XBRL Rendering Preview
Document and Entity Information - USD ($)
 12 Months Ended
Dec. 31, 2019
Apr. 22, 2020
Jun. 30, 2019
Document and Entity Information      
Entity Registrant Name Omnitek Engineering Corp.    
Document Type 10-K    
Document Period End Date Dec. 31, 2019    
Amendment Flag false    
Entity Central Index Key 0001404804    
Current Fiscal Year End Date --12-31    
Entity Common Stock, Shares Outstanding   21,339,865  
Entity Public Float     $ 563,980
Entity Filer Category Non-accelerated Filer    
Entity Emerging Growth Company false    
Entity Small Business true    
Entity Shell Company false    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Voluntary Filers No    
Entity Well-known Seasoned Issuer No    
Document Fiscal Year Focus 2019    
Document Fiscal Period Focus FY    
Entity File Number 000-53955    
Entity Incorporation, State Country Code CA    
Entity Address, Address Line One 1333 Keystone Way, #101    
Entity Address, City or Town Vista    
Entity Address, State or Province CA    
Entity Address, Postal Zip Code 92081    
City Area Code 760    
Local Phone Number 591-0089    
Balance Sheets - USD ($)
Dec. 31, 2019
Dec. 31, 2018
CURRENT ASSETS    
Cash $ 20,236 $ 17,060
Accounts receivable, net 7,462 13,442
Accounts receivable - related parties 16,712 6,666
Inventories, net 1,022,365 1,359,678
Contract assets 13,221 12,772
Deposits 2,501 5,811
Total Current Assets 1,082,497 1,415,429
PROPERTY & EQUIPMENT, net 1,809 2,376
OTHER ASSETS    
Other noncurrent assets 30,425 30,425
Total Other Assets 30,425 30,425
TOTAL ASSETS 1,114,731 1,448,230
CURRENT LIABILITIES    
Accounts payable and accrued expenses 409,020 362,363
Accrued management compensation 706,830 506,103
Accounts payable - related parties 134,077 145,171
Notes payable - related parties, current portion 27,000 15,000
Notes payable 15,000 0
Convertible notes payable 0 100,000
Contract liabilities 75,000 84,496
Customer deposits 163,681 140,338
Total Current Liabilities 1,530,608 1,353,471
LONG-TERM LIABILITIES    
Notes payable - related parties, net of current portion 15,000 0
Total Liabilities 1,545,608 1,353,471
STOCKHOLDERS' EQUITY (DEFICIT)    
Common stock, 125,000,000 shares authorized; no par value; 21,339,865 and 20,420,402 shares, respectively issued and outstanding 8,527,210 8,427,210
Common stock subscribed 20,000 0
Additional paid-in capital 11,997,842 11,923,056
Accumulated deficit (20,975,929) (20,255,507)
Total Stockholders' Equity (Deficit) (430,877) 94,759
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 1,114,731 $ 1,448,230
Balance Sheets (Parenthetical) - $ / shares
Dec. 31, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Common Stock, par or stated value $ 0 $ 0
Common Stock, shares authorized 125,000,000 125,000,000
Common Stock, shares issued 21,339,865 20,420,402
Common Stock, shares outstanding 21,339,865 20,420,402
Statements of Operations - USD ($)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Income Statement [Abstract]    
REVENUES $ 951,323 $ 1,271,118
REVENUES, related parties 13,086 14,568
Total Revenues 964,409 1,285,686
COST OF GOODS SOLD 554,101 687,457
INVENTORY RESERVE ADJUSTMENT 242,846 97,436
Total Cost of Goods Sold 796,947 784,893
GROSS MARGIN 167,462 500,793
OPERATING EXPENSES    
General and administrative 759,606 811,459
Research and development 106,916 106,896
Depreciation and amortization 567 7,590
Total Operating Expenses 867,089 925,945
LOSS FROM OPERATIONS (699,627) (425,152)
OTHER INCOME (EXPENSE)    
Loss on settlement of debt 0 (32,963)
Other income 0 8,391
Interest expense (19,995) (17,882)
Total Other Expense (19,995) (42,454)
LOSS BEFORE INCOME TAXES (719,622) (467,606)
INCOME TAX EXPENSE 800 800
NET LOSS $ (720,422) $ (468,406)
BASIC AND DILUTED LOSS PER SHARE $ (0.04) $ (0.02)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED 20,574,038 20,349,024
Statement of Stockholders' Equity (Deficit) - USD ($)
Common Stock
Common Stock Subscribed
Additional Paid-In Capital
Accumulated Deficit
Total
Stockholders' Equity, beginning of period, Value at Dec. 31, 2017 $ 8,411,411 $ 11,852,363 $ (19,787,101) $ 476,673
Stockholders' Equity, beginning of period, Shares at Dec. 31, 2017 20,281,082        
Value of options and warrants issued for services 37,730 37,730
Conversion of related note payable, Value $ 15,799 15,799
Conversion of related note payable, Shares 139,320        
Loss on settlement of debt   32,963   (32,963)
Sale of option to purchase common stock         0
Net loss (468,406) (468,406)
Stockholders' Equity, end of period, Value at Dec. 31, 2018 $ 8,427,210 11,923,056 (20,255,507) 94,759
Stockholders' Equity, end of period, Shares at Dec. 31, 2018 20,420,402        
Value of options and warrants issued for services 49,786 49,786
Loss on settlement of debt         0
Conversion of note payable, Value $ 25,000 25,000
Conversion of note payable, Shares 500,000        
Deposit - stock purchase agreement   20,000     20,000
Sale of common stock, Value $ 75,000     75,000
Sale of common stock, Shares 419,463        
Sale of option to purchase common stock 25,000 25,000
Net loss (720,422) (720,422)
Stockholders' Equity, end of period, Value at Dec. 31, 2019 $ 8,527,210 $ 20,000 $ 11,997,842 $ (20,975,929) $ (430,877)
Stockholders' Equity, end of period, Shares at Dec. 31, 2019 21,339,865        
Statements of Cash Flows - USD ($)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
OPERATING ACTIVITIES    
Net loss $ (720,422) $ (468,406)
Adjustments to reconcile net loss to net cash used in operating activities:    
Amortization and depreciation expense 567 7,590
Options and warrants granted 49,786 37,730
Inventory reserve 242,846 97,436
Loss on settlement of debt 0 32,963
Changes in operating assets and liabilities:    
Accounts receivable 5,980 (5,458)
Accounts receivable-related parties (10,046) (3,226)
Deposits 3,311 (4,570)
Inventory 94,467 97,541
Contract assets (449) (12,772)
Accounts payable and accrued expenses 46,656 5,131
Customer deposits 23,343 (72,072)
Accounts payable-related parties (11,094) 30,850
Contract liabilities (9,496) 54,496
Accrued management compensation 200,727 99,262
Net Cash Used in Operating Activities (83,824) (103,505)
INVESTING ACTIVITIES    
Purchase of property and equipment 0 (2,714)
Net Cash Used in Investing Activities 0 (2,714)
FINANCING ACTIVITIES    
Payments on convertible notes payable (60,000) 0
Proceeds from common stock subscription 20,000 0
Proceeds from sale of common stock 75,000 0
Proceeds from sale of option to purchase common stock 25,000 0
Proceeds from convertible notes payable 100,000
Proceeds from notes payable - related party 27,000 0
Net Cash Provided by Financing Activities 87,000 100,000
NET CHANGE IN CASH 23,279 (6,219)
CASH AT BEGINNING OF YEAR 17,060 23,279
CASH AT END OF PERIOD 20,236 17,060
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS    
Cash paid for: Interest 24,187 10,925
Cash paid for: Income taxes 800 800
NON CASH INVESTING AND FINANCING ACTIVITIES    
Conversion of Convertible Note Payable $ 25,000 $ 15,799
Note 1- Organization and Business Activity
 12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 1- Organization and Business Activity

NOTE 1 – ORGANIZATION AND BUSINESS ACTIVITY

 

Omnitek Engineering, Corp. (“Omnitek” or “the Company”) was incorporated on October 9, 2001 under the laws of the State of California. Omnitek develops and sells a proprietary technology to convert diesel engines to an alternative fuel, new natural gas engines, and complementary products. Omnitek products are available for stationary applications and the global transportation markets, which includes light commercial vehicles, minibuses, heavy-duty trucks, municipal buses, as well as rail and marine applications. The technology can be applied for compressed natural gas (“CNG”), liquefied natural gas (“LNG”), or renewable natural gas (“Biogas” or “RNG”), as well as liquid petroleum gas (“Propane” or “LPG”). Omnitek began operations on October 10, 2001, and was a spin-off from Nology Engineering, Inc.

