Document:

EXHIBIT 10.13

                     AMENDMENT NO. 1 TO SUBLICENSE AGREEMENT

     THIS AMENDMENT NO.1 TO SUBLICENSE AGREEMENT, (the "Amendment"), is made as
     of the 5th day of March, 2004, by and between COATES INTERNATIONAL, LTD., A
     Delaware corporation, having its principal offices located at 2100 Highway
     #34 & Ridgewood Road, Wall Township, New Jersey 07719-9738 ( SUBLICENSOR")
     and COATES MOTORCYCLE COMPANY, LTD., having its principal offices located
     at Central Avenue, Building 3 Farmingdale, New Jersey 07727 ( the "
     SUBLICENSEE").

                                   BACKGROUND
             WHEREAS, SUBLICENSOR owns the exclusive license (the "Exclusive
     License") to make, use and sell combustion engines utilizing the CSRV Valve
     System as well as the rights to franchise and sublicense certain Patent
     Rights* and Technical Information* relating to Licensed Products* utilizing
     the CSRV Valve System* throughout the countries, their territories and
     possessions, of North America, Central America and South America (the
     "Territory");

               WHEREAS, pursuant to its rights under the Exclusive License,
     SUBLICENSOR and SUBLICENSEE entered into a certain Sublicense Agreement,
     dated April 30, 2003 (the "Sublicense Agreement") pursuant to the general
     terms of which SUBLICENSOR granted SUBLICENSEE an exclusive sublicense to
     make, use and sell motorcycles utilizing the CSRV Valve System in all of
     the countries and their territories and possessions comprising North
     America, Central America and South America (the "Territory"), for a period
     equal to the duration of the patents, including the periods covering any
     continuations and reissuances thereof as well as any additional patents
     that may be issued relating to the CSRV Valve System as well as a certain
     "anti-dilution" right in order that the SUBLICENSOR have the right at all
     times to maintain a fifty percent plus ownership and control position over
     the SUBLICENSEE;

               WHEREAS, SUBLICENSEE is engaged in the preparation of an initial
     public offering of its securities and has determined that it would be in
     the best interests of its present and future shareholders to amend the
     Sublicense Agreement to terminate the "anti-dilution" rights granted by the
     SUBLICENSEE to the SUBLICENSOR in the original Sublicense Agreement as well
     as to clarify SUBLICENSEE'S rights to further sublicense and franchise its
     sublicense rights;

               WHEREAS, SUBLICENSOR currently owns 2,558,000 shares of the
     common stock of SUBLICENSEE and notwithstanding any dilution resulting from
     the contemplated initial public offering of SUBLICENSEE's common shares,
     SUBLICENSOR acknowledges that it will be a direct beneficiary and obtain
     material benefits as a result of SUBLICENSEE's public offering, which may
     include but not be limited to enhanced opportunities to earn royalties from
     licensed products sold by a well-capitalized SUBLICENSEE as well as
     increased marketing awareness and brand recognition for its technology and
     licensed products which could result from the motorcycle sales, anticipated
     in part from the funds derived by SUBLICENSEE'S contemplated initial public
     offering;

               WHEREAS, SUBLICENSOR and SUBLICENSEE desire and intend to set
     forth in this Amendment the express modifications to the Sublicense
     Agreement that shall govern their business relationship.

               NOW, THEREFORE, in consideration of the premises and covenants,
     and other good and valuable consideration, and the mutual promises of the
     performance of the undertakings set forth herein, it is agreed by and among
     the SUBLICENSOR and SUBLICENSEE as follows:

See notes to financial statements                                            23

<PAGE>

     I. AMENDMENT OF SUBLICENSE AGREEMENT.

          Subject to the terms and conditions set forth herein, SUBLICENSOR and
     SUBLICENSEE agree to amend the Sublicense Agreement in the following
     manner:

                  1. ARTICLE 1.14, SOLD UNIT, shall be amended by deleting
      Article 1.14 in its entirety and substituting the following new Article
      1.14 in lieu thereof:

                  1.14.(A) Manufactured Unit shall mean a Licensed Product that
                  has completed the manufacturing process by a permitted
                  sublicensee or franchisee of SUBLICENSEE under the terms of
                  this Agreement and as a result, is included in the
                  determination of royalty payments due and owing to SUBLICENSOR
                  pursuant to the terms of this Agreement.

