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: SEPTEMBER 30, 2010  Commission File Number     000-53955  OMNITEK ENGINEERING CORP. (Exact name of Registrant as specified in its charter)  California33-0984450(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  .  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.Accelerated filer.Non-accelerated filer.Smaller reporting companyX.  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 October 29, 2010, the Registrant had 15,547,675 shares of its no par value Common Stock outstanding.


TABLE OF CONTENTS


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|PART I - FINANCIAL INFORMATION                                                                                                                                         |  |     
|                                                                                                                                                                       |  |     
|Item 1.       Financial Statements                                                                                                                                     |  |     
|Balance Sheets as of September 30, 2010 and December 31, 2009                                                                                                          |  | 1   
|Statements of Operations for the three months ended September 30, 2010 and September 30, 2009, and for the nine months ended September 30, 2010 and September 30, 2009 |  | 2   
|Statements of Shareholders Equity for the nine months ended September 30, 2010, and the year ended December 31, 2009.                                                 |  | 3   
|Statements of Cash Flows for the nine months ended September 30, 2010 and September 30, 2009                                                                           |  | 4   
|Notes to the Financial Statements                                                                                                                                      |  | 5-8 
|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                                                                                                                                        |  | 13  
|Item 1A.    Risk Factors                                                                                                                                               |  | 13  
|Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds                                                                                              |  | 14  
|Item 3.       Defaults Upon Senior Securities                                                                                                                          |  | 14  
|Item 4.       [Removed and Reserved]                                                                                                                                   |  | 14  
|Item 5.       Other Information                                                                                                                                        |  | 14  
|Item 6.       Exhibits                                                                                                                                                 |  | 14  

ii     PART I FINANCIAL INFORMATION  ITEM 1.    FINANCIAL STATEMENTS  OMNITEK ENGINEERING CORP.Balance SheetsASSETSSeptember 30December 31,20102009(unaudited)(audited)CURRENT ASSETSCash$40,600$78,991Accounts receivable, net of allowance of $10,00069,96310,813Accounts receivable -related party-73,749Inventory1,122,7321,083,399Deposits123,706128,359Prepaid expense22,500-Total Current Assets1,379,5011,375,311FIXED ASSETS, net5,39911,727OTHER ASSETSPrepaid expense-2,500Intellectual property, net97,664158,503Total Other Assets97,664161,003TOTAL ASSETS$1,482,564$1,548,041LIABILITIES AND STOCKHOLDERS' EQUITYCURRENT LIABILITIESAccounts payable and accrued expenses$123,444$11,832Accrued expenses-related parties404,011371,050Accounts payable-related parties18,31116,105Customer deposits280,738194,331Note payable26,12384,158Total Current Liabilities852,628677,476Total Liabilities852,628677,476STOCKHOLDERS' EQUITYCommon stock, 125,000,000 shares authorized no par value15,647,675 and 16,127,675 shares issued and 15,547,675and 16,027,675 shares outstanding, respectively2,357,9762,330,476Additional paid-in capital3,836,9263,366,794Accumulated deficit(5,564,966)(4,826,705)Total Stockholders' Equity629,936870,565TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,482,564$1,548,041    The accompanying notes are an integral part of these financial statements.  Page 1


|                                 |                                       |                          |               |         |               |         |               |            |               |           |            |          |        
|-------------------------------- | ------------------------------------- | ------------------------ | ------------- | ------- | ------------- | ------- | ------------- | ---------- | ------------- | --------- | ---------- | -------- | -------
|OMNITEK ENGINEERING CORP.       
