UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number: 0-27432
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CLEAN DIESEL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1393453
- ------------------------ -------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
Clean Diesel Technologies, Inc.
300 Atlantic Street - Suite 702
Stamford, CT 06901-3522
(Address of principal executive offices) (Zip Code)
(203) 327-7050
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
--- ---
As of November 14, 2002, there were outstanding 11,945,728 shares of Common
Stock, par value $0.05 per share, of the registrant.
================================================================================
CLEAN DIESEL TECHNOLOGIES, INC.
Form 10-Q for the Quarter Ended September 30, 2002
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets as of September 30, 2002, 3
and December 31, 2001
Statements of Operations for the Three and Nine 4
Months Ended September 30, 2002 and 2001
Statements of Cash Flows for the Nine 5
Months Ended September 30, 2002 and 2001
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of 9
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk 11
Item 4. Controls and Procedures 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
-2-
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CLEAN DIESEL TECHNOLOGIES, INC.
BALANCE SHEETS
(in thousands except share data)
September 30, December 31,
2002 2001
--------------- --------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,462 $ 4,023
Accounts receivable 27 197
Inventories 323 296
Other current assets 61 96
--------------- --------------
Total current assets 1,873 4,612
Other assets 156 46
--------------- --------------
Total assets $ 2,029 $ 4,658
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ -- $ 250
Accounts payable and accrued expenses 241 558
--------------- --------------
Total current liabilities 241 808
Deferred compensation and pension benefits 405 368
--------------- --------------
Total long term liabilities 405 368
Stockholders' equity:
Preferred stock, par value $.05 per share,
authorized 80,000 shares, no shares issued
and outstanding -- --
Series A convertible preferred stock, par
value $.05 per share, $500 per share
liquidation preference, authorized 20,000
shares, no shares issued and outstanding -- --
Common stock, par value $0.05 per share,
authorized 15,000,000 shares, issued and
outstanding 11,241,379 and 11,214,280 shares 562 561
Additional paid-in capital 27,198 27,058
Accumulated deficit (26,377) (24,137)
--------------- --------------
Total stockholders' equity 1,383 3,482
--------------- --------------
Total liabilities and stockholders' equity $ 2,029 $ 4,658
=============== ==============
See notes to financial statements.
-3-
CLEAN DIESEL TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
----------- ----------- ---------- -----------
Revenue:
Product revenue $ 39 $ 65 $ 115 $ 153
License and royalty revenue 12 434 26 1,290
----------- ----------- ---------- -----------
Total revenue 51 499 141 1,443
Costs and expenses:
Cost of sales 17 50 72 109
General and administrative 569 461 1,704 1,346
Research and development 185 78 597 254
Patent filing and maintenance 4 38 31 138
----------- ----------- ---------- -----------
Loss from operations (724) (128) (2,263) (404)
Interest income 7 3 32 9
Interest expense -- (26) (9) (64)
----------- ----------- ---------- -----------
Net loss before preferred stock
dividend (717) (151) (2,240) (459)
Preferred stock dividend (non-cash) -- (213) -- (621)
----------- ----------- ---------- -----------
Net loss attributed to common
stockholders $ (717) $ (364) $ (2,240) $ (1,080)
=========== =========== ========== ===========
Basic and diluted loss per common
Share $ (0.06) $ (0.13) $ (0.20) $ (0.40)
=========== =========== ========== ===========
Weighted average number of common shares
outstanding - basic and diluted 11,241 2,699 11,232 2,680
=========== =========== ========== ===========
See notes to financial statements.
