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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                  FORM 10-K/A-3

(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, 2003

                                       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.     X
                                    ---

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

                               Yes        No  X
                                   ---       ---

Aggregate  market  value  of  the  voting  stock  held  by non-affiliates of the
registrant  based  on  the  average  bid  and  asked prices as of June 30, 2003:
$2.65   and  as  of  March  19,  2004:  $3.02

Indicate  number  of  shares  outstanding  of  each of the registered classes of
Common Stock at March 25, 2004: 15,679,337 shares Common Stock, $0.05 par value.
Certain  portions  of the Proxy Statement for the annual meeting of stockholders
to  be  held  in  2003  are  incorporated by reference into parts II, III and IV
hereof.

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<PAGE>
                                EXPLANATORY NOTE

     This  is  an amendment of the Clean Diesel Technologies, Inc. Annual Report
to  the Commission on Form 10-K for the period ended December 31, 2003 which was
previously  filed  on March 24, 2004 (the "10-K") and later amended on March 29,
2004  and  May  7, 2004. The purpose of this third amendment is to eliminate the
legend  "Draft Subject to Revision" inadvertently left on the Auditors Report in
Item  8  of the electronic transmission of the 10-K, to correct a typo in item 6
current  liabilities (changed to 868 from 8,687) and to conform the certificates
and consent attached as Exhibits 23-1, 31.1, 31.2 and 32.



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<PAGE>
<TABLE>
<CAPTION>
                                     TABLE OF DEFINED TERMS


TERM                         TERM DEFINITIONS
----                         ----------------
<S>                          <C>

ARIS(R) 2000                 Clean Diesel Technologies' Advanced Reagent Injection System for Urea SCR

AIM                          Alternative Investment Market of the London Stock Exchange

Bhp hour                     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

CO(2)                        Carbon dioxide

CWMF                         Catalyzed Wire Mesh Filter

DOCs                         Diesel Oxidizing Catalysts

DPFs                         Diesel Particulate Filters

EGR                          Exhaust Gas Recirculation

FBC                          Fuel Borne Catalyst

Fuel Tech                    Fuel-Tech N. V., a substantial shareholder of Clean Diesel Technologies

HC                           Hydrocarbons

LOE-NOx(TM)                  Clean Diesel Technologies' diesel fuel water emulsion technology

NESCAUM                      North East States for Coordinated Air Use Management

NOx                          Nitrogen Oxide

PFCs                         Platinum Fuel Catalysts

Platinum Plus(R)             Clean Diesel Technologies' 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
</TABLE>


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<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  Clean  Diesel Technologies' 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

     Clean  Diesel  Technologies,  Inc.  "Clean Diesel Technologies", 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.  Clean  Diesel  Technologies was spun-off from Fuel
Tech  in December 1995 by way of a rights issue.  Over the past eight years, CDT
has  developed its technologies and is now commercializing Platinum Plus(R) fuel
borne catalyst, and the ARIS(R) 2000 NOx reduction system.

     Management  has  worked  together for over 15 years in the chemical, power,
fuel  and  emission  control fields and has brought Clean Diesel Technologies to
the  commercialization  stage  on a cost effective basis by co-operative funding
for development and demonstration programs with industry partners.  Clean Diesel
Technologies  has  a  strong  patent position with 26 US patents issued and 8 US
patent applications pending as well as 70 other international patents issued and
76  international  patent  applications  pending.

     Combustion  engine development is influenced by concern over global warming
caused  by  CO2  emissions from fossil fuels and 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.

TECHNOLOGIES  AND  PRODUCTS

     Clean  Diesel  Technologies'  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 un-burnt
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,  un-burnt  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
diesel  oxidation  catalysts  and  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 un-burnt
hydrocarbons.

     From  1996  to  1999, Clean Diesel Technologies 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, Clean Diesel
Technologies'  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,  Clean  Diesel  Technologies  received its US EPA registration of Platinum
Plus  for  use  in bulk fuel by refiners, distributors and fleets.  In 2000, CDT
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.  In 2002, the
Mining,  Safety  and Health Administration (MSHA) accepted the Platinum Plus FBC
for  use  in  mines.  In  2003  CDT  received EPA verification for its FBC and a
diesel  oxidation  catalyst  (Purifier  system).  CDT  has  completed  a  second
verification  program  for  the FBC and a catalyzed wire mesh filter (CWMF) from


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<PAGE>
Mitsui  &  Co. of Japan and is awaiting final verification results from the EPA.
CDT  is  applying  to  CARB  for  verification  of both the FBC/DOC and FBC/CWMF
systems.  Verification  is  needed  for  the  end  user  of Platinum Plus to get
emission  reduction  credit  from the EPA's voluntary retrofit program or CARB's
mandatory  retrofit  program.

     Over  the  past  three  years, eleven 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  using  Platinum  Plus  ranged  from  3% to 12% with an average 7%
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 in lab engine test beds at both Cummins Engine Company and
the  Southwest  Research  Institute.

     In  several  tests  above, it was shown that Platinum Plus based systems do
not  increase  emissions  of  NO2 which is the much more toxic component of NOx.
This  is  in  contrast  to many of the systems currently on the market which are
heavily  catalyzed  with  platinum.

     Platinum  Plus  is  effective  with  normal sulfur diesel, ultra low sulfur
diesel,  arctic  diesel  (kerosene)  and biodiesel. When used with biodiesel and
No1D,  Platinum  Plus  FBC  prevents  the normal increase in NOx associated with
biodiesel.

ARIS(R)  2000

     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.  The principle advantage of the
patented  ARIS system is that it does not require compressed air to operate. The
system  is  designed  for  volume  production  and is very compact with very few
components,  making  it inherently cheaper than the compressed air systems which
were  first  to  be  developed  for  heavy  duty  vehicles.  The  ARIS system is
applicable  to  both  stationary  diesel engines for power generation and mobile
diesels  used  in  trucks,  buses,  trains  and  boats.

THE MARKET AND THE REGULATORY ENVIRONMENT

     Clean  Diesel  Technologies  estimates that worldwide annual consumption of
diesel  fuel  amounts  to  approximately  200 billion gallons (US), including 50
billion  in  the  United  States,  60  billion in Europe and 50 billion in Asia.

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 in the US.  An SCR system comprising an
ARIS  2000  injection  system  and a suitable catalyst is being sold into the US
market  by the RJM Corporation (a licensee of the ARIS 2000 technology).  Mitsui
&  Co.  Ltd has also licensed both the ARIS stationary and mobile technology for
Japan.  Combustion Component Associates (CCA) of Monroe Connecticut licensed the
ARIS  mobile  technology  for  the  US  market  in  2003.

     In  the  last  several  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  2005 and 2010.   European engine
manufacturers  have  decided  to  use  urea  SCR in 2006, at least on heavy duty
vehicles  and  very likely on medium and light trucks in later years. There is a
clear  preference  to  use  a  single fluid system for the medium and light-duty
trucks which have no compressed air system. It also seems probable that European
manufacturers  will adopt particulate filters to meet 2010 regulations which are
being  formulated

     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 they will use diesel particulate filters to
meet  regulations  for  2007.  US  regulations  for 2010 are fixed and require a
further  50%  reduction


                                        5
<PAGE>
in  NOx  over 2007. Urea SCR is a candidate technology for 2010. However, the US
EPA  has a preference to adopt alternative technology named "NOx Traps" or "Lean
NOx  Catalysis".  The  advantage of these systems is that they do not require an
infrastructure  to  supply  urea  but  so  far  these  technologies  have  not
demonstrated  durable  performance  at  the  required  levels.

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 20 to
30 years 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 vehicles with particulate controls and has
developed  the  Clean School Bus USA program to reduce emissions on school buses
and  the  Smartway  Transport  Program  to reduce both diesel emissions and fuel
consumption  on  over-the-road  trucks.

     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  2004  and  April  2007.

MARKET  OPPORTUNITY

     Continuing tightening of clean air standards, emission control regulations,
pressure  for  fuel  efficiency  and  growing  international  awareness  of  the
greenhouse  effect  provide  Clean  Diesel  Technologies  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 by using
combinations  of  improved  engine  design,  cleaner  burning  fuels  and  after
treatment  systems  such  as  diesel  particulate filters and catalytic systems.
Clean  Diesel  Technologies'  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 CDT's products economical.  With diesel fuel selling at
about  $1.75  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  7%  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 CDT's products, namely
reduction  in  emissions  and reduction in fuel consumption. Platinum Plus is an
"enabling  technology"  which  enables  reductions  from  the  engine itself and
enhances  performance  of  the  exhaust  treatment  system whilst improving fuel
economy.

