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, 1999

                                       OR

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

                         Commission file number 33-94884

                           COATES INTERNATIONAL, LTD.
             (Exact Name of Registrant as Specified in its Charter)

                               Delaware 22-2925432
                (State or other Jurisdiction of (I.R.S. Employer
               Incorporation or Organization) Identification No.)

          Highway 34 & Ridgewood Road, Wall Township, New Jersey 07719
               (Address of Principal Executive Office) (Zip Code)

                                 (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.
                                    Ye s X No

     The number of shares of  Registrant's  Preferred Stock Series A, $0.001 par
value, outstanding as of March 31, 1999, was 6,572,424 shares.

                                        1

<PAGE>



                           COATES INTERNATIONAL, LTD.
                          [A DEVELOPMENT STAGE COMPANY]


                                      INDEX


                                                                   Page
                                                                  Number

PART  1  -  FINANCIAL INFORMATION

Item 1   Financial Statements (unaudited)

             Balance Sheet
             - March 31, 1999                                             3

            Statements of Operations
           - Three months ended March 31, 1999 and 1998
              and since inception                                         4

           Statements of Cash Flows
           - Three months ended March 31,  1999 and 1998
              and since inception                                         5

          Notes to Consolidated Financial Statements                      6

Item 2  Management's Discussion and Analysis of Financial Condition       7-8
            And Results of Operations

PART II - OTHER INFORMATION                                               9

SIGNATURES                                                               10

FINANCIAL DATA SCHEDULE                                                  11

                                        2

<PAGE>



                           Coates International, Ltd.
                          (A Development Stage Company)
                                  Balance Sheet
                                 March 31, 1999
                                   (Unaudited)



<TABLE>
<CAPTION>
      Assets
Current Assets
<S>                                                                                                        <C>             
   Cash                                                                                                    $        101,965
   Restricted cash                                                                                                  192,000
   Prepaid insurance                                                                                                  3,370
   Due from related parties                                                                                          22,493
                                                                                                             --------------

      Total Current Assets
                                                                                                                   319,828

Property, Plant and Equipment - Net                                                                               1,576,158
                                                                                                             --------------

Other Assets
   Mortgage loans costs, net of accumulated amortization of $46,760                                                  64,860
   Deposit                                                                                                            2,500
                                                                                                             --------------

      Total Assets                                                                                                1,963,346
                                                                                                             ==============

      Liabilities and Stockholders' Equity

Current Liabilities
   Accounts payable and accrued expenses                                                                          1,086,676
   Accrued interest payable                                                                                         106,559
   Due to stockholders                                                                                               29,605
                                                                                                             --------------

        Total Current Liabilities                                                                                 1,222,840
                                                                                                             --------------

   Mortgage payable                                                                                                 900,000

Stockholders' Equity
   Preferred stock, Series A, $.001 par value, 14,000,000 shares authorized - voting,
      non-cumulative convertible, 6,572,424 shares issued and outstanding                                             6,572
   Common stock, $.001 par value, 20,000,000 shares authorized - no shares issued                                         -
   Additional paid-in capital                                                                                    10,910,964
   Deficit accumulated during the development stage                                                            (11,077,030)
                                                                                                             --------------

        Total Stockholders' Equity (Impairment)                                                                   (159,494)
                                                                                                             --------------
                                                                                                           $      1,963,346
       Total Liabilities and Stockholders' Equity                                                            ==============

</TABLE>


See notes to the condensed financial statements.

                                        3

<PAGE>





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



<TABLE>
<CAPTION>
 
                                                                                                           Period From
                                                                                                             August 31,
                                                                                                           1988 (Date of
                                                                                                              Inception)
                                                                                                               Through
                                                                                                              March 31,
                                                                                                                 1999
                                                                                                           ----------------
                                                                              Three Months Ended
                                                                                   March 31,
                                                                       ---------------------------------   ----------------
                                                                            1999              1998
                                                                       ---------------   ---------------   ----------------
                                                                         (Unaudited)       (Unaudited)       (Unaudited)
                                                                       ---------------   ---------------   ----------------

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

Operating Expenses:
   Research and development costs                                               46,249            67,619          2,545,228
   Research and development costs - related party                               22,102            25,121            951,490
                                                                                                                    =======
   General and administrative expenses                                         109,776            89,393          7,673,166
   Depreciation and amortization expense                                        28,580             1,606            397,323
                                                                       ---------------   ---------------   ----------------