 
Note 2 - Summary of Significant Accounting Policies
 12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 2 - Summary of Significant Accounting Policies

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

a.       Accounting Methods

 

The Company's financial statements are prepared using the accrual method of accounting.  The Company has elected a December 31, year-end.

 

b.       Use of Estimates in Preparing Financial Statements

 

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. The Company also regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowances, inventory valuation allowances, allowance for doubtful receivables and valuations of equity-based payments.

 

c.       Cash and Cash Equivalents

 

For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

 

d.       Accounts Receivable

 

Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis.  Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts.  Trade receivables are written off when deemed uncollectible.  Recoveries of trade receivables previously written off are recorded when received.   Allowance for doubtful accounts for the years ended December 31, 2019 and 2018 was $15,000 and $15,000, respectively. Additionally, bad debt expense for the years ended December 31, 2019 and 2018 was $-0- and $-0-, respectively.

 

e.       Inventories

 

Inventories are stated at the lower of cost or market, cost determined on an average cost basis.  Market value for raw materials is based on replacement costs. Inventory costs include material, labor and manufacturing overhead.  The Company reviews inventories on hand at least annually and records provisions for estimated excess, slow moving and obsolete inventory, as well as inventory with a carrying value in excess of net realizable value. The regular and systematic inventory valuation reviews include a current assessment of future product demand, historical experience and product expiration.

 

f.       Long-Lived Assets

 

The Company assesses the recoverability of its long-lived assets annually and whenever circumstances would indicate that there may be an impairment.  The Company compares the estimated undiscounted future cash flows to the carrying value of the long-lived assets to determine if an impairment has occurred.  In the event that an impairment has occurred, the Company will recognize the impairment immediately. No impairment expense was

recognized as of December 31, 2019 or 2018.

 

g.       Property and Equipment

 

Property and equipment are recorded at cost.  Depreciation and amortization are calculated on the straight-line method over the shorter of the lease term or the estimated useful lives of the assets ranging from three to five years.

 

h. Revenue Recognition

 

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

 

We recognize revenue on various products and services as follows:

 

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

 

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

 

Performance Obligations

 

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

 

Performance Obligations Satisfied Over Time

 

Revenues for Omnitek’s long-term contracts that satisfy the criteria for over time recognition (formerly known as percentage-of-completion method) is recognized as the work progresses. The majority of the revenue is derived from long-term engine development agreements that typically span between 12 to 24 months. Omnitek’s long-term contracts will continue to be recognized over time because our typical contract is for a customized asset

 

with no alternative use and generally the Company has a right to payment for work completed to date. Under the new revenue standard, the cost-to-cost measure of progress continues to best depict the transfer of control of assets to the customer, which occurs as the Company incurs costs. Contract costs include labor and material. Revenue from products and services transferred to customers over time accounted for 5% and 1% of revenue for the years ended December 31,2019 and 2018, respectively.

 

Performance Obligations Satisfied at a Point in Time

 

Revenue from product sales is recognized at a point in time. These sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risk and rewards transfer Upon fulfilment of the performance obligation, the customer is provided an invoice demonstrating transfer of control to the customer. Revenue from goods and services transferred to customers at a point in time accounted for 95% and 99% of revenue for the years ended December 31, 2019 and 2018, respectively.

 

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

 

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

 

Contract Estimates

 

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

 

Variable Consideration

 

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

 

Disaggregation of Revenue

 

The following table presents Omnitek’s revenues disaggregated by region and product type:

 

      December 31,       December 31,
        2019           2018  
      Consumer Long-term         Consumer Long-term  
Segments     Products Contract Total       Products Contract Total
Domestic   $ 450,986 - 450,986     $ 484,604 - 484,604
International     468,949 44,474 513,423       788,310 12,772 801,082
    $ 919,935 44,474 964,409     $ 1,272,914 12,772 1,285,686
                         
Filters     561,560 - 561,560       819,517 - 819,517
Components     358,375 - 358,375       453,397 - 453,397
Engineering Services     - 44,474 44,474       - 12,772 12,772
    $ 919,935 44,474 964,409     $ 1,272,914 12,772 1,285,686
                                               

 

i.       Cost of Goods Sold

 

The Company includes product costs (i.e. material, direct labor and overhead costs), shipping and handling expense, production-related depreciation expense and product license agreement expense in cost of goods sold.

 

j.       Research and Development

 

The Company expenses the costs of researching and developing its products during the period incurred. During the years ended December 31, 2019 and 2018, the Company incurred research and development expenses of $106,916 and $106,896, respectively.

 

k.       Advertising

 

The Company follows the policy of charging the costs of advertising to expense as incurred. During the years ended December 31, 2019 and 2018, the Company expensed $-0- and $-0-, respectively.

 

l.       Provision for Income Taxes

 

The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes ("Topic 740"), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

 

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of December 31, 2019, 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.

 

m.       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 2,672,223 and 2,556,390 stock options and warrants that would have been included in the fully diluted earnings per share as of December 31, 2019 and 2018, respectively. However, the common stock equivalents were not included in the loss per share computation because they are anti-dilutive.  

 

n.       Fair Value Measurements

 

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

 

Level 1 – Quoted prices in active markets for identical assets or liabilities;

 

Level 2 – Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and

 

Level 3 – Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.

 

o.       Stock-based Compensation

 

The Company recognizes compensation expense for stock-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value.  The Company estimates the fair

value of stock options using a Black-Scholes option pricing model which requires management to make estimates for certain assumptions regarding risk-free interest rate, expected life of options, expected volatility of stock and expected dividend yield of stock.

 

p.       Concentration of Risks

 

Customers

 

During the year ended December 31, 2019, seven customers accounted for approximately 74% of sales.

 

During the year ended December 31, 2018, seven customers accounted for approximately 73% of sales.

 

Suppliers

 

During the year ended December 31, 2019, five suppliers accounted for 86 % of products purchased.

 

During the year ended December 31, 2018, four suppliers accounted for 82% of products purchased.

 

q.       Liquidity and Going Concern

 

Historically, the Company has incurred net losses and negative cash flows from operations.  As of December 31, 2019, the Company had an accumulated deficit of $20,975,929 and total stockholders’ deficit of ($430,877).  At December 31, 2019, the Company had current assets of $1,082,497 including cash of $20,236, and current liabilities of $1,530,608, resulting in negative working capital of $448,111. For 2019, the Company reported a net loss of $720,422 and net cash used by operating activities of $83,824. Management believes that based on its operating plan, the projected sales for 2020, combined with funds available from its working capital will be sufficient to fund operations for the next twelve months from the date these financial statements were issued.  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.     

 

r.       Recently Adopted Accounting Pronouncements

 

In February 2016, the FASB issued its new lease accounting guidance in ASU 2016-2, Leases (Topic 842). Under the new guidance, lessees will be required to recognize for all leases (with the exception of short-term leases) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The standard is effective for the interim and annual reporting periods beginning after December 15, 2018. ASU 2016-2 allows companies to adopt the new standard by either applying a modified retrospective method to the beginning of the earliest period presented in the financial statements or an optional transition method to initially apply the standard on January 1, 2019 and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted the standard using the optional transition method and will apply the new guidance prospectively to leases that exist and those entered into on or after January 1, 2019 without adjusting comparative periods in the financial statements.

 

In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployees Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the scope of Topic 718 (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. With the adoption of ASU 2018-07, the accounting for share-based payments to nonemployees and employees will be substantially the same. ASU 2018-07 is effective for public companies for annual and interim periods beginning after December 15, 2018, with early adoption permitted. Management has

assessed the impact that ASU 2018-07 will have on the Company and determined that it will not have a material impact on the Company’s financial statements and related disclosures. 

