10-Q

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: June 30, 2012

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.)

1945 S. Rancho Santa Fe Road, San Marcos, California 92078

 (Address of principal executive offices, Zip Code)

(760) 591-0089

 (Registrant’s telephone number, including area code)

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

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

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

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  No x

As of August 6, 2012, the Registrant had 19,749,582 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 June 30, 2012 and December 31, 2011	1
	Condensed Statements of Operations for the three months and six months ended
	June 30, 2012 and June 30, 2011	2
	Condensed Statements of Cash Flows for the six months ended
	June 30, 2012 and June 30, 2011	3
	Notes to the Condensed Financial Statements	4
Item 2.	Management’s Discussion and Analysis of the Financial Condition and Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	13
Item 4.	Controls and Procedures	13
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	14
Item 1A.	Risk Factors	14
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3.	Defaults Upon Senior Securities	15
Item 4.	[Removed and Reserved]	15
Item 5.	Other Information	15
Item 6.	Exhibits	16

PART I

FINANCIAL INFORMATION

ITEM 1.                      FINANCIAL STATEMENTS

OMNITEK ENGINEERING CORP.
Condensed Balance Sheets
ASSETS
	June 30,			December 31,
	2012			2011
	(unaudited)
CURRENT ASSETS
Cash	$	3,524,094		$	31,196
Accounts receivable, net		86,124			13,506
Accounts receivable -related party		26,847			16,715
Inventory		922,677			1,020,117
Prepaid expense		837			2,512
Deposits		176,001			41,943
Total Current Assets		4,736,580			1,125,989
FIXED ASSETS, net		11,777			13,249
OTHER ASSETS
Long-term investments, net		1,222,019			-
Intellectual property, net		6,737			8,256
Total Other Assets		1,228,756			8,256
TOTAL ASSETS	$	5,977,113		$	1,147,494
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	65,154		$	57,828
Accrued expenses - related parties		292,517			351,580
Accounts payable - related parties		2,624			2,568
Customer deposits		291,736			286,608
Total Current Liabilities		652,031			698,584
Total Liabilities		652,031			698,584
STOCKHOLDERS' EQUITY
Common stock, 125,000,000 shares authorized no par value
19,749,590 and 17,137,812 shares issued and outstanding,
respectively		8,196,061			2,659,299
Additional paid-in capital		4,731,728			4,213,313
Accumulated deficit		(7,602,707	)		(6,423,702	)
Total Stockholders' Equity		5,325,082			448,910
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	5,977,113		$	1,147,494
The accompanying notes are an integral part of these condensed financial statements.

Page 1

OMNITEK ENGINEERING CORP.
Condensed Statements of Operations
(unaudited)
	For the Three			For the Three			For the Six			For the Six
	Months Ended			Months Ended			Months Ended			Months Ended
	June 30			June 30			June 30			June 30
	2012			2011			2012			2011
REVENUES	$	380,531		$	374,490		$	686,900		$	989,746
COST OF GOODS SOLD		149,449			202,738			350,061			485,368
GROSS MARGIN		231,082			171,752			336,839			504,378
OPERATING EXPENSES
General and administrative		1,198,267			243,232			1,435,590			509,089
Research and development expense		48,254			32,481			77,148			59,946
Depreciation and amortization expense		1,533			20,848			2,990			41,241
Total Operating Expenses		1,248,054			296,561			1,515,728			610,276
LOSS FROM OPERATIONS		(1,016,972	)		(124,809	)		(1,178,889	)		(105,898	)
OTHER INCOME (EXPENSE)
Interest expense		(82	)		-			(490	)		-
Interest income		1,174			1			1,174			1
Total Other Income (Expense)		1,092			1			684			1
LOSS BEFORE INCOME TAXES		(1,015,880	)		(124,808	)		(1,178,205	)		(105,897	)
INCOME TAX EXPENSE					-			800			800
NET LOSS	$	(1,015,880	)	$	(124,808	)	$	(1,179,005	)	$	(106,697	)
BASIC AND DILUTED LOSS PER SHARE	$	(0.05	)	$	(0.01	)	$	(0.06	)	$	(0.01	)
BASIC AND DILUTED WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING		19,661,571			16,471,747			18,429,153			16,068,031
The accompanying notes are an integral part of these condensed financial statements.

Page 2

OMNITEK ENGINEERING CORP.
Condensed Statements of Cash Flows
(unaudited)
	For the Six			For the Six
	Months Ended			Months Ended
	June 30,			June 30,
	2012			2011
OPERATING ACTIVITIES
Net loss	$	(1,179,005	)	$	(106,697	)
Adjustments to reconcile net loss to
net cash used by operating activities:
Amortization and depreciation expense		9,195			41,241
Options and warrants granted		518,415			126,534
Changes in operating assets and liabilities:
Accounts receivable		(72,618	)		8,684
Accounts receivable–related parties		(10,132	)		(18,357	)
Deposits		(134,058	)		7,569
Prepaid expense		1,675			-
Inventory		97,440			(40,719	)
Accounts payable and accrued expenses		7,326			(76,006	)
Customer deposits		5,128			(58,004	)
Accounts payable-related parties		56			-
Accrued expenses-related parties		(59,063	)		(27,500	)
Net Cash Used in Operating Activities		(815,641	)		(143,255	)
INVESTING ACTIVITIES
Purchase of long-term investments		(1,228,223	)		-
Purchase of property and equipment		-			(15,472	)
Net Cash Used in Investing Activities		(1,228,223	)		(15,472	)
FINANCING ACTIVITIES
Issuance of common stock for cash		5,536,762			150,000
Repayment of note payable		(40,000	)		-
Exercise of warrants and options for cash		-			87,500
Proceeds of note payable		40,000			-
Net Cash Provided by Financing Activities		5,536,762			237,500
NET INCREASE IN CASH		3,492,898			78,773
CASH AT BEGINNING OF PERIOD		31,196			34,944
CASH AT END OF PERIOD	$	3,524,094		$	113,717
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
CASH PAID FOR:
Interest	$	490		$	-
Income taxes	$	800		$	800
The accompanying notes are an integral part of these condensed financial statements.

Page 3

OMNITEK ENGINEERING CORP.

Condensed Notes to Financial Statements

June 30, 2012

(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 June 30, 2012, 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, 2011 audited financial statements.  The results of operations for the periods ended June 30, 2012 and 2011 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 San Marcos, California at June 30, 2012 and December 31, 2011 consisted of the following:

	June 30, 2012			December 31, 2011
Raw materials	$	1,026,971		$	946,762
Finished goods		504,781			674,198
Peru (finished goods)		18,454			18,454
In transit		-			8,232
Allowance for obsolete inventory		(627,529	)		(627,529	)
Total	$	922,677		$	1,020,117

The Company has established an allowance for obsolete inventory.  Expense for obsolete inventory was $-0- and $-0-, for the periods ended June 30, 2012 and December 31, 2011, respectively.

