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, 2003

                                       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 August 13, 2003, there were outstanding 11,985,419 shares of Common Stock,
par value $0.05 per share, of the registrant.


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


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

                  Form 10-Q for the Quarter Ended June 30, 2003

                                      INDEX


                                                                    Page
                                                                    ----
<S>                                                                 <C>
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

         Balance Sheets as of June 30, 2003,                          3
         and December 31, 2002

         Statements of Operations for the Three and Six               4
         Months Ended June 30, 2003 and 2002

         Statements of Cash Flows for the Six                         5
         Months Ended June 30, 2003 and 2002

         Notes to Financial Statements                                6

Item 2.  Management's Discussion and Analysis of                     11
         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                                           14
Item 6.  Exhibits and Reports on Form 8-K                            14

SIGNATURES                                                           15
</TABLE>


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

                            CLEAN DIESEL TECHNOLOGIES, INC.

                                    BALANCE SHEETS

                           (in thousands except share data)


                                                     June 30,       December 31,
                                                      2003             2002
                                                 ----------------  --------------
<S>                                              <C>               <C>
                                                    (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                        $           552   $       2,083
Accounts receivable                                          233             284
Inventories                                                  285             314
Other current assets                                         112              76
                                                 ----------------  --------------
Total current assets                                       1,182           2,757
Patents, net                                                 239             114
Other assets                                                 115             108
                                                 ----------------  --------------
Total assets                                     $         1,536   $       2,979
                                                 ================  ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses            $           249   $         223
                                                 ----------------  --------------
             Total current liabilities                       249             223

Deferred compensation and pension benefits                   441             418
                                                 ----------------  --------------
              Total long term liabilities                    441             418

Stockholders' equity:
Preferred stock, par value $.05 per share,
  authorized 80,000 shares, no shares issued
  and outstanding                                             --              --
Series A convertible preferred stock, par
  value $.05 per share, $500 per share
  liquidation preference, authorized 20,000
  shares, no shares issued and outstanding                    --              --
Common stock, par value $0.05 per share,
  authorized 30,000,000 and 15,000,000 shares,
  issued and outstanding 11,985,419 and
  11,968,387 shares, respectively.                           599             598
Additional paid-in capital                                28,518          28,519
Accumulated deficit                                      (28,271)        (26,779)
                                                 ----------------  --------------
Total stockholders' equity                                   846           2,338
                                                 ----------------  --------------
Total liabilities and stockholders' equity       $         1,536   $       2,979
                                                 ================  ==============


See notes to financial statements.
</TABLE>


                                      -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,
                                            2003      2002      2003      2002
                                          --------  --------  --------  --------
<S>                                       <C>       <C>       <C>       <C>
Revenue:
Product revenue                              $123       $15      $210       $76
License and royalty revenue                   160         4       169        14
                                          --------  --------  --------  --------
Total revenue                                 283        19       379        90

Costs and expenses:
Cost of sales                                  64        12       120        55
General and administrative                    636       577     1,338     1,135
Research and development                      170       300       419       412
Patent filing and maintenance                  --        --        --        27
                                          --------  --------  --------  --------

Loss from operations                         (587)     (870)   (1,498)   (1,539)
Interest income                                 2        10         6        25
Interest expense                               --        --        --        (9)
                                          --------  --------  --------  --------

Net loss                                    $(585)    $(860)  $(1,492)  $(1,523)
                                          ========  ========  ========  ========

Basic and diluted loss per common share    $(0.05)   $(0.08)   $(0.12)   $(0.14)
                                          ========  ========  ========  ========

Weighted average number of common shares
  outstanding - basic and diluted          11,976    11,241    11,972    11,228
                                          ========  ========  ========  ========




See notes to financial statements.
</TABLE>


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

                            STATEMENTS OF CASH FLOWS
                                  (Unaudited)


                                                        (in thousands)

                                                       Six Months Ended
                                                           June 30
                                                      2003          2002
                                                   -----------  ------------
<S>                                                <C>          <C>