                           (B) Sold Unit shall mean a Licensed Product that has
                  been sold by SUBLICENSEE under the terms of this Agreement and
                  the sales price from such sale has been received or collected
                  by the SUBLICENSEE and as a result, is included in the
                  DETERMINATION OF ROYALTY PAYMENTS DUE AND OWING TO SUBLICENSOR
                  pursuant to the terms of this Agreement.

                  2. ARTICLE 2.1, LICENSES GRANTED TO LICENSEE, shall be amended
      by deleting Article 2.1 in its entirety and substituting the following new
      Article 2.1 in lieu thereof:

                  2.1 SUBLICENSES GRANTED TO SUBLICENSEE
                  Subject to the terms and conditions set forth herein, for a
                  sublicense period equal to the duration of the Patents
                  commencing upon the Payment Date, as defined in Section 5.1
                  (the "Sublicense Period"), unless terminated pursuant to
                  Article VIII, SUBLICENSOR hereby grants to SUBLICENSEE:

                  (a) Engines. An exclusive sublicense, with the right to grant
                  further sublicenses and franchises to make, use or sell to
                  others, throughout the Territory within the Field of Use under
                  the Patent Rights and Technical Information subject to the
                  payment of royalties as provided herein, to make or retrofit
                  motorcycle engines that incorporate the CSRV Valve System in
                  accordance with the Technical Specifications, and to sell,
                  lease or otherwise dispose of such motorcycle engines; and

                  (b) CSRV Valve Seals.Within the limitations set forth in
                  subsections 2.1(a), a non-exclusive sublicense to use CSRV
                  Valve Seals solely in the manufacture of CSRV Valve Systems
                  for incorporation into motorcycle engines throughout the
                  Territory within the Field of Use under the Patent Rights and
                  Technical Information subject to the payment of royalties as
                  provided herein.

                  3. ARTICLE 5.1, Licensing Fee, 5.2, Royalties, 5.3, and 5.7
      Books and Records, shall be amended by deleting Articles 5.1, 5.2, 5.3 and
      5.7 in their entirety and substituting the following new Articles 5.1,
      5.2, 5.3 and 5.7 in lieu thereof:

                  5.1 - Sublicensing Fee and Undertakings.

                  In consideration of the rights granted under the Sublicense
                  Agreement, SUBLICENSEE paid to SUBLICENSOR a Sublicensing Fee
                  of 2,550,000 shares of SUBLICENSEE'S common stock and granted
                  to SUBLICENSOR an antidilution right to maintain a 50%+

See notes to financial statements                                            24

<PAGE>

                  ownership position in SUBLICENSEE'S securities. SUBLICENSOR
                  and SUBLICENSEE hereby agree to terminate the antidilution
                  rights granted to SUBLICENSOR in the Sublicense Agreement,
                  effective immediately. As consideration for the expansion of
                  its sublicense rights granted to it by SUBLICENSOR in this
                  Amendment, SUBLICENSEE and SUBLICENSOR agree as follows:

                  (a) SUBLICENSEE hereby agrees to issue to SUBLICENSOR an
                  additional 1,000,000 shares of its common stock as partial
                  consideration for the expanded sublicense rights granted to it
                  in this Amendment;

                  (b) SUBLICENSEE further agrees to utilize its best efforts to
                  register 1,000,000 shares of its common stock transferred and
                  paid to SUBLICENSOR and to include such shares in the Form
                  SB-2 registration statement SUBLICENSEE has filed with the
                  U.S. Securities and Exchange Commission and which is currently
                  under review;