|Statements of Operations        
|(unaudited)                     
|                                 |                                       |                          |               |         |               |         |               |            |               |           |            |          |        
|                                 |                                       |                          |               |         |               |         |               |            |               |           |            |          |        
|                                 |                                       |                          |               |         |               |         |               |            |               |           |            |          |        
|                                 |                                       |                          | For the Three |         | For the Three |         | For the Nine  |            | For the Nine 
|                                 |                                       |                          | Months Ended  |         | Months Ended  |         | Months Ended  |            | Months Ended 
|                                 |                                       |                          | September 30, |         | September 30, |         | September 30, |            | September 30,
|                                 |                                       |                          | 2010          |         | 2009          |         | 2010          |            | 2009         
|                                 |                                       |                          |               |         |               |         |               |            |               |          
|REVENUES                         | $                                     | 402,119                  |               | $       | 321,194       |         | $             | 1,176,373  |               | $         | 886,248   
|COST OF GOODS SOLD               |                                       | 160,419                  |               |         | 154,751       |         |               | 614,752    |               |           | 485,801   
|GROSS MARGIN                     |                                       | 241,700                  |               |         | 166,443       |         |               | 561,621    |               |           | 400,447   
|                                 |                                       |                          |               |         |               |         |               |            |               |           |            |          |        
|OPERATING EXPENSES               |                                       |                          |               |         |               |         |               |            |               |           |           
|                                 |                                       |                          |               |         |               |         |               |            |               |           |            |          |        
|                                 | General and administrative            |                          | 274,806       |         |               | 207,333 |               |            | 1,112,063     |           |            | 631,478 
|                                 | Research and development expense      |                          | 33,487        |         |               | 63,673  |               |            | 101,708       |           |            | 190,170 
|                                 | Depreciation and amortization expense |                          | 21,404        |         |               | 24,385  |               |            | 67,917        |           |            | 72,791  
|                                 |                                       |                          |               |         |               |         |               |            |               |           |            |          |        
|                                 |                                       | Total Operating Expenses |               | 329,697 |               |         | 295,391       |            |               | 1,281,688 |            |          | 894,439
|                                 |                                       |                          |               |         |               |         |               |            |               |           |            |          |        
|LOSS FROM OPERATIONS             |                                       | (87,997)                 |               |         | (128,948)     |         |               | (720,067)  |               |           | (493,992) 
|                                 |                                       |                          |               |         |               |         |               |            |               |           |            |          |        
|OTHER INCOME (EXPENSE)           |                                       |                          |               |         |               |         |               |            |               |           |           
|                                 |                                       |                          |               |         |               |         |               |            |               |           |            |          |        
|                                 | Other income                          |                          | -             |         |               | -       |               |            | -             |           |            | 69,022  
|                                 | Interest expense                      |                          | (7,044)       |         |               | (4,880) |               |            | (22,459)      |           |            | (18,479)
|                                 | Interest income                       |                          | 1,707         |         |               | 1,707   |               |            | 5,065         |           |            | 5,065   
|                                 |                                       |                          |               |         |               |         |               |            |               |           |            |          |        
|TOTAL OTHER INCOME (EXPENSE)     |                                       | (5,337)                  |               |         | (3,173)       |         |               | (17,394)   |               |           | 55,608    
|                                 |                                       |                          |               |         |               |         |               |            |               |           |            |          |        
|NET LOSS BEFORE INCOME TAXES     |                                       | (93,334)                 |               |         | (132,121)     |         |               | (737,461)  |               |           | (438,384) 
|INCOME TAX EXPENSE               |                                       | -                        |               |         | -             |         |               | 800        |               |           | 800       
|                                 |                                       |                          |               |         |               |         |               |            |               |           |            |          |        
|NET LOSS                         | $                                     | (93,334)                 |               | $       | (132,121)     |         | $             | (738,261)  |               | $         | (439,184) 
|                                 |                                       |                          |               |         |               |         |               |            |               |           |            |          |        
|BASIC AND DILUTED LOSS PER SHARE | $                                     | (0.01)                   |               | $       | (0.01)        |         | $             | (0.05)     |               | $         | (0.03)    
|                                 |                                       |                          |               |         |               |         |               |            |               |           |            |          |        
|WEIGHTED AVERAGE NUMBER          |                                       |                          |               |         |               |         |               |            |               |           |           
|OF COMMON SHARES OUTSTANDING     |                                       | 15,547,675               |               |         | 16,006,398    |         |               | 15,573,902 |               |           | 16,006,398

The accompanying notes are an integral part of these financial statements.  Page 2


|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|--------------------------------------- | ------------ |  | ------- | --------- | ----------- | ---------- | ------------- |  | ------ | ----------- | ----- | - | -----------
|OMNITEK ENGINEERING CORP.              
