As
filed with the Securities and Exchange Commission on November 10, 2010
Registration No. 333-166865
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1 ON FORM S-3
TO FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
Clean Diesel Technologies, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of incorporation or organization)
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06-1393453
(I.R.S. Employer Identification No.)
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4567 Telephone Road, Suite 206
Ventura, California 93003
(805) 639-9458
(Address, including zip code, and telephone number, including area code, of registrants principal executive offices)
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Copies to:
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Nikhil A. Mehta
Chief Financial Officer and Treasurer
4567 Telephone Road, Suite 206
Ventura, California 93003
(805) 639-9458
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Robert M. Smith
Reed Smith LLP
101 Second Street, Suite 1800
San Francisco, California 94105
(415) 659-5955
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(Name, address, including zip code, and telephone number, including area code, of agent for service)
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Approximate date of commencement of proposed sale to the public:
From time to time on or
after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant to dividend or
interest reinvestment plans, please check the following box.
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If any of the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment plans, check the following box.
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If this form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same
offering.
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If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities
Act, check the following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
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If this Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with the Commission
pursuant to Rule 462(e) under the Securities Act, check the following box.
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If this Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.D. filed to register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities Act, check the following box.
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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This Post-Effective Amendment No. 1 on Form S-3 shall become effective in accordance with Section
8(c) of the Securities Act of 1933, as amended, on such date as the Commission acting pursuant to
Section 8(c), may determine.
EXPLANATORY NOTE
The securities subject to this registration statement were previously included in the Registration
Statement on Form S-4 (SEC Registration No. 333-166865). On October 15, 2010, we completed the
merger of our wholly-owned subsidiary, CDTI Merger Sub, Inc., with and into Catalytic Solutions,
Inc. (CSI), as contemplated by that certain Agreement and Plan of Merger dated May 13, 2010, as
amended by letter agreements dated September 1, 2010 and September 14, 2010 (the Merger
Agreement). We refer to this transaction as the Merger. On October 15, 2010, we also effected
a one-for-six reverse stock split of the shares of our common stock. When we refer to our shares
of common stock on post-split basis, it means after giving effect to the one-for-six reverse
stock split. Share numbers also reflect the elimination of fractional shares in accordance with
the Merger Agreement. This Post-Effective Amendment on Form S-3 to our Registration Statement on
Form S-4 relates to the continued offering of (i) 450,145 shares of our common stock (on a
post-split basis) issuable upon the exercise of warrants to purchase shares of our common stock
issued in the Merger and (ii) 9,859 shares of our common stock (on a post-split basis) and warrants
to purchase 8,067 shares of our common stock (on a post-split basis) (and the shares of common
stock issuable from time to time upon exercise of these warrants) issuable upon the exercise of an
outstanding in-the-money warrant to purchase 1,250,000 shares of CSI Class A common stock that
we assumed in the Merger. We refer to this warrant as the Cycad Warrant. Pursuant to Rule 416
under the Securities Act of 1933, as amended (the Act), this registration statement also covers
an indeterminate amount of additional shares of our common stock that may hereafter be offered or
issued with respect to the shares registered hereby resulting from stock splits, stock dividends,
recapitalizations or certain other capital adjustments.
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject
to completion, dated November 10, 2010
PRELIMINARY PROSPECTUS
CLEAN DIESEL TECHNOLOGIES, INC.
450,145 Shares of Common Stock Underlying Warrants Previously Issued
9,859 Shares of Common Stock,
Warrants to Purchase 8,067 Shares of Common Stock
and 8,067 shares of Common Stock Underlying such Warrants
We are offering 450,145 shares of our common stock (on a post-split basis) to the holders of
warrants to purchase shares of our common stock that were issued at the effective time of the
October 15, 2010 merger of our wholly-owned subsidiary, CDTI Merger Sub, Inc., with and into
Catalytic Solutions, Inc. (CSI), as contemplated by that certain Agreement and Plan of Merger
dated May 13, 2010, as amended (the Merger Agreement). We refer to this transaction as the
Merger. As contemplated by the Merger Agreement, we are also offering 9,859 shares of our common
stock (on a post-split basis) and warrants to purchase 8,067 shares of our common stock (on a
post-split basis) (and the 8,067 shares of common stock issuable from time to time upon exercise of
these warrants) issuable upon the exercise of an outstanding in-the-money warrant to purchase
1,250,000 shares of CSI Class A common stock that remains outstanding after the Merger that we
assumed in the Merger. We refer to this warrant as the Cycad Warrant. At the effective time of
the Merger, the Cycad Warrant to purchase 1,250,000 shares of CSI Class A common stock for an
aggregate approximately $27,561 became exercisable for 9,859 shares of our common stock and
warrants to purchase 8,067 shares of our common stock for an aggregate approximately $27,561 (
i.e.
,
what would have been received had it been exercised for CSI Class A common stock immediately prior
to the Merger).
Please
see the section titled Plan of Distribution on
page 14 for more information
regarding the offering of the securities.
Our common stock is listed on the NASDAQ Capital Market, or NASDAQ, under the trading symbol
CDTI (although it is expected to continue to trade under the symbol CDTID through November 12,
2010 due to the 1-for-6 reverse stock split that took effect
October 15, 2010). On November 9,
2010, the last reported sales price for our common stock as quoted on
the NASDAQ was $12.11 per
share.
Investing in our common stock involves a high degree of risk. You should carefully read and
evaluate the cautionary statements concerning risk factors included in our periodic reports and
other information that we file with the Securities and Exchange Commission, or the SEC. See Risk
Factors on page 2.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS NOT AN OFFER TO SELL SECURITIES, NOR IS IT A SOLICITATION OF AN OFFER TO
BUY SECURITIES, IN ANY STATE OR COUNTRY WHERE THE OFFER OR SALE IS NOT PERMITTED.
The date of this prospectus is , 2010.
TABLE OF CONTENTS
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Page
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SUMMARY
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1
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RISK FACTORS
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2
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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USE OF PROCEEDS
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DESCRIPTION OF SECURITIES
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12
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PLAN OF DISTRIBUTION
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14
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LEGAL MATTERS
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EXPERTS
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WHERE YOU CAN FIND MORE INFORMATION
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
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You should rely only on the information contained in or incorporated by reference into this
prospectus or any applicable prospectus supplement. We have not authorized anyone to provide you
with different information. We are not making an offer to sell or seeking an offer to buy shares
of our common stock under this prospectus or any applicable prospectus supplement in any
jurisdiction where the offer or sale is not permitted. The information contained in this
prospectus, any applicable prospectus supplement and the documents incorporated by reference herein
and therein are accurate only as of their respective dates, regardless of the time of delivery of
this prospectus or any sale of a security. Our business, financial condition, results of
operations and prospects may have changed since that date.
SUMMARY
This summary highlights information contained elsewhere in this prospectus or incorporated by
reference. This summary does not contain all of the information that you should consider before
investing in our common stock. You should read the entire prospectus carefully, including the
risks of investing in our common stock discussed under Risk
Factors beginning on page 2, under
Risk Factors beginning on page 14, in our Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission, or SEC, on March 24, 2010, which is incorporated by reference
herein in its entirety, and as updated in any future filings made with the SEC that are
incorporated by reference herein, and the other information and documents incorporated into this
prospectus by reference, including our financial statements and related notes. As used in this
prospectus, unless otherwise specified or the context requires otherwise, the terms Clean Diesel,
we, our and us refer to Clean Diesel Technologies, Inc. and its subsidiaries, including
Catalytic Solutions, Inc. (CSI), unless the context otherwise requires.
