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, 2006

                                       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, 2006, there were 266,894,278 shares of the Registrant's common
stock were issued and outstanding.

<PAGE>

                           Coates International, Ltd.
                        Index to the Financial Statements
                                 March 31, 2006

<TABLE>
<CAPTION>
                                                                                       Page
<S>                                                                                      <C>
Financial Statements (Unaudited)

     Condensed Balance Sheet.........................................................    2

     Condensed Statements of Operations .............................................    3

     Condensed Statements of Cash Flows..............................................    4

     Notes to the Condensed Financial Statements.....................................    5

Item 2   Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                                  7-10

Item 3   Controls and Procedures                                                        10

PART II - OTHER INFORMATION                                                             11

Item 1.   LEGAL PROCEEDINGS                                                             11

Item 2.   CHANGES IN SECURITIES                                                         11

Item 3.   DEFAULTS ON SENIOR SECURITIES                                                 11

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                           11

Item 5.   OTHER INFORMATION                                                             11

Item 6.   EXHIBITS AND REPORTS ON FORM 8-K                                              11

SIGNATURES                                                                              12
</TABLE>

<PAGE>

                           Coates International, Ltd.
                             Condensed Balance Sheet
                                 March 31, 2006
                                   (Unaudited)

<TABLE>
<CAPTION>
<S>                                                                  <C>
Assets

   Cash                                                              $  1,516,212
   Inventory                                                              486,188
    Prepaid expenses                                                       76,658
                                                                     ------------
      Total Current Assets                                              2,079,058
Investment - related party                                                     --
Security Deposits                                                         197,500
Deferred offering costs                                                    47,685
Property, plant and equipment, net of accumulated
  depreciation of $720,423                                              1,490,362
Patents, net of accumulated amortization
  of $1,603                                                                60,549
                                                                     ------------
      Total Assets                                                   $  3,875,154
                                                                     ============
Liabilities and Stockholders' Deficit

Current Liabilities
   Accounts payable                                                  $      6,825
   Accrued expenses                                                       639,852
    Income Taxes Payable                                                  127,156
    Due to related parties                                                 92,337
                                                                     ------------
        Total Current Liabilities                                         866,170

   License deposits                                                       940,000
   Finance obligation                                                   3,876,607
                                                                     ------------
        Total Liabilities                                               5,682,777
                                                                     ------------
Stockholders' Deficit
Common stock, $.00001 par value, 1,000,000,000 shares authorized,
  266,894,278 shares issued and outstanding                                26,689
    Additional paid-in capital
                                                                       17,176,155
    Accumulated deficit                                               (19,010,467)
                                                                     ------------
       Stockholders' Deficit                                           (1,807,623)
                                                                     ------------
        Total Liabilities and Stockholders' Deficit                  $  3,875,154
                                                                     ============
</TABLE>

See notes to the condensed financial statements.


                                       2
<PAGE>

                           Coates International, Ltd.
                       Condensed Statements of Operations
                                   (Unaudited)

                                                       Three Months Ended
                                                           March 31,
                                                -------------------------------
                                                     2006             2005
                                                -------------     -------------
Revenue                                         $          --     $          --
                                                -------------     -------------
Operating Expenses:
  Research and development                                 --             1,921
  General and administrative expenses                 379,542           203,297
  Depreciation and amortization expense                12,637            15,732
                                                -------------     -------------
      Total Operating Expenses                        392,179           220,950
                                                -------------     -------------

Loss From Operations                                 (392,179)         (220,950)
                                                -------------     -------------

Other Income (Expense)
   Equity loss on investment - related party               --           (21,650)
   Interest expense, net                              (97,431)          (28,341)
                                                -------------     -------------
      Total Other Income (Expense)                    (97,431)          (49,991)
                                                -------------     -------------

Net Loss Before Income Taxes                         (489,610)         (270,941)

Income Taxes                                               --                --
                                                -------------     -------------
Net Loss                                        $    (489,610)    $    (270,941)
                                                =============     =============
Net (Loss) per share (Basic and diluted)        $         -0-     $         -0-
                                                =============     =============
Weighted Average Number of Common
Shares Outstanding                                266,894,278       265,859,634
                                                =============     =============

See notes to the condensed financial statements.


