Clean Diesel Technologies reports 2005 Second-quarter Results

Company Also Announces Receipt of Additional Grants or Awards in Three US States

STAMFORD, CT (12 August 2005) … Clean Diesel Technologies, Inc. (Clean Diesel) (EBB:CDTI & AIM:CDT/CDTS), a developer of chemical and technological solutions to reduce harmful engine emissions, today reported results for the second quarter and first half of 2005, and announced that it has been chosen for grants or awards in the states of Texas, New York and Massachusetts. Total revenue for this year's second quarter was $268,000 with a net loss of $1,286,000, or $0.07 loss per share, versus revenue of $93,000 and a net loss of $885,000, or $0.06 loss per share, for the second quarter of 2004. For the first six months ended June 30, 2005, total revenue was $460,000 with a net loss of $2,477,000, or $0.14 loss per share. In the comparable 2004 period, revenue was $287,000 and a net loss of $1,693,000, or $0.11 loss per share.

Completion of two previously announced State of Pennsylvania demonstration programs boosted Clean Diesel's revenue with sales of the verified Platinum Plus® Purifier diesel-oxidation catalysts (DOC) and fuel-borne catalyst (FBC). The Company supplied systems for 125 beverage-delivery and waste-hauling vehicles in southeastern Pennsylvania. The increase in Platinum Plus FBC revenue is also the result of the ongoing sales to fleets and expanded market share in the US mining sector.

Clean Diesel said that its increased sales and marketing initiatives are beginning to generate results. In the last two months: the Platinum Plus FBC has been selected in competitive bidding for grants or awards by the Texas Council of Environmental Quality, for demonstration of the Company's cleaner burning biodiesel blend; the Platinum Plus FBC/DOC was chosen by the New York State Energy Research Development Authority for application to ferries and marine vessels; and the State of Massachusetts selected the verified FBC/DOC and FBC catalyzed wire-mesh filter (CWMF) for use with public and municipal buses and vehicles.

Clean Diesel has recently commenced a program with Rhodia, the current FBC supplier for over one million vehicles in Europe, to demonstrate the performance benefits, lower cost and improved durability of the Platinum Plus FBC with particulate filter-based systems on light- and medium-duty original equipment manufacturers (OEMs). The use of the Platinum Plus FBC is expected to reduce life cycle platinum requirements of the filter systems by over 50 percent.

Clean Diesel expects revenue growth in the near term as local and state funding becomes more available and its technologies continue to gain broader acceptance. The recently approved US House bill and Senate bill to provide $1 billion, over five years, to support retrofit of existing engines would greatly increase the funds available to "clean-up" the 11 million existing diesel engines in the US.

Clean Diesel CEO Bernhard Steiner said, "Good progress has been made on attracting interest from US and European OEMs and tier-one suppliers in licensing the Company's ARIS injector system for urea selective catalytic reduction (SCR)-based NOx reduction and the exhaust gas recirculation (EGR)/SCR technology. The patented EGR/SCR system can achieve the stringent 2010 NOx limits."

In addition, Clean Diesel recently announced that Dr. Walter Copan has joined the Company as its Vice President and Chief Technology Officer. Dr. Copan was Principal Licensing Executive, Technology Transfer for the U.S. Department of Energy's National Renewable Energy Laboratory (NREL), where he was responsible for the commercialization of clean energy, energy efficiency and related technologies through partnerships with industry, academia, and government. Prior to his tenure with NREL, Dr. Copan spent 28 years with the Lubrizol Corporation in a number of positions in research and development, engineering, product development, strategy, international business development, and new ventures.

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

Statements of Operations (unaudited) (in thousands of US$ except share data)	Three months ended June 30			Six months ended June 30
	2005	2004		2004	2004
Revenue
Additive Revenue	91	56		186	113
Hardware Revenue	166	25		258	144
License and Royalty Revenue	11	12		16	30
Total Revenue	268	93		460	287
Costs and Expenses
Cost of Revenue	161	53		271	185
General and Administrative	1210	821		2,375	1,611
Research and Development	88	90		147	170
Patent amortization and other expense	25	27		64	39
Loss from operations	(1,216)	(898)		(2,397)	(1,718)
Other Income (expense)
Foreign Currency Exchange Gain	(75)	-		(94)	-
Interest Income	5	13		14	25
Net Loss	(1,286)	(885)		(2,477)	(1,693)
Basic and Diluted Loss per Common Share	(0.07)	(0.06)		(0.14)	(0.11)
Weighted Average Number of Common Shares Outstanding - Basic and Diluted	17,171	15,679		17,168	15,679

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

	June 30, 2005 (unaudited)		December 31, 2004
ASSETS Current Assets
Cash and Cash Equivalents	1,525		4,265
Accounts receivable, net	255		145
Inventories	338		387
Other Current Assets	113		71
Total Current Assets	2,231		4,868
Patents, Net	537		418
Fixed asset, Net	203		200
Other Assets	27		27
Total Assets	2,998		5,513
LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES:
Deferred Compensation and Pension Benefits	-		-
Accounts Payable and Accrued Expenses	282		391
Total Current Liabilities	282		391
Stockholders' Equity
Preferred Stock, par value 0.05 per share, authorized 100,000 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 and 15,679,387 shares, respectively	860		858
Additional Paid-in Capital	38,500		38,431
Accumulated Deficit	(36,644)		(34,167)
Total Stockholders' Equity	2,716		5,122
Total Liabilities and Stockholders' Equity	2,998		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.

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.