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, 2000

                                       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
                                   ---         ---

As  of  November  10,  2000,  there  were outstanding 2,662,080 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, 2000

                                      INDEX

                                                                           Page
                                                                           ----

PART  I.  FINANCIAL  INFORMATION

Item  1.  Financial  Statements  (Unaudited)

          Balance  Sheets  as  of  September  30,  2000,                   3
          and  December  31,  1999

          Statements  of  Operations  for  Three  and  Nine                4
          Months  Ending  September  30,  2000  and  1999

          Statements  of  Cash  Flows  for  the  Three  and  Nine          5
          Months  Ending  September  30,  2000  and  1999

          Note  to  Financial  Statements                                  6

Item  2.  Management's  Discussion  and  Analysis  of                      9
          Financial Condition and Results of Operations


PART  II. OTHER  INFORMATION

Item  1.  Legal  Proceedings                                              12
Item  2.  Changes  in  Securities                                         12
Item  3.  Defaults  upon  Senior  Securities                              12
Item  4.  Submission  of  Matters  to  a Vote of Security Holders         12
Item  5.  Other  Information                                              12
Item  6.  Exhibits  and  Reports  on  Form  8-K                           12


SIGNATURES                                                                13


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

                              CLEAN DIESEL TECHNOLOGIES, INC.
                                       BALANCE SHEETS

                                                            (in thousands except share data)

                                                             September 30,    December 31,
                                                                 2000             1999
                                                            ---------------  --------------
                                                              (Unaudited)
<S>                                                         <C>              <C>
ASSETS
Current assets:
Cash and cash equivalents                                   $          526   $         892
Accounts Receivable                                                      8              46
Inventories                                                            308             321
Other current assets                                                    46              52
                                                            ---------------  --------------
Total current assets                                                   888           1,311
Other assets                                                            31              35
                                                            ---------------  --------------
Total assets                                                $          919   $       1,346
                                                            ===============  ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Unrecognized License Revenue                                $           41   $          --
Accounts payable and accrued expenses                                  608             690
                                                            ---------------  --------------
Total Current Liabilities                                              649             690

Stockholders' equity:
Preferred Stock, par value $.05 per share,
   Authorized 85,000 shares, no shares issued
   and outstanding                                                      --              --
Series A Convertible Preferred Stock, par
   value $.05 per share, $500 per share
   liquidation preference, authorized 15,000
   shares, issued and outstanding 13,218 and 11,082,
   involuntary liquidation value (incl. dividends payable)
   $7,115,500 and $5,934,000                                             1               1
Common Stock, par value $0.05 per share,
  Authorized 15,000,000 shares, issued and
  outstanding 2,662,080 and 2,594,456 shares                           133             130
Additional paid-in capital                                          20,532          18,946
Accumulated Deficit                                                (20,396)        (18,421)
                                                            ---------------  --------------
Total stockholders' equity                                             270             656
                                                            ---------------  --------------
Total liabilities and stockholders' equity                  $          919   $       1,346
                                                            ===============  ==============
</TABLE>

See note to financial statements.


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


                                            (in thousands except per share data)


                                   Three Months Ended       Nine Months Ended
                                      September  30,          September  30,
                                    2000        1999        2000        1999
                                 ----------  ----------  ----------  -----------
<S>                              <C>         <C>         <C>         <C>
Revenue:
Sales                            $      52   $      41   $     137   $      100
License Revenue                         60          --         340           --
                                 ----------  ----------  ----------  -----------
Total Revenue                          112          41         477          100

Costs and expenses:
Cost of sales                           41          19          88           57
General and administrative             448         372       1,366        1,124
Research and development               110         197         415          649
Patent filing and maintenance           20          32          97           84
                                 ----------  ----------  ----------  -----------

Loss from operations                   507         579       1,489        1,814
Interest income                        (11)         (9)        (34)         (31)
Interest expense                         1           1           2            2
                                 ----------  ----------  ----------  -----------

Net loss before preferred stock
   Dividend                            497         571       1,457        1,785
Preferred Stock dividend               185       1,858         516        2,012
                                 ----------  ----------  ----------  -----------

Net loss attributed to Common
   Stockholders                  $     682   $   2,429   $   1,973   $    3,797
                                 ==========  ==========  ==========  ===========

Basic and diluted loss per
   Common Share                  $    0.26   $    0.94   $    0.75   $     1.48
                                 ==========  ==========  ==========  ===========

Average number of Common Shares
   outstanding                       2,662       2,592       2,622        2,574
                                 ==========  ==========  ==========  ===========
</TABLE>

See  note  to  financial  statements.


