ex103.htm


    Exhibit
      10.3

     

    LAWRENCE
      JAY SCHMERZLER,

    Professor
      Emeritus

    1
      Claridge Drive

    Verona,
      NewJersey 07079 

    
      
        
Phone:
        973-857-0365

    

     

    I
      am a
      Mechanical Engineer specializing in Thermal Power Systems and have worked in
      and
      supervised the research, testing, design, maintenance and development of
      Internal Combustion Engines (ICE) and their components for over 30 years. I
      have
      also researched and taught ICE, Pollution Control and Energy Conversion (EC)
      during that span of years. I am past President of the National Society of
      Inventors and have an active interest in energy conversion systems, especially
      Internal Combustion Engines.

     

    Mr.
      George J. Coates, President of Coates International, Ltd. invited me to his
      research & development facility to examine, review and evaluate engine
      systems having the Coates Rotary Valve System. I visited his plant a number
      of
      times, the last time being June 28, 2006.

     

    During
      my
      first visit, September 25, 1998, I rode in three cars having Coates Rotary
      Valve
      engine systems. The engines performed smoothly and quietly and had exceptionally
      good acceleration. There was no perceptible combustion knock or valve
      clatter.

     

    I
      was
      shown a Coates Rotary Valve system disassembled for a 30,000-mile inspection.
      The system showed evidence of use in a combustion system but showed no
      discernable wear, scuffing or scratches. I expect the conventional piston and
      the piston rings will have a much greater limiting effect on the life of the
      engine than the Coates Rotary Valve System.

     

    I
      also
      observed a number of other rotary valve applications in various stages of
      progress, including a motorcycle and racing car.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    During
      my
      visit of June 28, 2006, I arrived at approximately 12 noon, and was introduced
      to the Coates latest development of an alternate-fuel 855 CI generator engine
      running on natural gas, which is capable of utilizing mixtures of: hydrogen,
      natural gas, alcohol, diesel fuel, and/or gasoline. The engine was run under
      various loads, and its performance noted by George Coates, Mark Goldsmith,
      and
      myself.

     

    The
      engine demonstrated its capability to utilize alternate fuels and air mixtures.
      The engine makes use of the unique Coates Rotary Shaft to phase in the various
      fuel and air mixtures.

     

    The
      engine fuel flexibility lends itself to the current world situation wherein
      fuel-use flexibility is necessary in response to availability and
      costs.

     

    TEST
      DATE JANUARY 3, 2003

     

    On
      the
      first preliminary tests carried out on an electric power generator incorporating
      the 855 Natural Gas Coates CSRV Engine, it passed the EPA emission standards
      with a savings in fuel consumption of more than 35%.

     
      
        

      

    

     

    TEST
      DATE FEBRUARY 27, 1995

     

    A
      and B
      Tests were carried out by Compliance and Research Services, an independent
      EPA
      approved testing laboratory, showing the CSRV superior performance and lower
      emissions than the conventional poppet valve engine in hydro carbons (HC),
      carbon monoxide (C.O.), nitrous oxides (NOX), and (CO2) and fuel
      savings.

    


     

    A
      test
      carried out on a chassis dynamometer by Compliance and Research Services on
      a
      351 Ford Windsor V8 engine equipped with the Coates CSRV System showed almost
      double the output of torque and horsepower at 3200 RPM. The
      conventional poppet valve version put out 139 H.P. and 278 ft. pounds of torque
      at 1400 RPM. The CSRV put out 460.4 ft. pounds of torque, and
      280.6 H.P. and at 3704 RPM. The CSRV put out 471.2 ft. of
      torque and 332.3 H.P.

     
       

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    TEST
      DATE MARCH 24, 2003

     

    Test
      by
      Compliance and Research Services — The CSRV 1600 motorcycle has passed EPA
      emission standards by 50%, and fuel economy 40
      MPG.

     

     

    I
      was
      also shown the latest Coates Motorcycle production units. They are capable
      of
      going up to 130 mph in response to the fuel demands of economy and versatility.
      The model as shown had neat attractive lines capable of competing successfully
      with foreign competition.

     

    Opinion

    While
      there have been other rotating valve systems, none have been successfully
      applied to internal combustion engines until now.

     

    The
      Coates Rotary Valve System promises:

    
      	
              1.  

            	
              A
                quieter engine with higher specific power output (horsepower output/pound)
                and longer life than conventional poppet valve engines due to better
                "breathing" capability and higher speed
                capability.

            


    

    
      	
              2.  

