Omnitek Engineering (OMTK) 10-Q 13 Nov 18 2018 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 13, 2018
Details
Registrant Name	OMNITEK ENGINEERING CORP.
Registrant CIK	1,404,804
SEC Form	10-Q
Period End date	Sep. 30, 2018
Fiscal Year End	--12-31
Trading Symbol	omtk
Tax Identification Number (TIN)	330,984,450
Number of common stock shares outstanding		20,420,402
Filer Category	Non-accelerated Filer
Current with reporting	Yes
Small Business	true
Emerging Growth Company	false
Amendment Flag	false
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q3
Contained File Information, File Number	000-53955
Entity Incorporation, State Country Name	California
Entity Address, Address Line One	1333 Keystone Way, #101
Entity Address, City or Town	Vista
Entity Address, State or Province	California
Entity Address, Postal Zip Code	92,081
City Area Code	760
Local Phone Number	591-0089

Condensed Balance Sheets

Condensed Balance Sheets - USD ($)	Sep. 30, 2018	Dec. 31, 2017
CURRENT ASSETS
Cash	$ 5,498	$ 23,279
Accounts receivable, net	15,293	7,984
Accounts receivable - related parties	6,313	3,440
Inventory, net	1,451,896	1,554,656
Deposits	28,583	17,385
Total Current Assets	1,507,583	1,606,744
FIXED ASSETS, net	2,672	7,253
OTHER ASSETS
Other noncurrent assets	14,280	14,280
Total Other Assets	14,280	14,280
TOTAL ASSETS	1,524,535	1,628,277
CURRENT LIABILITIES
Accounts payable and accrued expenses	373,379	358,032
Accrued management compensation	512,103	406,841
Accounts payable - related parties	142,819	114,321
Notes payable - related parties	15,000	15,000
Convertible notes payable - related parties	0	15,000
Convertible notes payable, current portion	45,000	0
Billings in excess of costs and estimated earnings	0	30,000
Customer deposits	141,279	212,410
Total Current Liabilities	1,229,580	1,151,604
LONG-TERM LIABILITIES
Convertible notes payable, net of current portion	55,000	0
Total Liabilities	1,284,580	1,151,604
STOCKHOLDERS' EQUITY
Common stock, 125,000,000 shares authorized no par value 20,420,402 and 20,281,082 shares issued and outstanding, respectively	8,427,210	8,411,411
Additional paid-in capital	11,917,784	11,852,363
Accumulated deficit	(20,105,039)	(19,787,101)
Total Stockholders' Equity	239,955	476,673
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 1,524,535	$ 1,628,277

Condensed Balance Sheets - Pare

Condensed Balance Sheets - Parenthetical - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Details
Common Stock, Shares Authorized	125,000,000	125,000,000
Common Stock, No Par Value	$ 0	$ 0
Common Stock, Shares, Issued	20,420,402	20,281,082
Common Stock, Shares, Outstanding	20,420,402	20,281,082

Condensed Statements of Operati

Condensed Statements of Operations (unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Details
REVENUES	$ 265,999	$ 263,572	$ 995,085	$ 795,018
REVENUES, related parties	14,568	12,669	14,568	19,192
Total revenues	280,567	276,241	1,009,653	814,210
COST OF GOODS SOLD (exclusive of depreciation shown below)	170,108	158,358	575,088	456,765
GROSS MARGIN	110,459	117,883	434,565	357,445
OPERATING EXPENSES
General and administrative	184,374	240,477	618,680	789,618
Research and development	29,315	18,978	81,885	92,667
Depreciation and amortization	1,568	6,147	7,294	18,594
Total Operating Expenses	215,257	265,602	707,859	900,879
LOSS FROM OPERATIONS	(104,798)	(147,719)	(273,294)	(543,434)
OTHER INCOME (EXPENSE)
Other income	0	0	950	0
Loss on settlement of debt	(32,963)	0	(32,963)	0
Interest expense	(5,544)	(2,130)	(11,831)	(6,245)
Total Other Income (Expense)	(38,507)	(2,130)	(43,844)	(6,245)
LOSS BEFORE INCOME TAXES	(143,305)	(149,849)	(317,138)	(549,679)
INCOME TAX EXPENSE	0	0	800	800
NET LOSS	$ (143,305)	$ (149,849)	$ (317,938)	$ (550,479)
BASIC AND DILUTED LOSS PER SHARE	$ (0.01)	$ (0.01)	$ (0.02)	$ (0.03)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING -BASIC AND DILUTED	20,411,316	20,281,082	20,324,970	20,281,082

