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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 [NO FEE REQUIRED]

                  FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2001
                                       OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

    For the transition period from                    to
                                   ------------------    --------------------

                           COMMISSION FILE NO. 0-27432

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

           Delaware                                          06-1393453
-------------------------------                         ---------------------
(State or other jurisdiction of                           (I.R.S. Employer
 incorporation of organization)                         Identification Number)

                         SUITE 702, 300 ATLANTIC STREET
                               STAMFORD, CT 06901
                                 (203) 327-7050
           -----------------------------------------------------------
          (Address and telephone number of principal executive offices)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                     COMMON STOCK $0.05 PAR VALUE PER SHARE
                     --------------------------------------
                                (Title of Class)

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  (or  for  such shorter period that the
registrant  was required to file such reports), and (2) has been subject to such
filing  requirements  for  the  past  90  days.

                           Yes  X     No
                               ---       ---

Indicate  by  check mark if disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-K  is  not contained herein, and will not be contained, to the
best  of  the  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in  Part  III  of this Form 10-K or any
amendment  to  this  Form  10-K.

Aggregate  market  value  of  the  voting  stock  held  by non-affiliates of the
registrant  based  on the average bid and asked prices of March 15,  2002: $2.90

Indicate  number  of  shares  outstanding  of  each of the registered classes of
Common  Stock  at  March  15,  2002:  11,241,379  shares Common Stock, $0.05 par
value.
                      DOCUMENTS INCORPORATED BY REFERENCE:

Certain  portions  of the Proxy Statement for the annual meeting of stockholders
to be held in 2002 described in Parts II, III, and IV hereof are incorporated by
reference  in  this  report.
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<PAGE>
                             TABLE OF DEFINED TERMS

TERM              TERM DEFINITIONS
----------------  --------------------------------------------------------------
ARIS(TM) 2000     The Company's Advanced Reagent Injection System for Urea SCR

AIM               Alternative Investment Market of the London Stock Exchange

Bhp               Break horsepower per hour

BUWAL             Bundesamt fur Umwelt, Wald und Landschaft (German Federal
                  Office for Environment, Forest and Landscape)

CARB              California Air Resources Board

CDT               Clean Diesel Technologies, Inc.

CNG               Compressed Natural Gas

CO                Carbon Monoxide

CO2               Carbon dioxide

DOCs              Diesel Oxidizing Catalysts

DPFs              Diesel Particulate Filters

EGR               Exhaust Gas Recirculation

FBC               Fuel Born Catalyst

Fuel Tech         Fuel-Tech N. V., an affiliate of the Company

HC                Hydrocarbons

LOE-NOx(TM)       The Company's diesel fuel water emulsion technology

NESCAUM           North East States for Coordinated Air Use Management

NOx               Nitrogen Oxide

PFCs              Platinum Fuel Catalysts

Platinum Plus(R)  The Company's Platinum & Cerium fuel additive

PM                Particulate Matter

SCR               Selective Catalytic Reduction

US EPA            United States Environmental Protection Agency

Usg               US gallons

VERT              Program in Germany and Switzerland to develop, test and
                  certify diesel particulate filter systems


                                        2
<PAGE>
PART I

FORWARD-LOOKING  STATEMENTS

     Statements  in  this  Form  10-K  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."

ITEM  1.   BUSINESS

GENERAL

     Combustion  engine development is influenced by concern over global warming
caused  by  CO2  emissions  from  fossil  fuels  and  concern over toxic exhaust
emissions.  Since  CO2  is the result of combustion of fossil fuels, the primary
way to reduce CO2 emissions is to reduce fuel consumption.  The diesel engine is
as  much as 40% more fuel-efficient than gasoline engines.   Thus, increased use
of diesel engines relative to gasoline engines is one way to reduce overall fuel
consumption  and  thereby  significantly  reduce CO2 emissions.  Diesel engines,
however,  emit  higher  levels  of two toxic pollutants, namely particulates and
NOx, than gasoline engines fitted with auto catalysts.  Each of these pollutants
affects  human  health  and  the  environment.

     Clean  Diesel Technologies, Inc. "the Company", a Delaware corporation with
a  principal  place  of  business at 300 Atlantic Street, Stamford CT 06901, was
formed in 1994 as a wholly owned subsidiary of Fuel Tech to develop technologies
for  cleaning  up  harmful  emissions  from  diesel  engines while reducing fuel
consumption.  The Company was spun-off from Fuel Tech in December 1995 by way of
a  rights  issue.  Over  the  past  six  years,  the  Company  has developed its
technologies  and  is  now commercializing Platinum Plus(R) fuel borne catalyst,
and  the  ARISTM  2000  NOx  reduction  system.

     Management  has  worked  together for over 15 years in the chemical, power,
fuel  and  emission  control  fields  and  have  brought  the  Company  to  the
commercialization  stage  on  a cost effective basis by co-operative funding for
development  and demonstration programs with industry partners.  The Company has
a  strong  patent  position  with  26  US  patents  issued  and  five  US patent
applications  pending  as  well  as 63 other international patents issued and 68
international  patent  applications  pending.

TECHNOLOGIES  AND  PRODUCTS

     The Company's products, combined with other devices, can reduce particulate
emissions and NOx from diesel engines to or below the emission levels of natural
gas  engines, while also reducing fuel consumption.  This results in a reduction
in  fuel  costs  and  greenhouse  gas  emissions,  primarily  CO2, as well as in
emissions  of  particulates,  NOx,  CO  and  unburnt  hydrocarbons.

PLATINUM  PLUS(R)

     Platinum  Plus  is  a  patented,  fuel  soluble, fuel borne catalyst, which
contains  minute  amounts of platinum and cerium catalysts.  Platinum Plus takes
the  catalytic action into engine cylinders where it improves combustion thereby
reducing  particulates,  unburnt  hydrocarbons  and  CO  emissions  as  well  as
improving  fuel  economy.  Recent  fleet  tests  using  Platinum Plus have shown
improvement in fuel economy of between 3% and 12%.  Platinum Plus can be used on
its  own  with  either  regular  or  ultra  low  sulphur  diesel  fuel to reduce
particulate  emissions  by  10%  to  25% while also improving the performance of
particulate  filters  (which trap up to 95% of particulates but in doing so clog
up  with  soot)  by  burning  off  the soot particles and further reducing toxic
emission  components  of  CO  and  unburnt  hydrocarbons.

     From  1996  to  1999,  the Company defined and managed several research and
development  programs  on  platinum fuel catalysts which were conducted by Delft
Technical  University  (Netherlands), Ricardo Consulting Engineers (UK), Cummins
Engine  Company  (USA)  and  Southwest  Research  Institute  (USA).  Through its
strategy  of  using  independent test houses, the Company's small technical team
has  been  able to run several programs on a cost effective basis while bringing
in  a  wide  range  of  expertise.  Most  importantly,  the  results  have  been
independently  derived.

     Development  of  Platinum  Plus was completed in 1999.  In December of that
year,  the  Company received its US EPA registration of Platinum Plus for use in
bulk  fuel by refiners, distributors and fleets.  In 2000, the Company completed
the  European  VERT certification protocol for particulate filters and additives
for  use  with  particulate filters and in 2001 BUWAL approved Platinum Plus for
use  as  a  fuel  borne  catalyst  with  particulate  filters.

     Over  the  past 18 months, seven large fleet demonstration trials have been
carried out in the US in a range of industries including the  beverage delivery,
waste  hauling, grocery and fuel delivery.  The improvement in fuel economy from


                                        3
<PAGE>
using  Platinum  Plus ranged from 3% to 12% with an average 6% improvement.  The
best  results  were  generally  attributable to short haul "stop and go" driving
where  Platinum  Plus  has  the  greatest  opportunity to improve the combustion
process.  The  field  testing  programs  have confirmed the 3% to 8% improvement
measured  on  engine  test beds at both Cummins Engine Company and the Southwest
Research  Institute.

ARIS  2000(TM)

     The  ARIS  2000 (advanced reagent injection system) is a patented injection
system  for  the  reduction  of  NOx  emissions from diesel engines.  The system
comprises  a  single  fluid  computer-controlled  injector that provides precise
injection  of  non-toxic urea-based reagents into the exhaust of a stationary or
mobile  engine  where  it  converts  NOx across a catalyst to nitrogen and water
vapor.  The  system  has  shown  NOx reductions of up to 90% or more on a steady
state  operation  and of up to 85% in transient operations.  This process, known
as  selective catalytic reduction (SCR), has been in use for many years in power
stations  and  is  considered  by  management to be well proven.  ARIS 2000 is a
miniature  version  of  the  SCR  injection  system.  It  is designed for volume
production  and  is  applicable  to  both  stationary  diesel  engines for power
generation  and  mobile  diesels  used  in  trucks,  buses,  trains  and  boats.

     In  1996, the Company recruited a small team to develop an injection system
for  NOx  control.  The Company's target technical specifications for the system
were  based on the assumption that new emission control requirements would force
NOx  emission  levels  from  diesel  engines  down  very significantly to levels
similar to those required for gasoline engines fitted with auto catalysts.  From
1997 to 1998, the Company investigated and patented several methods of achieving
this  by  using urea and other ammonia precursors in both liquid and solid form.
In  1998  and  1999,  the Company produced prototypes, which were tested both by
potential  customers and on a test rig.  Subsequently, pre-production units were
made  and  supplied  to  engine  manufacturers  for selected test programs.  The
Company  sold  the  first  commercial  systems  in  late 1998 and in early 1999.
During  1998  and  1999, the Company also produced prototypes of the mobile ARIS
system.  Both  systems  use  the  same  controls  and injectors.  The Company is
seeking partners to complete the development and commercialization of the mobile
ARIS  system.

THE  MARKET  AND  THE  REGULATORY  ENVIRONMENT

     Clean  Diesel  estimates  that  worldwide annual consumption of diesel fuel
amounts  to  approximately 200 billion usg.  Consumption in the major markets is
summarized  as  follows:

<TABLE>
<CAPTION>
                                                     Annual consumption of
                                                  diesel fuel - billion usg/year
<S>                                               <C>
United States                                                                 50
Europe                                                                        60
Pacific Rim                                                                   50
Rest of the World                                                             40
                                                                ----------------
                                                                             200
                                                                ================
</TABLE>

NEW  DIESEL  ENGINES

     While  engine  manufacturers  have,  to  date, met emissions regulations by
engine  design  changes  (which  tend  to increase fuel consumption), management
believes  that  further reductions can only be achieved by using combinations of
cleaner  burning  fuels  and  after treatment systems such as diesel particulate
filters  and  catalytic  systems  for  NOx  reduction.

     There  is  an  immediate  market  for  NOx reduction systems for stationary
diesel engines, many of which are used in power generation.  Some 9,000 new high
horse  power  engines are sold each year.  An SCR system comprising an ARIS 2000
injection  system  and a suitable catalyst is being sold into this market by the
RJM  Corporation  (a  licensee  of  the  ARIS  2000  technology).

     In  the last two years, emissions regulations for new mobile diesel engines
in  the  major  world  markets have continued to tighten.  Emission levels which
came  into effect in 1999 for new vehicles were some 40% to 90% less than levels
of  the  mid  1980s.  Regulations  for introduction over the next seven years in
Europe,  the United States and Japan should reduce emission levels by 85% to 99%
below  the  mid  1980s  levels.  The  market for mobile NOx reduction systems is
expected  by management to develop between 2004 and 2007 in conjunction with the
release  of  these  new  regulations, which are expected to call for particulate
emissions  and NOx limits of 0.01 and 0.2g/bhp hour respectively on new engines.

     In  the opinion of management, the US market for diesel engines is expected
to grow significantly in the next few years based on fuel economy considerations
if  NOx  and particulate emissions can be controlled.  Engine manufacturers have
indicated  that  the  regulations  for  2007  cannot  be  met without NOx and/or
particulate  after  treatment.


