OMNITEK ENGINEERING CORP
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended:
March 31, 2013
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Commission File Number 000-53955
OMNITEK ENGINEERING CORP.
(Exact name of Registrant as specified in its charter)
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California
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33-0984450
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1333 Keystone Way, Suite 101, Vista, California 92081
(Address of principal executive offices, Zip Code)
(760) 591-0089
(Registrant’s telephone number, including area code)
Indicate by check mark whether the Registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
x
No
o
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
x
No
o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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x
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Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
o
No
x
As of May 8, 2013, the Registrant had 19,749,582 shares of its no par value Common Stock outstanding.
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Page
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PART I - FINANCIAL INFORMATION
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PART II - OTHER INFORMATION
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FINANCIAL INFORMATION
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OMNITEK ENGINEERING CORP.
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Condensed Balance Sheets
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ASSETS
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March 31,
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December 31,
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2013
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2012
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(unaudited)
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CURRENT ASSETS
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Cash
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$ | 2,561,017 | $ | 3,192,761 | ||||
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Accounts receivable, net
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48,597 | 120,547 | ||||||
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Accounts receivable -related party
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4,389 | 26,455 | ||||||
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Inventory
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1,354,846 | 1,133,595 | ||||||
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Prepaid expense
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18,000 | 7,440 | ||||||
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Deposits
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369,133 | 331,760 | ||||||
| Short-term investments, net | 253,615 | - | ||||||
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Total Current Assets
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4,609,597 | 4,812,558 | ||||||
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FIXED ASSETS, net
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59,610 | 14,560 | ||||||
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OTHER ASSETS
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Long-term investments, net
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937,883 | 1,201,671 | ||||||
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Intellectual property, net
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4,518 | 5,218 | ||||||
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Total Other Assets
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942,401 | 1,206,889 | ||||||
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TOTAL ASSETS
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$ | 5,611,608 | $ | 6,034,007 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
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Accounts payable and accrued expenses
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$ | 95,494 | $ | 317,106 | ||||
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Accrued compensation - related parties
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249,947 | 264,717 | ||||||
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Accounts payable - related parties
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(2,298 | ) | - | |||||
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Customer deposits
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212,460 | 184,109 | ||||||
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Total Current Liabilities
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555,603 | 765,932 | ||||||
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Total Liabilities
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555,603 | 765,932 | ||||||
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STOCKHOLDERS' EQUITY
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Common stock, 125,000,000 shares authorized no par value
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19,749,582 and 19,749,582 shares issued and outstanding,
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respectively
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8,196,061 | 8,196,061 | ||||||
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Additional paid-in capital
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4,905,519 | 4,867,169 | ||||||
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Accumulated deficit
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(8,045,575 | ) | (7,795,155 | ) | ||||
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Total Stockholders' Equity
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5,056,005 | 5,268,075 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | 5,611,608 | $ | 6,034,007 | ||||
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The accompanying notes are an integral part of these condensed financial statements.
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Condensed Statements of Operations (unaudited)
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For the Three
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For the Three
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Months Ended
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Months Ended
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March 31,
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March 31,
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2013
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2012
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REVENUES
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$ | 349,329 | $ | 306,369 | ||||
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COST OF GOODS SOLD
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204,085 | 200,612 | ||||||
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GROSS MARGIN
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145,244 | 105,757 | ||||||
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OPERATING EXPENSES
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General and administrative
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352,305 | 237,323 | ||||||
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Research and development expense
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50,359 | 28,894 | ||||||
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Depreciation and amortization expense
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13,270 | 1,457 | ||||||
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Total Operating Expenses
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415,934 | 267,674 | ||||||
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LOSS FROM OPERATIONS
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(270,690 | ) | (161,917 | ) | ||||
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OTHER INCOME (EXPENSE)
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Interest expense
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- | (408 | ) | |||||
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Interest income
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21,070 | - | ||||||
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Total Other Income (Expense)
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21,070 | (408 | ) | |||||
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LOSS BEFORE INCOME TAXES
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(249,620 | ) | (162,325 | ) | ||||
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INCOME TAX EXPENSE
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800 | 800 | ||||||
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NET LOSS
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$ | (250,420 | ) | $ | (163,125 | ) | ||
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BASIC AND DILUTED LOSS PER SHARE
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$ | (0.01 | ) | $ | (0.01 | ) | ||
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WEIGHTED AVERAGE NUMBER
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OF COMMON SHARES OUTSTANDING
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19,749,582 | 17,196,734 | ||||||
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The accompanying notes are an integral part of these condensed financial statements.
