Omnitek Engineering Corp - FORM 10-Q

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - Omnitek Engineering Corp	Financial_Report.xls
EX-32.1 - EXHIBIT 32.1 - Omnitek Engineering Corp	exhibit32_1.htm
EX-31.2 - EXHIBIT 31.2 - Omnitek Engineering Corp	exhibit31_2.htm
EX-31.1 - EXHIBIT 31.1 - Omnitek Engineering Corp	exhibit31_1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: MARCH 31, 2014

Commission File Number 000-53955

OMNITEK ENGINEERING CORP.

(Exact name of Registrant as specified in its charter)

California	33-0984450
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1333 Keystone Way, #101, Vista, California 92081

(Address of principal executive offices, Zip Code)

(760) 591-0089

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 15, 2014, the Registrant had 19,759,582 shares of its no par value Common Stock outstanding.

TABLE OF CONTENTS

	Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of March 31, 2014 and December 31, 2013	1
Condensed Statements of Operations for the three months ended March 31, 2014 and March 31, 2013	2
Condensed Statements of Cash Flows for the three months ended March 31, 2014 and March 31, 2013	3
Notes to the Condensed Financial Statements	4
Item 2. Management’s Discussion and Analysis of the Financial Condition and Results of Operations	8
Item 3. Quantitative and Qualitative Disclosures about Market Risk	11
Item 4. Controls and Procedures	11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	12
Item 1A. Risk Factors	12
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	12
Item 3. Defaults Upon Senior Securities	12
Item 5. Other Information	12
Item 6. Exhibits	13

Table of Contents

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OMNITEK ENGINEERING CORP.
Condensed Balance Sheets

ASSETS

	March 31,				December 31,
	2014				2013
	(unaudited)
CURRENT ASSETS
Cash		$	730,820			$	1,057,836
Accounts receivable, net			32,833				38,261
Accounts receivable - related parties			24,340				33,369
Inventory, net			2,223,845				2,225,868
Prepaid expense			18,461				21,474
Deposits			87,251				62,973
Short-term investments, net			910,366				917,248

Total Current Assets			4,027,916				4,357,029

FIXED ASSETS, net			112,136				118,460

OTHER ASSETS
Intellectual property, net			2,468				2,872

Total Other Assets			2,468				2,872

TOTAL ASSETS		$	4,142,520			$	4,478,361

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable and accrued expenses		$	137,469			$	91,744
Accrued management compensation			167,197				189,466
Accounts payable - related parties			2,336				1,475
Customer deposits			234,400				222,072

Total Current Liabilities			541,402				504,757

Total Liabilities			541,402				504,757

STOCKHOLDERS' EQUITY
Common stock, 125,000,000 shares authorized no par value
19,759,582 and 19,759,582 shares issued and outstanding,
respectively			8,201,311				8,201,311
Additional paid-in capital			5,226,955				5,181,636
Accumulated deficit			(9,827,148	)			(9,409,343	)

Total Stockholders' Equity			3,601,118				3,973,604

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	4,142,520			$	4,478,361


The accompanying notes are an integral part of these condensed financial statements.

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OMNITEK ENGINEERING CORP.
Condensed Statements of Operations (unaudited)




	For the Three			For the Three
	Months Ended			Months Ended
	March 31,			March 31,
	2014			2013

REVENUES	$	320,374		$	349,329
COST OF GOODS SOLD		195,051			204,085
GROSS MARGIN		125,323			145,244

OPERATING EXPENSES

General and administrative		451,402			352,305
Research and development expense		103,760			50,359
Depreciation and amortization expense		8,187			13,270

Total Operating Expenses		563,349			415,934

LOSS FROM OPERATIONS		(438,026	)		(270,690	)

OTHER INCOME (EXPENSE)

Interest expense		-			-
Interest income		21,021			21,070

Total Other Income (Expense)		21,021			21,070

LOSS BEFORE INCOME TAXES		(417,005	)		(249,620	)
INCOME TAX EXPENSE		800			800

NET LOSS	$	(417,805	)	$	(250,420	)

BASIC AND DILUTED LOSS PER SHARE	$	(0.02	)	$	(0.01	)

WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING		19,759,582			19,749,582


The accompanying notes are an integral part of these condensed financial statements.