-4-
CLEAN DIESEL TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30
2002 2001
----------- ----------
OPERATING ACTIVITIES
Net loss before preferred stock dividend $ (2,240) $ (459)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation and amortization 17 8
Amortization of deferred financing cost 8 59
Compensatory stock warrants 95 --
Changes in operating assets and liabilities:
Accounts receivable 170 (142)
Inventories (27) (7)
Other current assets 35 25
Accounts payable and accrued expenses (234) (86)
----------- ----------
Net cash used in operating activities (2,176) (602)
----------- ----------
FINANCING ACTIVITIES
Proceeds from exercise of stock options -- 3
Proceeds/(repayment) of term loan (250) 500
----------- ----------
Net cash (used in) provided by financing activities (250) 503
----------- ----------
INVESTING ACTIVITIES
Patent costs (49) --
Purchase of fixed assets (86) (12)
----------- ----------
Net cash used in investing activities (135) (12)
----------- ----------
Net decrease in cash and cash equivalents (2,561) (111)
----------- ----------
Cash and cash equivalents at beginning of period 4,023 541
----------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,462 $ 430
=========== ==========
NON-CASH ACTIVITIES
Preferred stock dividend -- 621
See notes to financial statements.
-5-
CLEAN DIESEL TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2002
(Unaudited)
BASIS OF PRESENTATION
The accompanying unaudited, consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. In the opinion
of management, all adjustments considered necessary for a fair presentation have
been included. All such adjustments are of a normal recurring nature. Operating
results for the nine-month period ended September 30, 2002, are not necessarily
indicative of the results that may be expected for the year ending December 31,
2002. For further information, refer to the Financial Statements and footnotes
thereto included in the Company's Form 10-K for the year ended December 31,
2001.
Clean Diesel Technologies, Inc. (the "Company" or "CDT") was incorporated
in the State of Delaware on January 19, 1994, as a wholly owned subsidiary of
Fuel-Tech N.V. ("Fuel Tech"). Effective December 12, 1995, Fuel Tech completed
a Rights Offering of the Company's Common Stock that reduced its ownership in
the Company to 27.6%. Fuel Tech currently holds a 16.3% interest in the Company
as of September 30, 2002.
The Company is a specialty chemical and energy technology company supplying
fuel additives and proprietary systems that reduce harmful emissions from
internal combustion engines while improving fuel economy. Prior to 2000, the
Company was a development stage enterprise devoted to research, development, and
commercialization of platinum fuel catalysts (PFCs) and Nitrogen Oxide (NOx)
reduction technologies for diesel engines. During December 1999, the Company
received its EPA registration for its platinum - cerium product and recorded its
first commercial sales. Accordingly, in the opinion of management the Company
was no longer a development stage enterprise. The success of the Company's
technologies will depend upon the commercialization opportunities of the
technologies and governmental regulations, and corresponding foreign and state
agencies.
Prior to 2000, the Company was primarily engaged in research and
development and has incurred losses since inception totaling $21,625,000
(excluding non-cash preferred stock dividends). In management's opinion, the
Company's cash balance at September 30, 2002 and the $1.4 million raised from
investors in October 2002 (see Subsequent Events section) will be sufficient to
fund the Company's operations into the fourth quarter 2003. The Company may
require additional capital to fund its future operations and working capital
needs. Although the Company believes that it would be successful in raising
additional capital, there is no guarantee that it will be able to raise such
funds on terms that will be satisfactory to the Company. The Company will
develop contingency plans in the event future financing efforts are not
successful. Such plans may include reducing expenses and selling or licensing
some of the Company's technologies.
INVENTORIES
Inventories are stated at the lower of cost or market and consist of
finished product. Cost is determined using the first-in, first-out (FIFO)
method.
INTANGIBLE ASSETS
In fiscal year 2002, the Company began capitalizing the costs of patents.
Patents include costs to secure patents on technology developed by the Company.
Patents are amortized on a straight-line basis over the remaining useful lives
of three to eighteen years. Patents are evaluated for potential impairment
whenever events or circumstances indicate that undiscounted cash flows are not
sufficient to recover their carrying amounts.
-6-
REVENUE RECOGNITION
The Company recognizes revenue from sales of Platinum Plus fuel borne
catalyst and ARIS 2000 systems upon shipment.