 

s.       Recently Issued Accounting Pronouncements

 

The Company has evaluated recent accounting pronouncements and their adoption has not had or is expected to have a material impact on the Company’s financial position, or statements.
Note 3 - Contract Assets And Liabilities
 12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
Note 3 - Contract Assets And Liabilities

NOTE 3 – CONTRACT ASSETS AND LIABILITIES

 

Contract Balances

 

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

 

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

 

  December 31,   December 31,
  2019   2018
Contract assets $ 13,221   $ 12,772
Contract liabilities $ (75,000)   $ (84,496)
Net amount of contract liabilities in excess of contract  assets $ (61,779)   $ (71,724)
Note 4 - Inventories
 12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 4 - Inventories

NOTE 4 – INVENTORIES

 

Inventories are located in Vista, California and at December 31, 2019 and 2018 consisted of the following:

 

  December 31,   December 31,
  2019   2018
Raw materials $ 935,834   $ 948,060
Finished goods   1,073,623     1,147,052
Work in progress   1,800     -
Inventory in transit   -     10,611
Allowance for obsolete inventory   (988,892)     (746,045)
Total $ 1,022,365   $ 1,359,678

 

The Company has established an allowance for obsolete inventory.  Expense for obsolete inventory was $242,846 and $97,436, for the years ended December 31, 2019 and December 31, 2018, respectively.
Note 5 - Property and Equipment
 12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 5 - Property and Equipment

NOTE 5 – PROPERTY AND EQUIPMENT

 

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

 

  December 31,   December 31,
  2019   2018
Production equipment $ 64,673      $ 64,673   
Computers/Office equipment   28,540        28,540   
Tooling equipment   12,380        12,380   
Leasehold Improvements   42,451        42,451   
Less: accumulated depreciation   (146,235)       (145,668)  
Total $ 1,809      $ 2,376   

 

Depreciation expense for the years ended December 31, 2019 and 2018 was $567 and $7,590, respectively.
Note 6 - Customer Deposits
 12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 6 - Customer Deposits

NOTE 6 – CUSTOMER DEPOSITS

 

The Company may require a customer deposit from domestic and international customers. As of December 31, 2019 and 2018 the Company had customer deposits of $163,681 and $140,338, respectively.
Note 7 - Notes Payable - Related Parties
 12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
Note 7 - Notes Payable - Related Parties

NOTE 7 – NOTES PAYABLE – RELATED PARTIES

 

On September 11, 2019 the Company borrowed $12,000 from a board member. The loan was evidenced by an unsecured promissory note which bears simple interest at the rate of 8% per annum. The principal amount of the note and all accrued interest was due and payable on or before December 11, 2019. Under the terms of a Promissory Note Extension, the principal amount of the note and all accrued interest is due and payable on or before the extended maturity date of June 30, 2020.

 

On May 28, 2019 the Company issued a Working Capital Promissory Note to the Company’s CEO for loans made to the Company during the calendar year 2019. The note has an annual interest rate of 5%, is unsecured and had an original maturity date of December 31, 2019. During 2019 the Company’s CEO made cumulative loans to the Company of $15,000. Under the terms of a Promissory Note Extension, the principal amount of the note and all accrued interest is due and payable on or before the extended maturity date of December 31, 2020.

 

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, 2020.

 

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

 

  December 31,   December 31,
  2019   2018
Note payable, related party, current portion $ 27,000   $ 15,000
Note payable, related party, net of current portion   15,000     -
Total $ 42,000   $ 15,000
Note 8 - Debt
 12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 8 - Debt

NOTE 8 – DEBT

 

Note payable

 

The Convertible Note Payable (see Note 9) matured on December 11, 2019, with an outstanding principal balance of $40,000. The Lender elected to convert $25,000 of the outstanding principal to restricted common stock. Under the terms of the Allonge to Senior Secured Convertible Promissory Note and Agreement, the remaining principal balance of $15,000 is due and payable with an extended maturity date of May 11, 2020. As of December 31, 2019 and December 31, 2018 Note Payable consisted of the following:

 

  December 31,   December 31,
  2019   2018
Notes payable $ 15,000   $ -
Total $ 15,000   $ -

 

Convertible Notes 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 $.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”.

 

In accordance with the terms of the Secured Convertible Promissory Note, the lender elected to convert $25,000 of the outstanding principal balance (totaling $40,000) of the note on the maturity date to restricted shares of the Company’s Common Stock at five cents ($0.05) per share. The remaining $15,000 of the principal balance was due and payable on the maturity date. Under the Allonge to Senior Convertible Promissory Note and Agreement entered into between the lender and the Company, the due date for the remaining $15,000 principal balance was extended to March 11, 2020. As of December 31, 2019 the outstanding principal balance of $15,000 has been reclassified to Note Payable since there is no longer a conversion feature associated with this balance.

 

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

 

  December 31,   December 31,
  2019   2018
Convertible note payable $ -   $ 100,000
Total $ -   $ 100,000
Note 9 - Commitments
 12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 9 - Commitments

NOTE 9 – COMMITMENTS

 

As of December 31, 2019 and 2018, the Company had outstanding purchase commitments for inventory totaling $152,583 and $133,141, respectively. Of these amounts, the Company had made prepayments of $18,645 as of December 31, 2019 and $21,956 as of December 31, 2018 and had commitments for future cash outlays for inventory totaling $133,938 and $111,185, respectively.

 

Effective September 1, 2019 the Company entered into the Fourth Amendment to the Lease for its facility, reducing the size of the leased space to 21,786 square feet and extending the lease term to August 31, 2020, at which time a new lease extension has to be negotiated. The current lease payment is $14,161 per month, plus common area maintenance expenses (CAM). Under the amended lease, past due rent is payable at monthly installments of $10,000, until such time as the past due rent has been paid in full. The lease is not subject to the right-of-use asset rules under ASU 2016-2 because it qualifies for the short-term lease exception under that pronouncement.

 

As of December 31, 2019 the outstanding balance was $62,529.

 

The security deposit of $14,000 remained the same.
Note 10 - Related Party Transactions
 12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 10 - Related Party Transactions

NOTE 10 – RELATED PARTY TRANSACTIONS

 

Accounts Receivable – Related Parties

 

The Company holds a non-controlling interest in various distributors in exchange for use of the Company’s name and logo. As of December 31, 2019, the Company owned a 15% interest in Omnitek Engineering Thailand Co. Ltd. and a 20% interest in Omnitek Peru S.A.C.  As of December 31, 2019 and December 31, 2018, the Company was owed $16,712 and $6,666, respectively, by related parties for the purchase of products and services.

 

Accrued Management Expenses

 

During the periods ended December 31, 2019 and December 31, 2018, the Company’s president and chief financial officer were due amounts for services performed for the Company.  As of December 31, 2019 and December 31, 2018 the accrued management fees consisted of the following:

 

  December 31,   December 31,
  2019   2018
Amounts due to the president $ 541,504   $ 399,296
Amounts due to the chief financial officer   165,326     106,807
Total $ 706,830   $
Note 11 - Stockholders' Equity
 12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 11 - Stockholders' Equity

NOTE 11 – STOCKHOLDERS’ EQUITY

 

Common Stock

 

On July 7, 2018 the Company issued 139,320 shares of its restricted common stock in consideration of a capital contribution via the conversion by a board member of $15,799, constituting unpaid principal of $15,000 and accrued interest of $799, owing under that certain Promissory Note dated November 7, 2017.

 

On September 6, 2019 the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a purchaser wherein the purchaser agreed to buy an aggregate of 3,579,014 restricted shares of common stock of the Company at a price of $.1788 per share for an aggregate purchase price of $640,000. Subject to the default and penalty provisions in the Purchase Agreement, the sale and purchase of the restricted shares and payment of the purchase price shall be made in 20 tranches as follows: (a) $75,000 payable on or before September 30, 2019 (tranche 1), (b) the balance of the purchase price paid in 18 monthly tranches, at a minimum of $10,000 per month with a total quarterly payment of no less than $90,000, and (c) a final payment of $25,000 on or before April 1, 2021(tranche 20). In accordance with these terms, purchaser paid $75,000 on September 30, 2019 and was issued 419,463 restricted shares of the Company’s restricted common stock. Between October 1, 2019 and December 31, 2019 the purchaser made cumulative payments of $20,000 towards the $90,000 required under the agreement and was therefore in default under the terms of the agreement. In accordance with a provision in the agreement the Company elected to waive the default but assess a $.03 per share penalty for all future installment payments, increasing the purchase price to $.2033 per share. The $20,000 paid by the purchaser as of December 31, 2019 has been classified as Common Stock Subscribed on the balance sheet.