                                      -4-
<PAGE>
<TABLE>
<CAPTION>
                         CLEAN DIESEL TECHNOLOGIES, INC.
                             STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                            (in thousands)

                                                          Nine  Months  Ended
                                                             September  30,
                                                           2000          1999
                                                       ------------  ------------
<S>                                                    <C>           <C>
OPERATING ACTIVITIES
Net Loss before preferred stock dividend               $    (1,457)  $    (1,785)
Adjustments to reconcile net loss to cash used in
   operating activities:
   Depreciation                                                  8            16
Changes in operating assets and liabilities:
   Accounts Receivable                                          38           (36)
   Inventories                                                  13           (27)
   Other current assets                                          6            14
   Unrecognized License Revenue                                 41            --
   Accounts payable and accrued expenses                       (41)          (43)
                                                       ------------  ------------

Net cash used in operating activities                  $    (1,392)  $    (1,861)
                                                       ------------  ------------

FINANCING ACTIVITIES
  Proceeds from the sale of preferred stocks                 1,022         1,721
  Proceeds from the exercise of stock options                    7             2
                                                       ------------  ------------

Net cash provided from (used in) financing activities        1,029         1,723
                                                       ------------  ------------

INVESTING ACTIVITIES
Purchase of fixed assets                                        (3)           (6)
                                                       ------------  ------------
Net cash (used in) provided by investing activities             (3)           (6)
                                                       ------------  ------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS                                              (366)         (144)
                                                       ------------  ------------
Cash and cash equivalents at beginning of period               892         1,663
                                                       ------------  ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD             $       526   $     1,519
                                                       ============  ============

NON-CASH ACTIVITIES
Preferred Dividend                                             516         2,012
Accrued Director's Fee in stock                                 30            30
</TABLE>

See  note  to  financial  statements.


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

                          NOTES TO FINANCIAL STATEMENTS
                               September 30, 2000
                                   (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
nine-month  period  ended  September 30, 2000, are not necessarily indicative of
the  results  that  may  be  expected for the year ending December 31, 2000. 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, 1999.

     The  balance  sheet at December 31, 1999, has been derived from the audited
Financial  Statements  at  that date but does not include all of the information
and  footnotes required by generally accepted accounting principles for complete
financial  statements.

     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, and then reduced its ownership in the
Company  to  27.6%.

     The  Company  is  a specialty chemical company supplying fuel additives and
proprietary  systems  that  reduce  harmful  emissions  from internal combustion
engines  while improving fuel economy.  Prior to December 1999 the Company was a
development  stage  enterprise  devoted  to  research,  development,  and
commercialization  of  Platinum  Fuel Catalysts (PFC's) and Nitrogen Oxide (NOx)
reduction  technologies  for  diesel engines.  During December 1999, the Company
received  its  EPA registration for its platinum - cerium diesel fuel combustion
catalyst  and  recorded  its  first  commercial  sales for this Platinum Plus(R)
diesel  fuel  catalyst  product.  Accordingly,  in the opinion of management the
Company  is  no  longer  a  development  stage  enterprise.

GOING  CONCERN

     The  financial statements have been prepared assuming that the Company will
continue  as  a  going concern and do not include any adjustments to reflect the
possible  future  effects on the recoverability and classification of assets and
the  amount  and classification of liabilities that may result from the possible
inability  of  the  Company  to  continue  as  a  going  concern.