                  (c) SUBLICENSEE acknowledges that it is the intent of
                  SUBLICENSOR to distribute the subject 1,000,000 shares to its
                  shareholders of record as a stock dividend following their
                  registration under the Securities Act of 1933, provided, that
                  the subject registration statement, including the subject
                  1,000,000 shares, is declared effective by the Securities and
                  Exchange Commission and its intended distribution to
                  SUBLICENSOR'S shareholders is in compliance with applicable
                  state securities laws;

                  (d) In the event the SUBLICENSEE'S registration statement,
                  including the 1,000,000 common shares, is not declared
                  effective by the Securities and Exchange Commission on or
                  before June 1, 2004, SUBLICENSEE'S obligations to continue its
                  efforts to register said shares under the Securities Act of
                  1933 shall terminate, unless such obligation is extended by
                  mutual agreement of SUBLICENSOR and SUBLICENSEE; (e)
                  SUBLICENSEE agrees to take all necessary corporate action in
                  order to register the 1,000,000 shares of its common stock
                  under the Securities Act of 1933 on behalf of SUBLICENSOR in
                  order to permit the lawful distribution of these shares to the
                  shareholders of SUBLICENSOR;

                  (f) SUBLICENSOR shall utilize its best efforts to cooperate
                  and assist SUBLICENSEE in the preparation of any documents
                  necessary in order to facilitate the registration and
                  distribution of the subject 1,000,000 common shares pursuant
                  to the Securities Act of 1933 and applicable state securities
                  laws.

                  SUBLICENSOR acknowledges its receipt of the Sublicensing Fee
                  payment of 2,550,000 shares of SUBLICENSEE'S common stock
                  pursuant to the Sublicense Agreement, and the additional
                  1,000,000 shares pursuant to this Amendment; SUBLICENSOR
                  further agrees that such stock issuances to it represents the
                  only payment and consideration that constitutes the
                  Sublicensing Fee due and payable under the Sublicense
                  Agreement and this Amendment. Accordingly, SUBLICENSOR further
                  acknowledges that its equity ownership position in the
                  SUBLICENSEE'S common stock shall be subject to further
                  dilution for proper corporate purposes and that the common
                  shares issuable to SUBLICENSOR under the Sublicense Agreement

See notes to financial statements                                            23

<PAGE>

                  and this Amendment do not bear any pre- emptive or similar
                  rights.

                  5.2 - Royalties.

                  (a) In further consideration for the grant of the Sublicense
                  described in Article II of the Sublicense Agreement,
                  SUBLICENSEE and its further sublicensees and franchisees shall
                  pay SUBICENSOR royalties as follows: in the case of the
                  SUBLICENSEE, it shall pay a royalty to SUBLICENSOR for each
                  Sold Unit in the amount of $25.00 per each 1,000 cc. within
                  the Territory, and; in the case of a sublicensee or franchisee
                  of SUBLICENSEE, it shall pay a royalty to SUBLICENSOR for each
                  Manufactured Unit that has completed the manufacturing process
                  in the Territory in the amount of $25.00 per each 1,000 cc.
                  and shall accrue when a Licensed Product becomes a
                  Manufactured Unit produced by a further sublicensee or
                  franchisee of the SUBLICENSEE. The royalties provided for in
                  this Section 5.2 shall be payable with respect to each Sold
                  Unit by SUBLICENSEE sold within the Territory and with respect
                  to each Manufactured Unit produced by a further sublicensee or
                  franchisee of the SUBLICENSEE within the Territory.

                  (b) Except as otherwise specified, the royalty payments
                  required by Section 5.2 shall accrue, in the case of the
                  SUBLICENSEE when a Licensed Product becomes a Sold Unit and,
                  in the case of a further sublicensee or franchisee of
                  SUBLICENSEE, shall accrue when a Licensed Product becomes a
                  Manufactured Unit.