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OMNITEK ENGINEERING CORP.
Condensed Statements of Cash Flows (unaudited)

	For the Three			For the Three
	Months Ended			Months Ended
	March 31,			March 31,
	2014			2013
OPERATING ACTIVITIES
Net loss	$	(417,805	)	$	(250,420	)
Adjustments to reconcile net loss to
net cash used by operating activities:
Amortization and depreciation expense		15,069			13,268
Options and warrants granted		45,319			38,350
Changes in operating assets and liabilities:
Accounts receivable		5,428			71,950
Accounts receivable–related parties		9,029			22,066
Deposits		(24,279	)		(37,373	)
Prepaid Expense		3,014			(10,560	)
Inventory		2,023			(221,251	)
Accounts payable and accrued expenses		45,726			(221,612	)
Customer deposits		12,327			28,351
Accounts payable-related parties		861			(2,298	)
Accrued compensation-related parties		(22,269	)		(14,770	)

Net Cash Used in Operating Activities		(325,557	)		(584,299	)

INVESTING ACTIVITIES
Purchase of property and equipment		(1,459	)		(47,445	)

Net Cash Used in Investing Activities		(1,459	)		(47,445	)

FINANCING ACTIVITIES
		-			-

Net Cash Provided by Financing Activities		-			-

NET DECREASE IN CASH		(327,016	)		(631,744	)
CASH AT BEGINNING OF YEAR		1,057,836			3,192,761

CASH AT END OF PERIOD	$	730,820		$	2,561,017

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
CASH PAID FOR:
Interest	$	-		$	-
Income taxes	$	800		$	800


The accompanying notes are an integral part of these condensed financial statements.

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OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2014

(unaudited)

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2014 and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2013 audited financial statements. The results of operations for the periods ended March 31, 2014 and 2013 are not necessarily indicative of the operating results for the full years.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements

The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.

Inventory

Inventory is stated at the lower of cost or market. The Company’s inventory consists of finished goods and raw material and is located in Vista, California, consisting of the following:

	March 31,			December 31,
Location : Vista, CA	2014			2013
Raw materials	$	1,168,791		$	1,191,550
Finished goods		1,516,522			1,621,201
In transit		-			23,269
Allowance for obsolete inventory		(461,468	)		(610,152	)
Total	$	2,223,845		$	2,225,868

The Company has established an allowance for obsolete inventory. Expense for obsolete inventory was $-0- and $10,426, for the periods ended March 31, 2014 and December 31, 2013, respectively.

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OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2014

(unaudited)

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property and Equipment

Property and equipment at March 31, 2014 and December 31, 2013 consisted of the following:

	March 31,			December 31,
	2014			2013
Production equipment	$	61,960		$	60,501
Computers/Office equipment		28,540			28,540
Tooling equipment		12,380			12,380
Leasehold Improvements		42,451			42,451
Less: accumulated depreciation		(33,195	)		(25,412	)
Total	$	112,136		$	118,460

Depreciation expense for the periods ended March 31, 2014 and December 31, 2013 was $7,783 and $19,858, respectively.

Basic and Diluted Loss per Share

The computation of basic earnings per share of common stock is based on the weighted average number of shares outstanding during the periods presented. The computation of fully diluted earnings per share includes common stock equivalents outstanding at the balance sheet date. The Company had 1,901,129 and 2,087,137 stock options and warrants that would have been included in the fully diluted earnings per share as of March 31, 2014 and December 31, 2013, respectively. However, the common stock equivalents were not included in the computation of the loss per share computation because they are anti dilutive.

Income Taxes,

The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes ("Topic 740"), which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized.

Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company's financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

At the adoption date of November 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of March 31, 2014 and December 31, 2013 the Company had no accrued interest or penalties related to uncertain tax positions. The Company files an income tax return in the U.S. federal jurisdiction and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2008.

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OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2014

(unaudited)

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Held to Maturity Investments

During the three months ended June 30, 2012, the Company purchased various corporate bonds. The Company intends to hold the bonds to maturity. Accordingly, the Company has recorded and is amortizing the premium on the bonds over the remaining life. As of March 31, 2014 the Company has amortized $52,181 of the premium leaving amortized cost basis remaining of $910,366. During the three months ended March 31, 2014 and 2013 the Company had correlating amortization expense of $6,882 and $11,974, respectively.

NOTE 3 - 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, 2013, the Company owned a 15% interest in Omnitek Engineering Thailand Co. Ltd., a 20% interest in Omnitek Peru S.A.C., and a 5% interest in Omnitek Stationary, Inc. As of March 31, 2014 and December 31, 2013, the Company was owed $24,340 and $33,369, respectively, by related parties for the purchase of products.

Accounts Payable – Related Parties

The Company regularly incurs expenses that are paid for by related parties and purchases goods and services from related parties. As of March 31, 2014 and December 31, 2013, the Company owed related parties for such expenses, goods and services in the amounts of $2,336 and $1,475, respectively.