 

Additionally, subject to the payment by the purchaser of the additional sum of $25,000 by September 30, 2019, the Company shall grant to the purchaser, an option to purchase an additional 3,579,014 restricted shares of common stock for an additional $640,000. The $25,000 option purchase price is consideration for the option and shall be non-refundable and shall not be applied to the purchase of any restricted shares. The purchaser may exercise the option within six months of the initial (tranche 1) payment (i.e., September 30, 2019) by paying the initial option tranche exercise payment of $75,000. If the purchaser has not exercised and paid the initial option exercise payment of $75,000 by March 31, 2020 the option to purchase the option shares shall expire and be terminated. The purchaser made a timely payment of $25,000 on September 30, 2019 to purchase the option but did not make the initial option tranche exercise payment of $75,000 by March 31, 2020. Therefore, the option to purchase the option shares has expired.

 

On December 31, 2019 the Company issued 500,000 shares of its restricted common stock in consideration of a capital contribution via the conversion of $25,000 of unpaid principal owing under that certain Convertible Note dated June 11, 2018 (see Note 9).

 

Options and Warrants

 

During the years ended December 31, 2019 and 2018, the Company granted 450,000 and 590,000 options for services, respectively.  During the years ended December 31, 2019 and 2018, respectively, the Company recognized expense of $49,786 and $37,730 related to options that vested during the years, pursuant to ASC Topic 718. The total remaining amount of compensation expense to be recognized in future periods is $7,014. No future compensation expense has been calculated for 150,000 options that were granted in 2015 due to the low probability that any of these options will vest before maturity.

 

In April 2007, the Company’s shareholders approved its 2006 Long-Term Incentive Plan (“the 2006 Plan”). Under the 2006 plan, the Company may issue up to 10,000,000 shares of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of December 31, 2014 the remaining 2,590,000 options previously issued under the plan expired. On August 3, 2011 the Board of Directors adopted the Omnitek Engineering Corp. 2011 Long-term Incentive Plan (the “2011 Plan”), under which 1,000,000 shares of Company’s Common Stock were reserved for issuance of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of December 31, 2019 the Company has a total of 600,000 options issued under the plan. On September 11, 2015 the Board of Directors adopted the Omnitek Engineering Corp. 2015 Long Term Incentive Plan (the “2015 Plan”), under which 2,500,000 shares of the Company’s Common Stock were reserved for issuance of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of December 31, 2019 the Company has a total of 2,065,556 options issued under the 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 December 31, 2019, the Company has a total of 750,000 options issued under the plan. During the twelve months ended December 31, 2019 and 2018 the Company issued -0- and -0- warrants, respectively.

 

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

 

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

 

 

December 31,

2019

  

December 31,

2018

Expected volatility 142%   150%  
Expected dividends 0%   0%  
Expected term 7 Years   7 Years  
Risk-free interest rate 2.01%   2.46%  
               

 

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

 

  December 31,   December 31,
                                      2019                          2018
        Weighted-Average         Weighted-Average
  Shares     Exercise Price   Shares     Exercise Price
Outstanding at beginning of year 2,965,556   $ 0.63   2,600,556   $ 0.82
Granted 450,000     0.08   590,000     0.07
Exercised -     -   -     -
Expired or cancelled (475,000)     2.49   (225,000)     1.33
Outstanding at end of year 2,940,556     0.25   2,965,556     0.63
Exercisable 2,672,223    $                    0.23   2,556,390    $                    0.67

 

A summary of the status of the options outstanding at December 31, 2019 is presented below:

 

Range of Exercise Prices   Number Outstanding   Weighted-Average Remaining Contractual Life     Number Exercisable   Weighted-Average Exercise Price
$0.01-1.00   2,890,556   4.18 years     2,622,223   $0.21
$1.01-2.00   50,000   0.36 years     50,000   1.13
$0.01-2.00   2,940,556   4.12 years     2,672,223   $0.23

 

A summary of the status of the options and warrants outstanding at December 31, 2018 is presented below:

 

Range of Exercise Prices   Number Outstanding   Weighted-Average Remaining Contractual Life   Number Exercisable   Weighted-Average Exercise Price
$0.01 - 1.00   2,440,556   4.80 years   2,031,390   $0.24
$1.01 - 2.00   75,000   1.18 years   75,000   1.37
$2.01 - 3.00   450,000   0.81 years   450,000   2.53
$0.01 - 3.00   2,965,556   4.11 years   2,556,390   $0.67
Note 12 - Income Taxes
 12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 12 - Income Taxes

NOTE 12 – INCOME TAXES

 

The provision for income taxes for the year ended December 31, 2019 and 2018 consists of the following:

 

    December 31,     December 31,  
Federal   2019      2018  
Current   $ -        $ -     
Deferred     -          -     
State                
Current   $ 800        $ 800     
Deferred     -          -     
  Income tax expense   $ 800        $ 800     

 

Net deferred tax assets consist of the following components as of December 31, 2019 and 2018:

 

    December  31,     December 31,  
Deferred tax assets:    2019      2018  
Net operating loss carryover   $ 6,821,469          6,560,622       
Research and development carry forward     131,088          131,088       
Inventory reserve     237,334          179,051       
Allowance for doubtful accounts     3,600          3,600       
Warranty allowance     3,068          3,068       
Accrued compensation     169,639          121,465       
Deferred tax liabilities:                  
Depreciation     (47,001)         (97,331)      
Valuation allowance     (7,319,197)         (6,901,563)      
Net deferred tax asset   $ -          -       
                     

 

The income tax provision differs from the amount of income tax determined by applying the estimated U.S. federal and state income tax rate of 24% as of December 31, 2019 and December 31, 2018 to pretax income from continuing operations for the year ended December 31, 2019 and 2018 due to the following:  

 

           
    December 31,     December 31,
      2019       2018
Book loss      $ (172,902)         (112,418)  
Meals and entertainment        16          16   
State tax deduction        -          -   
Deferred rent        -         (926)  
Stock/Options for services        11,949          9,055   
Officer’s life ins premium        1,181          1,181   
Depreciation        (8,784)         (7,593)  
Accrued compensation        48,174          23,823   
Inventory reserve        58,283          23,385   
Valuation allowance        124,964          127,753   
Net operating loss carryover        (62,081)         (63,476)  
Income Tax Expense      $ 800          800   

 

On December 21, 2017, the TCJA was enacted. Among other things, the TCJA reduces the U.S. federal corporate tax rate from 35 percent to 21 percent beginning January 1, 2018, requires companies to pay a one-time transition tax on certain previously unremitted earnings on non-U.S. subsidiaries, creates new taxes on certain foreign sourced earnings and imposes additional limitations on certain deductions, including interest expense and net operating losses arising after 2017. The Company has assessed the impact of the TCJA and is not subject to the one-time transition tax. The Company remeasured certain deferred tax assets and liabilities based on the rates that they are expected to reverse in the future, which is generally 21 percent under TCJA. The decrease in the Company’s net deferred tax assets was offset by a corresponding decrease in its valuation allowance.

 

At December 31, 2019, the Company had net operating loss carry forwards of approximately $6,821,469 through 2034.  No tax benefit has been reported in the December 31, 2019 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.
Note 13 - Subsequent Events
 12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Note 13 - Subsequent Events

NOTE 13 – SUBSEQUENT EVENTS

 

On January 7, 2020, Richard Miller notified the Company of his resignation as a director and the Chief Financial Officer of the Company, effective February 7, 2020.

 

On January 7, 2020, the Company issued 500,000 restricted shares of Common Stock to Jack Ferraro upon the conversion of $25,000 of the unpaid principal owing under that certain Senior Secured Promissory Note dated June 11, 2018 (the “Note”).  The shares were issued at a price of $0.05 per the terms of the Note.  No underwriters were used. The shares were issued pursuant to an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.  Mr. Ferraro is an “Accredited Investor” as defined under Rule 501 of Regulation D of the Act and has such knowledge and experience and possessed such information as it deemed necessary to make an informed investment decision.

 

On January 19, 2020 the Company and Werner Funk, President and CEO, agreed to a one-year extension of the $15,000 related party note payable due to Mr. Funk. The extended due date is January 19, 2021.

 

On March 11, 2020 the Company executed the Amendment and Agreement to the Allonge to the Secured Senior Convertible Promissory Note (the “Agreement”). The Agreement amended the original Allonge to Senior Convertible Promissory Note and Agreement by extending the due date from March 11, 2020 to May 15, 2020.

