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 June 30, 2001

                                       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
requirement s for the past 90 days.

                                 Yes [X] No [ ]

As of June 30, 2001,  there were 66,097,910 shares of the  Registrant's  common
stock issued and outstanding.

<PAGE>

                           Coates International, Ltd.

                              Financial Statements

                                 June 30, 2001


<PAGE>




                           Coates International, Ltd.
                       Index to the Financial Statements
                                 June 30, 2001





                                                                            Page

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


<PAGE>




To the Stockholders and Board of Directors of
Coates International, Ltd.



We have reviewed the accompanying balance sheet of Coates International, Ltd. as
of June 30, 2001,  and the related  statements of operations  and  statements of
cash  flows for the six  month  periods  ended  June 30,  2001 and  2000.  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.



Bridgewater, New Jersey
July 31, 2001


<PAGE>



                           Coates International, Ltd.
                             Condensed Balance Sheet
                                  June 30, 2001
                                   (Unaudited)
<TABLE>
<CAPTION>

      Assets
Current Assets
<S>                                                                                                       <C>
   Cash                                                                                                   $         24,257
   Restricted cash                                                                                                 112,000
   Accounts receivable                                                                                           3,800,000
   Inventory                                                                                                       205,357
   Prepaid insurance                                                                                                 6,432
                                                                                                           ---------------

      Total Current Assets                                                                                       4,148,046

Property, Plant and Equipment - Net of accumulated depreciation of $459,542                                      1,606,478

Other Assets
   Mortgage loan costs, net of accumulated amortization of $29,187                                                  35,673
   Deposits                                                                                                          2,500
                                                                                                           ---------------

      Total Assets                                                                                               5,792,697
                                                                                                           ===============

      Liabilities and Stockholders' Equity

Current Liabilities
   Note payable                                                                                                     20,253
   Current portion of mortgage payable                                                                               8,903
   Current portion of deferred revenue                                                                             950,000
   Accounts payable and accrued expenses                                                                           784,051
   Accrued interest payable                                                                                        118,391
   Due to officer                                                                                                   84,700
                                                                                                           ---------------

        Total Current Liabilities                                                                                1,966,298

   Mortgage payable, net of current portion                                                                        880,523
   Deferred revenue, net of current portion                                                                      2,375,000
                                                                                                           ---------------

        Total Liabilities                                                                                        5,221,821

Stockholders'  Equity  Preferred  stock,  Series  A,  $.001  par  value  voting,
   14,000,000 shares authorized -
      no shares issued                                                                                                   -
   Common stock, $.0001par value, 200,000,000 shares authorized, 66,097,910 shares
      issued and outstanding                                                                                         6,607
   Additional paid-in capital                                                                                   11,190,823
   Retained earnings (deficit)                                                                                 (10,626,554)
                                                                                                           ---------------

        Total Stockholders' Equity                                                                                 570,876
                                                                                                           ---------------
                                                                                                          $      5,792,697
        Total Liabilities and Stockholders' Equity
                                                                                                           ===============
</TABLE>




See notes to the condensed financial statements.


                                        2

<PAGE>




                           Coates International, Ltd.
                       Condensed Statements of Operations


<TABLE>
<CAPTION>

                                                             Three Months Ended                      Six Months Ended
                                                                  June 30,                               June 30,
                                                      ---------------------------------     ----------------------------------
                                                           2001              2000                2001               2000
                                                      --------------    ---------------     --------------     ---------------
                                                       (Unaudited)        (Unaudited)        (Unaudited)         (Unaudited)
                                                      --------------    ---------------     --------------     ---------------

<S>                                                 <C>                <C>                <C>                 <C>
Revenue                                             $        237,500   $        345,000   $        580,000    $        400,000
                                                      --------------    ---------------     --------------     ---------------

Operating Expenses:
   Research and development costs                             72,150             58,307            134,507             125,446
   Research and development costs -
        related party                                         44,187             44,187             88,375              88,375
   General and administrative expenses                       127,638            125,957            195,647             178,197
   Depreciation and amortization expense                      12,940              9,712             25,890              19,423
                                                      --------------    ---------------     --------------     ---------------

      Total Operating Expenses                               256,915            238,163            444,419             411,441
                                                      --------------    ---------------     --------------     ---------------