                                        4
<PAGE>
     In  Europe,  where diesel vehicles represent nearly 26% of all new vehicles
sold, two of the larger manufacturers have announced plans to introduce vehicles
with  additive/filter  systems.  In this application, the additive is part of an
onboard  dosing system.  In Europe, regulations for heavy-duty vehicles for 2005
may require the use of particulate filters.  Japan is proposing requirements for
particulate  filters  as  early  as  2003  on  new  heavy  duty  diesels.

EXISTING  DIESEL  ENGINES  AND  THE  RETROFIT  MARKET

     While  much  of  the  regulatory  pressure  and  the  response  from engine
manufacturers  has  been  focused  on  new engine emissions, there is increasing
concern over pollution from existing diesel engines which have a life of some 30
years  or  more  and  hence  there  is  a  growing interest in the potential for
retrofitting  diesel  engines  with  emission  reduction systems.  These include
stationary  diesels,  construction  equipment and public transportation vehicles
such  as  buses  as  well  as  truck  fleets.

     In  1998,  CARB  declared  diesel  particulates to be toxic and in 2000, it
proposed  reductions  in  particulate  emissions  from over one million existing
engines  in  California  as well as more stringent controls for new engines.  In
March  2000,  the  US  EPA  announced a program to provide emissions credits for
reduction  in emissions from existing heavy-duty diesel engines.  The US EPA has
stated  its  objective  for  retrofitting  more  than  100,000  vehicles  with
particulate  controls  by  the end of 2002.  In response, areas such as Houston,
Sacramento  and  Seattle  are  known  to  be  proposing  retrofit  programs.

     Japan  has  announced  a  retrofit  program, which would require all diesel
vehicles  residing  or passing through Tokyo to install particulate matter traps
phasing  in  between  April  2003  and  April  2006.

MARKET  OPPORTUNITY

     Continuing tightening of clean air standards, emission control regulations,
pressure  for  fuel  efficiency  and  growing  international  awareness  of  the
greenhouse  effect  provide  the Company with a substantial opportunity in world
markets.

     Without  compromising  the  fuel  economy benefits of diesel, a significant
reduction  of  particulate  and  NOx  emissions  can  only  be  achieved  using
combinations  of  improved  engine  design,  cleaner  burning  fuels  and  after
treatment systems such as diesel particulate filters and catalytic systems.  The
Company's  Platinum  Plus (which improves combustion catalytically) and the ARIS
2000  technology  (which  allows engines to be tuned for best fuel economy while
reducing  NOx  emissions)  can form key components of both these after treatment
systems.

     The  convergence  of requirements for emission compliance and the high cost
of  fuel,  make  the use of the Company's products economical.  With diesel fuel
selling  at  about  $1.50  per  usg  in  the  United  States,  the  fuel economy
improvement  alone  pays for the use of Platinum Plus.  A fuel saving of 3% will
provide  a  payback  to  US  fleet operators.  Platinum Plus in controlled fleet
tests  showed  an  average of 6% fuel economy improvement.   In Europe, where in
some  countries  diesel fuel retails for as much as $4.00 per gallon, because of
the  high  tax  component,  fuel  economy  benefits  are  even  more pronounced.

     Accordingly, there are two basic market drivers for the Company's products,
namely  from  customers  who  want  fuel economy or customers who need to reduce
emissions.  Most  customers  for Platinum Plus can be categorized as: OEM engine
manufacturers  for  emission  control; retrofit of existing engines for emission
control;  and  fuel  economy  customers  (fleets).

MARKETING  STRATEGY  AND  COMMERCIALIZATION

     The  Company's  plan is to supply finished fuel additive products direct in
certain  North  American  markets  and  to  license  its ARIS 2000 NOx reduction
technology  and  Platinum  Plus  products  for international markets and in some
sectors  of  the  North  American market.  Large chemical and additive companies
will  be  supplied  platinum  concentrate by the Company and they will blend and
market Platinum Plus.  The Company believes its strategy of licensing represents
the  most  efficient  way  to  gain  widespread distribution quickly and exploit
worldwide  demand  for  its  technologies.

Over the past 18 months, the Company has entered into a number of license and/or
marketing  agreements.

     -  The  Company  has licensed the RJM Corporation to market exclusively the
          ARIS  2000  technology  for stationary, marine and railroad diesels in
          the  Americas.  The  market in the US alone is estimated at over 9,000
          new  engines  per year with an installed base of over 150,000 engines.
          Clean  Diesel  received $1.1 million in license revenue over the first
          18 months from the RJM Corporation and is receiving a $1,500 to $2,500
          royalty  on  each  unit  sold.
     -  The  Company  has exclusively licensed Mitsui & Co., Ltd. ("Mitsui" ) to
          market  the  ARIS 2000 technology for stationary engines in Japan. The
          Company  received $495,000 in non-refundable up front license fees and
          will  earn  a  $1,500  to  $2,500  royalty  on  each  unit  sold.


                                        5
<PAGE>
     -  Mobile  ARIS  licenses  -  Several  parties  are in discussions with the
          Company  for non-exclusive licenses for the mobile NOx retrofit market
          in  the United States and Mitsui has an option for exclusive marketing
          and  sales  rights  for  the  ARIS  2000  mobile  technology in Japan.
     -  The  Lubrizol  Corporation  is  exclusively  licensed  for  the  use  of
          Platinum  Plus  for  filter  applications  in  Europe.
     -  Baker  Petrolite  Corporation (a  division  of Baker Hughes) is licensed
          for  the  non-exclusive  distribution of Platinum Plus to refiners and
          terminals  in  the  United  States.
     -  Global Companies,  LLC  is licensed to supply Platinum Plus to fleets in
          New  England,  as  the  exclusive  refiner  distributor.
     -  An  agreement  has  been  signed  with  ValvTect  Petroleum  Products (a
          division  of  RPM, Inc.) for the supply of Platinum Plus to fleets and
          oil  jobbers  in  the  United  States.

HEALTH  EFFECTS  AND  REGISTRATION  OF  ADDITIVES

     Metallic  additives  have come under scrutiny for their possible effects on
health.  The Company registered its platinum additive in 1997 in both the US and
United  Kingdom.  The  platinum  -  cerium  bimetallic additive required further
registration  in  the  US and that process involved a 1,000-hour engine test and
extensive emission measurements and analysis.  The registration was completed in
1999  and  issued  in  December  1999.

     Germany,  Austria  and  Switzerland  have  set  up  a  protocol  (VERT) for
approving  diesel  particulate filters and additive systems used with them.  The
Company  completed  the  required  tests  under the VERT protocol in 2000 and in
January 2001, the Swiss authority BUWAL approved the Platinum Plus fuel additive
for  use  with  a  filter.

     Engine  tests  show  that  the  amount  of platinum emitted from the use of
Platinum  Plus  is  roughly  equivalent  to  platinum  attrition from automotive
catalytic  converters.

     In  December  1996,  the  United  Kingdom Ministry of Health's Committee on
Toxicity  reviewed  the product and all the data submitted by the Company and in
its  response stated "The Committee is satisfied that the platinum emission from
vehicles would not be in an allergenic form and that the concentrations are well
below those known to cause human toxicity."  In 1997, Radian Associates reviewed
the  Company's data and the literature on platinum health effects and concluded,
"the  use  of Clean Diesel Technologies Platinum containing diesel fuel additive
is  not  expected  to  have  a adverse health effect on the population under the
condition  reviewed."  Radian also concluded that emissions of platinum from the
additive  had  a  margin  of  safety ranging from 2,000 to 2,000,000 times below
workplace  standards.

SOURCES  OF  SUPPLY

     The Company has outsourcing arrangements with two companies in the precious
metal  refining  industry and may make arrangements with others. The Company has
made  the  product  itself  in  the past but considers outsourcing to a precious
metal  refinery  to  be more cost effective. The Company has established several
sources  of  cerium  to  use  in  its  bimetallic  diesel  additive.

RESEARCH  AND  DEVELOPMENT

     During  2001,  the  Company employed 3 individuals, including two executive
officers,  in  engineering  and  product  development.  During  the  years ended
December  31,  2001,  2000,  and  1999,  the  Company's research and development
expenses exclusive of patent costs totaled approximately $365,000, $534,000, and
$827,000,  respectively. The Company expenses all research and development costs
as  incurred.

PROTECTION  OF  PROPRIETARY  INFORMATION

     The Company holds the rights to a number of patents and patent applications
pending.  There  can  be  no  assurance that pending patent applications will be
approved  or  that  the  issued  patents  or  pending  applications  will not be
challenged  or  circumvented  by  competitors.  Certain  critical  technology
incorporated  in  the  Company's  products  is  protected by trademark and trade
secret  laws  and  confidentiality  and  licensing  agreements.  There can be no
assurance that such protection will prove adequate or that the Company will have
adequate  remedies  for  disclosure  of  its  trade secrets or violations of its
intellectual  property  rights.

INSURANCE

     The  Company  maintains  coverage  for  the customary risks inherent in its
operations.  Although the Company believes its insurance policies to be adequate
in the amount and coverage for its current operations, no assurance can be given
that  this  coverage  will,  in fact, be or continue to be available in adequate
amounts or at a reasonable cost or that such insurance will be adequate to cover
any  future  claims  against  the  Company.


                                        6
<PAGE>
EMPLOYEES

     The Company has six full-time employees. In addition, one executive officer
of  Fuel Tech provides management and legal services for the Company pursuant to
a  Management  and Services Agreement between Fuel Tech and the Company on an as
needed  basis.  The  Company  also  retains two outside technical consultants on
specific  projects  related  to  platinum, engines and NOx reduction and retains
several  outside  marketing  agents.

     The  Company enjoys good relations with its employees and is not a party to
any  labor  management  agreements.

RISK  FACTORS  OF  THE  BUSINESS

     Investors  in  the  Company should be mindful of the following risk factors
relative  to  the  Company's  business:

LIQUIDITY  &  CONTINUING  OPERATING  LOSSES

     Prior  to  2000,  the  Company  was  a  development  stage business and has
incurred  losses  since  inception totaling $19,385,000 (excluding the effect of
non-cash  preferred  stock  dividends).  At the date of this report, the Company
has  cash  resources estimated to be sufficient for its needs through the second
quarter  2003.  See  the text below under the captions "Liquidity and Sources of
Capital" in Item 7, "Management's Discussion and Analysis of Financial Condition
and  Results  of  Operations,"  elsewhere  herein.

     The  Company  has  had  minimal  revenues  through  December 31, 2001.  The
Company  expects  to  continue  to incur operating losses at least through 2002.
There  can  be no assurance that the Company will achieve or sustain significant
revenues  or  profitability  in the future. See Item 7, "Management's Discussion
and  Analysis  of  Financial  Condition  and  Results  of Operations," elsewhere
herein.

COMPETITION

     Competition  in  the  diesel  fuel  additive  market is from other additive
suppliers,  supplying  other  metallic  additives.   The Company competes on the
basis  of  effectiveness,  price, proprietary technology, and ease of use of the
PFCs.

     Competition  in  the  NOx  control  market  is  from  other  suppliers  of
reagent-based  post-combustion  NOx  control  systems  including  large,
well-established  catalyst  and  engine manufacturing companies. The Company has
proprietary  technology.

NEED  FOR  REGISTRATION

     The  Company  needs  to  comply  with  registration  requirements  for each
territory in which it sells its products.  The Company received its registration
from  USEPA  under  Tier  1  of  211(b)  registration  for its platinum - cerium
additive  in  December  1999.  It  can  sell  the  product  with  its  current
registration  status,  which  provides  for pass through rights for the additive
companies  to  use the product without further registration.  However, there are
provisions in the Act under which EPA could require further testing. The EPA has
not  exercised these provisions yet for any additive. In Europe, the Company has
registered  in Switzerland and is registering in Germany.  Further testing could
be  needed  in  these  or  other  territories.

