SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB


               [X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                         For Quarter Ended June 30, 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 June 30, 1999, was 6,572,424 shares.

                                        1

<PAGE>

                                      INDEX


                                                                        Page
                                                                        Number

PART  1  -  FINANCIAL INFORMATION

 Financial Statements (unaudited)

     Condensed Balance Sheet
     - June 30, 1999                                                       3

     Condensed Statements of Operations
     - Three months and six months ended June 30, 1999 and 1998
       and since inception                                                 4

  Condensed Statements of Cash Flows
     - Six months ended June 30, 1999 and 1998
       and since inception                                                 5

  Notes to The Condensed 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)
                             Condensed Balance Sheet
                                  June 30, 1999
                                   (Unaudited)




<TABLE>
<CAPTION>

      Assets
Current Assets
<S>                                                                                                          <C>
   Cash                                                                                                      $          8,685
   Restricted cash                                                                                                    112,000
   Prepaid insurance                                                                                                    2,321
                                                                                                               --------------

      Total Current Assets                                                                                            123,006
                                                                                                               --------------

Property, Plant and Equipment, Net of Accumulated Depreciation of $390,661                                          1,608,304

Other Assets
   Mortgage Loan Costs, Net of Accumulated Amortization of $3,263                                                      61,997
   Deposit                                                                                                              2,500
                                                                                                               --------------

      Total Assets                                                                                                  1,795,807
                                                                                                               ==============

      Liabilities and Stockholders' Equity

Current Liabilities
   Accounts payable and accrued expenses                                                                              974,647
   Accrued interest payable                                                                                           106,559
   Due to stockholders                                                                                                 22,300
                                                                                                               --------------

        Total Current Liabilities                                                                                   1,103,506
                                                                                                               --------------

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                                                                                         10,935,424
Deficit accumulated during the development stage                                                                  (11,149,695)
                                                                                                                --------------

        Total Stockholders' Equity (Impairment)                                                                      (207,699)
                                                                                                                --------------
                                                                                                             $      1,795,807
        Total Liabilities and Stockholders' Equity

                                                                                                                ==============
</TABLE>



See notes to the condensed financial statements.

                                        3

<PAGE>



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



<TABLE>
<CAPTION>

                                                                                                                   Period From
                                                                                                                    August 31,
                                                                                                                  1988 (Date of
                                                                                                                    Inception)
                                                                                                                     Through
                                                                                                                     June 30,
                                                                                                                       1999
                                                                                                                 ----------------
                                                Three Months Ended                   Six Months Ended
                                                     June 30,                            June 30,
                                         --------------------------------    ---------------------------------   ----------------
                                              1999             1998               1999              1998
                                         ---------------  ---------------    ---------------   ---------------   ----------------
                                           (Unaudited)      (Unaudited)        (Unaudited)       (Unaudited)       (Unaudited)
                                         ---------------  ---------------    ---------------   ---------------   ----------------

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

Operating Expenses:
   Research and development costs                 10,325           68,044             56,574            56,674          2,555,553
   Research and development costs -
        related party                             26,087           23,764             48,189            48,885            977,577
   General and administrative
      expenses                                     2,183          123,415            111,959           212,808          7,675,352
   Depreciation and amortization
      expense                                      8,947                -             37,527             1,606            406,267
                                         ---------------  ---------------    ---------------   ---------------   ----------------

      Total Operating Expenses                    47,542          215,223            254,249           319,973         11,614,749
                                         ---------------  ---------------    ---------------   ---------------   ----------------

   Loss From Operations                          (47,542)        (215,223)          (254,249)         (398,962)       (10,927,374)
                                         ---------------  ---------------    ---------------   ---------------   ----------------

Other Income (Expense):
   Interest income                                  634              298                696               392            126,460
   Interest expense                             (25,757)          (3,781)           (50,672)           (7,381)          (348,781)
                                         ---------------  ---------------    ---------------   ---------------   ----------------

      Total Other Income (Expense)              (25,123)          (3,483)           (49,976)           (6,989)          (222,321)
                                         ---------------  ---------------    ---------------   ---------------   ----------------

Net Loss                               $        (72,665) $      (218,706)   $      (304,225)   $     (405,951) $     (11,149,695)

                                         ===============  ===============    ===============   ===============   ================

Loss Per Share                         $          (0.01) $         (0.03)   $         (0.05)  $         (0.06)
                                         ===============  ===============    ===============   ===============

Weighted Average Number of Shares
   Outstanding                                6,572,424        6,572,424          6,572,424          6,571,757
                                         ===============  ===============    ===============   ===============
</TABLE>








See notes to the condensed financial statements.