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows (unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
OPERATING ACTIVITIES
Net loss	$ (317,938)	$ (550,479)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization and depreciation expense	7,294	18,594
Options and warrants	32,458	120,209
Inventory reserve	50,000	0
Loss on extinguishment of debt	32,963	0
Changes in operating assets and liabilities:
Accounts receivable	(7,308)	(298)
Accounts receivable-related parties	(2,873)	(649)
Costs and estimated earnings in excess of billings	0	30,973
Deposits	(11,198)	(19,614)
Prepaid expense	0	5,325
Inventory	52,760	(28,855)
Accounts payable and accrued expenses	16,146	(37,070)
Customer deposits	(71,131)	178,479
Accounts payable-related parties	28,498	56,938
Billings in excess of costs and estimated earnings	(30,000)	30,000
Accrued management compensation	105,262	223,109
Net Cash Provided by (Used in) Operating Activities	(115,067)	26,662
INVESTING ACTIVITIES
Purchase of fixed assets	(2,714)	0
Net Cash Used in Investing Activities	(2,714)	0
FINANCING ACTIVITIES
Proceeds from convertible note payable	100,000	0
Net Cash Provided by Financing Activities	100,000	0
NET INCREASE (DECREASE) IN CASH	(17,781)	26,662
CASH AT BEGINNING OF YEAR	23,279	17,782
CASH AT END OF PERIOD	5,498	44,444
CASH PAID FOR:
Interest	7,583	5,721
Income taxes	800	800
NON CASH INVESTING AND FINANCING ACTIVITIES
Options issued for accrued salary	0	100,000
Common stock issued for convertible note	$ 15,799	$ 0

NOTE 1 - CONDENSED FINANCIAL ST

NOTE 1 - CONDENSED FINANCIAL STATEMENTS	9 Months Ended
	Sep. 30, 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 September 30, 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 September 30, 2018 and 2017 are not necessarily indicative of the operating results for the full years.

NOTE 2 - SIGNIFICANT ACCOUNTING

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 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. Recent Accounting Pronouncements 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 5 for additional discussion of our revenue recognition accounting policies and expanded disclosures required by the new standard. NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 2,563,473 and 2,379,723 stock options that would have been included in the fully diluted earnings per share as of September 30, 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 The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes ("Topic 740"), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of September 30, 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 September 30, 2018, the Company had an accumulated deficit of $20,105,039 and total stockholders’ equity of $239,955. At September 30, 2018, the Company had current assets of $1,507,583 including cash of $5,498, and current liabilities of $1,229,580, resulting in working capital of $278,003. For the nine months ended September 30, 2018, the Company reported a net loss of $317,938 and net cash used by operating activities of $115,067. 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 significant doubt upon the Company’s ability to continue as a going concern. Our financial statements have been prepared on a going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of operations. The financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts or the amounts or classification of liabilities should we be unable to continue as a going concern.

NOTE 3 - INVENTORY

NOTE 3 - INVENTORY	9 Months Ended
	Sep. 30, 2018
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, determined on an average cost basis and raw material, determined on a standard cost basis, and is located in Vista, California, consisting of the following: September 30, December 31, Location : Vista, CA 2018 2017 Raw materials $ 962,684 $ 990,945 Finished goods 1,187,821 1,185,888 Work in progress - 26,432 Allowance for obsolete inventory (698,609) (648,609) Total $ 1,451,896 $ 1,554,656 The Company has established an allowance for obsolete inventory. Expense for obsolete inventory was $50,000 and $-0-, for the periods ended September 30, 2018 and September 30, 2017, respectively.