     The  Company's  business  is  impacted  by  air  quality  regulations  and
regulations  governing  vehicle  emissions  as well as emissions from stationary
engines.  If  such  regulations  were  to  be  abandoned  or  held invalid,  the
Company's  prospects  would  be  adversely  affected.

NO  ASSURANCES  OF  ADDITIONAL  FUNDING

     The  Company  may seek additional funding in the form of a private offering
of  additional  shares  of the Company's equity securities. Any offering of such
securities  may  result  in  dilution  to  the  stockholders of the Company. The
ability  of the Company to consummate financing will depend on the status of the
Company's  marketing  programs,  and  field  trials,  as well as conditions then
prevailing  in the relevant capital markets. There can be no assurance that such
funding  will  be available if needed, or on terms acceptable to the Company. In
the  event  that  the Company needs additional funds and is unable to raise such
funds, the Company may be required to delay, scale back, or severely curtail its
operations or otherwise impede its ongoing commercialization, which could have a
material  adverse effect on the Company's business, operating results, financial
condition  and  long-term  prospects.  See  Item 7, "Management's Discussion and
Analysis  of  Financial  Condition and Results of Operations," elsewhere herein.

POSSIBLE  VOLATILITY  OF  STOCK  PRICE

     There  has  been  significant  volatility  in the market prices of publicly
traded  shares  of  emerging  growth  technology  companies.  Factors  such  as
announcements  of  technical developments, establishment of strategic alliances,


                                        7
<PAGE>
changes  in  governmental  regulation, and developments in patent or proprietary
rights may have a significant effect on the market price of the Company's Common
Stock.

RELATIONSHIP  WITH  FUEL  TECH;  CONFLICTS  OF  INTEREST

     One  Director/Officer  of  Fuel  Tech  and  its  subsidiaries  is  also  a
Director/Officer of the Company, and Fuel Tech as a 16.3% common stockholder, is
in a position involving the possibility of conflicts of interest with respect to
transactions  concerning  the  Company,  if  any transactions were to occur. The
Company  currently  has  four  directors  independent of Fuel Tech, see Item 13,
"Certain  Relationships and Related Transactions" and Subsequent Events footnote
in  Item  8.

UNCERTAINTY  OF  MARKET  ACCEPTANCE

     The  commercial  success  of  the  Company's  products  will  depend  upon
acceptance  by  the fuel additive, oil, and engine industries, and acceptance by
governmental  regulatory bodies. This market acceptance will in turn depend upon
competitive  developments  and  the  Company's  ability  to  demonstrate  the
efficiency,  cost  effectiveness,  safety,  and  ease of use of the PFCs and NOx
control  products  of  the Company. The failure by the Company to receive market
acceptance for the PFCs and NOx control products would have an adverse effect on
the Company's business, operating results and financial condition. See "Products
and  Markets"  in  Item  1,  "Business."

NO  ASSURANCE  OF  PROTECTION  OF  PATENTS  AND  PROPRIETARY  RIGHTS

     The  Company  holds licenses to a number of patents, holds certain patents,
and  has  patent  applications  pending.  There can be no assurance that pending
patent  applications  will  be  approved  or  that the issued patents or pending
applications  will  not  be  challenged  or circumvented by competitors. Certain
critical  technology  incorporated  in  the  Company's  products is protected by
trademark  and  trade  secret laws and confidentiality and licensing agreements.
There  can  be no assurance that such protection will prove adequate or that the
Company  will  have  adequate  remedies  for  disclosure of its trade secrets or
violations  of  its intellectual property rights. See "Protection of Proprietary
Information"  in  Item  1,  "Business."

PLATINUM  PRICE

     The  cost  of  platinum  may have a direct impact on the future pricing and
profitability  of  the  Platinum  Plus  FBCs.  Although  the  Company intends to
minimize  this risk through various purchasing and hedging strategies, there can
be  no assurance that the Company will be able to do so. A significant prolonged
increase  in  the  price of platinum could have a material adverse effect on the
Company's  business,  operating  results  and  financial  condition.

DEPENDENCE  ON  ATTRACTING  AND  RETAINING  PERSONNEL

     The  success  of  the  Company will depend, in large part, on the Company's
ability  (i)  to  retain  current  key  personnel;  (ii)  to  attract and retain
additional  qualified  management,  scientific, and manufacturing personnel; and
(iii) to develop and maintain relationships with research institutions and other
outside  consultants.  The loss of key personnel or the inability of the Company
to  hire or retain qualified personnel, or the failure to assimilate effectively
such  personnel  could have a material adverse effect on the Company's business,
operating  results  and  financial  condition.  See  "Employees"  in  Item  1,
"Business."

NO  DIVIDENDS

     The Company has to date not paid dividends on its Common Stock and does not
intend  to  pay  any  dividends  to  its  common stockholders in the foreseeable
future.  The  Company  currently  intends  to  reinvest earnings, if any, in the
development  and  expansion  of  its  business.

ITEM  2.  PROPERTIES

FACILITIES

     The  Company  has  leased  for administrative purposes 2,900 square feet of
office  space  at 300 Atlantic Street, Stamford, Connecticut.  The Company has a
signed  a  lease  extension  for  the period March 1, 1999, through February 28,
2002,  and  agreed  to  a  six month lease extension through August 2002, with 3
months  notice  to  terminate after that through December 2002. The lease has an
annual  cost  of  $116,000.

PATENTS  AND  TECHNOLOGY  ASSIGNMENTS

     The  Company's  technology  is  comprised  of patents, patent applications,
trade  or  service  marks,  data,  and know-how. This technology was acquired by
assignment  from  Fuel  Tech  or developed internally. This assignment agreement
provides  for  running royalties of 2.5% of gross revenues derived from the sale
of  the PFCs, commencing in 1998 and terminating in 2008. The Company may at any
time  terminate  this  royalty  obligation by payment to Fuel Tech of amounts in
2002  of  $7.6  million  and  declining  annually  to  $1.1 million in 2008. The
Company,  as  owner,  maintains  the  technology  at  its  expense.


                                        8
<PAGE>
     During  2001,  the  Company filed two additional US patent applications and
15  international  patent  application.  The  Company  now  has a total of 26 US
patents  granted  and  63  international  patents.  There are currently  five US
patent  applications  pending  and  68 international applications pending. These
patents  and  patent  applications  cover  the  means  of  controlling  the four
principal  emissions  from  diesel  engines  (NOx,  particulates,  CO,  and HC).

ITEM  3.     LEGAL  PROCEEDINGS

          The  Company  is  not  involved  in  any  legal  proceedings.

ITEM  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     On  December  10,  2001 CDT requested the Preferred Stockholders consent to
the  conversion of the Preferred Stock. In return, the mandatory conversion rate
was  increased  to  373.33.

     The  amendment  approved  with  CDT  receiving  3,936,960 (81%) affirmative
votes,  0  negative  (0%)  votes  and the holders of 937,324 (19%) votes did not
return  their consent.  According to the Certificate, 2,924,570 (60%) votes were
required  to  adopt  the  amendment.  The  Preferred Stock votes on the basis of
333.33 votes for each share of Preferred Stock of which there were 14,623 shares
outstanding and of record on December 10, 2001, entitled to a total of 4,874,284
votes.

PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

COMMON  STOCK

     The  Company's  Common  Stock  is  traded in the US in the over-the-counter
(OTC)  market  and  on  the  London  Stock  Exchange through the AIM. Reports of
transactions  of  the  Company's  shares  are  available  on  the OTC Electronic
Bulletin  Board  (Symbol  CDTI) and on the London Stock exchange (Symbol CDT and
CDTS).  At  March  14,  2002, there are 179 registered holders and approximately
979  beneficial  holders  of  Common  Stock.

     No  dividends  have been paid on the Company's Common Stock and the Company
does  not  intend  to  pay  dividends on these shares in the foreseeable future.

<TABLE>
<CAPTION>
                                                      OTC         LONDON STOCK EXCHANGE
                                                BULLETIN BOARD              AIM
                                                   (IN US$)              (IN GBP)
    STOCK PRICE DATE:                          HIGH         LOW       HIGH      LOW
    ---------------------------------------  -----------  --------  --------  --------
<S>                                          <C>          <C>       <C>       <C>
   1st Quarter  2000. . . . . . . . . . . . . . 3.75          1.63        --        --
   2nd Quarter  2000. . . . . . . . . . . . . . 2.63          1.25        --        --
   3rd Quarter  2000. . . . . . . . . . . . . . 2.50          1.63        --        --
   4th Quarter  2000. . . . . . . . . . . . . . 2.06          0.81        --        --

   1st Quarter  2001. . . . . . . . . . . . . . 1.19          0.81        --        --
   2nd Quarter  2001. . . . . . . . . . . . . . 2.38          1.48        --        --
   3rd Quarter  2001. . . . . . . . . . . . . . 2.15          1.50        --        --
   4th Quarter  2001. . . . . . . . . . . . . . 2.65          1.60      1.63      1.64
</TABLE>

SALES  AND  USES  OF  UNREGISTERED  SECURITIES  DURING  THE  PERIOD

     Pursuant  to a Regulation S exemption with respect to an offshore placement
and  a  Sec.4  (2)  private placement exemption under the Securities Act of 1933
(the  "Act"), the Company sold, effective December 28, 2001, 2,580,664 shares of
its  Common  Stock.  The  price  of  the  Common  Stock  was  1.40 GBP per share
(approximately  $2.00  per  share).  The Company also converted 15,897 shares of
Series A Preferred Stock into 5,934,829 shares of Common Stock, which reflects a
12%  premium  (373.33  common  shares  per  one  Series  A Preferred share). The
proceeds of the Common Stock issuance and Series A Preferred Stock conversion of
approximately  $3.721  million  (net of expenses and $0.817 million in term loan
re-payment)  will  be  used  for  general  corporate  purposes  of  the Company.

     Also  pursuant  to  Regulation S and Sec.4 (2) exemptions from registration
under  the  Act,  the  Company,  under  a  $1  million  Loan  Facility Agreement
effective  November  14,  2000, issued to private lenders $500,000 of its Senior
Promissory  Notes and Warrants to purchase 75,000 shares of the Company's Common
Stock.  In  March 2001, the Company issued an additional  $500,000 of its Senior
Promissory  Notes and Warrants to purchase 25,000 shares of the Company's Common


                                        9
<PAGE>
Stock.  In  December  2001,  in  exchange  for Common Stock, the Company retired
$750,000  of  its  Senior Promissory Notes including accrued interest of 10% per
annum.

ITEM  6.     SELECTED  FINANCIAL  DATA

     The  Company  was  incorporated  on  January  19,  1994,  as a wholly owned
subsidiary  of  Fuel  Tech.  Effective  December 12, 1995, Fuel Tech completed a
Rights  Offering of the Company's Common Stock, with Fuel Tech retaining a 27.6%
ownership interest in the Company. In 2001 and 2000, the Company obtained $3.721
million  and $1.021 million of proceeds, respectively, through private placement
sale of shares of its Common Stock and Series A Convertible Preferred Stock (the
"Series  A  Preferred  Stock"),  respectively.  As  a  participant  in  these
financings,  Fuel  Tech  owns 1,825,119 shares of the Company's Common Stock and
has  an  approximate  16.3%  interest  in  the  Company  at  December  31, 2001.

     As discussed elsewhere herein, prior to 2000, the Company was a development
stage  business.  The  following  selected  data  are derived from the financial
statements  of  Clean  Diesel  Technologies,  Inc.  The  data  should be read in
conjunction  with  the  financial  statements, related notes and other financial
information  herein.

