Financial Analysis

NOTE 10 COMMITMENTS As of December 31, 2025, and 2024, the Company had outstanding purchase commitments for inventory totaling $823,829 and $712,296, respectively. Of these amounts, the Company had prepayments of $327,800 as of December 31, 2025, and $494,140 as of December 31, 2024, and had commitments for future cash outlays for inventory totaling $499,799 and $218,156, respectively. …

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NOTE 8 NOTES PAYABLE RELATED PARTIES Convertible Notes Related Parties On June 4, 2021, the Company issued a convertible promissory note for $20,000 to a board member. The note has an annual interest rate of 8% and is unsecured. The principal amount of the note and all accrued interest was due and payable on or before December 4, 2021. On December 14, 2021, the maturity date of convertible promissory note was extended for an additional period of 3 months until March 4, 2022. Subsequently the maturity date was extended for additional periods to June 4, 2022, September 4, 2022, December 4, 2022, June 4, 2023 and December 4, 2023. On December 4, 2023 the Company made a payment of $10,000 reducing the outstanding balance to $10,000 and also extended the note until December 4, 2024. On December 4, 2024 the note was extended until December 4, 2025. On December 2, 2025 the note was extended until December 4, 2026. The note has a conversion feature, wherein, at the maturity date, the lender may convert the remaining principal balance and any unpaid accrued interest into shares of the Companys common stock. The number of shares of common stock to be issued upon such conversion shall be equal to the quotient obtained by dividing (i) the remaining unpaid principal balance and any unpaid accrued interest of this note by (ii) 90% of the average closing price of the common stock of the Company, for the five (5) trading days (between days 15 and 10 days) before the maturity date. Due to thi …

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NOTE 12 STOCKHOLDERS EQUITY Options and Warrants The Company has no warrants outstanding. On April 14, 2023, options to purchase 720,000 shares of common Stock expired. On February 9, 2024, options to purchase 855,556 shares of common stock expired. On January 10, 2025 and January 14, 2025, 290,000 and 300,000 options expired. During the years ended December 31, 2025, and 2024, the Company granted 150,000 and 450,000 options for services, respectively. During the years ended December 31, 2025, and 2024, the Company recognized expenses of $4,488 and $5,363 related to options that vested during the years, pursuant to ASC Topic 718. The total remaining amount of compensation expense to be recognized in future periods is $3,268. On September 11, 2015, the Board of Directors adopted the Omnitek Engineering Corp. 2015, Long Term Incentive Plan (the 2015 Plan), under which 2,500,000 shares of the Companys Common Stock were reserved for issuance of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of December 31, 2025, all of the options issued under the 2015 plan had expired. On October 2017, the Companys shareholders approved its 2017 Long-Term Incentive Plan (the 2017 Plan). Under the 2017 plan, the Company may issue up to 5,000,000 shares of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion. As of December 31, 2025, the Compan …

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NOTE 13 INCOME TAXES The provision for income taxes for the year ended December 31, 2025 and 2024 consists of the following: December 31, December 31, 2025 2024 Federal Current $ - $ - Deferred - - State Current $ 800 $ 800 Deferred - - Income tax expense $ 800 $ 800 Net deferred tax assets consist of the following components as of December 31, 2025, and 2024: December 31, December 31, 2025 2024 * Deferred tax assets: Net operating loss carryover $ 5,200,843 $ 8,213,337 Federal Tax Rate 21% 21 % Deferred Tax on Carry over losses $ 1,092,177 $ 1,724,801 Components of Deferred Tax Asset: - Income tax benefit at federal statutory rate $ 739,536 $ 1,379,486 - Inventory reserve $ 218,895 $ 211,690 - Accrued compensation $ 133,746 $ 133,625 Valuation allowance $ (1,092,177) (1,724,801) Net deferred tax asset $ - $ - * The numbers and disclosures have been updated in comparison to last form 10K filed. The income tax provision differs from the amount of income tax determined by applying the estimated U.S. federal and state income tax rate are 21% and 8.84% respectively as of December 31, 2025 and December 31, 2024 to pretax income from continuing operations for the year ended December 31, 2025 and 2024 due to the following: At December 31, 2025, the Company had net operating loss carry forwards of approximately $5,200,843 through 2034. No tax benefit has been reported in the December 31, 2025, financial statements since the potential tax benefit is offset by a valuation allowance of …