NOTE 4 - PROPERTY AND EQUIPMENT

NOTE 4 - PROPERTY AND EQUIPMENT	9 Months Ended
	Sep. 30, 2018
Notes
NOTE 4 - PROPERTY AND EQUIPMENT	NOTE 4 – PROPERTY AND EQUIPMENT Property and equipment at September 30, 2018 and December 31, 2017 consisted of the following: September 30, December 31, 2018 2017 Production equipment $ 64,673 $ 61,960 Computers/Office equipment 28,540 28,540 Tooling equipment 12,380 12,380 Leasehold Improvements 42,451 42,451 Less: accumulated depreciation (145,372) (138,078) Total $ 2,672 $ 7,253 Depreciation expense for the periods ended September 30, 2018 and September 30, 2017 was $7,294 and $18,594, respectively.

Note 5 - COSTS AND ESTIMATED EA

Note 5 - COSTS AND ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS	9 Months Ended
	Sep. 30, 2018
Notes
Note 5 - COSTS AND ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS	NOTE 5 – COSTS AND ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS Billing practices for our contracts are governed by the contract terms of each project based on progress toward completion approved by the owner, achievement of milestones or pre-agreed schedules. Billings do not necessarily correlate with revenue recognized under the percentage-of-completion method of accounting. The current liability, “Billings in excess of costs and estimated earnings,” represents billings in excess of revenues recognized. The current asset, “Costs and estimated earnings in excess of billings,” represents revenues recognized in excess of amounts billed to the customer, which are usually billed during normal billing processes following achievement of contractural requirements. NOTE 5 – COSTS AND ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS (CONTINUED) The two tables below set forth thet costs incurred and earnings accrued on uncompleted contracts compared with the billings on those contracts through September 30, 2018 and December 31, 2017 and reconcile the net excess billings to the amounts included in the balance sheets at those dates. September 30, December 31, 2018 2017 Cost incurred on uncompleted contracts $ - $ - Estimated earnings - - - - Billings on uncompleted contracts - (30,000) Costs incurred and estimated earnings under billings on uncompleted contracts - (30,000) Included in the accompanying balance sheets under the following captions: September 30, December 31, 2018 2017 Costs and estimated earnings in excess of billings on uncompleted contracts $ - $ - Billings in excess of costs and estimated earnings on uncompleted contracts - (30,000) Net amount of costs and estimated earnings on uncompleted contracts above billings $ - $ (30,000)

NOTE 6 - RELATED PARTY TRANSACT

NOTE 6 - RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2018
Notes
NOTE 6 - RELATED PARTY TRANSACTIONS	For the periods ended September 30, 2018 and December 31, 2017, the Company’s president and chief financial officer were due amounts for services performed for the Company. As of September 30, 2018 and December 31, 2017 the accrued management fees consisted of the following: September 30, December 31, 2018 2017 Amounts due to the president $ 410,854 $ 321,796 Amounts due to the chief financial officer 101,249 85,045 Total $ 512,103 $ 406,841

NOTE 7 - NOTE PAYABLE - RELATED

NOTE 7 - NOTE PAYABLE - RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2018
Notes
NOTE 7 - NOTE PAYABLE - RELATED PARTY TRANSACTIONS	On November 7, 2017 the Company issued a convertible promissory note for $15,000 to a related party. The note has an annual interest rate of 8% and is unsecured. The principal amount of the note and all accrued interest is due and payable on or before July 7, 2018. The note has a conversion feature, wherein, at the lender’s option, at the maturity date the lender may convert the remaining unpaid principal balance and any unpaid accrued interest into shares of the Company’s common stock. The number of shares of common stock to be issued upon such conversion shall be equal to the quotient obtained by dividing (i) the remaining unpaid principal balance and any unpaid accrued interest of this note by (ii) 90% of the average closing price of the common stock of the Company, for five trading days before the maturity date. Due to this provision, the Company considered whether the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging.” As the note isn’t convertible until maturity, no derivative liability was recognized. 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 September 30, 2018 and December 31, 2017 Note Payable – Related Party consisted of the following: September 30, December 31, 2018 2017 Note payable, related party $ 15,000 $ 15,000 Total $ 15,000 $ 15,000

