Clean Diesel Technologies Reports Second Quarter And Six-Month Results; First Commercial Sales of Platinum Plus.

STAMFORD, Conn.--(BUSINESS WIRE)--Aug. 11, 1997--Clean Diesel Technologies Inc. (NASDAQ:CDTI), a development-stage company, Monday reported results for its second quarter and six months ended June 30, 1997.

According to the announcement by Clean Diesel Technologies' Chief Executive Officer Jeremy D. Peter-Hoblyn, CDT reported a net loss for this year's second quarter of $1,154,000, or a loss per share of $0.46, compared with a net loss of $793,000, or a loss per share of $0.32, for the same year-earlier period. For the first six months of this year, CDT reported a net loss of $2,115,000, or a loss per share of $0.84, compared with a net loss of $1,430,000, or a loss per share of $0.57 for the prior year's first six months.

Since the middle of 1996, CDT has substantially increased its investments in research and development, staffing and administrative programs, as well as in the pursuit of cooperative technology agreements with major U.S. engine and emission control equipment manufacturers. During this period, the company has also invested in product commercialization activities and, in the first six months of 1997, CDT generated its first commercial sales of its proprietary Platinum Fuel Catalyst (PFC), Platinum Plus.

These first sales of CDT's PFC for gasoline-fueled engines were to its strategic marketing partner, U.K.-based Holt Lloyd International Ltd., a leading international automotive aftermarket products company. Holt has introduced CDT's PFC in the United Kingdom as a key element of a gasoline fuel additive. Initial orders from wholesalers and retailers have been very high, and consumer advertising programs will be starting this month. The product is sold by CDT to Holt under the Platinum Plus tradename and is distributed under Holt Lloyd's Cat Guard and Redex labels.

Peter-Hoblyn commented: "The response in the United Kingdom to the early marketing efforts of Holt for its Platinum Plus-based fuel additives has been very encouraging. Holt-Lloyd is now preparing to launch into further European and Asian markets. Additionally, we are making good progress in our efforts to establish additional strategic relationships in other important markets.

"We are also exploring various options to finance the growth of our commercialization and development efforts," he added.

Research and development expenses for the second quarter and first six months of 1997 increased to $706,000 and $1,162,000, respectively, from $352,000 and $576,000 during the respective comparable periods in 1996. The increase was primarily due to the addition of three senior technical personnel in 1996 who were employed for the entire first six months of 1997 and expenditures relating to various test programs.

These programs included the use of its PFC in gasoline and diesel vehicles, testing of Nitrogen Oxide (NOx) control technologies in conjunction with Engelhard and Nalco Fuel Tech, and engine testing of the PFC as required to maintain registration with the U.S. EPA. Both PFC and NOx control work is being done in collaboration with a major U.S. diesel engine manufacturer.

CDT's general and administrative expenses (G&A) decreased to $462,000 in the second quarter of 1997 from $492,000 in the same period last year as a result of efficiencies achieved through CDT's establishment of its own administrative structure in the second half of 1996. Additionally, the company incurred higher recruitment costs in 1996 as it increased its operations and staff.

G&A for the first six months of 1997 remained relatively flat, increasing to $958,000 from $950,000 in the same year-earlier period.

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. -0-

NOTE TO EDITORS: 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
                    (Unaudited)

                                                          Period from
                                                          Jan. 1, 1992
                Three Months Ended   Six Months Ended        through
                     June 30,            June 30,            June 30,
                  1997      1996      1997      1996           1997

Sales           $40,000     $-       $80,000     $-           $80,000

Costs and expenses:

 Cost of
 sales           23,000      -        46,000       -           46,000

 General
 and
 administrative 462,000   492,000    958,000    950,000     4,270,000

 Research
 and
 development    706,000   352,000  1,162,000    576,000     4,494,000

 Patent
 filing
 and
 maintenance     40,000    34,000    115,000     90,000       816,000

Loss from
operations    1,191,000   878,000  2,201,000  1,616,000     9,546,000

Interest
(income)
expense, net    (37,000)  (85,000)   (86,000)  (186,000)     (342,000)

Net loss
during
development
stage        $1,154,000  $793,000 $2,115,000 $1,430,000    $9,204,000

Net loss
per common
share             $0.46     $0.32      $0.84      $0.57        N/A

Average number
of common
shares
outstanding   2,517,000 2,500,000  2,514,000  2,500,000        N/A
-0-

                CLEAN DIESEL TECHNOLOGIES INC.
                 (A Development-Stage Company)
                       BALANCE SHEETS

                                     June 30,         Dec. 31,
                                       1997             1996
                                   (Unaudited)
Assets

Current assets:

Cash and cash equivalents          $3,053,000        $3,270,000

Short-term investments                 --             2,000,000

Inventories                            97,000           103,000

Other current assets                  249,000           222,000


Total current assets                3,399,000         5,595,000
Other assets                           75,000            82,000

Total assets                       $3,474,000        $5,677,000

Liabilities and stockholders' equity

Current liabilities:

Accounts payable
and accrued expenses                 $870,000          $741,000

Loan payable to
Fuel-Tech N.V.                        495,000           745,000

Total current liabilities           1,365,000         1,486,000

Stockholders' equity:

Preferred stock, par value
$.05 per share, authorized
100,000 shares, no shares
issued and outstanding                   --                 --

Common stock, par value
$.05 per share, authorized
5,000,000 shares, issued
and outstanding
2,516,666 and 2,500,000 shares        126,000           125,000

Additional paid-in capital         11,187,000        11,155,000

Deficit accumulated
during development stage           (9,204,000)       (7,089,000)

Total stockholders' equity          2,109,000         4,191,000

Total liabilities and
stockholders' equity               $3,474,000        $5,677,000

CONTACT: Allen & Caron Inc.

Mark Alvino (investors)

212/698-1360

Owen Daley (media)

714/252-8440

or

Clean Diesel Technologies Inc.

Scott Schecter, CFO

James Valentine, COO

203/327-7050