Clean Diesel Technologies Reports 2007 First Quarter Results.

STAMFORD, Conn. -- Clean Diesel Technologies, Inc. (EBB: CDTI, AIM: CDT/CDTS & XETRA: CDI), an innovation leader for clean energy and environmental technologies to reduce harmful engine emissions, reported results for its first quarter ended March 31, 2007. Total revenue for the quarter was $216,000 with a net loss of $1.8 million, or $0.06 loss per share, versus revenue of $269,000 for the comparable quarter of 2006 with a net loss of $1.6 million, or $0.06 loss per share. The higher revenue last year was due primarily to a market assessment consulting project that generated $73,000 in the 2006 quarter.

During the first quarter of 2007, the Company made substantial progress in its ongoing initiative to achieve technology license agreements with significant manufacturers and component suppliers. Clean Diesel Technologies will announce its achievements as agreements are signed and its licensees have consented to the contents of the announcements.

"We are confident this will be a landmark year for Clean Diesel," said Dr. Bernhard Steiner, President and CEO. "The quarter's numbers don't tell the interesting part of the story, but it is worth emphasizing that with our cash on hand and the potential for additional financing from the exercise of our outstanding warrants, we will have enough staying power to achieve our strategic goals. As of today, we are poised for growth through OEM and Tier-One supply and licensing agreements, some of which have been in test and negotiation for many years. The progress we have made in our license negotiations is leading to exciting new opportunities for the Company and its partners."

Dr. Walter Copan, Executive VP and Chief Technology Officer, said, "The growing concern over the effects of air pollution has resulted in substantially more demanding requirements to control oxides of nitrogen, particulate matter and carbon dioxide emissions, while also reducing fossil fuel consumption. Our patented platform technologies have worldwide application in precisely these areas."

Dr. Steiner added that the strength of the worldwide movement toward more environmentally friendly technology promises to benefit Clean Diesel in the coming months because of the Company's focus on expanding application of technologies and solutions designed to improve fuel efficiency and reduce harmful engine emissions.

"Over the course of the Company's existence, we have performed extensive and rigorous testing at best-in-class reference sites, collecting significant data that have enabled us to gain the respect of regulators and the interest of major manufacturers worldwide. We are proud that our technologies can clean up vehicles already on the road as well as those from the OEM market, along with stationary engines for such applications as power generation - but perhaps more importantly, we believe our technologies can provide keys to producing ultra-low emission vehicles in the future. The upside is that our technologies also provide significant fuel savings so that implementation 'pays for itself'," Steiner said.

Additive revenue in the three months ended March 31, 2007 was $122,000 compared to $150,000 in the prior year quarter, a decrease of $28,000, or 18.7%, due to a shift in order placement resulting from a transition of supply chain to distribution partners. Hardware revenue was $83,000 in the 2007 first quarter compared to $45,000 in the same 2006 period, an increase of $38,000, or 84.4%, due to increased sales of our ARIS advanced reagent injector and dosing systems for selective catalytic reduction. License fees and royalty revenue was $11,000 in the three months ended March 31, 2007 compared to $1,000 in the three months ended March 31, 2006, an increase of $10,000 primarily due to royalty payments related to the Company's ARIS technology.

Operating costs and expenses were $2,058,000 in the three month ended March 31, 2007 compared to $1,906,000 in the comparable 2006 period, an increase of $152,000, or 8.0%, reflecting higher selling, general and administrative expenses and higher patent-related costs, partially offset by lower research and development expenses. Selling, general and administrative expenses included $551,000 of non-cash charges for the fair value of stock options compared to $53,000 in non-cash share-based compensation expense in the three months ended March 31, 2006 in accordance with SFAS No. 123R, which the Company adopted in January 2006. The 2006 period also included $357,475 of severance charges for the former president and chief operating officer who had been released from employment in January 2006. Research and development expenses were $176,000 lower than the same prior year period because the 2006 period included significant special costs on a project that was then substantially completed. Patent-related costs were higher in the 2007 period due to additional costs associated with the protection of the CDT patents.

Clean Diesel's CFO Ann Ruple noted that at March 31, 2007, the Company had cash and cash equivalents of $6,298,000 and working capital of $6,725,000. In the three months ended March 31, 2007, the Company's operating activities used $2,050,000 of cash (primarily to fund the 2007 net loss) and its investing activities used $40,000 (predominantly for investments in the Company's patents). Cash provided by financing activities was $3,074,000 in the three months ended March 31, 2007, due primarily to proceeds from collection of subscriptions receivable from the 2006 private placement.

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

About Clean Diesel Technologies, Inc.

Clean Diesel Technologies, Inc., along with its wholly-owned subsidiary, Clean Diesel International, LLC, is a clean energy and environmental technology company that provides innovative solutions for emissions control and energy conservation. Clean Diesel Technologies' patented technologies, products and solutions enable cost-effective reduction of harmful emissions from internal combustion engines while also improving fuel economy and power. Products include Platinum Plus([R]) fuel-borne catalysts, the Platinum Plus Purifier Systems, the ARIS([R]) urea injection systems for selective catalytic reduction of NOx, diesel particulate filter and biofuels technologies. Their products are now in commercial use around the world. Platinum Plus and ARIS are registered trademarks of Clean Diesel Technologies, Inc. For more information, visit Clean Diesel at www.cdti.com or contact the Company directly.

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 US 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.

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