UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark  One)

[X]     QUARTERLY  REPORT  PURSUANT  TO  SECTION  13  OR 15(d) OF THE SECURITIES
        EXCHANGE  ACT  OF  1934
    For  the  quarterly  period  ended  June  30,  2004

                                       or

[_]     TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE  ACT  OF  1934
    For  the  transition  period  from  ______  to  ______

     Commission  file  number:   0-27432
                                 -------


                         CLEAN DIESEL TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

          Delaware                                     06-1393453
          --------                                     ----------
 (State of Incorporation)                  (I.R.S. Employer Identification No.)

Clean  Diesel  Technologies,  Inc.
300  Atlantic  Street  -  Suite  702
Stamford,  CT                                          06901-3522
(Address  of  principal  executive  offices)           (Zip  Code)

                                 (203) 327-7050
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the  past  90  days.

                              Yes  X     No
                                  ---       ---


Indicate  by  check  mark  whether  the  registrant  is an accelerated filer (as
defined  in  Rule  12b-2  of  the  Act).

                                Yes           No X
                                   ---          ---

As of August 12, 2004, there were outstanding 15,705,368 shares of Common Stock,
par  value  $0.05  per  share,  of  the  registrant.

    =========================================================================


                                        1
<PAGE>
                         CLEAN DIESEL TECHNOLOGIES, INC.

                  Form 10-Q for the Quarter Ended June 30, 2004

                                      INDEX

                                                                            Page
                                                                            ----

PART  I.     FINANCIAL  INFORMATION

Item  1.     Financial  Statements

             Balance Sheets as of June 30, 2004 (Unaudited),                   3
             and  December  31,  2003

             Statements of Operations for the three and Six Months             4
             Ended  June  30,  2004  and  2003  (Unaudited)

             Statements of Cash Flows for the Six Months                       5
             Ended  June  30,  2004  and  2003  (Unaudited)

             Note to Financial Statements                                      6

Item 2       Management's Discussion and Analysis of                          10
             Financial  Condition  and  Results  of  Operations


PART  II.    OTHER  INFORMATION

Item 1.      Legal Proceedings                                                13
Item 2.      Changes in Securities                                            13
Item 3.      Defaults upon Senior Securities                                  13
Item 4       Submission of Matters to a Vote of Security Holders              13
Item 5       Other Information                                                13
Item 6       Exhibits and Reports on Form 8-K                                 13

SIGNATURES & CERTIFICATIONS                                                   16


                                        2
<PAGE>
<TABLE>
<CAPTION>
PART  I.     FINANCIAL  INFORMATION
Item  1.     Financial  Statements

                         CLEAN DIESEL TECHNOLOGIES, INC.

                                 BALANCE SHEETS
                                                                  (in thousands)
                                                               JUNE 30,    December 31,
                                                              ----------  --------------
                                                                 2004          2003
                                                              (Unaudited)
------------------------------------------------------------  ----------  --------------
<S>                                                           <C>         <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                     $   4,629   $       6,515
Accounts receivable, net of allowance of $7 and $3 in
   2004 and 2003, respectively                                       80             115
Inventories                                                         375             320
Other current assets                                                 93              73
                                                              ----------  --------------
TOTAL CURRENT ASSETS                                              5,177           7,023
Patents, net                                                        298             274
Fixed assets, net of accumulated depreciation of $137 in
   2004 and $123 in 2003, respectively                              194             126
Other assets                                                         20              18
                                                              ----------  --------------
TOTAL ASSETS                                                  $   5,689   $       7,441
                                                              ==========  ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:

Deferred compensation and pension benefits                    $     441   $         441
Accounts payable and accrued expenses                               365             427
                                                              ----------  --------------
TOTAL CURRENT LIABILITIES                                           806             868

STOCKHOLDERS' EQUITY:
Preferred Stock, par value $0.05 per share,
   authorized 100,000 and 80,000 respectively, no shares
issued and outstanding                                               --              --
Series A Convertible Preferred Stock, par value $0.05 per
   share, $500 per share liquidation preference, authorized
   0 and 20,000  shares respectively,  no shares issued              --              --
and outstanding
Common Stock, par value $0.05 per share, authorized
   30,000,000 shares, issued and outstanding 15,679,337
   shares                                                           784             784
Additional paid-in capital                                       35,816          35,813
Accumulated deficit                                             (31,717)        (30,024)
                                                              ----------  --------------
TOTAL STOCKHOLDERS' EQUITY                                        4,883           6,573
                                                              ----------  --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $   5,689   $       7,441
                                                              ==========  ==============
</TABLE>

See  notes  to  financial  statements.