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NOTE 5 OPERATING LEASE The Companys lease consists of an operating lease for general office space and warehouse facilities. The Company recognizes rent expense for this lease on a straight-line basis over the lease term. Because the lease does not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the lease Commencement Date in determining the present value of future lease payments. On June 3, 2021, the Company entered into a lease for the premises located at 1345 Specialty Drive #E, Vista, CA, containing approximately 11,751 square feet of rentable area. The lease commenced on July 1, 2021, and expires on June 30, 2026. The monthly base rent under the lease is $9,988 per month and monthly operating expenses during the term of the lease, subject to adjustment under the lease, are $1,175 per month. On Commencement Date, the Company recognized a ROU asset of $653,701 and a lease liability of $652,350. During the year ended December 31, 2025, cash paid for amounts included in the measurement of operating lease liabilities was $167,461 and the Company recorded operating lease expenses included in operating expenses of $41,720 and cost of sales of $107,442, for a total of $149,162. Supplemental balance sheet information related to leases as of December 31, 2025 was as follows: Operating leases: Operating lease right-of-use-assets 72,095 Operating lease liabilities - current 86,878 Operating lease liabilities lon …

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NOTE 9 DEBT Loans payable SBA Economic Injury Disaster Loan On April 21, 2020, the Company obtained a loan (the SBA EIDL Loan) under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) adminitstered by the U.S. Small Business Administration. The Company received total proceeds of $199,000 from the loan. The SBA EIDL Loan is evidenced by a Loan Authorization and Agreement, a Secured Promissory Note (the Note and Security Agreement. Interest on the unpaid principal balance of the Note shall accrue at the rate of three and 75/100 percent (3.75%) per annum. Pursuant to the terms of the Note, commencing May 21, 2022 (i.e., twenty-four (24) months from the Note date), the Company shall make principal and interest payments in the amount of $970 every month, with any unpaid principal and accrued interest due and payable on April 21, 2050. As of December 31, 2025, accrued interest was $7,464. Current monthly payments are applied to the accrued interest. The obligations under the Loan Authorization and Agreement, and the Note shall be secured pursuant to the Security Agreement and a first position lien and security interest in the Collateral (as defined in the Security Agreement). The collateral in which the security interest is granted includes all tangible and intangible personal property, including, but not limited to: (a) inventory, and (b) equipment. As of December 31, 2025, and December 31, 2024, Debt consisted of the following: December 31, December 31, 2025 2024 …

LongTermDebtTextBlock · excerpt; the full note is in the filing

"r. 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 Companys financial position, or statements. In November 2023, the FASB issued ASU 2023-07, ""Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures"", which amends the disclosure to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an annual and interim basis for to enable investors to develop more decision-useful financial analyses. All public entities will be required to report segment information in accordance with the new guidance starting in annual periods beginning after December 15, 2023. The Company is currently assessing potential impacts of ASU 2023-06 and does not expect the adoption of this guidance will have a material impact on its financial statements and disclosures. In December 2023, the FASB issued ASU 2023-09, "" Income Taxes (Topic 740): Improvements to Income Tax Disclosures"", which amends the disclosure to address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information and includes certain other amendments to improve the effectiveness of income tax disclosures. For entities other than public business entities, the requirements will be effec …

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NOTE 11 RELATED PARTY TRANSACTIONS Accounts Payable Related Parties The Company regularly incurs expenses that are paid to related parties for purchases of goods and services from related parties. As of December 31, 2025, and December 31, 2024, the Company owed board members for such goods and services $34,630 and $139,834 respectively. NOTE 11 RELATED PARTY TRANSACTIONS (continued) Accounts Receivable Related Parties As of December 31, 2025, and December 31, 2024, the Company was owed $20,393 and $3,088, respectively, by an entity controlled by the Companys CEO for the purchase of products and services. Accrued Management Expenses During the periods ended December 31, 2025, and December 31, 2024, the Companys president was due amounts for services performed for the Company. As of December 31, 2025, and December 31, 2024 the accrued management fees consisted of the following: December 31, 2025 December 31, 2024 Amounts due to the president $ 636,888 $ 636,311 Total $ 636,888 $ 636,311 …

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"NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Accounting Methods The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a December 31, year-end. b. Use of Estimates in Preparing Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company also regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowances, inventory valuation allowances, allowance for doubtful receivables and valuations of equity-based payments. c. Cash and Cash Equivalents For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. d. Accounts Receivable Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Trade receivabl …

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NOTE 15 SUBSEQUENT EVENTS None …

SubsequentEventsTextBlock · excerpt; the full note is in the filing