   Income (Loss) From Operations                             (19,415)           106,837            135,581             (11,441)

Other Income (Expense):
   Interest income                                                71                877                893               1,698
   Interest expense                                          (39,344)           (35,705)           (75,013)            (71,458)
                                                      --------------    ---------------     --------------     ---------------

      Total Other Income (Expense)                           (39,273)           (34,828)           (74,120)            (69,760)
                                                      --------------    ---------------     --------------     ---------------

Net Income (Loss) Before Benefit
From Income Taxes                                            (58,688)            72,009             61,461             (81,201)

Benefit From Income Taxes                                          -                  -                  -                   -
                                                      --------------    ---------------     --------------     ---------------
Net Income (Loss)                                   $        (58,688)            72,009   $         61,461    $        (81,201)
                                                      ==============    ===============     ==============     ===============

                                                                         .01
Income (Loss) Per Share                             $ (0.01)              0                 $ 0.01              $(0.01)

                                                      ==============    ===============     ==============     ===============
                                                           6,572,424          6,572,424          6,572,424           6,572,424
Weighted Average Number of Common Shares
Outstanding
                                                      ==============    ===============     ==============     ===============
</TABLE>












See notes to the condensed financial statements.

                                       3
<PAGE>

                           Coates International, Ltd.
                      Condensed Statements of Cash Flows


<TABLE>
<CAPTION>

                                                                                                     Six Months Ended
                                                                                                         June 30,
                                                                                             ---------------------------------
                                                                                                  2001              2000
                                                                                               (Unaudited)       (Unaudited)
                                                                                             ---------------   ---------------

<S>                                                                                         <C>                  <C>
Cash Flow From Operating Activities                                                         $       (359,705)    $    (240,289)

Cash Flow From Investing Activities                                                                                    (10,000)

Cash Flow From Financing Activities
    Nonrefundable deposit from sale of land                                                                -            15,000
    Proceeds from officers loan                                                                       84,700                 -
    Repayment of note payable                                                                        (38,478)                -
    Repayment of mortgage payable                                                                     (3,081)           (3,647)
                                                                                             ---------------   ---------------
    Net Cash Provided by Financing Activities                                                         43,141            11,353
                                                                                             ---------------   ---------------

    Net Decrease in Cash                                                                            (316,564)         (238,936)
    Cash - Beginning of Periods                                                                      340,821           356,163
                                                                                             ---------------   ---------------
    Cash - End of Periods                                                                   $         24,257 $         117,227
                                                                                             ===============   ===============
</TABLE>

















                                       4




See notes to the condensed financial statements.

<PAGE>


                           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 six months  ended  June 30,  2001 and 2000 are not
  necessarily indicative of the results that may be expected for the years ended
  December  31, 2001 and 2000.  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, 2000.

RELATED PARTY TRANSACTION

  Subcontract  Labor - The Company  subcontracts  its project expense  (payroll,
  insurance and  supplies)  from an entity in which George J. Coates (an officer
  and director of the Company) is the sole  stockholder.  During the  respective
  six month  periods  ended  June 30,  2001 and 2000 the  Company  paid the same
  amount of $88,375 for both these services.


                                       5
<PAGE>

Item 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 basic  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").  George J. Coates and Gregory  Coates have also agreed,  as long as CIL
remains  independent  and viable,  not to compete  with CIL in the  manufacture,
assembly,  use or sale of internal  combustion  engines utilizing the technology
falling  within the scope of the Coates  Patents in the  Licensed  Areas,  or to
grant any other exclusive or non-exclusive license in the Licensed Areas, except
through CIL. In addition,  George J. Coates and Gregory  Coates have executed an
agreement  granting  CIL the  right to retain  any  monies  including  royalties
received from Nicholson McLaren or from Noble Motor Sport(manufacturer of Ascari
racing cars) for the manufacture,  sale, use or assembly of internal  combustion
engines  anywhere in the world using the technology  falling within the scope of
the Coates Patents.

CIL has a short  operating  history,  during which it has primarily  devoted its
attention to developing  the technology  associated  with the Coates SRV Engine.
During such time CIL has also  arranged  for certain  tests in order to evaluate
the  effectiveness of the technology.  CIL has also devoted much time attempting
to interest  various  persons and entities in acquiring  sub-licenses to use the
technology.