Accrued Management Expenses

During the periods ended March 31, 2014 and December 31, 2013, the Company’s president and vice president were due amounts for services performed for the Company. As of March 31, 2014 and December 31, 2013 the accrued management fees consisted of the following:

	March 31,			December 31,
	2014			2013
Amounts due to the president		$	118,628		$	133,397
Amounts due to the vice president			48,569			56,069
Total		$	167,197		$	189,466

NOTE 4 - STOCK OPTIONS AND WARRANTS

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 March 31, 2014 the Company has a total of 2,620,000 options issued under the plan. 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 March 31, 2014 the Company has a total of 715,000 options issued under the plan. During the three months ended March 31, 2014 the Company issued -0- options and -0- warrants.

During the three months ended March 31, 2014 and 2013, the Company recognized expense of $45,319 and $38,350, respectively, for options and warrants that vested during the periods pursuant to ASC Topic 718. Total remaining amount of compensation expense to be recognized in future periods is $600,862.

A summary of the status of the options and warrants granted at March 31, 2014 and December 31, 2013 and changes during the periods then ended is presented below:

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OMNITEK ENGINEERING CORP.

Notes to Condensed Financial Statements

March 31, 2014

(unaudited)

NOTE 4 - STOCK OPTIONS AND WARRANTS (CONTINUED)

	March 31,				December 31,
	2014				2013
			Weighted-Average					Weighted-Average
	Shares		Exercise Price		Shares			Exercise Price
Outstanding at beginning of year		6,250,313	$	2.30		6,085,313		$	2.29
Granted		-		-		175,000			2.42
Exercised		-		-		(10,000	)		.53
Expired or cancelled		-		-		-			-
Outstanding at end of year		6,250,313		2.30		6,250,313			2.30
Exercisable		5,838,230	$	2.28		5,803,230		$	2.28

Range of Exercise Prices		Number Outstanding		Weighted-Average Remaining Contractual Life	Number Exercisable		Weighted-Average Exercise Price

$	0.01-0.50		200,000	.53 years		200,000	$	0.38
$	0.51-0.75		1,570,000	.60 years		1,570,000		0.63
$	0.76-1.00		1,040,000	.61 years		1,040,000		0.94
$	1.01-2.00		140,000	4.27 years		116,667		1.8
$	2.01-3.00		580,000	5.67 years		191,250		2.54
$	3.01-4.00		2,720,313	3.02 years		2,720,313		3.88

$	0.01-4.00		6,250,313	2.21 years		5,838,230	$	2.28

NOTE 5 - SUBSEQUENT EVENTS

In accordance with ASC 855-10, Company management reviewed all material events through the date of this report. There are no material subsequent events to report.

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ITEM 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes to the financial statements included elsewhere in this periodic report. Some of the statements under “Management’s Discussion and Analysis,” “Description of Business” and elsewhere herein may include forward-looking statements which reflect our current views with respect to future events and financial performance. These statements include forward-looking statements both with respect to us specifically and the alternative fuels engines industry in general. Statements which include the words “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “will,” and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise. The safe harbor provisions of the federal securities laws do not apply to any forward-looking statements contained in this registration statement.

All forward-looking statements address such matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statements you read herein reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our written and oral forward-looking statements attributable to us or individuals acting on our behalf and such statements are expressly qualified in their entirety by this paragraph.

A. Results of Operations

For the three months ended March 31, 2014 and 2013

Revenues were $320,374 for the three months ended March 31, 2014 compared with $349,329 for the three months ended March 31, 2013, a decrease of $28,955, or 8%.

Our cost of sales was $195,051 for the three months ended March 31, 2014 compared with $204,085 for the three months ended March 31, 2013, a decrease of $9,034. Our gross margin was 39.1% for the three months ended March 31, 2014 compared with 41.6% in the same period in 2013.

Our operating expenses for the three months ended March 31, 2014 were $563,349 compared with $415,934 in the same period in 2013, an increase of $147,415 or 35%. General and administrative expense for the three months ended March 31, 2014 was $451,402 as compared with $352,305 for the three months ended March 31, 2013. The increase is primarily due to salary and wages expense of $140,856 for the three months ended March 31, 2014 as compared with $97,988 for the three months ended March 31, 2013 and legal expense of $47,765 for the three months ended March 31, 2014 compared with $7,160, for the three months ended March 31, 2013. Major components of general and administrative expenses for the three months ended March 31, 2014 were professional fees of $62,765, rent expense of $46,659, and salary and wages of $140,856. This compares to professional fees of $23,060, rent expense of $52,046 and salaries and wages of $97,988 for the three months ended March 31, 2013. For the three months ended March 31, 2014 research and development outlays were increased to $103,760 compared with $50,359 for the three months ended March 31, 2013.