                                        3
<PAGE>
<TABLE>
<CAPTION>
                         CLEAN DIESEL TECHNOLOGIES, INC.
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                               (in thousands except per share data)

                                                   Three Months Ended          Six Months Ended
                                                        June 30,                   June 30,
                                                  2004             2003         2004        2003
                                          --------------------  -----------  ----------  ----------
<S>                                       <C>                   <C>          <C>         <C>

Revenue:
Product revenue                           $                81  $       123  $      257   $     210
License and royalty revenue                                12          160          30         169
                                          --------------------  -----------  ----------  ----------
Total revenue                                              93          283         287         379

Costs and expenses:
Cost of product  sales                                     53           64         185         120
General and administrative                                821          636       1,611       1,338
Research and development                                   90          170         170         419
Patent amortization and other expense. .                   27           --          39          --
                                          --------------------  -----------  ----------  ----------

Loss from operations                                     (898)        (587)     (1,718)     (1,498)
Interest income                                            13            2          25           6
                                          --------------------  -----------  ----------  ----------

Net loss                                  $              (885)  $     (585)  $  (1,693)  $  (1,492)
                                          ====================  ===========  ==========  ==========

Basic and diluted loss per common share   $             (0.06)  $    (0.05)  $   (0.11)  $   (0.12)
                                          ====================  ===========  ==========  ==========

Weighted average number of common shares
   outstanding - basic and diluted                     15,679       11,976      15,679      11,972
                                          ====================  ===========  ==========  ==========
</TABLE>

See  notes  to  financial  statements.


                                        4
<PAGE>
<TABLE>
<CAPTION>
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                            (in thousands)

                                                       Six Months Ended
                                                            June 30,
                                                        2004        2003
                                                    -----------  ----------
<S>                                                 <C>          <C>
OPERATING ACTIVITIES
Net loss                                            $   (1,693)  $  (1,492)
Adjustments to reconcile net loss to cash used in
   operating activities:
   Depreciation and amortization                            61          33
   Changes in operating assets and liabilities:
   Accounts receivable                                      35          51
   Inventories                                             (55)         29
   Other current assets and security deposit               (22)        (36)
   Accounts payable and accrued expenses                   (62)         49
                                                    -----------  ----------

Net cash used in operating activities                   (1,736)     (1,366)
                                                    -----------  ----------

INVESTING ACTIVITIES
Patent costs                                               (48)       (137)
Purchase of fixed assets                                  (105)        (28)
                                                    -----------  ----------
Net cash used in investing activities                     (153)       (165)
                                                    -----------  ----------

FINANCING ACTIVITIES

Proceeds from broker fee credit (2003 fundraising)           3          --
                                                    -----------  ----------
Net cash provided by financing activities                    3          --
                                                    -----------  ----------

NET DECREASE IN CASH AND CASH EQUIVALENTS               (1,886)     (1,531)
                                                    -----------  ----------
Cash and cash equivalents at beginning of period         6,515       2,083
                                                    -----------  ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD          $    4,629   $     552
                                                    ===========  ==========
</TABLE>

See  notes  to  financial  statements.


                                        5
<PAGE>
                         CLEAN DIESEL TECHNOLOGIES, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2004
                                   (Unaudited)


BASIS  OF  PRESENTATION

The  accompanying  unaudited,  condensed, consolidated financial statements have
been  prepared  in  accordance with generally accepted accounting principles for
interim  financial  information  and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the information
and  footnotes required by generally accepted accounting principles for complete
financial  statements.  In the opinion of management, all adjustments considered
necessary  for  a fair presentation have been included. All such adjustments are
of  a  normal recurring nature. Operating results for the six-month period ended
June  30,  2004,  are  not  necessarily  indicative  of  the results that may be
expected  for  the year ending December 31, 2004. For further information, refer
to the Financial Statements and footnotes thereto included in the Company's Form
10-K  for  the  year  ended  December  31,  2003.