<TABLE>
<CAPTION>
                                                    FOR THE YEARS ENDED DECEMBER 31,
                                               -----------------------------------------
                                                2001    2000     1999     1998    1997
                                               ------  -------  -------  ------  -------
<S>                                            <C>     <C>      <C>      <C>     <C>
STATEMENTS OF OPERATIONS DATA                    (in thousands, except per share data)

Product Revenue                                $  176  $  199   $  142   $   46  $  199
License and Royalty Revenue                     1,424     383
                                               ------  -------  -------  ------  -------
Total Revenues                                  1,600     582      142       46     199
Costs and expenses:
Cost of product sales                             117     133       81       29     132
General and administrative                      1,858   1,799    1,585    1,515   1,730
Research and development                          365     534      827    1,009   1,985
Patent filing and maintenance                     196     152      134      156     237
                                               ------  -------  -------  ------  -------

Loss from operations                              936   2,036    2,485    2,663   3,885
Interest (income) expense, net                    170     (35)     (44)      57    (121)
Cost of withdrawn Rights Offering                  --      --       --      264      --
                                               ------  -------  -------  ------  -------
Net loss before preferred stock dividends       1,106   2,001    2,441    2,984   3,764

Preferred Stock Dividend (non-cash)               621     712      393       --      --
One-time Preferred Stock conversion premium     1,276      --       --       --      --
One-time imputed non-cash preferred dividend       --      --    1,750       --      --

Net loss attributable to common stockholders   $3,003  $2,713   $4,584   $2,984  $3,764
                                               ======  =======  =======  ======  =======

Basic and diluted loss per common share        $ 1.08  $ 1.03   $ 1.77   $ 1.19  $ 1.50

Weighted-average shares outstanding             2,777   2,631    2,594    2,517   2,517

Cash dividends paid                            $ 0.00  $ 0.00   $ 0.00   $ 0.00  $ 0.00
</TABLE>

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                               -----------------------------------------
                                                2001    2000     1999     1998    1997
                                               ------  -------  -------  ------  -------
<S>                                            <C>     <C>      <C>      <C>     <C>
BALANCE SHEET DATA                                           (in thousands)

Current assets                                 $4,612  $  965   $1,311   $1,940  $1,682
Total assets                                    4,658   1,057    1,346    1,985   1,750
Current liabilities                               808     400      494      686     894
Long-term liabilities                             368     808      196       --     395
Working capital                                 3,804     565      817    1,254     788
Stockholders' equity (deficit)                  3,482    (151)     656    1,299     461
</TABLE>


                                       10
<PAGE>
ITEM  7.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
RESULTS  OF  OPERATIONS

     Prior  to  2000,  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 EPA
registration  for  its  platinum  -  cerium  product  and  completed  its  first
commercial  sales, accordingly, in the opinion of management, the Company was no
longer  a  development  stage  enterprise.

RESULTS  OF  OPERATIONS
2001  VERSUS  2000

     Revenues  and  cost  of  product  sales  were  $1,600,000  and  $117,000,
respectively,  in 2001 versus $582,000 and $133,000, respectively, in 2000.  The
2001  revenues  consist  of Platinum Plus sales, ARIS 2000 system sales and ARIS
license  revenue  and  royalties.

     The  Company  has  received  its  EPA  registration  of the platinum-cerium
additive.  Field trials of the platinum-cerium additive started in 2000 and have
continued  in  2001.  In  2001,  sales  of  the platinum-cerium additive totaled
$114,000.  Based  on  initial  trial  results  and licensing agreements, ongoing
revenues  from  sales  of  its  Platinum  Plus  additive  are  expected  from
distributors,  refiners,  additive  marketing  companies  and  fleets.

     The  Company  identified  a market opportunity for urea selective catalytic
reduction  (SCR)  systems  for  use with stationary diesel engines primarily for
power generation.  The ARIS 2000 is a single fluid injection and metering system
complete  with  an  electronic  control  unit that can be integrated with engine
electronic  and  diagnostic  systems.  The  Company  has  licensed the ARIS 2000
system  for stationary diesel engines in North, South and Central America to the
RJM  Corporation and completed a license with Mitsui for Japan with an option on
the mobile ARIS technology.  Total sales of systems and license/royalties of the
ARIS  2000  in  2001  was $62,000 and $1,424,000 respectively versus $84,000 and
$306,000  in  2000  respectively.  The  Company  and  its licensee have sold and
installed  over  100  systems.  The  Company  believes  that  the  ARIS 2000 NOx
reduction  system  has  applications  for  both  stationary  engines  and mobile
engines.  While  the ARIS system  for stationary use is being sold commercially,
the  ARIS  system  for  mobile  applications  needs further development from the
present  prototype  stage.  The  Company  believes that the ARIS 2000 system can
most  effectively  be  commercialized through licensing several companies with a
related  business  in these markets.  The Company is actively seeking to license
the  mobile  technology  and  the  stationary  technology  in  Europe  and Asia.

     General  and  administrative  expenses increased to $1,858,000 in 2001 from
$1,799,000  in  2000.  The  increase  is  the result of non-cash warrant expense
associated  with  investor relation activities partially offset by lower  travel
expense in 2001. Research and development expenses decreased to $365,000 in 2001
from  $534,000  in  2000. The continued reduction in 2001 is due to the shift in
focus  from  research  and  development  to  commercialization.

     Patent filing and maintenance expenses increased to $196,000 in 2001 versus
$152,000  in  2000.  The  increase is due in part to maintaining the patents and
filing  new  applications.   Interest  income  decreased to $11,000 in 2001 from
$38,000  in 2000.  Interest expense increased to $181,000 in 2001 from $3,000 in
2000  due  to  interest  expenses  associated  with  the  Term  Loan  financing
arrangement.

     In  2001,  the  Company  recorded  $1,897,000  of  in-kind  preferred stock
dividends  on  its  Series  A  Preferred  Stock.  In  2000, the Company recorded
$712,000  of  in-kind preferred stock dividends on its Series A Preferred Stock.

2000  VERSUS  1999

     Revenues  and  cost  of  product  sales  were  $582,000  and  $133,000,
respectively,  in  2000 versus $142,000 and $81,000, respectively, in 1999.  The
2000  revenues  consist  of  Platinum Plus sales and license revenues, ARIS 2000
license  revenues  and  royalties  and  ARIS  2000  system  sales.

     The  Company  has  received  its  EPA  registration  of the platinum-cerium
additive.  Field trials of the platinum-cerium additive started in 1999 and have
continued  in  2000.  In 2000, sales of the platinum-cerium additive and license
revenue,  totaled  $115,000  and  $77,000  respectively.  Based on initial trial
results, ongoing revenues from sales of its Platinum Plus additives are expected
from  sales  to  fleets  and  aftermarket  products and in later years to engine
manufacturers  for  inclusion  with  an "onboard dosing" system on new vehicles.

     The  Company  identified  a market opportunity for urea selective catalytic
reduction  (SCR)  systems  for  use with stationary diesel engines primarily for
power generation.  The ARIS 2000 is a single fluid injection and metering system
complete  with  an  electronic  control  unit that can be integrated with engine
electronic  and  diagnostic  systems.  The  Company  has  licensed the ARIS 2000


                                       11
<PAGE>
system  for stationary diesel engines in North, South and Central America to the
RJM  Corporation  and  completed a limited license with Mitsui for Japan.  Total
sales  of systems and license and royalties of the ARIS 2000 in 2000 was $84,000
and  $306,000 respectively. The Company and its licensee have sold and installed
26  systems.  The  Company  believes that the ARIS 2000 NOx reduction system has
applications  for  both  stationary  engines and mobile engines.  While the ARIS
2000  for  stationary use is being sold commercially, the ARIS system for mobile
applications  needs  further  development from the present prototype stage.  The
Company  believes  that  the  ARIS  2000  system  can  most  effectively  be
commercialized  through  licensing  several companies with a related business in
these markets.  The Company is actively seeking to license the mobile technology
and  the  stationary  technology  in  Europe  and  Asia.

     General  and  administrative  expenses increased to $1,799,000 in 2000 from
$1,585,000  in 1999. The increase is primarily the result of increased marketing
expense  related  to  the  commercialization  of  Platinum  Plus.  Research  and
development  expenses  decreased  to $534,000 in 2000 from $827,000 in 1999. The
continued  reduction  in  2000  is  due  to the shift in focus from research and
development  to  commercialization.

     Patent  filing  and  maintenance expenses increased slightly to $152,000 in
2000  versus  $134,000  in 1999.  The increase is due in part to maintaining the
patents  and  filing  new  applications.   Interest income decreased slightly to
$38,000  in  2000 from $46,000 in 1999.  Interest expense increased to $3,000 in
2000 from $2,000 in 1999 due to interest expenses associated with the Director's
and  Officer's  Insurance  Policy,  which  is  financed.

     In 2000, the Company recorded $712,000 of in-kind preferred stock dividends
on  its  Series  A  Preferred  Stock.  In 1999, the Company recorded $393,000 of
in-kind preferred stock dividends on its Series A Preferred Stock.  In addition,
a  one-time  non-cash  charge  reflected  as a preferred stock dividend of $1.75
million  was  recognized  for the difference between the conversion price of the
Preferred Stock and the quoted market price of the Company's common stock at the
date  of  issuance.  (See  Footnote  2, "Significant Accounting Policies" to the
accompanying  financial  statements).

LIQUIDITY AND SOURCES OF CAPITAL

     Prior  to  2000,  the  Company  was  primarily  engaged  in  research  and
development  and  has  incurred  losses  since inception aggregating $19,385,000
(excluding the effect of the 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  years  ended  2001,  2000,  and  1999,  the  Company used cash of
$725,000,  $1,872,000,  and  $2,518,000,  respectively, in operating activities.

     At  December 31, 2001, and December 31, 2000, the Company had cash and cash
equivalents  of $4,023,000 and $541,000, respectively.  The increase in cash and
cash  equivalents in 2001 was due to $3.7 million raised through the issuance of
the  Company's  Common  Stock  in  December  2001.  Working capital increased to
$3,803,000  at  December  31,  2001,  from  $562,000  at December 31, 2000.  The
Company  anticipates  incurring  additional  losses  through at least 2002 as it
further  pursues  its  commercialization  efforts.

     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
fee  and  inventory  payment.

     In  April  2001,  the Company amended its February 2000 ARIS Stationary NOx
Reduction  license  agreement with the RJM Corporation.  Under the amended terms
of the license agreement, the Company received two fixed non-refundable payments
of  $412,500  each  on  June  1 and September 1 in lieu of potentially receiving
$1,040,000  on  the  second or third anniversary of the license agreement.   The
Company  will  continue to receive unit royalties on future sales of stationary,
marine  or  locomotive  applications  by  RJM.

     In  June  2000,  the  Company received a $160,000 payment from Mitsui 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  received an ARIS 2000 system, Platinum Plus product and diesel emissions
consulting  services  from CDT.  The Company recognized sales revenues for these
products  when  they  shipped  and  the  license  revenue was pro-rated over the
six-month  license  period.

     In  August  2001, the Company completed a license agreement with Mitsui for
CDT's ARIS 2000 NOx control system for all stationary diesel power generators in
Japan.  Under the agreement, the Company received non-refundable upfront license


                                       12
<PAGE>
payments  of $495,000 and will receive ongoing standard royalties on each system
sold  by  Mitsui.  Mitsui  also has an option to license the ARIS technology for
mobile  applications  in  Japan  for  an  additional  license  fee.

     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.

     In  December 2001, the Company received $3.721 million (net of expenses and
term  loan  repayment)  through  a  private placement of 2,580,664 shares of its
common  stock.  In conjunction with the private placement, the Company converted
all  of  its  Series  A  Preferred  Stock to Common Stock.  All of the Company's
Common  Stock  shares  were  registered  to trade on the AIM of the London Stock
Exchange.

     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  December  31,  2001 will be sufficient to fund the
Company's  operations  through the second quarter 2003.  The Company may 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.

ITEM 7A. 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. See "Risk Factors of the Business - Platinum
Price"  in  Item  1,  "Business."

     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.


                                       13
<PAGE>
ITEM  8.  FINANCIAL  STATEMENTS


                         Report of Independent Auditors



The Board of Directors and Stockholders
Clean Diesel Technologies, Inc.