OPERATING ACTIVITIES
Net loss                                           $   (1,492)  $    (1,523)
Adjustments to reconcile net loss to cash used in
   operating activities:
   Depreciation and amortization                           33            10
   Amortization of deferred financing expense              --             8
   Compensatory stock warrants                             --            95
Changes in operating assets and liabilities:
   Accounts receivable                                     51           181
   Inventories                                             29            (8)
   Other current assets                                   (36)            7
   Accounts payable and accrued expenses                   49          (314)
                                                   -----------  ------------

Net cash used in operating activities                  (1,366)       (1,544)
                                                   -----------  ------------

INVESTING ACTIVITIES
Patent costs                                             (137)          (48)
Purchase of fixed assets                                  (28)          (34)
                                                   -----------  ------------
Net cash used in investing activities                    (165)          (82)
                                                   -----------  ------------
FINANCING ACTIVITIES
Repayment of term loan                                     --          (250)
                                                   -----------  ------------
Net cash used in financing activities                      --          (250)
                                                   -----------  ------------

NET DECREASE IN CASH AND CASH EQUIVALENTS              (1,531)       (1,876)
                                                   -----------  ------------
Cash and cash equivalents at beginning of period        2,083         4,023
                                                   -----------  ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD         $      552   $     2,147
                                                   ===========  ============





See note to financial statements.
</TABLE>


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

                          NOTES TO FINANCIAL STATEMENTS
                                  June 30, 2003
                                   (Unaudited)

BASIS  OF  PRESENTATION

     The  accompanying  unaudited,  consolidated  financial statements have been
prepared  in  accordance  with  accounting  principles generally accepted in the
United  States  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 accounting principles generally
accepted  in the United States 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, 2003, are not necessarily
indicative  of the results that may be expected for the year ending December 31,
2003.  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,
2002.

     Clean  Diesel  Technologies, Inc. (the "Company" or "CDT") 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 a 15.2% interest in the Company as
of  June  30,  2003.

     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. During December 1999,
the  Company received its EPA registration for its platinum - cerium product and
recorded  its  first commercial sales. 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.

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 ($23,519,000 since
inception  excluding  non-cash  preferred stock dividends), the Company has been
unable to generate positive cash flow and will require additional capital in the
future in order to fund its operations, as its current cash position will not be
sufficient  to  fund the Company's cash requirements. CDT is close to finalizing
negotiations  with a strategic partner and co-investment by certain shareholders
to  secure  additional  financing.  Without  any  further funding or significant
revenues  from  sales,  demonstration  programs,  or  license  fees, the Company
expects  to  be  able  to  fund  operations  through  the third quarter of 2003.
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 on terms
that  will be satisfactory to the Company. The Company has developed contingency
plans  in  the  event  its  financing  efforts are not successful. Based on such
plans,  CDT  may  be  required  to  delay,  scale  back  or severely curtail its
operations,  which  could  have  a  material  adverse  effect  on  the business,
operating  results, financial condition and long-term prospects. Accordingly, at
June  30,  2003,  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.


                                      -6-
<PAGE>
REVENUE  RECOGNITION

     The  Company  recognizes  revenue  from  sales  of Platinum Plus fuel borne
catalyst  and  ARIS  2000  systems  upon  shipment.

     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 are no significant ongoing
services  required to be performed by CDT. The Company will also receive ongoing
royalty  payments  on  a  per  unit  basis.

     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  are  no  significant  ongoing  services  required to be performed by CDT.

     Royalty  fees  are  recognized  by  the  Company  when  earned.

RESEARCH  AND  DEVELOPMENT  COSTS

     Costs  relating  to  the  research,  development  and  testing  of products
including  testing  to  support  verification  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

     Patent  costs are capitalized and amortized over the remaining life of each
patent.

NOTES  PAYABLE

     In  November  2000,  the Company arranged a $1,000,000 term loan with three
private  lenders.  The term loan had a 10% interest rate and was payable in full
on  May  14,  2002.  The  Company  drew  down  $500,000 in November 2000 and the
remaining  $500,000  in  March  of  2001. As part of the private placement stock
transaction in December 2001, $750,000 of the outstanding term loan plus accrued
interest  was  converted  to common stock. The remaining $250,000 portion of the
term  loan  plus  accrued  interest  was  paid  in  cash  on  January  18, 2002.

STOCKHOLDERS'  EQUITY

     In  October 2002, Clean Diesel Technologies received $1.356 million (net of
$69,000 in expenses) through a private placement of 704,349 shares of its Common
Stock  on  the  AIM  (Alternative  Investment  Market)  London  Stock  Exchange.



