Coates International Ltd. signed a Letter of Intent with another Chinese industrial generator manufacturing corporation. This is a very large manufacturer and much more suitable for Coates to join forces with for large production quantities of CSRV products. Indications of demands for natural gas CNG, LNG, propane, syngas, flare off gas electric power CSRV industrial engine generators are rising and the company must start producing its products as soon as possible to fulfill orders of approximately 11,000 units per year.

This Chinese manufacturing corporation is headquartered in Hong Kong which has a simpler environment for conducting business. Management believes that the synergy from working together with this Chinese company could enhance shareholder value and provide a shorter timeframe for the company to start up production. A visit by the Chinese company's senior management is now being arranged by exclusive liaison agent to China, Mr. James Pang.

The name of the Chinese company cannot be announced until a definitive transaction is entered into.