 

On March 27, 2020 the Company granted a total of $150,000 Non-Qualified Stock Options pursuant to the 2017 Long-Term Incentive Plan. The Options were allocated as follows: 50,000 Options to the CEO for past and continued services (vest and exercisable immediately) and 50,000 Options each to two outside directors (total of 100,000 Options) for past and continued services (vest and exercisable immediately).

 

In December 2019, a novel strain of coronavirus disease (“COVID-19”) was first reported in Wuhan, China. Less than four months later, on March 11, 2020, the World Health Organization declared COVID-19 a pandemic. The extent of COVID-19’s impact on the Company’s operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. As a result, it is not currently possible to ascertain the overall impact of COVID-19 on the Company’s business. However, if the pandemic continues to evolve into a severe worldwide health crisis, the disease could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.
Note 2 - Summary of Significant Accounting Policies (Policies)
 12 Months Ended
Dec. 31, 2019
Policy Text Block [Abstract]  
a. Accounting Methods

a.       Accounting Methods

 

The Company's financial statements are prepared using the accrual method of accounting.  The Company has elected a December 31, year-end.
b. Ues of Estimates in Preparing Financial Statements

b.       Use of Estimates in Preparing Financial Statements

 

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. The Company also regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowances, inventory valuation allowances, allowance for doubtful receivables and valuations of equity-based payments.
c. Cash and Cash Equivalents

c.       Cash and Cash Equivalents

 

For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
d. Accounts Receivable

d.       Accounts Receivable

 

Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis.  Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts.  Trade receivables are written off when deemed uncollectible.  Recoveries of trade receivables previously written off are recorded when received.   Allowance for doubtful accounts for the years ended December 31, 2019 and 2018 was $15,000 and $15,000, respectively. Additionally, bad debt expense for the years ended December 31, 2019 and 2018 was $-0- and $-0-, respectively.
e. Inventories

e.       Inventories

 

Inventories are stated at the lower of cost or market, cost determined on an average cost basis.  Market value for raw materials is based on replacement costs. Inventory costs include material, labor and manufacturing overhead.  The Company reviews inventories on hand at least annually and records provisions for estimated excess, slow moving and obsolete inventory, as well as inventory with a carrying value in excess of net realizable value. The regular and systematic inventory valuation reviews include a current assessment of future product demand, historical experience and product expiration.
f. Long-lived Assets

f.       Long-Lived Assets

 

The Company assesses the recoverability of its long-lived assets annually and whenever circumstances would indicate that there may be an impairment.  The Company compares the estimated undiscounted future cash flows to the carrying value of the long-lived assets to determine if an impairment has occurred.  In the event that an impairment has occurred, the Company will recognize the impairment immediately. No impairment expense was recognized as of December 31, 2019 or 2018.
g. Property and Equipment

g.       Property and Equipment

 

Property and equipment are recorded at cost.  Depreciation and amortization are calculated on the straight-line method over the shorter of the lease term or the estimated useful lives of the assets ranging from three to five years.
h. Revenue Recognition

h. Revenue Recognition

 

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

 

We recognize revenue on various products and services as follows:

 

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

 

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

 

Performance Obligations

 

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

 

Performance Obligations Satisfied Over Time

 

Revenues for Omnitek’s long-term contracts that satisfy the criteria for over time recognition (formerly known as percentage-of-completion method) is recognized as the work progresses. The majority of the revenue is derived from long-term engine development agreements that typically span between 12 to 24 months. Omnitek’s long-term contracts will continue to be recognized over time because our typical contract is for a customized asset with no alternative use and generally the Company has a right to payment for work completed to date. Under the new revenue standard, the cost-to-cost measure of progress continues to best depict the transfer of control of assets to the customer, which occurs as the Company incurs costs. Contract costs include labor and material. Revenue from products and services transferred to customers over time accounted for 5% and 1% of revenue for the years ended December 31,2019 and 2018, respectively.

 

Performance Obligations Satisfied at a Point in Time

 

Revenue from product sales is recognized at a point in time. These sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risk and rewards transfer Upon fulfilment of the performance obligation, the customer is provided an invoice demonstrating transfer of control to the customer. Revenue from goods and services transferred to customers at a point in time accounted for 95% and 99% of revenue for the years ended December 31, 2019 and 2018, respectively.

 

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

 

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

 

Contract Estimates

 

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

 

Variable Consideration

 

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

 

Disaggregation of Revenue

 

The following table presents Omnitek’s revenues disaggregated by region and product type:

 

      December 31,       December 31,
        2019           2018  
      Consumer Long-term         Consumer Long-term  
Segments     Products Contract Total       Products Contract Total
Domestic   $ 450,986 - 450,986     $ 484,604 - 484,604
International     468,949 44,474 513,423       788,310 12,772 801,082
    $ 919,935 44,474 964,409     $ 1,272,914 12,772 1,285,686
                         
Filters     561,560 - 561,560       819,517 - 819,517
Components     358,375 - 358,375       453,397 - 453,397
Engineering Services     - 44,474 44,474       - 12,772 12,772
    $ 919,935 44,474 964,409     $ 1,272,914 12,772 1,285,686
                                               
i. Cost of Good Sold

i.       Cost of Goods Sold

 

The Company includes product costs (i.e. material, direct labor and overhead costs), shipping and handling expense, production-related depreciation expense and product license agreement expense in cost of goods sold.
j. Research and Development

j.       Research and Development

 

The Company expenses the costs of researching and developing its products during the period incurred. During the years ended December 31, 2019 and 2018, the Company incurred research and development expenses of $106,916 and $106,896, respectively.
k. Advertising

k.       Advertising

 

The Company follows the policy of charging the costs of advertising to expense as incurred. During the years ended December 31, 2019 and 2018, the Company expensed $-0- and $-0-, respectively.
l. Provision For Income Taxes

l.       Provision for Income Taxes

 

The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes ("Topic 740"), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

 

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of December 31, 2019, 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.
m. Basic and Diluted Loss Per Share

m.       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 2,672,223 and 2,556,390 stock options and warrants that would have been included in the fully diluted earnings per share as of December 31, 2019 and 2018, respectively. However, the common stock equivalents were not included in the loss per share computation because they are anti-dilutive.  
n. Fair Value Measurements

n.       Fair Value Measurements

 

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

 

Level 1 – Quoted prices in active markets for identical assets or liabilities;

 

Level 2 – Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and

 

Level 3 – Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.
o. Stock- Based Compensation

o.       Stock-based Compensation

 

The Company recognizes compensation expense for stock-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value.  The Company estimates the fair value of stock options using a Black-Scholes option pricing model which requires management to make estimates for certain assumptions regarding risk-free interest rate, expected life of options, expected volatility of stock and expected dividend yield of stock.
p. Concentration of Risks

p.       Concentration of Risks

 

Customers

 

During the year ended December 31, 2019, seven customers accounted for approximately 74% of sales.

 

During the year ended December 31, 2018, seven customers accounted for approximately 73% of sales.

 

Suppliers

 

During the year ended December 31, 2019, five suppliers accounted for 86 % of products purchased.

 

During the year ended December 31, 2018, four suppliers accounted for 82% of products purchased.    
q. Liquidity and Going Concern

q.       Liquidity and Going Concern

 

Historically, the Company has incurred net losses and negative cash flows from operations.  As of December 31, 2019, the Company had an accumulated deficit of $20,975,929 and total stockholders’ deficit of ($430,877).  At December 31, 2019, the Company had current assets of $1,082,497 including cash of $20,236, and current liabilities of $1,530,608, resulting in negative working capital of $448,111. For 2019, the Company reported a net loss of $720,422 and net cash used by operating activities of $83,824. Management believes that based on its operating plan, the projected sales for 2020, combined with funds available from its working capital will be sufficient to fund operations for the next twelve months from the date these financial statements were issued.  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.
r. Recently Adopted Accounting Pronouncements

r.       Recently Adopted Accounting Pronouncements

 

In February 2016, the FASB issued its new lease accounting guidance in ASU 2016-2, Leases (Topic 842). Under the new guidance, lessees will be required to recognize for all leases (with the exception of short-term leases) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The standard is effective for the interim and annual reporting periods beginning after December 15, 2018. ASU 2016-2 allows companies to adopt the new standard by either applying a modified retrospective method to the beginning of the earliest period presented in the financial statements or an optional transition method to initially apply the standard on January 1, 2019 and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted the standard using the optional transition method and will apply the new guidance prospectively to leases that exist and those entered into on or after January 1, 2019 without adjusting comparative periods in the financial statements.

