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 September 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 November 11, 2004, there were outstanding 17,164,868 shares of Common
Stock, par value $0.05 per share, of the registrant.

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


<PAGE>
                         CLEAN DIESEL TECHNOLOGIES, INC.

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

                                      INDEX

                                                                            Page
                                                                            ----

PART I.  FINANCIAL INFORMATION

Item 1.   Condensed Financial Statements

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

          Statements of Operations for the Three and Nine Months               4
          Ended September 30, 2004 and 2003 (Unaudited)

          Statements of Cash Flows for the Nine Months                         5
          Ended September 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

Item 3.   Quantitative and Qualitative Disclosures about Market Risk          11

Item 4.   Controls and Procedures                                             12


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                                                   14


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

                              CLEAN DIESEL TECHNOLOGIES, INC.

                                 CONDENSED BALANCE SHEETS

                                                          (in thousands, except share data)
                                                             SEPTEMBER 30,   December 31,
                                                            ------------------------------
                                                                 2004           2003
                                                              (Unaudited)
                                                            --------------  --------------
<S>                                                         <C>             <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                   $       5,408   $       6,515
Accounts receivable, net of allowance of $10 and $3 in
  2004 and 2003, respectively                                         178             115
Inventories                                                           443             320
Other current assets                                                   54              73
                                                            --------------  --------------

TOTAL CURRENT ASSETS                                                6,083           7,023
Patents, net                                                          324             274
Fixed assets, net of accumulated depreciation of $163 in
  2004 and $123 in 2003, respectively                                 206             126

Other assets                                                           27              18
                                                            --------------  --------------

TOTAL ASSETS                                                $       6,640   $       7,441
                                                            ==============  ==============


LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:

Deferred compensation and pension benefits                  $         441   $         441
Accounts payable and accrued expenses                                 713             427
                                                            --------------  --------------

TOTAL CURRENT LIABILITIES                                           1,154             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 16,738,368
  and 15,679,337 shares respectively                                  837             784
Additional paid-in capital                                         37,609          35,813
Accumulated deficit                                               (32,960)        (30,024)
                                                            --------------  --------------

TOTAL STOCKHOLDERS' EQUITY                                          5,486           6,573
                                                            --------------  --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $       6,640   $       7,441
                                                            ==============  ==============
</TABLE>


See notes to condensed  financial statements.


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


                                                   (in thousands except per share data)


                                             Three Months Ended           Nine Months Ended
                                                September 30,               September 30,
                                             2004          2003          2004          2003
                                          -----------  ------------  ------------  ------------
<S>                                       <C>          <C>           <C>           <C>
Revenue:
Product revenue                           $      223   $        81   $       479   $       291
License and royalty revenue                       18            18            49           187
                                          -----------  ------------  ------------  ------------
Total revenue                                    241            99           528           478

Costs and expenses:
Cost of product sales                            149            47           334           167
General and administrative                     1,150           517         2,761         1,855
Research and development                         174           171           344           590
Patent amortization and other expense             22            29            61            29
                                          -----------  ------------  ------------  ------------

Loss from operations                          (1,254)         (665)       (2,972)       (2,163)
Interest income                                   11             1            36             7
                                          -----------  ------------  ------------  ------------

Net loss                                  $   (1,243)  $      (664)  $    (2,936)  $    (2,156)
                                          ===========  ============  ============  ============

Basic and diluted loss per common share   $    (0.08)  $     (0.05)  $     (0.19)  $     (0.18)
                                          ===========  ============  ============  ============

Weighted average number of common shares
  outstanding - basic and diluted             15,757        12,119        15,719        12,021
                                          ===========  ============  ============  ============
</TABLE>


See notes to condensed financial statements.