Overview
Clean Diesel is a Delaware corporation formed in 1994 as a wholly-owned subsidiary of Fuel
Tech, Inc., a Delaware corporation (formerly known as Fuel-Tech N.V., a Netherlands Antilles
limited liability company) (Fuel Tech). Clean Diesel was spun-off by Fuel Tech in a rights
offering in December 1995. Since inception, Clean Diesel has developed a substantial portfolio of
patents and related proprietary rights and extensive technological know-how.
On October 15, 2010, our wholly-owned subsidiary, CDTI Merger Sub, Inc., merged with and into
CSI, as contemplated by that certain Agreement and Plan of Merger dated May 13, 2010, as amended by
letter agreements dated September 1, 2010 and September 14, 2010 (the Merger Agreement). We
refer to this transaction as the Merger. On October 15, 2010, prior to the Merger, we also
effected a one-for-six reverse stock split. When we refer to our shares of common stock on a
post-split basis, it means after giving effect to the one-for-six reverse stock split. The
Merger was accounted for as a reverse acquisition and, as a result, our companys (the legal
acquirer) consolidated financial statements will, in substance, be those of CSI (the accounting
acquirer), with the assets and liabilities, and revenues and expenses, of our company being
included effective from the date of the closing of the Merger.
CSI is a California corporation formed in 1996, has over 25 years of experience in the heavy
duty diesel systems market through its Heavy Duty Diesel Systems division and has proven technical
and manufacturing competence in the light duty vehicle catalyst market which meets auto makers
most stringent requirements. CSIs Catalyst division has supplied over 9 million catalyst parts to
light duty vehicle customers since 1996. CSIs business is organized into two divisions: its Heavy
Duty Diesel Systems division and its Catalyst division.
Following the Merger, we are now a vertically integrated global manufacturer and distributor
of emissions control systems and products, focused in the heavy duty diesel and light duty vehicle
markets. As a cleantech company, we utilize our proprietary patented Mixed Phase Catalyst (MPC
®
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technology, as well as our ARIS
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selective catalytic reduction; Platinum Plus
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Fuel-Borne Catalyst
(FBC), and other technologies to provide high-value sustainable solutions to reduce emissions,
increase energy efficiency and lower the carbon intensity of on- and off-road engine applications.
We, along with our wholly-owned subsidiary, CSI, are now headquartered in Ventura, California and
currently have operations in the United States, Canada, the United Kingdom, France, Japan and
Sweden as well as an Asian joint venture.
Company Information
Our principal executive offices following the Merger are located at 4567 Telephone Road, Suite
206, Ventura, California, 93003 and our telephone number at that location is (805) 639-9458. We
maintain an Internet website at www.cdti.com, and information regarding CSIs operations may be
found at www.catsolns.com. Information contained in or accessible through either of these websites
does not constitute part of this prospectus.
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RISK FACTORS
Investing in our common stock involves risks. Before purchasing any securities we offer, you
should carefully consider the risk factors described in our Annual Report on
Form 10-K
for the
fiscal year ended December 31, 2009, in any of our annual or quarterly reports for subsequent
fiscal years or quarters that are incorporated by reference herein, the other documents
incorporated by reference herein, and the additional risk factor set forth below. You should also
consider any other information included in this prospectus and any prospectus supplement and any
other information that we have incorporated by reference, including filings made with the SEC
subsequent to the date hereof. Any of these risks, as well as other risks and uncertainties, could
harm our financial condition, results of operations or cash flows. We cannot assure you of a
profit or protect you against a loss on the shares of our common stock that you purchase upon
exercise of the warrants received in the Merger or, in the case of the CSI warrant that remains
outstanding following the Merger, the shares of our common stock and warrants to purchase our
common stock issuable upon exercise of such CSI warrant.
Risks Relating to Our Business
We may not realize all of the anticipated benefits of the transaction.
To be successful after the Merger, we need to combine and integrate the businesses and
operations of CSI into our business and operations. The combination of two independent companies
is a complex, costly and time-consuming process. As a result, we must devote significant management
attention and resources to integrating the diverse business practices and operations of CSI with
ours. The integration process may divert the attention of our executive officers and management
from day-to-day operations and disrupt the business of either or both of the companies and, if
implemented ineffectively, preclude realization of the expected full benefits of the Merger. We
have not completed a merger or acquisition comparable in size or scope to the transaction. Our
failure to meet the challenges involved in successfully integrating the operations of CSI with ours
or otherwise to realize any of the anticipated benefits of the Merger could cause an interruption
of, or a loss of momentum in, our activities and could adversely affect our results of operations.
In addition, the overall integration of the two companies may result in unanticipated problems,
expenses, liabilities, competitive responses and loss of customer relationships, and may cause our
stock price to decline. The difficulties of combining the operations of the companies include,
among others:
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maintaining employee morale and retaining key employees;
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preserving important strategic and customer relationships;
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the diversion of managements attention from ongoing business concerns;
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coordinating geographically separate organizations;
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unanticipated issues in integrating information, communications and other systems;
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coordinating marketing functions;
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consolidating corporate and administrative infrastructures and eliminating duplicative
operations; and
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integrating the cultures of Clean Diesel and CSI.
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In addition, even if we are successful in integrating the businesses and operations of CSI
with ours, we may not fully realize the expected benefits of the Merger, including sales or growth
opportunities that were anticipated, within the intended time frame, or at all. Further, because
our respective businesses differ, our results of operations and market price of our common stock
may be affected by factors different from those existing prior to the Merger and may suffer as a
result of the Merger. As a result, we cannot assure you that the combination of the businesses and
operations of CSI with ours will result in the realization of the full benefits anticipated from
the Merger.
The forbearance agreement in place with respect to CSIs principal credit agreement expires on
January 13, 2011, and may not be renewed through the time we are able to establish a new line of
credit.
CSIs principal credit agreement has been in default since March 31, 2009. A forbearance
agreement is in place that expires on January 13, 2011 (that date that is 90 days after the
effective date of the Merger). Although no demand for repayment has been made, we cannot guarantee
that the lender will continue to extend its forbearance,
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or not make a determination that, in its opinion, CSI has a material adverse change such that it is
default under the current forbearance agreement. If the forbearance agreement is not renewed and/or
we are unable to establish a new line of credit, or if CSIs
lender, Fifth Third Bank, were to determine that CSI was
in default under the forbearance, Fifth Third may demand repayment. If we do not make repayment on
any such demand, Fifth Third could move to exercise remedies that would materially adversely affect
us and our business. These remedies would include setting off against the outstanding bank debt
proceeds of CSIs accounts receivable, the bank directing accounts receivable to be paid to it, the
inability to make further borrowings under the credit agreement, and the seizure or sale of CSIs
equipment, inventory and general intangibles.
We will need to have an adequate credit facility in place in order to conduct our operations for
any reasonable length of time, and no such facility is yet in place or committed, nor do we have
any assurances of additional funding
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We do not yet have a commitment from a financial institution offering an adequate credit
facility, which we need to have in place in order to conduct our operations for any reasonable
length of time. We cannot offer any assurances that any such facility can be put in place on
commercially reasonable terms. We may also be required to seek additional funding in the form of
a private or public offering of equity securities. We believe that debt financing would be
difficult to obtain because of our limited assets and cash flows as well as current general
economic conditions. Any offering of shares of our common stock may result in dilution to our
existing stockholders. Our ability to consummate a financing will depend not only our ability to
achieve operating efficiencies and other synergies post-Merger, as well as our success in
integrating CSIs operations with ours post-Merger, but also on 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 we need additional funds and are unable to raise such
funds, we may be required to delay, reduce or severely curtail our operations or otherwise impede
our on-going business efforts, which could have a material adverse effect on our business,
operating results, financial condition and long-term prospects.