                                        4

<PAGE>



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





<TABLE>
<CAPTION>

                                                                                                              Period From
                                                                                                              August 31,
                                                                                                             1988 (Date of
                                                                                                              Inception)
                                                                                                                Through
                                                                                                                June 30,
                                                                                                                  1999
                                                                                                           -----------------
                                                                                Six Months Ended
                                                                                     June 30,
                                                                        ---------------------------------  -----------------
                                                                              1999              1998
                                                                        ---------------   ---------------  -----------------
                                                                          (Unaudited)       (Unaudited)       (Unaudited)
                                                                        ---------------   ---------------  -----------------

<S>                                                                    <C>              <C>               <C>
Cash Flows From Operating Activities                                   $      (422,482) $       (422,170) $      (9,687,169)
                                                                        ---------------   ---------------  -----------------

Cash Flows From Investing Activities                                           (62,745)                -         (1,249,816)
                                                                        ---------------   ---------------  -----------------

Cash Flows From Financing Activities
    Proceeds from mortgage payable                                             900,000           460,539          1,400,000
    Repayment of mortgage payable                                             (500,000)         (160,000)          (660,000)
    Payment for mortgage loan costs                                            (65,343)                -           (112,104)
    Proceeds of additional paid-in capital                                     115,342           168,037          2,797,741
    Proceeds from issuance of stock                                                  -           129,000          7,488,148
    Payment for treasury stock                                                       -                 -            (30,000)
    Proceeds from (repayment of) stockholder loans                              29,338            (7,100)            61,885
    Net Cash Provided by Financing Activities                                  479,337           590,476         10,945,670
                                                                        ---------------   ---------------  -----------------

    Net (Decrease) Increase in Cash                                             (5,890)          168,306              8,685
    Cash - Beginning of Periods                                                 14,575            35,249                  -
                                                                        ---------------   ---------------  -----------------
    Cash - End of Periods                                              $         8,685 $         203,555 $            8,685

                                                                        ===============   ===============  =================

</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 and six months ended
    June 30, 1999 and 1998 are not  necessarily  indicative  of the results that
    may  be  expected   for  the  years  ended   December  31,  1999  and  1998,
    respectively. 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  subcontracts its project expense (payroll,
    insurance and supplies) from an entity in which George J. Coates is the sole
    stockholder. During the six months ended June 30, 1999 and 1998, $48,189 and
    $48,885, respectively, were paid for these services.

COMMITMENTS AND CONTINGENCIES

    The  Company is a defendant  in various  lawsuits  incident to the  ordinary
    course of business which are not possible to determine the probable  outcome
    or the amount of liability,  if any, under these lawsuits.  However,  in the
    opinion of  management,  the  disposition  of these lawsuits will not have a
    material  adverse  effect on the Company's  financial  position,  results of
    operations, or cash flows.

SUBSEQUENT EVENTS

    On August 6, 1999,  the Company  entered into an agreement with Well to Wire
    Energy Inc. (WTW) a Canadian corporation, whereby the Company is granting to
    WTW the right to  purchase  an  exclusive  license for the use of the Coates
    engine in connection  with the  conversion of natural gas to  electricity in
    the  country  of Canada  and its  territories.  The cost of the  license  is
    $5,000,000 and is payable $250,000 on August 16, 1999,  $500,000 thirty days
    after the  successful  validation  of the  Coates  engine,  and the  balance
    quarterly over the next four years.  The Company retains the exclusive right
    to manufacture  both the Coates engine and generator  components for sale to
    WTW and the  Company  will also  receive 5% of the gross  profits  which WTW
    derives from all sources.

                                        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  to  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 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 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 June 30,
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.

On August 2, 1999,  the Company hired Robert J. Levin,  CPA as Vice President of
Finance  and Chief  Financial  Officer.  Mr.  Levin has been the CFO of a public
company and acted as a financial consultant to numerous other public and private
companies  during the last ten years.  Management is  optimistic  that Mr. Levin
will  help  facilitate  the  Company's  move from the  development  stage to the
production stage. His duties include  preparation of public filings,  liaison to
independent  accountants  and attorneys,  and  responsibility  for all financial
aspects of the Company.

On August 6, 1999,  CIL entered into an agreement  with Well to Wire Energy Inc.
(WTW), a Canadian corporation,  whereby the Company is granting to WTW the right
to purchase an exclusive  license for the use of the Coates engine in connection
with the  conversion of natural gas to  electricity in the country of Canada and
its  territories.  The cost of the license is $5,000,000 and is payable $250,000
on August 16, 1999, $500,000 thirty days after the successful  validation of the
Coates engine,  and the balance  quarterly over the next four years. CIL retains
the  exclusive  right  to  manufacture  both the  Coates  engine  and  generator
components  for sale to WTW and CIL will also  receive  5% of the gross  profits
which WTW derives from all sources.