     As  a  result  of  the  Company's recurring operating losses of $17,737,000
since inception (excluding non-cash preferred dividends and the one-time imputed
preferred  dividend  of $1,750,000 recognized in the third quarter of 1999), the
Company  has  been  unable  to  generate a positive cash flow.   The Company may
require  additional  capital in the future in order to fund its operations.  The
Company's  current  cash  position,  including  proceeds  from  recent  license


                                      -6-
<PAGE>
agreements  will not be sufficient to fund the Company's cash requirements.  The
Company  completed  a  preferred  stock offering of $1,021,500 in April of 2000.
Without  any  further funding, the Company expects to be able to fund operations
into  the  first  quarter  2001.  Although  the Company believes that it will be
successful in its capital-raising efforts, there is no guarantee that it will be
able  to  raise such funds and, if raised, on terms that will be satisfactory to
the  Company.  The  Company  has  developed  contingency  plans in the event its
financing  efforts  are not successful. Such plans include reducing expenses and
selling  or  licensing the Company's technologies. Accordingly, at September 30,
2000,  there  is  substantial doubt as to the Company's ability to continue as a
going  concern.

INVENTORIES

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

REVENUE  RECOGNITION

     During  February  2000,  the Company completed a license agreement with RJM
Corporation  for  CDT's  ARIS  2000(TM)  NOx  Control System for all stationary,
marine  and  locomotive  applications  in North, Central and South America.  The
Company  received  a  $260,000 license payment and $100,000 inventory payment in
return  for  transferring  the ARIS 2000 technology to the RJM Corporation.  The
license  payment  is  non-refundable  and  requires  no  ongoing  services to be
performed  by  CDT.  Clean  Diesel  has  the  opportunity  to earn an additional
cumulative  $1,000,000  in  license  revenue  on  the  first,  second, and third
anniversaries of the license agreement based on the prior years' ARIS 2000 sales
performance.

In June 2000, the company received a $160,000 payment from Mitsui & Co. Ltd. for
a  short-term  exclusive  license for Platinum Plus fuel borne catalyst and ARIS
2000  diesel  emission  reduction  technologies.  In  addition  to the exclusive
license,  Mitsui  &  Co. received an ARIS 2000 system, Platinum Plus product and
diesel  emissions  consulting  services from Clean Diesel Technologies Inc.  The
company is recognizing sales revenue for these products when they are shipped to
Mitsui  and license revenue prorated over the six-month license period.  $19,000
of  the  license  revenue was recognized in the second quarter 2000.  $58,500 of
license  revenue, $41,000 of ARIS 2000 system revenue, and $759 of Platinum Plus
FBC  revenue  was  recognized  in  the  third  quarter  2000.

SERIES  A  PREFERRED  STOCK

     On  April  28,  2000,  the  Company completed a private placement preferred
stock  offering  of  1,362  Series  A  Preferred shares for $1,021,500 ($750 per
Series  A  Preferred Stock).  The Series A Preferred shares have the same rights
and  dividend  terms  as  the  previous Series A Preferred shares.  The Series A
Preferred  Stock  was  issued  at  a premium to the underlying common stock into
which  it  is  convertible.

     During  the  years  ended  December 31, 1999 and 1998, the Company received
proceeds  of $1.75 million and $1.85 million through private placements of 3,500
and 3,753 shares of its Series A Preferred Stock, respectively.  In addition, in
1998  $1.4  million  of  bridge loans and $0.5 million of term loans due to Fuel
Tech  were  converted  into  2,800 and 1,029 shares of Series A Preferred Stock.

     The  Preferred  Stock has a stated value and liquidation preference of $500
per share plus accrued and unpaid dividends.  Holders of the Preferred Stock are
entitled to receive cash dividends at the annual rate of 9% or dividends in kind
at the annual rate of 11%, when and if declared by the Board of Directors of the
Company  out  of  legally  available  funds  of  the Company. Cash dividends and
dividends  in  kind  are each deemed "Preferred Dividends."  Preferred Dividends
are  payable  quarterly  in  arrears.