Results of Operations for the Six Months and Three Months Ended June 30, 2001
and 2000

CIL continued to complete the  construction  of its working  prototype,  natural
gas-fueled generator engines under its agreements with Well to Wire Energy, Inc.
during the second  quarter of calendar year 2001.  Revenues for the three months
and six months  ended June 30, 2001 were  $237,500  and  $580,000 as compared to
$345,000 and $400,000,  respectively, for the same periods in 2000, representing
an  approximate  $107,500 or 31% decrease in the three month results as compared
to last  year and an  approximate  $180,000,  or 45%  increase  in the six month
revenue results as compared to the six month results for 2000. All such revenues
continue to be generated pursuant to CIL's Well-to-Wire Energy, Inc. agreements.


                                       6
<PAGE>

         Total  operating  expenses for the six month period ended June 30, 2001
were $444,419 compared to $441,441 for the same period in 2000,  representing an
increase of  approximately  $3,000,  with labor  costs.  materials  and supplies
expenses  remaining  relatively  constant for each of the  respective  first six
month periods of 2001 and 2000.

         For the three  months  ended June 30, 2001,  total  operating  expenses
increased  approximately $18,750, to $256,915, as compared to $238,163 for 2000,
representing  an approximate 8% increase.  This increase is  attributable to the
rise in materials  and supplies  expenses in the second  quarter to $72,150 from
$58,307 for the same period last year,  an increase of $13,843 or  approximately
24%, as well as an increase of approximately $3,200, or 33%, in depreciation and
amortization expenses, from $9,712 for the three month period in 2000 to $12,940
for the three month period ended June 30, 2001.

         Interest  expense  for the six months  ended  June 30,  2001 of $75,013
remained  relatively  constant when compared to the $71,458 of interest  expense
incurred for the same six month period in 2000. For the three month period ender
June 30, 2001,  interest expense  increased by 10% to $39,344 as compared to the
$35,705 of interest  expense paid during the same quarter of 2000. This increase
of approximately $3,600 for the second quarter ended June 30, 2001 over the same
quarter last year is attributable to the allocation of increasing amounts of the
Company's regular monthly mortgage payment being allocated to pay interest while
the portions of the monthly payments  allocated to pay principal decrease as the
outstanding mortgage debt's principal balance is reduced by amortization.

Liquidity and Capital Resources

The  Company  is in the  process of  completing  the  construction  of its first
production   model,   natural  gas  fueled  electric  power   generator   engine
incorporating  the Coates SRV  technology  (the  "Coates  Natural Gas  Generator
Engine") in connection with the Company's project with Well to Wire Energy, Inc.
Following the completion and testing of the Coates Natural Gas Generator Engine,
CIL expects to receive  the balance of its license  payment due in the amount of
$4,700,000  and  the  costs  and  expense  balance  due  on  its  two  prototype
development  engines  previously  constructed  of  $4,100,000  from Well to Wire
Energy,  Inc. If required,  management  will raise  additional  operating  funds
through a combination of private or public offerings of its securities.

                                       7
<PAGE>



                           PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

There are no material legal proceedings pending against the Company.

Item 2   CHANGES IN SECURITIES

             None.

Item 3   DEFAULTS ON SENIOR SECURITIES

              None

Item 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

               None

Item 5   OTHER INFORMATION

               None

Item 6   EXHIBITS AND REPORTS ON FORM 8-K
         (a) Exhibits

The following  listed  Exhibits are hereby  incorporated  by reference into this
Form 10-QSB for the quarter ended June 30, 2001, from the Company's Registration
Statement  filed on Form S-1 with the  Securities  and  Exchange  Commission  on
November 1, 1995, File No. 33-94884:

 Exhibit No.                Description of Exhibit
3.1 CIL's Restated Certificate of Incorporation
3.2 CIL's By-Laws
(b) No reports on Form 8-K were filed during the quarter ended June 30, 2001.













                                       8


<PAGE>



                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.


                                                COATES INTERNATIONAL, LTD.




Date:   August __, 2001                         By: /s/  George J. Coates
                                                ----------------------------
                                                 George J. Coates, President
                                                 Chief Executive Officer and
                                                 Chief Financial Office








                                       9