MARKETING STRATEGY AND COMMERCIALIZATION

     Clean  Diesel  Technologies'  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 Clean Diesel Technologies and
they  will  blend  and  market  Platinum  Plus.  CDT  believes  its  strategy of
licensing  represents  the  most  efficient  way to gain widespread distribution
quickly  and  exploit  worldwide  demand  for  its  technologies.

     Clean  Diesel  Technologies  has  licensed  the  RJM  Corporation  on  a
non-exclusive  basis  to  market 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 initial license revenue from the
RJM  Corporation  and is receiving a $1,500 to $2,500 royalty on each stationary
ARIS  unit sold.  Clean Diesel Technologies has also exclusively licensed Mitsui
&  Co.,  Ltd.  ("Mitsui")  to  market  the  ARIS  2000 technology for stationary
engines  in Japan. CDT received $495,000 in non-refundable up front license fees
and will earn a $1,500 to $2,500 royalty on each ARIS unit sold.

     Mitsui  also  exclusively  licensed  the  ARIS  technology  for  mobile
applications  in Japan. Mitsui paid $250,000 in mobile license fees and invested
an  additional  $200,000  in the development and testing of mobile ARIS systems.
CDT  also  receives  a per unit royalty on each mobile ARIS system sold. CDT has
licensed  Combustion  Component  Associates  for  the  ARIS  mobile


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<PAGE>
technology for the US market. CDT received an upfront license fee and an ongoing
per  unit  royalty.  CDT is in discussions with several companies to license the
mobile  ARIS  technology for retrofit and OEM opportunities in the United States
and  Europe.

     Clean  Diesel  Technologies  has  also  entered  into a number of marketing
distribution  agreements  with  chemical  additive  companies,  fuel  delivery
companies  ("wet  hosers") and fuel marketers.  CDT has licensed Baker Petrolite
Corporation  (a  division of Baker Hughes) for the non-exclusive distribution of
Platinum  Plus  to  refiners  and  terminals in the United States and the Global
Companies,  LLC  to supply Platinum Plus treated fuels to fleets in New England.
CDT  is  also working with Texas Night Fueling and Taylor Oil to supply Platinum
Plus  treated  fuel  directly  to  fleets.

HEALTH EFFECTS AND REGISTRATION OF ADDITIVES

     Metallic  additives  have come under scrutiny for their possible effects on
health.  Clean  Diesel  Technologies 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.  Clean
Diesel Technologies 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,  in  US and Switzerland, show that 95 to 99% of the catalyst
metal  introduced  to  the  fuel  by  the  FBC is retained within the engine and
exhaust and 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 Clean Diesel
Technologies  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 Clean Diesel Technologies' 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.

     In 2002 the Mining Safety and Health Administration (MSHA) accepted the use
of  Platinum  Plus with particulate filters and also allowed its use in all fuel
used  in  underground  mining  even  without  filters.

     In  October 2003, the EPA verified the Platinum Plus Purifier System, which
is  the  first time the EPA has verified a metal catalyst additive based system.

SOURCES  OF  SUPPLY

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

RESEARCH  AND  DEVELOPMENT

     During  2003,  Clean  Diesel Technologies employed 3 individuals, including
one  executive officer, in engineering and product development. During the years
ended December 31, 2003, 2002, and 2001, Clean Diesel Technologies' research and
development  expenses  exclusive of patent costs totaled approximately $855,000,
$693,000,  and  $365,000, respectively. The recent increase can be attributed to
EPA  and  CARB  verification  programs  and  testing.  Clean Diesel Technologies
expenses  all  research  and  development  costs  as  incurred.

PROTECTION  OF  PROPRIETARY  INFORMATION

     Clean  Diesel  Technologies  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 Clean Diesel Technologies' 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 Clean
Diesel  Technologies  will  have  adequate  remedies for disclosure of its trade
secrets  or  violations  of  its  intellectual  property  rights.


                                        7
<PAGE>
INSURANCE

     Clean  Diesel  Technologies  maintains  coverage  for  the  customary risks
inherent  in  its  operations.  Although  Clean Diesel Technologies 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 Clean Diesel
Technologies.

EMPLOYEES

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

     Clean  Diesel  Technologies enjoys good relations with its employees and is
not  a  party  to  any  labor  management  agreements.

RISK  FACTORS  OF  THE  BUSINESS

     Investors  in  Clean Diesel Technologies should be mindful of the following
risk  factors  relative  to  Clean  Diesel  Technologies  business:

LIQUIDITY  &  CONTINUING  OPERATING  LOSSES

     Prior  to  2000, Clean Diesel Technologies was a development stage business
and  has  incurred  losses  since  inception totaling $25,272,000 (excluding the
effect  of  non-cash  preferred  stock  dividends).  At the date of this report,
Clean  Diesel Technologies has cash resources estimated to be sufficient for its
needs  through  the  year 2005. 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.

     Clean  Diesel  Technologies  has  had minimal revenues through December 31,
2003.  CDT  expects to continue to incur operating losses at least through 2004.
There can be no assurance that Clean Diesel Technologies 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  such  as  Lubrizol,  Octel  and  O2  Diesel  (AAE  Technologies
International), supplying other additives and other emission reduction companies
such as Johnson Matthey, Engelhard, Environmental Solutions Worldwide and Engine
Control Systems (ECS), supplying other emission reduction systems.  CDT competes
on  the  basis  of  effectiveness,  price,  proprietary technology, and emission
reduction  performance.

     Competition  in  the  NOx  control  market  is  from  other  suppliers  of
reagent-based  post-combustion  NOx  control  systems  such as KleenAir Systems,
Miratech  Corporation  and  Siemens  inc.  as  well  as the engine manufacturing
companies.  CDT  has  proprietary  technology.

NEED  FOR  REGISTRATION

     Clean  Diesel  Technologies  needs to comply with registration requirements
for  each  territory  in  which  it  sells  its  products.  CDT  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 other 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.  Registration will be
required  in  other  countries  as  markets  are expanded and further testing in
support  of  these  registrations  is  likely  to  be  necessary.

     Clean  Diesel Technologies' 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, CDT's
prospects  would  be  adversely  affected.


                                        8
<PAGE>
NEED  FOR  PRODUCT  VERIFICATION

     In  the USA verification of the system or products performance over time is
required  to  be  demonstrated  against  newly  established protocols. There are
separate  verification  protocols for the EPA and CARB. Verification is required
for  systems  to  be  sold  into  the mandated or state funded programs. CDT has
achieved  verification  with  the EPA for  its first system as listed on the EPA
website  (http://www.epa.gov/otaq/retrofit/retroverifiedlist.htm).  Verification
          ------------------------------------------------------
for  a  second  system  is pending with the EPA.  Applications are being made to
CARB  and  further  applications to extend the verification to additional engine
categories  and  models  will  be  necessary as new CARB and EPA programs become
effective  or  as  marketing is expanded. Failure to achieve verifications for a
specific category would effectively prevent sales developing in that area.  CARB
also  requires  a  multimedia  assessment for all verified fuel or fuel additive
technologies.

NO  ASSURANCES  OF  ADDITIONAL  FUNDING

     Clean  Diesel  Technologies  may  seek  additional funding in the form of a
private  offering  of  additional  shares of  equity securities. Any offering of
such  securities  would  result  in dilution to the stockholders of Clean Diesel
Technologies.  The  ability  of  CDT  to consummate financing will depend on the
status  of  CDT's  marketing programs and commercialization progress, 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 acceptable terms.
In the event that Clean Diesel Technologies needs additional funds and is unable
to  raise  such  funds,  CDT  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  business, operating results,
financial  condition  and  long-term  prospects.  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.

UNCERTAINTY  OF  MARKET  ACCEPTANCE

     The commercial success of CDT'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  CDT's  ability  to  demonstrate  the  efficiency,  cost
effectiveness,  safety,  and ease of use of the PFCs and NOx control products of
Clean Diesel Technologies. The failure to receive market acceptance for the PFCs
and NOx control products would have an adverse effect on the business, operating
results  and  financial  condition.  See  "Products  and  Markets"  in  Item  1,
"Business."