                                      - 4 -
<PAGE>
<TABLE>
<CAPTION>
                         CLEAN DIESEL TECHNOLOGIES, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                           (in thousands)

                                                          Nine Months Ended
                                                            September 30,
                                                          2004        2003
                                                       ----------  -----------
<S>                                                    <C>         <C>
OPERATING ACTIVITIES
Net loss                                               $  (2,936)  $   (2,156)
Adjustments to reconcile net loss to cash used in
  operating activities:
  Depreciation and amortization                               95           59
  Changes in operating assets and liabilities:
    Accounts receivable                                      (63)         133
    Inventories                                             (123)          15
    Other current assets                                      10           13
    Accounts payable and accrued expenses                    347          163
                                                       ----------  -----------

Net cash used in operating activities                     (2,670)      (1,773)
                                                       ----------  -----------

INVESTING ACTIVITIES
Patent costs                                                 (82)        (142)
Purchase of fixed assets                                    (143)         (39)
                                                       ----------  -----------

Net cash used in investing activities                       (225)        (181)
                                                       ----------  -----------

FINANCING ACTIVITIES

Proceeds from issuance of common stock, net                1,785        3,865
Proceeds from broker fee credit (2003 fundraising)             3           --
                                                       ----------  -----------

Net cash provided by financing activities                  1,788        3,865
                                                       ----------  -----------

NET (DECREASE)INCREASE  IN CASH AND CASH EQUIVALENTS      (1,107)       1,911
                                                       ----------  -----------
Cash and cash equivalents at beginning of period           6,515        2,083
                                                       ----------  -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD             $   5,408   $    3,994
                                                       ==========  ===========
</TABLE>


See notes to condensed  financial statements.


                                      - 5 -
<PAGE>
                         CLEAN DIESEL TECHNOLOGIES, INC.

                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2004
                                   (Unaudited)


NOTE 1: 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 nine-month period ended
September  30,  2004,  are not necessarily indicative of the results that may be
expected  for  the year ending December 31, 2004.  The balance sheet at December
31, 2003 has been derived from the audited financial statements at that date but
does  not  include  all the information and notes required by generally accepted
accounting principles for complete financial statement presentation. For further
information, refer to the Financial Statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 2003.

Clean  Diesel  Technologies,  Inc. (the "Company" or "CDTI") 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 10.7% interest in the Company
as  of  September  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.

NOTE 2: 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.  As of September 30, 2004 $189,000 of finished goods and $254,000 of raw
materials  were  on  hand.

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  2022  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 September 28, 2004, 1,000,000 shares
of  its Common Stock. The price of the Common Stock was 1.025 sterling (GBP) per
share  (approximately  $1.82  per  share).  The  proceeds  of  the  Common Stock
issuance,  was  $1.785  million  (net  of  $65,000  in  expenses).

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
has  adopted  the  disclosure  requirements  of  SFAS  148 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
three  months  and  nine  months  ended  September  30:


                                      - 7 -
<PAGE>
<TABLE>
<CAPTION>
                                                         Third Quarter       Nine months YTD
                                                        2004       2003      2004     2003
                                                      ---------  ---------  --------  --------
<S>                                                   <C>        <C>        <C>       <C>
Net loss attributable to common stockholders as       $ (1,243)  $   (664)  $(2,936)  $(2,156)
reported
Deduct: Total stock-based employee compensation
    expense determined under fair value based method
    for all awards, net of related tax effects            (140)      (406)      463)     (791)
                                                      ---------  ---------  --------  --------
Pro forma net loss                                      (1,383)    (1,070)   (3,399)   (2,534)
Net loss per share:
Basic and diluted loss per common share-as reported   $  (0.08)  $  (0.05)    (0.19)  $ (0.18)
Basic and diluted per common share-pro forma          $  (0.09)  $  (0.09)  $ (0.22)  $ (0.21)
</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 and 150,000 options
were  granted  in  the  third quarter of 2004 at an estimated value of $194,800.

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  third  quarter  were  2,385,000  and  532,000  respectively.

NOTE 3: 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 $1,500 for the quarter and nine 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 former 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  September 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 September 30, 2004
and  was exchanged for 73,587 shares of common stock in October 2004 (see Note 6
Subsequent  Events  ).