Note 8 - CONVERTIBLE NOTE PAYAB

Note 8 - CONVERTIBLE NOTE PAYABLE	9 Months Ended
	Sep. 30, 2018
Notes
Note 8 - CONVERTIBLE NOTE PAYABLE	NOTE 8 – CONVERTIBLE NOTE PAYABLE On June 15, 2018 the Company entered into a Securities Purchase Agreement with an accredited investor, under which the investor purchased a Secured Convertible Promissory Note from the Company in the principal amount of $100,000. Under the terms of the Note simple interest will accrue at a rate of 10% per annum. The note will automatically mature and be due and payable on the eighteen (18) month anniversary. The Company shall make principal payments under the Note in the amount of $5,000 per month, beginning on the seventh month anniversary and continuing each month thereafter through the maturity date. Also commencing on the seventh month anniversary of the Note, the Company shall make interest payments under this Note based on the unpaid principal balance. The Note is secured by the inventory of the Company in accordance with a Security Agreement executed concurrently with the Note and UCC-1 Financing Statement perfecting said security interest. The Note includes a conversion feature wherein, under certain circumstances, the Lender may request a portion of the principal repayment be converted and payable in restricted shares of the Company’s Common Stock at the lesser of five cents ($0.05) per share or 90% of the average closing price calculated over the prior 20 trading days, but not less than $0.0025 per share. The floor of $0.025 per share prevents the embedded conversion option from qualifying for derivative accounting under ASC 815-15 “Derivative and Hedging”. September 30, December 31, 2018 2017 Convertible note payable $ 100,000 $ - Less current portion (45,000) - Convertible note payable, net of current portion $ 55,000 $ -

NOTE 9 - STOCK OPTIONS

NOTE 9 - STOCK OPTIONS	9 Months Ended
	Sep. 30, 2018
Notes
NOTE 9 - STOCK OPTIONS	NOTE 9 - STOCK OPTIONS During the nine months ended September 30, 2018 and 2017, the Company granted 590,000 and 350,000 options for services, respectively. During the nine months ended September 30, 2018 and 2017, the Company recognized expense of $32,458 and $120,209, respectively, for options and warrants that vested during the periods pursuant to ASC Topic 718. Total remaining amount of compensation expense to be recognized in future periods is $29,922. During the nine months ended September 30, 2018 and 2017, the Company granted -0- and 555,556 options to the CEO for accrued compensation, respectively. On August 3, 2011 the Board of Directors adopted the Omnitek Engineering Corp. 2011 Long-term Incentive Plan (the “2011 Plan”), under which 1,000,000 shares of Company’s Common Stock were reserved for issuance of both Incentive Stock Options to employees only and and Non-Qualified Stock Options to employees and consultants at its discretion. As of September 30, 2018 the Company has a total of 625,000 options issued under the 2011 P lan. On September 11, 2015 the Board of Directors adopted the Omnitek Engineering Corp. 2015 Long Term Incentive Plan (the “2015 Plan”), under which 2,500,000 shares of the Company’s Common Stock were reserved for issuance of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of September 30, 2018 the Company has a total of 2,065,556 options issued under the 2015 Plan. In October 2017, the Company’s shareholders approved its 2017 Long-Term Incentive Plan (the “2017 Plan”). Under the 2017 plan, the Company may issue up to 5,000,000 shares of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of September 30, 2018, the Company has a total of 300,000 options issued under the 2017 Plan. During the nine months ended September 30, 2018 and 2017 the Company issued -0- and -0- warrants, respectively. The Company recognizes compensation expense for stock-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value. The Company estimates the fair value of stock options using a Black-Scholes option pricing model which requires management to make estimates for certain assumptions regarding risk-free interest rate, expected life of options, expected volatility of stock and expected dividend yield of stock. When determining expected volatility, the Company considers the historical performance of the Company’s stock, as well as implied volatility. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant, based on the options’ expected term. The expected term of the options is based on the Company’s evaluation of option holders’ exercise patterns and represents the period of time that options are expected to remain unexercised. The Company uses historical data to estimate the timing and amount of forfeitures. NOTE 9 - STOCK OPTIONS (CONTINUED) The following table presents the assumptions used to estimate the fair values of the stock options granted: September 30, 2018 September 30, 2017 Expected volatility 150 % 105 % Expected dividends 0 % 0 % Expected term 7 Years 7 Years Risk-free interest rate 2.46 % 2.22 % A summary of the status of the options granted at September 30, 2018 and December 31, 2017 and changes during the periods then ended is presented below: September 30, 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 (200,000) 1.21 (2,815,313) 3.81 Outstanding at end of period 2,990,556 0.65 2,600,556 0.82 Exercisable 2,563,473 $ 0.69 2,354,723 $ 0.84 A summary of the status of the options outstanding at September 30, 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 2,440,556 5.06 years 2,013,473 0.24 $1.00-1.99 75,000 1.43 years 75,000 1.37 $2.00-2.99 475,000 1.01 years 475,000 2.52 $0.01-2.99 2,990,556 4.32 years 2,563,473 $0.69