Page 4

OMNITEK ENGINEERING CORP.

Condensed Notes to Financial Statements

June 30, 2012

(unaudited)

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes

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

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

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 June 30, 2012 and December 31, 2011 the Company had no accrued interest or penalties related to uncertain tax positions. The Company files an income tax return in the U.S. federal jurisdiction and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2007.

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 discount on the bonds over the remaining life.

	June 30, 2012		December 31, 2011
Amortized cost basis	$	1,222,019	$	-
Aggregate  fair value		1,205,510		-
Gross unrecognized holding (gains) losses		16,509		-
Other than temporary impairment recognized in other comprehensive income		-		-
Net carrying amount	$	1,222,019	$	-

Future maturities of held to maturity investments:

2013	$250,000
2014	900,000
Total	$1,150,000

Page 5

OMNITEK ENGINEERING CORP.

Condensed Notes to Financial Statements

June 30, 2012

(unaudited)

NOTE 3 - RELATED PARTY TRANSACTIONS

Accounts Receivable – Related Parties

During the years ended December 31, 2007 through 2010, the Company a minority interest in various distributors in exchange for use of the Company’s name and logo. As of December 31, 2011, 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 June 30, 2012 and December 31, 2011, the Company was owed $26,847 and $16,715, respectively, by these 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 June 30, 2012 and December 31, 2011, the Company owed related parties for such expenses, goods and services in the amounts of $2,624 and $2,568, respectively.

Accrued Expenses – Related Parties

During the periods ended June 30, 2012 and December 31, 2011, related parties were due amounts for services performed for the Company.  As of June 30, 2012 and December 31, 2011 the related parties’ payables consisted of the following:

	June 30,			December 31,
	2012			2011
Amounts due to the president		$	229,397		$	271,253
Amounts due to other officers of the company			63,120			80,327
Total		$	292,517		$	351,580

NOTE 4 - NOTES PAYABLE

Line of Credit Payable

On February 15, 2012 the Company entered into a revolving line of credit agreement with a shareholder for $50,000 for an initial period of 6 months. During the six months ended June 30, 2012, the Company borrowed a total of $40,000, and accrued interest expense of $490. As of June 30, 2012 the Company has repaid all of the outstanding debt and now owes $-0- under the revolving line of credit. The Company granted 5,000 stock purchase warrants as consideration for the funding of the revolving line of credit resulting in an expense of $15,450.

NOTE 5 - STOCK OPTIONS AND WARRANTS

In April 2007, the Company’s shareholders approved its 2006 Long-Term Incentive Plan (“the Plan”).   Under the plan, the Company may issue up to 10,000,000 shares of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion.  As of June 30, 2012 the Company has a total of 5,545,313 options and warrants issued under the plan.  During the six months ended June 30, 2012 the Company issued an additional amount of 2,725,313 warrants.

During the six months ended June 30, 2012 and 2011, the Company recognized expense of $518,415 and $126,534, respectively, for options and warrants that vested during the periods pursuant to ASC Topic 718.

Page 6

OMNITEK ENGINEERING CORP.

Condensed Notes to Financial Statements

June 30, 2012

(unaudited)

NOTE 5 - STOCK OPTIONS AND WARRANTS (CONTINUED)

A summary of the status of the options and warrants granted at June 30, 2012 and December 31, 2011 and changes during the periods then ended is presented below:

	2012				2011
	Shares		Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding at beginning of period		2,820,000	$	0.73		5,870,000		$	0.52
Granted		2,725,313		3.88		-			-
Exercised		-		-		(1,177,983	)		0.15
Expired or canceled		-		-		(1,872,017	)		0.43
Outstanding at end of period		5,545,313		2.28		2,820,000			0.73
Exercisable		5,545,313	$	2.28		2,820,000		$	0.73

A summary of the status of the options and warrants outstanding at June 30, 2012 is presented below:

		Total Outstanding				Total Exercisable
				Average				Weighted
		Number		Remaining		Number		Average
Range		O/S		Life (Yrs)		Exercisable		Exercisable
$	0.01 - 0.50		200,000		2.28		200,000	$	0.38
$	0.51 - 0.75		1,580,000		2.35		1,580,000	$	0.63
$	0.76 - 1.00		1,040,000		2.36		1,040,000	$	0.94
$	1.01 – 3.00		5,000		4.62		5,000	$	2.68
$	3.01 – 4.00		2,720,313		4.78		2,720,313	$	3.88
$	0.01 – 4.00		5,545,313		3.54		5,545,313	$	2.28

NOTE 6 - SIGNIFICANT EVENTS

On April 9, 2012, the Company closed a private placement (the “Private Placement”) with select accredited investors (the “Investors”) related to the sale and issuance of an aggregate of 2,602,246 shares of common stock (the “Common Stock”) of the Company (the “Shares”) and warrants to purchase an aggregate of 2,602,246 shares of Common Stock (the “Warrants”). The aggregate gross proceeds raised by the Company was $5,516,762 million. Each Share was be sold to the Investors at $2.12 per Share. The Warrants will expire five (5) years from the date of issue and may be exercised at $3.88 per Share, subject to adjustment in certain circumstances.

Page 7

OMNITEK ENGINEERING CORP.

Condensed Notes to Financial Statements

June 30, 2012

(unaudited)

NOTE 6 - SIGNIFICANT EVENTS (CONTINUED)

In connection with the Private Placement, the Company paid its placement agents (the “Placement Agents”) an aggregate cash commission equal to $386,173.  In addition, the Company will reimburse the Placement Agents $23,632 for costs and expenses incurred in connection with the Private Placement, and issue to the Placement Agents five-year warrants to purchase an aggregate of 78,067 shares of common stock, at an exercise price of $3.88 per share, subject to adjustment in certain circumstances (the “Placement Agent Warrants”).  The Company also issued to two consultants, five-year warrants to purchase an aggregate of 40,000 shares of common stock, at an exercise price of $3.88 per share. The Company recognized $502,965 of compensation expense for the warrants issued.

NOTE 7 - SUBSEQUENT EVENTS

On July 26, 2012, the Company granted an officer a stock option pursuant to the 2011 Long-Term Incentive Plan, to purchase 400,000 shares of common stock, at an exercise price of $2.56 per share representing 110% of the average of the closing price of the common stock as reported on the OTCBB for the prior 30 day period. One-sixtieth (1/60) of the total number of shares subject to the Options shall vest and become exercisable at the end of each month following November 1, 2012 on the same day of each month, so that all shares subject to the Options will be fully vested on the fourth anniversary. The Options will be exercisable for a period of seven years from November 1, 2012.

Additionally on July 26, 2012, the Company granted an officer a stock option pursuant to the 2011 Long-Term Incentive Plan, to purchase 50,000 shares of common stock, at an exercise price of $2.56 per share representing 110% of the average of the closing price of the common stock as reported on the OTCBB for the prior 30 day period. One-twenty-fourth (1/24) of the total number of shares subject to the Options shall vest and become exercisable at the end of each month following November 1, 2012 on the same day of each month, so that all shares subject to the Options will be fully vested on the second anniversary. The Options will be exercisable for a period of seven years from November 1, 2012.

