UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A-1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended as of June 30, 2003
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 August 13, 2003, there were outstanding 11,985,419 shares of Common Stock,
par value $0.05 per share, of the registrant.
================================================================================
EXPLANATORY NOTE
This is an amendment of the Clean Diesel Technologies, Inc. Quarterly
Report to the Commission on Form 10-Q for the period ended June 30, 2003 which
was previously filed on August 13, 2003 (the "10-Q"). The purpose of this
amendment is to conform the certificates attached as Exhibits 31.1, 31.2 and 32
to the current requirements of Regulation SK.
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CLEAN DIESEL TECHNOLOGIES, INC.
Form 10-Q for the Quarter Ended As of June 30, 2003
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets as of June 30, 2003, 4
and December 31, 2002
Statements of Operations for the Three and Six 5
Months Ended June 30, 2003 and 2002
Statements of Cash Flows for the Six 6
Months Ended June 30, 2003 and 2002
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of 12
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CLEAN DIESEL TECHNOLOGIES, INC.
BALANCE SHEETS
(in thousands except share data)
June 30, December 31,
2003 2002
------------ --------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 552 $ 2,083
Accounts receivable 233 284
Inventories 285 314
Other current assets 112 76
------------ --------------
Total current assets 1,182 2,757
Patents, net 239 114
Other assets 115 108
------------ --------------
Total assets $ 1,536 $ 2,979
============ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 249 $ 223
------------ --------------
Total current liabilities 249 223
Deferred compensation and pension benefits 441 418
------------ --------------
Total long term liabilities 441 418
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 30,000,000 and 15,000,000 shares,
issued and outstanding 11,985,419 and
11,968,387 shares, respectively. 599 598
Additional paid-in capital 28,518 28,519
Accumulated deficit (28,271) (26,779)
------------ --------------
Total stockholders' equity 846 2,338
------------ --------------
Total liabilities and stockholders' equity $ 1,536 $ 2,979
============ ==============
See notes to financial statements.
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CLEAN DIESEL TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
-------- -------- -------- --------
Revenue:
Product revenue $ 123 $ 15 $ 210 $ 76
License and royalty revenue 160 4 169 14
-------- -------- -------- --------
Total revenue 283 19 379 90
Costs and expenses:
Cost of sales 64 12 120 55
General and administrative 636 577 1,338 1,135
Research and development 170 300 419 412
Patent filing and maintenance -- -- -- 27
-------- -------- -------- --------
Loss from operations (587) (870) (1,498) (1,539)
Interest income 2 10 6 25
Interest expense -- -- -- (9)
-------- -------- -------- --------
Net loss $ (585) $ (860) $(1,492) $(1,523)
======== ======== ======== ========
Basic and diluted loss per common share $ (0.05) $ (0.08) $ (0.12) $ (0.14)
======== ======== ======== ========
Weighted average number of common shares
outstanding - basic and diluted 11,976 11,241 11,972 11,228
======== ======== ======== ========
See notes to financial statements.
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CLEAN DIESEL TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30
2003 2002
-------- --------
OPERATING ACTIVITIES
Net loss $(1,492) $(1,523)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation and amortization 33 10
Amortization of deferred financing expense -- 8
Compensatory stock warrants -- 95
Changes in operating assets and liabilities:
Accounts receivable 51 181
Inventories 29 (8)
Other current assets (36) 7
Accounts payable and accrued expenses 49 (314)
-------- --------
Net cash used in operating activities (1,366) (1,544)
-------- --------
INVESTING ACTIVITIES
Patent costs (137) (48)
Purchase of fixed assets (28) (34)
-------- --------
Net cash used in investing activities (165) (82)
-------- --------
FINANCING ACTIVITIES
Repayment of term loan -- (250)
-------- --------
Net cash used in financing activities -- (250)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,531) (1,876)
-------- --------
Cash and cash equivalents at beginning of period 2,083 4,023
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 552 $ 2,147
======== ========
See note to financial statements.
