Securities and Exchange Commission



Washington, D.C. 20549



Form 10-QSB



[X] Quarterly Report Pursuant to Section 13 or 15 (D) of the Securities Exchange

Act of 1934



For Quarter Ended March 31, 2002



Or



[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange

Act of 1934 For the Transition Period from



________ to _______



Commission file number 33-948884



Coates International, Ltd.

(Exact Name of Registrant as Specified in its Charter)



Delaware                                      		 22-2925432

(State or other Jurisdiction of                       (I.R.S. Employer

Incorporation or Organization)                       Identification No.)



Highway 34 & Ridgewood Road, Wall Township, New Jersey 07719

(Address of Principal Executive Office) (Zip Code)



(732) 449-7717

(Registrant's telephone number including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [  ]

As of  March 31, 2002, there were 264,704,440 shares of the Registrant's common stock issued and outstanding.



Coates International, Ltd.

Index to Form 10-QSB For the Quarter Ended

March 31, 2002











Page

Part I



Independent Accountants' Report  		1



Financial Statements



Condensed Balance Sheet		2



Condensed Statements of Operations		3



Condensed Statements of Cash Flows		4



Notes to the Condensed Financial Statements		5



Management's Discussion and Analysis of Financial

Condition and Results of Operations 6



Part II - Other Information10

























































To the Stockholders and Board of Directors of

Coates International, Ltd.





We have reviewed the accompanying balance sheet of Coates International, Ltd. as of March 31, 2002, and the related statements of operations and statements of cash flows for the three month periods ended March 31, 2002 and 2001.  These financial statements are the responsibility of the Company's management.



We conducted our reviews  in accordance with standards established by the American Institute of Certified Public Accountants.  A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters.  It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole.  Accordingly, we do not express such an opinion.



Based on our reviews, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles.







/s/Rosenberg Rich Baker Berman & Company

Rosenberg Rich Baker Berman & Company



Bridgewater, New Jersey

April 30, 2002

Coates International, Ltd.

Condensed Balance Sheet

March 31, 2002

(Unaudited)



|Assets                                                                                                        |  |  |   |                
|------------------------------------------------------------------------------------------------------------- |  |  | - | ---------------
|Current Assets                                                                                                |  |  |   |                
|Cash                                                                                                          |  |  | $ | $     1,130,264
|Inventory                                                                                                     |  |  |   | 230,163        
|Deferred offering costs                                                                                       |  |  |   | 44,870         
|Total Current Assets                                                                                          |  |  |   | 1,405,297      
|Property, Plant and Equipment - Net of accumulated depreciation of $449,835                                   |  |  |   | 1,607,322      
|Other Assets                                                                                                  |  |  |   |                
|Mortgage loan costs, net of accumulated amortization of $25,947                                               |  |  |   | 25,944         
|Deposits                                                                                                      |  |  |   | 2,500          
|Total Assets                                                                                                  |  |  |   | 3,041,063      
|Liabilities and Stockholders' Equity                                                                          |  |  |   |                
|Current Liabilities                                                                                           |  |  |   |                
|Current portion of mortgage payable                                                                           |  |  |   | 4,770          
|Due to officer                                                                                                |  |  |   | 8,400          
|Accounts payable and accrued expenses                                                                         |  |  |   | 922,801        
|Accrued interest payable                                                                                      |  |  |   | 12,177         
|License deposits                                                                                              |  |  |   | 825,000        
|Total Current Liabilities                                                                                     |  |  |   | 1,773,148      
|Mortgage payable, net of current portion                                                                      |  |  |   | 879,589        
|Stockholders' Equity                                                                                          |  |  |   |                
|Common stock, $.0000025 par value, 1,000,000,000 shares authorized,
264,704,440 shares issued and outstanding |  |  |   | 661            
|Additional paid-in capital                                                                                    |  |  |   | 12,858,731     
|Retained earnings (deficit)                                                                                   |  |  |   | (12,471,066)   
|Total Stockholders' Equity                                                                                    |  |  |   | 388,326        
|Total Liabilities and Stockholders' Equity                                                                    |  |  | $ | 3,041,063      

See notes to the condensed financial statements.



