Clean Diesel Technologies reports 1995 year-end results.

STAMFORD, Conn.--(BUSINESS WIRE)--March 25, 1996--Clean Diesel Technologies Inc. (NASDAQ:CDTI), a development-stage company engaged in the commercialization of diesel fuel additives formulated to reduce emissions and improve engine performance, Monday announced results for its fiscal year ended Dec.

The net loss for 1995 was $2 million, or 79 cents loss per share, compared with a loss of $1.1 million, or 43 cents loss per share, in 1994.

According to the announcement by Clean Diesel Technologies' President and Chief Executive Officer, Jeremy D. Peter-Hoblyn, the year-to-year increase in the net loss reflects significant increases in G&A expense, research and development efforts, product testing and related programs. Overall research and development expense rose 80 percent to $796,000 in 1995, compared with $441,000 in 1994, and G&A expense increased 90 percent to $963,000 from $507,000 in 1994.

The company's balance sheet at Dec. 31, 1995, was much improved following the company's November 1995 rights offering, which established Clean Diesel Technologies as a publicly traded corporation, separate from Fuel Tech N.V. (NASDAQ:FTEKF), its former parent company.

The offering raised $10.5 million in net proceeds to Clean Diesel Technologies, $8.5 million of which was received in 1995; Fuel Tech retained a 27-percent ownership interest in the company. At Dec. 31, cash and equivalents were $6.8 million and working capital stood at $8.4 million. In January 1996, the company received an additional $2 million of proceeds from the rights offering.

Clean Diesel Technologies is primarily engaged in the development of technologies to enhance engine performance, improve fuel economy and reduce harmful diesel emissions. The company's first product in development is a platinum fuel catalyst (PFC), specifically engineered to utilize the unique capabilities of platinum, a proven combustion agent. Clean Diesel's patented PFC compound is soluble yet stable when combined with diesel fuel.

Recent third-party test results demonstrated that use of the company's PFC compounds resulted in a significant reduction of particulate (smoke), hydrocarbon and carbon monoxide emissions, combined with improved fuel efficiency.

The PFC can be used alone as a basis for a "green diesel," or premium diesel fuel, and the fuel economy improvement derived from using the PFC will typically exceed the "premium" incremental cost, thereby providing substantial emission reductions at no cost to the consumer.

The company's overall potential market includes more than 200 billion gallons of diesel fuel consumed annually. The company is also developing systems and technologies for the reduction of nitrogen oxide (NOx) emissions from diesel engines.

Peter-Hoblyn commented, "1995 was a defining year for our young company. During the year, we invested heavily in extensive testing of our first two products in development -- both aimed at the reduction of emissions from diesel engines worldwide.

"The test results were very encouraging, giving us increased confidence in our business plan. The strong test results, coupled with our current cooperative development programs with selected major companies, leave us enthusiastic as we enter 1996.

"Manufacturing and supply arrangements have been made in the U.S. and South Africa and, on the marketing side, we are in discussions with oil companies, fuel additive companies and emission control companies with a view to making the appropriate marketing alliances.

"We are witnessing increasing public awareness and media emphasis concerning the environmental hazards caused by diesel engines," Peter-Hoblyn continued. "We believe awareness, combined with increasingly stringent federal and state environmental regulations requiring reduced emissions, have enhanced the market potential of our products."

Clean Diesel Technologies is a development-stage company with patent-protected products that reduce emissions from diesel engines while simultaneously improving fuel economy and power. The company's R&D efforts and products are grouped into two categories: Platinum Fuel Catalysts (PFCs) and Nitrogen Oxide (NOx) Reduction Systems. -0-

                    Clean Diesel Technologies Inc.
                    (A Development-Stage Company)
                      Statements of Operations
                (in thousands, except per share data)

                                                          Period from
                                                         Jan. 1, 1992
                                              Year Ended      through
                                               Dec. 31,       Dec. 31,
                                           1995       1994       1995
Costs and expenses:
 General and administrative             $   963    $   507    $ 1,470
 Research and development                   796        441      1,585
 Patent filing and maintenance              199        158        478
  Loss from operations                    1,958      1,106      3,533

Interest expense, net                        66          1         67
Net loss during development stage       $ 2,024    $ 1,107    $ 3,600
Net loss per common share               $ (0.79)   $ (0.43)
Average number of common shares
 outstanding                              2,563      2,566
-0-
                    Clean Diesel Technologies Inc.
                    (A Development-Stage Company)
                            Balance Sheets
                  (in thousands, except share data)

                                                       Year Ended
                                                        Dec. 31,
                                                      1995    1994
Assets:
Current assets:
Cash and cash equivalents                          $ 6,848    $   513
Stock subscription receivable                        2,018         --
Other current assets                                    16         --

Total assets                                       $ 8,882    $   513

Liabilities and stockholders' equity
 (deficiency)
Current liabilities:
Accounts payable and accrued expenses              $   421    $   191
Due to Fuel-Tech N.V.                                   --        929
Demand loan payable to Fuel-Tech N.V.                   66        250

Total current liabilities                              487      1,370

Loan payable to Fuel-Tech N.V.                         745         --

Stockholders' equity (deficiency):
Preferred stock, par value 5 cents per share
 authorized 100,000 shares, no shares issued
 and outstanding                                        --         --
Common stock, par value 5 cents per share
 authorized 5 million shares, issued and
 outstanding 2.5 million shares                        125        125
Additional paid-in capital                          11,125        594
Deficit accumulated during the development stage    (3,600)    (1,576)
Total stockholders' equity (deficiency)              7,650       (857)

                                                   $ 8,882    $   513

CONTACT: Clean Diesel Technologies Inc., Stamford

James Valentine/Scott Schecter, 203/327-7050

or

South Coast Communications, Irvine, Calif.

Joe Allen (investor)/Owen Daley (media), 714/252-8440