Omnitek Engineering Corp

Omnitek is a distressed alternative-fuel micro-cap whose flattering net income masks negative operating margins and cash burn.

Strengths

• Revenue +42% (84th pct) and high gross margin 38% (88th pct)
• Reported net margin and ROA positive on a one-off basis

Risks

• Operating margin -5.9% and operating cash margin -16.8% — the core business loses money
• Severe liquidity strain: current ratio 0.41, quick ratio 0.23, negative interest coverage and negative ROE
• Tiny scale, regulatory/EPA approval dependence and oil-vs-gas price sensitivity

Notable findings

• No interest coverageInterest coverage -2.81 (cannot cover interest)
• Weak liquidityCurrent ratio 0.41 (<1)
• Revenue declineRevenue -17.3% YoY