            	
              The
                use of smaller, lighter and more efficient
                engines.

            


    

    
      	
              3.  

            	
              High
                temperature permanently lubricated exhaust and intake spherical valve
                assemblies.

            


    

    
      	
              4.  

            	
              Elimination
                of oil flow needed to cool the conventional exhaust poppet valve
                stem,
                cams, cam followers, camshaft bearings and assemblies and intake
                poppet
                valve assemblies; thereby eliminating contamination of the lube oil
                and
                atmospheric pollution from this
                source.

            


    

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
              5.  

            	
              Flexibility
                in optimizing performance over a wide range of
                applications.

            


    

    
      	
              6.  

            	
              The
                prototype for the next generation of state-of-the-art ICE
                technology.

            


    

     

    SUMMATION

     

    In
      summation, I believe that the Coates CSRV Combustion Engine will substantially
      outperforrn the conventional poppet valve engines and the micro turbines in
      the
      following categories:

     

    
      
        
          
            	
                    ·  

                  	
                    Significant
                      reduction in harmful emissions

                  


          

           

        

        
          	
                  ·  

                	
                  A
                    reduction in fuel consumption while maintaining consistent power
                    output

                


        

         

      

    

    
      	
              ·  

            	
              Higher
                density power output resulting from complete
                combustion

            


    

     

    
      	
              ·  

            	
              I
                predicate my findings on the utilization of higher compression ratios
                and
                higher volumetric efficiencies of the CSRV Valve System and the reduction
                in frictional losses versus the reciprocating spring-loaded components
                as
                in all conventional poppet valve
                engines.

            


    

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	 THE
              CSRV 	 VERSUS
              	 THE
              POPPET VALVE


    

     

    Coates
      Spherical Rotary Valve 

    
      

    

     

    
      	
              The
                CSRV has a rotational motion, and requires no
                adjustments.

            	 	
              The
                poppet valve reciprocates in its working motion, which means it must
                stop
                at the top and stop at the bottom in mile-seconds of its working
                cycle.
                This causes component wearing out of adjustment.

            
	 	 	 
	
              The
                CSRV System has no possibility of float or bounce and is positively
                closed
                and positively opened and its motion is completely silent.

            	 	
              When
                it comes to rest at closing at approximately 2500RMP, it bounces
                on its
                seat. This is called bounce or float where the poppet valve is never
                fully
                closed and never fully opened. This causes tapping engine noise,
                inefficiency in fuel consumption, and adds unburned fuel to the atmosphere
                creating high pollution.

            
	 	 	 
	
              The
                CSRV is not lubricated with engine oil. Its bearings are sealed and
                do not
                require lube oil. The valves themselves do not require lubrication,
                therefore, do not emit engine oil burning pollutants into the atmosphere.
                The CSRV reduces emissions by creating a cleaner complete
                combustion.

            	 	
              The
                poppet valve is lubricated with engine oil, which is sprayed over
                the
                entire valve system to cool and lubricate its components. Engine
                oil is
                inducted through the inlet poppet valve stem into the combustion
                chamber
                and is burned with the fuel. It slows down the burning of the fuel
                mixture, and causes inefficiency in the complete combustion
                cycle.

            


    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
    

     

    
      	 THE
              CSRV 	 VERSUS
              	 THE
              POPPET VALVE


    

     

    Coates
      Spherical Rotary Valve 

    
      

    

     

    
      	
              The
                CSRV exhaust valves do not utilize engine oil for its lubrication.
                All its
                bearings are sealed and there is no contamination of engine oil into
                the
                air and fuel mixture and no clogging of the catalytic converter while
                reducing pollution to our atmosphere. There is no breakdown in the
                atomic
                structure of the engine oil and does not lower its
                viscosity.

            	 	
              The
                exhaust poppet valve is also cooled and lubricated with engine oil
                and
                reaches extremely high temperatures, which breaks down the atomic
                structure of the engine oil which lowers its viscosity. Engine oil
                must be
                changed every 3,000 to 5,000 miles. It is also lubricated at stem
                and when
                opened, oil is burned off into the exhaust system causing clogging
                of the
                catalytic converter and more pollution into our
                atmosphere.

            
	 	 	 
	
              
                The
                  CSRV has a volumetric efficiency of twice that of the poppet valve
                  with a
                  complete open port and no poppet valve in the center. CSRV permits
                  complete free flow of air into the combustion chamber and cylinder
                  throughout the acceleration curve. Only one CSRV is needed for
                  inlet and
                  one for exhaust. Air pumps, super chargers are not necessary, unless
                  there
                  is a factor or extreme speed is required. Normally aspirated inlet
                  air
                  speed is 450 ft. per second good to 350 to 400 MPH, higher than
                  that would
                  require blowers.