     In  order  to  conserve  cash,  on February 4, 1999, the Company's Board of
Directors  adopted  a  resolution  that  all dividends declared on the Preferred
Stock  be payable in kind at the annual rate of 11%.  The dividends will be paid
in the form of additional shares of Preferred Stock in accordance with the terms
and  conditions  of  the Certificate of Designation on the first business day of
January, April, July and October to stockholders of record on the first business
day  of  the  prior December, March, June, and September.  Dividends in kind are


                                      -7-
<PAGE>
evidenced  by  a stock certificate for full share amounts of such dividends with
fractional  amounts  accruing  and paid in full shares on a subsequent dividend.
The  directors  further  resolved  to  issue  certificates  for  stock dividends
annually rather than quarterly, unless a stockholder requests certificates to be
issued  more  frequently.  These resolutions will remain in effect until revoked
by  the  Company's  Board  of  Directors.

     The third quarter 2000 stock dividend payable on July 1, 2000, was declared
in  kind  as 357 additional shares of the Preferred Stock with a stated value of
$178,000.  As  of September 30, 2000, the company had 13,218 shares of Preferred
Stock  issued  and outstanding.  An additional 1,013 Preferred Stock shares were
declared  for  2000,  but not issued.  As of September 30, 2000, the company had
earned,  but  undeclared,  dividends  of  approximately  $196,000(392  shares).

     Each  share of the Preferred Stock is convertible into 333.33 shares of the
Company's  Common Stock, which is equivalent to $1.50 per Common Share. Assuming
full  conversion of the Preferred Stock, at September 30, 2000 the Company would
have approximately 7.4 million shares of Common Stock outstanding, of which Fuel
Tech  would  own  approximately  1.6  million shares, or a 21.8% interest in the
Company.

     The  Company can force the holder of Preferred Stock to convert its shares,
in  whole  or in part, into Common Stock at any time on, or after, the date that
the  average Closing Price (as defined in the Certificate of Designation) of the
Common  Stock  equals  or  exceeds  $4.50  for 20 consecutive trading days. Such
conversion  may,  at  the  election  of  the  holders  of  60% of the issued and
outstanding  shares  of the Preferred Stock, be scheduled to occur on a pro-rata
basis  quarterly  over  18  months.  The  Preferred Stock shall be automatically
converted  into  Common Stock should the Company consummate a public offering of
its  Common Stock in excess of certain prescribed amounts.  In the event of such
mandatory conversion, accrued and unpaid dividends will also convert into Common
Stock,  on  the  same  terms  as  the  underlying  shares  of  Preferred  Stock.

EARNINGS  PER  SHARE  DATA

     Basic and diluted earnings/(loss) per share excludes the dilutive effect of
stock  options  and warrants.  In addition, the 14,231 shares of Preferred Stock
(4.7M  common  stock  equivalent)  are  not  included  in  the basic and diluted
earnings/(loss)  per  share  calculation.

RELATED  PARTY  TRANSACTIONS

     The  Company  has a Management and Services Agreement with Fuel Tech. Under
the  new  agreement,  the  Company  agreed  to  pay  Fuel Tech a fee equal to an
additional 3 - 10% of the costs paid on the Company's behalf, dependent upon the
nature  of  the costs incurred.  Currently, a fee of 3% is assessed on all costs
billed  to the Company from Fuel Tech.  Charges to the Company, inclusive of the
administrative  fee, were approximately $17,300 and $26,000 in the third quarter
of  2000  and  1999,  respectively.

COMMITMENTS

     Effective  October  28, 1994, Fuel Tech granted two licenses to the Company
for  all  patents  and  rights  associated  with  its PFC 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 PFCs commencing in
1998.  The  royalty  obligation  expires in 2008.  The Company may terminate the
royalty  obligation  to Fuel Tech by payment of $9,818,180 in 2000 and declining
annually to approximately $1,090,910 in 2008.  The Company as assignee and owner
will  maintain  the  technology  at its own expense.  To date, no royalties have
been  paid  to  Fuel  Tech,  although  the Company has recorded an insignificant
accrual  for  royalties  payable  to  Fuel  Tech  at  September  30,  2000.