 

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

s.       Recently Issued Accounting Pronouncements

 

The Company has evaluated recent accounting pronouncements and their adoption has not had or is expected to have a material impact on the Company’s financial position, or statements.
Note 2 - Summary of Significant Accounting Policies (Tables)
 12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Schedule of Disaggregation of Revenue

The following table presents Omnitek’s revenues disaggregated by region and product type:

 

      December 31,       December 31,
        2019           2018  
      Consumer Long-term         Consumer Long-term  
Segments     Products Contract Total       Products Contract Total
Domestic   $ 450,986 - 450,986     $ 484,604 - 484,604
International     468,949 44,474 513,423       788,310 12,772 801,082
    $ 919,935 44,474 964,409     $ 1,272,914 12,772 1,285,686
                         
Filters     561,560 - 561,560       819,517 - 819,517
Components     358,375 - 358,375       453,397 - 453,397
Engineering Services     - 44,474 44,474       - 12,772 12,772
    $ 919,935 44,474 964,409     $ 1,272,914 12,772 1,285,686
                                               
Note 3 - Contract Assets And Liabilities (Tables)
 12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
Schedule of Costs in Excess of Billings

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

 

  December 31,   December 31,
  2019   2018
Contract assets $ 13,221   $ 12,772
Contract liabilities $ (75,000)   $ (84,496)
Net amount of contract liabilities in excess of contract  assets $ (61,779)   $ (71,724)
Note 4 - Inventories: Schedule of Inventories (Tables)
 12 Months Ended
Dec. 31, 2019
Table Text Block Supplement [Abstract]  
Schedule of Inventories

Inventories are located in Vista, California and at December 31, 2019 and 2018 consisted of the following:

 

  December 31,   December 31,
  2019   2018
Raw materials $ 935,834   $ 948,060
Finished goods   1,073,623     1,147,052
Work in progress   1,800     -
Inventory in transit   -     10,611
Allowance for obsolete inventory   (988,892)     (746,045)
Total $ 1,022,365   $ 1,359,678
Note 5 - Property and Equipment: Schedule of Property and Equipment (Tables)
 12 Months Ended
Dec. 31, 2019
Table Text Block Supplement [Abstract]  
Schedule of Property and Equipment

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

 

  December 31,   December 31,
  2019   2018
Production equipment $ 64,673      $ 64,673   
Computers/Office equipment   28,540        28,540   
Tooling equipment   12,380        12,380   
Leasehold Improvements   42,451        42,451   
Less: accumulated depreciation   (146,235)       (145,668)  
Total $ 1,809      $ 2,376   
Note 7 - Notes Payable - Related Parties: Schedule of Note Payable Related Party (Table)
 12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
Schedule of Notes Payable Related Party

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

 

  December 31,   December 31,
  2019   2018
Note payable, related party, current portion $ 27,000   $ 15,000
Note payable, related party, net of current portion   15,000     -
Total $ 42,000   $ 15,000
Note 8 - Debt: Schedule of Note payable (Tables)
 12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Schedule of Note payable

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

 

  December 31,   December 31,
  2019   2018
Notes payable $ 15,000   $ -
Total $ 15,000   $ -
Note 8 - Debt: Schedule of Convertible Note payable (Tables)
 12 Months Ended
Dec. 31, 2019
Disclosure Text Block [Abstract]  
Schedule of Convertible Note payable

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

 

  December 31,   December 31,
  2019   2018
Convertible note payable $ -   $ 100,000
Total $ -   $ 100,000
Note 10 - Related Party Transactions: Schedule of Related Party Transactions (Tables)
 12 Months Ended
Dec. 31, 2019
Table Text Block Supplement [Abstract]  
Schedule of Related Party Transactions

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

 

  December 31,   December 31,
  2019   2018
Amounts due to the president $ 541,504   $ 399,296
Amounts due to the chief financial officer   165,326     106,807
Total $ 706,830   $ 506,103
Note 11 - Stockholders' Equity: Schedule of Assumptions Used to Estimate the Fair Values of Stock Options Granted (Tables)
 12 Months Ended
Dec. 31, 2019
Table Text Block Supplement [Abstract]  
Schedule of Assumptions Used to Estimate the Fair Values of Stock Options Granted

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

 

 

December 31,

2019

  

December 31,

2018

Expected volatility 142%   150%  
Expected dividends 0%   0%  
Expected term 7 Years   7 Years  
Risk-free interest rate 2.01%   2.46%  
               
Note 11 - Stockholders' Equity: Schedule of Stock Options and Warrants, Activity (Tables)
 12 Months Ended
Dec. 31, 2019
Table Text Block Supplement [Abstract]  
Schedule of Stock Options and Warrants, Activity

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

 

  December 31,   December 31,
                                      2019                          2018
        Weighted-Average         Weighted-Average
  Shares     Exercise Price   Shares     Exercise Price
Outstanding at beginning of year 2,965,556   $ 0.63   2,600,556   $ 0.82
Granted 450,000     0.08   590,000     0.07
Exercised -     -   -     -
Expired or cancelled (475,000)     2.49   (225,000)     1.33
Outstanding at end of year 2,940,556     0.25   2,965,556     0.63
Exercisable 2,672,223    $                    0.23   2,556,390    $                    0.67
Note 11 - Stockholders' Equity: Summary of the Status of the Options and Warrants Outstanding (Tables)
 12 Months Ended
Dec. 31, 2019
Table Text Block Supplement [Abstract]  
Summary of the Status of the Options and Warrants Outstanding

A summary of the status of the options outstanding at December 31, 2019 is presented below:

 

Range of Exercise Prices   Number Outstanding   Weighted-Average Remaining Contractual Life     Number Exercisable   Weighted-Average Exercise Price
$0.01-1.00   2,890,556   4.18 years     2,622,223   $0.21
$1.01-2.00   50,000   0.36 years     50,000   1.13
$0.01-2.00   2,940,556   4.12 years     2,672,223   $0.23

 

A summary of the status of the options and warrants outstanding at December 31, 2018 is presented below:

 

Range of Exercise Prices   Number Outstanding   Weighted-Average Remaining Contractual Life   Number Exercisable   Weighted-Average Exercise Price
$0.01 - 1.00   2,440,556   4.80 years   2,031,390   $0.24
$1.01 - 2.00   75,000   1.18 years   75,000   1.37
$2.01 - 3.00   450,000   0.81 years   450,000   2.53
$0.01 - 3.00   2,965,556   4.11 years   2,556,390   $0.67
Note 12 - Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Tables)
 12 Months Ended
Dec. 31, 2019
Table Text Block Supplement [Abstract]  
Schedule of Components of Income Tax Expense (Benefit)

The provision for income taxes for the year ended December 31, 2019 and 2018 consists of the following:

 

    December 31,     December 31,  
Federal   2019      2018  
Current   $ -        $ -     
Deferred     -          -     
State                
Current   $ 800        $ 800     
Deferred     -          -     
  Income tax expense   $ 800        $ 800     
Note 12 - Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Tables)
 12 Months Ended
Dec. 31, 2019
Table Text Block Supplement [Abstract]  
Schedule of Deferred Tax Assets and Liabilities

Net deferred tax assets consist of the following components as of December 31, 2019 and 2018:

 

    December  31,     December 31,  
Deferred tax assets:    2019      2018  
Net operating loss carryover   $ 6,821,469          6,560,622       
Research and development carry forward     131,088          131,088       
Inventory reserve     237,334          179,051       
Allowance for doubtful accounts     3,600          3,600       
Warranty allowance     3,068          3,068       
Accrued compensation     169,639          121,465       
Deferred tax liabilities:                  
Depreciation     (47,001)         (97,331)      
Valuation allowance     (7,319,197)         (6,901,563)      
Net deferred tax asset   $ -          -       
                     
Note 12 - Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables)
 12 Months Ended
Dec. 31, 2019
Table Text Block Supplement [Abstract]  
Schedule of Effective Income Tax Rate Reconciliation

The income tax provision differs from the amount of income tax determined by applying the estimated U.S. federal and state income tax rate of 24% as of December 31, 2019 and December 31, 2018 to pretax income from continuing operations for the year ended December 31, 2019 and 2018 due to the following:  