NO ASSURANCE OF PROTECTION OF PATENTS AND PROPRIETARY RIGHTS

     Clean  Diesel  Technologies  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 Clean Diesel Technologies' 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  CDT  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 Clean Diesel Technologies
intends to minimize this risk through various purchasing and hedging strategies,
there  can  be  no  assurance  that  CDT  will  be  able to do so. A significant
prolonged increase in the price of platinum could have a material adverse effect
on  the  business,  operating  results  and  financial  condition.

DEPENDENCE ON ATTRACTING AND RETAINING PERSONNEL

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

ITEM  2.  PROPERTIES

FACILITIES

     Clean Diesel Technologies has a month to month lease  of  2,900 square feet
of  office  space  for administrative purposes at 300 Atlantic Street, Stamford,
Connecticut.  CDT  has signed a lease in the same building for 3,925 square feet


                                        9
<PAGE>
of administrative space beginning in May 2004. The 5 year lease will have annual
cost  of  $115,875,  including  rent,  utilities  and  parking.


PATENTS  AND  TECHNOLOGY  ASSIGNMENTS

     CDT'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
Platinum  Plus  FBC,  commencing  in  1998 and terminating in 2008. Clean Diesel
Technologies  may  at  any  time terminate this royalty obligation by payment to
Fuel  Tech  of  amounts  in  2004 of $5.5 million and declining annually to $1.1
million in 2008. CDT, as owner, maintains the technology at its expense.

     During  2003,  Clean  Diesel  Technologies  filed  4  additional  US patent
applications and 9 international patent applications.  Clean Diesel Technologies
now has a total of 26 US patents granted and 70 international patents. There are
currently  8  US  patent  applications pending and 76 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

     Clean Diesel Technologies is not involved in any legal proceedings.

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

     There  were  no  submissions of matter to a vote of security holders in the
fourth  quarter  of  2003.

PART  II

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

COMMON  STOCK

     Clean  Diesel  Technologies'  Common  Stock  is  traded  in  the  US on the
over-the-counter  (OTC)  market  and  on  the  London Stock Exchange through the
Alternative  Investment  Market  (AIM).  Reports of transactions of Clean Diesel
Technologies'  shares are available on the OTC Electronic Bulletin Board (Symbol
CDTI)  and  on  the  AIM (Symbol CDT and CDTS).  At March 3, 2004, there are 192
registered  holders  and  approximately  700 beneficial holders of Common Stock.

     No  dividends  have  been  paid  on  CDT's  Common  Stock  and Clean Diesel
Technologies 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 2002 . . . . . . . . .   3.50  2.10           2.55  1.56
     2nd Quarter 2002 . . . . . . . . .   4.00  2.60           2.35  1.40
     3rd Quarter 2002 . . . . . . . . .   2.60  1.30           1.60  0.97
     4th Quarter 2002 . . . . . . . . .   1.90  1.25           1.40  1.10

     1st Quarter 2003 . . . . . . . . .   3.00  1.40           1.54  1.10
     2nd Quarter 2003 . . . . . . . . .   2.40  1.41           1.48  1.25
     3rd Quarter 2003 . . . . . . . . .   2.00  1.50           1.35  1.05
     4th Quarter 2003 . . . . . . . . .   4.70  1.85           2.55  0.95
</TABLE>

SALES AND USES OF UNREGISTERED SECURITIES DURING THE PERIOD

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

     Pursuant to a Regulation S exemption with respect to an offshore placement,
Clean  Diesel  Technologies sold, effective September 26, 2003, 2,395,597 shares
of  its  Common  Stock.  The  price  of  the  Common  Stock  was  $1.63  per


                                        10
<PAGE>
share. The proceeds of the Common Stock issuance, $3.866 million, net of $39,000
in  expenses,  will  be  used for the general corporate purposes of Clean Diesel
Technologies.

ITEM  6.  SELECTED  FINANCIAL  DATA

     Clean Diesel Technologies 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  CDT's  Common  Stock,  with Fuel Tech retaining a 27.6%
ownership  interest in Clean Diesel Technologies. In 2003 and 2002, CDT obtained
$7.449  million  and  $1.356  million of proceeds, respectively, through private
placement  sales  of  shares  of its Common Stock. As a result of the additional
stock transactions, Fuel Tech's 1,825,119 shares of CDT's Common Stock represent
approximately  a  11.6%  interest  in  Clean Diesel Technologies at December 31,
2003.

     As discussed elsewhere herein, prior to 2000, Clean Diesel Technologies was
a  development  stage business. The following selected data are derived from the
financial  statements  of  CDT.  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,
                                               ------------------------------------------------
                                                 2003      2002      2001      2000      1999
                                               --------  --------  --------  --------  --------
<S>                                            <C>       <C>       <C>       <C>       <C>
STATEMENTS OF OPERATIONS DATA                       (in thousands, except per share data)

Product Revenue                                $   373   $   142   $   176   $   199   $   142
License and Royalty Revenue                        194       299     1,424       383        --
                                               --------  --------  --------  --------  --------
Total Revenues                                     567       441     1,600       582       142
Costs and expenses:
Cost of product sales                              219        86       117       133        81
General and administrative                       2,695     2,291     1,858     1,799     1,585
Research and development                           855       693       365       534       827
Patent filing and maintenance                       58        43       196       152       134
                                               --------  --------  --------  --------  --------

Loss from operations                            (3,260)   (2,672)     (936)   (2,036)   (2,485)
Interest income/(expense), net                      15        30      (170)       35        44
                                               --------  --------  --------  --------  --------
Loss before preferred stock dividend            (3,245)   (2,642)   (1,106)   (2,001)   (2,441)

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   $(3,245)  $(2,642)  $(3,003)  $(2,713)  $(4,584)
                                               ========  ========  ========  ========  ========

Basic and diluted loss per common share        $ (0.26)  $ (0.23)  $ (1.08)  $ (1.03)  $ (1.77)


Weighted-average shares outstanding             12,721    11,419     2,777     2,631     2,594


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


<TABLE>
<CAPTION>
                                             DECEMBER 31,
                                ---------------------------------------
                                 2003    2002    2001    2000     1999
                                ------  ------  ------  -------  ------
<S>                             <C>     <C>     <C>     <C>      <C>
BALANCE SHEET DATA                          (in thousands)

Current assets                  $7,023  $2,757  $4,612  $  965   $1,311

Total assets                     7,441   2,979   4,658   1,057    1,346

Current liabilities                868     223     808     400      494

Long-term liabilities                0     418     368     808      196

Working capital                  6,155   2,534   3,804     565      817

Stockholders' equity (deficit)   6,573   2,338   3,482    (151)     656
</TABLE>


ITEM  7.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
RESULTS OF OPERATIONS

     Prior to 2000, Clean Diesel Technologies was a development stage enterprise
and  its  efforts  were devoted to the research and development of platinum fuel
catalysts  and  nitrogen  oxide  reduction technologies to reduce emissions from
diesel  engines. During December 1999, CDT received its EPA registration for its
platinum-cerium  product and in early


                                       11
<PAGE>
2000  completed  its  first  commercial  sales;  accordingly,  in the opinion of
management,  Clean  Diesel  Technologies  was  no  longer  a  development  stage
enterprise.  Although  the  Company  has  been  unable to generate positive cash
flows,  it  has  made  significant progress in commercializing its technologies.


RESULTS  OF  OPERATIONS
2003  VERSUS  2002

     Revenues  and  cost  of  product  sales  were  $567,000  and  $219,000,
respectively,  in  2003  versus $441,000 and $86,000, respectively, in 2002. The
2003  revenues  consist  of  Platinum  Plus  sales, ARIS 2000 system sales, ARIS
license revenue and royalties, and miscellaneous equipment sales.

     CDT  received  EPA  verification  of  its  purifier system (FBC and DOC) in
October  2003,  and has completed a second verification program with the EPA for
the  FBC  and Mitsui CWMF and is waiting for final verification results from the
EPA  to  be  posted.  Clean Diesel Technologies has applied for verification for
emission reduction by CARB as well. The Platinum Plus FBC is registered with the
EPA.  In 2003, sales of the platinum-cerium additive totaled $192,000.  Based on
initial  trial  results and licensing agreements, ongoing revenues from sales of
its  Platinum  Plus additives are expected from distributors, refiners, additive
marketing  companies  and  fleets.