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


                                      -7-
<PAGE>
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  this  Statement  as  of  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:

<TABLE>
<CAPTION>
                                                                       2003      2002
                                                                     --------  --------
<S>                                                                  <C>       <C>

     Net loss as reported                                            $(1,492)  $(1,523)
     Deduct: Total stock-based employee compensation expense
           determined under fair value based method for all awards,
            net of related tax effects                                  (251)     (311)
                                                                     ------------------
     Pro forma net loss                                              $(1,743)  $(1,834)
     Net loss per share:
     Basic and diluted loss per common share-as reported             $ (0.12)  $ (0.14)
     Basic and diluted per common share-pro forma                    $ (0.15)  $ (0.16)
</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  loss  per  share in future years due to the timing of stock option
grants  and  considering  that  options  vest  over  a  period  of  three years.

     The  Black-Scholes option-pricing model was developed for use in estimating
the fair value of traded options that have no vesting restrictions and are fully
transferable.  In  addition,  option-pricing  models require the input of highly
subjective  assumptions  including  the expected stock price volatility. Because
CDT's  employee  stock options have characteristics significantly different from
those  of traded options and because changes in the subjective input assumptions
can  materially  affect  the  fair  value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the fair
value  of  its  stock  options.

     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 2003 grants,
expected  dividend  yield 0%, risk free interest rate 1.23%, expected volatility
95.7%  and  expected  life  of  the  option 4 years. Options were granted in the
second  quarter  of  2003.

LOSS  PER  SHARE

     Stock  options  and  stock  purchase  warrants  were  not  included  in the
computation of diluted loss per share because either the Company reported a loss
for  the  period  or  their exercise prices were greater than the average market
price  of  the  common  stock  and  therefore  would  be  antidilutive.

RELATED  PARTY  TRANSACTIONS

     In  November 2000, the Company secured a $1,000,000 term loan facility at a
10%  interest rate from several preferred shareholders, including Fuel Tech Inc.
which  pledged  $250,000.  In  2000  and  2001  the Company drew down the entire
$1,000,000  term  loan.  In  December  2001,  $750,000  of term loan and accrued
interest  was  repaid  as  part of the December 2001 private


                                      -8-
<PAGE>
placement of common stock discussed in the stock holders equity note. In January
2002,  the  Company repaid the remaining $250,000 term loan payable to Fuel Tech
plus  accrued  interest.

     The  Company  has a Management and Services Agreement with Fuel Tech. Under
the  agreement,  the Company pays 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  in both the second quarter of 2003 and 2002,
respectively.

     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, 2003 total obligations
were  $135,400  pertaining  to  this  plan.

     The  Company  makes  annual  pension  payments  or  accruals  pursuant to a
deferred  compensation  plan  on  behalf of its Chief Executive Officer. For the
quarters  ended  June  30,  2003 and 2002, $10,417 and $12,500 for each quarter,
respectively  were  expensed  in connection with such plan. At June 30, 2003 and
2002, total obligations were $305,616 and $257,700 pertaining to this plan. This
agreement  was  suspended  as  of June 15, 2003 and the company does not plan to
make  any  additional  accruals  in  the  future.

COMMITMENTS

     The  Company  is  obligated  under  a  sublease agreement for its principal
office. The Company has agreed to a 12 month extension with a three month notice
for  termination  of  the  lease  through  December  2003,  at an annual rate of
$116,000.  The  Company's  minimum  lease  payment  for 2003 is $58,000. For the
quarters  ended  June 30, 2003 and 2002, rental expense approximated $27,625 for
each  quarter.

     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  $6,545,455 in 2003 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 2002 and royalties payable to Fuel Tech at
June  30,  2003  are  $2,135.

MARKETING  AND  LICENSE  AGREEMENTS

     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. Clean Diesel has previously completed an
exclusive  ARIS  license  for  the  ARIS NOx reduction technology for stationary
applications  in  Japan.  CDT  receives royalties on each system sold by Mitsui.

     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  are  no  significant  ongoing  services  required to be performed by CDT.


                                      -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, 2002.