Our net loss for the three months ended March 31, 2014 was $417,805, or $0.02 per share, compared with a net loss of $250,420, or $0.01 per share for the three months ended March 31, 2013. The loss was primarily the result of increased operating expenses and research and development outlays for three months ended March 31, 2014 compared with the three months ended March 31, 2014.

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Results for the three months ended March 31, 2014 reflect the impact of non-cash expenses, including the value of options and warrants granted in the amount of $45,319 and depreciation and amortization of $15,069. For the three month period a year earlier, non-cash expenses for the value of options and warrants granted were $38,350, with depreciation and amortization of $13,270.

B. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cash Requirements

We believe that we will have sufficient cash from operations to meet our operating requirements for the proximate 12 months.

Liquidity and Capital Resources

Overview

For the three months ended March 31, 2014 and 2013

At March 31, 2014, our current liabilities totaled $541,402 and our current assets totaled $4,027,916, resulting in positive working capital of $3,486,514 and a current ratio of 7.44. We believe that through the collection of accounts receivable and the sale of inventory, in the normal course of business, we will meet our obligations on a timely basis and that our liquidity is sufficient for at least the next twelve months.

We have no firm commitments or obligations for capital expenditures. However, substantial discretionary expenditures will be required to enable us to conduct existing and planned product research, design, development, manufacturing, marketing and distribution of our products and Intellectual Property. We may need to raise additional capital to facilitate growth and support our long-term product development, manufacturing, and marketing programs. The Company has no established bank-financing arrangements and until we have sufficient assets, capital, and inventory or accounts receivable, it is not anticipated that we will secure any bank financing in the near future. Therefore, it is likely that we may need to seek additional financing through subsequent future public or private sales of our securities, including equity securities. We may also seek funding for the development, manufacturing, and marketing of our products through strategic partnerships and other arrangements with corporate partners. There can be no assurance, however, that such collaborative arrangements or additional funds will be available when needed, or on terms acceptable to us, if at all. If adequate funds are not available, we may be required to curtail one or more of our research and development programs.

We have historically incurred significant losses, which have resulted in a total accumulated deficit of $9,827,148 at March 31, 2014.

Operating Activities

We realized a negative cash flow from operations of $325,557 for the three months ended March 31, 2014 compared with a negative cash flow of $584,299 during the three months ended March 31, 2013.

Included in the net loss of $417,805 for the three months ended March 31, 2014 are non-cash expenses, which are not a drain on our capital resources. During the three months ended March 31, 2014, the expenses include the value of options and warrants granted in the amount of $45,319 and depreciation and amortization of $15,069. Excluding these non-cash amounts, our EBITDA for the three months ended March 31, 2014 would have been a loss of $357,417.

Off-Balance Sheet Arrangements

None.

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Critical Accounting Policies and Estimates

The Company's financial statements are prepared using the accrual method of accounting. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Areas where significant estimates are required include the following:

Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts.

Inventory is stated at the lower of cost or market. The Company’s inventory consists of finished goods and raw material. The Company identifies items in its inventory that have not been sold in a timely manner. Accordingly, the Company has established an allowance for the cost of such obsolete inventory.

The Company assesses the recoverability of its long lived assets annually and whenever circumstances would indicate that there may be an impairment. The Company compares the estimated undiscounted future cash flows to the carrying value of the long lived assets to determine if an impairment has occurred. In the event that an impairment has occurred, the Company recognizes the impairment immediately.

The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. The Company uses historical experience to determine the likely-hood of realization of deferred tax liabilities and assets.

Revenue Recognition

The Company recognizes revenue from the sale of new natural gas engines and components to convert existing diesel engines to natural gas engines. Revenue is recognized upon shipment of the products, and when collection is reasonably assured.

Accounting for Income Taxes

At the adoption date of November 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized.

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The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of March 31, 2014, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company files an income tax return in the U.S. federal jurisdiction and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2008.

At March 31, 2014, the Company had net operating loss carry forwards of approximately $2,711,099 through 2034. No tax benefit has been reported in the March 31, 2014 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.

Recently Issued Accounting Pronouncements

The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms, and that information is accumulated and communicated to our management, including our principal executive and principal financial officer (whom we refer to in this periodic report as our Certifying Officer), as appropriate to allow timely decisions regarding required disclosure.