     Clean  Diesel  Technologies  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.  CDT has licensed
the  ARIS  2000 system for stationary diesel engines in North, South and Central
America  to  the  RJM  Corporation  on  a  non-exclusive  basis  and completed a
stationary  license  agreement  with Mitsui for Japan on an exclusive basis.  In
December  of  2002  Clean  Diesel Technologies completed an additional exclusive
license  agreement  with  Mitsui Ltd for the mobile ARIS technology in Japan. In
2003  CDT completed an ARIS mobile license with Combustion Components Associates
for the US market. Total sales of systems and license/royalties of the ARIS 2000
in  2003  were $111,000 and $194,000, respectively, versus $102,000 and $298,000
in  2002,  respectively.  CDT and its licensees have sold and installed over 175
systems.  CDT  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.  CDT
believes  that  the  ARIS  2000  system  can  most effectively be commercialized
through  licensing  several  companies with a related business in these markets.
Clean  Diesel  Technologies  is  actively  seeking  to  license  the mobile ARIS
technology  in the US and Europe and the stationary technology in the US, Europe
and  Asia.

     General  and  administrative  expenses increased to $2,695,000 in 2003 from
$2,291,000 in 2002.  The increases is the result of an increase in staff expense
and  marketing  and  travel  relating to the increased sales effort in marketing
CDT's  technologies.  The  increase  is also related to higher professional fees
including  the  effects  of exchange rates, associated with being listed on AIM.
Research and development expenses increased to $855,000 in 2003 from $693,000 in
2002. The increase in research and development in 2003 is due to the development
of new applications for CDT's technologies and for verification testing relating
to  CARB  and  EPA  certification.

     Patent  filing and maintenance expenses increased to $58,000 in 2003 versus
$43,000  in 2002.  The increase is attributable to the canceling of some patents
in  non-viable countries and the resultant charge to income of the related asset
amounts  which  had  been  accrued.  Clean  Diesel  Technologies capitalizes the
expenses  related  to  filing and maintaining each patent and then amortizes the
expense  over  the  remaining  life of the patent.  Interest income decreased to
$15,000  in  2003  from  $39,000  in  2002 due to the decrease in funds used for
operations.  Interest  expense  decreased to $0 in 2003 from $9,000 in 2002 as a
result  of  using  equity  to  fund  operations.

2002 VERSUS 2001

     Revenues and cost of product sales were $441,000 and $86,000, respectively,
in  2002  versus  $1,600,000  and  $117,000,  respectively,  in  2001.  The 2002
revenues consist of Platinum Plus sales, ARIS 2000 system sales and ARIS license
revenue  and  royalties.

     Clean  Diesel  Technologies  received  its  EPA  registration  of  the
platinum-cerium additive.  Field trials of the platinum-cerium additive for fuel
economy  started  in  2000  and  continued in 2002. In 2002, CDT initiated field
trials  of  platinum-cerium  for  emission  reduction  as  well.  Clean  Diesel
Technologies applied for the platinum-cerium product to be verified for emission
reduction  by  both  the  EPA  and  CARB.  In 2002, sales of the platinum-cerium
additive  totaled  $40,000.  Based  on  initial  trial  results  and  licensing
agreements,  ongoing  revenues  from  sales  of  its  Platinum  Plus additive is
expected  from  distributors, refiners, additive marketing companies and fleets.


                                       12
<PAGE>
     Clean  Diesel  Technologies  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.  CDT has licensed
the  ARIS  2000 system for stationary diesel engines in North, South and Central
America to the RJM Corporation and completed a stationary license agreement with
Mitsui  for  Japan.  In  December of 2002 Clean Diesel Technologies completed an
additional  license  agreement with Mitsui Ltd for the mobile ARIS technology in
Japan.  Total  sales  of  systems and license/royalties of the ARIS 2000 in 2002
were $102,000 and $298,000, respectively, versus $62,000 and $1,424,000 in 2001,
respectively.  CDT  and  its licensees have sold and installed over 150 systems.
CDT  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.  CDT believes that the
ARIS  2000  system  can  most  effectively  be  commercialized through licensing
several  companies  with  a  related  business  in  these markets.  Clean Diesel
Technologies is actively seeking to license the mobile ARIS technology in the US
and  Europe  and  the  stationary  technology  in  Europe  and  Asia.

     General  and  administrative  expenses increased to $2,291,000 in 2002 from
$1,858,000  in  2001.  The  increase  is  the result of higher professional fees
associated  with  listing  on  AIM.  There  were also increases in marketing and
travel  relating  to  the  increased  effort  in  marketing  CDT's technologies.
Research and development expenses increased to $693,000 in 2002 from $365,000 in
2001. The increase in research and development in 2002 is due to the development
of new applications for CDT's technologies and for verification testing relating
to  CARB  and  EPA  certification.

     Patent  filing and maintenance expenses decreased to $43,000 in 2002 versus
$196,000 in 2001.  The decrease relates to a change in accounting policy.  Clean
Diesel  Technologies  now  capitalizes  the  expenses  related  to  filing  and
maintaining  each  patent and then amortizes the expense over the remaining life
of  the  patent.  Interest  income  increased to $39,000 in 2002 from $11,000 in
2001  due  to  funds  raised  from the issuance of CDT's Common Stock.  Interest
expense  decreased to $9,000 in 2002 from $181,000 in 2001 due to the retirement
of  the  term  loan  financing  arrangement  in  January  2002.

     In  2002,  Clean  Diesel  Technologies  recorded no in-kind preferred stock
dividends on its Series A Preferred Stock due to the conversion of the preferred
stock  into  common  stock in December 2001, for which no dividends are paid. In
2001, CDT recorded $1,897,000 of in-kind preferred stock dividends on its Series
A  Preferred  Stock.

LIQUIDITY  AND  SOURCES  OF  CAPITAL

     Prior  to 2000, Clean Diesel Technologies was primarily engaged in research
and  development and has incurred losses since inception aggregating $25,272,000
(excluding  the  effect of the preferred stock dividends).  CDT expects to incur
losses  through  the  foreseeable  future  as  it  further  pursues  its
commercialization efforts.  Although CDT has begun selling limited quantities of
Platinum  Plus  additive and generating ARIS licensing and royalties, revenue to
date  has  been  insufficient  to  cover  operating  expenses,  and Clean Diesel
Technologies  continues  to  be  dependent upon sources other than operations to
finance  its  working  capital  requirements.

     For  the  years  ended  2003, 2002 and 2001, Clean Diesel Technologies used
cash  of  $2,744,000,  $2,836,000  and  $725,000,  respectively,  in  operating
activities.

     At  December 31, 2003, and December 31, 2002, Clean Diesel Technologies had
cash  and  cash  equivalents  of  $6,515,000  and $2,083,000, respectively.  The
increase  in  cash  and  cash  equivalents in 2003 from 2002 was due to the fund
raising  completed  in  the  second  half of 2003.  Working capital increased to
$6,155,000  at  December  31,  2003,  from $2,534,000 at December 31, 2002.  CDT
anticipates  incurring  additional  losses  through  at least 2004 as it further
pursues  its  commercialization  efforts.

     In  April 2003, Clean Diesel Technologies completed a non-exclusive license
agreement  with  Combustion  Component  Associates  Inc.  (CCA)  of  Monroe,
Connecticut,  for  the  mobile  ARIS  technology  in  the US. Under terms of the
agreement CCA agreed to pay CDT a $150,000 license fee and committed to spend an
additional  $100,000  in  developing,  testing  and  demonstrating  ARIS  mobile
prototypes. CDT recognized the $150,000 license revenue in the second quarter of
2003,  as  there are no significant ongoing services required to be performed by
CDT.

     In  December  2002,  Clean  Diesel  Technologies  completed  an  additional
exclusive  license  agreement  with  Mitsui  for  the mobile ARIS technology for
Japan.  Under terms of the agreement Mitsui agreed to pay CDT a $250,000 license
fee  and Mitsui committed to spend an additional $200,000 in developing, testing
and demonstrating ARIS mobile prototypes. CDT recognized the $250,000 of license
revenue  in  the  fourth  quarter  of  2002.


