | $ (30,000) | $ (30,000) |
Note 3 - Contract Assets and 25
Note 3 - Contract Assets and Liabilities: Contract, Asset and Liability (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Details | ||
Contract assets | $ 0 | $ 0 |
Contract liabilities | (30,000) | (30,000) |
Net contract liabilities | $ (30,000) | $ (30,000) |
Note 4 - Related Party Transa26
Note 4 - Related Party Transactions (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Accounts receivable - related parties | $ 7,752 | $ 3,440 |
Accounts payable - related parties | 125,836 | 114,321 |
Nology Engineering Inc | ||
Accounts payable - related parties | $ 125,836 | $ 114,321 |
Omnitek Engineering Thailand Co Ltd | ||
Noncontrolling Interest, Ownership Percentage by Parent | 15.00% | |
Omnitek Peru SAC | ||
Noncontrolling Interest, Ownership Percentage by Parent | 20.00% |
Note 4 - Related Party Transa27
Note 4 - Related Party Transactions: Schedule of Accrued Management Fees (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Accrued management compensation | $ 432,084 | $ 406,841 |
President | ||
Accrued management compensation | 343,912 | 321,796 |
Chief Financial Officer | ||
Accrued management compensation | $ 88,172 | $ 85,045 |
Note 5 - Note Payable - Relat28
Note 5 - Note Payable - Related Party Transactions (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Nov. 07, 2017 | Jan. 19, 2017 | |
Related Party Convertible Note | |||
Debt Instrument, Face Amount | $ 15,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 8.00% | ||
Debt Instrument, Maturity Date | Jul. 7, 2018 | ||
Debt Instrument, Convertible, Terms of Conversion Feature | The number of shares of common stock to be issued upon such conversion shall be equal to the quotient obtained by dividing (i) the remaining unpaid principal balance and any unpaid accrued interest of this note by (ii) 90% of the average closing price of the common stock of the Company, for five trading days before the maturity date. | ||
Related Party Note Payable | |||
Debt Instrument, Face Amount | $ 15,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 5.00% | ||
Debt Instrument, Maturity Date | Jan. 19, 2019 |
Note 5 - Note Payable - Relat29
Note 5 - Note Payable - Related Party Transactions: Schedule of Convertible Notes, Related Party (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Details | ||
Convertible notes payable - related parties | $ 15,000 | $ 15,000 |
Note 5 - Note Payable - Relat30
Note 5 - Note Payable - Related Party Transactions: Schedule of Note Payable Related Party (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Details | ||
Notes payable - related parties | $ 15,000 | $ 15,000 |
Note 6 - Stock Options and Wa31
Note 6 - Stock Options and Warrants (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Granted | 590,000 | 905,556 | ||
Shares outstanding | 3,190,556 | 2,600,556 | 4,510,313 | |
Warrant | ||||
Granted | 0 | 0 | ||
2011 Long Term Incentive Plan | ||||
Number of Shares Authorized | 1,000,000 | |||
Shares outstanding | 815,000 | |||
2015 Long Term Incentive Plan | ||||
Number of Shares Authorized | 2,500,000 | |||
Shares outstanding | 2,165,556 | |||
2017 Long Term Incentive Plan | ||||
Number of Shares Authorized | 5,000,000 | |||
Shares outstanding | 300,000 | |||
Chief Executive Officer | ||||
Granted | 0 | 555,556 | ||
Options, Outstanding, Intrinsic Value | $ 0 | $ 0 | ||
Options and Warrants | ||||
Allocated Share-based Compensation Expense | 21,971 | $ 69,533 | ||
Compensation Cost Not yet Recognized | $ 40,409 |
Note 6 - Stock Options and Wa32
Note 6 - Stock Options and Warrants: Schedule of Assumptions Used to Estimate the Fair Values of Stock Options Granted (Details) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Details | ||
Expected volatility | 150.00% | 105.00% |
Expected dividends | 0.00% | 0.00% |
Expected term | 7 years | 7 years |
Risk-free interest rate | 2.46% | 2.22% |
Note 6 - Stock Options and Wa33
Note 6 - Stock Options and Warrants: Schedule of Stock Options and Warrants, Activity (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Shares outstanding | 2,600,556 | 4,510,313 |
Outstanding, Weighted Average Exercise Price | $ 0.82 | $ 2.81 |
Granted | 590,000 | 905,556 |
Granted, Weighted Average Exercise Price | $ 0.07 | $ 0.18 |
Exercised, Weighted Average Exercise | $ 0 | $ 0 |
Expired or cancelled | 0 | (2,815,313) |
Expired or cancelled, Weighted Average Exercise Price | $ 0 | $ 3.81 |
Shares outstanding | 3,190,556 | 2,600,556 |
Outstanding, Weighted Average Exercise Price | $ 0.68 | $ 0.82 |
Exercisable | 2,690,973 | 2,354,723 |
Exercisable, Weighted Average Exercise Price | $ 0.75 | $ 0.84 |
Common Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 0 | 0 |
Note 6 - Stock Options and Wa34
Note 6 - Stock Options and Warrants: Summary of the Status of the Options and Warrants Outstanding (Details) | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
$0.01-0.99 | |
Exercise Price Range, Lower Range Limit | $ 0.01 |
Exercise Price Range, Upper Range Limit | $ 0.99 |
Number Outstanding | shares | 2,540,556 |
Weighted-Average Remaining Contractual Life | 5 years 6 months 18 days |
Number Exercisable | shares | 2,040,973 |
Weighted-Average Exercise Price | $ 0.24 |
$1.00-1.99 | |
Exercise Price Range, Lower Range Limit | 1 |
Exercise Price Range, Upper Range Limit | $ 1.99 |
Number Outstanding | shares | 125,000 |
Weighted-Average Remaining Contractual Life | 1 year 3 months 18 days |
Number Exercisable | shares | 125,000 |
Weighted-Average Exercise Price | $ 1.18 |
$2.00-2.99 | |
Exercise Price Range, Lower Range Limit | 2 |
Exercise Price Range, Upper Range Limit | $ 2.99 |
Number Outstanding | shares | 525,000 |
Weighted-Average Remaining Contractual Life | 1 year 6 months 4 days |
Number Exercisable | shares | 525,000 |
Weighted-Average Exercise Price | $ 2.52 |
$0.01-3.99 | |
Exercise Price Range, Lower Range Limit | 0.01 |
Exercise Price Range, Upper Range Limit | $ 3.99 |
Number Outstanding | shares | 3,190,556 |
Weighted-Average Remaining Contractual Life | 4 years 8 months 19 days |
Number Exercisable | shares | 2,690,973 |
Weighted-Average Exercise Price | $ 0.73 |