Coates International, Ltd.

Condensed Statements of Operations

|                                                     |   |                             
|---------------------------------------------------- | - | ----------------------------
|                                                     |   | Three Months Ended
March 31,
|                                                     |   | 2002                        
|                                                     |   | (Unaudited)                 
|                                                     |   |                             
|Revenue                                              | $ | -                           
|Operating Expenses:                                  |   |                             
|Research and development costs                       |   | 105,814                     
|General and administrative expenses                  |   | 213,084                     
|Depreciation and amortization expense                |   | 13,007                      
|Total Operating Expenses                             |   | 331,905                     
|Income (Loss) From Operations                        |   | (331,905)                   
|Other Income (Expense):                              |   |                             
|Interest income                                      |   | 1,545                       
|Interest expense                                     |   | (41,908)                    
|Total Other Income (Expense)                         |   | (40,363)                    
|Net (Loss) Before Income Taxes                       |   | (372,268)                   
|Provision for Income Taxes                           |   | -                           
|Net (Loss)                                           | $ | (372,268)                   
|Income (Loss) Per Share                              | $ | (0.00)                      
|Weighted Average Number of Common Shares
Outstanding |   | 264,478,592                 











See notes to the condensed financial statements.

Coates International, Ltd.

Condensed Statements of Cash Flows



|                                                    |   |                             
|--------------------------------------------------- | - | ----------------------------
|                                                    |   | Three Months Ended
March 31,
|                                                    |   | 2002                        
|                                                    |   | (Unaudited)                 
|Cash Flow From Operating Activities                 | $ | 173,377                     
|Cash Flow From Investing Activities                 |   | (11,800)                    
|Cash Flow From Financing Activities                 |   |                             
|Proceeds from issuance of stock                     |   | 262,500                     
|Repayment of note payable                           |   | -                           
|Repayment of mortgage payable                       |   | (8,142)                     
|Net Cash Provided by (Used in) Financing Activities |   | 254,358                     
|Net Increase (Decrease) in Cash                     |   | 415,935                     
|Cash - Beginning of Periods                         |   | 714,329                     
|Cash - End of Periods                               | $ | 1,130,264                   



































See notes to the condensed financial statements.

Coates International, Ltd.

Notes to the Condensed Financial Statements





BASIS OF PRESENTATION



The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Item 310 of Regulation S-B.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the three months ended March  31, 2002 and 2001 are not necessarily indicative of the results that may be expected for the years ended December 31, 2002 and 2001.  The unaudited condensed financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2001.



RESTATEMENT OF PRIOR PERIOD RESULTS



The Company has restated its financial statements for three months ended March 31, 2001.  The restated financial results reflect errors in its accounting procedures related to revenue recognition.  The impact of these adjustments on the Company's financial results as originally reported is summarized below:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Three Months Ended
March 31, 2001
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | As Reported                      
|Retained earnings (deficit)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | $ | (10,567,856)                     
|Revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 342,500                          
|Net income (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 120,149                          
|Income (loss) per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 0.00                             
|SUBSEQUENT EVENT
Subsequent to March 31, 2002, the Company has raised an aggregate of $1,310,000 in cash from the private placement of 65,500 common shares.

On April 23, 2002, the Board of Directors authorized a 4-for-1 stock split, thereby increasing the number of common shares issued and outstanding on that date to 264,975,240 and decreasing the par value of each share to $0.0000025.  All references in the accompanying condensed financial statements to the number of common shares and per share amounts for March 31, 2002 and 2001 have been restated to reflect the stock split. |   |                                  



Item 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Except for historical information, the Company's reports to the Securities and Exchange Commission on Form 10-KSB and Form 10-QSB and periodic press releases, as well as other public documents and statements, contain "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the statements. These risks and uncertainties include general economic and business conditions, development and market acceptance of the Company's products, current dependence on Well to Wire Energy, Inc.as the Company's principal licensee and other risks and uncertainties identified in the Company's reports to the Securities and Exchange Commission, periodic press releases, or other public documents or statements.