                                       13
<PAGE>
     In  August  2001,  Clean  Diesel Technologies 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, CDT received nonrefundable
up-front  license  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, Clean Diesel Technologies secured a $1,000,000 privately
financed  term  loan  facility.  In December 2000, CDT 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 January 2002, the remaining $250,000 and accrued interest
for  the  term  loan  was  repaid.

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

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

     In  September  2003, Clean Diesel Technologies received $3.866 million (net
of  $39,000  in expenses) through a private placement of 2,395,597 shares of its
Common  Stock  on  AIM.

     In December 2003, Clean Diesel Technologies received $3.583 million (net of
$170,000  in  expenses)  through  a private placement of 1,282,600 shares of its
Common  Stock  on  AIM.

CRITICAL  ACCOUNTING  POLICIES

     The  preparation  of  financial  statements  in  conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect  the  amounts reported in the financial statements and
accompanying  notes.  Actual  results  can  differ  from  those  estimates.  The
Company  believes that of its significant accounting policies (see Note 1 to the
Financial Statements), the following may involve a higher degree of judgment and
complexity.

REVENUE  RECOGNITION

     Clean  Diesel  Technologies  recognizes revenue from sales of Platinum Plus
fuel  borne  catalyst  and  ARIS  systems  upon shipment.  CDT sells to end user
fleets, resellers, and additive distribution companies primarily in the US.  CDT
recognizes  license  revenue at the time of the license agreement when there are
no  significant  ongoing  services  to  be  performed  by  CDT.

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.

PATENT  EXPENSE

     Effective  January  1, 2002, all patent costs are capitalized and amortized
over  the remaining life of each patent.  Patents are reviewed regularly and any
patents  deemed  not commercial or cost effective are dropped and the cumulative
accrued  expense  is  written  off.  Prior to this all patent related costs were
expensed  as  incurred.

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,  it is not subject to any significant
market  risk  exposure.  See  "Risk Factors of the Business - Platinum Price" in
Item  1,  "Business."

     Clean  Diesel  Technologies  generally receives all income in United States
dollars.  CDT  typically makes several small payments monthly in various foreign
currencies  for patent expenses, product tests and registration, local marketing
and  promotion  and  consultants.


                                       14
<PAGE>
ITEM  8.  FINANCIAL  STATEMENTS


            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


BOARD OF DIRECTORS AND STOCKHOLDERS
Clean Diesel Technologies, Inc.

We  have  audited  the  accompanying balance sheet of Clean Diesel Technologies,
Inc.  as  of December 31, 2003 and the related statements of operations, changes
in stockholders' equity (deficit) and cash flows for the year then ended.  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  audit.

We  conducted  our  audit in accordance with the standards of the Public Company
Accounting Oversight Board (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  audit  provides  a
reasonable  basis  for  our  opinion.

In  our  opinion,  the financial statements referred to above present fairly, in
all material respects, the financial position of Clean Diesel Technologies, Inc.
as of December 31, 2003 and the results of its operations and its cash flows for
the  year  then  ended  in  conformity  with  U.S. generally accepted accounting
principles.


/s/ Eisner, LLP
New York, New York
February 18, 2004



                                       15
<PAGE>
                      REPORT OF INDEPENDENT AUDITORS - 2002


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

We  have  audited  the  accompanying balance sheet of Clean Diesel Technologies,
Inc.  as  of  December  31,  2002,  and  the  related  statements of operations,
stockholders'  equity  (deficit),  and  cash flows for each the two years in the
period  ended  December  31,  2002.  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 to above present fairly, in
all material respects, the financial position of Clean Diesel Technologies, Inc.
at  December  31, 2002, and the results of its operations and its cash flows for
each  of the two years in the period ended December 31, 2002, in conformity with
accounting  principles  generally  accepted  in  the  United  States.




                                       /s/ Ernst & Young LLP


Stamford, Connecticut
January 24, 2003



                                       16
<PAGE>
<TABLE>
<CAPTION>
CLEAN DIESEL TECHNOLOGIES, INC.
BALANCE SHEETS                                             (IN THOUSANDS EXCEPT SHARE DATA)


                                                                       DECEMBER 31,
                                                                   --------------------
                                                                     2003       2002
                                                                   ---------  ---------
<S>                                                                <C>        <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                          $  6,515   $  2,083
Accounts receivable, net of allowance of $3 and $0 in 2003 and
     2002, respectively                                                 115        284
Inventories                                                             320        314
Other current assets                                                     73         76
                                                                   ---------  ---------
TOTAL CURRENT ASSETS                                                  7,023      2,757
Patents, net                                                            274        114
Fixed assets, net of accumulated depreciation of $123 in 2003 and
     $74 in 2002, respectively                                          126         90
Other assets                                                             18         18
                                                                   ---------  ---------
TOTAL ASSETS                                                       $  7,441   $  2,979
                                                                   =========  =========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:

Deferred compensation and pension benefits                         $    441   $     --
Accounts payable and accrued expenses                                   427        223
                                                                   ---------  ---------
     TOTAL CURRENT LIABILITIES                                          868        223


Deferred compensation and pension benefits                               --        418
                                                                   ---------  ---------
     TOTAL LONG-TERM LIABILITIES                                         --        418


STOCKHOLDERS' EQUITY:
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,  no shares issued and outstanding                                --         --
Common Stock, par value $0.05 per share, authorized
   30,000,000 shares, issued and outstanding 15,679,337
   and 11,986,387 shares                                                784        598
Additional paid-in capital                                           35,813     28,519
Accumulated deficit                                                 (30,024)   (26,779)
                                                                   ---------  ---------
TOTAL STOCKHOLDERS' EQUITY                                            6,573      2,338
                                                                   ---------  ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $  7,441   $  2,979
                                                                   =========  =========


See accompanying notes.
</TABLE>


                                       17
<PAGE>
<TABLE>
<CAPTION>
CLEAN DIESEL TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS                      (IN THOUSANDS EXCEPT PER SHARE DATA)


                                                FOR THE YEARS ENDED DECEMBER 31,
                                                  ----------------------------
                                                    2003      2002      2001
                                                  --------  --------  --------
<S>                                               <C>       <C>       <C>
   Product revenue                                $   373   $   142   $   176
   License and royalty revenue                        194       299     1,424
                                                  --------  --------  --------
   Total revenue                                      567       441     1,600

   Costs and expenses:
   Cost of revenue                                    219        86       117
   General and administrative                       2,695     2,291     1,858
   Research and development                           855       693       365
   Patent amortization and other expense               58        43       196
                                                  --------  --------  --------

   Loss from operations before interest, expense
   and preferred dividends                         (3,260)   (2,672)     (936)
   Interest income                                     15        39        11
   Interest expense                                    --        (9)     (181)
                                                  --------  --------  --------

   Net loss before preferred stock dividends       (3,245)   (2,642)   (1,106)
   Preferred Stock dividends                           --        --      (621)
   Preferred Stock conversion premium                  --        --    (1,276)
                                                  --------  --------  --------

   Net loss attributable to common stockholders   $(3,245)  $(2,642)  $(3,003)
                                                  ========  ========  ========

   BASIC AND DILUTED LOSS PER COMMON SHARE
      ATTRIBUTABLE TO COMMON STOCKHOLDERS         $ (0.26)  $ (0.23)  $ (1.08)
                                                  ========  ========  ========

   WEIGHTED AVERAGE NUMBER OF COMMON
      SHARES OUTSTANDING                           12,721    11,419     2,777
                                                  ========  ========  ========


See accompanying notes.
</TABLE>


                                       18
<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, 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
Net loss for year                       --        --       --       --        --      (2,642)     (2,642)
Issuance of common stock warrants       --        --       --       --        95          --          95
Payment of directors'  fees in
    common stock                        --        --       23        1        46          --          47
Exercise of warrants                    --        --       27        1        (1)         --          --
Issuance of common stock                --        --      654       33     1,224          --       1,257
Issuance of common stock                --        --       50        2        97          --          99
                                    -------  --------  ------  -------  ---------  ----------  ----------

BALANCE AT DECEMBER 31, 2002            --   $    --   11,968  $   598  $ 28,519   $( 26,779)  $   2,338
NET LOSS FOR YEAR                       --        --       --       --        --      (3,245)     (3,245)
EXERCISE OF WARRANTS                    --        --       17        1        (1)         --          --
ISSUANCE OF COMMON STOCK                --        --    2,396      120     3,746          --       3,866
PAYMENT OF DIRECTORS'  FEES IN
    COMMON STOCK                        --        --       13        1        26          --          27
ISSUANCE OF COMMON STOCK                --        --    1,283       64     3,519          --       3,583
EXERCISE OF WARRANTS                    --        --        2       --         4          --           4