Neither Clean Diesel nor CSI have experienced positive cash flow from their operations, and our
ability to achieve positive cash flow from operations, or finance negative cash flow from
operations, will depend on reductions in our operating costs, which may not be achievable.
Both Clean Diesel and CSI have historically operated with negative cash flow from their
operations. Although we have identified areas where economies can be effected, whether or not we
will be successful in realizing these cost-savings, as well as when we are able to effect these
economies and the overall restructuring costs we will incur cannot be known at this time. All of
these will be important factors in determining whether we will have sufficient cash resources
available to maintain our operations for any appreciable length of time.
The Merger will likely adversely affect our ability to take advantage of the significant U.S.
Federal tax loss carryforwards accumulated.
Clean Diesel had approximately $53.7 million and $39.9 million of federal and state income tax
net loss carry forwards, respectively, at December 31, 2009 that could be used to reduce its U.S.
Federal and state tax liability in future years. CSI had approximately $89.8 million and $70.5
million of federal and state income tax net operating loss carry forwards, respectively, at
December 31, 2009 that could be used to reduce its federal and state tax liabilities in future
years. The Merger is likely to significantly limit the ability of these tax loss carryforwards to
be utilized in the future.
Clean Diesel and CSI both have incurred and will incur significant expenses as a result of the
Merger, which will reduce the amount of capital available to fund the business after the Merger.
Clean Diesel and CSI have incurred, and will continue to incur, significant expenses related
to the Merger. These expenses include investment banking fees, legal fees, accounting fees, and
printing and other costs. There may also be unanticipated costs related to the Merger. As a result,
we will have less capital available to fund its activities after the Merger.
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We will continue to incur significant costs as a result of operating as a public company, and our
management may be required to devote substantial time to compliance initiatives.
As a public company, we currently incur significant legal, accounting and other expenses. In
addition, the Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC and the
NASDAQ Stock Market, have imposed various requirements on public companies, including requiring
establishment and maintenance of effective disclosure and financial controls and changes in
corporate governance practices. Our management and other personnel devote a substantial amount of
time and financial resources to these compliance initiatives.
While CSI has been subject to the disclosure and other requirements of the AIM of the London
Stock Exchange, including the preparation of periodic financial statements prepared in accordance
with U.S. GAAP, it has not been subject to other requirements that apply to us, such as the
requirements of the Sarbanes-Oxley Act. Because we need to bring CSI into compliance with the
Sarbanes-Oxley Act, this will require significant expenditures and may also place additional
demands on our management and may divert managements time and attention away from the day-to-day
operations of the business. These additional obligations may also require us to hire additional
personnel. We are currently evaluating CSIs internal control systems in order to enable us to
report on our internal control over financial reporting. We cannot be certain as to the timing of
completion of the evaluation, testing and remediation actions, if any, that will be necessary or
the impact of the same on our operations. If we fail to staff our accounting and finance function
adequately, or maintain internal control systems adequate to meet the demands that are placed upon
us as a public company, including the requirements of the Sarbanes-Oxley Act, we may be unable to
report our financial results accurately or in a timely manner and our business and stock price may
suffer. The costs of being a public company, as well as diversion of managements time and
attention, may have a material adverse effect on our future business, financial condition and
results of operations.
Each of Clean Diesel and CSI incurred losses in the past and, following the Merger, expects to
incur losses in the near future.
Each of Clean Diesel and CSI has suffered losses from operations since inception. As of June
30, 2010, Clean Diesel had an accumulated deficit of $68.1 million, which amount includes
approximately $4.8 million of non-cash preferred stock dividends, and CSI had an accumulated
deficit of approximately $149.3 million. Although we expect to realize certain operating synergies
from the Merger, we nevertheless expect to continue to incur operating losses at least through
2010. There can be no assurance that we will achieve or sustain significant revenues, positive cash
flows from operations or profitability in the future.
CSIs auditors report for the fiscal year 2009 included a going concern explanatory paragraph.
The Merger was accounted for as a reverse acquisition and, as a result, our companys (the
legal acquirer) consolidated financial statements will, in substance, be those of CSI (the
accounting acquirer), with the assets and liabilities, and revenues and expenses, of our company
being included effective from the date of the closing of the Merger. CSI has suffered recurring
losses and negative cash flows from operations since inception, and CSIs working capital is
severely limited. As of December 31, 2009, CSI had an accumulated deficit of approximately $149.3
million and a working capital deficit of $4.4 million ($148.7 million and $3.6 million,
respectively, as of June 30, 2010). As a result, CSIs auditors report for fiscal year 2009
included an explanatory paragraph that expresses substantial doubt about CSIs ability to continue
as a going concern. Although the Merger provided necessary capital to the combined company, we
nevertheless require additional capital in order to conduct our operations for any reasonable
length of time. If we are not able to replace CSIs credit facility or otherwise recapitalize the
combined company, it would have a material adverse effect on our business, operating results,
financial condition and long-term prospects.
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Historically, each of Clean Diesel and CSI were dependent on a few major customers for a
significant portion of each companys revenue and the revenue of the combined company could decline
if we are unable to maintain or develop relationships with current or potential customers.
Historically, each of Clean Diesel and CSI derived a significant portion of its respective
revenue from a limited number of customers. For the year ended December 31, 2009, two customers
accounted for approximately 46% of CSIs revenue (37% for the six months ended June 30, 2010), and
two customers accounted for approximately 26% of Clean Diesels revenue (49% for the six months
ended June 30, 2010). For the year ended December 31, 2008, two customers accounted for
approximately 37% of CSIs revenue, and one customer accounted for approximately 15% of Clean
Diesels revenue. We intend to establish long-term relationships with existing customers and
continue to expand our customer base. While we diligently seek to become less dependent on any
single customer, and we anticipate that we will see reduced dependency on a smaller number of
customers as a combined company, it is likely that certain business relationships may result in one
or more customers contributing to a significant portion of our revenue in any given year for the
foreseeable future. The loss of one or more of our significant customers may result in a material
adverse effect on our revenue, ability to become profitable or our ability to continue our business
operations.
We face constant changes in governmental standards by which our products are evaluated.
We believe that, due to the constant focus on the environment and clean air standards
throughout the world, a requirement in the future to adhere to new and more stringent regulations
both domestically and abroad is possible as governmental agencies seek to improve standards
required for certification of products intended to promote clean air. In the event our products
fail to meet these ever-changing standards, some or all of our products may become obsolete.
Foreign currency fluctuations could impact financial performance.
Because of our activities in the U.K., Europe Canada, South Africa and Asia, we are exposed to
fluctuations in foreign currency rates. We may manage the risk to such exposure by entering into
foreign currency futures and option contracts of which there was one in 2009. Foreign currency
fluctuations may have a significant effect on our operations in the future.
Risks Related to Our Industry
We face competition and technological advances by competitors.
There is significant competition among companies that provide solutions for pollutant
emissions from diesel engines. Several companies market products that compete directly with our
products. Other companies offer products that potential customers may consider to be acceptable
alternatives to our products and services, including products that are verified by the
Environmental Protection Agency (EPA) and/or the California Air Resources Board (CARB), or other
environmental authorities. We face direct competition from companies with greater financial,
technological, manufacturing and personnel resources. Newly developed products could be more
effective and cost efficient than our current or future products. We also face indirect competition
from vehicles using alternative fuels, such as methanol, hydrogen, ethanol and electricity.
We depend on intellectual property and the failure to protect our intellectual property could
adversely affect our future growth and success.