     We  have  audited  the  accompanying  balance  sheets  of  Clean  Diesel
Technologies,  Inc. as of December 31, 2001 and 2000, and the related statements
of  operations,  stockholders'  equity (deficit), and cash flows for each of the
three  years  in the period ended December 31, 2001.  These financial statements
are  the  responsibility  of  the Company's management. Our responsibility is to
express  an  opinion  on  these  financial  statements  based  on  our  audits.

     We  conducted  our  audits  in accordance with auditing standards generally
accepted  in the United States. Those standards require that we plan and perform
the  audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence  supporting the amounts and disclosures in the financial statements. An
audit  also  includes  assessing  the accounting principles used and significant
estimates  made  by  management,  as  well  as  evaluating the overall financial
statement  presentation.  We  believe that our audits provide a reasonable basis
for  our  opinion.

     In  our opinion, the financial statements referred above present fairly, in
all material respects, the financial position of Clean Diesel Technologies, Inc.
at  December  31,  2001 and 2000, and the results of its operations and its cash
flows  for  each  of  the  three years in the period ended December 31, 2001, in
conformity  with  accounting principles generally accepted in the United States.




                                                           /S/ ERNST & YOUNG LLP

Stamford, Connecticut
March 4,  2002


                                       14
<PAGE>
<TABLE>
<CAPTION>
CLEAN DIESEL TECHNOLOGIES, INC.
BALANCE SHEET                                                  (IN THOUSANDS EXCEPT SHARE DATA)

                                                                          DECEMBER 31,
                                                                       --------------------
                                                                         2001       2000
                                                                       ---------  ---------
<S>                                                                    <C>        <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                              $  4,023   $    541
Accounts receivable                                                         197         50
Inventories                                                                 296        287
Other current assets                                                         96         87
                                                                       ---------  ---------
TOTAL CURRENT ASSETS                                                      4,612        965
Other assets                                                                 46         92
                                                                       ---------  ---------
TOTAL ASSETS                                                           $  4,658   $  1,057
                                                                       =========  =========

LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)
CURRENT LIABILITIES:
Notes payable                                                          $    250   $     --
Accounts payable and accrued expenses                                       558        400
                                                                       ---------  ---------
     TOTAL CURRENT LIABILITIES                                              808        400

Notes payable                                                                --        500
Deferred compensation and pension benefits                                  368        308
                                                                       ---------  ---------
     TOTAL LONG TERM LIABILITIES                                            368        808

STOCKHOLDERS' EQUITY(DEFICIT):
Preferred Stock, par value $0.05 per share,
  authorized 80,000 , no shares issued and outstanding
Series A Convertible Preferred Stock, par value $0.05 per share,
  $500 per share liquidation preference, authorized 20,000 shares,
  14,623 shares issued and outstanding in 2000.                              --          1
Common Stock, par value $0.05 per share, authorized
  15,000,000 shares, issued and outstanding 11,214,280
  and 2,660,611 shares                                                      561        133
Additional paid-in capital                                               27,058     20,849
Accumulated deficit                                                     (24,137)   (21,134)
                                                                       ---------  ---------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                      3,482       (151)
                                                                       ---------  ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                   $  4,658   $  1,057
                                                                       =========  =========
</TABLE>

See accompanying notes.


                                       15
<PAGE>
<TABLE>
<CAPTION>
CLEAN DIESEL TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS                    (IN THOUSANDS EXCEPT PER SHARE DATA)

                                              FOR THE YEARS ENDED  DECEMBER 31,
                                              ---------------------------------
                                                 2001       2000       1999
                                               ---------  ---------  ---------
<S>                                            <C>        <C>        <C>
Product revenue                                $    176   $    199   $    142
License and royalty revenue                       1,424        383          -
                                               ---------  ---------  ---------
Total revenue                                     1,600        582        142

Costs and expenses:
Cost of sales                                       117        133         81
General and administrative                        1,858      1,799      1,585
Research and development                            365        534        827
Patent filing and maintenance                       196        152        134
                                               ---------  ---------  ---------

Loss from operations                                936      2,036      2,485
Interest income                                     (11)       (38)       (46)
Interest expense                                    181          3          2
                                               ---------  ---------  ---------

Net loss before preferred stock dividends         1,106      2,001      2,441
Preferred Stock dividends (non-cash)                621        712        393
Preferred Stock conversion premium (non-cash)     1,276         --         --
One-time imputed non-cash preferred dividend         --         --      1,750
                                               ---------  ---------  ---------

Net loss attributable to common stockholders   $  3,003   $  2,713   $  4,584
                                               =========  =========  =========

BASIC AND DILUTED LOSS PER
  COMMON SHARE                                 $   1.08   $   1.03   $   1.77
                                               =========  =========  =========

WEIGHTED AVERAGE NUMBER OF COMMON
  SHARES OUTSTANDING                              2,777      2,631      2,594
                                               =========  =========  =========
</TABLE>

See accompanying notes.


                                       16
<PAGE>
<TABLE>
<CAPTION>
CLEAN DIESEL TECHNOLOGIES, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY(DEFICIT)                                           (IN THOUSANDS)

                                     Series A Convertible                                                    Total
                                        Preferred Stock    Common Stock    Additional                    Stockholders'
                                       -----------------  ---------------    Paid-In      Accumulated       Equity
                                       Shares    Amount   Shares  Amount     Capital        Deficit        (Deficit)
                                       -------  --------  ------  -------  ------------  -------------  ----------------
<S>                                    <C>      <C>       <C>     <C>      <C>           <C>            <C>
BALANCE AT DECEMBER 31, 1998              7.6         1    2,544      127       15,008        (13,837)            1,299
Net loss for year                          --        --       --       --       (2,441)        (2,441)
Sale of Series A Preferred Stock          3.5        --       --       --        1,750             --             1,750
Stock options exercised                    --        --       12        1            4             --                 5
Payment of directors' fees in
  common stock                             --        --       38        2           41             --                43
One-time preferred dividend                --        --       --       --        1,750         (1,750)               --
Declared but not issued preferred
  dividend                                 --        --       --       --          393           (393)               --
                                       -------  --------  ------  -------  ------------  -------------  ----------------

BALANCE AT DECEMBER 31, 1999             11.1   $     1    2,594  $   130  $    18,946   $   ( 18,421)  $           656
Net loss for year                          --        --       --       --           --         (2,001)           (2,001)
Issuance of preferred stock dividends      .7        --       --       --           --             --    -           --
Sale of Series A Preferred Stock          1.4        --       --       --        1,021             --             1,021
Issuance of common stock warrants          --        --       --       --          122             --               122
Stock options exercised                    --        --       27        1            6             --                 7
Payment of directors'  fees in
  common stock                             --        --       39        2           42             --                44
Declared but not issued preferred
  dividend                                1.4        --       --       --          712           (712)               --
                                       -------  --------  ------  -------  ------------  -------------  ----------------

BALANCE AT DECEMBER 31, 2000             14.6   $     1    2,660  $   133  $    20,849   $    (21,134)  $          (151)
Net loss for year                          --        --       --       --           --         (1,106)           (1,106)
Issuance of common stock warrants          --        --       --       --          157             --               157
Payment of directors'  fees in
  common stock                             --        --       26        1           40                               41
Stock options exercised                    --        --       13        1            2             --                 3
Declared but not issued preferred
  dividend                                1.2        --       --       --          621           (621)               --
Conversion of Preferred Shares to
  common stock                          (15.8)       (1)   5,299      265         (264)            --                --
Premium (12%) paid to preferred
  shareholders for conversion to
  common stock                             --        --      636       32        1,244         (1,276)               --
Issuance of common stock                   --        --    2,175      109        3,612             --             3,721
Term loan and related interest
  conversion to common stock               --        --      405       20          797             --               817
                                       -------  --------  ------  -------  ------------  -------------  ----------------

BALANCE AT DECEMBER 31, 2001               --   $    --   11,214  $   561  $    27,058   $    (24,137)  $         3,482
                                       =======  ========  ======  =======  ============  =============  ================
</TABLE>

See accompanying notes.


                                       17
<PAGE>
<TABLE>
<CAPTION>
CLEAN DIESEL TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS                                                      (IN THOUSANDS)

                                                           FOR THE YEARS ENDED DECEMBER 31,
                                                           --------------------------------
                                                             2001       2000        1999
                                                           ---------  ---------  ----------
<S>                                                        <C>        <C>        <C>
OPERATING ACTIVITIES
Net loss before preferred dividends                        $ (1,106)  $ (2,001)  $  (2,441)
Adjustments to reconcile net loss to cash used in
    operating activities:
    Depreciation                                                 11         10          18
    Amortization of deferred financing costs                     91         --          --
    Interest expense from term loans converted to common
         shares                                                  65         --          --
    Compensatory stock warrant                                  120         61          --
Changes in operating assets and liabilities:
    Account receivable                                         (147)        (4)        (46)
    Inventories                                                  (9)        34        (102)
    Other current assets                                         (9)       (35)          6
    Accounts payable and accrued expenses                       259         63          47
                                                           ---------  ---------  ----------
Net cash used in operating activities                          (725)    (1,872)     (2,518)
                                                           ---------  ---------  ----------

INVESTING ACTIVITIES
Purchase of fixed assets                                        (17)        (7)         (8)
                                                           ---------  ---------  ----------
Net cash used in investing activities                           (17)        (7)         (8)

FINANCING ACTIVITIES
Proceeds from exercise of stock options                           3          7           5
Proceeds from term loans                                        500        500          --
Proceeds from issuance of common stock, net                   3,721      1,021       1,750
                                                           ---------  ---------  ----------

Net cash provided by financing activities                     4,224      1,528       1,755
                                                           ---------  ---------  ----------

NET INCREASE (DECREASE) IN CASH AND
    CASH EQUIVALENTS                                          3,482       (351)       (771)
Cash and cash equivalents at beginning of period                541        892       1,663
                                                           ---------  ---------  ----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                 $  4,023   $    541   $     892
                                                           =========  =========  ==========

NON-CASH ACTIVITIES

Preferred Stock dividend                                   $    621   $    712   $     393
Preferred Stock conversion premium (non-cash)                 1,276         --          --
One-time imputed non-cash preferred dividend                     --         --       1,750
Conversion of term loans and related interest into
common stock                                                    817         --          --
</TABLE>

See accompanying notes.


                                       18
<PAGE>
CLEAN DIESEL TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS

1.   BUSINESS

     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, and reduced its ownership in
the  Company's Common Stock to 27.6%. As a result of additional equity offerings
in  subsequent  years, Fuel Tech currently holds a 16.3% interest in the Company
as  of  December  31,  2001.

     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. Prior to 2000, the
Company was a development stage enterprise devoted to research, development, and
commercialization  of  platinum  fuel  catalysts (PFCs) and Nitrogen Oxide (NOx)
reduction  technologies  for  diesel  engines. During December 1999, the Company
received its EPA registration for its platinum - cerium product and recorded its
first  commercial  sales.  Accordingly, in the opinion of management the Company
was  no  longer  a  development  stage  enterprise. The success of the Company's
technologies  will  depend  upon  the  commercialization  opportunities  of  the
technologies  and  governmental regulations, and corresponding foreign and state
agencies.

As  a  result  of  the  Company's  recurring operating losses ($19,385,000 since
inception  excluding  non-cash  preferred stock dividends), the Company has been
unable to generate a positive cash flow.  In management's opinion, the Company's
cash  balance  at  December  31,  2001  will be sufficient to fund the Company's
operations  through the second quarter 2003.  The Company may require additional
capital  to  fund its future operations and working capital needs.  Although the
Company  believes  that  it  would  be successful in raising additional capital,
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.

2.   SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

     The  preparation  of the financial statements in conformity with accounting
principles  generally  accepted in the United States requires management to make
estimates  and  assumptions  that  affect  the amounts reported in the financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.