Readers are cautioned not to place undue reliance on forward-looking statements. The Company undertakes no obligation to republish or revise forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrences of unanticipated events.

Background

Coates International Ltd. (CIL, or the Company) is a Delaware corporation organized in October 1991 by George J. Coates as the successor in interest to a Delaware corporation of the same name incorporated in August 1988.

CIL has completed the development of a spherical rotary valve SRV Engine (the  "Coates SRV Engine"),  the  development  of which was  initiated  by its founder,  George J. Coates, for use in internal combustion engines of all types. With respect to the Coates SRV Engine, seven applicable United States patents (the  "Coates Patents") have been issued to George J. Coates.  CIL holds an exclusive license from George J. Coates and his son Gregory Coates, to manufacture, sell and grant sub-licenses with respect to products based on the Coates Patents, within all of the countries, their territories and possessions, comprising  North  America,  South  America and Central  America  (the  "License Areas").  Agreements between George J. Coates, Gregory Coates, and CIL also contain certain non-compete clauses and rights relative to royalties received from Nicholson McLaren or from Noble Motor Sport.

CIL has a 14-year operating history, during which it has primarily devoted its attention to developing the technology associated with the Coates SRV Engine.



Agreements with Well to Wire Energy, Inc.

On September 29, 1999, CIL signed a license agreement (the "License Agreement") with Well to Wire Energy, Inc. ("WWE"), an oil and gas company in Canada, to license the exclusive use of V-8 cylinder engines modified with the Coates System to be fueled by natural gas to generate electrical power for the Country ofCanada (the "License Agreement") against payment of $5,000.000, of which a deposit payment in the amount of $300,000 was made. The agreement also provides for development and delivery of certain prototype engines under a separate research and development agreement between CIL and WWE, referred to as the "R&D Agreement", and stipulates that following the testing and delivery of the third prototype - a production model Coates Generator Engine - the balance of the license fee in the amount of $4,700,000 would be paid in 16 quarterly payments beginning 180 days after delivery.



Following due diligence investigation of the proposed applications for the production of electrical energy and the location of the engines in the natural gas fields or generation sites, it was agreed between CIL and Well to Wire Energy, Inc. that a larger engine modified with the Coates System would be more appropriate. Accordingly, CIL and Well to Wire agreed that CIL would research and develop a natural gas fed, 855 cubic inch, 6 cylinder, industrial electric generator engine(the "Coates Generator Engine").

Pursuant to further negotiations, CIL and WWE agreed that WWE would pay to CIL a $5,000,000 fee to research and develop a production model of the Coates Generator Engine. As part of the understanding between CIL and WWE under the R&D Agreement, CIL would develop a total of three prototype engines meeting these new specifications: two testing prototypes and one production model prototype. To date, Well to Wire Energy, Inc. has made aggregate payments of $1,200,000 to CIL for these prototypes, $250,000 of which was paid in calendar 1999; $845,000 of which was paid in fiscal year 2000, and $105,000 was paid during the first quarter in fiscal year 2001. The balance of  $3,800,000 is due to be paid by from Well to Wire Energy, Inc. 180 days after delivery of the production model



CIL has completed the construction and delivery of the first two prototypes and is working on the third prototype, representing the production version of the Coates Generator Engine.  The first two prototype Coates Generator Engines were delivered to Well to Wire Energy, Inc. in December, 2000 and April, 2001, respectively.