RESULTS  OF  OPERATIONS

     Product  sales and cost of sales were $123,000 and $64,000 respectively for
the  second  quarter  of 2003 versus $15,000 and $12,000 for 2002. Platinum Plus
fuel catalyst sales of $39,000 and $5,000 were recorded in the second quarter of
2003  and 2002, respectively. ARIS product sales of $53,000, primarily to Mitsui
&  Co., Ltd., were also recorded in the second quarter of 2003. The remainder of
product  revenue  in  2003  consists  of  additive  dispensing  equipment.

     Included  in  the  2003  and  2002  second  quarter revenue is $160,000 and
$4,000,  respectively,  of  license  and  royalty  income.  The 2003 license and
royalty  income is primarily from Combustion Component Associates Inc. (CCA) for
the  mobile ARIS technology in the US and from continuing royalties from Mitsui,
Ltd.  and  RJM  sales  of  ARIS  2000  systems.

     Year-to-date  sales  and  cost  of sales were $379,000 and $120,000 in 2003
versus  $90,000  and  $55,000  in  2002.  Included  in the total year revenue is
$169,000  and  $14,000  of  ARIS  license  and royalty revenue for 2003 and 2002
respectively.  Year-to-date  ARIS 2000 system sales for 2003 were $75,000 versus
$58,000  in  2002.  Year-to-date  Platinum  Plus FBC sales for 2003 were $80,000
versus  $17,000  in  2002.

     General  and  administrative  expenses increased $59,000 to $636,000 in the
second  quarter  2003  versus $577,000 in the same period of 2002. For the first
six  months  of  2003  general and administrative expenses increased $203,000 to
$1,338,000  versus  $1,135,000  in  2002.  The  rise  in  spending is related to
increases  in  marketing  and  sales personnel costs, travel expenses and higher
professional  fees  including  insurance  and  advisory  services.

     Research  and  development  expenses  decreased $130,000 to $170,000 in the
second quarter of 2003 versus $300,000 in the comparable period in 2002. For the
six  months  of  2003  research  and development costs are up $7,000 to $419,000
versus $412,000 in the same period in 2002. The increase is attributable to CARB
and  EPA  verification  programs  for  the  Company's  FBC.

     Patent  filing  costs  were $0 in both the second quarter of 2003 and 2002.
For  the first six months of the year patent cost decreased $27,000 to $0 in the
same  six  month  period  in 2002. The decrease is due to a change in accounting
policy  for which the Company will capitalize its patent costs and amortize such
costs  over  the  life  of  the  related  patent.

     Second  quarter  interest  income decreased $8,000 in 2003 to $2,000 versus
$10,000  in  the  comparable period in 2002. For the six months of 2003 interest
income  decreased  $19,000  to $6,000 versus $25,000 in the same period in 2002.
This  was the result of a decrease in the amount


                                      -10-
<PAGE>
of  cash  and  cash equivalents on hand in the second quarter of 2003 versus the
second  quarter  of  2002.

LIQUIDITY  AND  SOURCES  OF  CAPITAL

     Prior  to  2000,  the  Company  was  primarily  engaged  in  research  and
development  and  has  incurred  losses since inception aggregating $ 23,519,000
(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 product in 1999 and licensing revenue in 2000 and 2001, sales and
revenue  to  date  have  been  insufficient to cover operating expenses, and the
Company  continues to be dependent upon sources other than operations to finance
its  working  capital  requirements.

     For  the  six months ended June 30, 2003 and 2002, the Company used cash of
$1,366,000  and  $1,544,000  respectively,  in  operating  activities.

     At  June  30,  2003  and  December  31, 2002, the Company had cash and cash
equivalents  of  $552,000 and $2,083,000, respectively. The decrease in cash and
cash  equivalents  in 2003 was the result of the increased verification programs
with  EPA  and  CARB and the on-going marketing and operation costs. The Company
anticipates  incurring  additional  losses  through  at least 2003 as it further
pursues  its  commercialization  efforts.

     In  October 2002, Clean Diesel Technologies received $1.356 million (net of
$69,000 in expenses) through a private placement of 704,349 shares of its Common
Stock  on  the  AIM  (Alternative  Investment  Market)  London  Stock  Exchange.