On August 3, 2012, the Board of Directors of the Company appointed two new outside Directors to the Board. In conjunction with their appointment the Company granted each a non-qualified stock option to purchase twenty-five thousand (25,000) shares of the Company’s common stock at an exercise price of $1.79 per share (i.e. eighty-five percent (85%) of the closing price of the Company’s common stock as of August 3, 2012). Such Options shall be exercisable for a period of five years. The Option shall vest and be exercisable immediately.

Additionally, on August 3, 2012, the Company granted a non-qualified stock option grant to the Company’s engineering group manager, to purchase forty thousand (40,000) shares of the Company’s common stock at an exercise price of $1.79 per share (i.e. eighty-five percent (85%) of the closing price of the Company’s common stock as of August 3, 2012). Such Options shall be exercisable for a period of five years. The Option shall vest and be exercisable with regard to 25% of the total shares subject to the Option, at the end of each year following the Date of Grant, so that all shares subject to the Options will be fully vested on the fourth anniversary of the Date of Grant.

Page 8

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 June 30, 2012 and 2011

Revenues increased to $380,531 for the three months ended June 30, 2012 from $374,490 for the three months ended June 30, 2011, an increase of $6,041 or 2%.  We expect the sales for the remainder of 2012 to be on a par with or somewhat higher than 2011 while we complete our product improvements.

Our cost of sales decreased to $149,449 for the three months ended June 30, 2012 from $202,738 for the three months ended June 30, 2011, a decrease of $53,289. Our gross margin was 61% for the three months ended June 30, 2012 compared to 46% in 2011.  This was mainly due to the higher volume of filters in the mix of product that was shipped during the quarter.  We anticipate our gross margin to be between 38% to 42% for the remainder of the year.

Our operating expenses for the three months ended June 30, 2012 were $1,248,054 compared to $296,561 in 2011, an increase of $951,493 or 420%.  General and administrative expense for the three months ended June 30, 2012 was $1,198,267 as compared to $243,232 for the three months ended June 30, 2011.  The increase is due primarily to the cash expenses associated with the private placement of $413,306 and non-cash option issued expense of $502,965 for the three months ended June 30, 2012 as compared to $-0-  and $-0-, respectively, for the three months ended June 30, 2011.  Major components of general and administrative expenses for the three months ended June 30, 2012 were professional fees of $77,285, rent expense of $33,376, and salary and wages of $58,909. This compares to professional fees of $10,880, rent expense of $31,298 and salaries and wages of $52,173 for the three months ended June 30, 2011.   In the three months ended June 30, 2012 professional fees were higher by approximately $66,405 due to legal expenses incurred in connection with the private placement which closed on April 9, 2012. Research and development outlays were increased to $48,254 for the three months ended June 30, 2012 compared to $32,481 for the three months ended June 30, 2011 as we work to improve our products.

Our net loss for the three months ended June 30, 2012 was $1,015,880, ($0.05 per share) compared to a net less of $124,808 ($0.01 per share) for the three months ended June 30, 2011. The increased loss was the result of higher general and administrative expense in the three months ended June 30, 2012 compared to the three months ended June 30, 2011.

Page 9

Results for the three months ended June 30, 2012 reflect the impact of one-time cash private placement expenses of $413,306 and non-cash expenses, including the value of options and warrants granted in the amount of $502,965 and depreciation and amortization of $9,195. For the three month period a year earlier, non-cash expenses for the value of options and warrants granted were $69,452 and depreciation and amortization of $20,848.

For the six months ended June 30, 2012 and 2011

Revenues decreased to $686,900 for the six months ended June 30, 2012 from $989,746 for the six months ended June 30, 2011, a decrease of $302,846 or 31%.  Revenues for the period ended June 30, 2011 were exceptionally high due to due rescheduling of orders by certain customers.  We expect our sales for the remainder of 2012 to be on a par with or slightly higher than 2011.

Our cost of sales decreased to $350,061 for the six months ended June 30, 2012 from $485,368 for the six months ended June 30, 2011, a decrease of $135,307. Our gross margin was 46% for the six months ended June 30, 2012 compared to 49% in 2011.  This was mainly due to the volume and lower overall mix of filters in our products that were shipped during the six months.  We anticipate our margin to be between 38% and 42% for the remainder of the year.

Our operating expenses for the six months ended June 30, 2012 were $1,515,728 compared to $610,276 in 2011, an increase of $905,452 or 249%.  General and administrative expense for the six months ended June 30, 2012 was $1,435,590 as compared to $509,089 for the six months ended June 30, 2011.  The increase is due primarily to the increase in expenses related to the private placement expenses of $413,306 and options issued of $518,415 for the six months ended June 30, 2012 as compared to $-0- and $69,452, respectively, for the six months ended June 30, 2011.  Major components of general and administrative expenses for the six months ended June 30, 2012 were professional fees of $125,438, rent expense of $66,751, and salary and wages of $122,128. This compares to professional fees of $38,441, rent expense of $62,296 and salaries and wages of $102,477 for the six months ended June 30, 2011.   In the six months ended June 30, 2012 professional fees were higher by approximately $86,997 due to legal costs incurred in connection with the private placement which closed on April 9, 2012. Research and development outlays were increased to $77,148 for the six months ended June 30, 2012 compared to $59,946 for the six months ended June 30, 2012 as we worked to improve our products.

Our net loss for the six months ended June 30, 2012 was $1,179,005, ($0.06 per share) compared to a net loss of $106,697 ($0.01 per share) for the six months ended June 30, 2011. The increased loss was the result of higher General and administrative expenses associated with the private placement in the six months ended June 30, 2012.

Results for the six months ended June 30, 2012 reflect the impact of non-cash expenses, including the value of options and warrants granted in the amount of $518,415 and depreciation and amortization of $9,195. For the six month period a year earlier, non-cash expenses for the value of options and warrants granted were $126,534 and depreciation and amortization of $41,241.

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 six months ended June 30, 2012 and 2011

At June 30, 2012, our current liabilities totaled $652,031 and our current assets totaled $4,736,580, resulting in positive working capital of $4,084,549 and a current ratio of 6 to1.  During the six months ended June 30, 2012, we received $5,536,762 of cash from the issuance of common stock and $40,000 from the borrowing of funds .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.

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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 $7,602,707 at June 30, 2012.

Operating Activities

We have realized a negative cash flow from operations of $815,641 for the six months ended June 30, 2012 compared to a negative cash flow of $143,255 during the six months ended June 30, 2011.

Included in the net loss of $1,179,005 for the six months ended June 30, 2012 are one-time cash expenses of $413,306 for the private placement and non-cash expenses which are not a drain on our capital resources.  During the six months ended June 30, 2012, these non-cash expenses include the value of options and warrants granted in the amount of $518,415 and depreciation and amortization of $9,195.  Excluding these non-cash amounts, our EBITDA for the six months ended June 30, 2012 would have been a loss of $651,395.