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CLEAN DIESEL TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2003
(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 six-month period ended June 30, 2003, are not necessarily
indicative of the results that may be expected for the year ending December 31,
2003. 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,
2002.
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 15.2% interest in the Company
as of June 30, 2003.
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. During December 1999,
the Company received its EPA registration for its platinum - cerium product and
recorded its first commercial sales. The success of the Company's technologies
will depend upon the market acceptance of the technologies and governmental
regulations including corresponding foreign and state agencies.
GOING CONCERN
The financial statements have been prepared assuming that the Company will
continue as a going concern and do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets and
the amount and classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.
As a result of the Company's recurring operating losses ($23,519,000 since
inception excluding non-cash preferred stock dividends), the Company has been
unable to generate positive cash flow and will require additional capital in
the future in order to fund its operations, as its current cash position will
not be sufficient to fund the Company's cash requirements. CDT is close to
finalizing negotiations with a strategic partner and co-investment by certain
shareholders to secure additional financing. Without any further funding or
significant revenues from sales, demonstration programs, or license fees, the
Company expects to be able to fund operations through the third quarter of 2003.
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 has developed contingency
plans in the event its financing efforts are not successful. Based on such
plans, CDT may be required to delay, scale back or severely curtail its
operations, which could have a material adverse effect on the business,
operating results, financial condition and long-term prospects. Accordingly,
at June 30, 2003, there is substantial doubt as to the Company's ability to
continue as a going concern.
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.
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REVENUE RECOGNITION
The Company recognizes revenue from sales of Platinum Plus fuel borne
catalyst and ARIS 2000 systems upon shipment.
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 license
revenue in the fourth quarter of 2002, as there are no significant ongoing
services required to be performed by CDT. The Company will also receive ongoing
royalty payments on a per unit basis.
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 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 the Company when earned.
RESEARCH AND DEVELOPMENT COSTS
Costs relating to the research, development and testing of products
including testing to support verification programs with the California Air
Resources Board (CARB) and the Environmental Protection Agency (EPA), 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
Patent costs are capitalized and amortized over the remaining life of each
patent.
NOTES PAYABLE
In November 2000, the Company arranged a $1,000,000 term loan with three
private lenders. The term loan had a 10% interest rate and was payable in full
on May 14, 2002. The Company drew down $500,000 in November 2000 and the
remaining $500,000 in March of 2001. 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 portion of the
term loan plus accrued interest was paid in cash on January 18, 2002.
STOCKHOLDERS' EQUITY
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 the AIM (Alternative Investment Market) London Stock Exchange.
STOCK-BASED COMPENSATION
Clean Diesel Technologies accounts for 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
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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 has 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
for the six months ended June 30:
2003 2002
----------- -----------
Net loss as reported $ (1,492) $ (1,523)
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards,
net of related tax effects (251) (311)
------------------------
Pro forma net loss $ (1,743) $ (1,834)
Net loss per share:
Basic and diluted loss per common share-as reported $ (0.12) $ (0.14)
Basic and diluted per common share-pro forma $ (0.15) $ (0.16)
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 loss per share in future years due to the timing of stock option
grants and considering that options vest over a period of three years.
The Black-Scholes option-pricing model was developed for use in estimating
the fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option-pricing models require the input of highly
subjective assumptions including the expected stock price volatility. Because
CDT's employee stock options have characteristics significantly different from
those of traded options and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the fair
value of its stock options.
The fair value of each option grant, for pro forma disclosure purposes, was
estimated on the date of grant using the modified Black-Scholes option-pricing
model with the following weighted-average assumptions for the 2003 grants,
expected dividend yield 0%, risk free interest rate 1.23%, expected volatility
95.7% and expected life of the option 4 years. Options were granted in the
second quarter of 2003.
LOSS PER SHARE
Stock options and stock purchase warrants were not included in the
computation of diluted loss per share 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
-9-
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
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 second quarter of 2003 and 2002,
respectively.