SUBSEQUENT  EVENT

     On  November  10,  2000,  the Company arranged a $1,000,000 18th-month term
loan  from  several  of the company's  existing preferred shareholders. Terms of
the  loan  included  a  10% annual interest rate and warrants to purchase common
stock.


                                      -8-
<PAGE>
                         CLEAN DIESEL TECHNOLOGIES, INC.


Item  2.  Management's  Discussion,  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, 1999.


RESULTS  OF  OPERATIONS

     In  prior  years  the  Company  was  a development stage enterprise and its
efforts  were  devoted  to  the  research,  development and commercialization of
platinum  fuel  catalysts  and  nitrogen  oxide reduction technologies to reduce
emissions  from  diesel  engines.  During  1999, the Company received its US EPA
registration  for  its  platinum-cerium  fuel catalyst product and completed its
first  commercial  sales.

     Sales and Cost of sales were $52,000 and $41,000 respectively for the third
quarter  of  2000 versus $41,000 and $19,000 for 1999.  $11,000 of Platinum Plus
fuel catalyst sales was recorded in the third quarter of 2000.  Commercial sales
of  Platinum Plus fuel catalyst began in December 1999 and the Company is in the
process  of  rolling  out  regional demonstration programs with selected fleets.
The  Company  recorded $41,000 of ARIS 2000 sales and $60,000 of license revenue
from  Mitsui  for a limited 6-month term license for Platinum Plus fuel catalyst
and  ARIS  2000  in  the  third  quarter.

     Year-to-date  sales  and  cost  of  sales were $137,000 and $88,000 in 2000
versus  $100,000  and $57,000 in 1999.  Included in the 2000 revenue is $340,000
of  license  revenue  associated  with  the RJM ARIS 2000 license and the Mitsui
limited  license.  Clean  Diesel  Technologies will earn a royalty on all future
RJM  sales  of the ARIS 2000 as well as additional license revenue in 2001, 2002
and  2003  depending  on  ARIS  2000  sales  in  these  years.

     General  and  administrative  expense  increased $76,000 to $448,000 in the
third  quarter  2000 versus $372,000 in the comparable quarter in 1999.  General
and  administrative  expenses have increased $242,000 to $1,366,000 in the first
nine  months  of  2000  versus $1,124,000 in the comparable period in 1999.  The
increase is primarily attributable to the higher marketing costs associated with
the  increased  commercial  activity  and increased personnel costs, including a
full  time  chief  financial  officer.

     Third  quarter  research  and  development  expenses  decreased  $87,000 to
$110,000  in  2000  versus  $197,000  in the comparable period in 1999.  For the
year,  research  and  development  expenses  have  declined $234,000 to $415,000
versus  $649,000 in the comparable 1999 period.  The decrease is attributable to
the  shift  from  research and development to commercialization that occurred in
the latter half of 1999.  In addition, two engineers transferred from CDT to RJM
as  part  of  the  ARIS  2000  license  agreement.

     Patent  expense  decreased  $12,000  to  $20,000  in the third quarter 2000
versus  $32,000  in 1999.  For the year, patent expense has increased $13,000 to
$97,000  versus  $84,000 in the 1999 comparable period.  The increase is related
to  several  new  patents  filed  in  the  United  States  and  Europe.


                                      -9-
<PAGE>
     Interest  income  increased  $2,000  to  $11,000  in the third quarter 2000
versus  $9,000  in the comparable 1999 period.  For the year, interest income is
up  slightly  to $34,000 versus 1999 comparable interest income of $31,000.  The
increase  is  attributable  to  the $1 million preferred stock offering in April
2000.