CASH AND CASH EQUIVALENTS AND FINANCIAL INSTRUMENTS

     The  Company considers all highly liquid investments with maturity of three
months  or  less  when  purchased  to be cash equivalents. At December 31, 2001,
substantially  all  of  the  Company's cash and cash equivalents were on deposit
with  one financial institution.  All financial instruments are reflected in the
accompanying  balance  sheets  at  amounts  that  approximate fair market value.

INVENTORIES

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

REVENUE RECOGNITION

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

     In  February  2000,  the Company completed a license agreement with the RJM
Corporation  for  CDT's  ARIS 2000 NOx control system for all stationary, marine
and  locomotive  applications in North, Central, and South America.  The Company
received  a  $260,000  license  payment in return for transferring the ARIS 2000
technology  to the RJM Corporation.  The Company also received $100,000 from the
RJM  Corporation  for  all  of  the  remaining ARIS 2000 inventory.  The license
payment  is  non-refundable  and  requires no significant ongoing services to be
performed  by  CDT.


                                       19
<PAGE>
CLEAN  DIESEL  TECHNOLOGIES,  INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     In  April  2001,  the Company amended its February 2000 ARIS Stationary NOx
Reduction  license  agreement with the RJM Corporation.  Under the amended terms
of the license agreement, the Company received two fixed non-refundable payments
of  $412,500  each  on  June  1 and September 1 in lieu of potentially receiving
$1,040,000  on  the  second  or  third  anniversary.  The Company recognized the
$825,000 as license revenue in 2001.  The Company receives unit royalties on all
sales  of  stationary,  marine  or  locomotive  applications  by  RJM.

     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  received an ARIS 2000 system, Platinum Plus product and diesel
emissions  consulting  services from CDT.  The Company recognized sales revenues
for  these  products when they shipped and the license revenue was prorated over
the  six-month  license  period.

     In  August  2001, the Company completed a license agreement with Mitsui for
CDT's ARIS 2000 NOx control system for all stationary diesel power generators in
Japan.  Under  the  agreement,  the  Company  received  a non-refundable upfront
license payment of $495,000, and will receive ongoing standard royalties on each
system  sold by Mitsui. The Company recognized the license payment as revenue in
2001,  as  there  is  no  significant  ongoing  services  to be performed by the
Company.   Mitsui  also  has an option to license the ARIS technology for mobile
applications  in  Japan  for  an  additional  license  fee.

     Royalty  fees  are  recognized  by  the  Company  when  earned.

RESEARCH AND DEVELOPMENT COSTS

     Costs  relating  to  the research, development, and testing of products are
charged  to  operations as they are incurred. These costs include test programs,
salary and benefits, consultancy fees, materials, and certain testing equipment.
The  cost  of  patent filings and maintenance have been charged to operations as
they  are  incurred.   Included  in  accrued  expenses  at December 31, 2001 are
liabilities for research and development of  $20,000 and patent legal expense of
$15,000.

STOCK-BASED COMPENSATION

     The  Company accounts for stock option grants in accordance with Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees.
Under  the  Company'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.  The Company has adopted
the  disclosure provisions of Statement of Financial Accounting Standards (SFAS)
No.  123,  Accounting  for  Stock-Based  Compensation.

BASIC AND DILUTED LOSS PER COMMON SHARE

     Basic and diluted loss per share are calculated in accordance with SFAS No.
128, Earnings Per Share.   Basic earnings per share are computed by dividing net
earnings by the weighted average shares outstanding during the reporting period.
Diluted  earnings  per  share  are  computed similar to basic earnings per share
except  that  the  weighted  average shares outstanding are increased to include
additional  shares  from  the  assumed  exercise  of stock options, if dilutive.

     During  the  third  quarter  of  1999  the  Company  issued 3,500 shares of
Preferred Stock in exchange for $1.75 million, with each share being immediately
convertible  into  333.33 shares of the Company's Common Stock.  The Company was
actively  marketing its Preferred Stock at a premium (i.e., the $1.50 conversion
price  was  above  the  market price at the time of the solicitation) and did in
fact  receive commitments from European investors at a time when the stock price
was below $1.50 per share.  Subsequent to receiving the commitments but prior to
receiving  the  funds, the price of the Company's common stock increased to over
$3  per share.  In connection therewith, as required by the Financial Accounting
Standards  Board's  Emerging  Issues  Task  Force Statement 98-5 "Accounting for
Convertible  Securities  with  Beneficial  Conversion  Features  or  Contingent
Adjustable Conversion Ratios to Certain Convertible Instruments" the Company was
required  to record a one-time non-cash charge for a preferred stock dividend of
approximately $1.75 million resulting from the difference between the conversion
price  and  the quoted market price of the Company's Common Stock as of the date
of  issuance.  The  $1.75 million one-time non-cash charge for a preferred stock
dividend  has  been recognized in the computation of a loss applicable to common
stockholders  as  a  charge against the accumulated deficit with a corresponding
increase  in  additional  paid-in capital in 1999.  There was no actual dividend
distribution  to


                                       20
<PAGE>
CLEAN  DIESEL  TECHNOLOGIES,  INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Series  A Preferred stockholders.  The potentially dilutive Series A Convertible
Preferred  Stock  Securities  were  not  included  in the diluted loss per share
applicable  to  common  stockholders  as  the  effect  would  be  anti-dilutive.

3.   INCOME TAXES

     The  Company  accounts  for  income taxes in accordance with the "liability
method."  Under  this  method,  income  tax provisions are based on income taxes
currently  payable.  Those deferred because of temporary differences between the
financial  statements  and  tax  basis  of  assets  and  liabilities.

     At  December  31,  2001  and 2000, the Company had tax losses available for
offset  against future years' earnings of approximately $ 17.2 million and $16.3
million,  respectively.  Temporary  differences  were  insignificant  as of such
dates.  The  Company  has  provided  a  full  valuation  allowance to reduce the
related  deferred  tax  asset  to  zero.

     Approximately  $0.9 million, $2.0 million, $3.2 million, $3.4 million, $3.0
million,  $1.9  million,  $1.9  million  and  $0.8 million of the tax loss carry
forwards  expire  in  2009,  2010,  2011,  2012,  2013,  2019,  2020  and  2021,
respectively. The Company has not recognized any benefit from the aforementioned
tax  loss  carry  forwards.  The  Taxpayer  Relief  Act of 1997 modified the net
operating  loss  provisions so that losses arising for tax years beginning after
the  effective  date  of  the  Act  (August 5, 1997) would be eligible for carry
forward  for  twenty  years. Existing losses would still be subject to a 15 year
carry  forward  period.

     Under  the  provisions  of  the  United  States  Tax  Reform  Act  of 1986,
utilization  of  the Company's US federal tax loss carry forwards for the period
prior to December 12, 1995 may be limited as a result of the ownership change in
excess  of 50% related to the 1995 Fuel Tech Rights Offering.  Losses subsequent
to the aforementioned date may be limited due to cumulative ownership changes in
any  three  year  period.

4.   STOCKHOLDERS'  EQUITY

     During  2001 and 2000, the Company received proceeds of $3.721 million (net
of  $0.644  million  in expenses and $0.817 million in term loan re-payment) and
$1.021  million  through private placements of 2,580,664 and 1,362 shares of its
Common  Stock  and  Series A Preferred Stock, respectively. In addition, in 1999
$1.75 million was raised through a private placement of 3,500 Series A preferred
stock  shares  and in 1998, $1.4 million of bridge loans and $.5 million of term
loans  were  converted  into 2,800 and 1,029 shares of Series A Preferred Stock.
During  2001, $1,897,000 of dividends were declared for Series A preferred stock
and converted into the Company's Common Stock. On December 28, 2001, the Company
converted  all  outstanding  Series  A Preferred Stock (15,897 shares) including
accrued  stock  dividends,  into  Common  Stock  (5,934,829  shares).

     In  May  2001  and  April 2000 the Company issued 25,676 and 39,490 shares,
respectively of Common Stock to its Board of Directors, in lieu of approximately
$40,800  and  $44,400  of  Director's  Fees pertaining to their services for the
years  ended  December  31,  2000 and 1999. The share price used represented the
average  of  the  Company's  quarter  end,  high  and  low  trading prices. Such
Director's  Fees  had  been accrued and charged to expense during 2000 and 1999.

5.   STOCK  OPTIONS  AND  WARRANTS

     The  Company  maintains  a  stock  award plan, the 1994 Incentive Plan (the
"Plan").  Under  the  Plan, awards may be granted to participants in the form of
non-qualified  stock  options,  stock  appreciation  rights,  restricted  stock,
performance  awards,  bonuses,  or other forms of share-based or non-share-based
awards,  or combinations thereof. The Company grants awards at fair market value
on  the  date of grant with expiration dates typically ranging from seven to ten
years.  Participants  in  the  Plan  may  be  such  of  the Company's directors,
officers,  employees,  consultants, and advisers (except consultants or advisers
in  capital-raising  transactions)  as  the  directors  determine are key to the
success  of  the Company's business. The percentage of outstanding Common Shares
of the Company used to determine the maximum number of awards to participants is
17.5%. In general, the policy of the Board was to grant stock options vesting in
three  equal portions on the first through third anniversaries of the grant date
for  grants prior to 1997, and in equal portions on the grant date and the first
and  second  anniversaries  of  the  grant  date  for grants awarded after 1997.


                                       21
<PAGE>
CLEAN DIESEL TECHNOLOGIES, INC.
NOTES  TO  FINANCIAL  STATEMENTS  (CONTINUED

     If compensation expense for the Company'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, the Company's net loss and basic and diluted
loss  per  common  share  would  have  been  increased  to the pro forma amounts
indicated  below:

<TABLE>
<CAPTION>
                                                        2001    2000    1999
                                                       ------  ------  ------
<S>                                                    <C>     <C>     <C>

     Net loss attributable to Common Stockholders (000's):
     As reported                                       $3,003  $2,713  $4,584
     Pro forma                                          3,425   3,077   4,680

     Basic and diluted loss per common share:
     As reported                                       $ 1.08  $ 1.03  $ 1.77
     Pro forma                                           1.23    1.17    1.80
</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 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
the  Company'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:

<TABLE>
<CAPTION>
                                2001      2000      1999
                              --------  --------  --------
<S>                           <C>       <C>       <C>
     Expected dividend yield      0.0%      0.0%      0.0%
     Risk-free interest rate     4.66%     6.67%     5.72%
     Expected volatility         94.2%     99.7%    104.9%
     Expected life of option  4 YEARS   4 years   4 years
</TABLE>

     The  following  table  presents  a  summary  of  the Company's stock option
activity  and  related  information  for  the  years  ended  December  31:

<TABLE>
<CAPTION>
                                        2001                         2000                        1999
                             ---------------------------  ---------------------------  ---------------------------
                             OPTIONS   WEIGHTED-AVERAGE   OPTIONS   WEIGHTED-AVERAGE   OPTIONS   WEIGHTED-AVERAGE
                              (000'S)   EXERCISE PRICE    (000'S)    EXERCISE PRICE    (000'S)    EXERCISE PRICE
                             -------------------------------------------------------------------------------------
<S>                          <C>       <C>                <C>       <C>                <C>       <C>
Outstanding, beginning
  of year                        974   $            2.54      760   $            2.48      440   $            3.41
Granted                          240                1.97      246                2.48      335                1.16
Exercised                        (12)                .20      (27)                .24      (12)                .40
Forfeited                        (63)               2.00       (5)               1.93       (3)                .90
                             --------------------------------------------------------  ---------------------------
Outstanding, end
  of year                      1,139   $            2.48      974   $            2.54      760   $            2.48
                             ========================================================  ===========================
Exercisable, end
  of year                        939   $            2.55      744   $            2.72      537   $            2.98
Weighted-average
  fair value of options
  granted during the year              $            1.38            $            1.78            $             .69
</TABLE>


                                       22
<PAGE>
     The  following table summarizes information about stock options outstanding
at  December  31,  2001:

<TABLE>
<CAPTION>
CLEAN DIESEL TECHNOLOGIES, INC.
NOTES  TO  FINANCIAL  STATEMENTS  (CONTINUED)

               OPTIONS OUTSTANDING                                    OPTIONS EXERCISABLE
---------------------------------------------  -----------------  ----------------------------
                             WEIGHTED-AVERAGE
   RANGE OF       NUMBER OF     REMAINING      WEIGHTED-AVERAGE   NUMBER OF  WEIGHTED-AVERAGE
EXERCISE PRICES    OPTIONS   CONTRACTUAL LIFE   EXERCISE PRICE     OPTIONS    EXERCISE PRICE
----------------  ---------  ----------------  -----------------  ---------  -----------------
<S>               <C>        <C>               <C>                <C>        <C>
$   .20 - $2.49     652,500              8.05  $            1.55    515,003  $            1.44
$ 2.50 -   4.63     422,500              6.51               3.26    359,168               3.40
$ 5.63 -   6.82      64,450              4.03               6.70     64,450               6.70
----------------  ---------  ----------------  -----------------  ---------  -----------------
$   .20 - $6.82   1,139,450              7.25  $            2.48    938,621  $            2.55
</TABLE>

     In  March  1997,  in  consideration  of  his  assistance  to the Company in
obtaining  sources  of permanent financing the Company granted a director of the
Company  a  warrant  to purchase 25,000 shares of the Company's Common stock for
$10.00  per  share  which exceeded the fair market value of the Company's Common
Stock  at  the  date  of  grant.