|Statements of Stockholders' Equity     
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|                                        |              |  |         |           |             | Additional |               |  |        |             | Total
|                                        | Common Stock |  | Paid-In |           | Accumulated |            | Stockholders'
|                                        | Shares       |  | Amount  |           | Capital     |            | Deficit       |  | Equity
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|Balance, December 31, 2008              | 16,006,398   |  | $       | 2,320,476 |             | $          | 2,933,948     |  | $      | (3,469,010) |       | $ | 1,785,414  
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|Common stock issued for                 |              |  |         |           |             |            |               |  |        |             |       |   |            
|conversion of note payable              | 21,277       |  |         | 10,000    |             |            | -             |  |        | -           |       |   | 10,000     
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|Common stock issued as                  |              |  |         |           |             |            |               |  |        |             |       |   |            
|collateral for note payable             | 100,000      |  |         | -         |             |            | -             |  |        | -           |       |   | -          
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|Value of options issued for services    | -            |  |         | -         |             |            | 266,331       |  |        | -           |       |   | 266,331    
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|Value of warrants issued for services   | -            |  |         | -         |             |            | 145,254       |  |        | -           |       |   | 145,254    
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|Contributed interest on related         |              |  |         |           |             |            |               |  |        |             |       |   |            
|party payables                          | -            |  |         | -         |             |            | 21,261        |  |        | -           |       |   | 21,261     
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|Net loss for year ended                 |              |  |         |           |             |            |               |  |        |             |       |   |            
|December 31, 2009                       | -            |  |         | -         |             |            | -             |  |        | (1,357,695) |       |   | (1,357,695)
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|Balance, December 31, 2009              | 16,127,675   |  |         | 2,330,476 |             |            | 3,366,794     |  |        | (4,826,705) |       |   | 870,565    
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|Common stock issued for                 |              |  |         |           |             |            |               |  |        |             |       |   |            
|conversion of note payable              | 20,000       |  |         | 7,500     |             |            | -             |  |        | -           |       |   | 7,500      
|(unaudited)                             |              |  |         |           |             |            |               |  |        |             |       |   |            
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|Common stock forfeited (unaudited)      | (600,000)    |  |         | -         |             |            | -             |  |        | -           |       |   | -          
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|Common stock issued for                 |              |  |         |           |             |            |               |  |        |             |       |   |            
|services (unaudited)                    | 100,000      |  |         | 20,000    |             |            | -             |  |        | -           |       |   | 20,000     
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|Value of options and warrants           |              |  |         |           |             |            |               |  |        |             |       |   |            
|issued for services (unaudited)         | -            |  |         | -         |             |            | 453,397       |  |        | -           |       |   | 453,397    
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|Contributed interest on related         |              |  |         |           |             |            |               |  |        |             |       |   |            
|party payables (unaudited)              | -            |  |         | -         |             |            | 16,735        |  |        | -           |       |   | 16,735     
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|Net loss for the nine months ended      |              |  |         |           |             |            |               |  |        |             |       |   |            
|September 30, 2010 (unaudited)          | -            |  |         | -         |             |            | -             |  |        | (738,261)   |       |   | (738,261)  
|                                        |              |  |         |           |             |            |               |  |        |             |       |   |            
|Balance, September 30, 2010 (unaudited) | 15,647,675   |  | $       | 2,357,976 |             | $          | 3,836,926     |  | $      | (5,564,966) |       | $ | 629,936    

