Clean Diesel Technologies Reports Fourth Quarter, Year-End Results.

STAMFORD, Conn.--(BUSINESS WIRE)--April 6, 1998--Clean Diesel Technologies Inc. (Nasdaq: CDTI), a development stage company, Monday reported results for the fourth quarter and fiscal year ended Dec. 31, 1997.

According to the announcement by Clean Diesel Technologies Chief Executive Officer Jeremy D. Peter-Hoblyn, CDT reported a net loss for the fourth quarter of $756,000, or $0.30 per share, compared with a net loss of $1,147,000, or $0.46 per share, for the year-earlier period.

For the fiscal year, CDT reported a net loss of $3,764,000, or $1.50 per share, compared with a net loss of $3,489,000, or $1.40 per share, for fiscal 1996.

Supporting the company's product development, R&D expenses for the fourth quarter and the year were $265,000 and $1,985,000, respectively, from $675,000 and $1,747,000 for the comparable 1996 periods.

Over the course of 1997, CDT supported investments in research and development, as well as cooperative technology agreements with major U.S. engine and emission control equipment manufacturers.

The company also invested during the past year in product commercialization activities and, in the first part of 1997, generated its first commercial sales of its proprietary Platinum Plus Platinum Fuel Catalyst (PFC).

"During 1997, the company completed a test program with a major U.S. engine manufacturer, which achieved EPA 2004 standards for new diesel engines using the PFC in conjunction with an advanced engine design and aftertreatment system," Peter-Hoblyn said.

"Two additional programs, one in Europe and one in Southeast Asia, have demonstrated the additive's effectiveness in reducing by 20-30 percent particulates (smoke) and hydrocarbons from light-duty engines."

Following the successful testing of its bimetallic additive for diesel fuel, CDT arranged a short-term loan to fund operations while the company pursues options for long-term financing. The loan was arranged from Fuel-Tech N.V., which already owns 27.4 percent of the common stock of CDT. The loan is secured by the patents and intellectual property of the company.

The company also has entered into a letter of intent with SG Associates Limited of London to obtain a bridge loan in the amount of $750,000 which, when combined with Fuel-Tech's short-term loan, will provide financing of $1.25 million.

This bridge loan, which is subject to legal documentation, will constitute Senior Debt, will bear interest at the rate of 10 percent per annum and will be due April 15, 2001.

The bridge loan is automatically convertible into Series A Convertible Preferred Stock upon the conclusion of a public or private financing that contributes at least $1.75 million of additional net proceeds to the company. Fuel-Tech N.V. will convert its $500,000 short-term loan commitment into a $500,000 participation in the bridge loan.

The company believes that, with the bridge loan from Fuel-Tech N.V. and SG Associates Limited of London, it has sufficient cash balances to fund its requirements until November of 1998.

The company is actively seeking additional financing through a private placement or other financing alternative and is in discussions with several interested parties.

Although the company believes that it will be successful in its capital raising efforts, there is no guarantee that the company will be able to raise such capital on terms satisfactory to the company.

If the company is unable to secure additional funding after November 1998, there will then be substantial doubt as to the company's ability to operate as a going concern.

The company has been advised by the Nasdaq Stock Market Inc. that it is likely to be delisted from the Nasdaq (Small Cap) for failure to satisfy the Nasdaq's minimum tangible assets requirement.

The company has applied for an exception to delisting on the basis of prospective financing. If there should be a delisting, however, quotations as to company shares will continue to be available on the OTC Bulletin Board until the listing is reinstated.

Clean Diesel Technologies is a development-stage company with patent-protected products that reduce emissions from diesel engines while simultaneously improving fuel economy and power. R&D efforts and products are grouped into two categories: PFCs and NOx Reduction Systems. Platinum Plus is a registered trademark of Clean Diesel Technologies Inc. -0-

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 and unknown risks, 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. -0-

                     CLEAN DIESEL TECHNOLOGIES INC.
                     (A Development Stage Company)
                       STATEMENTS OF OPERATIONS
                  (In thousands, except per share data)


            Three Months Ended    Twelve Months Ended   Period from
                Dec. 31                Dec. 31          Jan. 1, 1992
                                                      through Dec. 31,
            1997         1996     1997         1996        1997

Sales      $  40        $  --    $  199       $  --      $  199

Cost and
expenses:

Cost of
sales         42           --       132          --         132

General and
admini-
strative     421          444     1,730       1,842       5,042

Research and
develop-
ment         265          675     1,985       1,747       5,317

Patent filing
and
main-
tenance       79           92       237         223         938

Loss from
oper-
ations       767        1,211     3,885       3,812      11,230

Interest
(income)
expense,
net          (11)         (64)     (121)       (323)       (377)

Net loss
during
development
stage     $  756     $  1,147  $  3,764    $  3,489   $  10,853

Basic and
diluted loss
per common
share     $ 0.30     $   0.46   $  1.50     $  1.40         N/A

Average number of
common shares
out-
standing   2,517        2,500     2,517       2,500         N/A

CONTACT: Allen & Caron Inc.

Mark Alvino (investors)

212/698-1360

Owen Daley (media)

714/252-8440

or

Clean Diesel Technologies Inc.

James Valentine or Scott Schecter, 203/327-7050