Financing Activities

During the six months ended June 30, 2012, we received $5,536,762 of cash from a prviate placement offering and $40,000 from the borrowing of funds. We repaid the $40,000 during the six months ended June 30, 2012.

Off-Balance Sheet Arrangements

None.

Critical Accounting Policiesand 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.

Page 11

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

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

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

Revenue Recognition

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

Accounting for Income Taxes

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

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

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

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of June 30, 2012, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company files an income tax return in the U.S. federal jurisdiction and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2006.

At June 30, 2012, the Company had net operating loss carry forwards of approximately $685,000  through 2032. No tax benefit has been reported in the June 30, 2012 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.

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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 June 30, 2012, pursuant to Rule 13a-15(b) under the Securities Exchange Act. Based upon that evaluation, our Certifying Officer concluded that, as of June 30, 2012, 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 June 30, 2012  that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Page 13

PART II - OTHER INFORMATION

ITEM 1.        LEGAL PROCEEDINGS

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

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

On April 9, 2012, pursuant to a Securities Purchase Agreement, we issued to 32 Investors, an aggregate of 2,602,246 shares of our common stock and Warrants exercisable into 2,602,246 shares of our common stock for total subscription proceeds of $5,516,762.  The Warrants have an exercise price of $3.88 per share and are exercisable for a period of five years expiring on April 8, 2017.  The number of shares of common stock to be received upon the exercise of the Warrants are subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the common stock that occur after the Closing Date.

Pursuant to the terms of the Engagement Agreement, the Company also issued to the Placement Agent at the Closing Date warrants to purchase 78,067 shares of common stock of the Company, which is equal to 3% of the aggregate number of shares sold to Investors, which shall have the same terms, including exercise price and registration rights, as the Investor Warrants issued in the private placement. We also paid a cash placement fee of $386,173, which is equal to 7% of the aggregate purchase price paid by Investors that were sold in the private placement.

The issuance of securities to the Investors and the Placement Agent were not registered under the Securities Act. Such issuance of securities was exempt from registration under the safe harbor provided by Regulation D Rule 506 and Section 4(2) of the Securities Act. We made this determination in part based on the representations of Investors, which included, in pertinent part, that such Investors were an “accredited investor” as defined in Rule 501(a) under the Securities Act, and upon such further representations from the Investors that (a) the Investor is acquiring the securities for his, her or its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (b) the Investor agrees not to sell or otherwise transfer the purchased securities unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (c) the Investor either alone or together with its representatives has knowledge and experience in financial and business matters such that he, she or it is capable of evaluating the merits and risks of an investment in us, and (d) the Investor has no need for the liquidity in its investment in us and could afford the complete loss of such investment.  Our determination is made based further upon our action of (a) making written disclosure to each Investor in the Securities Purchase Agreement prior to the closing of sale that the securities have not been registered under the Securities Act and therefore cannot be resold unless they are registered or unless an exemption from registration is available, (b) making written descriptions of the securities being offered, the use of the proceeds from the offering and any material changes in the Company’s affairs that are not disclosed in the documents furnished, and (c) placement of a legend on the certificate that evidences the securities stating that the securities have not been registered under the Securities Act and setting forth the restrictions on transferability and sale of the securities, and upon such inaction of  the Company of any general solicitation or advertising for securities herein issued in reliance upon Regulation D Rule 506 and Section 4(2) of the Securities Act.

Additionally, on April 9, 2011, the Company issued warrants to purchase 40,000 shares of common stock of the Company to two accredited investors for consulting services provided to the Company.  The Warrants have an exercise price of $3.88 per share and are exercisable for a period of five years expiring on April 8, 2017.  The number of shares of common stock to be received upon the exercise of the Warrants are subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the common stock that occur after the Closing Date.  The issuance of the Warrants was exempt from registration under the safe harbor provided by Regulation D Rule 506 and Section 4(2) of the Securities Act.  The consultants receiving the Warrants were accredited investors, were acquainted with the Company’s business plan and proposed activities at the time of issuance, and possessed information on the Company necessary to make an informed investment decision.  No underwriters were used in the issuance of the securities.

Subsequent to the period covered by this report, on July 26, 2012, the Company granted its CEO, President and Secretary, Werner Funk, a Stock Option pursuant to the 2011 Long-Term Incentive Plan, to purchase 400,000 shares of common stock, at an exercise price of $2.56 per share representing 110% of the average of the closing price of the common stock as reported on the OTCBB for the prior 30 day period.  One-sixtieth (1/60) of the total number of shares subject to the Options shall vest and become exercisable at the end of each month following the Effective Date on the same day of each month as the Effective Date, so that all shares subject to the Options will be fully vested on the fourth anniversary of the Effective Date.  The Options will be exercisable for a period of seven years from the Effective Date.

Additionally on July 26, 2012, the Company granted its CFO and Vice President, Janice M. Quigley, a Stock Option pursuant to the 2011 Long-Term Incentive Plan, to purchase 50,000 shares of common stock, at an exercise price of $2.56 per share representing 110% of the average of the closing price of the common stock as reported on the OTCBB for the prior 30 day period.  One-twenty-fourth (1/24) of the total number of shares subject to the Options shall vest and become exercisable at the end of each month following the Effective Date on the same day of each month as the Effective Date, so that all shares subject to the Options will be fully vested on the second anniversary of the Effective Date.  The Options will be exercisable for a period of seven years from the Effective Date.

On August 3, 2012, the Board of Directors of the Company appointed Gary S. Maier and George G. Chachas to serve as outside Directors of the Company.  In conjunction with their appointment the Company granted to Mr. Maier and Mr. Chachas, each, a non-qualified stock option grant to purchase twenty-five thousand (25,000) shares of the Company’s common stock at an exercise price of $1.79 per share (i.e. eighty-five percent (85%) of the closing price of the Company’s common stock as of August 3, 2012).  Such Options shall be exercisable for a period of five years.  The Option shall vest and be exercisable immediately.

Additionally, on August 3, 2012, the Company granted a non-qualified stock option grant to the Company’s engineering group manager, to purchase forty thousand (40,000) shares of the Company’s common stock at an exercise price of $1.79 per share (i.e. eighty-five percent (85%) of the closing price of the Company’s common stock as of August 3, 2012).  Such Options shall be exercisable for a period of five years.  The Option shall vest and be exercisable with regard to 25% of the total shares subject to the Option, at the end of each year following the Date of Grant, so that all shares subject to the Options will be fully vested on the fourth anniversary of the Date of Grant.

No underwriters were used. The securities were issued pursuant to an exemption from registration provided by Section 4(2) of the Securities Act of 1933. The individuals receiving the options were intimately acquainted with the Company’s business plan and proposed activities at the time of issuance, and possessed information on the Company necessary to make an informed investment decision.