In April 2001, the Company amended its February 2000 ARIS Stationary NOx
Reduction license agreement with the RJM Corporation. Under the amended terms
of the license agreement, the Company received two fixed non-refundable payments
of $412,500 each on June 1 and September 1 in lieu of potentially receiving
$1,040,000 on the second or third anniversary. The Company recognized the
$825,000 as license revenue in 2001. The Company receives unit royalties on all
ARIS sales of stationary, marine or locomotive applications by RJM.
In August 2001, the Company completed a license agreement with Mitsui & Co.
Ltd for CDT's ARIS 2000 NOx control system for all stationary diesel power
generators in Japan. Under the agreement, the Company received a non-refundable
upfront license payment of $495,000, and will receive ongoing standard royalties
on each system sold by Mitsui. The Company recognized the license payment as
revenue in 2001, as there were no significant ongoing services to be performed
by the Company. Mitsui also has an option to license the ARIS technology for
mobile applications in Japan for an additional license fee.
Royalty fees are recognized by the Company when earned.
STOCKHOLDERS' EQUITY
During December 2001, the Company received proceeds of $3.721 million (net
of $0.644 million in expenses and $0.817 million in term loan re-payment)
through private placements of 2,580,664 of its Common Stock. In 2000, the
Company received $1.021 million through private placements of 1,362 shares of
its Series A Preferred Stock. In addition, in 1999 $1.75 million was raised
through a private placement of 3,500 Series A preferred stock shares and in
1998, $1.4 million of bridge loans and $0.5 million of term loans were converted
into 2,800 and 1,029 shares of Series A Preferred Stock.
During 2001, $1,897,000 of non-cash stock dividend and conversion premium
were declared for the Series A preferred stock and converted into the Company's
Common Stock. On December 28, 2001, the Company converted all outstanding Series
A Preferred Stock (15,897 shares) including accrued stock dividends, into Common
Stock (5,934,829 shares).
EARNINGS PER SHARE
Employee stock options and stock purchase warrants were not included in the
computation of diluted earnings per share for 2002, because either the Company
reported a loss for the period or their exercise prices were greater than the
average market price of the common stock and therefore would be antidilutive.
RELATED PARTY TRANSACTIONS
In November 2000, the Company secured a $1,000,000 term loan facility at a
10% interest rate from several preferred shareholders, including Fuel Tech Inc.
which pledged $250,000. In 2000 and 2001 the Company drew down the entire
$1,000,000 term loan. In December 2001, $750,000 of term loan and accrued
interest was repaid as part of the December 2001 private placement of common
stock discussed in the stock holders equity note. In January 2002, the Company
repaid the remaining $250,000 term loan payable to Fuel Tech Inc. plus accrued
interest.
The Company has a Management and Services Agreement with Fuel Tech. Under
the agreement, the Company pays Fuel Tech a fee equal to an additional 3 - 10%
of the costs paid on the Company's behalf, dependent upon the nature of the
costs incurred. Currently, a fee of 3% is assessed on all costs billed to the
Company from Fuel Tech. Charges to the Company, inclusive of the administrative
fee, were approximately $17,300 in both the third quarter of 2002 and 2001.
-7-
COMMITMENTS
Effective October 28, 1994, Fuel Tech granted two licenses to the Company
for all patents and rights associated with its platinum fuel catalyst
technology. Effective November 24, 1997, the licenses were canceled and Fuel
Tech assigned to the Company all such patents and rights on terms substantially
similar to the licenses. In exchange for the assignment, the Company will pay
Fuel Tech a royalty of 2.5% of its annual gross revenue from sales of the
platinum fuel catalysts commencing in 1998. The royalty obligation expires in
2008. The Company may terminate the royalty obligation to Fuel Tech by payment
of $7,636,364 in 2002 and declining annually to $1,090,910 in 2008. The Company
as assignee and owner will maintain the technology at its own expense. The 2001
royalties of $2,673 were paid to Fuel Tech in 2002 and royalties payable to Fuel
Tech at September 30, 2002 were $683.
