Dynamotive Energy Systems Corp – ‘10QSB’ for 9/30/00

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Quarterly Report — Small Business   —   Form 10-QSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10QSB       Quarterly Report -- Small Business                    29    121K 

Document Table of Contents

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

 FORM 10-QSB

(Mark One)                                                                      

[X]       QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934                                                 

 For the quarterly period ended September 30, 2000

[ ]       TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT       

 Commission File Number: 0-27524

--------------------------------------------------------------------------------
 DYNAMOTIVE TECHNOLOGIES CORPORATION
 (Exact name of small business issuer as specified in its charter)
--------------------------------------------------------------------------------

British Columbia                                       N/A  
-----------------------------------                   --------------------------
(State or other jurisdiction of                           (I.R.S. Employer    
incorporation or organization)                          Identification No.) 

 Suite 105 - 1700 West 75th Avenue
----------------------------------------
 Vancouver, B.C. V6P 6G2
(Address of principal executive offices)

(604) 267-6000
--------------------------
 (Issuer's telephone number)

State the number of shares outstanding of each of the issuer's classes of Common
Stock, as of the latest practicable date:                                       

                                                                [Download Table]


    Class                              Outstanding as at September 30, 2000
---------------------------------------------------------------------------
                                                                           
Common Stock, no par value                      35,285,184                 

Transitional Small Business Disclosure Format (Check One):  Yes [   ]  No [ X ] 

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PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS                                                   

  The following financial statements have been prepared in accordance with
accounting principles generally accepted in Canada. While adhering to these     
Canadian accounting principles results in financial statements disclosing an    
information content substantially similar to financial statements that comply   
with United States generally accepted accounting principles, there are material 
variations in the two country's accounting principles, practices and methods    
used. Reference should be made to the notes that accompany the Company's        
financial statements as well as to Note 15 of the Company's annual report on    
Form 10-KSB which discusses the material variations in the accounting principles
in Canada as compared to those followed in the United States.                   

                                                                [Download Table]


Interim Financial Statements                              Page

                                                              
Consolidated Balance Sheet                                4   
Consolidated Statement of Loss and Deficit                5   
Consolidated Statement of Cash Flow                       6   
Notes to Interim Financial Statements                     7-15


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 CONSOLIDATED FINANCIAL STATEMENTS
(in U.S. dollars)               

   DYNAMOTIVE TECHNOLOGIES CORPORATION

SEPTEMBER 30, 2000              

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DYNAMOTIVE TECHNOLOGIES CORPORATION                                             

 CONSOLIDATED BALANCE SHEETS

                                                               (in U.S. dollars)

                                                                [Download Table]


                                                      SEPTEMBER 30,     December 31,
                                                          2000              1999    
                                                            $                 $     
------------------------------------------------------------------------------------

                                                                                    
ASSETS                                                                              
CURRENT                                                                             
Cash and term deposits                                2,128,402            223,769  
Accounts receivable                                     215,643            384,743  
Government grants receivable                            271,886            158,942  
Inventory                                                 2,794             37,950  
Prepaid expenses and deposits                           342,925            129,530  
------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                  2,961,650            934,934  
------------------------------------------------------------------------------------

Capital assets                                        1,263,570            848,292  
Patents                                                 746,779            529,209  
------------------------------------------------------------------------------------
                                                      4,971,999          2,312,435  
====================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY                                                
CURRENT                                                                             
Accounts payable and accrued liabilities                434,128            437,631  
Deferred Revenue                                        293,400            265,124  
Current portion of long-term debts                      282,061            190,095  
Lease Obligations                                         7,972                 --  
------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                             1,017,561            892,850  
Long-term debt                                               --                 --  
------------------------------------------------------------------------------------
                                                      1,017,561            892,850  
------------------------------------------------------------------------------------
Commitments and contingencies [note 3(c)]                                           
SHAREHOLDERS' EQUITY                                                                
Shares to be issued                                     326,513             36,912  
Share capital, net [note 3]                          20,564,162         15,461,939  
Contributed surplus                                     409,030            409,030  
Cumulative translation adjustment [note 2]             (361,688)          (310,385) 
Deficit                                             (16,983,579)       (14,177,911) 
------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY                            3,954,438          1,419,585  
------------------------------------------------------------------------------------
                                                      4,971,999          2,312,435  
====================================================================================