Our management evaluated, with the participation of our Certifying Officer, the effectiveness of our disclosure controls and procedures as of March 31, 2014, pursuant to Rule 13a-15(b) under the Securities Exchange Act. Based upon that evaluation, our Certifying Officer concluded that, as of March 31, 2014, our disclosure controls and procedures were effective.

Changes in Internal Controls

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On August 20, 2013, Omnitek filed a complaint against CNG One Source, Inc., a Pennsylvania corporation (“CNG”) for declaratory judgment of patent non-infringement on patent nos. 8,011,094 and 6,910,269 and declaratory invalidity on the same two patents in the United States District Court, Southern District of California, case number 13-cv-1948-CAB-NLS.

Before the above lawsuit could be served on CNG, on October 9, 2013, CNG filed a complaint for monetary damages under a claim of copyright infringement, unfair competition, unjust enrichment, conversion and trespass to chattels, seeking damages in excess of $75,000 in the United States District Court, Western District of Pennsylvania, case number Case 13-cv-00304-SPB. The crux of this suit alleges that Omnitek was infringing on CNG’s copyrighted materials. On October 30, 2013, CNG filed a dismissal of their claim without prejudice. Omnitek never received any service of process regarding this lawsuit, did not answer said complaint or otherwise appear, and was only made aware of the lawsuit’s existence through its own research.

On October 23, 2013, Omnitek filed a second amended complaint to their original lawsuit against CNG and further naming ESI Aftermarket, Inc., a Pennsylvania corporation (“ESI”), as an additional defendant and amending their complaint to reflect claims of patent infringement on our patent no. 7,426,920, abuse of process, unfair competition in addition to its earlier claims of patent non-infringement and declaratory invalidity.

On December 10, 2013, we filed a third amended complaint against CNG, ESI and further naming Karen Teslovich and Darius Teslovich, and amending their complaint to reflect claims of alter ego in addition to the patent infringement on Omnitek’s patent no. 7,426,920, abuse of process, unfair competition, patent non-infringement and declaratory invalidity.

In response to the third amended complaint, CNG, ESI, Karen and Darius Teslovich have filed motions to dismiss the case for lack of personal jurisdiction or, in the alternative, to transfer venue to Pennsylvania. Omnitek is currently awaiting a decision on the pending motions. To date, no substantive Answer has been filed by any defendant.

We believe the merits of our case are valid and strong and will continue to pursue this matter to its conclusion.

Other than as set forth above, we are not a party to any pending legal proceeding. No federal, state or local governmental agency is presently contemplating any proceeding against Omnitek. No director, executive officer or affiliate of the Company or owner of record or beneficially of more than five percent of Omnitek's common stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 5. OTHER INFORMATION

None.

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Table of Contents

ITEM 6. EXHIBITS

(a) Documents filed as part of this Report.

1. Financial Statements. The condensed unaudited Balance Sheet of Omnitek Engineering Corp. as of March 31, 2014 and the audited balance sheet as of December 31, 2013, the condensed unaudited Statements of Operations for the three months periods ended March 31, 2014 and 2013, and the condensed unaudited Statements of Cash Flows for the three month periods ended March 31, 2014 and 2013, together with the notes thereto, are included in this Quarterly Report on Form 10-Q.

3. Exhibits. The following exhibits are either filed as a part hereof or are incorporated by reference. Exhibit numbers correspond to the numbering system in Item 601 of Regulation S-K.

Exhibit
Number		Description of Exhibit

3.1	Amended and Restated Articles of Incorporation(1)
3.2	Amended and Restated By-Laws Adopted July 12, 2012 (2)
31.1		CEO certification pursuant to Section 302 of The Sarbanes – Oxley Act of 2002 (3)
31.2		CFO certification pursuant to Section 302 of The Sarbanes – Oxley Act of 2002 (3)
32.1		CEO and CFO certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (3)
101		The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 formatted in Extensible Business Reporting Language (“XBRL”): (i) the balance sheets (unaudited) ; (ii) the statements of operations (unaudited); (iii) the statements of cash flows (unaudited); and, (iv) related notes.

(1)	Previously filed on Form on Form 10 on April 27, 2010

(2)	Previously filed on Form 8-K on August 2, 2012

(3)	Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Omnitek Engineering Corp.




Dated: May 15, 2014
		By: Werner Funk
		Its: Chief Executive Officer Principal Executive Officer



Dated: May 15, 2014		/s/ Alicia A. Rolfe
		By: Alicia A. Rolfe
		Its: Chief Financial Officer Principal Financial Officer

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