Clean Diesel Technologies Closes on Previously Announced $1.8 Million Fundraising; Raises Additional $800,000-GBP 450,000

STAMFORD, Conn.--Oct. 4, 2004--Clean Diesel Technologies Inc. announced that it has received the funds from its $1.8 million (GBP 1.025 million) investment at a price of GBP 1.025 (US $1.82), announced on Sept. 20, 2004. The share price is based on the U.K. price as of Sept. 14, 2004. In addition CDT has received signed commitment letters from several current shareholders and directors, for the issuance of $800,000 (GBP 450,000) of CDT common stock at the same terms. CDT expects to close on the second investment by Oct. 8, 2004. In total from the two transactions the company has raised $2.6 million (GBP 1.5 million) from the sale of 1.43 million shares and now has 17.1 million shares outstanding. The company does not expect to raise additional funds on the same terms.

Derek R. Gray, non-executive chairman and director, and Jeremy Peter-Hoblyn, director and former CEO, are subscribing for 50,000 and 80,000 shares respectively in the second tranche, bringing their ownership totals to 415,000 and 130,000 shares respectively, or 2.4 percent and 0.8 percent of the total outstanding CDT stock.

The $2.6 million of total fund-raising proceeds will strengthen the company's balance sheet and support the continued technology commercialization in the United States, Europe and Asia, as the company has a number of initiatives and programs in progress for the fourth quarter of 2004 and the first half of 2005.

Recently the company has been announcing and shipping significant orders for its EPA-verified Platinum Plus(R) Purifier System including a state of Pennsylvania grant and the supply of Purifier Systems for several school bus projects. The company also announced its second EPA verification for the Platinum Plus fuel borne catalyst (FBC) additive with a particulate filter designed by Mitsui/PUREarth.

The new CDT restricted common shares will be issued in reliance on the exemption from registration under Regulation S under the U.S. Securities Act of 1934 for offshore private placements. Because the new shares are subject to transfer restrictions for a period of time, they may not be resold to persons in the United States or U.S. persons, but may otherwise be traded in the United Kingdom without other restrictions. Application for the shares to trade on the Alternative Investment Market (AIM) of the London Stock Exchange has been made and the shares will trade on AIM under the ticker symbol CDTI.

About Clean Diesel Technologies Inc.

Clean Diesel Technologies Inc. is a specialty chemical company with patented products that reduce emissions from diesel engines while simultaneously improving fuel economy and power. Products include Platinum Plus(R) fuel catalysts, the Platinum Plus Purifier System, and the ARIS(R) 2000 urea injection systems for selective catalytic reduction of NOx. Platinum Plus and ARIS are registered trademarks of Clean Diesel Technologies Inc. For more information, visit CDT at www.cdti.com or contact the company directly.