Clean Diesel Technologies, Inc. (the "Company") was incorporated in the State of
Delaware  on  January  19,  1994, as a wholly owned subsidiary of Fuel-Tech N.V.
("Fuel  Tech").  Effective  December  12,  1995,  Fuel  Tech  completed a Rights
Offering  of  the  Company's  Common  Stock  that   reduced its ownership in the
Company  to 27.6%. Fuel Tech currently holds an 11.6% interest in the Company as
of  June  30,  2004.

The Company is a specialty chemical and energy technology company supplying fuel
additives  and  proprietary  systems that reduce harmful emissions from internal
combustion  engines  while  improving fuel economy.  The Company's Platinum Plus
FBC  fuel  additive is registered with the EPA for on-highway use.  The Platinum
Plus  FBC  in  combination  with a diesel oxidation catalyst or a catalyzed wire
mesh  filter have both been verified by the EPA for retrofit emission reduction.
The success of the Company's technologies will depend upon the market acceptance
of the technologies and governmental regulations including corresponding foreign
and  state  agencies.

SIGNIFICANT  ACCOUNTING  POLICIES

INVENTORIES
Inventories including raw materials and finished product are stated at the lower
of  cost  or  market.  Cost  is  determined using the first-in, first-out (FIFO)
method.

REVENUE  RECOGNITION

     CDT recognizes revenue from the sale of Platinum Plus FBC, Purifier, CWMF
and ARIS 2000 systems upon shipment.  The Company sells to end user fleets,
resellers, and additive distribution companies primarily in the U.S. One-time
license revenue fees are recorded in the period the license agreement is
completed and if there are no significant ongoing services required to be
performed in the future.  Royalty revenue is recognized when earned.

In December 2002, Clean Diesel Technologies completed an additional exclusive
license agreement with Mitsui for the mobile ARIS technology for Japan.  Under
terms of the agreement Mitsui agreed to pay CDT a $250,000 license fee and
Mitsui committed to spend an additional $200,000 in developing, testing and
demonstrating ARIS mobile prototypes. CDT recognized the $250,000 license
revenue in the fourth quarter of 2002, as there were no significant ongoing
services required to be performed by CDT at that time.  The Company will also
receive ongoing royalty payments on a per unit basis.


                                        6
<PAGE>
In  April  2003,  Clean  Diesel  Technologies  completed a non-exclusive license
agreement  with  Combustion  Component  Associates  Inc.  (CCA)  of  Monroe,
Connecticut,  for  the  mobile  ARIS  technology  in  the US. Under terms of the
agreement CCA agreed to pay CDT a $150,000 license fee and committed to spend an
additional  $100,000  in  developing,  testing  and  demonstrating  ARIS  mobile
prototypes.  CDT will also receive ongoing royalty payments on a per unit basis.
CDT  recognized  the  $150,000 license revenue in the second quarter of 2003, as
there  were  no  significant ongoing services required to be performed by CDT at
that  time.

RESEARCH  AND  DEVELOPMENT  COSTS
Costs  relating  to  the research, development and testing of products including
verification  expenses  for  testing  programs with the California Air Resources
Board  (CARB)  and  the  Environmental  Protection  Agency (EPA), are charged to
operations  as  they are incurred. These costs include test programs, salary and
benefits,  consultancy  fees,  materials  and  certain  testing  equipment.

PATENT  EXPENSE
Effective  January  1, 2002, CDT began capitalizing all direct incremental costs
associated  with  initial  patent  filing costs and amortized such cost over the
remaining  life  of  each patent. Patents are reviewed regularly and any patents
deemed  not  commercially  feasible  or  cost  effective  are  removed  and  the
cumulative  capitalized  cost  is  written  off  at that time. Prior to this all
patent  related  costs  were expensed as incurred.  The expiration of CDT's U.S.
patents  range  from  2007  to  2021  while several of the initial international
patents  expire  in  2005.

