Coates International Cancels Plan To Spin-Off Assets To Coates Hi-Tech Engines

Production Operations Will Now Be Established Under A Division Of Coates International: STOCKHOLDERS UPDATE

WALL TOWNSHIP, NJ--Aug. 21, 2013: Coates International, Ltd. (NASDAQ OTCBB: COTE) – After additional research and careful reconsideration, the board of directors of Coates International, Ltd. has determined that it is not in the best interests of its shareholders to proceed with its previously announced plans to spin off its manufacturing operations and rights to its intellectual property to Coates Hi-Tech Engines, Ltd. ("Coates Hi-Tech"), its majority-owned subsidiary. The inherent complexity coupled with the cost and effort to concurrently support two publicly reporting companies were a major consideration in this decision. Accordingly, at this time, there are no longer any plans to conduct business or raise any working capital within Coates Hi-Tech. Manufacturing of the Coates products will be established under a division of Coates International, Ltd.

Mr. Coates comments, "We have worked extremely long and hard to develop the Coates CSRV products, and I believe that it is not necessary to have two public companies. A production division of Coates International, Ltd. is the way to go, where Coates International, Ltd. will still be the owner of all the assets and future profits of sales and licensing revenues. This also protects all our shareholders' interests." James Pang is still in China negotiating with the Hungang government regarding an incentive package for the merger of Coates International, Ltd with a Chinese company to establish a production operation of the Coates CSRV products in China.

There can be no assurance that the Company will be successful in any of its endeavors.