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

STAMFORD, Conn.--(BUSINESS WIRE)--March 25, 1999--Clean Diesel Technologies Inc. (EBB: CDTI), a development stage company, Wednesday reported results for the fourth quarter and fiscal year ended Dec. 31, 1998.

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 $782,000, or $0.31 per share, compared with a net loss of $756,000, or $0.30 per share, for the year-earlier period.

For the fiscal year ended Dec. 31, 1998, CDT reported a net loss of $2,984,000, or $1.20 per share, on revenues of $46,000, compared with a net loss of $3,764,000, or $1.50 per share, on revenues of $199,000, for fiscal year ended Dec. 31, 1997.

Peter-Hoblyn commented, "1998 marked a shift in our primary emphasis from research and development toward a focus on commercialization of our Platinum Plus(R) diesel fuel catalyst and ARIS(TM) 2000 NOx reduction system. As a result of this basic shift, the company expanded its participation in collaborative and consortium-based demonstration programs which led to further reductions in R&D expenses for the year."

The company expects revenue from sales of its Platinum Plus additives to begin in 1999, initially from sales to fleets and aftermarket products and later to engine manufacturers for inclusion with an "on board dosing" system on new vehicles.

Fleet testing is currently underway in the United States with marketing partners to confirm fuel economy improvements. Emissions benefits of the platinum fuel catalyst ("PFC") have been confirmed in fleet tests in Taiwan and Korea, and vehicle programs with two diesel OEMs will commence in 1999. CDT recently demonstrated the ability of its PFC to significantly improve the performance of diesel aftertreatment devices as part of an industry consortium project. This program also showed the ability of the PFC to help meet diesel emission standards for the year 2002 on a 1998 heavy-duty diesel.

First shipments of the ARIS 2000, an advanced reagent injection system for NOx control, were made in 1998 to two engine manufacturers and the company will launch the ARIS 2000 for stationary diesels in the second half of 1999. The company is in discussions with several parties about funding development of the mobile ARIS system.

CDT also may begin to realize revenue from demonstration programs and joint development agreements under its proposals to engine manufacturers and the U.S. EPA as part of the $109 million settlement between the EPA/OEMs. However, the company will not know whether its programs are accepted until mid-1999.

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.

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, 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.

                     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,
            1998         1997     1998         1997        1998

Sales      $   7        $  40    $   46       $ 199      $  245

Cost and
expenses:

Cost of
sales          5           42        29         132         161

General and
admini-
strative     394          421     1,515       1,730       6,557

Research and
develop-
ment         325          265     1,009       1,985       6,326

Patent filing
and
main-
tenance       37           79       156         237       1,094

Loss from
oper-
ations       754          767     2,663       3,885      13,893

Interest
income       (11)         (21)      (41)       (165)       (622)

Interest
expense       22           10        98          44         302

Cost of
withdrawn
Rights
Offering      17           --       264          --         264

Net loss
during
development
stage     $  782     $    756  $  2,984    $  3,764   $  13,837

Basic and
diluted loss
per common
share     $ 0.31     $   0.30   $  1.20     $  1.50         N/A

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