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Omnitek Engineering Corp. Reports 2017 Results

VISTA, Calif., March 29, 2018 (GLOBE NEWSWIRE) -- Omnitek Engineering Corp. (OMTK) today reported results for its fourth quarter and year ended December 31, 2017 – highlighted by a strategic focus on ramping up foreign sales, following the completion or near-completion of multi-year natural gas engine development programs in several key countries.

Revenues for the fourth quarter ended December 31, 2017 were $260,004 compared with $361,152 a year earlier, primarily due to the timing of foreign sales from development phases to large scale production in foreign markets.  For the same period, the company reported a net loss of $485,818, or $0.02 per share, compared with $193,800, or $0.01 per share, a year ago, primarily due to a non-cash inventory reserve adjustment of $305,458. The inventory reserve adjustment represents a non-cash charge for slow-moving inventory and is recorded as a separate line item component of total cost of goods sold.

Gross margin for the quarter includes the non-cash inventory reserve adjustment noted above, resulting in a negative gross margin of $188,379 compared with positive gross margin of $106,539 a year earlier.

Revenues for the full year were $1.1 million compared with $1.3 million in 2016, primarily due to decreased diesel-to-natural gas engine conversion kit sales and the timing of development program completions noted above.  For the full year, the company reported a net loss of $1.1 million, or $0.05 per share, compared with a net loss of $901,392, or $0.04 per share, a year earlier – primarily reflecting an increase in the non-cash charge for the inventory reserve adjustment noted above.

Gross margin for the full year includes the non-cash inventory reserve adjustment noted above, resulting in a gross margin of $169,062 compared with gross margin of $532,101 a year earlier.  Adjusted gross margin as percentage of sales was 44 percent compared with 48 percent a year earlier, excluding the previously noted non-cash inventory reserve adjustment.

Results for the twelve months ended December 31, 2017 reflect non-cash expenses, including the value of options and warrants granted in the amount of $131,522, depreciation and amortization of $24,586 and inventory reserve adjustment of $305,458. For the twelve months ended December 31, 2016, non-cash expenses and income included the value of options and warrants granted for $174,242, depreciation and amortization of $27,593 and inventory reserve adjustment of $93,635.

“During the past year, we have seen a dramatic shift from domestic to international demand for engine conversions -- primarily due to oil prices remaining relatively low, though we still expect the domestic market to regain momentum.  At this point, air pollution regulations and the price disparity between diesel and natural gas in foreign markets, mostly as a result of higher taxes on diesel fuel, are providing meaningful development programs for Omnitek outside the United States, particularly in Europe and Asia, and we expect a transformative year for the company as sales begin ramping up in these markets,” said Werner Funk, president and chief executive officer of Omnitek Engineering Corp.

Funk noted the 200-nation “Paris Agreement on Climate Change” remains an important catalyst for alternative solutions to diesel fuel, with natural gas particularly appealing in both foreign and domestic markets -- especially since the fine-particles (PM2.5) and black carbon emissions from diesel engines and potent greenhouse gas (GHG) emissions are abated when using natural gas.

At December 31, 2017, current liabilities totaled $1.2 million and current assets totaled $1.6 million, resulting in positive working capital of approximately $455,000 and a current ratio of 1.4 to 1. 

About Omnitek Engineering Corp.
Omnitek Engineering Corp. develops and sells proprietary diesel-to-natural gas conversion systems and complementary products, including new natural gas engines that utilize the company’s technology -- providing global customers with innovative alternative energy and emissions control solutions that are sustainable and affordable.