See accompanying notes                                                          

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DYNAMOTIVE TECHNOLOGIES CORPORATION                                             

 CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT

                                                               (in U.S. dollars)

                                                        [Enlarge/Download Table]


                                                 THREE MONTHS     Three months   NINE MONTHS     Nine Months  
                                                    ENDED            ended          ENDED           ended     
                                                 SEPTEMBER 30,    September 30,  SEPTEMBER 30,   September 30,
                                                     2000             1999           2000            1999     
                                                       $                $              $               $      
--------------------------------------------------------------------------------------------------------------
                                                                                                              
REVENUE                                                                                                       
Sales                                               138,760           369,015        584,511        789,752   
Interest and other income                            40,455             7,150         92,609         21,941   
--------------------------------------------------------------------------------------------------------------
                                                    179,215           376,165        677,120        811,693   
--------------------------------------------------------------------------------------------------------------

EXPENSES                                                                                                      
Amortization and depreciation                        73,841            60,012        218,937        205,946   
Amortization of prepaid expenses                         --                --             --         88,801   
Cost of sales                                        94,340           277,620        371,346        651,183   
Research and development                             66,623(2)         55,077        237,648        232,787   
Interest expense                                     12,370             1,064         19,597          1,752   
Marketing                                           135,227           119,693        600,085        303,644   
Office supplies, telephone and insurance(1)         109,272            60,376        169,789        146,988   
Professional fees                                    12,601            40,598        193,919        167,481   
Professional fees on convertible debenture                                                                    
     settlement                                          --                --             --         46,244   
Royalties                                             3,613            21,279         21,865         22,787   
Rent                                                 64,836            32,525        133,767         95,684   
General and administrative salaries                                                                           
     and benefits [note 7]                          352,435           255,206      1,140,979        725,158   
Severance costs                                          --                --             --         82,122   
--------------------------------------------------------------------------------------------------------------
                                                    925,158           923,450      3,107,932      2,770,577   
--------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS                               (745,943)         (547,285)    (2,430,812)    (1,958,884)  

OTHER REVENUE & EXPENSES                                                                                      
Board compensation & staff bonus [note 7]                --                --        276,665             --   
Overtime settlement expenses [note 7]                    --                --         65,616             --   
SAR Redemption [note 7]                               7,960                --          7,960             --   
Loss on disposal of equipment                            --             5,802         24,615          5,802   
--------------------------------------------------------------------------------------------------------------
                                                      7,960             5,802        374,856             --   
--------------------------------------------------------------------------------------------------------------
LOSS FOR THE PERIOD                                (753,903)         (553,087)    (2,805,668)    (1,964,686)  

Deficit, beginning of period                    (16,229,676)      (13,144,578)   (14,177,911)   (11,732,980)  
--------------------------------------------------------------------------------------------------------------
DEFICIT, END OF PERIOD                          (16,983,579)      (13,697,665)   (16,983,579)   (13,697,666)  
==============================================================================================================

WEIGHTED AVERAGE NUMBER OF                                                                                    
COMMON SHARES OUTSTANDING                        34,048,212        23,020,981     32,138,953     20,552,431   
--------------------------------------------------------------------------------------------------------------
LOSS PER COMMON SHARE                                 (0.02)            (0.02)         (0.09)         (0.10)  
==============================================================================================================

(1)  Office expenses include unrealized foreign currency exchange loss/(gain)   

(2)  Shown net of government grant                                              

See accompanying notes                                                          

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DYNAMOTIVE TECHNOLOGIES CORPORATION                                             

 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                               (in U.S. dollars)

                                                        [Enlarge/Download Table]