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Condensed Statements of Cash Flows (unaudited)
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For the Three
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For the Three
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Months Ended
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Months Ended
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March 31,
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March 31,
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2013
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2012
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OPERATING ACTIVITIES
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Net loss
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$ | (250,420 | ) | $ | (163,125 | ) | ||
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Adjustments to reconcile net loss to
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net cash used by operating activities:
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Amortization and depreciation expense
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3,095 | 1,457 | ||||||
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Amortization of premium on long-term investments
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6,881 | - | ||||||
| Amortization of premium on short-term investments | 3,292 | - | ||||||
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Options and warrants granted
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38,350 | 15,450 | ||||||
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Changes in operating assets and liabilities:
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Accounts receivable
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71,950 | (42,301 | ) | |||||
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Accounts receivable–related parties
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22,066 | 16,715 | ||||||
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Deposits
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(37,373 | ) | (43,250 | ) | ||||
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Prepaid Expense
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(10,560 | ) | 837 | |||||
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Inventory
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(221,251 | ) | 58,526 | |||||
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Accounts payable and accrued expenses
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(221,612 | ) | 72,791 | |||||
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Customer deposits
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28,351 | 32,984 | ||||||
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Accounts payable-related parties
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(2,298 | ) | 10,764 | |||||
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Accrued compensation-related parties
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(14,770 | ) | (4,110 | ) | ||||
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Net Cash Used in Operating Activities
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(584,299 | ) | (43,262 | ) | ||||
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INVESTING ACTIVITIES
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Purchase of property and equipment
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(47,445 | ) | - | |||||
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Net Cash Used in Investing Activities
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(47,445 | ) | - | |||||
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FINANCING ACTIVITIES
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Issuance of common stock for cash
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- | 20,000 | ||||||
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Note Payable
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- | 40,000 | ||||||
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Net Cash Provided by Financing Activities
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- | 60,000 | ||||||
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NET DECREASE IN CASH
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(631,744 | ) | 16,738 | |||||
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CASH AT BEGINNING OF YEAR
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3,192,761 | 31,196 | ||||||
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CASH AT END OF PERIOD
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$ | 2,561,017 | $ | 47,934 | ||||
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SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
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CASH PAID FOR:
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Interest
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$ | - | $ | 408 | ||||
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Income taxes
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$ | 800 | $ | 800 | ||||
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NON CASH FINANCING ACTIVITIES:
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| $ | - | $ | - | |||||
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The accompanying notes are an integral part of these condensed financial statements.
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Page 3
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, 2013, 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, 2012 audited financial statements. The results of operations for the periods ended March 31, 2013 and 2012 are not necessarily indicative of the operating results for the full years.
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
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.
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 March 31, 2013 and San Marcos, California at December 31, 2012 consisted of the following:
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March 31,
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December 31,
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Location : Vista and San Marcos, CA respectively
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2013
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2012
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Raw materials
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$ | 1,432,710 | $ | 806,700 | ||||
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Finished goods
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549,665 | 684,273 | ||||||
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In transit
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- | 270,151 | ||||||
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Allowance for obsolete inventory
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(627,529 | ) | (627,529 | ) | ||||
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Total
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$ | 1,354,846 | $ | 1,133,595 | ||||
The Company has established an allowance for obsolete inventory. Expense for obsolete inventory was $-0- and $-0-, for the periods ended March 31, 2013 and December 31, 2012, respectively.
Page 4
OMNITEK ENGINEERING CORP.
Condensed Notes to Financial Statements
March 31, 2013
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
Property and equipment at March 31, 2013 and December 31, 2012 consisted of the following:
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March 31,
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December 31,
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2013
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2012
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Production equipment
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$ | 53,822 | $ | 14,814 | ||||
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Computers/Office equipment
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3,717 | - | ||||||
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Tooling equipment
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10,020 | 5,300 | ||||||
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Less: accumulated depreciation
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(7,949 | ) | (5,554 | ) | ||||
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Total
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$ | 59,610 | $ | 14,560 | ||||
Depreciation expense for the years ended March 31, 2013 and December 31, 2012 was $2,395 and $3,250, 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 1,749,582 and 2,169,855 stock options and warrants that would have been included in the fully diluted earnings per share as of March 31, 2013 and December 31, 2012, 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.