We rely on patent, trademark and copyright law, trade secret protection, and confidentiality
and other agreements with employees, customers, partners and others to protect our intellectual
property. However, some of our intellectual property is not covered by any patent or patent
application, and, despite precautions, it may be possible for third parties to obtain and use our
intellectual property without authorization.
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We do not know whether any patents will be issued from pending or future patent applications
or whether the scope of the issued patents is sufficiently broad to protect our technologies or
processes. Moreover, patent applications and issued patents may be challenged or invalidated. We
could incur substantial costs in prosecuting or defending patent infringement suits. Furthermore,
the laws of some foreign countries may not protect intellectual property rights to the same extent
as do the laws of the United States.
The patents protecting our proprietary technologies expire after a period of time. Currently,
our patents have expiration dates ranging from 2010 through 2027. Although we have attempted
to incorporate technology from our core patents into specific patented product applications,
product designs and packaging to extend the lives of our patents, there can be no assurance that
this building block approach will be successful in protecting our proprietary technology. If we
are not successful in protecting our proprietary technology, it could have a material adverse
effect on our business, financial condition and results of operations.
As part of our confidentiality procedures, we generally have entered into nondisclosure
agreements with employees, consultants and corporate partners. We also have attempted to control
access to and distribution of our technologies, documentation and other proprietary information.
We plan to continue these procedures. Despite these procedures, third parties could copy or
otherwise obtain and make unauthorized use of our technologies or independently develop similar
technologies. The steps that we have taken and that may occur in the future might not prevent
misappropriation of our solutions or technologies, particularly in foreign countries where laws or
law enforcement practices may not protect the proprietary rights as fully as in the United States.
There can be no assurance that we will be successful in protecting our proprietary rights. Any
infringement upon our intellectual property rights could have an adverse effect on our ability to
develop and sell commercially competitive systems and components.
If third parties claim that our products infringe upon their intellectual property rights, we may
be forced to expend significant financial resources and management time litigating such claims and
our operating results could suffer.
Third parties may claim that our products and systems infringe upon third-party patents and
other intellectual property rights. Identifying third-party patent rights can be particularly
difficult, especially because patent applications are not published until up to 18 months after
their filing dates. If a competitor were to challenge our patents, or assert that our products or
processes infringe their patent or other intellectual property rights, we could incur substantial
litigation costs, be forced to make expensive product modifications, pay substantial damages or
even be forced to cease some operations. Third-party infringement claims, regardless of their
outcome, would not only drain financial resources but also divert the time and effort of management
and could result in customers or potential customers deferring or limiting their purchase or use of
the affected products or services until resolution of the litigation.
Our results may fluctuate due to certain regulatory, marketing and competitive factors over which
we have little or no control.
The factors listed below, some of which we cannot control, may cause our revenue and results
of operations to fluctuate significantly:
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Actions taken by regulatory bodies relating to the verification, registration or health
effects of our products.
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The extent to which our Platinum Plus fuel-borne catalyst and ARIS nitrogen oxides
reduction products obtain market acceptance.
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The timing and size of customer purchases.
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Customer concerns about the stability of our business, which could cause them to seek
alternatives to our solutions and products; and
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Increases in raw material costs, especially platinum.
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6
Failure of one or more key suppliers to timely deliver could prevent, delay or limit us from
supplying products. Delays in delivery times for platinum group metal purchases could also result
in losses due to fluctuations in prices.
Due to customer demands, we are required to source critical materials and components such as
ceramic substrates from single suppliers. Failure of one or more of the key suppliers to timely
deliver could prevent, delay or limit us from supplying products because we would be required to
qualify an alternative supplier. For certain products and customers, we are required to purchase
platinum group metal materials. As commodities, platinum group metal materials are subject to daily
price fluctuations and significant volatility, based on global market conditions. Historically, the
cost of platinum group metals used in the manufacturing process has been passed through to the
customer. This limits the economic risk of changes in market prices to platinum group metal usage
in excess of nominal amounts allowed by the customer. However, going forward there can be no
assurance that we will continue to be successful passing platinum group metal price risk onto its
current and future customers to minimize the risk of financial loss. Additionally, platinum group
metal material is accounted for as inventory and therefore subject to lower of cost or market
adjustments on a regular basis at the end of accounting periods. A drop in market prices relative
to the purchase price of platinum group metal could result in a write-down of inventory. Due to
the high value of platinum group metal materials, special measures have been taken to secure and
insure the inventory. There is a risk that these measures may be inadequate and expose us to
financial loss.
Qualified management, marketing, and sales personnel are difficult to locate, hire and train, and
if we cannot attract and retain qualified personnel, it will harm the ability of the business to
grow.
Our success depends, in part, on our ability to retain current key personnel, attract and
retain future key personnel, additional qualified management, marketing, scientific, and
engineering personnel, and develop and maintain relationships with research institutions and other
outside consultants. Competition for qualified management, technical, sales and marketing
employees is intense. In addition, as we work to integrate personnel following the Merger, some
employees might leave the combined company and go to work for competitors. The loss of key
personnel or the inability to hire or retain qualified personnel, or the failure to assimilate
effectively such personnel could have a material adverse effect on our business, operating results
and financial condition.
We may not be able to successfully market new products that are developed or obtain direct or
indirect verification or approval of our new products.
Some of our catalyst products and heavy-duty diesel systems are still in the development or
testing stage with targeted customers. We are developing technologies in these areas that are
intended to have a commercial application, however, there is no guarantee that such technologies
will actually result in any commercial applications. In addition, we plan to market other
emissions reduction devices used in combination with our current products. There are numerous
development and verification issues that may preclude the introduction of these products for
commercial sale. These proposed operations are subject to all of the risks inherent in a
developing business enterprise, including the likelihood of continued operating losses. If we are
unable to demonstrate the feasibility of these proposed commercial applications and products or
obtain verification or approval for the products from regulatory agencies, we may have to abandon
the products or alter our business plan. Such modifications to our business plan will likely delay
achievement of revenue milestones and profitability.
Any liability for environmental harm or damages resulting from technical faults or failures of our
products could be substantial and could materially adversely affect our business and results of
operations.
Customers rely upon our products to meet emissions control standards imposed upon them by
government. Failure of our products to meet such standards could expose us to claims from
customers. Our products are also integrated into goods used by consumers and therefore a
malfunction or the inadequate design of our products could result in product liability claims. Any
liability for environmental harm or damages resulting from technical faults or failures could be
substantial and could materially adversely affect our business and results of operations. In
addition, a well-publicized actual or perceived problem could adversely affect the markets
perception of our products, which would materially impact our financial condition and operating
results.
7
Future growth of our business depends, in part, on market acceptance of our catalyst products,
successful verification of our products and retention of our verifications.
While we believe that there exists a viable market for our developing catalyst products, there
can be no assurance that such technology will succeed as an alternative to competitors existing
and new products. The development of a market for the products is affected by many factors, some of
which are beyond our control. The adoption cycles of our key customers are lengthy and require
extensive interaction with the customer to develop an effective and reliable catalyst for a
particular application. While we continue to develop and test products with key customers, there
can be no guarantee that all such products will be accepted and commercialized. Our relationships
with our customers are based on purchase orders rather than long-term formal supply agreements.
Generally, once a catalyst has successfully completed the testing and certification stage for a
particular application, it is generally the only catalyst used on that application and therefore
unlikely that, unless there are any defects, the customer will try to replace that catalyst with a
competing product. However, our customers usually have alternate suppliers for their products and
there is no assurance that we will continue to win the business.
If a market fails to develop or develops more slowly than anticipated, we may be unable to
recover the costs we will have incurred in the development of our products and may never achieve
profitability. In addition, we cannot guarantee that we will continue to develop, manufacture or
market our products or components if market conditions do not support the continuation of the
product or component.