NOTE 2 - SIGNIFICANT ACCOUNTI_2

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 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.
Going Concern	Recent Accounting Pronouncements 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 5 for additional discussion of our revenue recognition accounting policies and expanded disclosures required by the new standard.
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 2,563,473 and 2,379,723 stock options that would have been included in the fully diluted earnings per share as of September 30, 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 September 30, 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 September 30, 2018, the Company had an accumulated deficit of $20,105,039 and total stockholders’ equity of $239,955. At September 30, 2018, the Company had current assets of $1,507,583 including cash of $5,498, and current liabilities of $1,229,580, resulting in working capital of $278,003. For the nine months ended September 30, 2018, the Company reported a net loss of $317,938 and net cash used by operating activities of $115,067. 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 significant doubt upon the Company’s ability to continue as a going concern. Our financial statements have been prepared on a going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of operations. The financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts or the amounts or classification of liabilities should we be unable to continue as a going concern.

NOTE 3 - INVENTORY (Tables)

NOTE 3 - INVENTORY (Tables)	9 Months Ended
	Sep. 30, 2018
Tables/Schedules
Schedule of Inventory	Inventory is stated at the lower of cost or market. The Company’s inventory consists of finished goods, determined on an average cost basis and raw material, determined on a standard cost basis, and is located in Vista, California, consisting of the following: September 30, December 31, Location : Vista, CA 2018 2017 Raw materials $ 962,684 $ 990,945 Finished goods 1,187,821 1,185,888 Work in progress - 26,432 Allowance for obsolete inventory (698,609) (648,609) Total $ 1,451,896 $ 1,554,656

NOTE 4 - PROPERTY AND EQUIPME_2

NOTE 4 - PROPERTY AND EQUIPMENT (Tables)	9 Months Ended
	Sep. 30, 2018
Tables/Schedules
Schedule of Property and Equipment	Property and equipment at September 30, 2018 and December 31, 2017 consisted of the following: September 30, December 31, 2018 2017 Production equipment $ 64,673 $ 61,960 Computers/Office equipment 28,540 28,540 Tooling equipment 12,380 12,380 Leasehold Improvements 42,451 42,451 Less: accumulated depreciation (145,372) (138,078) Total $ 2,672 $ 7,253