     In  November 2000, the Company secured a $1,000,000 privately financed term
loan facility. In December 2000, the Company drew down $500,000 of the term loan
facility  and  in  March  2001 the remaining $500,000 of the term loan was drawn
down.  As  part  of  the  private  placement stock transaction in December 2001,
$750,000  of  the  outstanding  term loan plus accrued interest was converted to
common  stock.  The remaining $250,000 plus accrued interest was paid in cash in
January  2002.

     As  a  result  of the Company's recurring operating losses, the Company has
been  unable  to  generate  positive  cash  flow.  In  management's opinion, the
Company's cash balance at June 30, 2003 will be sufficient to fund the Company's
operations  through  the third quarter 2003. The Company will require additional
capital  to  fund  its  future operations. 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 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
June 30, 2003 there is substantial doubt as to the Company's ability to continue
as  a  going  concern.

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  small  payments  monthly  in various foreign
currencies  for patent expenses, product tests and registration, local marketing
and  promotion  and  consultants.


ITEM  4.     CONTROLS  AND  PROCEDURES

     Within  90  days  prior  to  the filling date of this report, the Company's
certifying  officers  performed  an  evaluation  of  the  effectiveness  of  the
Company's  disclosure  controls  and  procedures.  The  disclosure  controls and
procedures  were determined to be sufficient to ensure


                                      -11-
<PAGE>
that  material  information  relating to the Company, including its consolidated
subsidiaries,  is  made  known to the certifying officers within those entities,
particularly during the period in which this quarterly report is being prepared.

     There  were no significant changes in the registrant's internal controls or
in  other  factors  that could significantly affect these controls subsequent to
the  date  of  their evaluation, including any corrective actions with regard to
significant  deficiencies  and  material  weaknesses.


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

     1.     Consents  Authorizing  Increase  in  Authorized  Capital.
            ---------------------------------------------------------

             By forms of written consent received on or before May 20, 2003, the
holders  of  6,527,561  shares  of  CDT's common stock, or 54.5% of the total of
11,976,903  issued  and  outstanding  shares  as of the record date of March 24,
2003,  approved  of  an  increase in the authorized capital of CDT to 30,100,000
shares,  of  which  30,000,000  are  common shares and 100,000 preferred shares.

     2.     Annual  Meeting  June  11,  2003
            --------------------------------

     At  the CDT Annual Meeting, held on June 11, 2003, the holders of 7,257,974
shares  of  CDT's  common  stock,  or  60.6%  of the total 11,976,903 issued and
outstanding  shares  as  of the record date of May 16, 2003, were represented in
person  or  by  proxy,  and:

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

                                   Shares          Shares
           Name                      For          Withheld
           ----                      ---          --------

     John A. de Havilland         7,240,914         17,060
     Derek R. Gray                7,240,914         17,060
     Charles W. Grinnell          7,240,914         17,060
     Jeremy D. Peter-Hoblyn       7,240,914         17,060
     James M. Valentine           7,240,914         17,060


     (ii)  The  proposal  to  approve  the  appointment  of Ernst & Young LLP as
independent  auditors of CDT for the year 2003 and to approve their compensation
was  approved  by  a  vote  of  shares 7,240,914 for and 17,060 against and none
abstaining.

Item  5.   Other  Information
           None

Item  6.   Exhibits  and  Reports  on  Form  8-K
           a.   Exhibits
           None

           b.   Reports  on  Form  8-K


                                      -12-
<PAGE>
          (i)  A  report  was filed on June 16, 2003 to announce the election of
               Derek  R.  Gray  as  non-executive  chairman  of  the  Board  of
               Directors.

          (ii) A report was filed on June 2, 2003 confirming that the authorized
               capital  of  Clean  Diesel  Technologies, Inc. had increased from
               15,100,000  to  30,100,000  shares.




                                      -13-
<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.


Date: August 13, 2003                         By:  /s/Jeremy D. Peter-Hoblyn
                                                   -----------------------------
                                                   Jeremy  D.  Peter-Hoblyn
                                                   Chief  Executive  Officer
                                                   and  Director



Date: August 13, 2003                         By:  /s/David W. Whitwell
                                                   -----------------------------
                                                   David  W.  Whitwell
                                                   Chief  Financial  Officer,
                                                   Vice President and  Treasurer


                                      -14-
<PAGE>