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

BALANCE AT DECEMBER 31, 2003            --   $    --   15,679  $   784  $ 35,813   $( 30,024)  $   6,573

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

See accompanying notes.
</TABLE>


                                       19
<PAGE>
<TABLE>
<CAPTION>
CLEAN DIESEL TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS                                                    (IN THOUSANDS)
                                                                          FOR THE YEARS ENDED DECEMBER 31,
                                                                          --------------------------------
                                                                            2003      2002        2001
                                                                          --------  --------  ------------
<S>                                                                       <C>       <C>       <C>
OPERATING ACTIVITIES
Net loss                                                                  $(3,245)  $(2,642)  $    (1,106)
Adjustments to reconcile net loss to cash used in operating activities:
    Depreciation and amortization                                              81        26            11
    Amortization of deferred financing costs                                   --         8            91
    Interest expense from term loans converted to common shares                --        --            65
    Compensatory stock warrant                                                 --        95           120
Changes in operating assets and liabilities:
    Accounts receivable                                                       169       (87)         (147)
    Inventories                                                                (6)      (18)           (9)
    Other current assets                                                        3        20            (9)
    Accounts payable and accrued expenses                                     254      (238)          259
                                                                          --------  --------  ------------

Net cash used in operating activities                                      (2,744)   (2,836)         (725)
                                                                          --------  --------  ------------

INVESTING ACTIVITIES
Patent activities                                                            (192)     (122)           --
Purchase of fixed assets                                                      (85)      (88)          (17)
                                                                          --------  --------  ------------
Net cash used in investing activities                                        (277)     (210)          (17)


FINANCING ACTIVITIES
Proceeds from exercise of stock options and warrants                            4        --             3
Proceeds from (repayment of) term loans                                        --      (250)          500
Proceeds from issuance of common stock, net
                                                                            7,449     1,356         3,721
                                                                          --------  --------  ------------

Net cash provided by financing activities                                   7,453     1,106         4,224
                                                                          --------  --------  ------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    CASH EQUIVALENTS                                                        4,432    (1,940)        3,482
Cash and cash equivalents at beginning of the year                          2,083     4,023           541
                                                                          --------  --------  ------------

CASH AND CASH EQUIVALENTS AT END OF THE YEAR                              $ 6,515   $ 2,083   $     4,023
                                                                          ========  ========  ============

NON-CASH INVESTING AND FINANCING ACTIVITIES

Preferred Stock dividend                                                  $    --   $    --   $       621

Preferred Stock conversion premium (non-cash)                                  --        --         1,276

Conversion of term loans and related interest into                             --        --           817

Stock to be issued to Directors in lieu of cash fee                       $    57   $    28   $        47


See accompanying notes.
</TABLE>


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

1.   BUSINESS

     Clean  Diesel  Technologies,  Inc.  ("CDT")  located  in  Stamford  CT, 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  CDT's  Common  Stock,  and reduced its
ownership  in  CDT's  Common  Stock  to  27.6%. As a result of additional equity
offerings in subsequent years, Fuel Tech currently holds a 11.6% interest in CDT
as  of  December  31,  2003.

     Clean  Diesel  Technologies  is  a specialty chemical and energy technology
company  supplying  fuel  additives  and  proprietary  systems to reduce harmful
emissions  from  internal  combustion engines while improving fuel economy. Over
the past several years the Company has filed patents, developed its technologies
and  is  now  commercializing  Platinum  Plus,  a fuel borne catalyst (FBC), the
Purifier  System  which  includes  the  FBC  combined  with a traditional diesel
oxidation  catalyst, the FBC/catalyzed wire mesh (CWMF) system and the ARIS 2000
NOx reduction system through a direct sales and licensing distribution strategy.
CDT  is  developing  a  network  of licensed distributors to sell and market its
patented  Platinum Plus FBC,  recently verified Purifier System and the FBC/CWMF
system  (verification  pending).  CDT  continues  to  market  and  sell the FBC,
Purifier  and  CWMF  systems  to key corporate fleets to generate demand for its
technologies.  CDT's  strategy  for  the  ARIS  2000  NOx reduction system is to
continue  licensing  the  patented  technology  to  engineering  and  automotive
companies  for  an  upfront  license fee and an on-going royalty. The success of
CDT's  technologies  will depend upon the commercialization opportunities of the
technologies,  governmental  regulations,  and  corresponding  foreign and state
agencies.  CDT's  raw  materials are maintained off site and the majority of its
blending  and  manufacturing  is  performed  by  third  parties.

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

     Clean  Diesel  Technologies  considers  all  highly liquid investments with
maturity  of  three  months  or  less  when purchased to be cash equivalents. At
December  31, 2003, substantially all of CDT'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.

RECLASSIFICATION

     Certain  prior  year balances have been reclassified in order to confirm to
the  current  year's  presentation.


INVENTORIES

     Inventories are stated at the lower of cost or market and consist primarily
of  finished  product ($73,000) platinum (metal) concentrate ($171,000) and ARIS
injectors  and parts ($56,000). Cost is determined using the first-in, first-out
(FIFO)  method.


REVENUE  RECOGNITION

     Clean  Diesel  Technologies  recognizes revenue from sales of Platinum Plus
fuel  borne catalyst, Purifier and ARIS systems upon shipment.  CDT sells to end
user fleets, resellers, and additive distribution companies primarily in the US.
One  customer  represents  65% of CDT's accounts receivable at December 31, 2003
and  26%  of  revenue  for  2003.

     In  August  2001,  Clean Diesel Technologies completed an exclusive license
agreement  with  Mitsui  Ltd  for  CDT's  ARIS  2000  NOx control system for all
stationary  diesel  power  generators  in  Japan  for  the remaining life of the
patents.  Under  the  agreement,  CDT  received a nonrefundable up-front license
payment  of $495,000, and will receive ongoing standard royalties on each system
sold  by Mitsui. CDT recognized the license payment as revenue in 2001, as there
are  no  significant  ongoing  services  to  be  performed  by  CDT.


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

     In  December  2002,  Clean  Diesel  Technologies  completed  an  additional
exclusive license agreement with Mitsui for the mobile ARIS technology for Japan
for  the  remaining  life  of  the  patents. Under terms of the agreement Mitsui
agreed  to  pay  CDT  a  $250,000  license  fee and Mitsui committed to spend an
additional  $200,000  in  developing,  testing  and  demonstrating  ARIS  mobile
prototypes. CDT recognized the $250,000 license revenue in the fourth quarter of
2002.

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

     Royalty  fees  are  recognized by Clean Diesel Technologies when earned and
royalty  revenue  for  2003  was  $44,000.

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.

PATENT  EXPENSE

     Effective  January  1,  2002,  CDT  commenced  capitalizing  all  direct
incremental  costs associated with initial patent filing costs and amortized the
cost  over  the  estimated  remaining life of such patent.  Patents are reviewed
regularly  and  any  patents deemed not commercial or cost effective are dropped
and  the  cumulative  accrued  expense is written off.  Prior to this all patent
related  costs were expensed as incurred.  The expiration of CDT's patents range
from  2008  to  2021.