                                                      THREE MONTHS   Three months   NINE MONTHS     Nine Months 
                                                          ENDED          ended         ENDED           ended    
                                                      SEPTEMBER 30,  September 30,  SEPTEMBER 30,  September 30,
                                                          2000           1999           2000           1999     
                                                            $              $              $              $      
----------------------------------------------------------------------------------------------------------------
                                                                                                                

OPERATING ACTIVITIES                                                                                            
Loss for the period                                     (753,903)     (553,088)     (2,805,668)     (1,964,686) 
Add items not involving cash:                                                                                   
  Amortization and depreciation                           73,841        60,012         218,937         205,946  
  Non-cash expenses                                      126,906            --         705,759              --  
Net change in non-cash working capital                                                                          
  balances related to operations [note 4]                (46,531)       28,300         (73,974)         22,296  
----------------------------------------------------------------------------------------------------------------
CASH USED IN OPERATING ACTIVITIES                       (599,687)     (464,776)     (1,954,946)     (1,736,444) 
----------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES                                                                                            
New borrowing/Retirement of debt                         (24,336)           --          91,966              --  
Long-term debt                                                --       (31,381)             --         (25,727) 
Lease Obligations                                         (1,136)           --           7,972              --  
Convertible debentures retired                                --            --              --      (1,480,000) 
Share capital issued                                       8,000       141,731       4,436,129       2,510,880  
Share subscription deposit                                    --      (117,432)             --         132,568  
----------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES                    (17,472)       (7,082)      4,536,067       1,137,721  
----------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES                                                                                            
Increase in patents costs                                (18,748)         (245)        (29,280)        (19,982) 
Purchase of capital assets (net of grants)              (316,293)      (16,745)       (596,793)        (74,671) 
Sale of Equipment                                             --         1,142              --           1,142  
----------------------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES                       (335,041)      (15,848)       (626,073)        (93,511) 
----------------------------------------------------------------------------------------------------------------

Effect of exchange rate changes on cash                   26,725       (28,943)        (50,415)          3,351  
----------------------------------------------------------------------------------------------------------------

Increase (decrease) in cash                                                                                     
  and cash equivalents                                  (925,475)     (516,649)      1,904,633        (688,883) 
Cash and cash equivalents,                                                                                      
  beginning of period                                  3,053,877       973,651         223,769       1,145,886  
----------------------------------------------------------------------------------------------------------------
CASH AND TERM DEPOSITS, END OF PERIOD                  2,128,402       457,002       2,128,402         457,003  
================================================================================================================

See accompanying notes                                                          

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DYNAMOTIVE TECHNOLOGIES CORPORATION                                             

NOTES TO CONSOLIDATED 
FINANCIAL STATEMENTS

September 30, 2000                                             (in U.S. dollars)

1. NATURE OF BUSINESS                                                           

DynaMotive Technologies Corporation was incorporated on April 11, 1991 under the
laws of the Province of British Columbia. Since its inception the Company has   
been engaged in the process of commercializing several new technologies that are
in various stages of development.                                               

Successful completion of the Company's product development program, and its     
transition, ultimately, to attaining profitable operations is dependent upon    
obtaining additional financing adequate to continue its research and development
activities, and achieving a level of revenues adequate to support the Company's 
cost structure. Management intends to obtain this financing primarily through   
the offering of securities and other forms of financing. However, there can be  
no assurance that the Company will be able to obtain such financing, which may  
impact the Company's ability to continue as a going concern. While the Company  
believes that it has sufficient operating revenue and cash reserves to fund     
ongoing operations for the year 2000, it is in the process of seeking additional
funding in connection with further development for its BioOil division.         

2. SIGNIFICANT ACCOUNTING POLICIES                                              

In the opinion of management, the unaudited quarterly consolidated financial    
statements reflect all adjustments consisting only of normal and recurring      
adjustments necessary to present fairly the financial position at September 30, 
2000 and the results of operations and changes in cash flow for the nine months 
ended September 30, 2000, in accordance with accounting principles generally    
accepted in Canada.                                                             

These financial statements should be read in conjunction with the Company's     
financial statements and notes thereto related to the year ended December 31,   
1999.                                                                           

FOREIGN CURRENCY TRANSLATION                                                    

The accounts of the Company and its consolidated subsidiaries are measured using
the Canadian dollar as the functional currency. Assets and liabilities are      
translated into U.S. dollars using current exchange rates in effect at the      
balance sheet date, while the share capital and contributed surplus accounts are
translated at historical exchange rates. Revenues and expenses are translated   
using weighted average exchange rate during the period. Gains and losses        
resulting from this process are recorded in shareholders' equity as an          
adjustment to the cumulative translation account.                               