The Company had a deferred salary plan with its Chief Executive Officer in
which he deferred $62,500 of his annual salary until the Company reaches $5
million in revenue. This agreement was terminated in March 2001 and the
executive's salary was returned to full pay. At June 30, 2003 total obligations
were $135,400 pertaining to this plan.
The Company makes annual pension payments or accruals pursuant to a
deferred compensation plan on behalf of its Chief Executive Officer. For the
quarters ended June 30, 2003 and 2002, $10,417 and $12,500 for each quarter,
respectively were expensed in connection with such plan. At June 30, 2003 and
2002, total obligations were $305,616 and $257,700 pertaining to this plan.
This agreement was suspended as of June 15, 2003 and the company does not plan
to make any additional accruals in the future.
COMMITMENTS
The Company is obligated under a sublease agreement for its principal
office. The Company has agreed to a 12 month extension with a three month
notice for termination of the lease through December 2003, at an annual rate of
$116,000. The Company's minimum lease payment for 2003 is $58,000. For the
quarters ended June 30, 2003 and 2002, rental expense approximated $27,625 for
each quarter.
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 $6,545,455 in 2003 and declining annually to $1,090,910 in 2008. The Company
as assignee and owner will maintain the technology at its own expense. Minimum
royalties were paid to Fuel Tech in 2002 and royalties payable to Fuel Tech at
June 30, 2003 are $2,135.
MARKETING AND LICENSE AGREEMENTS
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 license
revenue in the fourth quarter of 2002. Clean Diesel has previously completed an
exclusive ARIS license for the ARIS NOx reduction technology for stationary
applications in Japan. CDT receives royalties on each system sold by Mitsui.
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 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.
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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, 2002.
RESULTS OF OPERATIONS
Product sales and cost of sales were $123,000 and $64,000 respectively for
the second quarter of 2003 versus $15,000 and $12,000 for 2002. Platinum Plus
fuel catalyst sales of $39,000 and $5,000 were recorded in the second quarter of
2003 and 2002, respectively. ARIS product sales of $53,000, primarily to Mitsui
& Co., Ltd., were also recorded in the second quarter of 2003. The remainder of
product revenue in 2003 consists of additive dispensing equipment.
Included in the 2003 and 2002 second quarter revenue is $160,000 and
$4,000, respectively, of license and royalty income. The 2003 license and
royalty income is primarily from Combustion Component Associates Inc. (CCA) for
the mobile ARIS technology in the US and from continuing royalties from Mitsui,
Ltd. and RJM sales of ARIS 2000 systems.
Year-to-date sales and cost of sales were $379,000 and $120,000 in 2003
versus $90,000 and $55,000 in 2002. Included in the total year revenue is
$169,000 and $14,000 of ARIS license and royalty revenue for 2003 and 2002
respectively. Year-to-date ARIS 2000 system sales for 2003 were $75,000 versus
$58,000 in 2002. Year-to-date Platinum Plus FBC sales for 2003 were $80,000
versus $17,000 in 2002.
General and administrative expenses increased $59,000 to $636,000 in the
second quarter 2003 versus $577,000 in the same period of 2002. For the first
six months of 2003 general and administrative expenses increased $203,000 to
$1,338,000 versus $1,135,000 in 2002. The rise in spending is related to
increases in marketing and sales personnel costs, travel expenses and higher
professional fees including insurance and advisory services.
Research and development expenses decreased $130,000 to $170,000 in the
second quarter of 2003 versus $300,000 in the comparable period in 2002. For the
six months of 2003 research and development costs are up $7,000 to $419,000
versus $412,000 in the same period in 2002. The increase is attributable to CARB
and EPA verification programs for the Company's FBC.
Patent filing costs were $0 in both the second quarter of 2003 and 2002.
For the first six months of the year patent cost decreased $27,000 to $0 in the
same six month period in 2002. The decrease is due to a change in accounting
policy for which the Company will capitalize its patent costs and amortize such
costs over the life of the related patent.