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  the former Chief Executive Officer for his post-retirement
benefit upon his retirement or when the Company reaches $5 million in sales.  At
September  30,  2004,  total  obligations were $305,616 pertaining to this plan.
This  expense has been


                                      - 8 -
<PAGE>
classified as a current liability on the balance sheet as of September 30, 2004.
The Company paid its total obligation under the plan in October 2004 (see Note 6
Subsequent  Events).


NOTE 4: 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  an  annual  cost  of  approximately $116,000,
including  rent,  utilities  and  parking.

CDT  has  signed  a four year lease (through July 2008) for 2,750 square feet of
warehouse  space  in  Milford,  CT.  Annual  rent  including  utilities  will be
approximately  $21,000.

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 $ 4,363,637 in 2005, $3,272,728 in
2006,  $2,181,819  in  2007  and $1,090,910 in 2008. The Company as assignee and
owner  is responsible for maintaining the technology at its own expense. Minimum
royalties  were  paid to Fuel Tech in 2003 and royalties payable to Fuel Tech at
September  30,  2004  are  $4,950.

NOTE 5: CONCENTRATION

For the quarter ended September 30, 2004, two customers accounted for 61% of the
Company's  revenue and for the year to date period ending September 30, 2004 one
customer  accounted  for  43%  of  total  revenue. For the comparable nine month
period  in  2003, a different single customer accounted for 31% of the Company's
revenue.

NOTE 6: SUBSEQUENT EVENTS

In  October  2004  the  Company completed an additional private placement of its
Common  Stock  Pursuant  to a Regulation S exemption with respect to an offshore
placement.  Clean Diesel Technologies sold 426,500 shares of its Common Stock at
a  price of 1.025 sterling (GBP) per share (approximately $1.83 per share).  The
proceeds  of  the  Common  Stock  issuance,  was  $750,000  (net  of  $25,000 in
expenses).  As  part  of  that  transaction,  retired  CEO  Jeremy  Peter-Hoblyn
exchanged his deferred salary of $135,400 for 73,587 shares of CDT common stock.

Also  in  October  of  2004  the  Company  paid  as  required  under  a deferred
Compensation  Plan,  its  retired  CEO  Jeremy  Peter-Hoblyn  all of his accrued
pension  of  $305,500.


                                      - 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 Annual Report on Form 10-K for the year ended
December  31,  2003.

RESULTS OF OPERATIONS

2004 VERSUS 2003
Product  sales and cost of sales were $223,000 and $149,000 respectively for the
third  quarter  of 2004 versus $81,000 and $47,000 for 2003.  Platinum Plus fuel
catalyst sales of $89,000 and $58,000 were recorded in the third quarter of 2004
and 2003, respectively and Platinum Plus purifier system sales of $85,000 and $0
were  recorded in the third quarter of 2004 and 2003 respectively.  ARIS product
sales  of $43,000 and $12,000, primarily to Mitsui & Co., Ltd., were recorded in
the  third  quarter  of  2004  and  2003,  respectively.

Included  in  both the 2004 and 2003 third quarter revenue is $18,000 of license
and royalty income.  The 2004 license and royalty income is from continuing ARIS
system royalties from Mitsui & Co., Ltd and the 2003 royalty income is from RJM.

For  the  nine  months  ended September 30, product sales and cost of sales were
$479,000  and  $334,000  respectively  for 2004 versus $291,000 and $167,000 for
2003.  Platinum  Plus fuel catalyst sales of $199,000 and $138,000 were recorded
in  the  first  nine  months  of  2004  and 2003, respectively and Platinum Plus
Purifier  system  sales  of  $95,000 and $0 respectively in 2004 and 2003.  ARIS
product  sales  of  $177,000 and $87,000, were recorded year-to-date in 2004 and
2003  respectively.  Included  in  first nine months of total revenue is $49,000
and  $187,000  of  license  and  royalty income for 2004 and 2003, respectively.