LIQUIDITY  AND  SOURCES  OF  CAPITAL

     In  December  1999,  the Company received its U.S. EPA registration for its
platinum  -  cerium  fuel  catalyst  product  and  began commercial sales of the
product.  Prior  to  this  time  the Company was a development stage enterprise.
The  Company  has  been  primarily  a  research and development company that has
incurred losses since inception aggregating $17,737,000 (excluding the effect of
the  preferred dividends and the one-time non-cash imputed preferred dividend of
$1,750,000  recognized  in  the  third quarter of 1999).  The Company expects to
incur  losses  through  the  foreseeable  future  as  it  further  pursues  its
commercialization  efforts.  The  Company continues to be dependent upon sources
other  than  operations  to  finance  its  working  capital  requirements.

     In  December  1995,  the Company raised approximately $10.5 million, net of
offering expenses and broker-dealer commissions through the 1995 Rights Offering
of  its  shares  by  Fuel Tech.  The Company then repaid Fuel Tech approximately
$2.3  million in inter-company loans.  On February 17, 1998, Fuel Tech agreed to
provide  the  Company with up to $500,000 in order to fund its cash requirements
until  such time as the Company obtained the long-term financing it was seeking.
On  May  20, 1998, the $500,000 commitment was converted into a bridge loan (the
"Bridge  Loan").  The Bridge Loan stipulated an automatic conversion into shares
of  Preferred  Stock  upon  the conclusion of a public or private financing that
contributed  a  minimum  of  $1.75  million  of  additional  net proceeds to the
Company.  In  mid-1998,  the  Company  also  received  an additional $900,000 of
financing under the same Bridge Loan (having the same terms and conditions) from
outside  investors.  As more fully described below, in November 1998, the Bridge
Loan  automatically  converted  into  2,800  shares  of  Preferred  Stock.

     In  1997,  the Company repaid $250,000 of a $745,000 promissory demand note
with  Fuel Tech and restructured the remaining amount into a $495,000 promissory
note  (the  "Term  Note")  with  Platinum Plus, Inc. ("Platinum Plus"), a wholly
owned subsidiary of Fuel Tech.  See below for further information concerning the
exchange  of  the  Term  Note  for  shares  of  the  Company's  Preferred Stock.

     In  November  1998, the Company obtained approximately $1.85 million in net
proceeds  against  the  issuance  of  3,753  shares of Preferred Stock through a
private  placement.  As the Company received net proceeds in excess of the $1.75
million  minimum, and in accordance with the terms of the Bridge Loan agreement,
the  $1.4  million  Bridge Loan, mentioned above, converted into 2,800 shares of
Preferred  Stock.  Additionally,  in  an  effort  to  retain its approximate 27%
interest  in  the  Company  (assuming conversion of the Preferred Stock into the
Company's  Common Shares), Fuel Tech elected to exchange its $495,000 Term Note,
and  $20,000  of associated accrued interest from its Bridge Loan and Term Note,
for  1,029 shares of Preferred Stock.  As a result, Fuel Tech owned 2,029 shares
of  the  Company's  Preferred Stock at December 31, 1998.  These shares plus the
1999  quarterly  dividends,  if converted, along with its Common Stock ownership
would  give  Fuel  Tech  an approximate 21.8% interest in the Company on a fully
converted  basis  at  December  31,  1999.

     In  August/September  1999,  the  Company  received gross proceeds of $1.75
million,  excluding  expenses  of  $29,000,  from  private investors against the
issuance  of  an  additional  3,500  shares  of Preferred Stock.  Therefore, the
Company  had 11,082 shares of Preferred Stock issued and outstanding at December
31,  1999.

     In  May  2000, 774 Preferred Series A shares were issued for 1999 preferred
dividends  declared,  but not issued.  On April 28, 2000 the company completed a
private  placement of 1,362 Series A Preferred shares for $1,021,500.  Therefore
as  of  September  30,  2000, the Company had a total of 13,218 issued shares of
preferred  stock, which are convertible into approximately 4.4 million shares of


                                      -10-
<PAGE>
common stock ($0.05 par convertible at a rate of 1:333.33).  On January 1, 2000,
April  1, 2000 and July 1, 2000, the Company declared a preferred stock dividend
in  kind  of  318, 338 and 357 shares, respectively.  Therefore, as of September
30,2000,  the  Company had a total of 14,231 shares of preferred stock issued or
issuable  on  demand.