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.      [REMOVED AND RESERVED]

ITEM 5.      OTHER INFORMATION

None

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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 June 30, 2012 and the audited balance sheet as of December 31, 2011, the condensed unaudited Statements of Operations for the three and six month periods ended June 30, 2012 and 2011, and the condensed unaudited Statements of Cash Flows for the six month periods ended June 30, 2012 and 2011, 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 S, 2011 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. (3)

(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

(4)   Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files submitted under Exhibit 101 are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

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SIGNATURES

Pursuant to the requirements of 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: August 9, 2012
	By: Werner Funk
	Its: Chief Executive Officer President and Secretary

Dated: August 9, 2012	/s/ Janice M. Quigley
	By: Janice M. Quigley
	Its: Chief Financial Officer

Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Dated: August 9, 2012
	By: Werner Funk, Director

Dated: August 9, 2012	/s/ Janice M. Quigley
	Janice M. Quigley, Director

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EX-31.01

Exhibit 31.01

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14

I, Werner Funk, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Omnitek Engineering Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have, for the small business issuer and have:

(a)         Designed such disclosure controls and procedures, or caused such disclosure controls andprocedures to be designed under my supervision, to ensure that material information relating to the smallbusiness issuer, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)         Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures andpresented in this report our conclusions about the effectiveness of the disclosure controls and procedures, asof the end of the period covered by this report based on such evaluation; and

(d)         Disclosed in this report any change in the small business issuer’s internal control over financialreporting that occurred during the small business issuer’s most recent fiscal quarter that has materiallyaffected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5.    I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a)         All significant deficiencies and material weaknesses in the design or operation of internal controlover financial reporting which are reasonably likely to adversely affect the small business issuer’s ability torecord, process, summarize and report financial information; and

(b)         Any fraud, whether or not material, that involves management or other employees who have asignificant role in the small business issuer’s internal control over financial reporting.

Dated: August 9, 2012                                                     

___________________________

By:  Werner Funk

Its:  President and Secretary

EX-31.02

Exhibit 31.02

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a-14

I, Janice M. Quigley, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Omnitek Engineering Corp.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have, for the small business issuer and have:

(a)         Designed such disclosure controls and procedures, or caused such disclosure controls andprocedures to be designed under my supervision, to ensure that material information relating to the smallbusiness issuer, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 (b)        Designed such internal control over financial reporting, or caused such internal control overfinancial reporting to be designed under our supervision, to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)         Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures andpresented in this report our conclusions about the effectiveness of the disclosure controls and procedures, asof the end of the period covered by this report based on such evaluation; and,

(d)         Disclosed in this report any change in the small business issuer’s internal control over financialreporting that occurred during the small business issuer’s most recent fiscal quarter that has materiallyaffected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and,

5.    I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

 (a)          All significant deficiencies and material weaknesses in the design or operation of internal controlover financial reporting which are reasonably likely to adversely affect the small business issuer’s ability torecord, process, summarize and report financial information; and,

(b)         Any fraud, whether or not material, that involves management or other employees who have asignificant role in the small business issuer’s internal control over financial reporting.

Dated: August 9, 2012                                                                          

 /s/ Janice M. Quigley

___________________________

By: Janice M. Quigley

Its:  Chief Financial Officer

EX-32

Exhibit 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Omnitek Engineering Corp. (the “Company”) on Form 10-Q for the period ending June 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Werner Funk, Chief Executive Officer and I, Janice M. Quigley, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1)          The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)          The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: August 9, 2012                                                        

___________________________

By:  Werner Funk

Its:  President and Secretary

Dated: August 9, 2012                                                                           

/s/ Janice M. Quigley

___________________________

By: Janice M. Quigley

Its:  Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Notes Payable (Details) (USD $)	6 Months Ended	3 Months Ended
	Jun. 30, 2012	Jun. 30, 2012 Line of Credit
Line of Credit Facility, Maximum Borrowing Capacity		$ 50,000
Repayment of note payable	40,000	40,000
Line of Credit Facility, Increase, Accrued Interest		490
Line of Credit Facility, Amount Outstanding		0
Warrants Issued as Consideration for Line of Credit		5,000
Allocated Share-based Compensation Expense		$ 15,450

XML

Notes Payable

3 Months Ended

Jun. 30, 2012

Notes Payable:

Notes Payable

NOTE 4 - NOTES PAYABLE

Line of Credit Payable

On February 15, 2012 the Company entered into a revolving line of credit agreement with a shareholder for $50,000 for an initial period of 6 months. During the six months ended June 30, 2012, the Company borrowed a total of $40,000, and accrued interest expense of $490. As of June 30, 2012 the Company has repaid all of the outstanding debt and now owes $-0- under the revolving line of credit. The Company granted 5,000 stock purchase warrants as consideration for the funding of the revolving line of credit resulting in an expense of $15,450.

XML

Significant Events (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Jun. 30, 2011
Private Placement Fees Paid	$ 386,173
Other Private Placement Costs Paid	23,632
Share-based Compensation		518,415	126,534
Private Placement
Stock Issued During Period, Shares, New Issues	2,602,246
Warrants Issued During Period	2,602,246
Stock Issued During Period, Value, New Issues	5,516,762
Private Placement Price	$ 2.12
Warrant Expiration Term (Yrs)	5
Warrant Exercise Price	$ 3.88
Share-based Compensation	$ 502,965
Private Placement | Placement Agent
Warrants Issued During Period	78,067
Warrant Exercise Price	$ 3.88
Private Placement | Consultant
Warrants Issued During Period	40,000
Warrant Exercise Price	$ 3.88

XML

Stock Options and Warrants: Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range (Details) (USD $)	3 Months Ended
	Jun. 30, 2012
$0.01 - 0.50
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term	2 years 3 months 12 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Number	200,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price	$ 0.38
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number	200,000
$0.51 - 0.75
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term	2 years 4 months 8 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Number	1,580,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price	$ 0.63
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number	1,580,000
$0.76 - 1.00
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term	2 years 4 months 11 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Number	1,040,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price	$ 0.94
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number	1,040,000
$1.01 - 3.00
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term	4 years 7 months 16 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Number	5,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price	$ 2.68
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number	5,000
$3.01 - 4.00
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term	4 years 9 months 14 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Number	2,720,313
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price	$ 3.88
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number	2,720,313
$0.01 - 4.00
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term	3 years 6 months 17 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Number	5,545,313
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price	$ 2.28
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number	5,545,313

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Subsequent Events (Details) (USD $)	3 Months Ended		3 Months Ended		3 Months Ended
	Jun. 30, 2012 Executive Officer Stock Compensation Plan	Jul. 26, 2012 Executive Officer Stock Compensation Plan	Jun. 30, 2012 Officer Stock Compensation Plan	Jul. 26, 2012 Officer Stock Compensation Plan	Jun. 30, 2012 Director Stock Options	Aug. 03, 2012 Director Stock Options	Aug. 03, 2012 Engineering Group Manager Stock Options
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number		400,000		50,000		25,000	40,000
Options, Exercise Price		$ 2.56		$ 2.56		$ 1.79	$ 1.79
Options, Granted, Premium or Discount to Share Price		110.00%		110.00%		85.00%	85.00%
Options, Granted, Starting Vest Date	Nov. 01, 2012		Nov. 01, 2012
Options, Expiration Date	Nov. 01, 2019		Nov. 01, 2019		Aug. 03, 2017