     In  June  1999, in consideration of their undertaking to assist the Company
in  obtaining sources of permanent financing the Company granted warrants to two
directors  for  58,333  and 29,167 shares at $1.50 per share, which exceeded the
fair  market  value  of  the Company's Common Stock at the date of grant and was
included  in  the  cost  of  capital.

     In  March  2000,  Pursuant to a financial consulting agreement, the Company
granted  an  investment  bank  25,000  warrants to purchase the Company's common
stock,  at an exercise price of $3.00 per share.  The value of such warrants was
$61,000  and  was  charged  to  earnings.

     In  April 2000, in consideration of their undertaking to assist the Company
in  obtaining sources of permanent financing the Company granted warrants to two
directors  for  27,675  and 12,150 shares at $2.25 per share.  The value of such
warrants  was  $78,000  and  was  included  in  the  cost  of  capital.

     In  November  2000,  the  Company  granted  the  lenders a total of 100,000
warrants  in  conjunction  with a $1,000,000 term loan agreement.  50,000 of the
warrants  were  awarded in November 2000, 25,000 of the warrants were awarded in
December  2000  when  $500,000  of  the term loan was borrowed and the remaining
25,000  warrants  were awarded when the remaining $500,000 was borrowed in March
2001.  The  warrants  were priced at $2.00 per share.  The value of the warrants
issued  was  $60,750  and have been capitalized as a deferred financing cost and
will  be  amortized over the life of the loan.  The value of the 25,000 warrants
issued  in  March  2001  was  $37,250  and  have  been capitalized as a deferred
financing  cost.  In  December  2001,  the  Company  converted  $750,000  of the
outstanding  $1,000,000  loan  into  Common  Stock  and  expensed $16,100 of the
remaining  capitalized  warrant  expense.

     In  February  2001, in consideration of their performing investor relations
on  behalf  of  the  Company  in  the UK, the Company granted Equity Development
Limited  two  50,000  blocks  of  warrants at $1.50 per share.  The first 50,000
block  of  warrants  has  a 1 year term and vests when the Company's stock price
remains above $2.50 for 7 consecutive days.  The second 50,000 block of warrants
has  a  term of two years and vests when the Company's stock price remains above
$3.00  for  7  consecutive  days.  The  value  of such warrants was $119,500 and
charged  to  earnings  in  2001.

     In  conjunction  with  the  Company's December 2001 AIM listing and private
placement  of  Common  Stock, the Company granted its financial advisor, Nabarro
Wells  Limited,  51,613 warrants at $2.00 per share on December 28, 2001 and was
considered  cost  of  capital.

<TABLE>
<CAPTION>
                                             CDT Warrants

                                   2001                        2000                        1999
                        --------------------------  --------------------------  --------------------------
                        Warrants   EXERCISE PRICE   Warrants   EXERCISE PRICE   Warrants   EXERCISE PRICE
                         (000'S)      PER SHARE      (000'S)      PER SHARE      (000'S)      PER SHARE
                        --------------------------  --------------------------  --------------------------
<S>                     <C>        <C>              <C>        <C>              <C>        <C>
Outstanding, beginning
  of year                     302              N/A        163              N/A         75  $ 6.50 - $10.00
Granted                       177  $   1.50 - 2.00        139  $   1.50 - 2.00         88  $          1.50
Exercised                       -                -          -                -          -                -
Forfeited                      50  $          6.50          -                -          -                -
                        ------------------------------------------------------  --------------------------
Outstanding, end
    of year                   429  $  1.50 - 10.00        302  $  1.50 - 10.00        163  $  1.50 - 10.00
                        ======================================================  ==========================
</TABLE>


                                       23
<PAGE>
<TABLE>
<CAPTION>
CLEAN DIESEL TECHNOLOGIES, INC.
NOTES  TO  FINANCIAL  STATEMENTS  (CONTINUED)

                     WARRANTS  OUTSTANDING                           WARRANTS EXERCISABLE
-----------------------------------------------------------------  ------------------------------
                             WEIGHTED-AVERAGE
RANGE OF          NUMBER OF  REMAINING (YEARS)  WEIGHTED-AVERAGE                WEIGHTED-AVERAGE
EXERCISE PRICES   WARRANTS     EXERCISE LIFE     EXERCISE PRICE    EXERCISABLE        PRICE
-----------------------------------------------------------------  ------------------------------
<S>               <C>        <C>                <C>                <C>          <C>
$1.50 - $2.00       339,113               5.54  $            1.72      239,113  $            1.82
 2.25 -  3.00        64,825               6.41               2.54       64,825               2.54
   10.00             25,000               2.33              10.00       25,000              10.00
-----------------------------------------------------------------  ------------------------------
$1.50 - $10.00      428,938               5.36  $            2.33      328,938  $            2.58
</TABLE>

6.   COMMITMENTS

     The  Company  is  obligated  under  a  sublease agreement for its principal
office.  In  January  1999,  the  Company  extended  to  its  original  sublease
agreement, which runs from March 1, 1999, through February 28, 2002. The Company
has  agreed  to a six month extension with three month notice for termination of
the  lease  through  December 2002, at an annual rate of $116,000. The Company's
minimum  lease  payments  for  2002 is $71,500. For the years ended December 31,
2001, 2000, and 1999, rental expense approximated $81,500, $81,200, and $82,000,
respectively.

     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  $7,636,364 in 2002 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 2001 and royalties payable to Fuel Tech at
December  31,  2001  were  not  significant.

7.   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  and  at December 31, 2001, the Company had $250,000 term
loan  payable to Fuel Tech plus accrued interest. The remaining $750,000 of term
loan  and  accrued  interest  was  repaid  as  part of the December 2001 private
placement  of  common  stock  discussed  in  the  stock  holders  equity  note.

     The  Company  has  a  Management and Services Agreement with Fuel Tech. The
agreement  requires the Company to reimburse Fuel Tech for management, services,
and  administrative  expenses  incurred  on  behalf  of the Company. 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. Certain
of  Fuel  Tech's  officers  and directors serve as officers and directors of the
Company.  The  financial  statements  include  charges from Fuel Tech of certain
management  and  administrative  costs,  which  approximate $70,00, $77,000, and
$106,000 for the years ended December 31, 2001, 2000, and 1999, respectively. In
the  opinion of the Company's management, such costs are fair and reasonable and
are  on  terms  no  less  favorable  than  could be obtained from a third party.

     Average  trade  balances  due to Fuel Tech for the years ended December 31,
2001  and  2000,  approximated  $6,000  and  $9,000,  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. For the years ended December 31,
2001  and  2000  $10,400,  and $62,500 of expense was accrued in connection with
such arrangement. At December 31, 2001 and 2000, total obligations were $135,400
and  $125,000  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
three years ended December 31, 2001, $50,000, $50,000 and $50,000 of expense was
recognized per year in connection with such plan. At December 31, 2001 and 2000,
total  obligations  were  $232,700  and  $182,700  pertaining  to  this  plan.


                                       24
<PAGE>
CLEAN DIESEL TECHNOLOGIES, INC.
NOTES  TO  FINANCIAL  STATEMENTS  (CONTINUED)

8.   MARKETING  AND  JOINT  DEVELOPMENT  AGREEMENTS

     The  Company  and AMBAC International reached an agreement in December 1997
under  which  the  parties  will jointly share in the cost of development of the
ARIS  injector for urea SCR. The Company holds the exclusive marketing rights to
the  injector for a period of five years subject to certain minimum purchases of
injectors  from  AMBAC. The Company has agreed to purchase injectors exclusively
from AMBAC until November 3, 2002 or to pay AMBAC for 50% of AMBAC's development
cost and a royalty on injectors made elsewhere for the Company.  The Company has
assigned  its  rights  with  AMBAC to the RJM Corporation as part of its License
Agreement.     No  rights  or  licenses have been granted by either party to the
other  on  patents  or inventions conceived prior to the agreement. However, the
parties have filed a joint patent on the specific ARIS injector. The Company has
retained  all  rights  to  its  underlying  patents  including  the  fundamental
return-flow injection concept on which the US patent office has issued a "notice
of  allowance."

9.   SUBSEQUENT  EVENTS

     Effective  March  1,  2002,  Ralph  E.  Bailey  Chairman  and non-executive
director  of  the  Company  and Douglas G. Bailey, non-executive director of the
Company  have  resigned  from  the  Company's  board  of  directors  in order to
concentrate  their  attention  on  the  activities  of  Fuel  Tech.  The  Board
subsequently  elected  CEO  Jeremy Peter-Hoblyn to Chairman and reduced its size
from  seven  to  five  directors.

     In  March 2002, the Board of Directors of the Company approved the issuance
of  the Company's Common Stock in consideration of their accrued directors' fees
at December 31, 2001 (totaling $52,000), and for all future fees. A director may
choose  to  receive  either  all  stock  or  20%  cash  and  80%  stock.

     In  January  2002,  the  Company  retired  its outstanding notes payable by
paying  $250,000  plus  accrued  interest  of  $24,100  to  the  note  holders.

10.  RECENT ACCOUNTING PRONOUNCEMENTS

Business  Combinations
     In  June 2001, the FASB issued SFAS No. 141, "Business Combinations," which
applies  to  business  combinations  occurring after June 30, 2001. SFAS No. 141
requires that the purchase method of accounting be used and includes guidance on
the  initial recognition and measurement of goodwill and other intangible assets
acquired  in  the  combination.

Goodwill  and  Other  Intangible  Assets
     In  June  2001,  the  FASB  also  issued  SFAS No. 142, "Goodwill and Other
Intangible  Assets." SFAS No. 142 no longer permits the amortization of goodwill
and  indefinite-lived intangible assets.  Instead, these assets must be reviewed
annually  (or  more  frequently  under  certain  conditions)  for  impairment in
accordance with this statement.  This impairment test uses a fair value approach
rather than the undiscounted cash flows approach previously required by SFAS No.
121.  The  goodwill  impairment  test  under  SFAS  No.  142 requires a two-step
approach, which is performed at the reporting unit level, as defined in SFAS No.
142.  Step  one  identifies potential impairments by comparing the fair value of
the reporting unit to its carrying amount.  Step two, which is only performed if
there  is  a potential impairment, compares the carrying amount of the reporting
unit's  goodwill  to  its  implied  value,  as  defined in SFAS No. 142.  If the
carrying  amount of the reporting unit's goodwill exceeds the implied fair value
of  that  goodwill, an impairment loss is recognized for an amount equal to that
excess.  The  Company will adopt SFAS No. 142 effective January 1, 2002 and does
not  expect the impact of the adoption of SFAS No. 142 to have a material effect
on  the  Company's  results  of  operations  or  financial  position.

