Coates International Ltd. (OTCMKTS:COTE)’s Climb Continues

Coates International Ltd. (OTCMKTS:COTE) has had a pretty nice run since its latest announcement hit the web, adding 35.29% to its market value in yesterday’s session alone – but will its fortune hold?

Interestingly enough, COTE has steadily been gaining favor with investors lately, in spite of the dubious moves of its management. Its largest June spike happened immediately after it announced that ti is to receive $20 million worth of funding from Southridge Partners II LP in exchange for common stock over the next 36 months or so.

True enough, COTE needed the money desperately, because if its latest financial report was any indication, it was far from financially stable at the time. There is a very real possibility that the crash that followed that particular hype jump was caused by dumping of discounted converted shares.

Of course, there is no way to be sure of what happened, since COTE is a pinksheets company and as such does not take reporting too seriously, but seeing as how most of its debt up until that point converted into common stock at a 30% to 40% discount, this seems like a reasonable guess.

The press release that caught investors’ attention this time announced that a down payment on the company’s latest project has been made. That’s all well and good, but COTE claims that for some reason, the income can’t be recorded as sales income until the product itself is shipped. As the press release attests, that may take a while, as generators need to be run for 300 to 500 hours continuously on full load for said test. In spite of this, COTE thinks that it will manage to ship them “by the end of the month”.

Whether or not that will be the case remains to be seen. In the mean time, investors would do well to watch out for the other obvious red flags that COTE displays – such as its tendency towards rampant dilution, toxic funding, its poor financials, and the unproven and dubious claims, just to name a few.