The accompanying notes are an integral part of these financial statements.  Page 3       OMNITEK ENGINEERING CORP.Statements of Cash Flows(unaudited)For the NineFor the NineMonths EndedMonths EndedSeptember 30September 3020102009OPERATING ACTIVITIESNet loss$(738,261)$(439,184)Adjustments to reconcile net loss tonet cash provided by (used in) operating activities:Impairment of investments-900Amortization and depreciation expense67,91772,791Options and warrants granted453,397199,079Contributed interest16,73515,946Changes in operating assets and liabilities(Increase) decrease in accounts receivable(59,150)(104,574)(Increase) decrease in accounts receivable-related parties73,7497,043(Increase) decrease in inventory(39,333)172,702(Increase) decrease in inventory deposits4,65311,705Increase (decrease) in accounts payable and accrued expenses118,26863,906Increase (decrease) in customer deposits86,407(40,062)Increase (decrease) in accrued expenses-related parties36,012(4,808)Net Cash Provided by (Used in) Operating Activities20,394(44,556)INVESTING ACTIVITIESPurchase of intellectual property(750)-Purchase of property and equipment-(1,475)Net Cash Used in Investing Activities(750)(1,475)FINANCING ACTIVITIESProceeds from note payable-10,000Repayment of note payable(58,035)-Net Cash Provided by (Used in) Financing Activities(58,035)10,000NET DECREASE IN CASH(38,391)(36,031)CASH AT BEGINNING OF PERIOD78,99146,471CASH AT END OF PERIOD$40,600$10,440SUPPLEMENTAL DISCLOSURES OFCASH FLOW INFORMATIONCASH PAID FOR:Interest$5,723$-Income Taxes$800$800NON CASH FINANCING ACTIVITIES:Common stock issued for debt$7,500$-Common stock issued for prepaid services$20,000$-   The accompanying notes are an integral part of these financial statements.  Page 4    OMNITEK ENGINEERING CORP.Condensed Notes to Financial Statements
September 30, 2010(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 September 30, 2010, 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, 2009 audited financial statements.  The results of operations for the periods ended September 30, 2010 and 2009 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 September 30, 2010 and December 31, 2009 consisted of the following:  September 30,December 31,20102009Location:San Marcos, CARaw materials$882,802$1,034,923Finished goods677,674486,220Peru (finished goods)18,45418,454Allowance for obsolete inventory(456,198)(456,198)$1,122,732$1,083,399  The Company has established an allowance for obsolete inventory.  Expense for obsolete inventory was $-0- and $232,395, for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively.   Page 5   OMNITEK ENGINEERING CORP.Condensed Notes to Financial Statements
September 30, 2010(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 September 30, 2010 and December 31, 2009, 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.  NOTE 4 - RELATED PARTY TRANSACTIONS  Accounts Receivable  Related Parties  During the years ended December 31, 2007 through 2009, the Company acquired a minority interest in various distributors in exchange for use of the Companys name and Logo. As of September 30, 2010, the Company owned a 15% interest in Omnitek Engineering Thailand Co. Ltd., a 20% interest in Omnitek Peru S.A.C.  As of September 30, 2010 and December 31, 2009, the Company was owed $-0- and $73,749, respectively, by related parties for the purchase of products.  Accounts Payable  Related Parties  The Company regularly incurs expenses that are paid for by related parties and purchases goods and services from related parties. As of September 30, 2010 and December 31, 2009, the Company owed related parties for such expenses, goods and services in the amounts of $18,311 and $16,105, respectively.  Accrued Expenses  Related Parties  As of September 30, 2010 and December 31, 2009, related parties were owed $404,011 and $371,050, respectively, for services performed for the Company.  The Company recorded $16,736 and $10,631 in imputed interest on the related party payable during the nine months ended September 30, 2010 and 2009. This amount was contributed to additional paid-in capital.    Page 6   OMNITEK ENGINEERING CORP.Condensed Notes to Financial Statements
September 30, 2010(unaudited)   NOTE 5 -  NOTE PAYABLE  As of September 30, 2010, the Company has a current note payable to Brad Birdwell, in the amount of $26,123, which bears interest at 12% per annum. The note calls for the Company to make monthly payments of $8,885 of principal and interest, with the final payment due December 15, 2010.  Interest only payments were made during August and September and the final three payments are due on October 15, November 15 and December 15, 2010.  The note is secured by 100,000 shares, of the Companys common stock and certain inventory parts.  As stipulated by the note the 100,000 shares have been issued in the Companys name and are pledged to secure the note.  Although issued, the shares are not considered outstanding. When the note is paid in full, the shares will be cancelled. If the Company defaults on the note, the rights of the collateral allow the collateral to be sold and the proceeds of the sales to be applied to the outstanding indebtedness, until the remaining amount due on the note is paid in full.  NOTE 6 -  STOCK OPTIONS  During the nine months ended September 30, 2010 and 2009, the Company recognized expense of $451,968 and $199,079, respectively, for options that vested during the periods pursuant to ASC Topic 718.  In April 2007, the Companys shareholders approved its 2006 Long-Term Incentive Plan (the Plan).   Under the plan, the Company may issue up to 10,000,000 shares of both Incentive Stock Options to employees only and Non-Qualified Stock Options to employees and consultants at its discretion.  As of September 30, 2010 the Company has a total of 1,610,000 options issued under the plan.  No options were issued under the plan during the periods ended September 30, 2010 and December 31, 2009.  A summary of the status of the options and warrants granted at September 30, 2010 and December 31, 2009 and changes during the periods then ended is presented below: 20102009SharesWeighted Average Exercise PriceSharesWeighted Average Exercise PriceOutstanding at beginning of period5,170,000$      0.574,670,000$        0.57Granted700,0000.125900,0000.39Expired or cancelled(1,200,000)0.44(400,000)0.125Outstanding at end of period4,670,0000.545,170,0000.57Exercisable3,203,333$       0.453,273,333$        0.50       Page 7   OMNITEK ENGINEERING CORP.Condensed Notes to Financial Statements