                  5.3 - SUBLICENSEE or a further sublicensee or franchisee of
                  SUBLICENSEE, as the case may be, shall pay the royalties
                  accruing during each Payment Computation Period (consisting of
                  each day during each calendar month for each calendar year,
                  including the first and the last day of each calendar month),
                  ten (10) days after the end of such Payment Computation Period
                  and such payment shall be accompanied by a royalty report
                  stating the following:

                  (a) in the case of the SUBLICENSEE, the number of Sold Units
                  of each Licensed Product type sold during such Payment
                  Computation Period, and in the case of a further SUBLICENSEE
                  or franchisee of the SUBLICENSEE, the number of Manufactured
                  Units of each Licensed Product type manufactured during such
                  Payment Computation Period; and

                  (b) the amount of the royalty payment due for each such
                  Licensed Product during each such Payment Computation Period,
                  broken down to reflect the derivation of such amount.

                  5.7 - BOOKS AND RECORDS.

                  Until five (5) years after the termination of the Sublicense
                  Period, SUBLICENSEE shall keep full and accurate books and
                  records setting forth the sales records and the amount of
                  compensation payable with respect to the Sold Units of each
                  Licensed Product. In the case of a further sublicensee or
                  franchisee of SUBLICENSEE, SUBLICENSEE shall cause each such
                  further sublicensee and franchisee to keep full and accurate
                  books and records setting forth the manufacturing records and
                  the amount of compensation payable with respect to the
                  Manufactured Units of each Licensed Product. SUBLICENSEE and
                  its further sublicensees and franchisees shall permit an
                  independent certified public accountant selected by
                  SUBLICENSOR to examine such books and records, upon reasonable
                  notice during working hours, at any time, but not later than
                  two (2) years following the payment in question, for the

See notes to financial statements                                            26

<PAGE>

                  purpose of verifying the reports, accounting and payments
                  required by this Sublicense Agreement.

     II. RATIFICATION AND CONFIRMATION OF BALANCE OF TERMS AND PROVISIONS OF
         SUBLICENSE AGREEMENT

         SUBLICENSOR and SUBLICENSEE hereby ratify and confirm all of the terms
     and provisions of the Sublicense Agreement not expressly modified by this
     Amendment and incorporate by reference all of such terms and provisions
     into this Amendment as if set forth herein in their entirety.

          IN WITNESS WHEREOF, the SUBLICENSOR and SUBLICENSEE have executed this
     Amendment as of the day, month and year first above written.

                                  SUBLICENSOR:

                                  COATES INTERNATIONAL, LTD.

                                  By: /s/ George J. Coates
                                     ----------------------
                                     George J. Coates, President

                                  SUBLICENSEE:

                                  COATES MOTORCYCLE COMPANY, LTD.

                                  By: /s/ Gregory G. Coates
                                      ------------------------
                                      Gregory G. Coates, President

AMENDMENT NO. 1 to Sublicense and License Agr 04-05-04 no sigs

See notes to financial statements                                            27EXHIBIT 10.14

                      AMENDMENT NO. 1 TO LICENSE AGREEMENT

     THIS AMENDMENT NO.1 TO LICENSE AGREEMENT, (the "Amendment"), is made as of
     this 5th day of March, 2004, by and between THE COATES TRUST, having a
     business address at Katherina Court, 101 East Hill Place, Market Street
     North, Nassau, the Bahamas, GEORGE J. COATES AND GREGORY G. COATES, having
     a business address c/o Coates International, Ltd., 2100 Highway #34 &
     Ridgewood Road, Wall Township, New Jersey 07719-9738 ( collectively, the
     "LICENSOR") and COATES MOTORCYCLE COMPANY, LTD., having its principal
     offices located at Central Avenue, Building 3 Farmingdale, New Jersey 07727
     ( the " LICENSEE").