Preliminary Agreements with 1107 N.W. Central Avenue, Inc. and Gary Sommer

In March 2002, CIL and George J. Coates arrived at a preliminary understanding with 1107 N.W. Central Avenue, Inc. and Gary Sommer (together hereinafter referred to as "1107") that culminated in drafts for two re-license agreements which will, subject to completion, convey to 1107 exclusive rights to market non-exclusive end-user licenses for Coates CSRV engine technology in certain markets and relative to certain applications, subject to payment by 1107 of non-refundable deposit payments against total license fees aggregating $50,000,000. The agreements also would call for on-going royalty payments accruing to CIL on future manufacturing under the end-user licenses of combustion engines incorporating the Coates CSRV engine technology.  If 1107, for any reason, was unable to complete the transactions within a specified time period, any deposits paid would be converted into common stock of CIL at rates between $20 and $25 per share, pre-split with respect to the planned four-to-one stock split.









Pursuant to the understanding, 1107 has paid to CIL the sum of $500,000 as a non-refundable deposit.  Such deposit has been recognized in the March 31, 2002, balance sheet as a current liability, will, however, be reclassified as income or equity, depending on the final outcome of the above transactions, after the re-license agreements have been finalized.



Agreement with McLean, England and Associates, LLC

During the first quarter CIL negotiated a license arrangement with McLean, England and Associates, LLC ("McLean) which, on April 12, 2002, produced a final agreement that calls for $25,000,000 in license fees for specific uses of the Coates CSRV engine technology in certain applications, within the United States of America.  Payment of the license fee is contingent upon the successful completion of tests of two prototype engines fitted with the CSRV system.  At the time of this submission, McLean has paid CIL a non-refundable deposit of $565,000 against the license fee, a portion of which amounting to $25,000 was received during the first quarter and has been recognized in the balance sheet at March 31, 2002, as a current liability, to be re-classified in the subsequent period as income.

Results of Operations for the Quarters Ended March 31, 2002 and 2001

CIL's  current source of revenues are the payments due to CIL from WWE under the R&D Agreement and the License Agreement, and the payments made and anticipated to be made under the agreements with 1107 and McLean.  During the quarter ended March 31, 2002 the Company received $525,000 in payments from 1107 and McLean, however, due to the fact that the underlying agreements had not been finalized at the end of the period, all such payments were not recognized as income but classified as a current liability. By comparison, during the firs quarter a year ago, the Company had received $105,000 in license payments from Well to Wire Energy, Inc. pursuant to the R&D Agreement, which amounts were recorded by the Company as revenues. Further payments are not scheduled until the completion of the testing and delivery to WWE of the third prototype, production model Coates Generator Engine which is expected to occur during the second quarter in 2002.  As of the date of this filing, CIL has completed the construction of this third prototype Coates Generator Engine. This prototype is currently undergoing testing.



Total operating expenses for the quarter were $331,905 compared to $187,504 for the first quarter in 2001. The relatively large increase was primarily due to substantially higher general and administrative expenses, predominantly salaries due to increased staffing, and legal professional services expense. Research and development costs were substantially the same in both quarters, totaling $105,814 in 2002 and $106,545 in 2001.

The lack of revenues coupled with the increase of operating expenses resulted in a loss from operations of $331,9055 for the quarter compared to a loss of $82,504 during the same period a year ago. Other non-operating expenses for the three months ended March 31, 2002, amounted to $40,363, almost entirely attributable to interest expense for the mortgage on the Company's headquarters facility. The net results for the quarter was a loss of $372,268 for less than $.01 per share, as compared to a net loss of $117,351 for the first quarter in 2001.

Management expects the license agreements described above to contribute an increasing stream of revenues during the upcoming periods.  There cam be no assurance, however, that completion and testing of the various prototype engines can be completed in a satisfactory manner and within the anticipated time frames, and that other contributing factors will not prohibit or delay finalization and consummation of the agreements, in which case revenues in the short run would be limited to certain non-refundable deposit payments.

