Coates International Ltd. (OTCMKTS:COTE) Explodes On Revenue News

Coates International Ltd. (OTCMKTS:COTE) exploded 482.35% up the charts yesterday after announcing that the company has received orders worth more than $50 MILLION.

The press release that announced the orders hit the web before the start of the session and its effect on the ticker was profound – this latest jump broke both the volume and percentile climb records for COTE. The market’s reaction was understandable – it should be obvious how an announcement of such significance would make investors excited about a company. However, it should have made them a little suspicious as well.

The first hint that something is amiss can be found in the company’s ticker. OTC Markets pinksheets companies rarely experience an increase in revenues that is as dramatic as COTE‘s Marketing Director announced. A bit of digging in the company’s filings confirms any suspicions on the matter:

• Cash – $72 thousand
• Total Current Assets – $190 thousand
• Total Current Liabilities – $7.1 MILLION
• Total Revenues- $4.8 THOUSAND
• Net Loss – $2.8 million

As can be seen in the company’s ballance sheets covering Q1 2015, COTE‘s balance sheets do not look like those of a company fit to receive orders worth $50 million. Rather, it looks like your everyday mediocre pinksheets company – unsuccessful and idle. The company’s dilution statistics are not encouraging either.

• As of May 9, 2014, the Registrant had 385 million shares of its common stock
• As of May 8, 2015, the Registrant had 712 million shares of its common stock

Investors are advised to note well that as per COTE‘s filings, as of March 31, 2015, “there were $319,000 principal amount of convertible promissory notes outstanding … The notes may be converted into unregistered shares of the Company’s common stock at a discount ranging from 30% to 40%.”

In other words, COTE is a pinksheets company with boastful but extremely dubious PR claims, unsupported by its filings. Its balance sheets look mediocre, its stock has seen more than 50% dilution in the last year alone, and there is currently more than $300 thousand worth of debt that could be converted into shares and dumped on the market at a significant discount. That last bit is especially frightful, now that share prices have risen all the way to a cent.

This is why investors should be very careful when dealing with COTE stock.