We believe that it is an essential requirement of the U.S. retrofit market that emissions
control products and systems are verified under the EPA and/or CARB protocols to qualify for
funding from the EPA and/or CARB programs. Funding for these emissions control products and systems
is generally limited to those products and technologies that have already been verified.
Verification is also useful for commercial acceptability. EPA verifications were withdrawn on two
of our products in January 2009 because available test results were not accepted by EPA as meeting
new emissions testing requirements for nitrogen dioxide (NO2) measurement. Although prior testing
indicates satisfactory performance can be achieved, we have no assurance that the EPA will
determine that the results of the proposed evaluations will meet the new standards, nor whether
additional testing that may be required by the EPA will be adequate to remove any remaining concern
the EPA may have regarding use of our fuel-borne catalyst. As a general matter, wee have no
assurance that our products will be verified by the CARB or that such a verification will be
acceptable to the EPA.
Future growth of our business depends, in part, on enforcement of existing emissions-related
environmental regulations and further tightening of emission standards worldwide.
We expect that our future business growth will be driven, in part, by the enforcement of
existing emissions-related environmental regulations and tightening of emissions standards
worldwide. If such standards do not continue to become stricter or are loosened or are not enforced
by governmental authorities, it could have a material adverse effect on our business, operating
results, financial condition and long-term prospects.
New metal standards, lower environmental limits or stricter regulation for health reasons of
platinum or cerium could be adopted and affect use of our products.
New standards or environmental limits on the use of platinum or cerium metal by a governmental
agency could adversely affect our ability to use our Platinum Plus fuel-borne catalyst in some
applications. In addition, the CARB requires multimedia assessment (air, water, soil) of the
fuel-borne catalyst. The EPA could require a Tier III test of the Platinum Plus fuel-borne
catalyst at any time to determine additional health effects of platinum or cerium, which tests may
involve additional costs beyond our current resources.
8
Risks Related to Our Common Stock
The investors in CSIs capital raise, who converted their shares of Class B common stock into
shares of our common stock in the Merger, collectively hold a large percentage of our outstanding
common stock, and, should they choose to act together, will have significant influence over the
outcome of corporate actions requiring stockholder approval; such shareholders priorities for our
business may be different from our other stockholders.
Approximately 45% of our outstanding common stock is collectively held by the purchasers of
CSIs secured convertible notes in its capital raise (which notes converted into CSIs Class B
common stock and were exchanged for shares of our common stock in the Merger). Accordingly, the
investors in CSIs capital raise, should they choose to act together, will be able to significantly
influence the outcome of any corporate transaction or other matter submitted to our stockholders
for approval, including the election of directors, any merger, consolidation or sale of all or
substantially all of our assets or any other significant corporate transaction, such that the
investors in CSIs capital raise, should they choose to act together, could delay or prevent a
change of control of our company, even if such a change of control would benefit our other
stockholders. The interests of the investors in CSIs capital raise may differ from the interests
of our other stockholders.
The price of our common stock may be adversely affected by the sale of a significant number of new
common shares.
The sale, or availability for sale, of substantial amounts of our common stock could adversely
affect the market price of our common stock and could impair our ability to raise additional
working capital through the sale of equity securities. On October 15, 2010, we issued (or reserved
for issuance) an aggregate 2,287,873 shares of our common stock and warrants to purchase an
additional 666,583 shares of our common stock, each on a post-split basis after eliminating
fractional shares, in connection with the Merger. We also issued 109,020 shares and warrants to
purchase an additional 166,666 shares of our common stock, each on a post-split basis after
eliminating fractional shares, in a Regulation S offering. Resales of these shares by the holders
thereof (some of whom received registered shares and some of whom have registration rights),
resales of the shares received upon exercise of the warrants (including those registered on this
registration statement), the sale of additional shares by us in the public market or a private
placement to fund our operations, or the perception by the market that these sales could occur,
could contribute to downward pressure on the trading price of our stock.
The risk of dilution, perceived or actual, may contribute to downward pressure on the trading price
of our stock.
In addition to the securities that are issuable upon exercise of the Cycad Warrant, this
prospectus relates to shares of our common stock that are issuable upon exercise of warrants issued
to former shareholders of CSI in the Merger. Unless accelerated, these warrants are exercisable
until October 15, 2013. We also have other outstanding warrants and stock options to purchase
shares of our common stock, and it is contemplated that additional shares or options to acquire
shares of our common stock will be issued, including those contemplated by the Merger Agreement for
certain employees and others affiliated with CSI. The exercise of these securities will result in
the issuance of additional shares of our common stock, such as those being registered hereby. We
may also issue additional shares of our common stock or securities exercisable for or convertible
into shares of our common stock, whether in the public market or in a private placement to fund our
operations, or as compensation. These issuances, particularly where the exercise price or purchase
price is less than the current trading price for our common stock, could be viewed as dilutive to
the holders of our common stock. The risk of dilution, perceived or actual, may cause existing
stockholders to sell their shares of stock, which would contribute to a decrease in the price of
shares of our common stock. In that regard, downward pressure on the trading price of our common
stock may also cause investors to engage in short sales, which would further contribute to downward
pressure on the trading price of our stock.
9
There has historically been limited trading volume in, and significant volatility in the price of,
our common stock on The NASDAQ Capital Market.
Our common stock began trading on The NASDAQ Capital Market effective October 3, 2007. Prior
to this date, our common stock was traded on the OTC Bulletin Board. Historically, the trading
volume in our common stock has been relatively limited and a consistently active trading market for
our common stock may not develop. The average daily trading volume in our common stock on the
NASDAQ Capital Market in 2009 was approximately 9,600 shares (on a pre-split basis). However, in
the period immediately following the Merger and the reverse stock split, we experienced
significantly higher trading volume than typical for our company.
There has been significant volatility in the market prices of publicly traded shares of
emerging growth technology companies, including our shares. During the last two weeks of October
2010 following the Merger and the reverse stock split, the closing price for a share of our common
stock ranged from as low as $3.99 per share to as high as $37.06 per
share. On November 9, 2010,
the closing price for a share of our common stock was $12.11 per share. Factors such as
announcements of technical developments, verifications, establishment of distribution agreements,
significant sales orders, changes in governmental regulation and developments in patent or
proprietary rights may have a significant effect on the future market price of our common stock. As
noted above, there has historically been a low average daily trading volume of our common stock. To
the extent this trading pattern continues, the price of our common stock may fluctuate
significantly as a result of relatively minor changes in demand for our shares and sales of our
stock by holders.
We have not and do not intend to pay dividends on shares of our common stock.
We have not paid dividends on our common stock since inception, and do not intend to pay any
dividends to our stockholders in the foreseeable future. We intend to reinvest earnings, if any, in
the development and expansion of our business.
10
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including documents incorporated by reference into this document, contains
statements relating to our future results that are considered forward-looking statements. These
statements, which may be expressed in a variety of ways, including the use of future or present
tense language, relate to, among other things: all statements about our future results, our ability
to integrate CSI, the prospects of the combined company, and our plans, objectives and strategies.