Liquidity and Capital Resources

During the quarter, the Company, through private placements with accredited investors, sold 44,400 common shares (post-split) for which it received $262,500 in cash. In addition, the Company received $525,000 in non-refundable deposit payments against future license agreements.  These cash inflows more than offset losses from operations during the period, and increased the cash position from  $714,329 at December 31, 2001, to $1,130,264 at March 31, 2002.  Notwithstanding this improved liquidity, working capital showed a deficit of $367,851 at March 31, 2002. This was primarily due to the accounting treatment of the before-mentioned license deposits that were classified as current liabilities, for reasons discussed above. Aside of these deposits, current liabilities are primarily composed of approximately $700,000 legal fees due one law firm for its representation of CIL in litigation over the past several years.



Subsequent to March 31, 2002, the Company has raised an aggregate of $1,310,00 in cash from the private placement of 65,500 common shares, and has received $540,000 from McLean against the license agreement.



The Company has completed the construction of the last of three prototype engines, the production model, natural gas fueled electric power generator engine incorporating the Coates SRV technology (the "Coates Generator Engine") in connection with the Company's R&D Agreement and License Agreement with Well to Wire Energy, Inc.  Following the testing and delivery of the Coates Generator Engine, CIL expects to receive the balance of  $3,800,000 from Well to Wire Energy, Inc under the R&D Agreement. Under the License Agreement, the balance due CIL of $4,700,00 is payable in equal quarterly payments over a four year period, commencing 180 days following delivery of the third prototype Coates Generator Engine to WWE. Delivery is expected to occur during the second quarter of 2002. Pursuant to its R&D Agreement with WWE, the balance of the $5,000,000 fee due CIL, currently $3,800,000, is payable also upon the delivery of the third prototype to Well to Wire Energy, Inc., in a lump sum.



In addition, the Company expects to receive, during the second quarter, further payments against the license agreement with 1197, such amounts aggregating at a minimum $500,000.





















PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

There are no material legal proceedings pending against the Company.

Item 2   CHANGES IN SECURITIES



During the first quarter ended March 31, 2002, the Company issued an aggregate 11,100 Common Shares to 7 accredited investors in private placements and received net subscription proceeds of $262,500, for the purchase price of $20 and $25 per share. All of these private placements were made in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the "1933 Act") provided by Regulation D and Section 4(2) of the 1933 Act in that the number of accredited investors was limited; that the accredited investors were either existing shareholders of CIL or had established business relationships with the Company.  The certificates representing the CIL shares placed contained the appropriate restrictive legends designating such shares as restricted securities, non-transferable and non- saleable other than pursuant to registration under the 1933 Act or pursuant to exemptions therefrom.



Item 3   DEFAULTS ON SENIOR SECURITIES

None



Item 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On April 23, 2002, the Board of Directors authorized a four (4) for one (1) forward stock split for all issued and outstanding Common Shares held of record as of 5:00 PM Eastern Time on that date, thereby increasing  the issued and outstanding shares on that date to 264,975,240 Common Shares.

Item 5   OTHER INFORMATION

None

Item 6   EXHIBITS AND REPORTS ON FORM 8-K



(a) Exhibit (3)(i) - Certificate of Incorporation and Amendments thereto, incorporated

herein by reference to Exhibits of previous filings with the Commission.

Exhibit (3)(ii) - By-laws of the Company, incorporated herein by reference to Exhibits of

previous filings with the Commission.

(b)  Reports on Form 8-K  Form 8-K filed on January 25, 2002 with the Commission in

connection with the execution and delivery of a Letter of Intent, dated January 17, 2002, by

and  between the Company and Castle Securities Corp.

SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934, the Registrant  has duly  caused  this  Form 10-QSB for the quarter ended March 31, 2002 to be  signed  on its  behalf by the undersigned, thereunto duly authorized.







COATES INTERNATIONAL, LTD.





Date:   May 15, 2002

/s/ George J. Coates________________________

George J. Coates, President

Chief Executive Officer and

Chief Financial Office