Some of the statements contained in this news release discuss future expectations, contain projections of results of operations or financial condition or state other "forward-looking" information. These statements are subject to known and unknown risks, uncertainties, and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking information is based on various factors and is derived using numerous assumptions. Important factors that may cause actual results to differ from projections include, among many others, the ability of the Company to raise sufficient capital to meet operating requirements, completion of R&D and successful commercialization of products/services, patent completion, prosecution and defense against well-capitalized competitors. These are serious risks and there is no assurance that our forward-looking statements will occur or prove to be accurate. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," and variations of such words and similar expressions are intended to identify such forward-looking statements. Unless required by law, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

(Financial Tables Follow)

 
OMNITEK ENGINEERING CORP.
Statement of Operations
        For the Three   For the Three   For the Year   For the Year
        Months Ended
      Months Ended       Ended       Ended
        December 31   December 31   December 31   December 31
        2017   2016   2017   2016
                         
                     
REVENUES   $   260,004      $   361,152     $   1,074,213      $   1,308,100  
COST OF GOODS SOLD       142,925         160,978          599,693         682,364  
INVENTORY RESERVE ADJUSTMENT     305,458       93,635       305,458       93,635  
  Total Cost of Goods Sold     448,383       254,613       905,151       775,999  
GROSS MARGIN       (188,379 )       106,539         169,062         532,101  
                             
OPERATING EXPENSES                        
                             
  General and administrative       262,730         256,604         1,052,344       1,217,396  
  Research and development expense       26,273         35,404         118,940         187,109  
  Depreciation and amortization expense       5,992         6,512         24,586         27,593  
                             
    Total Operating Expenses       294,995         298,520         1,195,870         1,432,098  
                             
LOSS FROM OPERATIONS       (483,374 )       (191,981 )       (1,026,808 )       (899,997 )
                             
OTHER INCOME (EXPENSE)                        
                           
  Other income     -          -          -             5,574  
  Interest expense     (2,444 )     (1,819 )     (8,689 )     (6,170 )
  Interest income     -          -          -          1  
                             
    Total Other Income (Expense)       (2,444 )     (1,819 )     (8,689 )     (595 )
                             
LOSS BEFORE INCOME TAXES       (485,818 )       (193,800 )       (1,035,497 )     (900,592 )
INCOME TAX EXPENSE     -          -            800         800  
                             
NET LOSS   $   (485,818 )   $   (193,800 )   $   (1,036,297 )   $   (901,392 )
                             
BASIC AND DILUTED LOSS PER SHARE   $ (0.02 )   $ (0.01 )   $ (0.05 )   $ (0.04 )
                             
WEIGHTED AVERAGE NUMBER OF COMMON SHARES BASIC AND DILUTED      
20,281,082
    
 
20,281,082
          20,281,082        
 
20,142,284  
                                         


 
OMNITEK ENGINEERING CORP.
Balance Sheet
ASSETS
      December 31,   December 31,
      2017   2016
           
CURRENT ASSETS          
  Cash $   23,279     $    17,782  
  Accounts receivable, net   7,984         28,159  
  Accounts receivable - related parties   3,440          7,005  
  Inventory, net     1,554,656         1,869,900  
  Prepaid expense   -          5,324  
  Cost in excess of billings   -          30,973  
  Deposits      17,385         21,716  
               
    Total Current Assets     1,606,744         1,980,859  
               
FIXED ASSETS, net     7,253          31,839  
               
OTHER ASSETS          
  Other noncurrent assets   14,280         14,280   
               
    Total Other Assets     14,280         14,280  
               
    TOTAL ASSETS $   1,628,277     $    2,026,978  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
               
CURRENT LIABILITIES          
  Accounts payable and accrued expenses $   358,032     $   325,255  
  Accrued management compensation     406,841         314,788  
  Accounts payable – related parties     114,321         18,373  
  Notes payable – related parties   15,000       -     
  Convertible notes payable – related parties   15,000       -     
  Billings in excess of earnings   30,000       -     
  Customer deposits     212,410          87,114  
               
    Total Current Liabilities   1,151,604         745,530  
               
    Total Liabilities   1,151,604         745,530  
               
STOCKHOLDERS' EQUITY          
  Common stock, 125,000,000 shares authorized no par value          
    20,281,082 shares issued and outstanding   8,411,411       8,411,411  
  Additional paid-in capital   11,852,363         11,620,841  
  Accumulated deficit   (19,787,101 )       (18,750,804 )
               
    Total Stockholders' Equity     476,673          1,281,448  
               
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $   1,628,277     $    2,026,978