These forward-looking statements, and other forward-looking statements contained in our other
public disclosures (including those incorporated in this prospectus) are based on assumptions that
involve risks and uncertainties and that are subject to change based on various important factors
(some of which are beyond our control), including those factors described in Item 1A under Risk
Factors and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31,
2009, in any of our annual or quarterly reports for subsequent fiscal years or quarters that are
incorporated by reference herein, and our other filings with the SEC. Actual results may differ
materially from those expressed or implied as a result of these risks and uncertainties, including,
but not limited to uncertainties inherent in the litigation and litigation settlement process. All
forward-looking statements speak only as of the date on which such statements are made, and we
undertake no obligation to update any statement to reflect events or circumstances after the date
on which such statement is made or to reflect the occurrence of unanticipated events. Because
these forward-looking statements are subject to assumptions and uncertainties, actual results may
differ materially from those expressed or implied by these forward-looking statements, and the
factors that will determine these results are beyond our ability to control or predict. We caution
you not to place undue reliance on these forward-looking statements, which speak only as of the
date of this prospectus, in the case of forward-looking statements contained in this prospectus, or
the dates of the documents incorporated by reference into this prospectus, in the case of
forward-looking statements made in those incorporated documents.
USE OF PROCEEDS
The warrants to purchase shares of our common stock issued (or reserved for issuance) in the
Merger have an exercise price of $7.92 per share and do not have a cashless exercise feature. In
addition, upon any cash exercise of the Cycad Warrant assumed in the Merger, we will receive
proceeds from purchases of shares of our common stock and warrants to purchase shares of our common
stock we issue upon exercise.
Assuming the warrants to purchase an additional 450,145 shares of our common stock included in
this registration statement are exercised in full, we will receive approximately $3,565,148. If
the Cycad Warrant assumed in the Merger, which has a cashless exercise feature, is exercised in
cash in full for the 9,859 shares of our common stock (on a post-split basis) and warrants to
purchase 8,067 shares of our common stock (on a post-split basis) included in this registration
statement, we will receive approximately $27,561. If the warrants to purchase 8,067 shares of our
common stock issued upon exercise of the Cycad Warrant are then exercised in full at the $7.92
exercise price per share, we will receive an additional $63,891. Any proceeds that we receive will
be used for general corporate purposes.
11
DESCRIPTION OF SECURITIES
We are offering 450,145 shares of our common stock (on a post-split basis) to the holders of
warrants to purchase shares of our common stock received in the Merger. We are also offering 9,859
shares of our common stock (on a post-split basis) and warrants to purchase 8,067 shares of our
common stock (on a post-split basis) (and the shares of common stock issuable from time to time
upon exercise of these warrants) issuable upon exercise of the Cycad Warrant assumed in the Merger.
Following is a description of the warrants issued to the former shareholders of CSI as a result of
the Merger and would be issued upon exercise of the Cycad Warrant, assuming that the expiration
date of the warrants has not yet occurred.
Exercise Price; Expiration
The warrants have an exercise price of $7.92 per share (on a post-split basis). This was
determined by dividing $30,000,000 by the number of shares of our common stock outstanding
immediately after the effective time of the Merger. The exercise price per share of the warrant and
the number of shares of our common stock issuable upon exercise of the warrant will be
proportionally adjusted if we effect a further reclassification, split or subdivision of our common
stock.
All of the warrants will expire on the earlier of (i) October 15, 2013 (the third anniversary
of the effective time of the Merger) and (ii) that date that is thirty (30) days after we give
notice to the warrant holder that the market value of one share of our common stock has exceeded
130% of the exercise price of the warrant for 10 consecutive days. No such notice has been given
as of the date of this prospectus.
Exercise
The registered holder of a warrant to purchase shares of our common stock can exercise all or
any portion of the warrants evidenced by the warrant certificate by delivering on any business day
during the exercise period to American Stock Transfer and Trust Company, the transfer agent, (i)
the warrant certificate, (ii) a subscription form substantially in the form attached to the warrant
certificate, as duly and properly executed by the registered holder, and (iii) an amount equal to
the aggregate exercise price for the number of shares of our common stock as to which warrants are
exercised, and (iv) any and all applicable withholding taxes due in connection with the exercise of
the warrants.
Adjustments to Prevent Dilution
The exercise price per share of our common stock and the number of shares of our common stock
issuable upon any subsequent exercise of the warrants to purchase shares of our common stock will
be proportionately adjusted in the event that Clean Diesel effects a further reclassification,
split or subdivision of our outstanding shares of common stock.
Effect of a Merger
If there is a sale of all or substantially all of our properties and assets to another person,
or a merger or consolidation with and into another corporation pursuant to which we are not the
surviving entity, then as part of such sale or merger, provisions shall be made such that the
holder of the warrant to purchase shares of our common stock will thereafter be entitled to
receive, during the period specified by the warrant, an equivalent number of shares of common stock
or other securities or property of the surviving entity that the holder would have been entitled to
in such sale or merger if the warrant to purchase shares of our common stock had been exercised
immediately prior to the sale or merger. Appropriate adjustment shall be made to the exercise price
of the warrant to purchase shares of our common stock so that the aggregate exercise price of the
warrants remains substantially the same.
12
Transfer Restrictions
Subject to certain limited exceptions, the warrants to purchase shares of our common stock are
not transferable by the holder.
Share Rights
The accrual of dividends, if any, on the shares of common stock issued upon the exercise of
any warrant to purchase shares of our common stock evidenced by a warrant certificate will be
governed by the terms generally applicable to our common stock. Neither a warrant certificate nor
the warrants to purchase shares of our common stock shall entitle any holder thereof to any of the
rights of a holder of shares of our common stock, including, without limitation, the right to
receive dividends, if any, or payments upon the liquidation, dissolution or winding up of Clean
Diesel or to consent or receive notice as stockholders in respect of the meetings of our
stockholders or the election of our directors or any other matter.
Warrant Certificates
Warrants are physically certificated.
Legends
Each warrant certificate representing the warrants and any other securities issued upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall be
stamped or otherwise imprinted with legends in the following form (in addition to any other legends
required under applicable securities laws):
THIS WARRANT IS NOT TRANSFERABLE OTHER THAN IN THE LIMITED CIRCUMSTANCES PROVIDED HEREIN AND THE
HOLDER HEREOF AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS WARRANT MAY NOT BE OFFERED, SOLD,
PLEDGED, OR OTHERWISE TRANSFERRED BY SUCH HOLDER OTHER THAN AS PROVIDED HEREIN.
We and any duly appointed transfer agent for the registration or transfer of the warrants to
purchase shares of our common stock is authorized to decline to make any transfer of the warrants
if such transfer would constitute a violation or breach of the foregoing.
13
PLAN OF DISTRIBUTION
We are offering 450,145 shares of our common stock (on a post-split basis) to the holders of
warrants to purchase shares of our common stock that we issued to holders of CSIs Class A common
stock in the Merger. We are also offering 9,859 shares of our common stock (on a post-split basis)
and warrants to purchase 8,067 shares of our common stock (on a post-split basis) (and the shares
of common stock issuable from time to time upon exercise of these warrants) issuable upon the
exercise of the Cycad Warrant that we assumed in the Merger.
The common stock issuable upon the exercise of the warrants issued in the Merger and the
shares of our common stock and warrants to purchase shares of our common stock (and the shares of
common stock issuable from time to time upon exercise of these warrants) issuable upon the exercise
of the Cycad Warrant assumed in the Merger will not be offered through underwriters, or brokers or
dealers. We will not pay any compensation in connection with the offering of the shares upon
exercise of the warrants issued in the Merger or shares and warrants (or the shares of common stock
issuable from time to time upon exercise of these warrants) upon exercise of the Cycad Warrant
assumed in the Merger.
American Stock Transfer & Trust Company is the transfer agent and registrar for our common
stock. Its address is 6201 15th Avenue, Brooklyn, New York 11219, and its telephone number is
(718) 921-8224.
Our common stock is listed on the NASDAQ under the symbol CDTI (although it is expected to
continue to trade under the symbol CDTID through November 12, 2010 due to the 1-for-6 reverse
stock split that took effect October 15, 2010).