 

           
    December 31,     December 31,
      2019       2018
Book loss      $ (172,902)         (112,418)  
Meals and entertainment        16          16   
State tax deduction        -          -   
Deferred rent        -         (926)  
Stock/Options for services        11,949          9,055   
Officer’s life ins premium        1,181          1,181   
Depreciation        (8,784)         (7,593)  
Accrued compensation        48,174          23,823   
Inventory reserve        58,283          23,385   
Valuation allowance        124,964          127,753   
Net operating loss carryover        (62,081)         (63,476)  
Income Tax Expense      $ 800          800   
Note 2 - Summary of Significant Accounting Policies: d. Accounts Receivable (Details) - USD ($)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Text Block [Abstract]    
Allowance For Doubtful Accounts $ 15,000 $ 15,000
Provision for Doubtful Accounts $ 0 $ 0
Note 2 - Summary of Significant Accounting Policies: f. Long-lived Assets (Details) - USD ($)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Text Block [Abstract]    
Asset Impairment Charges $ 0 $ 0
Note 2 - Summary of Significant Accounting Policies: g. Property and Equipment (Details)
 12 Months Ended
Dec. 31, 2019
Minimum  
Property, Plant and Equipment, Useful Life 3 years
Maximum  
Property, Plant and Equipment, Useful Life 5 years
Note 2 - Summary of Significant Accounting Policies: h. Revenue Recognition: Disaggregation of Revenue (Details) - USD ($)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Consumer Products $ 919,935 $ 1,272,914
Long-term Contract 44,474 12,772
Revenues 964,409 1,285,686
Filters    
Consumer Products 561,560 819,517
Long-term Contract 0 0
Revenues 561,560 819,517
Components    
Consumer Products 358,375 453,397
Long-term Contract 0 0
Revenues 358,375 453,397
Engineering Services    
Consumer Products 0 0
Long-term Contract 44,474 12,772
Revenues 44,474 12,772
Domestic    
Consumer Products 450,986 484,604
Long-term Contract 0 0
Revenues 450,986 484,604
International    
Consumer Products 468,949 788,310
Long-term Contract 44,474 12,772
Revenues $ 513,423 $ 801,082
Note 2 - Summary of Significant Accounting Policies: h. Revenue Recognition: Performance Obligations (Details)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Performance Obligations Satisfied Over Time [Member]    
Revenue percentage 5.00% 1.00%
Performance Obligations Satisfied at a Point in Time [Member]    
Revenue percentage 95.00% 99.00%
Note 2 - Summary of Significant Accounting Policies: j. Research and Development (Details) - USD ($)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Text Block [Abstract]    
Research and Development $ 106,916 $ 106,896
Note 2 - Summary of Significant Accounting Policies: k. Advertising (Details) - USD ($)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Text Block [Abstract]    
Advertising Expense $ 0 $ 0
Note 2 - Summary of Significant Accounting Policies: m. Basic and Diluted Loss Per Share (Details) - shares
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Text Block [Abstract]    
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 2,672,223 2,556,390
Note 2 - Summary of Significant Accounting Policies: p. Concentration of Risks (Details)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Supplier Concentration Risk    
Concentration Risk, Percentage 86.00% 82.00%
Concentration Risk, Supplier four suppliers four suppliers
Customer Concentration Risk    
Concentration Risk, Customer seven customers seven customers
Concentration Risk, Percentage 74.00% 73.00%
Note 2 - Summary of Significant Accounting Policies: q. Liquidity and Going Concern (Details) - USD ($)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Text Block [Abstract]      
Accumulated deficit $ (20,975,929) $ (20,255,507)  
Total Stockholders' Equity (430,877) 94,759 $ 476,673
Total Current Assets 1,082,497 1,415,429  
Cash 20,236 17,060 $ 23,279
Total Current Liabilities 1,530,608 1,353,471  
Working Capital (448,111)    
NET LOSS (720,422)    
Net Cash Used in Operating Activities $ (83,824) $ (103,505)  
Note 3 - Contract Assets And Liabilities - Net excess billings (Details) - USD ($)
Dec. 31, 2019
Dec. 31, 2018
Notes to Financial Statements    
Contract assets $ 13,221 $ 12,772
Contract liabilities (75,000) (84,496)
Net amount of contract liabilities in excess of Contract assets $ (61,779) $ (71,724)
Note 4 - Inventory (Details) - USD ($)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Text Block [Abstract]    
Expense for Obsolete Inventory $ 242,846 $ 97,436
Note 4 - Inventory: Schedule of Inventory (Details) - USD ($)
Dec. 31, 2019
Dec. 31, 2018
Text Block [Abstract]    
Raw materials $ 935,834 $ 948,060
Finished goods 1,073,623 1,147,052
Work in progress 1,800 0
Inventory in transit 0 10,611
Allowance for obsolete inventory (988,892) (746,045)
Total $ 1,022,365 $ 1,359,678
Note 5 - Property and Equipment: Schedule of Property and Equipment (Details) - USD ($)
Dec. 31, 2019
Dec. 31, 2018
Less: accumulated depreciation $ (146,235) $ (145,668)
Total 1,809 2,376
Production Equipment    
Property, Plant and Equipment, Gross 64,673 64,673
Computer Equipment    
Property, Plant and Equipment, Gross 28,540 28,540
Tools, Dies and Molds    
Property, Plant and Equipment, Gross 12,380 12,380
Leasehold Improvements    
Property, Plant and Equipment, Gross $ 42,451 $ 42,451
Note 5 - Property and Equipment (Details) - USD ($)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Text Block [Abstract]    
Depreciation expense $ 567 $ 7,590
Note 6 - Customer Deposits (Details) - USD ($)
Dec. 31, 2019
Dec. 31, 2018
Text Block [Abstract]    
Customer deposits $ 163,681 $ 140,338
Note 7 - Notes Payable - Related Parties (Details) - USD ($)
 1 Months Ended 12 Months Ended
Sep. 11, 2019
May 28, 2019
Jan. 19, 2017
Dec. 31, 2019
Dec. 31, 2018
Proceeds from related party       $ 100,000
Notes Payable Related Party | Board Member          
Promissory note $ 12,000        
Debt Instrument, Interest Rate During Period 8.00%        
Debt Instrument, Maturity Date Jun. 30, 2020        
Notes Payable Related Party | Chief Executive Officer [Member]          
Promissory note   $ 5,000 $ 15,000    
Debt Instrument, Interest Rate During Period   5.00% 5.00%    
Debt Instrument, Maturity Date   Dec. 31, 2020 Jan. 19, 2020    
Proceeds from related party       $ 15,000  
Note 7 - Notes Payable - Related Parties: Schedule of Note Payable Related Party (Details) - USD ($)
Dec. 31, 2019
Dec. 31, 2018
Notes to Financial Statements    
Note payable, related party, current portion $ 27,000 $ 15,000
Note payable, related party, net of current portion 15,000 0
Total $ 42,000 $ 15,000
Note 8 - Debt (Details) - USD ($)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Jun. 15, 2018
Note payable $ 15,000 $ 0  
Secured Convertible Promissory Note      
Debt Instrument, Face Amount     $ 100,000
Debt Instrument, Interest Rate, Stated Percentage     10.00%
Debt Instrument, Periodic Payment $ 5,000    
Debt Instrument, Convertible, Conversion Price $ 0.025    
Debt Instrument, Description The note will automatically mature and be due and payable on the eighteen (18) month anniversary. The Company shall make principal payments under the Note in the amount of $5,000 per month    
Debt Instrument, Convertible, Conversion Price The Note includes a may request a portion of the principal repayment be converted and payable in restricted shares of the Company’s Common Stock at the lesser of five cents ($0.05) per share or 90% of the average closing price calculated over the prior 20 trading days, but not less than $.025 per share.    
Note payable     $ 40,000
Note 8 - Debt: Schedule of Note payable (Details) - USD ($)
Dec. 31, 2019
Dec. 31, 2018
Disclosure Text Block [Abstract]    
Notes payable $ 15,000 $ 0
Total $ 15,000 $ 0
Note 8 - Debt : Schedule of Convertible Note Payable (Details) - USD ($)
Dec. 31, 2019
Dec. 31, 2018
Disclosure Text Block [Abstract]    
Convertible note payable $ 0 $ 100,000
Convertible notes payable, net of current portion $ 0 $ 100,000
Note 9 - Commitments (Details) - USD ($)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Deposits $ 2,501 $ 5,811