              

            	 	
              
                The
                  poppet valves have limited capacity of volumetric efficiency because
                  they
                  inhibit the free flow of air into the combustion chamber and cylinder
                  and
                  causes pulsation of airflow mixture throughout the acceleration
                  curve.
                  That is why manufacturers incorporate 3, 4, and 5 poppet valves
                  per
                  cylinder, also adding air pumps, super chargers, turbos,
                  etc.

              

               

            


    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
       

      
        	 THE
                CSRV 	 VERSUS
                	 THE
                POPPET VALVE


      

       

      Coates
        Spherical Rotary Valve 

      
        

      

       

    

    
      	
              The
                CSRV is free rotating with less than 90% of the friction losses that
                the
                poppet valve system has with all the springs, of which use is completely
                eliminated.

            	 	
              All
                these poppet valves are spring loaded with very strong springs and
                sometimes double springs. This causes tremendous fictional losses
                and wear
                of components, which cannot be avoided while using poppet
                valves.

            
	 	 	 
	
              The
                CSRV has unlimited valve timing possibilities and no restrictions
                within
                the valve timing duration and no possibilities of making contact
                with the pistons, preventing major damage to the
                engine.

            	 	
              Valve
                timing is limited because the poppet valve opens into the combustion
                chamber and could make contact with the piston, where destruction
                of the
                engine occurs. This mostly happens on sport cars, racing cars and
                OHV
                engines or when a valve sticks, and on de-acceleration on engines
                with
                over 30,000 miles and more.

            
	 	 	 
	
              The
                CSRV rotates away from the chamber and is moving constantly, which
                eliminates the possibilities of hot spots, and reduces the constant
                temperature of the combustion chamber. This reduces NOX, nitrous
                oxides,
                HC hydro-carbons, CO carbon monoxide. Even though tetraethyl lead
                is
                removed from the fuel today, the CSRV can utilize higher compression
                ratios in its engine designs, which results in thermal efficiencies
                in the
                40%, 50% and possibly 60% range with significant reductions in fuel
                consumption, harmful emissions, and complete combustion.

            	 	
              The
                poppet valve is in the combustion chamber permanently and the exhaust
                poppet valve gets red hot, which caused hot spots, and at times,
                pre-ignition occurs, when the constant temperature of the combustion
                chamber exceeds 2,500°
                F. The
                engine manufactures NOX, oxides of nitrogen, and since tetraethyl
                lead was
                removed from fuels, poppet valve engines cannot utilize higher compression
                ratios above 10 1⁄2 to 1. This results in engine efficiency at only 22%. For
                every dollar worth of fuel you put into your vehicle, you get 22
                cents of
                drivability, the other 78 cents is lost in heat, friction and pumping
                losses.

            


    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
       

      
        	 THE
                CSRV 	 VERSUS
                	 THE
                POPPET VALVE


      

       

      Coates
        Spherical Rotary Valve 

      
        

      

       

      
        	
                No
                  maintenance, adjusting servicing is required to the CSRV for the
                  life of
                  the engine. No noise is caused by the CSRV System. No damage occurs
                  to the
                  engine.

              	 	Most poppet valve engines
                must
                have these valves adjusted manually every 5,000 miles when servicing
                intervals are due. This is downtime and costly, and if not done,
                will
                cause more excessive wear, noise and serious damage to the
                engine.
	 	 	 
	The
                CSRV will replace the poppet valve and eliminate all its
                problems.	 	The
                poppet valve is the main problem with the combustion engine which
                limits
                its efficiencies.
	 	 	 
	The
                CSRV System was invented and designed by George J. Coates. No other
                company has tried to improve in its design. It is fully patented
                worldwide. In the future, when it is in the main stream, no doubt
                people
                will try to improve it.	 	Manufacturers
                have tried for more than 100 years with side valves, pushrod, overhead
                inlet poppet valves, and side exhaust valves, overhead camshafts,
                high
                lift camshafts, twin overhead camshafts, air pumps, turbo chargers
                and the results in the 50s, 60s, 70s, were 29% thermal efficiencies
                and
                after the removal of lead, 22% thermal efficiencies today.
	 	 	 