     In  November 2000, the company arranged a $1,000,000 term loan from several
existing  preferred  shareholders.

     The  Company  signed  an  agreement with the RJM Corporation on February 2,
2000  that  licensed  RJM  to  sell  CDT's  ARIS 2000 NOx control system for all
stationary,  marine,  and  locomotive  applications in North, Central, and South
America.  Under  terms of the agreement CDT received an initial $360,000 license
and  inventory  payment  and the opportunity to earn an additional $1,000,000 in
license revenue over the next 3 years based on the performance of the ARIS 2000.
In  addition to license revenue, CDT will earn a royalty on all future ARIS 2000
sales.

     In  June of 2000, the Company received a $160,000 payment from Mitsui & Co.
Ltd.  for  a  short-term  exclusive  license  for  the  Platinum Plus fuel borne
catalyst  and the ARIS 2000 diesel emission reduction technologies.  The Company
recognized $19,000 and $100,000 of license and product revenue in the second and
third  quarter  2000,  respectively.  The  Company  will recognize the remaining
$41,000  of  license  revenue  in  the  fourth  quarter  of  2000.

     Effective  as  of  October  28, 1994, Fuel Tech granted two licenses to the
Company  for  all  patents and rights associated with its Platinum Fuel Catalyst
("PFC")  technology.  Effective  November  24, 1997, the licenses were cancelled
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 PFC's, commencing in 1998.  The royalty obligation expires in 2008.
The  Company  may  terminate  the  royalty obligation to Fuel Tech by payment of
$9,818,180 in 2000 and declining annually to $1,090,910 in 2008.  The Company as
assignee  and owner will maintain the technology at its own expense.  To date no
royalties  have  been  paid  to  Fuel  Tech.

     For  the  nine  months  ended September 30, 2000 and 1999, the Company used
cash  of  $1,392,000  and  $1,861,000  respectively,  in  operating  activities.

     At September 30, 2000, and December 31, 1999, the Company had cash and cash
equivalents  of $526,000 and $1,519,000, respectively.  The decrease in cash and
cash equivalents in 2000 was the result of the Company's use of its resources to
fund operations in 2000, partially offset by the funds received from the RJM and
Mitsui  license agreements.  The Company anticipates incurring additional losses
through  at  least  2000  as  it  further pursues its commercialization efforts.

     As  a  result  of the Company's recurring operating losses, the Company has
been  unable  to  generate  a  positive cash flow.  In management's opinion, the
Company's  cash balance at September 30, 2000, including the $1,021,500 received
from  private  investors against the issuance of 1,362 shares of preferred stock
and  the  Mitsui  license  agreement  will  be  sufficient to fund the Company's
operations  into  the  first  quarter  of 2001.  The Company requires additional
capital  to  fund  its  working  capital  needs  in  2001.  Although the Company
believes  that it will be successful in its capital-raising efforts, there is no
guarantee that it will be able to raise such funds and, if raised, on terms that
will be satisfactory to the Company.  The Company will develop contingency plans
in  the  event  future  financing  efforts  are  not successful.  Such plans may
include  reducing  expenses  and  selling  or  licensing  some  of the Company's
technologies.  Accordingly, at September 30, 2000, there is substantial doubt as
to  the  Company's  ability to continue as a going concern. See "Liquidity Going
Concern"  elsewhere  herein  for  additional  information.


                                      -11-
<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
         None


                                      -12-
<PAGE>
                         CLEAN DIESEL TECHNOLOGIES, INC.
                                   SIGNATURES



     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.



                         CLEAN DIESEL TECHNOLOGIES, INC.



Date: November 13, 2000            By:  /s/  Jeremy  D.  Peter-Hoblyn
                                      ------------------------------------------
                                      Jeremy  D.  Peter-Hoblyn
                                      President and Chief Executive Officer



Date: November 13, 2000            By:  /s/  David  W.  Whitwell
                                      ------------------------------------------
                                      David  W.  Whitwell
                                      Vice President and Chief Financial Officer


                                      -13-
<PAGE>