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Coates International, Ltd. Stockholders' Update: The Company Was Notified That The Delegation Of Chinese Business Executives Will Visit The Coates Headquarters After February 10, 2013

WALL TOWNSHIP, N.J., Jan. 28, 2013 /PRNewswire/ -- Coates International, Ltd. (NASDAQ OTCBB: COTE) – Coates International, Ltd. (the "Company") has received notice from Mr. James Pang, its Exclusive Liaison Agent to China, that representatives of the Hong Kong-based major manufacturer now plan to visit the Company's headquarters shortly after the Chinese New Year which starts on February 10, 2013.
  • The Company continues to work with two different states for the purpose of establishing its manufacturing operations. Two majority-owned subsidiaries have been established for this purpose. Management has visited one of these states and met with the city and state officials. The Company has also developed detailed business plans for raising new capital and ramping up production in either of these two states.

Both of the states are finalizing a proposal to the company to provide a package of business and tax incentives. A suitable, existing manufacturing site has been identified in each of the two states.  Once a decision is made as to which of the two states to set up operations in, the manufacturing site would be acquired by the Company.

The Company plans to initially focus on production of CSRV industrial, electric-power natural gas engine generators. Thereafter, the business plans also provide for additions to the product line to include: domestic stand-alone propane, four-cylinder quiet generators, performance V-8 engines, 4-cylinder water-cooled engines and 1, 2 and 3-cylinder air-cooled engines. Also under consideration in the future, are retrofit kits for heavy trucks and buses and further application of the CSRV technology to marine products.
  • The business plans for the CSRV engine production contemplate the creation of a substantial number of new, skilled permanent jobs. This, combined with anticipated new sources of revenue from both domestic distribution and exports of the CSRV products would serve to stimulate both the local and US economies.
  • The Company has received an assessment of the market opportunity from its Canadian-based distributor which indicates a need for 11,000 power units per year in the US and Canada over a five year period. The Company will require a reasonable period of time to ramp up its production to that level. Depending on the mix of the types of power units sold in any given year, if the Company could achieve that production volume to meet this estimated demand, it could generate revenues in excess of $1 Billion annually.
  • The Company is attempting to firm up certain smaller orders which would enable it to begin building units on a relatively short timetable for delivery to these customers. This would provide further support for the viability of the CSRV system technology, while generating revenues and cash flow.
  • Potential sources of working capital that would be needed to commence the ramp up toward large scale manufacturing include:
  • Draw down of the Existing Dutchess Equity Line of Credit -- $19,700,000
  • Negotiation of a Letter of Credit which must first be deemed acceptable by a bank -- $30,000,000
  • Once the Company commences production it can begin to collect fees owed to it under its CSRV technology sublicenses for Canada and the US for use and sale of industrial, natural gas CSRV power units for the oil and gas industry -- $54,847,000
  • After the Company receives the final business and tax incentive package commitment and chooses a state for its operations, the Company plans to undertake a private offering of its securities to raise additional working capital to support the ramp-up of production
  • After a reasonable period of time to reach and exceed a break-even point from manufacturing operations, the Company intends to reinvest positive cash flows to expand manufacturing capacity and its product line.
  • To the extent that the Company achieves it business plans, shareholder value would naturally be enhanced.

The Company would like to arrange an open house for shareholders some time after the Chinese visit.

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