Second quarter interest income decreased $8,000 in 2003 to $2,000 versus
$10,000 in the comparable period in 2002. For the six months of 2003 interest
income decreased $19,000 to $6,000 versus $25,000 in the same period in 2002.
This was the result of a decrease in the amount of cash and cash equivalents on
hand in the second quarter of 2003 versus the second quarter of 2002.
LIQUIDITY AND SOURCES OF CAPITAL
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Prior to 2000, the Company was primarily engaged in research and
development and has incurred losses since inception aggregating $ 23,519,000
(excluding the effect of the non-cash preferred stock dividends). The Company
expects to incur losses through the foreseeable future as it further pursues its
commercialization efforts. Although the Company started selling limited
quantities of product in 1999 and licensing revenue in 2000 and 2001, sales and
revenue to date have been insufficient to cover operating expenses, and the
Company continues to be dependent upon sources other than operations to finance
its working capital requirements.
For the six months ended June 30, 2003 and 2002, the Company used cash of
$1,366,000 and $1,544,000 respectively, in operating activities.
At June 30, 2003 and December 31, 2002, the Company had cash and cash
equivalents of $552,000 and $2,083,000, respectively. The decrease in cash and
cash equivalents in 2003 was the result of the increased verification programs
with EPA and CARB and the on-going marketing and operation costs. The Company
anticipates incurring additional losses through at least 2003 as it further
pursues its commercialization efforts.
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 the AIM (Alternative Investment Market) London Stock Exchange.
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.
As a result of the Company's recurring operating losses, the Company has
been unable to generate positive cash flow. In management's opinion, the
Company's cash balance at June 30, 2003 will be sufficient to fund the Company's
operations through the third quarter 2003. The Company will 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. Accordingly, at
June 30, 2003 there is substantial doubt as to the Company's ability to continue
as a going concern.
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.
-12-
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
1. Consents Authorizing Increase in Authorized Capital.
---------------------------------------------------
By forms of written consent received on or before May 20, 2003, the holders
of 6,527,561 shares of CDT's common stock, or 54.5% of the total of 11,976,903
issued and outstanding shares as of the record date of March 24, 2003, approved
of an increase in the authorized capital of CDT to 30,100,000 shares, of which
30,000,000 are common shares and 100,000 preferred shares.
2. Annual Meeting June 11, 2003
----------------------------
At the CDT Annual Meeting, held on June 11, 2003, the holders of 7,257,974
shares of CDT's common stock, or 60.6% of the total 11,976,903 issued and
outstanding shares as of the record date of May 16, 2003, were represented in
person or by proxy, and:
(i) The proposal to elect the five nominees as directors was approved by a
vote with respect to each individual nominee, as follows:
Shares Shares
Name For Withheld
---- --- --------
John A. de Havilland 7,240,914 17,060
Derek R. Gray 7,240,914 17,060
Charles W. Grinnell 7,240,914 17,060
Jeremy D. Peter-Hoblyn 7,240,914 17,060
James M. Valentine 7,240,914 17,060
(ii) The proposal to approve the appointment of Ernst & Young LLP as
independent auditors of CDT for the year 2003 and to approve their compensation
was approved by a vote of shares 7,240,914 for and 17,060 against and none
abstaining.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
None
b. Reports on Form 8-K
(i) A report was filed on June 16, 2003 to announce the election
of Derek R. Gray as non-executive chairman of the Board of
Directors.
(ii) A report was filed on June 2, 2003 confirming that the
authorized capital of Clean Diesel Technologies, Inc. had
increased from 15,100,000 to 30,100,000 shares.
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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.
Date: As of August 13, 2003 By: /s/ Jeremy D. Peter-Hoblyn
-------------------------------
Jeremy D. Peter-Hoblyn
Director and
Chief Executive Officer
Date: As of August 13, 2003 By: /s/ David W. Whitwell
-------------------------------
David W. Whitwell
Chief Financial Officer,
Vice President and Treasurer
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