MARKETING AND LICENSE AGREEMENTS
In March 2001, the Company licensed the Lubrizol Corporation to distribute
and blend the Company's patented Platinum Plus fuel borne catalyst in Europe for
use with particulate filters. The seven year exclusive agreement includes
minimum annual sales performance requirements. Effective November 1, 2002, as a
result of changing market conditions in the European particulate filter market,
the Company and Lubrizol mutually agreed to terminate their Platinum Plus fuel
borne catalyst agreement.
In June 2001 the Company announced a non-exclusive distribution license
agreement with Baker Petrolite, a division of Baker Hughes. Baker Petrolite
will distribute CDT's patented Platinum Plus diesel fuel combustion catalyst to
refineries and fuel terminals in the U.S. and Canada.
In August 2001, the Company completed a license agreement with Mitsui & Co.
Ltd for CDT's ARIS 2000 NOx control system for all stationary diesel power
generators in Japan. Under the agreement, the Company received non-refundable
upfront license 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 September 2001, the Company signed a license agreement with Global
Companies LLC for bulk treatment of diesel fuel with the Platinum Plus fuel
additive. Global Companies LLC of Waltham, MA will be the exclusive terminal
blender of the Platinum Plus diesel fuel combustion catalyst in New England for
delivery to select fuel marketers and fleet customers.
SUBSEQUENT EVENTS
In October 2002, the company raised $1.4 million in common stock at $2.00
per share from several existing institutional shareholders. The new shares are
being issued in reliance with Regulation S under the U.S. Securities Act and
because they are subject to transfer restrictions for a period of time, they may
not be resold to persons in the U.S. or U.S. persons, but may otherwise be
traded in the UK without other restrictions. The shares will be traded on AIM
under the ticker/symbol CDTI.
Effective November 1, 2002, as a result of changing market conditions in
the European particulate filter market, the Company and Lubrizol mutually agreed
to terminate their Platinum Plus fuel borne catalyst agreement.
-8-
CLEAN DIESEL TECHNOLOGIES, INC.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
FORWARD-LOOKING STATEMENTS
Statements in this Form 10-Q that are not historical facts, so-called
"forward-looking statements," are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Investors are cautioned
that all forward-looking statements involve risks and uncertainties, including
those detailed in the Company's filings with the Securities and Exchange
Commission. See "Risk Factors of the Business" in Item 1, "Business," and also
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Operations" in the Company's Form 10-K for the year ended December 31, 2001.
RESULTS OF OPERATIONS
Prior to 2000, the Company was a development stage enterprise and its
efforts were devoted to the research, development and commercialization of
platinum fuel catalysts and nitrogen oxide reduction technologies to reduce
emissions from diesel engines. During December 1999, the Company received its
US EPA registration for its platinum-cerium fuel catalyst product and completed
its first commercial sales.
Product sales and cost of sales were $39,000 and $17,000 respectively for
the third quarter of 2002 versus $65,000 and $50,000 for 2001. Platinum Plus
fuel catalyst sales of $11,000 and $16,000 were recorded in the third quarter of
2002 and 2001, respectively. ARIS product sales of $28,000, primarily due to
Mitsui & Co., Ltd., were recorded in the third quarter of 2002.
Included in the 2002 and 2001 third quarter revenue is $12,000 and
$434,000, respectively, of license and royalty income. The 2002 license and
royalty income is from a major European diesel fuel system supplier for a 6
month lease of an ARIS 2000 system. In 2001, CDT received a one-time license
payment from Mitsui & Co., Ltd. CDT earns a royalty on all sales of the ARIS
2000 system.
Year-to-date sales and cost of sales were $141,000 and $72,000 in 2002
versus $1,443,000 and $109,000 in 2001. Included in the total year
revenue is $26,000 and $1,290,000 of ARIS license and royalty revenue for 2002
and 2001 respectively. Year-to-date Platinum Plus FBC sales for 2002 were
$28,000 versus $101,000 in 2001.