      Total Operating Expenses                                                 206,707           183,739         11,567,207
                                                                       ---------------   ---------------   ----------------

   Loss From Operations                                                        206,707         (183,739)       (10,879,832)
                                                                       ---------------   ---------------   ----------------

Other Income (Expense):
   Interest income                                                                  62                94            125,826
   Interest expense                                                           (24,915)           (3,600)          (323,024)
                                                                       ---------------   ---------------   ----------------

      Total Other Income (Expense)                                            (24,853)           (3,506)          (197,198)
                                                                       ---------------   ---------------   ----------------

   Net Loss                                                           $      (231,560) $       (187,245) $     (11,077,030)
                                                                       ===============   ===============   ================

   Net Loss Per Share                                                 $         (0.04) $          (0.03)
                                                                       ===============   ===============
   Weighted Average Number of Shares                                        6,572,424         6,571,091
                                                                       ===============   ===============
</TABLE>










See notes to the condensed financial statements.

                                        4

<PAGE>



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

<TABLE>
<CAPTION>

                                                                                                             Period From
                                                                                                             August 31,
                                                                                                            1988 (Date of
                                                                                                             Inception)
                                                                                                               Through
                                                                                                              March 31,
                                                                                                                1999
                                                                                                          -----------------
                                                                              Three Months Ended
                                                                                   March 31,
                                                                       ---------------------------------  -----------------
                                                                            1999              1998
                                                                       ---------------   ---------------  -----------------
                                                                         (Unaudited)       (Unaudited)       (Unaudited)
                                                                       ---------------   ---------------  -----------------

<S>                                                                   <C>              <C>               <C>               
Cash Flows From Operating Activities                                  $      (247,784) $       (180,306) $      (9,512,471)
                                                                       ---------------   ---------------  -----------------

Cash Flows From Investing Activities                                         (222,808)                 -        (1,456,640)
                                                                       ---------------   ---------------  -----------------

Cash Flows From Financing Activities
    Proceeds from mortgage payable                                             900,000                 -          1,400,000
    Repayment of mortgage payable                                            (500,000)                 -          (660,000)
    Proceeds of additional paid-in capital                                     140,882            48,747          2,823,281
    Proceeds from issuance of stock                                                  -           129,000          7,488,148
    Payment for treasury stock                                                       -                 -           (30,000)
    Loans from stockholders                                                     17,100                 -             49,647
                                                                       ---------------   ---------------  -----------------
    Net Cash Provided by Financing Activities                                  557,982           177,747         11,071,076
                                                                       ---------------   ---------------  -----------------

    Net Increase (Decrease) in Cash                                             87,390           (2,559)            101,965
    Cash - Beginning of Periods                                                 14,575            35,249                  -
                                                                       ---------------   ---------------  -----------------
    Cash - End of Periods                                             $        101,965 $          32,690 $          101,965
                                                                       ===============   ===============  =================
</TABLE>















See notes to the condensed financial statements.

                                        5

<PAGE>


          Coates International, Ltd.
                          (A Development Stage Company)
                   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, 1999
    and 1998 are not necessarily  indicative of the results that may be expected
    for the years ended  December  31, 1999 and 1998.  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, 1998.

RELATED PARTY TRANSACTION

    Subcontract Labor - The Company previously subcontracted its project expense
    (payroll,   insurance  and  supplies)  from  an  entity,  Coates  Prescision
    Engineering, Inc., in which George J. Coates is the sole stockholder. During
    the three  months  ended  March 31,  1999,  the  Company did not pay for any
    project labor expense through Coates Prescision Engineering,  Inc.; however,
    during the three months  ended March 31, 1998 and 1997,  the Company did pay
    $25,121 and $52,000, respectively, for such services to said entity.


                                        6

<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  (the
"Predecessor   Entity").   As  a  result  of  a  dispute  with  certain   former
employee-directors  who  claimed  top  own  approximately  nine  percent  of the
Predecessor  Entity's  outstanding  capital stock,  the  Predecessor  Entity was
reorganized  in  November  1991.  Pursuant  to  the  reorganization,  all of the
Predecessor  Entity's assets subject to liabilities were distributed to CIL, the
non- litigating  stockholders of the Predecessor  Entity became the stockholders
of CIL, and the Predecessor Entity was dissolved.

