Clean Diesel Technologies Reports 2003 Second-Quarter Results.

Business Editors

STAMFORD, Conn.--(BUSINESS WIRE)--Aug. 13, 2003

Clean Diesel Technologies Inc. (CDT) (EBB:CDTI) & (AIM:CDT/CDTS) today reported an increase in revenue in the second quarter of 2003 and year-to-date over prior year periods. Total revenue for this year's second quarter was $283,000 with a net loss of $585,000, or $0.05 loss per share. This compares with total revenue of $19,000 and a net loss of $860,000 or $0.08 loss per share for the same period in 2002.

For the first six months ended June 30, 2003, total revenue was $379,000 and a net loss of $1,492,000 or $0.12 loss per share. In the comparable 2002 period, revenue was $90,000 and a net loss of $1,523,000 or $0.14 loss per share. CDT's increased revenue was generated from both increased sales of its Platinum Plus(R) fuel-borne catalyst (FBC) and ARIS(R) license, sales and royalty income.

ARIS sales and royalty payments were primarily the result of orders from Mitsui's Denox Inc. group for stationary power generation diesels in Japan, and prototype mobile systems for several truck manufacturers.

President and Chief Operating Officer James M. Valentine commented: "Orders for the company's Platinum Plus FBC have increased significantly over the last several months. Since receiving authorization from the Mining Safety & Health Administration (MSHA) in January 2003, the combination of CDT's Platinum Plus FBC and our partner CleanAir Systems' specially catalyzed filter is being used in over a dozen mines.

"The CDT-CleanAir Systems FBC/filter was accepted by MSHA for use in the mines as a result of the 85 percent particulate matter (PM) reduction without increasing NO2 (a strong lung irritant produced from heavily catalyzed systems). The CDT-CleanAir Systems FBC/filter is the only precious-metal catalytic system accepted by MSHA for use in underground mines." The company expects significant sales from the mining industry as more mines complete their required emission reduction programs.

Valentine also noted, "The company has seen growth in FBC sales in several other categories as well, including on-highway applications for fuel economy performance, and in power generation and off-road applications for emissions reductions."

Also during the quarter, the company completed verification testing with both the EPA and California Air Resources Board (CARB) of the Platinum Plus Purifier System, consisting of CDT's patented Platinum Plus FBC and a lightly catalyzed diesel oxidation catalyst (DOC). Tests at Southwest Research Institute (SwRI) showed 45-53 percent reduction in particulate emissions, nearly double that of other verified oxidation systems.

The Purifier system is now listed on the EPA's verified technologies Web site, with the final reduction percentages expected to be added in the next 30 to 60 days, after EPA reviews all data. The company is marketing the low-cost Purifier system for application to school bus fleets, delivery vehicles, refuse trucks and "SmartWay Transport" program members. The SmartWay program is a voluntary commitment by large fleets to work with EPA to reduce emissions and fuel consumption from diesel fleets.

CDT also completed screening and durability tests of a new, low-cost catalyzed wire-mesh filter supplied by Mitsui PUREarth under an earlier Memorandum of Understanding. Testing at SwRI showed reductions of PM in excess of 65 percent. A number of these systems are in commercial operation in California and Texas on refuse and delivery vehicles to support CARB and EPA verification.

Finally, CDT is close to completing negotiations with a strategic partner and co-investment by certain shareholders to secure additional working capital. While sales have increased, the company needs additional funds in the near term to complete verification and commercial rollout and to cover its other operating expenses. Although the company believes it will be successful in securing additional capital, there is no assurance that it will be able to raise such funds on acceptable terms.

Full financial information is included in the company's Form 10-Q filed with the Securities and Exchange Commission (www.SEC.gov).

About Clean Diesel Technologies Inc.

Clean Diesel Technologies is a specialty chemical company with patented products that reduce emissions from diesel engines while simultaneously improving fuel economy. Products include Platinum Plus(R) fuel-borne catalysts which reduce engine out emissions of particulate (PM), carbon monoxide (CO) and hydrocarbons (HC), while improving fuel economy and also increasing the regeneration of diesel particulate filters, and the ARIS(R) 2000 urea injection systems for selective catalytic reduction of NOx.

Certain statements in this news release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known or unknown risks, including those detailed in the company's filings with the Securities and Exchange Commission, uncertainties and other factors which may cause the actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

Note to Editors: Platinum Plus and ARIS are registered trademarks of Clean Diesel Technologies Inc.

                    CLEAN DIESEL TECHNOLOGIES INC.

                       STATEMENTS OF OPERATIONS
                              (Unaudited)

                 (in thousands except per share data)

                                   Three Months Ended Six Months Ended
                                         June 30,          June 30,
                                      2003     2002     2003     2002

Revenue:
Product revenue                    $   123  $    15  $   210  $    76
License and royalty
revenue                                160        4      169       14
Total revenue                          283       19      379       90

Costs and expenses:
Cost of sales                           64       12      120       55
General and administrative             636      577    1,338    1,135
Research and development               170      300      419      412
Patent filing and
maintenance                             --       --       --       27

Loss from operations                  (587)    (870)  (1,498)  (1,539)
Interest income                          2       10        6       25
Interest expense                        --       --       --       (9)

Net loss                           $  (585) $  (860) $(1,492) $(1,523)

Basic and diluted loss per
common share                       $ (0.05) $ (0.08) $ (0.12) $ (0.14)

Weighted average number
of common shares
outstanding -- basic and
diluted                             11,976   11,241   11,972   11,228


                    CLEAN DIESEL TECHNOLOGIES INC.

                             BALANCE SHEET
                   (in thousands except share data)

                                                    June 30,  Dec. 31,
                                                       2003      2002
                                                   (Unaudited)
Assets
Current assets:
Cash and cash equivalents                          $    552  $  2,083
Accounts receivable                                     233       284
Inventories                                             285       314
Other current assets                                    112        76
Total current assets                                  1,182     2,757
Patents, Net                                            239       114
Other assets                                            115       108
Total assets                                       $  1,536  $  2,979

Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable and
accrued expenses                                   $    249  $    223
        Total current
        liabilities                                     249       223

Deferred compensation
and pension benefits                                    441       418
        Total long term
        liabilities                                     441       418

Stockholders' Equity:
Preferred stock, par value
$0.05 per share, authorized
80,000 shares, no shares issued
and outstanding                                          --        --

Series A convertible preferred
stock, par value $0.05 per
share, $500 per share
liquidation preference,
authorized 20,000 shares, no
shares issued and outstanding                            --        --

Common stock, par value $0.05
per share, authorized
30,000,000 and 15,000,000
shares, issued and
outstanding 11,985,419 and
11,968,387 shares                                       599       598

Additional paid-in capital                           28,518    28,519
Accumulated deficit                                 (28,271)  (26,779)
Total stockholders' equity                              846     2,338
Total liabilities and
stockholders' equity                               $  1,536  $  2,979