General and administrative expenses increased $108,000 to $569,000 in the
third quarter 2002 versus $461,000 in the same period of 2001. For the first
nine months of 2002 general and administrative expenses increased $358,000 to
$1,704,000 versus $1,346,000 in 2001. The rise in spending is related to the
hiring of a Vice President of Sales and Marketing in April 2002, increases in
salaries and marketing related costs associated with the commercialization of
the Platinum Plus-FBC. The 2002 year-to-date general and administrative expense
also includes a one-time $95,000 non-cash charge for additional 2001
compensatory stock warrant expense to a third party.
Research and development expenses increased $107,000 to $185,000 in the
third quarter 2002 versus $78,000 in the comparable period in 2001. For the year
research and development costs are up $343,000 to $597,000 versus $254,000 in
the same period in 2001. The increase is attributable to the start of several
verification and certification programs for the Platinum Plus FBC.
Patent filing costs decreased $34,000 to $4,000 in the third quarter of
2002 versus $38,000 in the comparable 2001 period. During the second quarter of
2002, the Company began capitalizing its patent costs and will amortize such
costs over the life of the related patent. For the year patent cost has
decreased $107,000 to $31,000 versus a $138,000 in the same nine month period in
2001.
Third quarter interest income increased $4,000 in 2002 to $7,000 versus
$3,000 in the comparable period in 2001. For the year interest income increased
$23,000 to $32,000 versus $9,000 in the same period in 2001. This was a result
of an increase in the amount of cash and cash equivalents on hand in 2002. For
the year interest expense declined to $9,000 from $64,000 in the first nine
months of 2001 as the result of the repayment of the term loan in January 2002.
-9-
LIQUIDITY AND SOURCES OF CAPITAL
Prior to 2000, the Company was primarily engaged in research and
development and has incurred losses since inception aggregating $ 21,625,000
(excluding the effect of the preferred stock dividends). The Company expects to
incur losses through the foreseeable future as it further pursues its
commercialization efforts. Although the Company started selling limited
quantities of product in 1999 and licensing revenue in 2000, sales and revenue
to date have been insufficient to cover operating expenses, and the Company
continues to be dependent upon sources other than operations to finance its
working capital requirements.
For the nine months ended September 30, 2002 and 2001, the Company used
cash of $2,176,000 and $602,000 respectively, in operating activities.
At September 30, 2002 and December 31, 2001, the Company had cash and cash
equivalents of $1,462,000 and $4,023,000, respectively. The decrease in cash
and cash equivalents in 2002 was the result of payments made for expenses
related to the stock offering in December 2001, various product certification
programs and the normal on-going operations of the Company. The Company
anticipates incurring additional losses through at least 2002 as it further
pursues its commercialization efforts.
The Company signed an agreement with the RJM Corporation on February 2,
2000 which licensed RJM to sell CDT's ARIS 2000 NOx control system for all
stationary, marine, and locomotive applications in North, Central, and South
America. Under terms of the agreement CDT received an initial $360,000 license
fee and inventory payment.
In April 2001, the Company amended its February 2000 ARIS Stationary NOx
Reduction license agreement with the RJM Corporation. Under the amended terms
of the license agreement, the Company received two fixed non-refundable payments
of $412,500 each on June 1 and September 1 in lieu of potentially receiving
$1,040,000 on the second or third anniversary of the license agreement. The
Company will continue to receive unit royalties on future sales of stationary,
marine or locomotive applications by RJM.
In August 2001, the Company completed a license agreement with Mitsui for
CDT's ARIS 2000 NOx control system for all stationary diesel power generators in
Japan. Under the agreement, the Company received non-refundable upfront license
payments of $495,000 and will receive ongoing standard royalties on each system
sold by Mitsui. Mitsui also has an option to license the ARIS technology for
mobile applications in Japan for an additional license fee.
In November 2000, the Company secured a $1,000,000 privately financed term
loan facility. In December 2000, the Company drew down $500,000 of the term
loan facility and in March 2001 the remaining $500,000 of the term loan was
drawn down. As part of the private placement stock transaction in December
2001, $750,000 of the outstanding term loan plus accrued interest was converted
to common stock. The remaining $250,000 plus accrued interest was paid in cash
in January 2002.
