Coates International, Ltd. Is in the Middle of a Transaction With One of the Largest Marine Manufacturers in the World, CSSC, a Chinese Company Owned by the Government of the People’s Republic of China — Stockholders’ Update

WALL TOWNSHIP, NJ--(Marketwired - Oct 14, 2015) - Coates International, Ltd. (OTC PINK: COTE) (the "Company") the Company is pleased to announce that Mr. James Pang, exclusive liaison agent to China for the Company, is nearing the final stages of the agreements with CSSC and AF Power. In this deal are Coates Power Ltd. China, Renown Power Hong Kong and the Company USA.

• Mr. Jack Perkowski, Company Director, will be returning to China next week and will be in contact with Mr. James Pang and the Company.
  
  
• CSRV parts and components are being manufactured by independent engineering companies in the USA. Some parts, however, are taking much longer to produce than anticipated.
  
  
• The Company is working with Cummins Power to get production up and running of 150 KW, 200 KW and 250 KW CSRV natural gas electric power generator sets and the 35 to 50 KW stand-alone diesel and propane gen sets to fill orders.
  
  

The Company has received feedback from shareholders and the financial community with respect to the fact the Company's balance sheet, which is prepared in accordance with United States generally accepted accounting principles ("GAAP"), reflects less than $2.5 million of total assets. Coates owns many valuable assets that are not permitted to be reflected on its balance sheet by the GAAP rules. When an investor is considering acquiring another company, there are many factors that go into a decision making process that cannot be found in the GAAP-basis financial statements. This includes the fair market value of intangible assets, quality of the customer lists, value of vendor relationships, contingent liabilities, potential income tax exposure and unrecorded assets and liabilities. 

Explanatory comments from Barry C. Kaye, CFO: "While GAAP is required to be followed by every publicly traded company, Management believes that no single rule can anticipate every circumstance, and therefore, the resulting presentation of a Company's financial condition may not be very meaningful, in some cases. Proof of this can be found in the hundreds of revisions to GAAP, some of which have been drastic changes, promulgated by the governing bodies that establish GAAP dating back to the 1950's. In essence, GAAP is an art form that is continuously evolving in an attempt to improve the quality of audited financial statements. However, attempts to keep refining GAAP will likely continue indefinitely and many of the so-called improvements did not achieve the desired outcome and had to be amended and/or superseded. My early exposure to GAAP occurred in the early 1970's and it is hard to believe how aspects had to be unlearned because of the unimaginable, pervasive revisions over the last 40 years."

The following stockholders' update has been primarily prepared to provide a more meaningful picture of the Company's financial condition, results of operations and prospects.

1. Things to consider about the Company's financial condition and results of operations:
   1. Intellectual property, the Company's most significant asset, which consists of exclusive rights to patents for manufacturing, sales and distribution, leasing and sublicensing of the Coates CSRV technology throughout the Western Hemisphere is not permitted by GAAP to be presented on its balance sheet. The Company has already received firm orders amounting to future sales of $142 million of CSRV Gen Sets, which is indisputable evidence that these patent rights have current value and substantial future value. The value of intangible assets is determined based on the reasonably expected future stream of cash flows that can only be generated by the owner of the intangible asset.
   2. The Company owns numerous prototypes of products that demonstrate the benefits of CSRV technology including industrial generators, synchronous home generators, vehicles and automobile engines. These were all developed over the course of many years through research and development. In accordance with GAAP, all expenses incurred during research and development are required to be charge to expense as incurred, rather than showing the cost of the prototypes as assets on the balance sheet. None of these prototypes are included in the Company's assets on its balance sheet. Almost $40 million has been expensed during the production of the prototypes, including approximately $10 million invested by the Coates family prior to inception of the Company, according to George J. Coates. These prototypes are used regularly to demonstrate the viability and benefits of the CSRV technology. These are unique assets that cannot be acquired or reproduced without incurring extensive costs over a long timeframe.
   3. The Company's results of operations also include certain expenses that are required to be recorded by GAAP which will never require any outlay of cash. This includes over $17 million for stock-based compensation since the beginning of 2014.
      
      

Safe Harbor Statement:

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Please see our filings with the Securities and Exchange Commission. Our public filings with the SEC may be viewed and printed on the website maintained by the SEC at http://www.sec.gov.