                                       3
<PAGE>

                           Coates International, Ltd.
                       Condensed Statements of Cash Flows
                                   (Unaudited)

                                                        Three Months Ended
                                                             March 31,
                                                    ---------------------------
                                                       2006            2005
                                                    -----------     -----------
Cash Flow From Operating Activities                 $  (334,732)    $  (209,064)
                                                    -----------     -----------

Cash Flow From Investing Activities:
     Outlays for Patents                                 (6,694)        (29,053)
                                                    -----------     -----------
Cash used for financing activities:
    Payments for deferred financing costs               (25,185)             --
    Repayment of related party loans                    (45,300)         73,979
    Repayment of mortgage                                    --          (1,172)
    Proceeds from issuance of stock                          --          10,000
                                                    -----------     -----------
                                                        (70,485)         82,807
                                                    -----------     -----------
    Net Decrease in Cash                               (411,911)       (155,310)
    Cash - Beginning of Period                        1,928,123         180,182
                                                    ===========     ===========
    Cash - End of Period                            $ 1,516,212     $    24,872
                                                    ===========     ===========

Supplemental disclosure of cash flow information:
Cash paid during period for -
    Interest                                        $        --     $    28,340
                                                    ===========     ===========


See notes to the condensed financial statements.


                                       4
<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 three months ended March 31, 2006 and 2005 are not
necessarily indicative of the results that may be expected for the years ended
December 31, 2006 and 2005. 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-KSB for the year
ended December 31, 2005.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.

RELATED PARTY TRANSACTIONS

On April 30, 2003, the Company entered into a sublicense agreement with Coates
Motorcycle. Prior to the agreement, Gregory Coates, an officer of the Company,
owned 100% of Coates Motorcycle. Pursuant to the agreement, the Company granted
certain exclusive licenses in exchange for approximately 51% of the common
shares of Coates Motorcycle. In addition, the Company had an anti-dilution
right.

During 2004, the Company amended its license agreement with Coates Motorcycle to
expand the license rights granted and to remove the anti-dilution provision in
exchange for 1,000,000 common shares of Coates Motorcycle. As a result of these
transactions and the sale of 9,400 shares during 2005, the Company currently
owns 3,548,600 shares of Coates Motorcycle, representing approximately a 30%
ownership interest.

The Company's investment in Coates Motorcycle is being accounted for under the
equity method of accounting for investments. As such, the investment is being
carried at cost, adjusted for the Company's proportionate share of their
undistributed earnings and losses.


                                       5
<PAGE>

Summarized information for Coates Motorcycle is as follows:


    For the Quarter Ended March 31            2006            2005
    ------------------------------          --------        --------
    Revenue                              $        --       $       --
    Operating expenses                       217,872           72,069
    Net loss                                (223,727)         (72,418)


    As of March 31,                           2006            2005
    ---------------                         --------        --------
    Current assets                       $    88,072       $   55,243
    Total assets                             644,454          405,280
    Current liabilities                     (429,542)        (314,239)
    Total liabilities                     (1,067,875)        (318,739)
    Stockholders' equity (deficit)          (423,421)          86,541

The Company also made loans to Coates Motorcycle from time to time to provide
working capital for the development and testing of motorcycle engines which
incorporate the Company's technologies. As of December 31, 2004, the total
outstanding balance of these loans, including accrued interest thereon, was
$362,200 and was converted into 362,200 shares of Preferred Series A Stock of
Coates Motorcycle.

George J. Coates has made advances to the Company at various times to provide
working capital, the outstanding balance of which was $92,337 at March 31, 2006.
These borrowings are in the form of demand loans which carry no interest and are
repaid from time to time depending upon cash availability.


                                       6
<PAGE>

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. 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. ("We", "our", "us", "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 the Coates Spherical Rotary Valve
      engine (the "CSRV" engine), the development of which was initiated by its
      founder, George J. Coates, for use in internal combustion engines of all
      types. We are now engaged in adapting our technology to various combustion
      engine applications in connection with existing licensing arrangements.

      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 of Canada (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").


                                       7
<PAGE>

      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. 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 the basic construction of 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. The third prototype
      855 cubic inch engine for WWE was completed and is the testing model. The
      Company intends to deliver this third engine, which has been incorporated
      into a complete generator, during the second quarter of 2006.

      Agreement with McLean, England and Associates, LLC

      The Company entered into a license arrangement with McLean, England and
      Associates, LLC ("McLean") in 2002, which provides 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. McLean has paid
      non-refundable deposits aggregating $565,000 towards the license fee. The
      entire amount of $565,000 has been recognized in the balance sheet at
      March 31, 2006 as a non-current liability. Upon fulfillment of the
      remaining obligations under this agreement this amount will be recognized
      as income.

      The licensing agreement has been amended to provide McLean the opportunity
      to complete the prototype for the diesel fuel engine at its own cost and
      effort. To date, McLean has been unable to fulfill its obligation to
      complete this engine. Negotiations are underway to resolve all issues.

