Coates International Ltd. (OTCMKTS:COTE) Surges Again
Coates International Ltd. (OTCMKTS:COTE) managed to jump 38.89% up the charts yesterday, after it announced that another company is to buy $20 million wort of its stock.
Evidently Southridge Partners II LP, a Delaware limited partnership is willing to buy said $20 MILLION worth of COTE stock over the period of three years, at a price of “94% of the lowest volume weighted average price of the stock on the ten trading days that comprise the defined pricing period”.
Investors jumped at COTE stock immediately after seeing the news – that much is evident by looking at the charts. But is that enthusiasm really warranted?
True enough, this arrangement seems to be a pretty good deal, especially in comparison with COTE‘s previous finding endeavors. Suffice it to say that COTE has issued, and continues to issue, outrageous amounts of shares at a discounts ranging from 30% to 40%. However, investors should duly note the fact that this will dilute the stock even further.
$20 million can buy a lot of COTE stock. So if COTE share prices remain the same as they are now, this purchase will leave Southridge in possession of 1.3 BILLION shares of the company’s common stock just in the first year – and that’s if COTE manages to retain its hype-induces, explosive gains. To put things into perspective – as of May 8, 2015, COTE had 713 million shares of its common stock issued and outstanding.
True enough, COTE certainly needs the money Southbridge can provide it with. Its latest financials looked pretty grim:
- Cash – $72 thousand
- Total Current Assets – $190 thousand
- Total Current Liabilities – $7.1 MILLION
- Total Revenues- $5 THOUSAND
- Net Loss – $2.8 million
$7 million worth of funding per year can go a long way towards pushing COTE towards commercial success, but investors should ask themselves one very important question – is the staggering amount of dilution said funding will bring really worth it?