Note 5 - COSTS AND ESTIMATED _2

Note 5 - COSTS AND ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS (Tables)	9 Months Ended
	Sep. 30, 2018
Tables/Schedules
Schedule of Costs in Excess of Billings	September 30, December 31, 2018 2017 Cost incurred on uncompleted contracts $ - $ - Estimated earnings - - - - Billings on uncompleted contracts - (30,000) Costs incurred and estimated earnings under billings on uncompleted contracts - (30,000)
Contract, Asset and Liability	Included in the accompanying balance sheets under the following captions: September 30, December 31, 2018 2017 Costs and estimated earnings in excess of billings on uncompleted contracts $ - $ - Billings in excess of costs and estimated earnings on uncompleted contracts - (30,000) Net amount of costs and estimated earnings on uncompleted contracts above billings $ - $ (30,000)

NOTE 6 - RELATED PARTY TRANSA_2

NOTE 6 - RELATED PARTY TRANSACTIONS (Tables)	9 Months Ended
	Sep. 30, 2018
Tables/Schedules
Schedule of Accrued Management Fees	As of September 30, 2018 and December 31, 2017 the accrued management fees consisted of the following: September 30, December 31, 2018 2017 Amounts due to the president $ 410,854 $ 321,796 Amounts due to the chief financial officer 101,249 85,045 Total $ 512,103 $ 406,841

NOTE 7 - NOTE PAYABLE - RELAT_2

NOTE 7 - NOTE PAYABLE - RELATED PARTY TRANSACTIONS (Tables)	9 Months Ended
	Sep. 30, 2018
Tables/Schedules
Schedule of Convertible Notes, Related Party	As of September 30, 2018 and December 31, 2017 Convertible Notes – Related Party consisted of the following: September 30, December 31, 2018 2017 Convertible note, related party $ - $ 15,000 Total $ - $ 15,000
Schedule of Note Payable Related Party	As of September 30, 2018 and December 31, 2017 Note Payable – Related Party consisted of the following: September 30, December 31, 2018 2017 Note payable, related party $ 15,000 $ 15,000 Total $ 15,000 $ 15,000

Note 8 - CONVERTIBLE NOTE PAY_2

Note 8 - CONVERTIBLE NOTE PAYABLE (Tables)	9 Months Ended
	Sep. 30, 2018
Tables/Schedules
Schedule of Convertible Note payable	As of September 30, 2018 and December 31, 2017 Convertible Note Payable consisted of the following: September 30, December 31, 2018 2017 Convertible note payable $ 100,000 $ - Less current portion (45,000) - Convertible note payable, net of current portion $ 55,000 $ -

NOTE 9 - STOCK OPTIONS (Tables)

NOTE 9 - STOCK OPTIONS (Tables)	9 Months Ended
	Sep. 30, 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: September 30, 2018 September 30, 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 granted at September 30, 2018 and December 31, 2017 and changes during the periods then ended is presented below: September 30, 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 (200,000) 1.21 (2,815,313) 3.81 Outstanding at end of period 2,990,556 0.65 2,600,556 0.82 Exercisable 2,563,473 $ 0.69 2,354,723 $ 0.84
Summary of the Status of the Options and Warrants Outstanding	A summary of the status of the options outstanding at September 30, 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 2,440,556 5.06 years 2,013,473 0.24 $1.00-1.99 75,000 1.43 years 75,000 1.37 $2.00-2.99 475,000 1.01 years 475,000 2.52 $0.01-2.99 2,990,556 4.32 years 2,563,473 $0.69

NOTE 2 - SIGNIFICANT ACCOUNTI_3

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES: Basic and Diluted Loss Per Share (Details) - shares	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Details
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2,563,473	2,379,723

NOTE 2 - SIGNIFICANT ACCOUNTI_4

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES: Going Concern (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
Details
Accumulated deficit	$ (20,105,039)		$ (20,105,039)		$ (19,787,101)
Total Stockholders' Equity	239,955		239,955		476,673
Total Current Assets	1,507,583		1,507,583		1,606,744
Cash	5,498	$ 44,444	5,498	$ 44,444	23,279	$ 17,782
Total Current Liabilities	1,229,580		1,229,580		$ 1,151,604
Working Capital			278,003
NET LOSS	$ (143,305)	$ (149,849)	(317,938)	(550,479)
Net Cash Provided by (Used in) Operating Activities			$ (115,067)	$ 26,662