STOCK-BASED  COMPENSATION

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

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

<TABLE>
<CAPTION>
                                                                         2003      2002      2001
                                                                       --------  --------  --------
<S>                                                                    <C>       <C>       <C>
       Net loss attributable to common stockholders as reported        $(3,245)  $(2,642)  $(3,003)
       Deduct: Total stock-based employee compensation expense
           determined under fair value based method for all awards,
           net of related tax effects                                   (1,176)     (591)     (422)
                                                                       ----------------------------
       Pro forma net loss attributable to common stockholders          $(4,421)  $(3,233)  $(3,425)
       Net loss per share attributable to common stockholders:
       Basic and diluted net loss per common share-as reported         $ (0.26)  $ (0.23)  $ (1.08)
       Basic and diluted per common share-pro forma                    $ (0.35)  $ (0.28)  $ (1.23)
</TABLE>


                                       22
<PAGE>
CLEAN  DIESEL  TECHNOLOGIES,  INC.
NOTES  TO  FINANCIAL  STATEMENTS  (CONTINUED)

     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 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>
                                                     2003      2002      2001
                                                   --------  --------  --------
<S>                                                <C>       <C>       <C>

     Expected dividend yield                           0.0%      0.0%      0.0%
     Risk-free interest rate                           4.1%     4.85%     4.66%
     Expected volatility                              99.4%     94.2%     94.2%
     Expected life of option                       4 YEARS   4 years   4 years

   The 2003 weighted average fair value per option granted was $2.10.
</TABLE>


BASIC  AND  DILUTED  LOSS  PER  COMMON  SHARE

     Basic  and diluted loss per share is calculated in accordance with SFAS No.
128,  Earnings  Per  Share.   Basic  loss  per share is computed by dividing net
earnings by the weighted-average shares outstanding during the reporting period.
Diluted  loss  per  share is 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 and warrants, if dilutive.
CDT's  computation  of  diluted net loss per share for 2003 does not include the
common  shares associated with 1,020,000 in the money options as of December 31,
2003,  as  this  would  be  anti-dilutive.

3.   INCOME TAXES

The  Company  follows  the liability method of accounting for income taxes. Such
method  requires  recognition  of  deferred  tax  liabilities and assets for the
expected  future  tax  consequences  of  events  that  have been included in the
financial  statements  or  tax  returns. Deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax bases
of  assets  and  liabilities  using  enacted tax rates in effect for the year in
which  the  differences  are  expected  to  reverse.

     At  December  31,  2003  and 2002, Clean Diesel Technologies had tax losses
available  for  offset  against  future  years'  earnings of approximately $23.0
million  and  $19.8  million,  respectively.  Temporary  differences  were
insignificant  as of such dates.  CDT 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, $0.9 million, $2.6 million and $3.2 million
of  the  tax  loss  carryforwards  expire in 2009, 2010, 2011, 2012, 2018, 2019,
2020, 2021, 2022 and 2023, respectively. CDT has not recognized any benefit from
the  aforementioned  tax  loss  carryforwards.  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  carryforward  for  20  years.  Existing  losses would still be subject to a
15-year  carryforward  period.

     Under  the  provisions  of  the  United  States  Tax  Reform  Act  of 1986,
utilization  of CDT'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  2003,  Clean  Diesel Technologies received proceeds of $7.5 million
(net  of  expenses)  through  two  private placements totaling approximately 3.7
million  shares of its Common Stock on the AIM of the London Stock Exchange.  In
2002,  Clean  Diesel  Technologies  received  proceeds of $1.356 million (net of
expenses) through a private placement of approximately 0.7 million shares of its
Common  Stock  on  the  AIM  of  the  London  Stock  Exchange.  In  2001,  CDT


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

received  proceeds  of  $3.721  million  (net  of $0.644 million in expenses and
$0.817  million  in  term  loan  repayment)  through  a  private  placement  of
approximately  2.6  million  shares  of  its  Common  Stock.

During  2001,  $1.9  million  of  dividends were declared for Series A Preferred
Stock and converted into CDT's Common Stock. On December 28, 2001, CDT converted
all outstanding Series A Preferred Stock (15,897 shares) including accrued stock
dividends,  into  Common  Stock  (approximately  5.9  million  shares).

     In  October  2003  and  May  2002,  CDT  issued  13,276  and 22,658 shares,
respectively, of Common Stock to its Board of Directors in lieu of approximately
$27,500  and  $46,800  of  Director's  fees pertaining to their services for the
years  ended  December 31, 2002 and 2001.   The share price used represented the
average  of CDT's quarter-end high and low trading prices.  Such Director's fees
had  been  accrued  and  charged  to  expense  during  2002  and  2001.

5.   STOCK OPTIONS AND WARRANTS

     Clean  Diesel Technologies maintains a stock award plan, the 1994 Incentive
Plan  (the "Plan"). Under the Plan, awards may be granted to participants in the
form of incentive stock options, 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. CDT grants
awards at fair market value on the date of grant with expiration dates typically
10  years.  Participants  in  the  Plan  may  include CDT'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  business.   The  percentage of outstanding Common Shares of CDT 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.

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

<TABLE>
<CAPTION>
                                                2003                          2002                          2001
                                     ----------------------------------------------------------  ---------------------------
                                      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                              1,567  $            2.60     1,139   $            2.48      974   $            2.54
Granted                                    681               2.12       470                2.94      240                1.97
Exercised                                   --                 --        --                  --      (12)                .20
Forfeited                                   --                 --       (42)               2.97      (63)               2.00
                                     ----------------------------------------------------------  ---------------------------
Outstanding, end
    of year                              2,248  $            2.45     1,567   $            2.60    1.139   $            2.48
                                     ==========================================================  ===========================
Exercisable, end
    of year                              1,711  $            2.49     1,220   $            2.56      939   $            2.55
Weighted-average fair value of
    options granted during the year             $            2.10             $            2.01            $            1.38
</TABLE>

     The  following table summarizes information about stock options outstanding
at  December  31,  2003:

<TABLE>
<CAPTION>
                        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     1,142,500              7.58  $            1.63    852,500  $             1.9
 2.50 -  4.63     1,046,000              7.35               3.11    798,665               3.14
 5.63 -  6.82        59,450              2.05               6.72     59,450               6.72
----------------------------------------------------------------  ----------------------------
$ .20 - $6.82     2,247,950              7.33  $            2.45  1,710,615  $            2.49
</TABLE>

     In  November  2000,  CDT granted the lenders a total of 100,000 warrants in
conjunction  with  a  $1,000,000  term  loan  agreement.  Fifty  thousand 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


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

warrants  issued  was  $60,750  and has 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 has also been capitalized as a
deferred  financing  cost.  In  December  2001,  CDT  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 Clean Diesel Technologies in the UK, CDT granted Equity Development
Limited  two  50,000  blocks  of  warrants at $1.50 per share.  The first 50,000
block  of  warrants has a one year term and vests when CDT's stock price remains
above $2.50 for seven consecutive days.  The second 50,000 block of warrants has
a  term  of  two  years and vests when CDT's stock price remains above $3.00 for
seven  consecutive days.  The value of such warrants was $119,500 and charged to
earnings  in  2001.  In  2002,  as a result of the warrants becoming vested, CDT
charged  to  earnings  an  additional  $95,000  for  the  100,000  warrants.

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

     In  conjunction  with  the  September  2003  stock offering CDT granted the
private placement investors 230,240 warrants (approximately one warrant for each
10 shares of common stock purchased) at the same $1.63 price as the common stock
issued.

<TABLE>
<CAPTION>
                                                          CDT Warrants

                                  2003                        2002                        2001
                        --------------------------  --------------------------  --------------------------
                        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                   379         N/A             429         N/A            302          N/A
Granted                       230  $          1.63          -                -       177   $   1.50 - 2.00
Exercised                      19  $   1.50 - 2.00         50  $   1.50 - 2.00         -                 -
Forfeited                      33                -          -                -       (50)  $          6.50
                        ------------------------------------------------------  --------------------------
Outstanding, end
    of year                   557  $  1.50 - 10.00        379  $  1.50 - 10.00       429   $  1.50 - 10.00
                        ======================================================  ==========================
</TABLE>

<TABLE>
<CAPTION>
                       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       466,908               6.55  $            1.73           466,908  $ 1.73
 2.25 -   3.00       64,825               4.41               2.54            64,825    2.54
10.00                25,000               0.33              10.00            25,000   10.00
-----------------------------------------------------------------  ------------------------
$1.50 - $10.00      556,733               6.02  $            2.19           556,733  $ 2.19
</TABLE>

6.   COMMITMENTS

     Clean  Diesel  Technologies is obligated under a sublease agreement for its
principal  office,  through  the end of 2003. CDT has agreed to move to a larger
space  within  the same building and has signed a new 5 year lease directly with
Equity  Office  beginning  May  1,  2004.  Annual  rent will be $115,875 and the
company  will  remain  in its current location until the new space is available.
For  the  years  ended  December  31,  2003,  2002  and  2001,  rental  expense
approximated  $110,500,  $112,100  and  $81,500,  respectively.