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 March 31, 2013 and December 31, 2012 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 2007.
Page 5
OMNITEK ENGINEERING CORP.
Condensed Notes to Financial Statements
March 31, 2013
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. As of March 31, 2013, the Company has amortized $36,725 of the premium leaving an amortized short-term cost basis remaining of $253,615 and long-term cost basis remaining of $937,883.
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, 2012, the Company owned a 15% interest in Omnitek Engineering Thailand Co. Ltd., a 20% interest in Omnitek Peru S.A.C., and a 5% interest in Omnitek Stationary, Inc. As of March 31, 2013 and December 31, 2012, the Company was owed $4,389 and $26,455, respectively, by related parties for the purchase of products.
Accounts Payable – Related Parties
The Company regularly incurs expenses that are paid for by related parties and purchases goods and services from related parties. As of March 31, 2013 and December 31, 2012, the Company owed related parties for such expenses, goods and services in the amounts of $(2,298) and $-0-, respectively.
Accrued Expenses – Related Parties
During the periods ended March 31, 2013 and December 31, 2012, related parties were due amounts for services performed for the Company. As of March 31, 2013 and December 31, 2012 the related parties’ payables consisted of the following:
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March 31,
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December 31,
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2013
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2012
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Amounts due to the president
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$ | 182,628 | $ | 197,398 | ||
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Amounts due to other officers of the company
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67,319 | 67,319 | ||||
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Total
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$ | 249,947 | $ | 264,717 | ||
Page 6
OMNITEK ENGINEERING CORP.
Condensed Notes to Financial Statements
March 31, 2013
In April 2007, the Company’s shareholders approved its 2006 Long-Term Incentive Plan (“the Plan”). Under the 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 March 31, 2013 the Company has a total of 3,160,000 options issued under the plan. During the three months ended March 31, 2013 the Company issued -0- options and warrants.
During the three months ended March 31, 2013 and 2012, the Company recognized expense of $38,350 and $15,450, respectively, for options and warrants that vested during the periods pursuant to ASC Topic 718.
A summary of the status of the options and warrants outstanding at March 31, 2013 and December 31, 2012 and changes during the periods then ended is presented below:
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March 31,
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December 31,
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2013
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2012
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Weighted-Average
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Weighted-Average
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Shares
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Exercise Price
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Shares
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Exercise Price
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Outstanding at beginning of year
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6,085,313 | $ | 2.29 | 2,820,000 | $ | 0.73 | |||||||||
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Granted
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- | - | 3,265,313 | 3.64 | |||||||||||
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Exercised
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- | - | - | - | |||||||||||
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Expired or cancelled
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- | - | - | - | |||||||||||
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Outstanding at end of year
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6,085,313 | 2.29 | 6,085,313 | 2.29 | |||||||||||
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Exercisable
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5,639,063 | $ | 2.11 | 5,612,813 | $ | 2.09 | |||||||||
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Range of Exercise Prices
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Number Outstanding
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Weighted-Average Remaining Contractual Life
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Number Exercisable
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Weighted-Average Exercise Price
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| $ | 0.01-0.50 | 200,000 |
1.53 years
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200,000 | $ | 0.38 | ||||||||
| $ | 0.51-0.75 | 1,580,000 |
1.60 years
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1,580,000 | 0.63 | |||||||||
| $ | 0.76-1.00 | 1,040,000 |
1.61 years
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1,040,000 | 0.94 | |||||||||
| $ | 1.01-2.00 | 90,000 |
4.34 years
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50,000 | 1.79 | |||||||||
| $ | 2.01-3.00 | 455,000 |
6.31 years
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48,750 | 2.57 | |||||||||
| $ | 3.01-4.00 | 2,720,313 |
4.02 years
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2,720,313 | 3.88 | |||||||||
| $ | 0.01-4.00 | 6,085,313 |
3.08 years
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5,639,063 | $ | 2.27 | ||||||||
In accordance with ASC 855-10, Company management reviewed all material events through the date of this report. There are no material subsequent events to report.
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ITEM 2
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes to the financial statements included elsewhere in this periodic report. Some of the statements under “Management’s Discussion and Analysis,” “Description of Business” and elsewhere herein may include forward-looking statements which reflect our current views with respect to future events and financial performance. These statements include forward-looking statements both with respect to us specifically and the alternative fuels engines industry in general. Statements which include the words “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “will,” and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise. The safe harbor provisions of the federal securities laws do not apply to any forward-looking statements contained in this registration statement.