STOCKHOLDERS'  EQUITY
Pursuant  to  a  Regulation  S  exemption with respect to an offshore placement,
Clean  Diesel Technologies sold, effective December 1, 2003, 1,282,600 shares of
its  Common  Stock.  The  price  of the Common Stock was 1.70 sterling (GBP) per
share (approximately $2.92 per share). The proceeds of the Common Stock issuance
was  $3.583  million  (net  of  $170,000  in  expenses).

Pursuant  to  a  Regulation  S  exemption with respect to an offshore placement,
Clean  Diesel  Technologies sold, effective September 26, 2003, 2,395,597 shares
of  its  Common  Stock.  The  price of the Common Stock was $1.63 per share. The
proceeds  of  the  Common  Stock issuance  was $3.866 million (net of $39,000 in
expenses).

STOCK-BASED COMPENSATION
Clean  Diesel  Technologies  accounts for stock option grants in accordance with
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees. Under CDT's current plan, options may be granted at not less than the
fair  market value on the date of grant and therefore no compensation expense is
recognized  for  the  stock options granted to employees.  In December 2002, the
FASB  issued  SFAS  No. 148, "Accounting for Stock-Based Compensation-Transition
and  Disclosure."  SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based
Compensation,"  to  provide  alternative  methods  of transition for a voluntary
change  to  the  fair  value based method of accounting for stock-based employee
compensation.  In  addition, the Statement amends the disclosure requirements of
SFAS  No.  123  to  require  prominent  disclosures  in  both annual and interim
financial  statements  about  the  method of accounting for stock-based employee
compensation and the effect of the method used on reported results.  The Company
adopted  the  disclosure  requirements  of  SFAS  123  on  December  31,  2002.

If  compensation  expense  for  CDT's plan had been determined based on the fair
value  at  the grant dates for awards under its plan, consistent with the method
described  in SFAS No. 123, CDT's net loss and basic and diluted loss per common
share would have been increased to the pro forma amounts indicated below for the
six  months  ended  June  30:


                                        7
<PAGE>
<TABLE>
<CAPTION>
                                                                      Second Quarter       6 months YTD
                                                                      2004      2003       2004      2003
                                                                    --------  ---------  --------  ---------
<S>                                                                 <C>       <C>        <C>       <C>
    Net loss attributable to common stockholders as reported           (885)      (585)  $(1,693)  $ (1,492)
    Deduct: Total stock-based employee compensation expense
          determined under fair value based method for all awards,
          net of related tax effects                                   (119)      (133)     (323)      (251)
                                                                    --------  ---------  --------  ---------
    Pro forma net loss                                               (1,004)      (718)  $(2,016)  $ (1,743)
    Net loss per share:
    Basic and diluted loss per common share-as reported             $ (0.06)  $  (0.05)  $ (0.11)  $  (0.12)
    Basic and diluted per common share-pro forma                    $ (0.06)  $  (0.06)  $ (0.13)  $  (0.15)
</TABLE>

In accordance with the provisions of SFAS No. 123, for purposes of the pro forma
disclosures the estimated fair value of the options is amortized over the option
vesting  period.  The  application  of the pro forma disclosures presented above
are not representative of the effects SFAS No. 123 may have on operating results
and  earnings  (loss)  per  share  in  future periods due to the timing of stock
option  grants  and  considering that options vest over a period of three years.

The  fair  value  of  each  option grant, for pro forma disclosure purposes, was
estimated  on  the date of grant using the modified Black-Scholes option-pricing
model  with  the  following  weighted-average  assumptions  for the 2004 grants,
expected  dividend  yield 0%, risk free interest rate 5.05%, expected volatility
99.41%  and expected life of the option 4 years.  35,000 options were granted in
the  first  quarter  of  2004  at  an  estimated  value  of  $69,700.