September 30, 2010(unaudited)   NOTE 6 -  STOCK OPTIONS (CONTINUED)  A summary of the status of the options and warrants outstanding at September 30, 2010 is presented below:


|                         |                    |           |  |                                             |                    |                                 |                                 |           |  |                   
|------------------------ | ------------------ | --------- |  | ------------------------------------------- | ------------------ | ------------------------------- | ------------------------------- | --------- |  | ------------------
|Range of Exercise Prices |                    |           |  | Weighted-Average Remaining Contractual Life |                    | Weighted-Average Exercise Price |                                 |           |  |                   
|                         | Number Outstanding |           |  |                                             | Number Exercisable |                                 | Weighted-Average Exercise Price
|                         |                    |           |  |                                            
|                         |                    |           |  |                                             |                    |                                 |                                 |           |  |                   
|$0.01-0.50               |                    | 1,950,000 |  | 2.75 years                                  |                    | $              0.23             |                                 | 1,350,000 |  | $             0.16
|0.51-0.75                |                    | 1,580,000 |  | 4.3 years                                   |                    | 0.63                            |                                 | 1,580,000 |  | 0.63              
|0.76-1.00                |                    | 1,140,000 |  | 4.0 years                                   |                    | 0.95                            |                                 | 273,333   |  | 0.92              
|                         |                    |           |  |                                             |                    |                                 |                                 |           |  |                   
|$0.01-1.00               |                    | 4,670,000 |  | 3.6 years                                   |                    | $              0.54             |                                 | 3,203,333 |  | $             0.45

On January 5, 2010, the Company granted 700,000 previously expired options to a consultant. The fair value of the options granted was estimated on the date granted using the Black-Scholes pricing model, with the following assumptions used for the valuation: risk-free interest rate of 0.97%, expected dividend yield of zero, expected lives of one and one half years and expected volatility of 196.7%.  An officer of the Company returned 600,000 shares upon his departure.  His 600,000 options expire on December 31, 2010 if not exercised.  NOTE 7 - SUBSEQUENT EVENTS  In accordance with ASC 855-10, Company management reviewed all material events through the date of this report.  There are no material subsequent events to report.  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 September 30, 2010 and 2009  Our sales increased to $402,119 in 2010 from $321,194 in 2009, an increase of 25%.  Our international sales increased by $55,434 from $162,571 to $218,005, and our U.S. sales increased by $25,491 from $158,623 to $184,114.  Our cost of sales rose to $160,419 in 2010 from $154,751 in 2009. Our Gross Margin was 60% in 2010 compared to 52% in 2009. We expect that our gross margin will continue in the 40% to 50% range until our operations grow sufficiently to allow us to negotiate better pricing for our components.  Our operating expenses for 2010 were $329,697 compared to $295,391 in 2009. Because of the decline in sales in 2009, we implemented a severe cost-cutting program. However, in 2010 we incurred a $42,645 expense for the value of options and shares extended to consultants compared to $65,410 in 2009.  Major components of general and administrative expenses during 2010 were accounting expenses of $10,864, rent expense of $31,598, and salary and wages of $50,808. This compares to accounting expenses of $2,130, rent expense of $25,427 and salaries and wages of $53,746 during 2009. In 2010 we incurred approximately $55,000 of legal and accounting expenses in connection with the filing of our registration statement. We decreased research and development outlays to $33,487 in 2010 from $63,673 in 2009.  Our net loss for the three months ended September 30, 2010 was $93,334 compared to $132,121 in 2009. Our loss decreased because of our cost cutting efforts despite the costs incurred in filing our registration statement and the value of the extended options.  