                                   BACKGROUND

               WHEREAS, LICENSOR and LICENSEE entered into a certain License
     Agreement, dated April 30, 2003 (the "License Agreement") pursuant to the
     general terms of which LICENSOR granted LICENSEE a non-exclusive license to
     use and sell motorcycles utilizing the CSRV Valve System in all of the
     countries and their territories and possessions of the World except all of
     the countries and their territories comprising North America, Central
     America and South America (the "Territory"), for a period equal to the
     duration of the patents, including the periods covering any continuations
     and reissuances thereof as well as any additional patents that may be
     issued and that relate to the CSRV Valve System;

               WHEREAS, LICENSEE is engaged in the preparation of an initial
     public offering of its securities and LICENSEE has determined that it would
     be in the best interests of the LICENSEE and its present and future
     shareholders to amend the License Agreement to seek an expansion of its
     rights under the License Agreement by modifying the license from a
     non-exclusive license to utilize the CSRV Valve System in the Territory to
     an exclusive license as well as to expand LICENSEE'S rights under the
     original License Agreement to include the rights to manufacture, sublicense
     and franchise the technology;

               WHEREAS, LICENSOR has agreed to so expand LICENSEE'S rights under
     the License Agreement, provided LICENSEE pays to LICENSOR an additional
     licensing fee payment, all as more fully described in this Amendment; and

               WHEREAS, LICENSOR and LICENSEE desire and intend to set forth in
     this Amendment all of the express modifications to the License Agreement
     that shall govern their business relationship.

               NOW, THEREFORE, in consideration of the premises and covenants,
     and other good and valuable consideration, and the mutual promises of the
     performance of the undertakings set forth herein, it is agreed by and among
     the LICENSOR and LICENSEE as follows:

     I. AMENDMENT OF LICENSE AGREEMENT.

          Subject to the terms and conditions set forth herein, LICENSOR and
     LICENSEE agree to amend the License Agreement in the following manner:

         1. Article 1.5, Field of Use, shall be amended by deleting Article 1.5
         in its entirety and substituting the following new Article 1.5 in lieu
         thereof:

See notes to financial statements                                             28

<PAGE>

                  1.5 Field of Use shall mean utilizing in the Territory the
                  CSRV Valve System solely, and for no purpose other than, the
                  manufacturing, use and sale of motorcycles and
                  gasoline-powered internal combustion engines, used in
                  motorcycles. This License and Field of Use shall also include
                  the right to sublicense and/or make franchise agreements with
                  third parties.

         2. Article 1.14, Manufactured Unit, shall be amended by deleting
         Article 1.14 in its entirety and substituting the following new Article
         1.14 in lieu thereof:

                  1.14.(A) Manufactured Unit shall mean a Licensed Product that
                  has completed the manufacturing process by a permitted
                  sublicensee or franchisee of LICENSEE under the terms of this
                  Agreement and as a result, is included in the determination of
                  royalty payments due and owing to LICENSOR pursuant to the
                  terms of this Agreement.

                           (B) Sold Unit shall mean a Licensed Product that has
                  been sold by LICENSEE under the terms of this Agreement and
                  the sales price from such sale has been received or collected
                  by the LICENSEE and as a result, is included in the
                  determination of royalty payments due and owing to LICENSOR
                  pursuant to the terms of this Agreement.

         3. Article 2.1, LICENSES GRANTED TO LICENSEE, shall be amended by
         deleting Article 2.1 in its entirety and substituting the following new
         Article 2.1 in lieu thereof:

                  2.1 LICENSES GRANTED TO LICENSEE

                  Subject to the terms and conditions set forth herein, for a
                  license period equal to the duration of the Patents commencing
                  upon the Payment Date, as defined in Section 5.1 (the "License
                  Period"), unless terminated pursuant to Article VIII, LICENSOR
                  hereby grants to LICENSEE:

                  (a) Engines. An exclusive license, with the right to grant
                  sublicenses and franchises to make, use or sell to others,
                  throughout the Territory within the Field of Use under the
                  Patent Rights and Technical Information subject to the payment
                  of royalties as provided herein, to make or retrofit
                  motorcycle engines that incorporate the CSRV Valve System in
                  accordance with the Technical Specifications, and to sell,
                  lease or otherwise dispose of such motorcycle engines; and

                  (b) CSRV Valve Seals.Within the limitations set forth in
                  subsections 2.1(a), a non-exclusive license to use CSRV Valve
                  Seals solely in the manufacture of CSRV Valve Systems for
                  incorporation into motorcycle engines throughout the Territory
                  within the Field of Use under the Patent Rights and Technical
                  Information subject to the payment of royalties as provided
                  herein.