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Related Party Transactions

3 Months Ended

Jun. 30, 2012

Related Party Transactions:

Related Party Transactions

NOTE 3 - RELATED PARTY TRANSACTIONS

Accounts Receivable – Related Parties

During the years ended December 31, 2007 through 2010, the Company a minority interest in various distributors in exchange for use of the Company’s name and logo. As of December 31, 2011, 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 June 30, 2012 and December 31, 2011, the Company was owed $26,847 and $16,715, respectively, by these 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 June 30, 2012 and December 31, 2011, the Company owed related parties for such expenses, goods and services in the amounts of $2,624 and $2,568, respectively.

Accrued Expenses – Related Parties

During the periods ended June 30, 2012 and December 31, 2011, related parties were due amounts for services performed for the Company.  As of June 30, 2012 and December 31, 2011 the related parties’ payables consisted of the following:

		June 30,		December 31,
		2012		2011
Amounts due to the president	$	229,397	$	271,253
Amounts due to other officers of the company		63,120		80,327
Total	$	292,517	$	351,580

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Condensed Balance Sheets (USD $)	Jun. 30, 2012	Dec. 31, 2011
CURRENT ASSETS
Cash	$ 3,524,094	$ 31,196
Accounts receivable, net	86,124	13,506
Accounts receivable -related party	26,847	16,715
Inventory	922,677	1,020,117
Prepaid expense	837	2,512
Deposits	176,001	41,943
Total Current Assets	4,736,580	1,125,989
FIXED ASSETS, net	11,777	13,249
OTHER ASSETS
Long-term investments, net	1,222,019
Intellectual property, net	6,737	8,256
Total Other Assets	1,228,756	8,256
TOTAL ASSETS	5,977,113	1,147,494
CURRENT LIABILITIES
Accounts payable and accrued expenses	65,154	57,828
Accrued expenses - related parties	292,517	351,580
Accounts payable - related parties	2,624	2,568
Customer deposits	291,736	286,608
Total Current Liabilities	652,031	698,584
Total Liabilities	652,031	698,584
STOCKHOLDERS' EQUITY
Common stock, 125,000,000 shares authorized no par value 19,749,590 and 17,137,812 shares issued and outstanding, respectively	8,196,061	2,659,299
Additional paid-in capital	4,731,728	4,213,313
Accumulated deficit	(7,602,707)	(6,423,702)
Total Stockholders' Equity	5,325,082	448,910
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 5,977,113	$ 1,147,494

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Condensed Financial Statements

3 Months Ended

Jun. 30, 2012

Condensed Financial Statements:

Condensed Financial Statements

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2012, 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, 2011 audited financial statements.  The results of operations for the periods ended June 30, 2012 and 2011 are not necessarily indicative of the operating results for the full years.

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Significant Accounting Policies: Held To Maturity Investments (Details) (USD $)	3 Months Ended
	Jun. 30, 2012
Held-to-maturity Securities, Debt Maturities, within One Year, Net Carrying Amount	250,000
Held-to-maturity Securities, Debt Maturities, after One Through Five Years, Net Carrying Amount	900,000
Held-to-maturity Securities, Debt Maturities, without Single Maturity Date, Net Carrying Amount	1,150,000
Minimum
Held-to-maturity Securities, Debt Maturities, Date	Jan. 01, 2013
Maximum
Held-to-maturity Securities, Debt Maturities, Date	Jan. 01, 2014

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Related Party Transactions: Related Parties Payables (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Amounts due to the president	$ 229,397	$ 271,253
Amounts due to other officers of the company	63,120	80,327
Accrued expenses - related parties	$ 292,517	$ 351,580

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Significant Accounting Policies

3 Months Ended

Jun. 30, 2012

Significant Accounting Policies:

Significant Accounting Policies

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

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

Recent Accounting Pronouncements

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 San Marcos, California at June 30, 2012 and December 31, 2011 consisted of the following:

		June 30, 2012		December 31, 2011
Raw materials	$	1,026,971	$	946,762
Finished goods		504,781		674,198
Peru (finished goods)		18,454		18,454
In transit		-		8,232
Allowance for obsolete inventory		(627,529)		(627,529)
Total	$	922,677	$	1,020,117

The Company has established an allowance for obsolete inventory.  Expense for obsolete inventory was $-0- and $-0-, for the periods ended June 30, 2012 and December 31, 2011, respectively.

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 June 30, 2012 and December 31, 2011 the Company had no accrued interest or penalties related to uncertain tax positions. The Company files an income tax return in the U.S. federal jurisdiction and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2007.

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 discount on the bonds over the remaining life.

		June 30, 2012		December 31, 2011
Amortized cost basis	$	1,222,019	$	-
Aggregate  fair value		1,205,510		-
Gross unrecognized holding (gains) losses		16,509		-
Other than temporary impairment recognized in other comprehensive income		-		-
Net carrying amount	$	1,222,019	$	-

Future maturities of held to maturity investments:

                                2013       $250,000

                                2014         900,000

                                Total   $1,150,000

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Condensed Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Common Stock, par or stated value	$ 0	$ 0
Common Stock, shares authorized	125,000,000	125,000,000
Common Stock, shares issued	19,749,590	17,137,812
Common Stock, shares oustanding	19,749,590	17,137,812

XML

Stock Options and Warrants: Schedule of Share-based Compensation, Stock Options, Activity (Tables)

3 Months Ended

Jun. 30, 2012

Schedule of Share-based Compensation, Stock Options, Activity:

Schedule of Share-based Compensation, Stock Options, Activity

	2012		2011
	Shares	Weighted Average Exercise Price	Shares	Weighted Average Exercise Price
Outstanding at beginning of period	2,820,000	$      0.73	5,870,000	$        0.52
Granted	2,725,313	3.88	-	-
Exercised	-	-	(1,177,983)	0.15
Expired or canceled	-	-	(1,872,017)	0.43
Outstanding at end of period	5,545,313	2.28	2,820,000	0.73
Exercisable	5,545,313	$     2.28	2,820,000	$         0.73

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Document and Entity Information	3 Months Ended
	Jun. 30, 2012	Aug. 06, 2012
Document and Entity Information
Entity Registrant Name	OMNITEK ENGINEERING CORP
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Entity Central Index Key	0001404804
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		19,749,582
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2

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Stock Options and Warrants: Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range (Tables)

3 Months Ended

Jun. 30, 2012

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range:

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range

	200,000	$0.38
$0.51 - 0.75	1,580,000	2.35	1,580,000	$           0.63
$0.76 - 1.00	1,040,000	2.36	1,040,000	$           0.94
$1.01 – 3.00	5,000	4.62	5,000	$           2.68
$3.01 – 4.00	2,720,313	4.78	2,720,313	$           3.88
$0.01 – 4.00	5,545,313	3.54	5,545,313	$           2.28

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Condensed Statements of Operations (unaudited) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
REVENUES	$ 380,531	$ 374,490	$ 686,900	$ 989,746
COST OF GOODS SOLD	149,449	202,738	350,061	485,368
GROSS MARGIN	231,082	171,752	336,839	504,378
OPERATING EXPENSES
General and administrative	1,198,267	243,232	1,435,590	509,089
Research and development expense	48,254	32,481	77,148	59,946
Depreciation and amortization expense	1,533	20,848	2,990	41,241
Total Operating Expenses	1,248,054	296,561	1,515,728	610,276
LOSS FROM OPERATIONS	(1,016,972)	(124,809)	(1,178,889)	(105,898)
OTHER INCOME (EXPENSE)
Interest expense	(82)		(490)
Interest income	1,174	1	1,174	1
Total Other Income (Expense)	1,092	1	684	1
LOSS BEFORE INCOME TAXES	(1,015,880)	(124,808)	(1,178,205)	(105,897)
INCOME TAX EXPENSE			800	800
NET LOSS	$ (1,015,880)	$ (124,808)	$ (1,179,005)	$ (106,697)
BASIC AND DILUTED LOSS PER SHARE	$ (0.05)	$ (0.01)	$ (0.06)	$ (0.01)
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING	19,661,571	16,471,747	18,429,153	16,068,031

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Subsequent Events

3 Months Ended

Jun. 30, 2012

Subsequent Events:

Subsequent Events

NOTE 7 - SUBSEQUENT EVENTS

On July 26, 2012, the Company granted an officer a stock option pursuant to the 2011 Long-Term Incentive Plan, to purchase 400,000 shares of common stock, at an exercise price of $2.56 per share representing 110% of the average of the closing price of the common stock as reported on the OTCBB for the prior 30 day period. One-sixtieth (1/60) of the total number of shares subject to the Options shall vest and become exercisable at the end of each month following November 1, 2012 on the same day of each month, so that all shares subject to the Options will be fully vested on the fourth anniversary. The Options will be exercisable for a period of seven years from November 1, 2012.

Additionally on July 26, 2012, the Company granted an officer a stock option pursuant to the 2011 Long-Term Incentive Plan, to purchase 50,000 shares of common stock, at an exercise price of $2.56 per share representing 110% of the average of the closing price of the common stock as reported on the OTCBB for the prior 30 day period. One-twenty-fourth (1/24) of the total number of shares subject to the Options shall vest and become exercisable at the end of each month following November 1, 2012 on the same day of each month, so that all shares subject to the Options will be fully vested on the second anniversary. The Options will be exercisable for a period of seven years from November 1, 2012.

On August 3, 2012, the Board of Directors of the Company appointed two new outside Directors to the Board. In conjunction with their appointment the Company granted each a non-qualified stock option to purchase twenty-five thousand (25,000) shares of the Company’s common stock at an exercise price of $1.79 per share (i.e. eighty-five percent (85%) of the closing price of the Company’s common stock as of August 3, 2012). Such Options shall be exercisable for a period of five years. The Option shall vest and be exercisable immediately.

Additionally, on August 3, 2012, the Company granted a non-qualified stock option grant to the Company’s engineering group manager, to purchase forty thousand (40,000) shares of the Company’s common stock at an exercise price of $1.79 per share (i.e. eighty-five percent (85%) of the closing price of the Company’s common stock as of August 3, 2012). Such Options shall be exercisable for a period of five years. The Option shall vest and be exercisable with regard to 25% of the total shares subject to the Option, at the end of each year following the Date of Grant, so that all shares subject to the Options will be fully vested on the fourth anniversary of the Date of Grant.

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Significant Events

3 Months Ended

Jun. 30, 2012

Significant Events:

Significant Events

NOTE 6 - SIGNIFICANT EVENTS

On April 9, 2012, the Company closed a private placement (the “Private Placement”) with select accredited investors (the “Investors”) related to the sale and issuance of an aggregate of 2,602,246 shares of common stock (the “Common Stock”) of the Company (the “Shares”) and warrants to purchase an aggregate of 2,602,246 shares of Common Stock (the “Warrants”). The aggregate gross proceeds raised by the Company was $5,516,762 million. Each Share was be sold to the Investors at $2.12 per Share. The Warrants will expire five (5) years from the date of issue and may be exercised at $3.88 per Share, subject to adjustment in certain circumstances.

In connection with the Private Placement, the Company paid its placement agents (the “Placement Agents”) an aggregate cash commission equal to $386,173.  In addition, the Company will reimburse the Placement Agents $23,632 for costs and expenses incurred in connection with the Private Placement, and issue to the Placement Agents five-year warrants to purchase an aggregate of 78,067 shares of common stock, at an exercise price of $3.88 per share, subject to adjustment in certain circumstances (the “Placement Agent Warrants”).  The Company also issued to two consultants, five-year warrants to purchase an aggregate of 40,000 shares of common stock, at an exercise price of $3.88 per share. The Company recognized $502,965 of compensation expense for the warrants issued.

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Related Party Transactions (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Accounts receivable -related party	$ 26,847	$ 16,715
Accounts payable - related parties	$ 2,624	$ 2,568
Omnitek Engineering Thailand Co Ltd
Noncontrolling Interest, Ownership Percentage by Parent		15.00%
Omnitek Peru SAC
Noncontrolling Interest, Ownership Percentage by Parent		20.00%
Omnitek Stationary, Inc.
Noncontrolling Interest, Ownership Percentage by Parent		5.00%

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Significant Accounting Policies: Inventory: Schedule of Inventory, Current (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Inventory, Raw Materials	$ 1,026,971	$ 946,762
Inventory, Finished Goods	504,781	674,198
Other Inventory, in Transit		8,232
Inventory Valuation Reserves	(627,529)	(627,529)
Inventory, Net	922,677	1,020,117
Peru
Inventory, Finished Goods	$ 18,454	$ 18,454

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Significant Accounting Policies: Held To Maturity Investments: Held to Maturity Investments (Tables)

3 Months Ended

Jun. 30, 2012

Held to Maturity Investments:

Held to Maturity Investments

		June 30, 2012		December 31, 2011
Amortized cost basis	$	1,222,019	$	-
Aggregate  fair value		1,205,510		-
Gross unrecognized holding (gains) losses		16,509		-
Other than temporary impairment recognized in other comprehensive income		-		-
Net carrying amount	$	1,222,019	$	-

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Significant Accounting Policies (Policies)

3 Months Ended

Jun. 30, 2012

Policies (Detail level 2):

Use of Estimates

Use of Estimates

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

Inventory

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 San Marcos, California at June 30, 2012 and December 31, 2011 consisted of the following:

		June 30, 2012		December 31, 2011
Raw materials	$	1,026,971	$	946,762
Finished goods		504,781		674,198
Peru (finished goods)		18,454		18,454
In transit		-		8,232
Allowance for obsolete inventory		(627,529)		(627,529)
Total	$	922,677	$	1,020,117

The Company has established an allowance for obsolete inventory.  Expense for obsolete inventory was $-0- and $-0-, for the periods ended June 30, 2012 and December 31, 2011, respectively.