      Results of Operations for the Three Month Periods Ended March 31, 2006 and
      2005

      CIL's currently anticipated sources of revenues are the payments due to
      CIL from WWE under the R&D Agreement and the License Agreement, and the
      payments made and to be made under the agreements with McLean. Further
      payments from these sources are not scheduled until the completion of the
      testing and delivery to WWE of the third prototype, testing model Coates
      Generator Engine.

      No revenues were generated during the three month ended March 31, 2006 and
      2005. Total operating expenses for the three months ended March 31, 2006
      was $392,179, as compared to $220,950 for the corresponding three month
      period of 2005. Research and development expenses were $ -0- and $1,921
      for the three months ended March 31, 2006 and 2005, respectively. The
      Company's primary focus in 2006 has been the completion of the third
      prototype engine resulting in a reduced emphasis on research and
      development activities. Approximately $93,885 for the three month period
      represented labor charges.

      General and administrative expenses were $379,542 for the three months
      ended March 31, 2006 as compared to $203,297 for the three months ended
      March 31, 2005. This $176,245, or 86.7% increase was primarily related to
      higher legal and professional fees in the 2006 quarter in connection with
      the Company's planning efforts to raise additional capital through a
      private placement offering of its securities. Interest expense increased
      from $28,341 to $97,431, or 244% as a result of the accounting treatment
      of the sale/leaseback transaction entered into in the 4th quarter of 2005.
      Under this accounting method, the net cash proceeds from the transaction
      of $3,876,607 was recorded as a liability and the rent payments are
      recorded as interest expense on the finance obligation at a annual
      interest rate of 10.06%. Interest expense in the 2005 quarter consisted of
      interest on an approximately $867,000 mortgage loan on the property that
      houses the Company's offices, warehouse and manufacturing facility.


                                       8
<PAGE>

      The Company experienced a net loss for the three months ended March 31,
      2006 of $489,610, or $0.00 per share, as compared to a net loss of
      $270,941, or $0.00 per share, for the corresponding three month period in
      2005. The net loss for the three month period ended March 30, 2005
      included the Company's share of losses based on its equity ownership in
      Coates Motorcycle amounting to $21,650.

      The Company received net proceeds of approximately $3,025,000 from the
      sale and leaseback of the property which houses its principal offices,
      warehouse and manufacturing facility in the fourth quarter of 2005. In the
      opinion of management, the additional working capital generated from this
      transaction should be sufficient to enable the Company to fund the
      completion of the prototype engines under the WWE and McLean license
      agreements, and depending upon their successful completion, management
      expects the license agreements described above to contribute an increasing
      stream of revenues during the upcoming periods. There can 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

      The Company's cash position at March 31, 2006 was $1,516,212, an increase
      of $1,491,340 from the $24,872 cash position at March 31, 2005 and a
      decrease of $411,911 from the $1,928,123 cash position at December 31,
      2005. The increase in cash compared to the balance at March 31, 2005
      resulted from the proceeds of the sale/leaseback of the property that
      houses the Company's offices, warehouse and manufacturing facility. The
      lower cash position at March 31, 2006 compared to the cash balance at
      December 31, 2005, reflects the use of proceeds to repay vendors and other
      third parties for current and past due invoices as well as increased
      expenditures for legal and professional fees. CIL's working capital of
      $1,212,888 at March 31, 2006 represents a $2,640,664 increase from the
      ($1,427,776) working capital deficit position at March 31, 2005, also
      resulting from the proceeds of the sale/leaseback transaction. CIL's
      current liabilities of $866,170 at March 31, 2006 have increased $58,846,
      or approximately 7.3% from the $807,324 balance at December 31, 2005, also
      resulting from the proceeds of the sale/leaseback transaction.

      CIL has completed the basic construction of the last of the three
      prototype Coates Generator Engines for WWE, the production model, which is
      currently undergoing testing in connection with CIL's R&D Agreement and
      License Agreement with Well to Wire Energy, Inc. Upon completion of
      testing and delivery of this third prototype engine, CIL expects to
      receive the balance of $3,800,000 due from Well to Wire Energy, Inc within
      180 days after delivery, under the R&D Agreement. Under the License
      Agreement, the balance due CIL of $4,700,000 is payable in equal quarterly
      payments over a four year period, commencing 180 days following delivery
      to WWE of the third prototype engine. As well, CIL is scheduled to receive
      the license fee payments due under the McLean license when the two truck
      engines, one being completed by McLean pursuant to the April 2004 license
      amendment, and the other truck engine, which the Company is completing,
      are delivered and fully tested. In the opinion of management, the
      additional working capital generated from the sale/leaseback transaction
      in the fourth quarter of 2005, should be sufficient to enable the Company
      to finalize the third prototype production model Coates Generator Engine
      under the WWE license agreement and the truck engine, under the McLean
      license agreement. The remaining tasks include testing the functionality,
      design and components through what we believe to be the final evaluation
      protocols for these two projects. There can be no assurance, however, that
      these agreements, as well as those presently in negotiations with the
      other licensees, will be consummated in accordance with the Company's
      expectations nor that payments will be received as called for in the
      agreements.