                                        7

<PAGE>



Results of Operations for the Six Months and Three Months Ended June 30, 1999
and 1998

No revenues were  recognized  for the three months and six months ended June 30,
1999 and 1998.  Total operating  expenses for the six months ended June 30, 1999
were $254,249 compared to $319,973 for the same period in 1998. The decrease was
attributed to an increase in  depreciation  and  amortization  of  approximately
$36,000   offset  by  a  decrease   in  general  and   administrative   expenses
approximating  $101,000. This decrease is the result of a forgiveness of debt in
the current year  approximating  $90,000  which offset other period  general and
administrative  expenses.  The forgiveness of debt was the result of settlements
in connection with certain legal fees and printing costs.

Total operating  expenses for the three months ended June 30, 1999 were $47,542
as  compared  with  $215,223  for the same  period in 1998.  This  decrease  was
attributed to the aforementioned  forgiveness of debt in the current three month
period  in  addition  to  a  decrease  in  research   and   development   costs,
approximating $58,000.

Interest  expense for the six months ended June 30, 1999 was $50,672 as compared
to  $7,381  for  the  same  three  month  period  in  1998.   This  increase  of
approximately  $43,000  was due to a higher  mortgage  on the  property in 1999,
coupled  with a higher  interest  rate.  The  increase  in  interest  expense of
approximately  $22,000 for the three months  ended June 30, 1999 was  attributed
also to the higher mortgage and higher interest rate.

The net loss for the six months  ended June 30,  1999 was  $304,225  as compared
with a loss of $405,951 for the same period in 1998. Once again, the main reason
for this decrease was the $90,000  reduction in the current  year's  general and
administrative  expenses due to the  forgiveness  of debt.  The net loss for the
three  months  ended June 30, 1999 was $72,665 as compared to a net loss for the
three  months  ended  June 30,  1998 of  $218,706.  This  decrease  was due to a
decrease in research and development  costs  approximating  $58,000 coupled with
the  aforementioned  forgiveness  of debt which fell in this three month period.
Total  losses  since  inception  in August 1988  through June 30, 1999 amount to
$11,149,695.

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 July 15,  1999,  the  Company commenced a private offering  for the
placement of Series  A  Preferred  Stock with  certain  institutional  and
accredited investors in accordance with the exemption provided by Rule 506 (of)
Regulation D promulgated  under the Securities Act of 1933. These securities are
being offered  solely to accredited  investors as that term is defined in Rule
501(a) of Regulation D. The Offering is structured,  requiring  that a minimum
of 150,000  shares be sold on a "best  efforts,  all or none  basis" or all the
subscription  funds held in escrow shall be returned and the private  offering
would be terminated. The maximum number of shares offered is 750,000 at a price
of  $20.00  per  share.  Accordingly, the  Company  seeks to raise a minimum
$3,000,000 and a maximum $15,000,000.  Management is optimistic  that at least
$10,000,000 will be raised  based on the initial  response  to the  offering by
interested  parties.  Assuming the offering is successful, the proceeds will be
used for,  among other things,  to finance  equipment and labor to permit the
commencement of manufacturing and production. Management has located a facility
which  would  house  the   production   operation   and  become  the   corporate
headquarters,   while  the  existing   building  would  remain  a  research  and
development plant.  Management  believes that it can finalize  negotiations to
purchase  this  property  as soon as the  aforementioned private offering is
complete.

     The combination of funds raised through the private offering and proceeds
derived from the potential sale of the $5,000,000  license to Well to Wire
Energy Inc. should more than offset the general and administrative  expenses for
the twelve months ending June 30, 2000 which are estimated at $100,000 per month
or $1,200,000.  Although  management is optimistic  that at least the minimum of
$3,000,000  will be  raised  through  the private offering, there can be no
assurances that  this  will be  achieved.  The closing of the sale of the
license to Well to Wire Energy Inc. is contingent upon the successful validation
of the Coates engine.  Although  management is confident that the Coates System
will achieve the validation requirements, there can be no assurances that the
engine results will be realized.


                                        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 June 30, 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: August 16, 1999         By:      s/George J. Coates
                                       ---------------------------------------
                                       George J. Coates, President and
                                       Chief Executivel Officer


Date: August 16, 1999         By:      s/Robert J. Levin
                                       ---------------------------------------
                                       Robert J. Levin, Chief Financial Officer































coat10q.699



                                       10

<PAGE>