Coates International Ltd (OTCMKTS:COTE) reported that a significant amount of progress has been made by the company representatives in China. Coates International had been in talks with a Cummins engine manufacturer, so as to get their own assembly line established for the Coates CSRV green combustion engine. Once regular production begins, the company aims to market the CSRV as the most advanced green combustion engine on the planet.

After recent talks, the company representatives expect that production would hopefully begin soon and the one of the existing production line would be utilized for the purpose. Currently, the company is utilizing its resources back home, in New Jersey, to manufacture the engine for existing orders. However, the Chinese facility would prove to be of great benefit to Coates, which can save substantially on operating costs.

China has long been an attractive industrial zone for manufacturers. The country offers a number of incentives to industrialists and they get to make use of cheap labor from China. For now, the operating expenses in the US have taken a toll on the company’s finances, which is reflected on their latest filing. For its 1Q2015, Coates International reported $72,000 in cash, $4,800 in revenues and a net loss of $2.8 million. Such figures are common for OTC companies, but considering the business model for Coates International these figures could spell doom for the company.

Coates International CEO, George J. Coates, stated that the world market is slowly shifting towards the green engine, which has resulted in higher demand for the CSRV. The company did receive large orders for generators from the Middle East, but unless Coates International can control its losses, the added business would make very little difference. Coates plans to start shipments next month, which would add some finances to the company’s bleak balance sheet.

Coates International Ltd (OTCMKTS:COTE) reported an increase of 4.76% to its share value during the June 15 session, after trading 712.91 million shares, to reach a close at $0.0044.