         4.Article 2.6, Acknowledgement of License., shall be amended by
         deleting Article 2.6 in its entirety and substituting the following new
         Article 2.6 in lieu thereof:

                  2.6 - Acknowledgement of License.
                  On all CSRV Valve Systems, LICENSEE, as well as any
                  sublicensee or franchisee of LICENSEE, shall acknowledge that
                  the same are manufactured under license from LICENSOR. Unless
                  otherwise agreed to by the parties, the following notice shall
                  be used by LICENSEE on an exposed surface of all Licensed

See notes to financial statements                                             29

<PAGE>

                  Products: "Manufactured under license from Coates Trust" Such
                  notice shall also be used in all descriptive materials and
                  instruction and service manuals relating to the Coates
                  Spherical Rotary Valve System

         5. Articles 5.1, Licensing Fee, 5.2, Royalties, 5.3, and 5.7, Books and
         Records, shall be deleted in their entirety and the following new
         articles shall be substituted in lieu thereof:

                  5.1 - Licensing Fee. . In consideration of the rights granted
                  in the License Agreement, LICENSEE issued to LICENSOR a
                  licensing fee payment of 2,500,000 shares of its common stock
                  and such common shares were issued to the LICENSOR as follows:
                  500,000 shares to the Coates Trust, 1,000,000 common shares to
                  Gregory G. Coates and 1,000,000 common shares to George J.
                  Coates. In further consideration of the expansion of the
                  license granted to LICENSEE pursuant to Article II of this
                  Amendment, LICENSEE hereby agrees to pay to the LICENSOR an
                  additional licensing fee comprised of 5,924,000 shares of its
                  common stock, to be issued to the LICENSOR as follows:
                  2,500,000 shares, to the Coates Trust, 1,424,000 common shares
                  To Gregory G. Coates and 2,000,000 common shares to George J.
                  Coates, with such additional licensing fee shares to be issued
                  on the date LICENSEE executes this Amendment or as soon
                  thereafter as practicable (both licensing fee payments of
                  shares shall be collectively referred to as the "Licensing
                  Fee"). LICENSOR and LICENSEE acknowledge and agree that the
                  LICENSEE'S common stock issued and delivered pursuant to the
                  License Agreement and this Amendment to LICENSOR shall not
                  have any pre-emptive rights of any nature whatsoever and shall
                  be subject to future dilution in the sole and exclusive
                  discretion of LICENSEE for proper corporate purposes.

                  5.2 - Royalties.

                  (a) In further consideration for the grant of the License
                  described in Article II of this Amendment, LICENSEE and its
                  sublicensees and franchisees shall pay LICENSOR royalties as
                  follows: in the case of the LICENSEE, it shall pay a royalty
                  to LICENSOR for each Sold Unit in the amount of $25.00 per
                  each 1,000 cc. within the Territory, and; in the case of a
                  sublicensee or franchisee of LICENSEE, it shall pay a royalty
                  to LICENSOR for each Manufactured Unit that has completed the
                  manufacturing process in the Territory in the amount of $25.00
                  per each 1,000 cc. and shall accrue when a Licensed Product
                  becomes a Manufactured Unit produced by a sublicensee or
                  franchisee of the LICENSEE. The royalties provided for in this
                  Section 5.2 shall be payable with respect to each Sold Unit by
                  LICENSEE sold within the Territory and with respect to each
                  Manufactured Unit produced by a sublicensee or franchisee of
                  the LICENSEE within the Territory.