In December 2001, the Company received $3.721 million (net of expenses and
term loan repayment) through a private placement of 2,580,664 shares of its
common stock. In conjunction with the private placement, the Company converted
all of its Series A Preferred Stock to Common Stock. All of the Company's
Common Stock shares were registered to trade on the AIM of the London Stock
Exchange.
As a result of the Company's recurring operating losses, the Company has
been unable to generate a positive cash flow. In management's opinion, the
Company's cash balance at September 30, 2002 and the $1.4 million raised in
October 2002 private placement (see Subsequent Events section) will be
sufficient to fund the Company's operations into the fourth quarter 2003. The
Company may require additional capital to fund its future operations. Although
the Company believes that it will be successful in its capital-raising efforts,
there is no guarantee that it will be able to raise such funds on terms that
will be satisfactory to the Company. The Company will develop contingency plans
in the event future financing efforts are not successful. Such plans may
include reducing expenses and selling or licensing some of the Company's
technologies.
-10-
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the opinion of management, with the exception of exposure to
fluctuations in the cost of platinum, the Company is not subject to any
significant market risk exposure.
The Company generally receives all income in United States dollars. The
Company typically makes several small payments monthly in various foreign
currencies for patent expenses, product tests and registration, local marketing
and promotion and consultants.
ITEM 4. CONTROLS AND PROCEDURES
Within 90 days prior to the filling date of this report, the Company's
certifying officers performed an evaluation of the effectiveness of the
Company's disclosure controls and procedures. The disclosure controls and
procedures were determined to be sufficient to ensure that material information
relating to the Company, including its consolidated subsidiaries, is made known
to the certifying officers within those entities, particularly during the period
in which this quarterly report is being prepared.
There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
-11-
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
None
b. Reports on Form 8-k
A report on Form 8-K was filed October 15, 2002 to report
the private placement of Company common stock at $2.00 per share under
Regulation S of the Securities Act, raising approximately $1.4
million.
-12-
CLEAN DIESEL TECHNOLOGIES, INC.
SIGNATURES & CERTIFICATIONS
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The Undersigned in their capacities as Chief Executive Officer and Chief
Financial Officer of the Registrant do hereby certify that:
(i) This report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(ii) Information contained in the report fairly presents, in all material
respects, the financial condition and results of operations of the
Registrant as of, and for, the periods presented in the report.
Date: November 14, 2002 By: /s/ Jeremy D. Peter-Hoblyn
-----------------------------------
Jeremy D. Peter-Hoblyn
Chairman, Director and
Chief Executive Officer
Date: November 14, 2002 By: /s/ David W. Whitwell
-----------------------------------
David W. Whitwell
Chief Financial Officer,
Vice President and Treasurer
I, Jeremy D. Peter-Hoblyn, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Clean Diesel
Technologies Inc.:
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of and for the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act 13a-14 and 15d-14) for the registrant and have:
-13-
a) Designed such disclosures controls and procedures to ensure that
material information relating to the registrant is made known to us by
others within the registrant, particularly during the period in which
this quarterly report is being prepared; and
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "evaluation date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the "evaluation date";
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weakness in
internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls;
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: November 14, 2002 By: /s/ Jeremy D. Peter-Hoblyn
------------------------------
Jeremy D. Peter-Hoblyn
Chairman, Director and
Chief Executive Officer
I, David W. Whitwell, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Clean Diesel
Technologies Inc.:
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of and for the periods presented in this quarterly report;
-14-
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act 13a-14 and 15d-14) for the registrant and have:
d) Designed such disclosures controls and procedures to ensure that
material information relating to the registrant is made known to us by
others within the registrant, particularly during the period in which
this quarterly report is being prepared; and
e) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "evaluation date"); and
f) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the "evaluation date";
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):
c) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weakness in
internal controls; and
d) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls;
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: November 14, 2002 By: /s/ David W. Whitwell
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David W. Whitwell
Chief Financial Officer,
Vice President and Treasurer
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