Securities and Exchange Commission



Washington, D.C. 20549



Amendment No. 1 to 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.



Coates International, Ltd.



Financial Statements



September  30, 2001





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



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.









Coates International, Ltd.

Condensed Statements of Operations



|                                                     |   |                                  |   |                                
|---------------------------------------------------- | - | -------------------------------- | - | -------------------------------
|                                                     |   | Three Months Ended
September 30, |   | Nine Months Ended
September 30,
|                                                     |   | 2001                             |   | 2000                           
|                                                     |   | (Unaudited)                      |   | (Unaudited)
As Restated        
|Revenue                                              | $ | -                                | $ | 320,000                        
|Operating Expenses:                                  |   |                                  |   |                                
|Research and development costs                       |   | 48,395                           |   | 190,722                        
|Research and development costs - related party       |   | -                                |   | 9,750                          
|General and administrative expenses                  |   | 219,609                          |   | 36,288                         
|Depreciation and amortization expense                |   | 12,959                           |   | 15,259                         
|Total Operating Expenses                             |   | 280,963                          |   | 252,019                        
|(Loss) Income From Operations                        |   | (280,963)                        |   | 67,981                         
|Other Income (Expense):                              |   |                                  |   |                                
|Interest income                                      |   | 3                                |   | 184                            
|Interest expense                                     |   | (33,356)                         |   | (36,586)                       
|Settlement of lawsuit                                |   | (87,410)                         |   | -                              
|Miscellaneous income                                 |   | -                                |   | 15,000                         
|Total Other Income (Expense)                         |   | (120,763)                        |   | (21,402)                       
|Net (Loss) Income Before Benefit
From Income Taxes   |   | (401,726)                        |   | 46,579                         
|Benefit From Income Taxes                            |   | -                                |   | -                              
|Net (Loss) Income                                    | $ | (401,726)                        | $ | 46,579                         
|(Loss) Income Per Share                              | $ | (0.01)                           | $ | 0.00                           
|Weighted Average Number of Common Shares
Outstanding |   | 66,093,943                       |   | 66,085,410                     













See notes to the condensed financial statements.

Coates International, Ltd.

Condensed Statements of Cash Flows



|                                               |   |                                
|---------------------------------------------- | - | -------------------------------
|                                               |   | Nine Months Ended
September 30,
|                                               |   | 2001                           
|                                               |   | (Unaudited)                    
|Cash Flows From Operating Activities           | $ | (559,563)                      
|Cash Flows From Investing Activities           |   | -                              
|Cash Flows From Financing Activities           |   |                                
|Proceeds from note payable                     |   | -                              
|Repayment of mortgage payable                  |   | (4,323)                        
|Proceeds from issuance of stock                |   | 265,000                        
|Proceeds from officer loan                     |   | 84,700                         
|(Repayment of) Proceeds from stockholder loans |   | 18,700                         
|Repayment of note payable                      |   | (58,731)                       
|Net Cash Provided by Financing Activities      |   | 305,346                        
|Net Decrease in Cash                           |   | (254,217)                      
|Cash - Beginning of Periods                    |   | 340,821                        
|Cash - End of Periods                          | $ | 86,604                         





































See notes to the condensed financial statements.





Coates International, Ltd.

Notes to the Condensed Financial Statements





BASIS OF PRESENTATION



The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Item 310 of Regulation S-B.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the 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.



RESTATEMENT OF PRIOR PERIOD RESULTS

The Company has restated its financial statements for the nine months ended September 30, 2001 and 2000.  The restated financial results reflect errors in its accounting procedures related to revenue recognition and equity transactions, the nature of which are a misclassification of a license deposit as revenue and bookkeeping omissions of certain equity transactions, respectively.   The impact of these adjustments on the Company's financial results as originally reported is summarized below:



|                            |   | Nine Months Ended September 30, 2000
|--------------------------- | - | ------------------------------------
|                            |   | As Reported                         
|Retained earnings (deficit) | $ | (10,577,912)                        
|Net income (loss)           |   | (12,117)                            
|Income (loss) per share     |   | 0.00                                



SUBSEQUENT EVENT

Subsequent to September 30, 2001, the Company has raised an aggregate $876,000 in cash from the private placement of 43,800 common shares.

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 ofCanada (the "License Agreement") against payment of $5,000.000, of which a deposit payment in the amount of $300,000 was made. The agreement also provides for development and delivery of certain prototype engines under a separate research and development agreement between CIL and WWE, referred to as the "R&D Agreement", and stipulates that following the testing and delivery of the third prototype - a production model Coates Generator Engine - the balance of the license fee in the amount of $4,700,000 would be paid in 16 quarterly payments beginning 180 days after delivery.



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

Pursuant to further negotiations, CIL and WWE agreed that WWE would pay to CIL a $5,000,000 fee to research and develop a production model of the Coates Generator Engine. As part of the understanding between CIL and WWE under the R&D Agreement, CIL would develop a total of three prototype engines meeting these new specifications: two testing prototypes and one production model prototype. To date, Well to Wire Energy, Inc. has made aggregate payments of $1,200,000 to CIL for these prototypes, $250,000 of which was paid in calendar 1999; $845,000 of which was paid in fiscal year 2000, and $105,000 was paid during the first quarter in fiscal year 2001. The balance of  $3,800,000 is due to be paid 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 9.3%. 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 decreaseof research and development costs whichduring 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.





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 entitiesMillwest 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 representing a payment against the $5,000,000 fee due under the R&D Agreement 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 $773,958. 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.



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.George J. Coates, if necessary, will continue to advance funds to CIL in order for it to meet its operational cash requirements. If  required, management will raise additional operating funds through a combination of private or public offerings of its securities.  In the event CIL is not successful in raising capital through targeted private or public offerings of its securities, and it has not generated sufficient revenues to fund its operations, such events would have a material adverse effect on CIL's financial condition and plan of operations.





































































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.

SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934, the Registrant  has duly  caused  this  Amendment No. 1 to 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:   February 21, 2002

/s/ George J. Coates________                                            			 			             George J. Coates, President

Chief Executive Officer and

Chief Financial Office