Income Taxes

Income Taxes

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

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

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 June 30, 2012 and December 31, 2011 the Company had no accrued interest or penalties related to uncertain tax positions. The Company files an income tax return in the U.S. federal jurisdiction and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2007.

Held To Maturity Investments

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 discount on the bonds over the remaining life.

		June 30, 2012		December 31, 2011
Amortized cost basis	$	1,222,019	$	-
Aggregate  fair value		1,205,510		-
Gross unrecognized holding (gains) losses		16,509		-
Other than temporary impairment recognized in other comprehensive income		-		-
Net carrying amount	$	1,222,019	$	-

Future maturities of held to maturity investments:

                                2013       $250,000

                                2014         900,000

                                Total   $1,150,000

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Significant Accounting Policies: Inventory: Schedule of Inventory, Current (Tables)

3 Months Ended

Jun. 30, 2012

Schedule of Inventory, Current:

Schedule of Inventory, Current

		June 30, 2012		December 31, 2011
Raw materials	$	1,026,971	$	946,762
Finished goods		504,781		674,198
Peru (finished goods)		18,454		18,454
In transit		-		8,232
Allowance for obsolete inventory		(627,529)		(627,529)
Total	$	922,677	$	1,020,117

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Related Party Transactions: Related Parties Payables (Tables)

3 Months Ended

Jun. 30, 2012

Related Parties Payables:

Related Parties Payables

		June 30,		December 31,
		2012		2011
Amounts due to the president	$	229,397	$	271,253
Amounts due to other officers of the company		63,120		80,327
Total	$	292,517	$	351,580

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Significant Accounting Policies: Held To Maturity Investments: Held to Maturity Investments (Details) (USD $)	Jun. 30, 2012
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	$ 1,222,019
Held-to-maturity Securities, Fair Value	1,205,510
Held-to-maturity Securities, Unrecognized Holding Loss	16,509
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount	$ 1,222,019

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Stock Options and Warrants (Details) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Share-based Compensation	$ 518,415	$ 126,534
2006 Long Term Incentive Plan
Shares Held in Employee Stock Option Plan, Allocated	10,000,000

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Condensed Statements of Cash Flows (unaudited) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
OPERATING ACTIVITIES
Net loss	$ (1,179,005)	$ (106,697)
Adjustments to reconcile net loss to net cash used by operating activities:
Amortization and depreciation expense	9,195	41,241
Options and warrants granted	518,415	126,534
Changes in operating assets and liabilities:
Accounts receivable	(72,618)	8,684
Accounts receivable-related parties	(10,132)	(18,357)
Deposits	(134,058)	7,569
Prepaid expense	1,675
Inventory	97,440	(40,719)
Accounts payable and accrued expenses	7,326	(76,006)
Customer deposits	5,128	(58,004)
Accounts payable-related parties	56
Accrued expenses-related parties	(59,063)	(27,500)
Net Cash Used in Operating Activities	(815,641)	(143,255)
INVESTING ACTIVITIES
Purchase of long-term investments	(1,228,223)
Purchase of property and equipment		(15,472)
Net Cash Used in Investing Activities	(1,228,223)	(15,472)
FINANCING ACTIVITIES
Issuance of common stock for cash	5,536,762	150,000
Repayment of note payable	(40,000)
Exercise of warrants and options for cash		87,500
Proceeds of note payable	40,000
Net Cash Provided by Financing Activities	5,536,762	237,500
NET INCREASE IN CASH	3,492,898	78,773
CASH AT BEGINNING OF PERIOD	31,196	34,944
CASH AT END OF PERIOD	3,524,094	113,717
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
CASH PAID FOR: Interest	490
CASH PAID FOR: Income taxes	$ 800	$ 800

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Stock Options and Warrants

3 Months Ended

Jun. 30, 2012

Stock Options and Warrants:

Stock Options and Warrants

NOTE 5 - STOCK OPTIONS AND WARRANTS

In April 2007, the Company’s shareholders approved its 2006 Long-Term Incentive Plan (“the Plan”).   Under the plan, the Company may issue up to 10,000,000 shares of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion.  As of June 30, 2012 the Company has a total of 5,545,313 options and warrants issued under the plan.  During the six months ended June 30, 2012 the Company issued an additional amount of 2,725,313 warrants.

During the six months ended June 30, 2012 and 2011, the Company recognized expense of $518,415 and $126,534, respectively, for options and warrants that vested during the periods pursuant to ASC Topic 718.              

A summary of the status of the options and warrants granted at June 30, 2012 and December 31, 2011 and changes during the periods then ended is presented below:

	2012		2011
	Shares	Weighted Average Exercise Price	Shares	Weighted Average Exercise Price
Outstanding at beginning of period	2,820,000	$      0.73	5,870,000	$        0.52
Granted	2,725,313	3.88	-	-
Exercised	-	-	(1,177,983)	0.15
Expired or canceled	-	-	(1,872,017)	0.43
Outstanding at end of period	5,545,313	2.28	2,820,000	0.73
Exercisable	5,545,313	$     2.28	2,820,000	$         0.73

A summary of the status of the options and warrants outstanding at June 30, 2012 is presented below:

	200,000	$0.38
$0.51 - 0.75	1,580,000	2.35	1,580,000	$           0.63
$0.76 - 1.00	1,040,000	2.36	1,040,000	$           0.94
$1.01 – 3.00	5,000	4.62	5,000	$           2.68
$3.01 – 4.00	2,720,313	4.78	2,720,313	$           3.88
$0.01 – 4.00	5,545,313	3.54	5,545,313	$           2.28

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Stock Options and Warrants: Schedule of Share-based Compensation, Stock Options, Activity (Details) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2011	Dec. 31, 2010
Options, Outstanding	5,545,313	2,820,000	5,870,000
Options, Outstanding, Weighted Average Exercise Price	$ 2.28	$ 0.73	$ 0.52
Options, Grants in Period	2,725,313
Options, Granted, Weighted Average Exercise Price	$ 3.88
Options, Exercised		(1,177,983)
Options, Exercised, Weighted Average Exercise Price		$ 0.15
Options, Expirations in Period		(1,872,017)
Options, Expired, Weighted Average Exercise Price		$ 0.43
Options, Exercisable	5,545,313	2,820,000
Options, Exercisable, Weighted Average Exercise Price	$ 2.28	$ 0.73

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Significant Accounting Policies: Inventory (Details) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Inventory Write-down	$ 0	$ 0