	
                There
                  are approximately 90% fewer parts in the CSRV System compared to
                  conventional poppet valve systems and only two moving, easy to
                  assemble,
                  and relatively inexpensive parts per cylinder bank

              	 	There
                are literally hundreds and thousands of parts, springs, and components
                in
                the poppet valve system, most of which are moving, are hard to assemble,
                and are costly.


      

    

    
       

      
        	 	 	 Sincerely,	 
	 	 	 	 
	
              	
                By:
                  

              	/s/ Prof.
                Lawrence Schmerzler, P.E.	 
	 	 	Prof.
                Lawrence Schmerzler, P.E.	 
	 	 	 	 
	 	 	 	 


      

    

     

    


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    COMPARISON
      OF THE COATES CSRV ENGINE

    TO
      THE STANDARD POPPET VALVE ENGINE

     

    FIRST
      EXAMPLE

     

    The
      oil
      and gas companies all over the world are being prevented by their governments
      from burning off the raw natural gas into the atmosphere. This gas is a
      by-product of the process of retrieving oil. They have been pumping this raw
      gas
      into our atmosphere for the past 120 years producing tremendous amounts of
      poisonous gases and contributing in a major way to global warming.

     

    Up
      until
      now, they used diesel engines for electric generation, compression and pumping
      for oil production. Attempts were made to run normal poppet valve engines on
      raw
      natural gas. They only lasted 60 days before they were destroyed. Then they
      used
      micro turbine generators, where the jets got blocked and they burned out also,
      in approximately the same time period. In comparison to this, the Coates CSRV
      855 Industrial Engine was designed to run on the natural gas at the oil well,
      which uses less fuel, runs on low pressure of gas supply and does not have
      any
      problem running on natural gas as all components are self-cleaning and
      durable.

    


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    LAWRENCE
      JAY SCHMERZLER, P.E.

    Professor
      Emeritus

     

    Background
      Information

     

    I
      left
      college and volunteered to serve in any engine room of any ship that needed
      to
      leave. I was assigned and served on the U.S.S. Malabar (a quadruple expansion
      steam engine which had been built as WWI ended for Rockefeller as
      an
oil tanker and subsequently put in storage since 1919).

     

    I
      received accelerated training at the Coast Guard Training Station in New London,
      Connecticut. I received a Marine Engineering degree there for steam, diesel,
      and
      electrical engines. I then shipped out to England, France, Italy, and North
      Africa on turbo and triple-expanse engines. After this, the war was over in
      Europe, and I volunteered to serve in the Pacific region, where 36 other marine
      engineers, along with me, were to work on Nordberg Diesel engines. The need
      for
      these engineers, however, no longer existed as the war
      was over. We all had taken one month training.

     

    I
      was
      directed to serve on a diesel advanced development ship that had various
      advanced engineering equipment, such as: variable pitched propellers that could
      go from full astern to full ahead, and advanced refrigeration equipment. The
      ship had just completed a run to South America, with a full complement of Coast
      Guard engineers, and had to dump the cargo because of malfunction of the
      refrigeration equipment. I was responsible for a subsequent successful voyage,
      also to South America. It was powered by a Nordberg Diesel Engine.

     

    After
      graduation from the University of Texas, with a mechanical engineering degree,
      I
      subsequently worked for a U.S. steel division in Kansas City, MO.; it was an
      oil
      well supply company. I worked on improvement of oil-field engines operating
      on
      diesel, natural gas and kerosene. I also taught internal combustion engines
      and
      design at Kansas City Junior College in the evenings.

     

    Subsequently,
      I was employed by U.S. Boch in the laboratory on development of fuel injection
      equipment. I also worked for Hamilton Standard Division of United Aircraft
      on
      propeller transmission gear.

     

    Then
      I
      worked at Newark College of Engineering (now NJIT) teaching internal combustion
      engines. I received my Masters Degree from NCE. At this time, I also patented
      a
      number of invention, which include:

     

    1.  Heat
      Pumps

    2.  Desalinization
      Equipment

    3.  Exercising
      Machine

     

    I
      also
      consulted with a number of organizations on secret projects, which include
      the
      following companies:

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    Lawrence
      Jay Schmerzler background (continued)

     

    1.  Westinghouse

    2.  General
      Instrument (Thermal Electric Division)

    3.  Western
      Electric

    4.  Hydrometrics

     

    Under
      General Instrument, I had U.S. Secret Clearance for evaluating the latest
      developments on energy conversion. I was hired as Director of Engineering
      (Thermo-Electric Division), after doing consulting work for them.

     

    As
      a
      member of Consultant Services I worked as an expert witness on many cases.
      In
      all these, only one case was lost.