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DYNAMOTIVE TECHNOLOGIES CORPORATION                                             

NOTES TO CONSOLIDATED 
FINANCIAL STATEMENTS

September 30, 2000                                             (in U.S. dollars)

3. SHARE CAPITAL                                                                

                                                        [Enlarge/Download Table]

                                                                  SEPTEMBER 30,       December 31,
                                                                      2000                1999    
                                                                        $                   $     
--------------------------------------------------------------------------------------------------

                                                                                                  
AUTHORIZED                                                                                        

100,000,000 common shares                                                                         
100,000,000 preferred shares Class A with $5.00 par value                                         

ISSUED AND OUTSTANDING                                                                            

35,285,184  [December 31, 1999 - 24,617,402]                       $20,564,162        $15,461,939 

--------------------------------------------------------------------------------------------------

(a)  During the first nine months of 2000:                                      

 [i]   Pursuant to a private placement on February 11, 2000, the Company
     issued 7,000,000 common shares for total proceed of $3,500,000.

 [ii]  Pursuant to a private placement on February 29, 2000, the Company
issued 1,547,300 common shares for $773,650 cash.         

  [iii] Pursuant to an private placement during the first quarter, 232,500
shares were issued for $116,250 cash.                     

[iv]  368,748 common shares were issued to directors and employees at 
   prices from $0.468 and $0.50 per common share in lieu of cash
compensation.                                             

[v]   1,000,000 restricted common shares were issued pursuant to the  
         purchase of the exclusive worldwide pyrolysis patents from Resource
Transforms International, Ltd on February 10, 2000.       

    [vi]  184,731 common shares were issued as payment for commercial services
      based upon reported share prices ranging from $0.50 to $1.00 per
          common share. 330,703 shares were issued pursuant to the exercise of
        option with exercise prices ranging from $0.40 to $1.00 per common
   share. 3,800 shares were issued pursuant to the redemption of
employee Stock Appreciation Rights.                       

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DYNAMOTIVE TECHNOLOGIES CORPORATION                                             

NOTES TO CONSOLIDATED 
FINANCIAL STATEMENTS

September 30, 2000                                             (in U.S. dollars)

3. SHARE CAPITAL (CONT'D.)                                                      

                                                                [Download Table]


                                                         $       Number of Shares
---------------------------------------------------------------------------------
                                                                                 
SHARE CAPITAL, DECEMBER 31, 1999                    15,461,939      24,617,402   

Private placement                                    4,389,900       8,779,800   
Shares issued from exercise of options                 167,510         330,703   
Shares issued, directors & employees compensation      178,737         368,748   
Shares issued, RTI patent purchase                     250,000       1,000,000   
Shares issued, for commercial services                 108,116         184,731   
Shares issued, redemption of SARs                        7,960           3,800   

SHARE CAPITAL, SEPTEMBER 30, 2000                                                
     Common shares without par value                20,564,162      35,285,184   

---------------------------------------------------------------------------------

(b)  At September 30, 2000 the following stock options to Directors, employees  
and others were outstanding:                                          

                                                        [Enlarge/Download Table]


 NO. OF COMMON                   EXERCISE PRICE                                                
SHARES ISSUABLE                        $                   DATE OF EXPIRY                      
-----------------------------------------------------------------------------------------------
                                                                                               