LOSS PER SHARE
Employee  stock  options  and  stock  purchase warrants were not included in the
computation  of  diluted  loss  per  share for 2004 or 2003, because the Company
reported  a  loss  for  the period and the effect would be anti-dilutive.  Total
potential dilutive employee stock options and warrants outstanding at the end of
the  second  quarter  were  2,235,000  and  532,000  respectively.

RELATED PARTY TRANSACTIONS

The  Company  has  a  Management  and  Services  Agreement  with Fuel Tech.  The
agreement  requires  CDT  to  reimburse  Fuel  Tech for management, services and
administrative  expenses  incurred on our behalf.  The Company has agreed to pay
Fuel  Tech  a  fee  equal  to  an  additional  3% of the costs paid on behalf of
administration  (approximately  $500  and  $1,000 for the quarter and six months
year  to  date.  Currently, and for the last three years CDT has reimbursed Fuel
Tech  for  the  expenses associated with one Fuel Tech officer/director who also
serves  as  an  officer/director of CDT.  The Company believes the charges under
the  Management  and Services Agreement are reasonable and fair.  The Management
and  Services  Agreement may be cancelled by either party by notifying the other
in  writing  of  the  cancellation  on  or  before  May  15  in  any  year.

The Company had a deferred salary plan with its Chief Executive Officer in which
he deferred $62,500 of his annual salary until the Company reaches $5 million in
revenue.  This agreement was terminated in March 2001 and the executive's salary
was  returned  to  full  pay.  At  June 30, 2004 total obligations were $135,400
pertaining  to  this  plan.  This  expense  has  been  classified  as  a current
liability  on  the  balance  sheet  as  of  June  30,  2004.



                                        8
<PAGE>
The  company has made annual pension payments or accruals pursuant to a deferred
compensation  plan.  Until June 15, 2003, CDT made annual accruals in amounts of
up  to  $50,000 for Chief Executive Officer for his post-retirement benefit upon
his  retirement  or  when  the Company reaches $5 million in sales.  At June 30,
2004, total obligations were $305,616 pertaining to this plan.  This expense has
been classified as a current liability on the balance sheet as of June 30, 2004.

COMMITMENTS

Clean  Diesel  Technologies has signed a lease at 300 Atlantic Street, Stamford,
Connecticut  for  3,925  square  feet  of administrative space. The 5 year lease
through  March  2009, will have annual cost of approximately $116,000, including
rent,  utilities  and  parking.

Effective  October  28,  1994, Fuel Tech granted two licenses to the Company for
all  patents  and  rights associated with its platinum fuel catalyst technology.
Effective  November  24, 1997, the licenses were canceled and Fuel Tech assigned
to the Company all such patents and rights on terms substantially similar to the
licenses.  In  exchange  for  the  assignment,  the Company will pay Fuel Tech a
royalty  of  2.5%  of  its  annual gross revenue from sales of the platinum fuel
catalysts  commencing  in  1998.  The  royalty  obligation  expires in 2008. The
Company  may  terminate  the  royalty  obligation  to  Fuel  Tech  by payment of
$5,454,546  in 2004 and declining annually to $1,090,910 in 2008. The Company as
assignee  and  owner  will  maintain  the technology at its own expense. Minimum
royalties  were  paid to Fuel Tech in 2003 and royalties payable to Fuel Tech at
June  30,  2004  are  $2,750.

CONCENTRATION

For  the  quarter and six months ended June 30, 2004, one customer accounted for
41%  and  57%  respectively  of  the  Company's revenue. For the comparable 2003
periods,  a different single customer accounted for 53% and 40% of the Company's
revenue.

SUBSEQUENT  EVENTS

In  July  2004,  the  Company  signed a four year lease for 2,750 square feet of
warehouse  space  in  Milford  CT.  Annual  rent  including  utilities  will  be
approximately  $21,000.


                                        9
<PAGE>
                         CLEAN DIESEL TECHNOLOGIES, INC.