All forward-looking statements address such matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise.
If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statements you read herein reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our written and oral forward-looking statements attributable to us or individuals acting on our behalf and such statements are expressly qualified in their entirety by this paragraph.
A. Results of Operations
For the three months ended March 31, 2013 and 2012
Revenues increased to $349,329 for the three months ended March 31, 2013 from $306,369 for the three months ended March 31, 2012, an increase of $42,960 or 14%.
Our cost of sales increased to $204,085 for the three months ended March 31, 2013 from $200,612 for the three months ended March 31, 2012, an increase of $3,473. Our gross margin was 41.6% for the three months ended March 31, 2013 compared to 34.5% in 2012. This was mainly due to higher margin product being shipped during the three months ended March 31, 2013. We anticipate our gross margin will be between 35% to 40% for the remainder of the year.
Our operating expenses for the three months ended March 31, 2013 were $415,934 compared to $267,674 in 2012, an increase of $148,260 or 55%. General and administrative expense for the three months ended March 31, 2013 was $352,305 as compared to $237,323 for the three months ended March 31, 2013. The increase is primarily due to wages and option expense of $136,338 for the three months ended March 31, 2013 as compared to $78,670, for the three months ended March 31, 2012 and facility relocation expense and increased rent expense amounts of $42,973 for the three months ended March 31, 2013 as compared to $-0-, for the three months ended March 31, 2012. Major components of general and administrative expenses for the three months ended March 31, 2013 were professional fees of $23,060, rent expense of $52,046, and salary and wages of $97,988. This compares to professional fees of $48,253, rent expense of $33,376 and salaries and wages of $63,220 for the three months ended March 31, 2012. In the three months ended March 31, 2013 professional fees were lower by approximately $25,193 due to reduction in legal expenses incurred. Research and development outlays were increased to $50,359 for the three months ended March 31, 2013 compared to $28,894 for the three months ended March 31, 2012.
Our net loss for the three months ended March 31, 2013 was $250,420, ($0.01 per share) compared to a net loss of $163,125 ($0.01 per share) for the three months ended March 31, 2012. The increased loss was primarily the result of expenses associated with business relocation and expansion in the three months ended March 31, 2013 compared to the three months ended March 31, 2012.
Results for the three months ended March 31, 2013 reflect the impact of non-cash expenses, including the value of options and warrants granted in the amount of $38,350 and depreciation and amortization of $13,270. For the three months period a year earlier, non-cash expenses for the value of options and warrants granted were $15,450 and depreciation and amortization of $1,457.
B. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Cash Requirements
We believe that we will have sufficient cash from operations to meet our operating requirements for the proximate 12 months.
Liquidity and Capital Resources
Overview
For the three months ended March 31, 2013 and 2012
At March 31, 2013, our current liabilities totaled $555,603 and our current assets totaled $4,609,590, resulting in positive working capital of $4,053,994 and a current ratio of 8.30
. We believe that through the collection of accounts receivable and the sale of inventory, in the normal course of business, we will meet our obligations on a timely basis and that our liquidity is sufficient for at least the next twelve months.
We have no firm commitments or obligations for capital expenditures. However, substantial discretionary expenditures will be required to enable us to conduct existing and planned product research, design, development, manufacturing, marketing and distribution of our products and Intellectual Property. We may need to raise additional capital to facilitate growth and support our long-term product development, manufacturing, and marketing programs. The Company has no established bank-financing arrangements and until we have sufficient assets, capital, and inventory or accounts receivable, it is not anticipated that we will secure any bank financing in the near future. Therefore, it is likely that we may need to seek additional financing through subsequent future public or private sales of our securities, including equity securities. We may also seek funding for the development, manufacturing, and marketing of our products through strategic partnerships and other arrangements with corporate partners. There can be no assurance, however, that such collaborative arrangements or additional funds will be available when needed, or on terms acceptable to us, if at all. If adequate funds are not available, we may be required to curtail one or more of our research and development programs.
We have historically incurred significant losses, which have resulted in a total accumulated deficit of $8,045,575 at March 31, 2013.
Operating Activities
We have realized a negative cash flow from operations of $584,299 for the three months ended March 31, 2013 compared to a negative cash flow of $43,362 during the three months ended March 31, 2012.