    935,182                          0.40                  October 31, 2000 - December 10, 2004
    525,000                          0.50                  January 31, 2001 - January 31, 2005 
    868,569                          1.00                  April 30, 2002 - February 2, 2005   
  2,673,400                          1.50                  April 30, 2001 - June 14, 2005      
     20,000                          1.95                  June 14, 2005                       
    115,000                          2.00                  January 31, 2001 - December 19, 2002
     14,400                          2.50                  November 1, 2000                    
      6,000                          2.75                  December 1, 2002                    
     10,000                          3.00                  November 30, 2000                   
     12,000                          3.13                  November 15, 2001                   
      3,985                          4.00                  October 31, 2002                    
     50,000                          5.50                  November 12, 2001                   
-----------------------------------------------------------------------------------------------
  5,233,536                                                                                    
===============================================================================================

Options become exercisable at dates determined by the Board of Directors at the 
time of granting the option.                                                    

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DYNAMOTIVE TECHNOLOGIES CORPORATION                                             

NOTES TO CONSOLIDATED 
FINANCIAL STATEMENTS

September 30, 2000                                             (in U.S. dollars)

3. SHARE CAPITAL (CONT'D.)                                                      

(c)  During 1998, the Company established a stock appreciation rights plan      
whereby the participants will be entitled to require the Company to redeem the  
stock appreciation rights ("SARs") for an amount equal to the excess of the     
market value of the underlying common shares over the initial value of the SAR  
at the date of grant. The SARs vest as the Company achieves Capitalized Stock   
Values as defined in the agreement. The Company also has the rights to redeem   
the SARs at its option under certain circumstances. The number of SARs that can 
be granted under the plan until December 31, 2008 cannot exceed 2,500,000.      

At September 30, 2000, the following stock appreciation rights were outstanding:

                                                        [Enlarge/Download Table]


                                       INITIAL                         EXPIRATION    
SARS OUTSTANDING                        VALUE                             DATE       
-------------------------------------------------------------------------------------
                                                                                     
    1,255,000                           $0.400                       January 28, 2004
      200,000                           $0.625                       May 1, 2004     
      207,500                           $1.000                       May 1, 2004     
       75,000                           $1.000                       March 8, 2004   
-------------------------------------------------------------------------------------
    1,737,500                                                                        
=====================================================================================

During the first nine months of 2000, 1,111,667 of the company's 1,742,500 total
issued SARs vested, having met the first and second vesting provisions of the   
company's 1998 SAR Plan as a result of the Capitalized Stock Value of the       
company exceeding $50 million over a consistent 20-day trading period. The      
precise amount of the company's liability cannot be established until such time 
that the SARs are, in fact, redeemed. Based upon the market closing price of    
$1.97 for the company's shares as at September 30, 2000, the company would have 
been obligated to pay $1,626,032 if all vested SARs had been redeemed on that   
date. Under the SAR Plan, the company may elect to make payment of any          
redemption liability either in cash or with shares. As of the end of the third  
quarter, the company has redeemed a total of 5,000 vested SARs for a total of   
$7,960                                                                          

(d) Warrants outstanding as at September 30, 2000:                              

                                                        [Enlarge/Download Table]


                                 NUMBER OF COMMON      EXERCISE              EXPIRATION          
                                  SHARES ISSUABLE        PRICE                  DATE             
-------------------------------------------------------------------------------------------------
                                                                                                 
    Series A Warrants(1)                   --           $6.500                  September 9, 2000
    Series B Warrants(2)                   --           $5.375                  September 9, 2000
    Series C Warrants(3)                   --           $4.000                       May 30, 2000
    Series D Warrants                 275,000           $3.000                  December 22, 2000
    Series F Warrants               2,075,000           $1.500      January 1, 2003-March 5, 2005
    Series G Warrants                 300,000           $2.500                      March 1, 2003
    Series H Warrants                  15,000           $1.750                       May 31, 2002
    Series I Warrants                  15,000           $2.500                       May 31, 2002
    Series J Warrants                 880,000           $2.000        July 31, 2002-July 31, 2003
    Series K Warrants                  75,000           $1.500                      July 31, 2003

-------------------------------------------------------------------------------------------------

(1)  1,447,586 of the 1,472,000 Series A Warrants required to be issued, as set 
 out in the Company's Initial Public Offering prospectus dated March 26,
1996, expired on September 9, 2000.                                   

