Clean Diesel Technologies Reports 2005 First Quarter Results

Company Announces Results from EPA-Requested Testing

STAMFORD, CT (May 16, 2005) … Clean Diesel Technologies, Inc. (CDT) (EBB:CDTI & AIM:CDT/CDTS), a developer of chemical and technological solutions to reduce harmful engine emissions, announced its results for the first quarter 2005. CDT reported total revenue for the first quarter 2005 of $192,000 with a net loss of $1,191,000, or $0.07 loss per share. This compares to 2004 first quarter total revenue of $194,000 and a net loss of $808,000, or $0.05 loss per share, for the same quarterly period in 2004.

In the first quarter Platinum Plus® fuel-borne catalyst (FBC) and Purifier System revenue increased due to the completion of the first of two retrofit projects in Pennsylvania. The second larger project is targeted for completion in the second quarter. In addition, purifier systems were installed on off-road and construction applications in the Northeast. FBC shipments to mining operations increased as additional particulate filters were added to comply with MSHA regulations for reducing particulate matter (PM) in underground mines. The FBC helps keep filters from plugging with soot at low temperatures and avoids the large increase in NO2 emissions from traditional heavily catalyzed systems.

Revenue for ARIS®, CDT’s urea-injection system for NOx reduction, decreased in the first quarter, but is expected to pick up in the second quarter based on delivery of booked orders and new awards to ARIS licensees in the US and Japan.

Expenses increased in the first quarter compared to prior year due to increased personnel costs associated with the international operations, increased sales and marketing activity and platinum emission testing.

Testing confirms emissions substantially lower than standards

As announced in January 2005, CDT has been conducting additional testing during the first quarter to address questions from the EPA (US Environmental Protection Agency) on the use of its FBC. Testing results from two independent EPA-accepted laboratories showed less than one percent of the platinum emitted is in a potentially allergenic form; this is similar to reported amounts for platinum emissions from autocats and diesel catalysts currently in use worldwide.

The measured emissions of potentially soluble platinum were under one microgram per horsepower hour of work from an engine emitting over 100,000 micrograms per horsepower hour of toxic soot particulates. The ambient levels of soluble platinum from the use of the Platinum Plus FBC are hundreds to thousands of times below the most stringent standards published for safe exposure on a regular basis using an industry-accepted urban canyon model and assuming varying levels of FBC market penetration.

The independent testing results have been submitted to EPA.

Ongoing developments

CDT is in discussions for several licensing and distribution agreements for its Platinum Plus FBC and ARIS technologies in both the US and Europe and it expects agreements to be announced in the near future.

In the US CDT has initiated an OEM (Original Equipment Manufacturer) development program targeted at integrating the Platinum Plus FBC into advanced engine-exhaust systems designed to meet strict 2007 particulate emission standards. These standards will require the use of diesel-particulate filters on new engines and the FBC will help keep the filters from plugging with soot during low temperature operation and city driving. Use of the FBC is also expected to reduce the platinum loading used on devices and reduce fuel-economy penalty.

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

CLEAN DIESEL TECHNOLOGIES, INC. STATEMENTS OF OPERATIONS (Unaudited) (in thousands of US$ except per share data)

	Three months ended March 31
	2005	2004
Revenue
Additive Revenue	95	57
Hardware Revenue	92	119
License and Royalty Revenue	5	18
Total Revenue	192	194
Costs and Expenses
Cost of Revenue	110	132
General and Administrative	1,165	790
Research and Development	59	80
Patent amortization and other expense	39	12
Loss from operations	(1,181)	(820)
Foreign Currency Exchange Gain	(19)	-
Interest Income	9	12
Net Loss	(1,191)	(808)
Basic and Diluted Loss per Common Share	(0.07)	(0.05)
Weighted Average Number of Common Shares Outstanding - Basic and Diluted	17,166	15,679

BALANCE SHEETS (in thousands of US$ except per share data)

	March 31, 2005		December 31, 2004
ASSETS Current Assets
Cash and Cash Equivalents	2,996		4,265
Accounts receivable, net	156		145
Inventories	295		387
Other Current Assets	125		71
Total Current Assets	3,572		4,868
Patents, Net	496		418
Fixed assets, net	220		200
Other Assets	27		27
Total Assets	4,315		5,513
LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES:
Deferred Compensation and Pension Benefits	-		-
Accounts Payable and Accrued Expenses	384		391
Total Current Liabilities	384		391
Stockholders' Equity
Preferred Stock, par value 0.05 per share, authorized 80,000 shares, no shares issued and outstanding
Common Stock, par value 0.05 per share, authorized 30,000,000 shares, issued and outstanding 17,165,868	858		858
Additional Paid-in Capital	38,431		38,431
Accumulated Deficit	(35,358)		(34,167)
Total Stockholders' Equity	3,931		5,122
Total Liabilities and Stockholders' Equity	4,315		5,513

About Clean Diesel Technologies, Inc.

Clean Diesel Technologies, Inc. is a specialty chemical company with patented products that reduce emissions from diesel engines while simultaneously improving fuel economy and power. Products include Platinum Plus® fuel catalysts, the Platinum Plus Purifier System, and the ARIS® 2000 urea injection systems for selective catalytic reduction of NOx. Platinum Plus and ARIS are registered trademarks of Clean Diesel Technologies, Inc. For more information, visit CDT at www.cdti.com or contact the Company directly.

Clean Diesel International LLC is located in Surrey England, south of London.

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.