Included in the net loss of $250,420 for the three months ended March 31, 2013 are non-cash expenses, which are not a drain on our capital resources. During the three months ended March 31, 2013, the expenses include the value of options and warrants granted in the amount of $38,350 and depreciation and amortization of $13,270. Excluding these non-cash amounts, our EBITDA for the three months ended March 31, 2013 would have been a loss of $198,800.
Off-Balance Sheet Arrangements
None.
Critical Accounting Policies
and Estimates
The Company's financial statements are prepared using the accrual method of accounting. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Areas where significant estimates are required include the following:
Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts.
Inventory is stated at the lower of cost or market. The Company’s inventory consists of finished goods and raw material. The Company identifies items in its inventory that have not been sold in a timely manner. Accordingly, the Company has established an allowance for the cost of such obsolete inventory.
The Company assesses the recoverability of its long lived assets annually and whenever circumstances would indicate that there may be an impairment. The Company compares the estimated undiscounted future cash flows to the carrying value of the long lived assets to determine if an impairment has occurred. In the event that an impairment has occurred, the Company recognizes the impairment immediately.
The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. The Company uses historical experience to determine the likely-hood of realization of deferred tax liabilities and assets.
Revenue Recognition
The Company recognizes revenue from the sale of new natural gas engines and components to convert existing diesel engines to natural gas engines. Revenue is recognized upon shipment of the products, and when collection is reasonably assured.
Accounting for Income Taxes
The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes ("Topic 740"), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized.
Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.
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 March 31, 2013, 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 2007.
At March 31, 2013, the Company had net operating loss carry forwards of approximately $1,312,703 through 2034. No tax benefit has been reported in the March 31, 2013 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.
Recently Issued Accounting Pronouncements
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms, and that information is accumulated and communicated to our management, including our principal executive and principal financial officer (whom we refer to in this periodic report as our Certifying Officer), as appropriate to allow timely decisions regarding required disclosure.
Our management evaluated, with the participation of our Certifying Officer, the effectiveness of our disclosure controls and procedures as of March 31, 2013, pursuant to Rule 13a-15(b) under the Securities Exchange Act. Based upon that evaluation, our Certifying Officer concluded that, as of March 31, 2013, our disclosure controls and procedures were effective.
Changes in Internal Controls
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
We are not a party to any pending legal proceedings. The Company is not aware of any federal, state or local governmental agency presently contemplating any proceeding against the Company. No director, executive officer or affiliate of the Company or owner of record or beneficially of more than five percent of the Company's common stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
None
None
None
(a) Documents filed as part of this Report.
1.
Financial Statements.
The condensed unaudited Balance Sheet of Omnitek Engineering Corp. as of March 31, 2013 and the audited balance sheet as of December 31, 2012, the condensed unaudited Statements of Operations for the three month periods ended March 31, 2013 and 2012, and the condensed unaudited Statements of Cash Flows for the three-month periods ended March 31, 2013 and 2012, together with the notes thereto, are included in this Quarterly Report on Form 10-Q.
3.
Exhibits
. The following exhibits are either filed as a part hereof or are incorporated by reference. Exhibit numbers correspond to the numbering system in Item 601 of Regulation S-K.
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Exhibit
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Number
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Description of Exhibit
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31.1
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CEO certification pursuant to Section 302 of The Sarbanes – Oxley Act of 2002
(1)
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31.2
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CFO certification pursuant to Section 302 of The Sarbanes – Oxley Act of 2002
(1)
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32.1
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CEO and CFO certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(1)
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101
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The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 formatted in Extensible Business Reporting Language (“XBRL”): (i) the balance sheets (unaudited) ; (ii) the statements of operations (unaudited); (iii) the statements of cash flows (unaudited); and, (iv) related notes.
(2)
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(1)
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Filed herewith
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(2)
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Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files submitted under Exhibit 101 are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Omnitek Engineering Corp.
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Dated: May 15, 2013
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By: Werner Funk
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Its: President and Secretary
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Dated: May 15, 2013
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/s/ Janice M. Quigley
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By: Janice M. Quigley
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Its: Chief Financial Officer
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Page 14
TABLE OF CONTENTS
Part IItem 1. Financial StatementsNote 1 Condensed Financial StatementsNote 2 Significant Accounting PoliciesNote 2 Significant Accounting Policies (continued)Note 3 - Related Party TransactionsNote 4 - Stock Options and WarrantsNote 5 - Subsequent EventsItem 2 Management's Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II - Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sale Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 5. Other InformationItem 6. Exhibits