Is Coates International Ltd. (OTCMKTS:COTE) Going To Turn The Tide?

Yesterday, Coates International Ltd. (OTCMKTS:COTE) finally managed to recover some of the ground it had lost in the previous six sessions. But will this bounce last?

The answer to that question seems quite logical at this point in time, and even superficial due diligence can easily lead investors to it.

Put bluntly – there are a couple of reasons for COTE‘s fall after the initial wave of excitement surrounding its boastful claims died out, and none of then has really gone away on Friday.

For one, its financials are hardly encouraging:

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

And if you think those numbers are unimpressive, then you should certainly check out the company’s share structure.

Some digging and a bit of basic math shows that COTE stock has been diluted more than 50% during 2014 – a fact that is made all the more horrifying by the revelation that the shares that caused said dilution were issued “at a discount ranging from 30% to 40%”. And that’s not even the worst part of that sad and grim tale.

According to the company’s latest financial report, there is still more than $300 thousand worth of debt that could be converted into COTE shares and dumped on the market at any time. Case in point – just between April 1 and May 13, COTE has issued a further 101 million shares at an average rate of $0.001 a piece.

So let’s recap – COTE‘s hype is spent, its balance sheets look atrocious and its share structure is even worse.

In all honesty, in light of all this, the ticker’s latest upward movement looks more like a dead cat bounce than the start of a lasting recovery.

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