CIL has completed the basic  development of a spherical rotary valve system (the
"Coates System"), 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 System, seven applicable Unites States patents (the "Coates Patents")
have been issued to George J.  Coates.  CIL holds a  non-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 moneys including  royalties  received from Nicholson McLaren
or from Noble Motor Sport  (manufacturer of Ascari racing cars) for 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 System. 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.

CIL is  currently  manufacturing  components  for  high  performance  automotive
engines modified with the Coates System on a limited basis at its Wall Township,
New Jersey,  manufacturing facility.  Except as may be set forth herein, CIL has
not sold any automotive engines or components during the quarter ended March 31,
1999.  CIL has  received  numerous  oral and written  inquiries  from  potential
customers,  expressing  an interest in  acquiring  high  performance  automotive
racing engines modified with the Coates System.  No assurances can be given that
these inquiries will result in binding sales orders. CIL intends to aggressively
pursue all inquiries  with the goal of obtaining  firm orders.  CIL's ability to
generate  revenues and achieve  profitable  operations is principally  dependent
upon the  execution of  sub-license  agreements  with engine  manufacturers  and
retrofitters  and upon the  Company's  successful  marketing  and  sales of high
performance  automotive,  motorcycle and marine racing engines.  Despite limited
success  to date  due  principally  to its lack of  funding,  CIL  continues  to
aggressively  pursue the  marketing  of Coates  System  technology  to potential
sub-licensees worldwide.




                                        7

<PAGE>





Results of Operations for the Quarters Ended March 31, 1999 and 1997

No revenues were recognized during the quarter periods ended March 31, 1999, and
1998.  The absence of revenues  caused all  operating  and interest  expenses to
directly reflect in the net result as losses.  Total operating expenses incurred
during the last quarter  amounted to $202,707  compared to $183,739 for the same
period in 1998. Higher general and  administrative  expenses were largely offset
by lower research and development costs.

After recognizing $24,853 net interest expense,  the Company's operations show a
net loss from  operations  of $231,560 or $0.04 per share for the quarter  ended
March 31,  1999,  compared  to a net loss of  $187,245 or $.03 per share for the
same quarter in the preceding year.

Total  losses since  inception  in August 1988 through  March 31, 1999 amount to
$10,879,832.


Liquidity and Capital Resources

  The Company's balance sheet and financial  condition did not change materially
during the quarter.  However, the losses experienced during this period affected
cash flow and,  therefore,  the Company's cash position . Cash on hand currently
is  insufficient to guaranty an orderly  retirement of liabilities  unless their
due dates are  extended.  On March 28,  1999,  the Company  refinanced  its Wall
Township, New Jersey executive office and testing facility property with Eastern
Savings Bank, FSB or New York. The Company obtained a mortgage loan in the gross
amount of  $900,000,  secured by a first  mortgage  lien of its  property.  This
mortgage  accrues  interest on the outstanding  principal  balance of 15.99% per
annum,  requires  monthly  payments  of $12,521  and  becomes due and payable in
March,  2004.  Management  continues to explore  various  alternative  financing
arrangements  to raise  additional  capital  through a  combination  of  private
placements and debt financing.
At the  time of  this  Report,  no  binding  financial  arrangements  have  been
consummated.



                                        8

<PAGE>





PART  II  -  OTHER INFORMATION


Item 1        LEGAL PROCEEDINGS

The response to this item can be found in the  Company's  annual  report on Form
10-KSB,  Item  3,  for  the  year  ended  December  31,  1998,  which  is  being
incorporated herein by reference to such report.


Item 2        CHANGES IN SECURITIES   -  None


Item 3        DEFAULTS ON SENIOR SECURITIES    -  None
              -----------------------------


Item 4        SUBMISSION OF MATTERS TO A VOTE OF
              SECURITIES' HOLDERS      -  None


Item 5        OTHER INFORMATION     -  None


Item 6        EXHIBITS AND REPORTS ON FORM 8-K

              (b) The  Company  did not file  any  current  reports  on Form 8-K
during the quarter ended March 31, 1999.




                                        9

<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: May 17, 1999                  By: s/George J. Coates
                                    -------------------
                                    George J. Coates
                                    Chief Executive and Chief Financial Officer





































coat10q.399

                                       10



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