Excluding the non cash expenses for options and contributed interest our net loss would have been $44,745 and $61,396 during 2010 and 2009, respectively. We expect that we will continue to grant options and warrants to obtain the services we require as a way to reduce cash expenditures.   Page 9     For the nine months ended September 30, 2010 and 2009  Our sales increased to $1,176,373 in 2010 from $886,248 in 2009. The increase of 33% was the result of the higher energy costs that increased the demand for alternative energy sources worldwide. During the first nine months of 2010 diesel prices rose from approximately $2.75 per gallon in California to approximately $3.25 per gallon, while natural gas prices stayed constant. This created an incentive to convert engines using our technology. Our international sales increased by $95,008 from $492,463 to $587,471, and our U.S. sales increased by $195,117 from $393,785 to $588,902.  Our cost of sales rose to $614,752 in 2010 from $485,801 in 2009. Our Gross Margin was 48% in 2010 compared to 45% in 2009. We expect that our gross margin will continue in the 40% to 50% range until our operations grow sufficiently to allow us to negotiate better pricing for our components.  Our operating expenses for 2010 were $1,281,688 compared to $894,439 in 2009. Because of the decline in sales in 2009, we implemented a severe cost-cutting program. However, in 2010 we incurred a $453,397 expense for the value of options and shares extended to consultants compared $199,079. Other major components of general and administrative expenses during 2010 were accounting expenses of $61,933, rent expense of $94,794, and salary and wages of $155,196. This compares to accounting expenses of $28,853, rent expense of $77,074 and salaries and wages of $162,161 during 2009. In 2010 we incurred approximately $55,000 of legal and accounting expenses in connection with the filing of our registration statement. We decreased research and development outlays to $101,708 in 2010 from $190,170 in 2009.  Our net loss for the nine months ended September 30, 2010 was $738,261 compared to $439,184 in 2009. Our loss increased despite our cost cutting efforts because of the costs incurred in filing our registration statement and the value of the extended options.  Excluding the non cash expenses for options and contributed interest our net loss would have been $268,129 and $224,159 during 2010 and 2009, respectively. We expect that we will continue to grant options and warrants to obtain the services we require as a way to reduce cash expenditures.  B. Managements Discussion and Analysis of Financial Condition and Results of Operations.  Cash Requirements  We believe that we have sufficient cash to meet our operating requirements for the proximate 12 months.  Liquidity and Capital Resources  Overview  For the Nine Months Ended September 30, 2010 and 2009  We have historically incurred significant losses which have resulted in a total accumulated deficit of $5,564,966 at September 30, 2009. In particular we incurred a loss of $738,261 and $439,184 during the nine months ended September 30, 2010 and 2009, respectively.  At September 30, 2010, our current liabilities totaled $852,628 and our current assets totaled $1,379,501. This leaves a net of $526,873 to cover possible negative cash flows in 2010. 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. We believe that our liquidity is sufficient for at least the next twelve months.  We have no firm commitments or obligations for capital expenditures. However, substantial discretionary expenditures will be required to enable us to conduct existing and planned product research, design, development, manufacturing, marketing and distribution of our products and Intellectual Property. We may need to raise additional capital to facilitate growth and support our long-term product development, manufacturing, and marketing programs. The Company has no established bank-financing arrangements and until we have sufficient assets, capital, and inventory or accounts receivable, it is not anticipated that we will secure any bank financing in the near future. Therefore, it is likely that we may need to seek additional financing through subsequent future public or private sales of our securities, including equity securities. We may also seek funding for the development, manufacturing, and marketing of its 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.  Page 10      Operating Activities  We have realized a positive cash flow from operations of $20,394 for the nine months ended September 30, 2010 compared to a negative cash flow of $44,556 during the nine months ended September 30, 2009. Included in the net loss are non cash expenses which are not a drain on our capital resources. During 2010, these expenses include the value of options and warrants granted in the amount of $453,397, contributed interest of $16,735, and depreciation and amortization of $67,917. Excluding these non cash amounts, the net loss would have been $200,212 for the nine months ended September 30, 2010.  Financing Activities  During 2010 we repaid $58,035 as compared to $10,000 in proceeds from notes payable during 2009.  Off-Balance Sheet Arrangements  None.  Critical Accounting Policies and Estimates  The Company's financial statements are prepared using the accrual method of accounting. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Areas where significant estimates are required include the following:  Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts.  Inventory is stated at the lower of cost or market. The Companys inventory consists of finished goods and raw material. The Company identifies items in its inventory that have not been sold in a timely manner. Accordingly, the Company has established an allowance for the cost of such obsolete inventory.  