Item 2.     Management's Discussion and Analysis of Financial Condition
            and Results of Operations


FORWARD-LOOKING STATEMENTS

Statements  in  this  Form  10-Q  that  are  not  historical  facts,  so-called
"forward-looking statements," are made pursuant to the safe harbor provisions of
the  Private  Securities Litigation Reform Act of 1995.  Investors are cautioned
that  all  forward-looking statements involve risks and uncertainties, including
those  detailed  in  the  Company's  filings  with  the  Securities and Exchange
Commission.  See  "Risk Factors of the Business" in Item 1, "Business," and also
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of  Operations" in the Company's Form 10-K for the year ended December 31, 2003.

RESULTS OF OPERATIONS

2004 VERSUS 2003
Product sales and cost of sales were $81,000 and $53,000 respectively for the
second quarter of 2004 versus $123,000 and $64,000 for 2003.  Platinum Plus fuel
catalyst sales of $55,000 and $39,000 were recorded in the second quarter of
2004 and 2003, respectively.  ARIS product sales of $26,000 and $53,000,
primarily to Mitsui & Co., Ltd., were recorded in the second quarter of 2004 and
2003, respectively.

Included  in  the  2004 and 2003 second quarter revenue is $12,000 and $160,000,
respectively,  of  license  and  royalty  income.  The  2004 license and royalty
income  is  from continuing ARIS system royalties from Mitsui & Co., Ltd and the
2003  license  income  is  from  CCA.

For  the six months ended June 30, product sales and cost of sales were $257,000
and  $185,000  respectively  for  2004  versus  $210,000  and $120,000 for 2003.
Platinum  Plus  fuel catalyst sales of $111,000 and $80,000 were recorded in the
first  half  of 2004 and 2003, respectively.  ARIS product sales of $134,000 and
$75,000,  were  recorded  year-to-date  in  2004  and  2003  respectively.  The
remainder of product revenue in 2004 consists of CDT Purifier Systems.  Included
in  first  six  months  of  total revenue is $30,000 and $169,000 of license and
royalty  income  for  2004  and  2003,  respectively.

General and administrative expenses increased $185,000 to $821,000 in the second
quarter  2004 versus $636,000 in the same period of 2003. For the first 6 months
of  2004,  general  and administrative expenses increased $273,000 to $1,611,000
from  $1,338,000  in  the  same  2003  period. The year-to-date 2004 increase in
general  and  administrative  expenses  is related to increases in marketing and
sales activities primarily personnel costs, in both the US and Europe and higher
professional  fees  including  financial  advisory  services.

Research  and  development  expenses  decreased $80,000 to $90,000 in the second
quarter  2004  versus $170,000 in the comparable 2003 period. For the six months
to  date  research  and development expenses have decreased $249,000 to $170,000
from  $419,000  in  2003.  The  decrease is attributable to the verification and
certification  program  expenses  for  the  Platinum  Plus FBC in 2003 not being
incurred  in  2004

Patent  amortization  and other costs were $27,000 in the second quarter of 2004
versus  $0  in  the comparable 2003 period. The year-to-date increase in 2004 is
$39,000.  The increase is related to the change in capitalization policy and the
write-off  of  several  patents  in  2004.

Second  quarter  interest  income  increased  $11,000  in 2004 to $13,000 versus
$2,000  in  the  comparable  period in 2003. Year-to-date interest has increased
$19,000  to  $25,000 versus $6,000 for the 2003 period.  This was a result of an
increase  in  the  amount  of  cash  and  cash  equivalents  on  hand  in  2004.


                                       10
<PAGE>
LIQUIDITY  AND  SOURCES  OF  CAPITAL
Prior to 2000, the Company was primarily engaged in research and development and
has  incurred  losses  since  inception  aggregating  $26,965,000 (excluding the
effect of the non-cash preferred stock dividends).  The Company expects to incur
losses  through  the  foreseeable  future  as  it  further  pursues  its
commercialization  efforts.  Although  the  Company  started  selling  limited
quantities  of  Platinum  Plus  additive  and  the  verified Purifier system and
generating some ARIS licensing fees and royalties, operating revenue to date has
been  insufficient  to cover operating expenses, and the Company continues to be
dependent  upon  proceeds  from  fund  raising  to  finance  its working capital
requirements.

For  the  six  months  ended  June  30,  2004 and 2003, the Company used cash of
$1,736,000 and $1,366,000 respectively, in operating activities.