General  and  administrative  expenses  increased  $633,000 to $1,150,000 in the
third  quarter  2004 versus $517,000 in the same period of 2003. For the first 9
months  of  2004,  general  and  administrative  expenses  increased $906,000 to
$2,761,000  from  $1,855,000  in  the  same  2003  period. The year-to-date 2004
increase  in general and administrative expenses is related to the third quarter
write  off  of  $275,000  for  legal  and  advisory  expenses  associated with a
potential  stock  registration  and increases in marketing and sales activities,
primarily  personnel  and  related  costs  of  $400,000  in  the  US and Europe.

Research  and  development  expenses  increased  $3,000 to $174,000 in the third
quarter  2004 versus $171,000 in the comparable 2003 period. For the nine months
to  date  research  and development expenses have decreased $246,000 to $344,000
from  $590,000  which were incurred in 2003. The decrease is attributable to the
verification  and  certification  program  expenses for the Platinum Plus FBC in
2003.

Patent  amortization  and  other costs were $22,000 in the third quarter of 2004
versus  $29,000 in the comparable 2003 period. The year-to-date increase in 2004
is  $32,000.  The increase is related to the change in capitalization policy and
the  write-off  of  several  patents  in  2004.


                                     - 10 -
<PAGE>
Third quarter interest income increased $10,000 in 2004 to $11,000 versus $1,000
in the comparable period in 2003. Year-to-date interest has increased $29,000 to
$36,000  versus $7,000 for the 2003 period.  This was a result of an increase in
the  amount  of  cash  and  cash  equivalents  on  hand  in  2004.

LIQUIDITY AND SOURCES OF CAPITAL
Prior to 2000, the Company was primarily engaged in research and development and
has  incurred  losses  since  inception  aggregating  $28,208,000 (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 nine months ended September 30, 2004 and 2003, the Company used cash of
$2,731,000  and  $1,773,000  respectively,  in  operating  activities.

At  September  30,  2004  and  December  31, 2003, the Company had cash and cash
equivalents  of  $5,408,000  and $6,515,000, respectively.  The decrease in cash
and  cash equivalents in 2004 was the result of building of inventories, capital
expenditures for equipment and new administrative offices and on-going marketing
and  operation  costs,  primarily  related  to  personnel  costs.  The  Company
anticipates  incurring  additional  losses  through  at least 2004 as it further
pursues  its  commercialization  efforts.

In  September  2004,  Clean  Diesel Technologies received $1.785 million (net of
$65,000  in  expenses)  through  a  private placement of 1,000,000 shares of its
Common  Stock.  The  price  of  the  Common  Stock  was  1.025  GBP  per  share
(approximately  $1.82 per share).  The proceeds of the Common Stock issuance are
being  used  for  the  general  corporate purposes of Clean Diesel Technologies.

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).

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 September 30, 2004 of $5.4
million  along  with  the $750,000 raised in October 2004 (see subsequent events
section)  will  be  sufficient to meet the cash needs into the second quarter of
2006.  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.


                                     - 11 -
<PAGE>
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.

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
         None

Item 5.  Other  Information
         None

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

              None

         b.   Reports on Form 8-K

              On  August  26,  2004 the Company announced the appointment of Dr.
              Bernhard  Steiner  as  CEO  and  director and at the same time the
              Retirement  of CEO Jeremy Peter-Hoblyn who remains on the Board of
              Directors.

              On  September  20, 2004  the Company reported a commitment to sell
              and  issue  under the exemption from registration of Regulation S,
              1  million  shares  of  the  company's  common stock for 1.025 GBP
              (approximately  $1.82).

              On  October  5, 2004 the Company reported a commitment to sell and
              issue  under  the  exemption  from  registration  of Regulation S,
              426,500  shares  of  the  company's  common  stock  for 1.025  GBP
              (approximately  $1.82).


                                     - 13 -
<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: November 11, 2004          By: /s/ Bernhard Steiner
                                     ----------------------------
                                     Bernhard Steiner
                                     Director  and
                                     Chief Executive Officer



Date: November 11, 2004          By: /s/ David W. Whitwell
                                     ----------------------------
                                     David W. Whitwell
                                     Chief Financial Officer,
                                     Vice President and Treasurer


                                     - 14 -
<PAGE>