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 September 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 September 30 2001, there were 66,111,010 shares of the Registrant's common
stock issued and outstanding.


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<PAGE>


                           Coates International, Ltd.

                              Financial Statements

                               September 30, 2001



                                                                               2
<PAGE>

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




                                                                            Page
Financial Statements

     Condensed Balance Sheet................................................. 1

     Condensed Statements of Operations...................................... 2

     Condensed Statements of Cash Flows...................................... 3

     Notes to the Condensed Financial Statements............................. 4



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<PAGE>

                           Coates International, Ltd.
                             Condensed Balance Sheet
                               September 30, 2001
                                   (Unaudited)


      Assets
Current Assets
      Cash                                                        $     86,604
      Accounts receivable                                                   --
      Inventory                                                        205,357
      Prepaid insurance                                                  6,432
                                                                  ------------
        Total Current Assets                                           298,393

Property, Plant and Equipment - Net of accumulated
     depreciation of $469,248                                        1,596,771

Other Assets

      Mortgage loan costs, net of accumulated
        amortization of $32,430                                         32,430

      Deposits                                                           2,500
                                                                  ------------
        Total Assets                                                 1,930,094
                                                                  ============
        Liabilities and Stockholders' Equity (Deficit)

Current Liabilities

      Current portion of mortgage payable                                8,903
      Accounts payable and accrued expenses                            845,457
      Accrued interest payable                                         118,391
      Due to stockholders                                               18,700
      Due to officer                                                    80,900
                                                                  ------------
        Total Current Liabilities                                    1,072,351

      License deposit                                                  300,000
      Mortgage payable, net of current portion                         879,281
                                                                  ------------
        Total Liabilities                                            2,251,632
                                                                  ------------
Stockholders' Equity (Deficit)

Common stock, $.0001 par value, 1,000,000,000 shares
authorized, 66,111,010 shares issued and outstanding                     6,611

Additional paid-in capital                                          11,499,282
      Retained earnings (Deficit)                                  (11,827,431)
                                                                  ------------
        Total Stockholders' Equity (Deficit)                          (321,538)
                                                                  ------------
        Total Liabilities and Stockholders' Equity (Deficit)      $  1,930,094
                                                                  ============


See notes to the condensed financial statements.


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<PAGE>

                           Coates International, Ltd.
                       Condensed Statements of Operations


<TABLE>
<CAPTION>
                                                                  Three Months Ended                 Nine Months Ended
                                                                     September 30,                     September 30,
                                                             -----------------------------     -----------------------------
                                                                 2001             2000             2001             2000
                                                              (Unaudited)     (Unaudited)       (Unaudited)      (Unaudited)
                                                                              As Restated                        As Restated
                                                             ------------     ------------     ------------     ------------
<S>                                                          <C>              <C>              <C>              <C>
Revenue                                                      $         --     $    320,000     $    105,000     $    720,000

Operating Expenses:
         Research and development costs                            48,395          190,722          271,277          385,043
         Research and development costs - related party                --            9,750               --           29,250
         General and administrative expenses                      219,609           36,288          415,256          214,485
         Depreciation and amortization expense                     12,959           15,259           38,849           34,682
                                                             ------------     ------------     ------------     ------------
                  Total Operating Expenses                        280,963          252,019          725,382          663,460
                                                             ------------     ------------     ------------     ------------
         (Loss) Income From Operations                           (280,963)          67,981         (620,382)          56,540

Other Income (Expense):
         Interest income                                                3              184              896            1,882
         Interest expense                                         (33,356)         (36,586)        (108,369)        (108,044)
         Settlement of lawsuit                                    (87,410)              --          (87,410)              --
         Miscellaneous income                                          --           15,000               --           15,000
                                                             ------------     ------------     ------------     ------------
                  Total Other Income (Expense)                   (120,763)         (21,402)        (194,883)         (91,162)
                                                             ------------     ------------     ------------     ------------
Net (Loss) Income Before Benefit                                 (401,726)          46,579         (815,265)         (34,622)
    From Income Taxes
Benefit From Income Taxes                                              --               --               --               --
                                                             ------------     ------------     ------------     ------------
Net (Loss) Income                                            $   (401,726)    $     46,579     $   (815,265)    $    (34,622)
                                                             ============     ============     ============     ============
(Loss) Income Per Share                                      $      (0.01)    $       0.00     $      (0.01)    $       0.00
                                                             ============     ============     ============     ============
Weighted Average Number of Common Shares
         Outstanding                                           66,093,943       66,085,410       66,093,943       66,085,410
                                                             ============     ============     ============     ============
</TABLE>

See notes to the condensed financial statements.