At  June  30,  2004  and  December  31,  2003,  the  Company  had  cash and cash
equivalents  of  $4,629,000  and $6,515,000, respectively.  The decrease in cash
and  cash  equivalents  in  2004  was the result of the building of inventories,
capital  expenditures  for equipment and new administrative offices and on-going
marketing  and  operation  costs.  The  Company anticipates incurring additional
losses  through  at  least  2004  as  it  further  pursues its commercialization
efforts.

In  December  2003,  Clean  Diesel  Technologies received $3.583 million (net of
$170,000  in  expenses)  through  a private placement of 1,282,600 shares of its
Common  Stock.  The  price  of  the  Common  Stock  was  1.70  GBP  per  share
(approximately  $2.92 per share).  The proceeds of the Common Stock issuance are
being used for the general corporate purposes of Clean Diesel Technologies.

In  September  2003,  Clean  Diesel Technologies received $3.866 million (net of
$39,000  in  expenses)  through  a  private placement of 2,395,597 shares of its
Common  Stock.  In  conjunction  with  the  private  placement, 230,240 ten year
warrants with an exercise price of $1.63 per share were issued.

At  the  present  time,  the Company cannot estimate when, or if, its operations
will  generate  positive  cash flows from operations.  The Company does not have
any  credit  facilities  available  with  financial  institutions or other third
parties  if  the  Company cannot generate cash flow from operations, CDT will be
dependent upon external sources of best-efforts financing, of which there are no
firm  commitments  or  arrangements.  Based  on  the  current  operating  plan,
management  believes  that  the cash balance as of June 30, 2004 of $4.6 million
will  be sufficient to meet the cash needs into the second half of 2005.  In the
future, unless the operating revenues are sufficient to meet operating expenses,
the  Company  may need to access capital markets to fund operations by incurring
indebtedness or issuing equity securities.  The Company can provide no assurance
that  it  will  be  successful  in  any  future  financing  effort to obtain the
necessary  working  capital  to  support operations.  If Management is unable to
obtain  the  necessary financing from external sources, the Company  may need to
manage  any  cash  shortfalls  by taking measures which may include deferring or
reducing  the  scope  of  commercialization efforts, reducing costs and overhead
expenses,  or  otherwise  curtailing  operations,  or  obtaining  funds  by  a
disposition  of  assets or through arrangements with others that may require CDT
to relinquish rights to certain of our technologies, or to license the rights to
such  technologies  on  terms that are less favorable to than might otherwise be
available.



ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In  the opinion of management, with the exception of exposure to fluctuations in
the  cost of platinum, the Company is not subject to any significant market risk
exposure.

The Company generally receives all income in United States dollars.  The Company
typically makes several payments monthly in various foreign currencies for
patent expenses, product tests and registration, local marketing and promotion,
consultants and one employee.


                                       11
<PAGE>
ITEM 4.     CONTROLS AND PROCEDURES

The  Company  maintains disclosure controls and procedures and internal controls
designed  to  ensure  that information required to be disclosed in the Company's
filings  under  the  Securities  Exchange  Act  of  1934 is recorded, processed,
summarized  and reported within the time periods specified in the Securities and
Exchange  Commission's  rules  and  forms.  The  Company's  management, with the
participation  of  its principal executive and financial officers, has evaluated
the  effectiveness of the Company's disclosure controls and procedures as of the
end  of  the period covered by this Quarterly Report on form 10Q.  The Company's
principal  executive  and  financial  officers  have  concluded,  based  on such
evaluation,  that such disclosure controls and procedures were effective for the
purpose for which they were designed as of the end of such period.

There  was  no change in the Company's internal control over financial reporting
that  was identified in connection with such evaluation that occurred during the
period  covered  by  this  Quarterly  Report  on  form  10Q  that has materially
affected,  or  is reasonably likely to materially affect, the Company's internal
control  over  financial  reporting.


