SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A2
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1998
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)
(908) 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, 1998, was 6,572,424 shares.
1
<PAGE>
Coates International, Ltd.
(A Development Stage Company)
Statements of Operations
<TABLE>
<CAPTION>
Period From
August 31,
1988 (Date of
Inception)
Through
June 30,
1998
----------------
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------- --------------------------------- ----------------
1998 1997 1998 1997
--------------- --------------- --------------- --------------- ----------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
--------------- --------------- --------------- --------------- ----------------
(Restated) (Restated) (Restated)
--------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Revenue $ - $ - $ - $ - $ 687,375
--------------- --------------- --------------- --------------- ----------------
Operating Expenses:
Research and development costs 91,808 64,744 184,548 136,191 3,237,770
General and administrative
expenses 123,415 347,151 212,808 572,911 7,156,878
Depreciation expense - 6,419 1,606 19,950 321,276
--------------- --------------- --------------- --------------- ----------------
Total Operating Expenses 215,223 418,314 398,962 729,052 10,715,924
--------------- --------------- --------------- --------------- ----------------
Loss From Operations (215,223) (418,314) (398,962) (729,052) (10,028,549)
--------------- --------------- --------------- --------------- ----------------
Other Income (Expense):
Interest income 298 7 392 13 125,258
Interest expense (3,781) (3,600) (7,381) (7,200) (246,377)
--------------- --------------- --------------- --------------- ----------------
Total Other Income (Expense) (3,483) (3,593) (6,989) (7,187) (121,119)
--------------- --------------- --------------- --------------- ----------------
Net (Loss) $ (218,706) $ (421,907) $ (405,951) $ (736,239) $ (10,149,668)
=============== =============== =============== =============== ================
(Loss) Per Share $ (0.03) $ (0.07) $ (0.06) $ (0.12)
=============== =============== =============== ===============
6,572,424 5,963,600 6,571,757 5,963,600
Weighted Average Number of Shares
Outstanding =============== =============== =============== ===============
</TABLE>
See notes to the condensed financial statements.
4
<PAGE>
Results of Operations for the Quarters Ended June 30, 1998 and 1997
No revenues were recognized during the quarters ended June 30, 1998, and 1997.
The cash shortage during the second quarter severely hampered the Company's
efforts to complete testing and trial of certain engine configurations which is
considered crucial in furthering the prospects for successful negotiation of
potential sub-license agreements with engine manufacturers and refitters. To
overcome this constraint, management during the second quarter had to spend much
time and effort in seeking to improve liquidity with the result that towards the
end of the quarter, additional funding was secured (see "Liquidity and Capital
Resources"). The relatively improved financial situation makes it possible to
continue research and development work during the upcoming quarters. However,
management at this time cannot with any degree of certainty predict when
meaningful revenues might be achieved.
As a result of strict cost control measures and curtailment of activities,
operating expenses incurred during the second quarter decreased to $215,223
compared to $418,314 for the same period in 1997. The largest single cost
element was research & development expense which totaled $91,808 during the
second quarter in 1998. General and administrative expenses totaled $123,415 for
the quarter, down from $347,151 in the same quarter in 1997.
After recognizing $3,483 net interest expense, the Company's operations show a
net loss from operations of $218,706 or $0.03 per share for the quarter ended
June 30, 1998, compared to a net loss of 421,907 or $0.07 per share for the same
quarter in the preceding year.
Total losses since inception in August 1988 through June 30, 1998 amount to
$10,149,668.
Liquidity and Capital Resources
During June 1998, the Company acquired a new mortgage in the amount of $500,000
and paid off the old mortgage which had a balance of $160,000. The new mortgage
will be due in one year and is secured by a first lien on the land and buildings
of the Company.
At June 30, 1998, CIL had a net worth of $437,062. Working capital showed a
deficit of $(1,183,347), compared to a negative $(1,036,578) at December 31,
1997. This deficit will continue to affect the Company's operations even though
the mortgage financing transaction described above provided operating funds. In
order to further improve the Company's financial situation and provide funds to
meet maturing obligations and finance the ongoing efforts to market the
Company's products, management plans to raise additional capital through a
combination of private placements and debt issues.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment No. 2 to its form 10-QSB for the
quarter ended June 30, 1998 to be signed on its behalf by the undersigned,
thereunto duly authorized.
COATES INTERNATIONAL, LTD.
Date: October 16, 1998 By:s/George J. Coates
George J. Coates
Chief Executive and Chief Financial Officer
coat10q2.698
<PAGE>