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<PAGE>


                           Coates International, Ltd.
                       Condensed Statements of Cash Flows


                                                          Nine Months Ended
                                                            September 30,
                                                       ------------------------
                                                          2001           2000
                                                      (Unaudited)    (Unaudited)
                                                       ---------      ---------
Cash Flows From Operating Activities                   $(559,563)     $(132,505)

Cash Flows From Investing Activities                          --        (74,000)

Cash Flows From Financing Activities
     Proceeds from note payable                               --         77,000
     Repayment of mortgage payable                        (4,323)        (4,659)
     Proceeds of capital contributed by stockholder           --         69,965
     Proceeds from issuance of stock                     265,000             35
     Proceeds from officer loan                           84,700             --
     (Repayment of) Proceeds from stockholder loans       18,700        (10,000)
     Repayment of note payable                           (58,731)            --
                                                       ---------      ---------
     Net Cash Provided by Financing Activities           305,346        132,341
                                                       ---------      ---------
     Net Decrease in Cash                               (254,217)       (74,164)
     Cash - Beginning of Periods                         340,821        356,163
                                                       ---------      ---------
     Cash - End of Periods                             $  86,604      $ 281,999
                                                       =========      =========

See notes to the condensed financial statements.


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<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 nine months ended September 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.



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<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 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 Coates Patents.

     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. 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.

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.


                                                                               8
<PAGE>

     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 to CIL
by 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.

Results of Operations for the Three and Nine Months Periods Ended September 30,
2001 and September 30, 2000.

     CIL's only current source of revenues are the payments due to CIL from WWE
under the R&D Agreement and the License Agreement. After receiving $105,000 in
payments from Well to Wire Energy, Inc. in the first quarter of 2001 pursuant to
the R&D Agreement, no further payments are scheduled until the completion of the
testing and delivery to WWE of the third prototype, production model Coates
Generator Engine. As of the date of this filing, CIL has completed the
construction of its third prototype Coates Generator Engine, the production
prototype, pursuant to its agreements with Well to Wire Energy, Inc. This
prototype is currently being tested.. Until CIL is able to manufacture and
assemble the Coates Generator Engines pursuant to sales orders or until CIL
receives payments for the sale of further license and sublicensing rights, CIL's
sole source of revenue will be these Well to Wire Energy, Inc. payments.

     Total operating expenses for the nine month period ended September 30, 2001
were $725,382 compared to $640,955 for the same period in 2000, representing an
increase of approximately 13%. The increase was primarily due to increased legal
expenses in connection with CIL's prosecution of certain legal claims and
increased patent maintenance expenses, the majority of which was recorded in the
third quarter. The resulting increase of general and administrative expenses was
partially offset by a decrease of research and development costs which


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<PAGE>

during the nine month period totaled $271,277, compared to $391,788 during the
same period of the prior year.

     The absence of revenues coupled with the increase of operating expenses
resulted in a loss from operations of $280,963 for the quarter and $620,382 for
the nine months period, compared to profits of $67,091 and $56,540,
respectively, for the same periods in the prior year.

     Interest expense for the nine months ended September 30, 2001 of $108,369
remained relatively constant when compared to the $108,044 of interest expense
incurred for the same nine month period in 2000. In addition, during the third
quarter the Company recorded an extraordinary expense of $87,410 representing a
payment to two shareholders in settlement of a 1994 lawsuit. The net results for
the third and the first three quarters in 2001 were losses of $401,726 and
$815,265, or $.01 per share, as compared to a profit of $46,579 and a loss of
$34,622 for the comparable periods of 2000.

Liquidity and Capital Resources

     Since its inception, all of the development costs and operating expenses of
CIL have primarily been financed through the cash generated through the sale of
stock, through capital contributions made by George J. Coates' son, Gregory
Coates, and through several payments for prototype and license fees made by two
entities Millwest Corporation and Well to Wire Energy, Inc. During the first
three quarters of 2001, the Company placed 11,300 shares with 7 accredited
investors against payment of subscription funds of $265,000 and received
$105,000 in research and development payments from WWE.

     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 first 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.

     At September 30, 2001, current liabilities exceeded current assets by
$728,958. Current liabilities are primarily composed of an approximate $717,000
legal fee due one law firm for its representation of CIL in litigation over the
past several years. The law firm has, in prior periods, accepted limited
payments from CIL and is expected to continue to do so for the foreseeable
future.


                                                                              10
<PAGE>

     Subsequent to September 30, 2001, the Company has raised an aggregate
$876,000 in cash from the private placement of 43,800 Common Shares with
accredited investors. The Company expects these funds to suffice in financing
operations during the upcoming quarters. If required, management will raise
additional operating funds through combination of private or public offerings of
its securities.


                                                                              11
<PAGE>

                           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 third quarter ended September 30, 2001, the Company issued an
aggregate 11,300 Common Shares to 7 accredited investors in private placements
and received subscription proceeds of $265,000, 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 the1933 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

        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 September 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
               September 30 2001.


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<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 September 30,
2001 to be signed on its behalf by the undersigned, thereunto duly authorized.




                                               COATES INTERNATIONAL, LTD.



Date:   January 22, 2002
                                               /s/ George J. Coates
                                               ---------------------------------
                                               George J. Coates, President
                                               Chief Executive Officer and
                                               Chief Financial Office


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