14
LEGAL MATTERS
The validity of the securities offered by this prospectus will be passed upon for us by Reed
Smith LLP.
EXPERTS
The
consolidated financial statements of Clean Diesel Technologies, Inc.
as of December 31,
2009 and 2008 and for each of the three years in the period ended December 31, 2009 and the related
financial statement schedule incorporated by reference in this prospectus and registration
statement have been audited by EisnerAmper LLP (formerly known as Eisner LLP), an independent
registered public accounting firm, as stated in their report incorporated by reference herein and
is included in reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
The
consolidated financial statements of Catalytic Solutions, Inc. (CSI) as of December 31, 2009 and
2008, and for the years then ended, have been incorporated by
reference herein and in the registration statement in reliance upon the
report of KPMG LLP, independent registered public accounting firm, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and auditing. The audit report
covering the December 31, 2009, consolidated financial statements contains an explanatory paragraph
that states that CSI has suffered recurring losses from operations and has an accumulated deficit
that raise substantial doubt about CSIs ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the outcome of that
uncertainty.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-3 that we filed with the SEC.
Certain information in the registration statement has been omitted from this prospectus in
accordance with the rules of the SEC. We are a reporting company and file annual, quarterly and
current reports, proxy statements and other information with the SEC. You may read and copy any
document we file with the SEC at the SECs Public Reference Room at 100 F Street, N.E., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the
Public Reference Room. Our SEC filings are also available at the SECs website at www.sec.gov. We
maintain a website at www.cdti.com and information regarding CSIs operations may be found at
www.catsolns.com. Information contained in or accessible through either website does not
constitute part of this prospectus and you should not rely on that information in deciding whether
to invest in our common stock, unless that information is also in or incorporated by reference in
this prospectus.
15
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to incorporate by reference information we file with it into our
registration statement on Form S-3 of which this prospectus is a part, which means that we can
disclose important information to you by referring you to other documents. The information
incorporated by reference is an important part of this prospectus.
We incorporate by reference the documents listed below:
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our Annual Report on Form 10-K for the fiscal year ended December 31, 2009, filed
on March 25, 2010, as amended by our Annual Report on Form 10-K/A, filed on April 30,
2010;
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our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, filed on
May 14, 2010, as amended by our Quarterly Report on Form 10-Q/A, filed on May 14, 2010;
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our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, filed on
August 16, 2010;
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our Current Reports on Form 8-K filed with the SEC on February 2, 2010, April 23,
2010; May 14, 2010, as amended on May 20, 2010; May 18, 2010; July 6, 2010; July 20,
2010; August 16, 2010, as amended on August 26, 2010; August 25, 2010; August 30, 2010;
August 31, 2010; September 7, 2010; September 20, 2010; September 28, 2010; October 4,
2010; October 13, 2010; October 18, 2010; October 21, 2010 and October 25, 2010 (other
than portions of those documents designated as furnished); and
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the description of Clean Diesel common stock contained in our Registration
Statement on Form 8-A filed on September 27, 2007, as that description may be updated
from time to time.
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In addition, all documents we file (other than documents or portions of documents that under
applicable SEC rules are furnished instead of filed) with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act (i) on or after the date of filing of this post-effective
amendment to registration statement containing this prospectus and prior to the effectiveness of
this post-effective amendment to registration statement and (ii) on or after the date of this
prospectus until the earlier of the date on which all of the securities registered hereunder have
been sold or this registration statement has been withdrawn shall be deemed incorporated by
reference in this prospectus and to be a part of this prospectus from the date of filing of those
documents.
You may request a copy of these filings incorporated by reference in this prospectus, other
than an exhibit to these filings unless we have specifically incorporated that exhibit by reference
into the filing, at no cost, by writing or telephoning us at the following address and telephone
number:
CLEAN DIESEL TECHNOLOGIES, INC.
4567 Telephone Road, Suite 206
Ventura, California 93003
Attention: Investor Relations
(805) 639-9458
Any statement contained in a document incorporated or deemed to be incorporated by reference
in this prospectus will be deemed modified, superseded or replaced for purposes of this prospectus
to the extent that a statement contained in this prospectus or in any subsequently filed document
that also is or is deemed to be incorporated by reference in this prospectus modifies, supersedes
or replaces such statement. Any statement so modified, superseded or replaced, will not be deemed,
except as so modified, superseded or replaced, to constitute a part of this prospectus.
16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14.
Other Expenses of Issuance and Distribution
The following table sets forth the approximate amount of expenses in connection with the
offering of the securities being registered. All of the amounts shown are estimates except the
Securities and Exchange Commission (SEC) registration fee.
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Registration fee under the Securities Act of 1933, as amended
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$
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Legal fees and expenses
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20,000
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Printing fees and expenses
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2,000
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Accounting fees and expenses
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10,000
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Miscellaneous expenses
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500
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Total
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$
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32,500
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Item 15.
Indemnification of Directors and Officers
Section 102(b)(7) of the Delaware General Corporation Law (DGCL) permits a corporation, in
its certificate of incorporation, to limit or eliminate, subject to certain statutory limitations,
the liability of directors to the corporation or its stockholders for monetary damages for breaches
of fiduciary duty, except for liability (a) for any breach of the directors duty of loyalty to the
corporation or its stockholders, (b) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) under Section 174 of the DGCL or (d) for
any transaction from which the director derived an improper personal benefit.
Under Section 145 of the DGCL, a corporation may indemnify a director, officer, employee or
agent of the corporation (or a person who is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint venture, trust or
other enterprise) against expenses (including attorneys fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. In the case of an action brought by or in the right of a corporation, the corporation
may indemnify a director, officer, employee or agent of the corporation (or a person who is or was
serving at the request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) against expenses (including
attorneys fees) actually and reasonably incurred by him if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the corporation, except
that no indemnification may be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation unless and only to the extent a
court finds that, in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the court shall deem proper.
Our restated certificate of incorporation, as amended (article eighth), limits the liability
of directors to the maximum extent permitted by the DGCL. Our restated certificate of
incorporation, as amended (article ninth), provides that we shall indemnify our officers, directors
and agents to the fullest extent permitted by law, including those circumstances where
indemnification would otherwise be discretionary. We believe that indemnification under our
restated certificate of incorporation, as amended, covers at least negligence and gross negligence
on the part of indemnified parties. We may enter into indemnification agreements with each of our
directors and officers, which may, in some cases, be broader than the specific indemnification
provisions contained in the DGCL. The indemnification agreements may require us, among other
things, to indemnify each director and officer against certain liabilities that may arise by reason
of their status or service as directors or officers (other than liabilities arising from willful
misconduct of a culpable nature) and to advance such persons expenses incurred as a result of any
proceeding against him or her as to which such person could be indemnified.
We may purchase and maintain insurance to protect ourselves and any indemnified parties
against liability or expense asserted or incurred by such indemnified party in connection with any
proceeding, whether or not we would have the power to indemnify such person against such liability
or expense by law or under the indemnification provisions in our restated certificate of
incorporation, as amended.
II-1
Item 16.
Exhibits.
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|
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2.1
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Agreement and Plan of Merger, dated as of May 13, 2010, among Clean Diesel
Technologies, Inc., CDTI Merger Sub, Inc. and Catalytic Solutions , Inc.
(incorporated by reference to Annex A to the joint proxy statement/information
statement and prospectus included in Clean Diesels Registration Statement on Form
S-4/A filed on September 23, 2010).