Asset  Retirement  Obligations
     In  June  2001,  the  FASB  issued  SFAS  No.  143,  "Accounting  for Asset
Retirement  Obligations."  This standard provides the accounting for the cost of
legal obligations associated with the retirement of long-lived assets.  SFAS No.
143  requires  that  companies recognize the fair value of a liability for asset
retirement  obligations  in the period in which the obligations are incurred and
capitalize  that  amount  as  a  part of the book value of the long-lived asset.
That  cost  is  then  depreciated  over  the  remaining  life  of the underlying
long-lived  asset.  The  Company  is  required  to  adopt SFAS No. 143 effective
January  1, 2003  and does not expect the impact of the adoption of SFAS No. 143
to  have  a  material effect on the Company's results of operations or financial
position.


                                       25
<PAGE>
CLEAN DIESEL TECHNOLOGIES, INC.
NOTES  TO  FINANCIAL  STATEMENTS  (CONTINUED)

Impairment  or  Disposal  of  Long-Lived  Assets
     In  August  2001,  the  FASB issued SFAS No. 144.  This standard supersedes
SFAS No. 121 and the provisions of APB Opinion No. 30, "Reporting the Results of
Operations-Reporting  the  Effects  of  Disposal of a Segment of a Business, and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions" with
regard  to reporting the effects of a disposal of a segment of a business.  SFAS
No.  144  establishes  a single accounting model for assets to be disposed of by
sale  and  addresses several SFAS No. 121 implementation issues.  The Company is
required to adopt SFAS No. 144 effective January 1, 2002 and does not expect the
impact  of  the  adoption  of  SFAS  No.  144  to  have a material effect on the
Company's  results  of  operations  or  financial  position.

<TABLE>
<CAPTION>
11.     QUARTERLY FINANCIAL DATA (UNAUDITED)
        (IN THOUSANDS EXCEPT PER SHARE DATA)

                                    1st Quarter      2nd Quarter      3rd Quarter      4th Quarter
                                   Ended 3/31/01    Ended 6/30/01    Ended 9/30/01    Ended 12/31/01    Total Year
                                     Unaudited        Unaudited        Unaudited        Unaudited          2001
                                  ---------------------------------------------------------------------------------
<S>                               <C>              <C>              <C>              <C>               <C>
TOTAL REVENUE                     $           24   $          919   $          499   $           158   $     1,600
GROSS PROFIT                                  17              868              449               149         1,483
NET (LOSS)/PROFIT                           (760)              44             (364)           (1,923)       (3,003)
BASIC LOSS PER SHARE                       (0.29)            0.02            (0.13)            (0.63)        (1.08)
DILUTED LOSS PER SHARE                     (0.29)            0.01            (0.13)            (0.63)        (1.08)

-------------------------------------------------------------------------------------------------------------------
                                   1st Quarter      2nd Quarter      3rd Quarter       4th Quarter
                                  Ended 3/31/00    Ended 6/30/00    Ended 9/30/00    Ended 12/31/00    Total Year
                                    Unaudited        Unaudited        Unaudited        Unaudited          2000
                                  ---------------------------------------------------------------------------------
Total revenue                     $          306   $           59   $          112   $           105   $       582
Gross profit                                 284               34               71                60           449
Net loss                                    (462)            (829)            (682)             (740)       (2,713)
Basic and Diluted loss per share           (0.18)           (0.32)           (0.26)            (0.27)        (1.03)

-------------------------------------------------------------------------------------------------------------------

<FN>
Note:  The sum of the quarters' earnings per share may not equal the full year per share amounts
</TABLE>

ITEM  9.     CHANGES  IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL  DISCLOSURE

     None.

PART III

ITEM  10.  DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

     Information  regarding directors and executive officers of the Company will
be  set  forth  under  the  captions  "Election of Directors" and "Directors and
Executive  Officers  of the Company" in the Company's Proxy Statement related to
the  2002  annual  meeting  of  stockholders  (the  "Proxy  Statement")  and  is
incorporated  by  reference  herein.

ITEM  11.  EXECUTIVE  COMPENSATION


                                       26
<PAGE>
     Information  required  by  this  item  will  be set forth under the caption
"Executive Compensation" in the Proxy Statement and is incorporated by reference
herein  excluding,  however,  the  information under the captions "Report of the
Board  of Directors on Executive Compensation" and "Performance Graph," which is
not  incorporated  by  reference.

ITEM  12.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND  MANAGEMENT

     Information  required  by  this  item  will  be set forth under the caption
"Principal  Stockholders  and  Stock  Ownership  of  Management"  in  the  Proxy
Statement  and  is  incorporated  by  reference  herein.


ITEM  13.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     Information  required  by  this  item  will be set forth under the captions
"Compensation  Committee  Interlocks  and  Insider  Participation"  and "Certain
Relationships  and  Related  Transactions"  in  the  Proxy  Statement  and  is
incorporated  by  reference  herein.


PART IV

ITEM  14.  EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES  AND  REPORTS  ON FORM 8-K

(A)       (1)  FINANCIAL  STATEMENTS

          The  Financial  Statements  identified  below and required by Part II,
          Item  8  of  this  Form  10-K  are  set  forth  above.
               Report  of  Independent  Auditors
               Balance  Sheets  as  of  December  31,  2001,  and  2000
               Statements  of  Operations for the years ended December 31, 2001,
                 2000,  and  1999
               Statements  of  Changes  in Stockholders' Equity(Deficit) for the
                 years  ended  December  31,  2001,  2000,  and  1999
               Statements  of  Cash Flows for the years ended December 31, 2001,
                 2000,  and  1999

          (2)  FINANCIAL  STATEMENT  SCHEDULES

          Schedules  have  been omitted because of the absence of the conditions
          under  which  they  are  required  or because the required information
          where  material  is  shown  in  the  financial statements or the notes
          thereto.



                                       27
<PAGE>
(3) EXHIBITS

       Exhibit No.    Title
      -----------     -----

            *3(i)     Certificate of Incorporation.
          ^^3(ii)     Certificate of Amendment of Certificate of Incorporation,
                         effective  June  22,  1998.
          *3(iii)     By-Laws.
          ++3(iv)     Certificate of Designation for Series A Convertible
                         Preferred  Stock.
            ^3(v)     Certificate of Amendment of Certificate of Designation for
                         Series  A  Convertible  Preferred  Stock.
          ^^3(vi)     Second Certificate of Amendment of Certificate of
                         Designation  for  Series  A  Preferred  Stock.
          **3(vii)    Third Certificate of Amendment of Certificate of
                         Designation  for  Series  A  Preferred  Stock
              *4a     Specimen Stock Certificate, Common Stock.
             ++4b     Specimen Stock Certificate, Series A Convertible Preferred
                         Stock.
             +10a     Assignment of Intellectual Property Rights Fuel-Tech N.V.
                         to Platinum  Plus,  Inc.  as  of  November  5,  1997.
             +10b     Assignment of Intellectual Property Rights Fuel Tech, Inc.
                         to  Clean  Diesel  Technologies, Inc. as of November 5,
                         1997.
             +10c     Assignment Agreement as of November 5, 1997, among
                         Platinum  Plus,  Inc., Fuel-Tech N.V., and Clean Diesel
                         Technologies,  Inc.
         *****10d     1994 Incentive Plan, as amended through August 8, 1996.
            ^^10e     Amendment of Section 5.1 of 1994 Incentive Plan, effective
                         June  9,  1999.
          ****10f     Management Services Agreement between Clean Diesel
                         Technologies, Inc., Fuel Tech, Inc., and Fuel-Tech N.V.
                         as  of  June  1,  1996.
           ***10g     Office Premises Lease of January 26, 1996.
             +10h     Registration Rights Agreement between Clean Diesel
                         Technologies,  Inc.  and  Fuel-Tech N.V. of November 5,
                         1997.
           +++10i     Registration Rights Agreement between Clean Diesel
                         Technologies,  Inc.  and  the  holders  of  Series  A
                         Convertible  Preferred  Stock  as of November 11, 1998.
            ++10j     Bridge Loan Agreement between Clean Diesel Technologies,
                         Inc.  and  the  several lenders set forth on Schedule A
                         thereto-dated  May  8,  1998.
           +++10k     Loan Note Agreement between Clean Diesel Technologies,
                         Inc.  and  the  several lenders set forth on Schedule A
                         thereto-dated  November  11,  1998.
            *+10l     Material Foreign Patents.
          ++++10m     License Agreement as of 31 January 2000 between Clean
                         Diesel  Technologies,  Inc.  and  RJM  Corporation.
          ++++10n     NOx Reduction Assets Purchase Agreement as of 31 January
                         2000  between  Clean  Diesel Technologies, Inc. and RJM
                         Corporation.
          ** 10 o     Loan Facility Agreement of November 14, 2000 with
                         exhibits.
          **23.1     Consent of Auditors, Ernst & Young LLP.

----------------
        * Previously filed as Exhibit to Registration Statement on Form S-1 of
          August 16, 1995, No. 33-95840.
       ** Filed herewith.
      *** Previously filed as Exhibit to Form 10-K for the year ended December
          31, 1995.
     **** Previously filed as Exhibit to Form 10-Q for the quarter ended
          September 30, 1996.
    ***** Previously filed as Exhibit to Form 10-K for the year ended December
          31, 1996.
        ^ Previously filed as Exhibit to Form 10-K for the year ended December
          31, 1998.
        + Previously filed as Exhibit to Form 10-K for the year ended December
          31, 1997.
       ++ Previously filed as Exhibit to Form 8-K dated May 26, 1998.
      +++ Previously filed as Exhibit to Form 10-Q for the quarter ended
          September 30, 1998.
       ^^ Previously filed as Exhibit to forms 10-K for the year ended December
          31, 2000.
     ++++ Previously filed as Exhibit to Form 8-K dated February 1, 2000.

     (b)  REPORTS ON FORM 8-K

          The Company filed Form 8-K for the issuance of new stock in the fourth
quarter of 2001.


                                       28
<PAGE>
                                   SIGNATURES

     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange  Act  of  1934,  Clean  Diesel  Technologies, Inc. has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

                                         CLEAN  DIESEL  TECHNOLOGIES,  INC.



      March 4, 2002                      By:  /s/   Jeremy D. Peter-Hoblyn
-----------------------                       ----------------------------------
           Date                               Jeremy  D.  Peter-Hoblyn
                                              Chief  Executive  Officer  and
                                              Chairman of the Board of Directors


     Pursuant  to  the  requirements of the Securities Exchange Act of 1934, the
following  persons  on  behalf  of  Clean  Diesel  Technologies, Inc. and in the
capacities  and  on  the  date  indicated  have  duly  signed this report below.


     /s/  Jeremy D. Peter-Hoblyn     Chief Executive Officer and Chairman of the
     ---------------------------     Board  of  Directors
          Jeremy D. Peter-Hoblyn     (principal  executive  officer)


     /s/ David W. Whitwell           Chief Financial Officer, Vice President,
     ---------------------------     and Treasurer (principal financial and
         David W. Whitwell           accounting officer)


     /s/  John  A.  de Havilland     Director
     ---------------------------
          John A. de Havilland


     /s/  Derek  R.  Gray            Director
     ---------------------------
          Derek  R.  Gray


     /s/  Charles  W.  Grinnell       Director, Vice President, and Corporate
     ---------------------------      Secretary
           Charles W. Grinnell


     /s/  James  M.  Valentine        Director  and  President
     ---------------------------
          James M. Valentine


     Dated: March 4, 2002


                                       29
<PAGE>