     

    1. 
      Performance
      of high production hamburger heating equipment

    2.  Defects
      in modern apartment heating systems due to catalytic action between some of
      the
      components of the system.

     

     

    While
      teaching at NJIT, I taught (during my summer vacations) Western Electric field
      engineers air-conditioning and ventilation.

     

    After
      serving in various lower level positions, I became President of: 

     

    1. 
National
      Society of Investors

    2. 
AAUP
      - New Jersey (American Association of
      University Professors)

    At
      NJIT:

     

    1.  I
      was Chairman of the Faculty Council at NJIT

    2.  Elected
      "Secretary of the Faculty"

    3.
      Appointed to sit on the Patent Committee

    


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    Professor
      Lawrence Jay
      Schmerzler

    Professional
      Engineer

     

    Professor
      Schmerzler, P.E. is a Fellow in the American Society of Mechanical Engineers
      (ASME) and Emeritus Professor of Mechanical Engineering at the New Jersey
      Institute of Technology. He is an inventor and Forensic Engineer who has served
      with distinction in both industry and higher education.

     

    His
      Teaching, Industrial, Forensic and Consulting Work has encompassed: Supervision
      of Internal Combustion Engines (I.C.E.) Test and Development Labs; Supervision
      of Mechanical Engineering (ME) Laboratories; Supervision of ME Department
      Thermal Area Courses; Basic and Advanced Energy Conversion; Desalination; Steam,
      Diesel and Electrical Power; Cogeneration; I.C.E. Test and Development; Jet
      Engine and Rocket Fuel Controls; Pollution Control of Internal Combustion
      Engines; Refrigeration; Fuel Injection Systems; Carburetors; Development of
      Hybrid Gasoline-Electric Auto; Utilization of Mixed-Fission Products; Energy
      Conservation in Paper-making Operations; and Matrix Heat
      Exchangers.

     

    Professional
      Organizational Activities have included:

     

     

    
      	
               ●

            	 President
              of the National Society of Inventors (NSI)
	
               ●

            	 President
              of the American Association of University Professors (AAUP), New Jersey
              (NJ) State Conference 
	
               ●

            	 Chairman
              of the Executive Committee of the American Society of Mechanical Engineers
              (ASME) North Jersey Section
	
               ●

            	 Chairman
              of ASME Region II History and Heritage Committee
	
               ●

            	 New
              Jersey State Legislative Coordinator for ASME
	
               ●

            	 Chairman
              of the American Society for Engineering Education, Mechanical Engineering
              Division of the Mid-Atlantic Region
	
               ●

            	 Chairman
              of the ASME Mechanical Engineering Department Advisors of the North-East
              Region 
	
               ●

            	 Member
              of the ASME National Nominating Committee
	
               ●

            	 Member
              of ASME Sloan Project Advisory Committee
	
               ●

            	 Member
              of the Executive Committee of the Entrepreneurs Forum
	
               ●

            	 Member
              of the Governing Board of the Professional Staff Association at the
              New
              Jersey Institute of Technology (NJIT)
	
               ●

            	 Secretary
              of the Faculty at NJIT
	
               ●

            	 Chairman
              of the Faculty Council at NJIT
	
               ●

            	 Secretary
              of the NJ Engineer's Committee for Student Guidance
	
               ●

            	 Chairman
              of the NJIT Mechanical Engineering Department Long Range Planning
              Committee 
	
               ●

            	 Chairman
              of the North Jersey Industry Fund Drive for
              ASME


    

     

    His
      Honors, Awards and Citations include:

     

    
      	
               ●

            	 The ASME Centennial Medallion for
              Contributions to Engineering
	
               ●

            	 The National Science Foundation (NSF)
              Fellowship in Energy Conversion 
	
               ●

            	 The NSF Research Grant for Faculty
              Research in Industry Program
	
               ●

            	 The NJIT Van Houten Alumni Award for
              Teaching Excellence 
	
               ●

            	 The AAUP-NJSC Award for Outstanding
              Service to Higher Education 
	
               ●

            	 Fellow in the American Society of
              Mechanical Engineers 
	
               ●

            	 Membership in Pi Tau Sigma and the
              Sigma XI Research Society 
	
               ●

            	 Eight
              Patents


    

     

    He
      is a
      graduate of: the University of Texas in Austin with a BS in Mechanical
      Engineering; NJIT with an MS in Mechanical Engineering: and the U.S. Maritime
      School at Fort Trumbull as a Marine Engineer.

     

    12