SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                 FORM 10-QSB/A2

               [X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                         For Quarter Ended June 30, 1998

                                       OR

               [ ]TRANSITION REPORT PURSUANT O SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the Transition Period from _______ to _______

                         Commission file number 33-94884

                           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)

                                 (908) 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.
                                    Ye s X No

     The number of shares of  Registrant's  Preferred Stock Series A, $0.001 par
value, outstanding as of June 30, 1998, was 6,572,424 shares.

                                        1

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                           Coates International, Ltd.
                          (A Development Stage Company)
                            Statements of Operations

<TABLE>
<CAPTION>





                                                                                                              Period From
                                                                                                               August 31,
                                                                                                             1988 (Date of
                                                                                                               Inception)
                                                                                                                Through
                                                                                                                June 30,
                                                                                                                  1998
                                                                                                            ----------------
                                           Three Months Ended                   Six Months Ended
                                                June 30,                            June 30,
                                    --------------------------------    ---------------------------------   ----------------
                                         1998             1997               1998              1997
                                    ---------------  ---------------    ---------------   ---------------   ----------------
                                      (Unaudited)      (Unaudited)        (Unaudited)       (Unaudited)       (Unaudited)
                                    ---------------  ---------------    ---------------   ---------------   ----------------
                                      (Restated)                          (Restated)                           (Restated)
                                    ---------------                     ---------------                     ----------------

<S>                               <C>               <C>                <C>               <C>              <C>               
Revenue                           $               - $              -   $              -  $              - $          687,375
                                    ---------------  ---------------    ---------------   ---------------   ----------------

Operating Expenses:
Research and development costs               91,808           64,744            184,548           136,191          3,237,770
General and administrative
   expenses                                 123,415          347,151            212,808           572,911          7,156,878
Depreciation expense                              -            6,419              1,606            19,950            321,276
                                    ---------------  ---------------    ---------------   ---------------   ----------------

Total Operating Expenses                    215,223          418,314            398,962           729,052         10,715,924
                                    ---------------  ---------------    ---------------   ---------------   ----------------

Loss From Operations                      (215,223)        (418,314)          (398,962)         (729,052)       (10,028,549)
                                    ---------------  ---------------    ---------------   ---------------   ----------------

Other Income (Expense):
Interest income                                 298                7                392                13            125,258
Interest expense                            (3,781)          (3,600)            (7,381)           (7,200)          (246,377)
                                    ---------------  ---------------    ---------------   ---------------   ----------------

Total Other Income (Expense)                (3,483)          (3,593)            (6,989)           (7,187)          (121,119)
                                    ---------------  ---------------    ---------------   ---------------   ----------------

Net (Loss)                        $       (218,706) $      (421,907)   $      (405,951)  $      (736,239) $     (10,149,668)
                                    ===============  ===============    ===============   ===============   ================

(Loss) Per Share                  $          (0.03) $         (0.07)   $         (0.06)  $         (0.12)
                                    ===============  ===============    ===============   ===============
                                          6,572,424        5,963,600          6,571,757         5,963,600
Weighted Average Number of Shares
Outstanding                         ===============  ===============    ===============   ===============

</TABLE>



See notes to the condensed financial statements.

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Results of Operations for the Quarters Ended June 30, 1998 and 1997

No revenues were  recognized  during the quarters ended June 30, 1998, and 1997.
The cash  shortage  during the second  quarter  severely  hampered the Company's
efforts to complete testing and trial of certain engine  configurations which is
considered  crucial in furthering  the prospects for  successful  negotiation of
potential  sub-license  agreements with engine  manufacturers and refitters.  To
overcome this constraint, management during the second quarter had to spend much
time and effort in seeking to improve liquidity with the result that towards the
end of the quarter,  additional  funding was secured (see "Liquidity and Capital
Resources").  The relatively  improved financial  situation makes it possible to
continue  research and development work during the upcoming  quarters.  However,
management  at this time  cannot  with any  degree  of  certainty  predict  when
meaningful revenues might be achieved.

As a result of strict cost  control  measures  and  curtailment  of  activities,
operating  expenses  incurred  during the second  quarter  decreased to $215,223
compared  to  $418,314  for the same  period in 1997.  The  largest  single cost
element was research &  development  expense which  totaled  $91,808  during the
second quarter in 1998. General and administrative expenses totaled $123,415 for
the quarter, down from $347,151 in the same quarter in 1997.

After recognizing $3,483 net interest expense,  the Company's  operations show a
net loss from  operations  of $218,706 or $0.03 per share for the quarter  ended
June 30, 1998, compared to a net loss of 421,907 or $0.07 per share for the same
quarter in the preceding year.

Total  losses  since  inception  in August 1988  through June 30, 1998 amount to
$10,149,668.


Liquidity and Capital Resources

During June 1998, the Company  acquired a new mortgage in the amount of $500,000
and paid off the old mortgage which had a balance of $160,000.  The new mortgage
will be due in one year and is secured by a first lien on the land and buildings
of the Company.

At June 30, 1998,  CIL had a net worth of  $437,062.  Working  capital  showed a
deficit of  $(1,183,347),  compared to a negative  $(1,036,578)  at December 31,
1997. This deficit will continue to affect the Company's  operations even though
the mortgage financing  transaction described above provided operating funds. In
order to further improve the Company's  financial situation and provide funds to
meet  maturing  obligations  and  finance  the  ongoing  efforts  to market  the
Company's  products,  management  plans to raise  additional  capital  through a
combination of private placements and debt issues.


















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<PAGE>



                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  Amendment  No. 2 to its form  10-QSB for the
quarter  ended  June 30,  1998 to be  signed on its  behalf by the  undersigned,
thereunto duly authorized.



                                    COATES INTERNATIONAL, LTD.


Date:   October 16, 1998            By:s/George J. Coates
                                    George J. Coates
                                    Chief Executive and Chief Financial Officer






































coat10q2.698


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