NOTE 3 - INVENTORY_ Schedule of

NOTE 3 - INVENTORY: Schedule of Inventory (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Details
Raw materials	$ 962,684	$ 990,945
Finished goods	1,187,821	1,185,888
Work in progress	0	26,432
Allowance for obsolete inventory	(698,609)	(648,609)
Total	$ 1,451,896	$ 1,554,656

NOTE 3 - INVENTORY (Details)

NOTE 3 - INVENTORY (Details) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Details
Inventory reserve	$ 50,000	$ 0

NOTE 4 - PROPERTY AND EQUIPME_3

NOTE 4 - PROPERTY AND EQUIPMENT: Schedule of Property and Equipment (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Less: accumulated depreciation	$ (145,372)	$ (138,078)
Total	2,672	7,253
Production Equipment
Property, Plant and Equipment, Gross	64,673	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 4 - PROPERTY AND EQUIPME_4

NOTE 4 - PROPERTY AND EQUIPMENT (Details) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Details
Depreciation expense	$ 7,294	$ 18,594

Note 5 - COSTS AND ESTIMATED _3

Note 5 - COSTS AND ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS: Schedule of Costs in Excess of Billings (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Details
Cost incurred on uncompleted contracts	$ 0	$ 0
Estimated earnings	0	0
Billings on uncompleted contracts	0	(30,000)
Costs incurred and estimated earnings under billings on uncompleted contracts	$ 0	$ (30,000)

Note 5 - COSTS AND ESTIMATED _4

Note 5 - COSTS AND ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS: Contract, Asset and Liability (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Details
Costs and estimated earnings in excess of billings on uncompleted contracts	$ 0	$ 0
Billings in excess of costs and estimated earnings on uncompleted contracts	0	(30,000)
Net amount of costs and estimated earnings on uncompleted contracts above billings	$ 0	$ (30,000)

NOTE 6 - RELATED PARTY TRANSA_3

NOTE 6 - RELATED PARTY TRANSACTIONS (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Accounts receivable - related parties	$ 6,313	$ 3,440
Accounts payable - related parties	142,819	114,321
Nology Engineering Inc
Accounts payable - related parties	$ 142,819	$ 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 6 - RELATED PARTY TRANSA_4

NOTE 6 - RELATED PARTY TRANSACTIONS: Schedule of Accrued Management Fees (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Accrued management compensation	$ 512,103	$ 406,841
President
Accrued management compensation	410,854	321,796
Chief Financial Officer
Accrued management compensation	$ 101,249	$ 85,045

NOTE 7 - NOTE PAYABLE - RELAT_3

NOTE 7 - NOTE PAYABLE - RELATED PARTY TRANSACTIONS (Details) - USD ($)	Jul. 06, 2018	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Nov. 07, 2017	Jan. 19, 2017
Common stock issued for convertible note	$ 15,799			$ 15,799	$ 0
Debt Instrument, Convertible, Conversion Price	$ 0.1134
Loss on settlement of debt		$ (32,963)	$ 0	$ (32,963)	$ 0
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.
Debt Conversion, Converted Instrument, Shares Issued	139,320
Loss on settlement of debt	$ 32,963
Principal
Common stock issued for convertible note	15,000
Interest
Common stock issued for convertible note	$ 799
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 7 - NOTE PAYABLE - RELAT_4

NOTE 7 - NOTE PAYABLE - RELATED PARTY TRANSACTIONS: Schedule of Convertible Notes, Related Party (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Details
Convertible notes payable - related parties	$ 0	$ 15,000

NOTE 7 - NOTE PAYABLE - RELAT_5

NOTE 7 - NOTE PAYABLE - RELATED PARTY TRANSACTIONS: Schedule of Note Payable Related Party (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Details
Notes payable - related parties	$ 15,000	$ 15,000