(2)  315,625 Series B Warrants expired on September 9, 2000.                    

(3)  358,492 Series C Warrants expired on May 30, 2000.                         

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DYNAMOTIVE TECHNOLOGIES CORPORATION                                             

 NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

September 30, 2000                                             (in U.S. dollars)

4. NET CHANGE IN NON-CASH WORKING CAPITAL BALANCES                              

                                                        [Enlarge/Download Table]


                                        THREE MONTHS    Three Months   NINE MONTHS      Nine Months 
                                            ENDED           ended          ENDED           ended    
                                        SEPTEMBER 30,   September 30,  SEPTEMBER 30,   September 30,
                                            2000            1999           2000            1999     
                                              $               $              $               $      
--------------------------------------------------------------------------------------------------- 
                                                                                                    
Accounts receivable                         77,210         170,323       167,821           92,300   
Government grants receivable              (118,407)        (64,149)     (112,944)          44,885   
Inventory                                   (2,794)          9,103        35,156           45,191   
Prepaid expenses and deposits             (164,094)        (92,953)     (213,395)          10,878   
Deferred Revenue                           163,494          32,068        28,276           46,560   
Accounts payable and accrued liabilities    (1,940)        (31,893)       (3,503)        (223,320)  
Loss on Sale of Equipment                       --           5,802        24,615            5,802   
--------------------------------------------------------------------------------------------------- 
                                           (46,531)         28,300       (73,974)          22,296   
=================================================================================================== 


5. SEGMENTED INFORMATION                                                        

The Company has five reportable segments. The segments are DynaPower(R),        
Actuators, BioTherm(TM), Corporate, and Other. DynaPower(R) is a process for    
cleaning metal without the use of chemicals. The actuator technology is used in 
both steel and aluminum welding. BioTherm(TM) is a waste-to-energy technology   
that converts low value forest waste and agricultural by-products into BioOil,  
while Corporate consists of interest and rent. Other includes a pulverizing     
technology which disintegrates a variety of solid materials and organic waste   
into a form suitable for the production of BioOil.                              

The accounting policies of the segments are the same as those described in the  
summary of significant accounting policies. The Company evaluates performance   
based on many factors, including net income or loss.                            

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DYNAMOTIVE TECHNOLOGIES CORPORATION                                             

 NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

September 30, 2000                                             (in U.S. dollars)

5. SEGMENTED INFORMATION (CONT'D.)                                              

                                                        [Enlarge/Download Table]


                                                                 SEPTEMBER 2000    December 1999 
                                                                        $                $       
------------------------------------------------------------------------------------------------ 
                                                                                                 
REVENUE                                                                                          
Actuator                                                                    --            66,197 
DynaPower(R)                                                           585,752         1,189,446 
BioTherm(TM)                                                               811             4,025 
Other                                                                       --                -- 
Corporate                                                               90,557            25,126 
------------------------------------------------------------------------------------------------ 
                                                                       677,120         1,284,794 
------------------------------------------------------------------------------------------------ 

OPERATING INCOME (LOSS), see below for further breakdown                                         
Actuator                                                               (13,118)           39,005 
DynaPower(R)                                                          (244,628)         (257,110)
BioTherm(TM)                                                          (754,567)         (822,514)
Other                                                                  (11,990)          (19,400)
Corporate                                                           (1,781,365)       (1,384,912)
------------------------------------------------------------------------------------------------ 
                                                                    (2,805,668)       (2,444,931)
------------------------------------------------------------------------------------------------ 

CAPITAL EXPENDITURES (NET OF GRANT),                                                             
including patents and non-cash expenditures                                                      
Actuator                                                                    --                68 
DynaPower(R)                                                           109,351            41,775 
BioTherm(TM)                                                           572,782            36,086 
Other                                                                    3,734               258 
Corporate                                                              190,206            17,181 
------------------------------------------------------------------------------------------------ 
                                                                       876,073            95,368 
================================================================================================ 