                                       12
<PAGE>
PART II.     OTHER INFORMATION

Item 1.     Legal Proceedings
            None

Item 2.     Changes in Securities
            None

Item 3.     Defaults upon Senior Securities
            None

Item 4.     Submission of Matters to a Vote of Security Holders

     At the June 10, 2004 Annual Meeting of CDT, the holders of 10,564,497
shares of CDT's common stock were present in person or by proxy.  This
attendance was, according to the records of CDT's Transfer Agent, 67.4% of the
total of 15,666,336 issued and outstanding shares as of the record date of April
5, 2004.  At the meeting:

     (i) The proposal to elect the five nominees as directors was approved by a
vote with respect to each individual nominee, as follows:

<TABLE>
<CAPTION>
                         Shares     Shares
Name                       For     Withheld
----------------------  ---------  --------
<S>                     <C>        <C>
John A. de Havilland    9,250,644     2,000
Derek R. Gray           9,250,644     2,000
Charles W. Grinnell     9,218,944    33,700
Jeremy D. Peter-Hoblyn  9,218,944    33,700
James M. Valentine      9,224,444    28,200
</TABLE>

     (ii) The proposal to approve the appointment of Eisner LLP as independent
auditors of CDT for the year 2004 was approved by a vote of shares 9,251,766
for, 700 against and 178 abstaining.

Item 5.     Other Information

The Company has been advised by Mr. Jeremy Peter-Hoblyn, CEO, that he intends to
retire in September 2004 or shortly thereafter when his successor is identified.
The Nominating Committee of the Board of Directors has identified a candidate
and is in the final stages of discussion with an announcement expected shortly.

Mr. Farad Azima, formerly CEO and subsequently Chairman of UK based Verity Group
plc which developed into technology licensing company NXT plc, was retained to
provide the Company business development and advisory services.  Mr. Azima is
also assisting the CDT Nominating Committee in identifying potential CEO
candidates.

Effective June 18, 2004, the Company filed a certificate of elimination to
terminate the authorization of the Company's Series A preferred Stock.

Item 6.     Exhibits and Reports on Form 8-K
            a.     Exhibits

                   Confidential treatment requested for Exhibits 10.1 and 10.2

          10.1     License Agreement of July 13, 2001 between Registrant and
                   Mitsui Co., Ltd as amended by Amendment No. 1 of December
                   18, 2002.


                                       13
<PAGE>
          10.2     License Agreement of March 31, 2003 between Registrant and
                   Combustion Components Associates, Inc.

          10.3     Lease of January 29, 2004 of Premises at 300 Atlantic Street,
                   Stamford Connecticut, USA, between Registrant as Tenant and
                   CT-Stamford Atlantic Forum, LLC as Landlord.

          10.4     Amendment No. 1 of September 30, 2002 to Employment Agreement
                   of December 2, 1996 between Registrant and J. D.
                   Peter-Hoblyn.

          10.5     Employment Agreement of March 1, 2001 between Registrant and
                   D.W. Whitwell.

          10.6     Employment Agreement of April 1, 2002 between Registrant and
                   G.R. Reid.

          10.7     Consultancy Agreement of May 25, 2004 as amended by Agreement
                   of June 18, 2004 between Registrant and F. Azima.

          31.1     Section 302 Certification of Chief Executive Officer.

          31.2     Section 302 Certification of Chief Financial Officer.

          32.0     Section 906 Certifications of Chief Executive and Chief
                   Financial Officers.

            b.     Reports on Form 8-K

                   None


                                       14
<PAGE>
                         CLEAN DIESEL TECHNOLOGIES, INC.
                           SIGNATURES & CERTIFICATIONS



Pursuant  to  the  requirements  of  the  Securities  Exchange  Act of 1934, the
Registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  thereunto  duly  authorized.



Date:  August 13, 2004                  By:  /s/Jeremy D. Peter-Hoblyn
                                             -------------------------
                                             Jeremy D. Peter-Hoblyn
                                             Director  and
                                             Chief Executive Officer


Date:  August  13, 2004                 By:  /s/David W. Whitwell
                                             -------------------------
                                             David W. Whitwell
                                             Chief Financial Officer,
                                             Vice President and Treasurer


                                       15
<PAGE>