                                       9
<PAGE>

      During the second quarter of 2003, the Company organized a subsidiary,
      Coates Motorcycle Company, Ltd. ("Coates Motorcycle"), to research and
      develop a heavy cruiser motorcycle equipped with the Coates SRV engine. In
      connection with this project, on April 30, 2003, CIL executed and
      delivered an exclusive Sublicense Agreement to Coates Motorcycle in
      exchange for a 50+% equity ownership interest and anti-dilution right to
      maintain this majority ownership position. In consideration for its
      receipt of this exclusive Sublicense Agreement, Coates Motorcycle issued
      2,550,000 of its common shares to CIL and became its subsidiary.
      Conjunctively, George J. Coates, Gregory G. Coates and the Coates Trust
      granted a non-exclusive license to Coates Motorcycle for a minority equity
      interest without any anti-dilution rights.

      On March 5, 2004 this Sublicense Agreement was amended, the anti-dilution
      rights were terminated and the Company received an additional 1,000,000
      shares of Coates Motorcycle. In connection with these transactions, Coates
      Motorcycle ceased to qualify as a consolidated subsidiary of the Company.
      The Company's ownership interest in Coates Motorcycle was approximately
      30% at March 31, 2006.

      ITEM 3. CONTROLS AND PROCEDURES

      (a) Evaluation of Disclosure Controls and Procedures.

      Within the 90 days prior to the filing date of this Quarterly Report on
      Form 10-QSB, our Chief Executive Officer and our Principal Financial
      Officer evaluated the effectiveness of our disclosure controls and
      procedures as defined in Rule 13a-14(c) under the Securities Exchange Act
      of 1934, as amended (the "Exchange Act"). Based upon that evaluation, the
      Chief Executive Officer and the Principal Financial Officer, have
      concluded that our current disclosure controls and procedures are adequate
      and effective to ensure that information required to be disclosed in the
      reports we file under the Exchange Act is recorded, processed, summarized
      and reported on a timely basis.

      (b) Changes in Internal Controls.


                                       10
<PAGE>

      There have been no significant changes in our internal controls or in
      other factors that could significantly affect internal controls subsequent
      to the date of their evaluation by the Chief Executive Officer and the
      Principal Financial Officer.

      PART II - OTHER INFORMATION

      Item 1. Legal Proceedings

      The Company, its officers and directors and other related and unrelated
      parties have been named as defendants in a lawsuit brought in the Superior
      Court of New Jersey, Law Division, Ocean County, by a local New Jersey
      attorney, as a pro se plaintiff and captioned H. Alton Neff v. George
      Coates, Coates International, Ltd. et al, based upon that plaintiff's
      contention that he is the assignee of 1107 N.W. Central Avenue, Inc. 1107
      and the Company entered into a Preliminary Agreement in relation to the
      potential grant, by the Company of a license to 1107. The Preliminary
      Agreement provided that the $500,000 deposit of 1107 would convert to the
      stock of the Company if 1107 did not make the next payment required by the
      Preliminary Agreement. 1107 did not make the next payment; therefore, the
      deposit converted into shares of the Company's restricted common stock.
      Company management deems this lawsuit without merit and intends to
      vigorously defend this action and to seek from the plaintiff payment of
      its legal fees and costs.

      Item 2 CHANGES IN SECURITIES

      None

      c) sales of unregistered securities during the quarter ended March 31,
      2006:

      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:

                  31.1 and 31.2 Certification of the Chief Executive Officer and
            Principal Financial Officer pursuant to Section 302 of the
            Sarbanes-Oxley Act of 2002.

                  32.1 and 32.2 Certification of Chief Executive Officer and
            Principal Financial Officer pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

            (b) Reports on Form 8-K:

                  On April 26, 2006, we issued a press release announcing our
            application to file a U.S. patent application for combination fuel
            mixing system utilizing alternative fuels. Under Form 8-K Item 7.01,
            Regulation FD Disclosure.


                                       11
<PAGE>

                                   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, 2006
to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 15, 2006                     COATES INTERNATIONAL, LTD.


                                       By: /s/ George J. Coates
                                           -------------------------------
                                               George J. Coates, President
                                               Chief Executive Officer and
                                               Principal Financial Officer


                                       12