Expiration date Mar. 01, 2019  
Lease payment $ 14,161  
Security deposit 14,000  
Commitments outstanding balance 62,529  
Inventories    
Long-term Purchase Commitment, Amount 133,938 111,185
Deposits 18,645 21,956
Future Cash Outlays | Inventories    
Long-term Purchase Commitment, Amount $ 152,583 $ 133,141
Note 10 - Related Party Transactions (Details) - USD ($)
Dec. 31, 2019
Dec. 31, 2018
Accounts receivable - related parties $ 16,712 $ 6,666
Omnitek Engineering Thailand Co. Ltd.    
Noncontrolling Interest, Ownership Percentage by Parent 15.00%  
Omnitek Peru S.A.C.    
Noncontrolling Interest, Ownership Percentage by Parent 20.00%  
Note 10 - Related Party Transactions: Schedule of Related Party Transactions (Details) - USD ($)
Dec. 31, 2019
Dec. 31, 2018
Accrued management compensation $ 706,830 $ 506,103
President    
Accrued management compensation 541,504 399,296
Chief Financial Officer    
Accrued management compensation $ 165,326 $ 106,807
Note 11 - Stockholders' Equity (Details) - USD ($)
 1 Months Ended 12 Months Ended
Jul. 07, 2018
Sep. 06, 2017
Dec. 31, 2019
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Oct. 31, 2017
Sep. 11, 2015
Dec. 31, 2014
Aug. 03, 2011
Apr. 30, 2007
Granted       450,000 590,000            
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized     $ 7,014 $ 7,014              
Outstanding     2,940,556 2,940,556 2,965,556 2,600,556          
SecuritiesPurchaseAgreement                      
Stock Issued During Period, Shares, Restricted Stock   3,579,014 500,000                
Stock Issued During Period, Value, Restricted Stock   $ 640,000 $ 25,000                
Share Price   $ .1788                  
Employee Stock Option                      
Granted       450,000 590,000            
Allocated Share-based Compensation Expense       $ 49,786 $ 37,730            
Employee Stock Option | 2006 Long-Term Incentive Plan                      
Number of Shares Authorized                     10,000,000
Outstanding                 2,590,000    
Employee Stock Option | 2011 Long-Term Incentive Plan                      
Number of Shares Authorized                   1,000,000  
Outstanding     600,000 600,000              
Employee Stock Option | 2015 Long-Term Incentive Plan                      
Number of Shares Authorized               2,500,000      
Outstanding     2,065,556 2,065,556              
Employee Stock Option | 2017 Long-Term Incentive Plan                      
Outstanding             5,000,000        
John M. Palumbo                      
Stock Issued During Period, Shares, New Issues 139,320                    
Stock Issued During Period, Value, New Issues $ 15,799                    
John M. Palumbo | Unpaid Principal                      
Stock Issued During Period, Value, New Issues 15,000                    
John M. Palumbo | Accrued interest                      
Stock Issued During Period, Value, New Issues $ 799                    
Note 11 - Stockholders' Equity: Schedule of Assumptions Used to Estimate the Fair Values of Stock Options Granted (Details)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Text Block [Abstract]    
Expected volatility 142.00% 150.00%
Expected dividends 0.00% 0.00%
Expected term 7 years 7 years
Risk-free interest rate 2.01% 2.46%
Note 11 - Stockholders' Equity: Schedule of Stock Options and Warrants, Activity (Details) - $ / shares
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Text Block [Abstract]    
Outstanding at beginning of year 2,965,556 2,600,556
Outstanding, Weighted Average Exercise Price at beginning of year $ 0.63 $ 0.82
Granted 450,000 590,000
Granted, Weighted Average Exercise Price $ 0.08 $ 0.07
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period 0 0
Exercised, Weighted Average Exercise $ .00 $ .00
Expired or cancelled (475,000) (225,000)
Expired or cancelled, Weighted Average Exercise Price $ 2.49 $ 1.33
Outstanding at end of year 2,940,556 2,965,556
Outstanding, Weighted Average Exercise Price at end of year $ 0.25 $ 0.63
Exercisable 2,672,223 2,556,390
Exercisable, Weighted Average Exercise Price $ 0.23 $ 0.67
Note 11 - Stockholders' Equity: Summary of the Status of the Options and Warrants Outstanding (Details) - $ / shares
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
$0.01 - 1.00    
Number Outstanding 2,890,556 2,440,556
Weighted-Average Remaining Contractual Life 4 years 2 months 5 days 4 years 9 months 18 days
Number Exercisable 2,622,223 2,031,390
Weighted-Average Exercise Price $ 0.21 $ 0.24
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit 0.01 0.01
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit $ 1.00 $ 1.00
$1.01 - 2.00    
Number Outstanding 50,000 75,000
Weighted-Average Remaining Contractual Life 4 months 9 days 1 year 2 months 5 days
Number Exercisable 50,000 75,000
Weighted-Average Exercise Price $ 1.13 $ 1.37
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit 1.01 1.01
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit $ 2.00 $ 2.00
$0.01-2.00    
Number Outstanding 2,940,556  
Weighted-Average Remaining Contractual Life 4 years 1 month 13 days  
Number Exercisable 2,672,223  
Weighted-Average Exercise Price $ 0.23  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit 0.01  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit $ 2.00  
$2.01 - 3.00    
Number Outstanding   450,000
Weighted-Average Remaining Contractual Life   9 months 22 days
Number Exercisable   450,000
Weighted-Average Exercise Price   $ 2.53
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit   2.01
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit   $ 3.00
$0.01-3.00    
Number Outstanding   2,965,556
Weighted-Average Remaining Contractual Life   4 years 1 month 9 days
Number Exercisable   2,556,390
Weighted-Average Exercise Price   $ 0.67
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit   0.01
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit   $ 3.00
Note 12 - Income Taxes (Details) - USD ($)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Text Block [Abstract]    
Estimated US federal and state income tax rates 24.00% 24.00%
Net Operating Loss Carryforwards $ 6,821,469  
Note 12 - Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Federal    
Current $ 0 $ 0
Deferred 0 0
State    
Current 800 800
Deferred 0 0
Income Tax Expense (Benefit), Total $ 800 $ 800
Note 12 - Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($)
Dec. 31, 2019
Dec. 31, 2018
Deferred tax assets:    
Net operating loss carryover $ 6,821,469 $ 6,560,622
Research and development carry forward 131,088 131,088
Inventory reserve 237,334 179,051
Allowance for doubtful accounts 3,600 3,600
Warranty allowance 3,068 3,068
Accrued compensation 169,639 121,465
Deferred tax liabilities:    
Depreciation (47,001) (97,331)
Valuation allowance (7,319,197) (6,901,563)
Net deferred tax asset $ 0 $ 0
Note 12 - Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($)
 12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Text Block [Abstract]    
Book loss $ (172,902) $ (112,418)
Meals and entertainment 16 16
State tax deduction 0 0
Deferred rent 0 (926)
Stock/Options for services 11,949 9,055
Officer's life ins premium 1,181 1,181
Depreciation (8,784) (7,593)
Accrued compensation 48,174 23,823
Inventory reserve 58,283 23,385
Valuation allowance 124,964 127,753
Net operating loss carryover (62,081) (63,476)
Income Tax Expense $ 800 $ 800
Note 13 - Subsequent Events (Details) - USD ($)
 1 Months Ended 12 Months Ended
Jan. 07, 2020
Mar. 27, 2020
Jan. 19, 2020
Dec. 31, 2019
Dec. 31, 2018
Granted       450,000 590,000
Subsequent Event | 2017 Long-Term Incentive Plan          
Granted price   $ 150,000      
Subsequent Event | Chief Executive Officer          
Extension fee for related party note payable     $ 15,000    
Due date     Jan. 19, 2021    
Subsequent Event | Chief Executive Officer | 2017 Long-Term Incentive Plan          
Granted   50,000      
Subsequent Event | Jack Ferraro          
Stock Issued During Period, Shares, Restricted Stock 500,000        
Stock Issued During Period, Value, Restricted Stock $ 25,000        
Share Price $ 0.05        
Subsequent Event | Two Outside Directors | 2017 Long-Term Incentive Plan          
Granted   100,000