     Effective  October 28, 1994, Fuel Tech granted two licenses to Clean Diesel
Technologies  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 CDT all such patents and rights on terms substantially
similar  to the licenses. In exchange for the assignment, CDT 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. CDT may
terminate  the  royalty obligation to Fuel Tech by payment of $5,454,546 in 2004
and  declining  annually  to  $1,090,910 in 2008. CDT as assignee and owner will
maintain  the technology at its own expense. Minimum royalties were paid to Fuel
Tech  in  2002  and  royalties  payable  to  Fuel Tech at December 31, 2003 were
$4,800.


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

7.   RELATED PARTY TRANSACTIONS

In  November  2000,  Clean  Diesel  Technologies  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 CDT drew down the
entire  $1,000,000 term loan.  As part of the December 2001 private placement of
Common  Stock  discussed  in  Note  4,  $750,000  of  the term loan plus accrued
interest  was  repaid  in common stock.  In January 2002, the remaining $250,000
plus  accrued  interest  of  the  term  loan  was  repaid.

     Clean Diesel Technologies has a Management and Services Agreement with Fuel
Tech. The agreement requires CDT to reimburse Fuel Tech for management, services
and  administrative expenses incurred on behalf of CDT.   CDT agreed to pay Fuel
Tech  a  fee  equal  to  an  additional 3-10% of the costs paid on CDT's behalf,
dependent upon the nature of the costs incurred.  One Fuel Tech officer/director
serves  as  an  officer/director  of  Clean  Diesel Technologies.  The financial
statements  include  charges  from  Fuel  Tech  of  certain  management  and
administrative  costs,  which  approximate  $69,000, $69,000 and $70,000 for the
years  ended  December  31,  2003,  2002  and  2001,  respectively.

     Clean  Diesel  Technologies  had  a  deferred  salary  plan  with its Chief
Executive  Officer  in  which he deferred $62,500 of his annual salary until CDT
reaches  $5 million in revenue.  This agreement was terminated in March 2001 and
the executive's salary was returned to full pay.  No additional expense has been
accrued.  At December 31, 2003 and 2002, total obligations were $135,400 in both
years  pertaining  to  this  plan.

     Clean  Diesel  Technologies  makes  annual  pension  payments  or  accruals
pursuant  to  a  deferred  compensation  plan  on  behalf of its Chief Executive
Officer.  The  CEO has also agreed to defer payment of the deferred compensation
plan until the Company reaches $5 million in revenue or he retires. In June 2003
the  CEO  elected  to  discontinue his deferred compensation plan. For the three
years  ended  December  31,  2003,  $22,900,  $50,000 and $50,000 of expense was
recognized  each  year  in  connection  with the plan.  At December 31, 2003 and
2002,  total obligations were $305,600 and $282,700, respectively, pertaining to
this  plan.

8.   MARKETING AND JOINT DEVELOPMENT AGREEMENTS

     Clean  Diesel  Technologies 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 (Selective Catalytic Reduction).
CDT  holds  the  exclusive marketing rights to the injector for a period of five
years  subject  to  certain  minimum  purchases of injectors from AMBAC. CDT 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 CDT.  Clean Diesel Technologies 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. CDT 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.   RECENT ACCOUNTING PRONOUNCEMENTS

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.  Clean Diesel
Technologies  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  CDT's  results  of  operations  or  financial  position.


                                       26
<PAGE>
CLEAN  DIESEL  TECHNOLOGIES,  INC.
NOTES  TO  FINANCIAL  STATEMENTS  (CONTINUED)

10.  QUARTERLY FINANCIAL DATA (UNAUDITED)
      (IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                               1st Quarter      2nd Quarter      3rd Quarter      4th Quarter
                              Ended 3/31/03    Ended 6/30/03    Ended 9/30/03    Ended 12/31/03    Total Year
                                Unaudited        Unaudited        Unaudited        Unaudited          2003
                             ---------------------------------------------------------------------------------
<S>                          <C>              <C>              <C>              <C>               <C>
TOTAL REVENUE                $           96   $          283   $           99   $            89   $       567

GROSS PROFIT *                           39              219               52                38           348
NET LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS                    (907)            (585)            (664)           (1,089)       (3,245)
BASIC NET LOSS PER COMMON
SHARE                                 (0.08)           (0.05)           (0.05)            (0.08)        (0.26)
DILUTED NET LOSS PER COMMON
SHARE                                 (0.08)           (0.05)           (0.05)            (0.08)        (0.26)

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

                              1st Quarter      2nd Quarter      3rd Quarter      4th Quarter
                             Ended 3/31/02    Ended 6/30/02    Ended 9/30/02    Ended 12/31/02     Total Year
                               Unaudited        Unaudited        Unaudited       Unaudited            2002
                             ---------------------------------------------------------------------------------
Total revenue                $           71   $           19   $           51   $           300   $       441
Gross profit *                           27                7               34               287           355
Net loss attributable to
common stockholders                    (662)            (860)            (717)             (403)       (2,642)
Basic net loss per common
share                                 (0.06)           (0.08)           (0.06)            (0.03)        (0.23)
Diluted net loss per common
share                                 (0.06)           (0.08)           (0.06)            (0.03)        (0.23)
--------------------------------------------------------------------------------------------------------------
<FN>

Note: The sum of the quarters' earnings per share may not equal the full year per share amounts
* Gross profit is defined as total revenue less cost of revenue.
</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 CDT will be set
forth  under  the  captions  "Election  of  Directors", "Directors and Executive
Officers  of  Clean  Diesel Technologies" and "Committees of the Board" in CDT's
Proxy  Statement  related to the 2004 annual meeting of stockholders (the "Proxy
Statement")  and  is  incorporated  by  reference  herein.

     Clean Diesel has adopted a code of Ethics and Business Conduct (the "Code")
that  applies  to  all  employees,  officers  and Directors, including the Chief
Executive  Officer,  Chief Financial Officer and Controller.  A copy of the code
is  available free of charge on written or telephone request to the Secretary of
the  Company  at the address or telephone number of the Company set out in Clean
Diesel's  annual  report  to  Stockholders.


                                       27
<PAGE>
ITEM 11.  EXECUTIVE  COMPENSATION

     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.

ITEM  14.  CONTROLS  AND  PROCEDURES

     As  of  the  date  of  this  filing,  an evaluation was performed under the
supervision  and  with  the participation of the Company's management, including
its  CEO  and  CFO,  of  the  effectiveness  of  the design and operation of the
Company's  disclosure  controls  and  procedures.  Based on that evaluation, the
Company's  management,  including  its  CEO and CFO concluded that the Company's
disclosure  controls  and  procedures  were  effective  as of December 31, 2003.
There  have been no significant changes in the Company's internal controls or in
other  factors  that  could significantly affect internal controls subsequent to
December  31,  2003.

PART  IV

ITEM 15.  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, 2003, and 2002
          Statements of Operations for the years ended December 31, 2003, 2002,
            and 2001
          Statements of Changes in Stockholders' Equity(Deficit) for the years
            ended December 31, 2003, 2002, and 2001
          Statements of Cash Flows for the years ended December 31, 2003, 2002,
            and 2001

     (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.



                                       28
<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.
              @(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.
                @10o     Loan Facility Agreement of November 14, 2000 with
                         exhibits.
              **23.1     Consent of Auditors, Eisner LLP.
                  99     Certification Pursuant to 18 U.S.C.Section 1350, as
                         adopted pursuant to Section 906 of the Sarbanes-Oxley
                         Act of 2002.
_________________
             * 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.
             @ Previously filed as Exhibit to Form 10K for the year ended
               December 31, 2002.

     (b)  REPORTS ON FORM 8-K


                                       29
<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
amendment  to  the  report  on  Form  10-K  to  be  signed  on its behalf by the
undersigned,  thereunto  duly  authorized.

                                      CLEAN DIESEL TECHNOLOGIES, INC.



  As of December 30, 2004            By:/s/ Bernhard Steiner
----------------------------            -----------------------------
          Date                              Bernhard Steiner
                                            Chief Executive Officer and Director



     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/ Bernhard Steiner           Chief Executive Officer and Director
   -----------------------------
       Bernhard Steiner

   /s/ Jeremy D. Peter-Hoblyn     Director
   -----------------------------
       Jeremy D. Peter-Hoblyn

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


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


   /s/ Derek R. Gray              Director, Non-Executive Chairman of the Board
   -----------------              of Directors
       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: As of December 30, 2004



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