                  (b) Except as otherwise specified, the royalty payments
                  required by Section 5.2 shall accrue, in the case of the
                  LICENSEE when a Licensed Product becomes a Sold Unit and, in
                  the case of a sublicensee or franchisee of LICENSEE, shall
                  accrue when a Licensed Product becomes a Manufactured Unit.

                  5.3 - LICENSEE or a sublicensee or franchisee of LICENSEE, as
                  the case may be, shall pay the royalties accruing during each
                  Payment Computation Period (consisting of each day during each
                  calendar month for each calendar year, including the first and
                  the last day of each calendar month), ten (10) days after the
                  end of such Payment Computation Period and such payment shall
                  be accompanied by a royalty report stating the following:

See notes to financial statements                                             30

<PAGE>

                  (a) in the case of the LICENSEE, the number of Sold Units of
                  each Licensed Product type sold during such Payment
                  Computation Period, and in the case of a sublicensee or
                  franchisee of the LICENSEE, the number of Manufactured Units
                  of each Licensed Product type manufactured during such Payment
                  Computation Period; and

                  (b) the amount of the royalty payment due for each such
                  Licensed Product during each such Payment Computation Period,
                  broken down to reflect the derivation of such amount.

                  5.7 - Books and Records. Until five (5) years after the
                  termination of the License Period, LICENSEE shall keep full
                  and accurate books and records setting forth the sales records
                  and the amount of compensation payable with respect to the
                  Sold Units of each Licensed Product. In the case of a
                  sublicensee or franchisee of LICENSEE, LICENSEE shall cause
                  each sublicensee and franchisee to keep full and accurate
                  books and records setting forth the manufacturing records and
                  the amount of compensation payable with respect to the
                  Manufactured Units of each Licensed Product. LICENSEE and its
                  sublicensees and franchisees shall permit an independent
                  certified public accountant selected by LICENSOR to examine
                  such books and records, upon reasonable notice during working
                  hours, at any time, but not later than two (2) years following
                  the payment in question, for the purpose of verifying the
                  reports, accounting and payments required by this Agreement.

         6. Article 7.3, Obligations of LICENSEE, sections (a) and (b) shall be
         deleted in their entirety and the following new Article 7.3, sections
         (a) and (b) shall be substituted in lieu THEREOF:

                  7.3 - Obligations of LICENSEE. LICENSEE will, and on behalf of
                  its sublicensees and franchisees, cause them to:

                  (a)   execute all such tasks as may be necessary to bring
                        about the speedy manufacture, sale and use of Licensed
                        Products consistent with good business practice;

                  (b)   ensure that all steps within its power are undertaken
                        with all reasonable speed to ensure that Licensed
                        Products made and sold by LICENSEE and its sublicensees
                        and franchisees comply with all relevant governmental
                        regulations in the Territory; and

     II. RATIFICATION AND CONFIRMATION OF BALANCE OF TERMS AND PROVISIONS OF
         LICENSE AGREEMENT.

         LICENSOR and LICENSEE hereby ratify and confirm all of the terms and
     provisions of the License Agreement not expressly modified by this
     Amendment and incorporate by reference all of such terms and provisions
     into this Amendment as if set forth herein in their entirety.

See notes to financial statements                                             31

<PAGE>

              IN WITNESS WHEREOF, the LICENSOR and LICENSEE have executed this
     Amendment as of the day, month and year first above written.

                                   LICENSORS:

                                   THE COATES TRUST

                                   By: /s/ George J. Coates
                                      -----------------------------------------
                                        George J. Coates, Trustee

                                      /s/ George J. Coates
                                      -----------------------------------------
                                      George J. Coates, Individually

                                      /s/ Gregory G. Coates
                                      -----------------------------------------
                                      Gregory G. Coates, Individually

                                    LICENSEE:

                                    COATES MOTORCYCLE COMPANY, LTD.

                                   By: /s/ Gregory G. Coates
                                      -----------------------------------------
                                      Gregory G. Coates, President

AMENDMENT NO. 1 to Sublicense and License Agr 04-05-04 no sigs

See notes to financial statements                                             32

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