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2.2
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|
Letter Agreement dated September 1, 2010 amending the Agreement and Plan of Merger
dated as of May 13, 2010 (incorporated by reference to Exhibit 2.2 to the joint
proxy statement/information statement and prospectus included in Clean Diesels
Registration Statement on Form S-4/A filed on September 23, 2010).
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2.3
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Letter Agreement dated September 14, 2010 amending the Agreement and Plan of Merger
dated as of May 13, 2010 (incorporated by reference to Exhibit 2.3 to the joint
proxy statement/information statement and prospectus included in Clean Diesels
Registration Statement on Form S-4/A filed on September 23, 2010).
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3.1
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Restated Certificate of Incorporation of Clean Diesel Technologies, Inc.
(incorporated by reference to Exhibit 3(i)(a) to Clean Diesels Annual report on
Form 10-K for the year ended December 31, 2006 and filed on March 30, 2007).
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3.2
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Certificate of Amendment of Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3(i)(b) to Clean Diesels Registration Statement on Form S-1
(No. 333-144201) dated on June 29, 2007)
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3.3
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Certificate of Amendment of Restated Certificate of Incorporation.
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3.4
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By-Laws of Clean Diesel Technologies, Inc. as amended through November 6, 2008
(incorporated by reference to Exhibit 3.1 to Clean Diesels Quarterly Report on Form
10-Q filed on November 10, 2008).
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4.1
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Specimen of Certificate for Clean Diesel Technologies, Inc. Common Stock.
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4.2
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Form of Warrant to Purchase Common Stock.
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5.1
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Opinion of Reed Smith LLP as to validity of the securities issued, filed herewith.
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23.1
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Consent of EisnerAmper LLP (formerly known as Eisner LLP), Independent Registered
Public Accountants.
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23.2
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Consent of KPMG LLP, Independent Registered Public Accountants.
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23.3
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Consent of Reed Smith LLP (included in Exhibit 5.1).
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24.1
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Powers of Attorney, included on signature page
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Item 17.
Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the Calculation of Registration Fee table in the effective
registration statement;
(iii) To include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to such information in
the registration statement;
II-2
Provided, however
, That:
(A) Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the
registration statement is on Form S-3 or Form F-3 and the information required to be included in a
post-effective amendment by those paragraphs is contained in reports filed with or furnished to the
Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in the registration statement, or is contained in a form
of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be
the initial
bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any
purchaser:
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be
part of the registration statement as of the date the filed prospectus was deemed part of and
included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part
of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule
415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a)
of the Securities Act of 1933 shall be deemed to be part of and included in the registration
statement as of the earlier of the date such form of prospectus is first used after effectiveness
or the date of the first contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is
at that date an underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration statement to which that
prospectus relates, and the offering of such securities at that time shall be deemed to be the
initial
bona fide
offering thereof.
Provided, however
, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement or prospectus that
is part of the registration statement will, as to a purchaser with a time of contract of sale prior
to such effective date, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in any such document
immediately prior to such effective date.
(5) That, for the purpose of determining liability of the registrant under the Securities Act
of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the
undersigned registrant pursuant to this registration statement, regardless of the underwriting
method used to sell the securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the
offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing
material information about the undersigned registrant or its securities provided by or on behalf of
the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of the registrants annual report pursuant to section
13(a) or section 15(d) of the
II-3
Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plans
annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial
bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, Clean Diesel
Technologies, Inc. certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Ventura, State of
California, on the
10
th
day of November, 2010.
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CLEAN DIESEL TECHNOLOGIES, INC.
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By:
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/s/
Charles F. Call
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Charles F. Call
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Chief Executive Officer
(Principal Executive Officer)
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below on this
Registration Statement constitutes and appoints Charles F. Call and Nikhil A. Mehta, each of whom
may act without joinder of the other, as their true and lawful attorneys-in-fact and agents, each
with full power of substitution and resubstitution, for such person and in his or her name, place
and stead, in any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or
their substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration
statement has been signed below by the following persons in the capacities and on the dates
indicated.
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Signature
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Title
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|
Date
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Director, Chief Executive Officer
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November 10, 2010
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Charles F. Call
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(Principal Executive Officer)
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Chief Financial Officer
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|
November 10, 2010
|
Nikhil A. Mehta
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(Principal Financial Officer)
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Controller
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November 10, 2010
|
David E. Shea
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(Principal Accounting Officer)
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/s/
Alexander Hap Ellis, III
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Chairman of the Board
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November 10, 2010
|
Alexander Hap Ellis, III
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/s/
Bernard (Bud) H. Cherry
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Director
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November 10, 2010
|
Bernard (Bud) H. Cherry
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/s/
Charles R. Engles, Ph.D.
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Director
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November 10, 2010
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Charles R. Engles, Ph.D.
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Director
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November 10, 2010
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Derek R. Gray
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Director
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November 10, 2010
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Mungo Park
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/s/
Timothy Rogers
Timothy Rogers
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Director, Senior Corporate Vice President
Product
Development
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November 10, 2010
|
II-5
INDEX TO EXHIBITS
|
|
|
Exhibit No.
|
|
Description of Exhibit
|
2.1
|
|
Agreement and Plan of Merger, dated as of May 13, 2010, among Clean Diesel
Technologies, Inc., CDTI Merger Sub, Inc. and Catalytic Solutions , Inc.
(incorporated by reference to Annex A to the joint proxy statement/information
statement and prospectus included in Clean Diesels Registration Statement on Form
S-4/A filed on September 23, 2010).
|
|
|
|
2.2
|
|
Letter Agreement dated September 1, 2010 amending the Agreement and Plan of Merger
dated as of May 13, 2010 (incorporated by reference to Exhibit 2.2 to the joint
proxy statement/information statement and prospectus included in Clean Diesels
Registration Statement on Form S-4/A filed on September 23, 2010).
|
|
|
|
2.3
|
|
Letter Agreement dated September 14, 2010 amending the Agreement and Plan of Merger
dated as of May 13, 2010 (incorporated by reference to Exhibit 2.3 to the joint
proxy statement/information statement and prospectus included in Clean Diesels
Registration Statement on Form S-4/A filed on September 23, 2010).
|
|
|
|
3.1
|
|
Restated Certificate of Incorporation of Clean Diesel Technologies, Inc.
(incorporated by reference to Exhibit 3(i)(a) to Clean Diesels Annual report on
Form 10-K for the year ended December 31, 2006 and filed on March 30, 2007).
|
|
|
|
3.2
|
|
Certificate of Amendment of Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3(i)(b) to Clean Diesels Registration Statement on Form S-1
(No. 333-144201) dated on June 29, 2007)
|
|
|
|
3.3
|
|
Certificate of Amendment of Restated Certificate of Incorporation.
|
|
|
|
3.4
|
|
By-Laws of Clean Diesel Technologies, Inc. as amended through November 6, 2008
(incorporated by reference to Exhibit 3.1 to Clean Diesels Quarterly Report on Form
10-Q filed on November 10, 2008).
|
|
|
|
4.1
|
|
Specimen of Certificate for Clean Diesel Technologies, Inc. Common Stock.
|
|
|
|
4.2
|
|
Form of Warrant to Purchase Common Stock.
|
|
|
|
5.1
|
|
Opinion of Reed Smith LLP as to validity of the securities issued, filed herewith.
|
|
|
|
23.1
|
|
Consent of EisnerAmper LLP (formerly known as Eisner LLP), Independent Registered
Public Accountants.
|
|
|
|
23.2
|
|
Consent of KPMG LLP, Independent Registered Public Accountants.
|
|
|
|
23.3
|
|
Consent of Reed Smith LLP (included in Exhibit 5.1)
|
|
|
|
24.1
|
|
Powers of Attorney, included on signature page
|
II-6
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