The Company assesses the recoverability of its long lived assets annually and whenever circumstances would indicate that there may be an impairment. The Company compares the estimated undiscounted future cash flows to the carrying value of the long lived assets to determine if an impairment has occurred. In the event that an impairment has occurred, the Company recognizes the impairment immediately.  The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. The Company uses historical experience to determine the likely-hood of realization of deferred tax liabilities and assets.  Page 11      Revenue Recognition  The Company recognizes revenue from the sale of new engines for use with compressed natural gas and engine components to convert existing engines to compressed natural gas use. 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 December 31, 2009, 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 December 31, 2009, the Company had net operating loss carry forwards of approximately $500,000 through 2029. No tax benefit has been reported in the December 31, 2009 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.  Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.  Recently Issued Accounting Pronouncements  During the year ended December 31, 2010 the Company adopted the following accounting pronouncements, which had no impact on the financial statements or results of operation:  In January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the scope of current US GAAP. It clarifies the decrease in ownership provisions of Subtopic 810-10 and removes the potential conflict between guidance in that Subtopic and asset derecognition and gain or loss recognition guidance that may exist in other US GAAP. An entity will be required to follow the amended guidance beginning in the period that it first adopts FAS 160 (now included in Subtopic 810-10). For those entities that have already adopted FAS 160, the amendments are effective at the beginning of the first interim or annual reporting period ending on or after December 15, 2009. The amendments should be applied retrospectively to the first period that an entity adopted FAS 160. The Company does not expect the provisions of ASU 2010-02 to have a material effect on the financial position, results of operations or cash flows of the Company.  Page 12      In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260. Effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis. The Company does not expect the provisions of ASU 2010-01 to have a material effect on the financial position, results of operations or cash flows of the Company.  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 September 30, 2010, pursuant to Rule 13a-15(b) under the Securities Exchange Act. Based upon that evaluation, our Certifying Officer concluded that, as of September 30, 2010, 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 September 30, 2010 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.  PART II - OTHER INFORMATION.  ITEM 1. LEGAL PROCEEDINGS.  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.  Page 13      ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS.  On September 22, 2010, the Company issued an aggregate of 100,000 shares of its Common Stock to South Bay Holdings at a price of $0.20 per share for future consulting and advisory services to be rendered to the Company valued at $20,000.  No underwriters were used. The securities were sold pursuant to an exemption from registration provided by Section 4(2) of the Securities Act of 1933.  South Bay Holdings was intimately acquainted with the Companys business plan and proposed activities at the time of issuance, is an accredited investor 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  ITEM 6. EXHIBITS  (a) Documents filed as part of this Report.  1. Financial Statements.  The unaudited Balance Sheet of Omnitek Engineering Corp. as of September 30, 2010 and the audited balance sheet as of December 31, 2009, the unaudited Statements of Operations for the three months and six-month periods ended September 30, 2010 and 2009, the Consolidated Statements Stockholders Equity, and the unaudited Consolidated Statements of Cash Flows for the six-month periods ended September 30, 2010 and 2009, 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. Exhibits 10.1 through 10.20 relate to compensatory plans incorporated by reference as exhibits hereto pursuant to Item 15(b) of Form 10-K.  ExhibitNumberDescription of Exhibit2.01Pensare Inc. Merger Agreement and Plan of Reorganization(1)3.01Amended and Restated Articles of Incorporation(1)3.02Amended and Restated By-laws(1)10.01Exclusive Representation Agreement with Omnitek Stationary, Inc., dated  December 2, 2009(1)10.02Exclusive Representation Agreement with Omnitek Peru SAC dated  September 28, 2009(2)10.03Exclusive Representation Agreement with Omnitek Thailand Co., Ltd. dated  November 1, 2007(2)10.04Employment Agreement of Werner Funk(2)10.05Employment Agreement of Janice Quigley(2)21.01Subsidiaries(1)24.01Power of Attorney(1)31.1CEO certification pursuant to Section 302 of  The Sarbanes  Oxley Act of 2002(3)31.2CFO certification pursuant to Section 302 of  The Sarbanes  Oxley Act of 2002(3)32.1CEO 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) (1) Incorporated by reference to our Registration Statement on Form 10 filed on April 27, 2010. (2) Incorporated by reference to our Registration Statement on Form 10/A-2 filed on July 15, 2010. (3) Filed herewith  Page 14      SIGNATURES  In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the Undersigned, thereunto duly authorized.   OMNITEK ENGINEERING CORP.       Dated: November 12, 2010 /s/ Werner Funk By: Werner Funk Its: President and CEO  Page 15