Note 8 - CONVERTIBLE NOTE PAY_3

Note 8 - CONVERTIBLE NOTE PAYABLE (Details) - USD ($)	9 Months Ended
	Sep. 30, 2018	Jul. 06, 2018	Jun. 15, 2018
Debt Instrument, Convertible, Conversion Price		$ 0.1134
Secured Convertible Promissory Note
Debt Instrument, Face Amount			$ 100,000
Debt Instrument, Interest Rate, Stated Percentage			10.00%
Debt Instrument, Periodic Payment	$ 5,000
Secured Convertible Promissory Note | Maximum
Debt Instrument, Convertible, Conversion Price	$ 0.05
Secured Convertible Promissory Note | Minimum
Debt Instrument, Convertible, Conversion Price	$ 0.0025

Note 8 - CONVERTIBLE NOTE PAY_4

Note 8 - CONVERTIBLE NOTE PAYABLE: Schedule of Convertible Note payable (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Details
Convertible note payable	$ 100,000	$ 0
Convertible notes payable, current portion	45,000	0
Convertible notes payable, net of current portion	$ 55,000	$ 0

NOTE 9 - STOCK OPTIONS (Details

NOTE 9 - STOCK OPTIONS (Details) - USD ($)	9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Dec. 31, 2016	Sep. 11, 2015	Aug. 03, 2011
Granted	590,000		905,556
Expense recognized for options and warrants vested	$ 32,458	$ 120,209
Total remaining amount of compensation expense to be recognized in future periods	$ 29,922
Shares outstanding	2,990,556		2,600,556	4,510,313
Warrant
Granted	0	0
2017 Long Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	5,000,000
Shares outstanding	300,000
President
Granted	0	555,556
Employee Stock Option
Granted	590,000	350,000
Employee Stock Option | 2011 Long Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized						1,000,000
Shares outstanding	625,000
Employee Stock Option | 2015 Long Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized					2,500,000
Shares outstanding	2,065,556

NOTE 9 - STOCK OPTIONS_ Schedul

NOTE 9 - STOCK OPTIONS: Schedule of Assumptions Used to Estimate the Fair Values of Stock Options Granted (Details)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 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 9 - STOCK OPTIONS_ Sched_2

NOTE 9 - STOCK OPTIONS: Schedule of Stock Options and Warrants, Activity (Details) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 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	(200,000)	(2,815,313)
Expired or cancelled, Weighted Average Exercise Price	$ 1.21	$ 3.81
Shares outstanding	2,990,556	2,600,556
Outstanding, Weighted Average Exercise Price	$ 0.65	$ 0.82
Exercisable	2,563,473	2,354,723
Exercisable, Weighted Average Exercise Price	$ 0.69	$ 0.84
Common Stock
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	0	0

NOTE 9 - STOCK OPTIONS_ Summary

NOTE 9 - STOCK OPTIONS: Summary of the Status of the Options and Warrants Outstanding (Details)	9 Months Ended
	Sep. 30, 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	2,440,556
Weighted-Average Remaining Contractual Life	5 years 21 days
Number Exercisable | shares	2,013,473
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	75,000
Weighted-Average Remaining Contractual Life	1 year 5 months 4 days
Number Exercisable | shares	75,000
Weighted-Average Exercise Price	$ 1.37
$2.00-2.99
Exercise Price Range, Lower Range Limit	2
Exercise Price Range, Upper Range Limit	$ 2.99
Number Outstanding | shares	475,000
Weighted-Average Remaining Contractual Life	1 year 3 days
Number Exercisable | shares	475,000
Weighted-Average Exercise Price	$ 2.52
$0.01-2.99
Exercise Price Range, Lower Range Limit	0.01
Exercise Price Range, Upper Range Limit	$ 2.99
Number Outstanding | shares	2,990,556
Weighted-Average Remaining Contractual Life	4 years 3 months 25 days
Number Exercisable | shares	2,563,473
Weighted-Average Exercise Price	$ 0.69