Coates International Ltd (OTCMKTS:COTE) reported a deal with Southridge Partners II LP which provides a new credit financing mechanism. The proceeds of $20 million from this deal will be utilized to support manufacturing operations which are ongoing on a limited scale.

The deal

As per the equity purchase deal, Southridge shall commit to buy up to $20 million of the Coates’ stock in next three years. The Company is registering 205 million shares of its common stock with the SEC planned to be resold by Southridge Partners as the Company uses the capital in connection with this deal. Coates International informed that the equity line of credit will be obtainable after the registration statement becomes effective. George J. Coates, the CEO, said that the capital will be accessed at company’s sole option. It will largely depend on management and the goal of accomplishing business plan.

No reverse split

In unrelated news, Coates International Ltd (OTCMKTS:COTE) confirmed that the company was contacted by a shareholder suggesting management that her stockbroker mistakenly conveyed that the company announced a reverse stock split. However, it is not true and there is no intention of announcing any reverse stock split. The company will opt for it if and only if things changes dramatically, and the management and board of directors decide to act as per changed business conditions.

The details

The shareholders also told that stockbroker advised her not to purchase any more shares of Coates stock. The matter is being probed by the company. The management informed that stockbroker got this information from some data feed from a business section of Securian Financial Services. It is a firm which disseminates information on stocks to numerous stockbrokers around the nation. It should be noted that the news holds no relevance.

Coates International Ltd (OTCMKTS:COTE) gained 11.11% to close at $0.00400 in yesterday’s trading session. The stock has a market capitalization of $2.85 million with 712.91 million outstanding shares.