10-Q: Omnitek Engineering Corp. Q1 2026 Financials Show Revenue Decline

Omnitek Engineering Corp. reported a significant decrease in revenue for the first quarter of 2026 compared to the prior year, alongside a widening net loss, despite improved gross margin percentage.

Summary

• Omnitek Engineering Corp. reported revenues of $155,597 for the three months ended March 31, 2026, a substantial decrease from $359,746 in the same period of 2025.
• Cost of Goods Sold also decreased, leading to a gross margin of $80,613 for Q1 2026, compared to $140,968 for Q1 2025.
• However, the gross margin as a percentage of sales improved to 52% in Q1 2026 from 39% in Q1 2025.
• Operating expenses decreased to $130,697 in Q1 2026 from $151,724 in Q1 2025, primarily due to lower general and administrative expenses.
• The company reported a net loss of $68,584 for Q1 2026, an increase from a net loss of $26,660 for Q1 2025.
• Basic and diluted loss per share remained at ($0.00) for both periods.
• Cash flow from operations was positive at $19,107 for Q1 2026, a significant improvement from negative $109,115 in Q1 2025.
• The company has an accumulated deficit of $21,822,429 and negative working capital of $978,128 as of March 31, 2026.
• Management believes current working capital and projected sales are sufficient for the next twelve months, but acknowledges uncertainty regarding future profitability and the ability to raise additional capital.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to the significant revenue decline, increased net loss, and substantial doubt cast upon the company's ability to continue as a going concern, despite some operational improvements like increased gross margin percentage and positive operating cash flow.

Positives

• Gross margin percentage improved to 52% in Q1 2026 from 39% in Q1 2025.
• Operating expenses decreased by $21,027 in Q1 2026 compared to Q1 2025.
• Cash flow from operating activities turned positive, reaching $19,107 in Q1 2026, a significant improvement from a negative $109,115 in Q1 2025.
• The company has $79,204 in cash as of March 31, 2026, an increase from $14,097 as of December 31, 2025.

Negatives

• Revenue for the three months ended March 31, 2026, decreased by $204,149 to $155,597 compared to $359,746 in the prior year period.
• The net loss for the three months ended March 31, 2026, increased to $68,584 from $26,660 in the prior year period.
• The company has a substantial accumulated deficit of $21,822,429 as of March 31, 2026.
• Negative working capital of $978,128 as of March 31, 2026.
• Management acknowledges uncertainty regarding the ability to continue as a going concern for the next year due to recurring losses and negative cash flows from operations, and uncertainty about raising additional capital.

Risks

• The company's ability to continue as a going concern is subject to substantial doubt due to historical net losses, negative cash flows from operations, accumulated deficit, and uncertainty about raising additional capital.
• If adequate funds are not available, the company may be required to curtail research and development programs.
• The company's disclosure controls and procedures were not effective as of March 31, 2026, due to a lack of proper segregation of duties in certain areas of the financial reporting process, creating a reasonable possibility of material misstatements.
• The company is subject to market risks, although specific disclosures are not required for smaller reporting companies.

Future Outlook

Management believes that its operating plan, projected sales for 2026, and available working capital will be sufficient to fund operations for the next twelve months. However, there is uncertainty regarding the continuation of current operating levels, improvement in near-term operating cash flows, attainment of profitability, and the ability to raise additional capital.

Management Comments

• Management believes that based on its operating plan, the projected sales for 2026, combined with funds available from its working capital will be sufficient to fund operations for the next twelve months.
• However, there can be no assurance that operations and operating cash flows will continue at the current levels or improve in the near future.
• Whether, and when, the Company can attain profitability and positive cash flows from operations is uncertain.
• The Company is also uncertain whether it can raise additional capital.
• These uncertainties cast substantial doubt upon the Company's ability to continue as a going concern for a period of one year from the issuance of these financial statements.

Industry Context

StockSavvy.ai notes that Omnitek Engineering Corp.'s performance in Q1 2026, characterized by declining revenues and increasing net losses despite improved gross margins, reflects challenges common in specialized engineering and manufacturing sectors where demand can be cyclical and project-dependent. The company's focus on engineering services, filters, and components suggests exposure to industrial and potentially consumer markets, which may be experiencing shifts in demand or increased competition.

Corporate Governance

Legal Proceedings

• The company settled a legal matter with Olson-Ecologic Engine Testing Laboratories, LLC for $13,872.97 in six equal monthly payments commencing December 2025, and will take back certain engine parts of equal value. Omnitek will also waive $5,025 owed by Olson-Ecologic for testing services. This matter was settled out of court on November 18, 2025.

Related Party Transactions

• As of March 31, 2026, the company owed related parties $36,807 for goods and services.
• As of March 31, 2026, an entity controlled by the CEO owed the company $22,734 for products and services.
• As of March 31, 2026, the company owed its CEO $636,311 for accrued management fees.
• A convertible promissory note of $10,000 payable to a board member was extended until December 4, 2026.
• A Working Capital Promissory Note to the CEO had a principal balance and accrued interest of $244,940 as of March 31, 2026, with a maturity date extended to March 23, 2028.

Stakeholder Impact

• Shareholders may be concerned about the declining revenue, increasing net loss, and the going concern uncertainty, potentially impacting share value.
• Employees may be concerned about the company's financial stability and potential for operational curtailment if additional capital is not secured.
• Creditors and suppliers may face increased risk due to the company's negative working capital and going concern issues.

Next Steps

• Management will continue to execute its operating plan and monitor projected sales for 2026.
• The company may seek additional financing through public or private sales of securities.
• The company may seek funding through strategic partnerships and other arrangements with corporate partners.

Key Dates

Recommendation

While the company shows some operational improvements like increased gross margin percentage and positive operating cash flow, the significant revenue decline, widening net loss, and substantial doubt regarding its ability to continue as a going concern present considerable risks. The uncertainty around future capital raises further complicates the outlook. A 'hold' recommendation is appropriate, suggesting investors monitor the company's ability to stabilize revenue, manage expenses, and secure necessary funding before considering a more definitive investment stance.

Keywords

Omnitek Engineering Corp, Form 10-Q, Quarterly Report, Financial Statements, Revenue, Net Loss, Gross Margin, Operating Expenses, Cash Flow, Working Capital, Going Concern, SEC Filing