AMORTIZATION                                                                                     
Actuator                                                                13,118            16,880 
DynaPower(R)                                                            72,064            92,555 
BioTherm(TM)                                                            96,448           129,689 
Other                                                                   11,990            19,400 
Corporate                                                               25,317            34,160 
------------------------------------------------------------------------------------------------ 
                                                                       218,937           292,684 
================================================================================================ 

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DYNAMOTIVE TECHNOLOGIES CORPORATION                                             

 NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

September 30, 2000                                             (in U.S. dollars)

5. SEGMENTED INFORMATION (CONT'D.)                                              

                                                                [Download Table]


                                             SEPTEMBER 2000     December 1999
                                                   $                  $      
-----------------------------------------------------------------------------
                                                                             
TOTAL ASSETS                                                                 
Actuator                                           83,021            95,908  
DynaPower(R)                                      481,518           468,594  
BioTherm(TM)                                    1,173,990           682,226  
Other                                              66,192            73,840  
Corporate                                       3,167,278           991,867  
-----------------------------------------------------------------------------
                                                4,971,999         2,312,435  
=============================================================================

GEOGRAPHIC INFORMATION                                                          

                                                                [Download Table]


                                            SEPTEMBER 2000      December 1999
                                                   $                  $      
-----------------------------------------------------------------------------
                                                                             
REVENUE                                                                      
United States                                   505,860             835,008  
Italy                                            11,206             190,868  
Canada                                          155,100             185,102  
Germany                                              --              66,197  
Other                                             4,954               7,619  
-----------------------------------------------------------------------------
                                                677,120           1,284,794  
=============================================================================

DETAILS OF OPERATING INCOME/(LOSS) FOR THE PERIOD ENDING SEPTEMBER 30, 2000     

                                                        [Enlarge/Download Table]


                                ACTUATOR     DYNAPOWER      BIOTHERM        OTHER     CORPORATE      TOTAL   
                              ------------------------------------------------------------------------------ 
                                                                                                             
REVENUE                              --       585,752           811            --        90,557      677,120 

COST OF SALES                        --      (371,346)           --            --            --     (371,346)
                              ------------------------------------------------------------------------------ 
GROSS MARGIN                         --       214,406           811            --        90,557      305,774 
                              ------------------------------------------------------------------------------ 
EXPENSES                                                                                                     
Salaries                             --       182,802       167,195            --     1,141,223    1,491,220 
R&D                                  --        54,299       173,428            --         9,921      237,648 
Interest Expense                     --            --            --            --        19,597       19,597 
Marketing                            --       836,666       177,378            --       339,041      600,085 
Office Supplies/Exp                 --        38,926        45,766             --        85,097      169,789 
Professional fees                    --         6,752        16,816            --       170,351      193,919 
Royalty                              --            --        21,865            --            --       21,865 
Rent                                 --        20,525        56,482            --        56,760      133,767 
Amortization                     13,118        72,064        96,448        11,990        25,317      218,937 
(Gain)/loss on asset disposal        --            --            --            --        24,615       24,615 
                              ------------------------------------------------------------------------------ 
TOTAL EXPENSES                   13,118       459,034       755,378        11,990     1,871,922    3,111,441 
                              ------------------------------------------------------------------------------ 
NET INCOME/(LOSS)               (13,118)     (244,628)     (754,567)      (11,990)   (1,781,365)  (2,805,668)
                              ============================================================================== 

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DYNAMOTIVE TECHNOLOGIES CORPORATION                                             

NOTES TO CONSOLIDATED 
FINANCIAL STATEMENTS

September 30, 2000                                             (in U.S. dollars)

6. RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES                   

The financial statements have been prepared in accordance with accounting       
principles generally accepted in Canada (Canadian GAAP), which in the case of   
the Company, conform in all material respects with those in the U.S. (U.S.      
GAAP), except as fully described in note 15 to the consolidated financial       
statements as at December 31, 1999.                                             

IF ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES WERE FOLLOWED, 
THE EFFECT ON THE CONSOLIDATED STATEMENT OF LOSS WOULD BE:                      

                                                        [Enlarge/Download Table]

                                                  THREE MONTHS   Three months     NINE MONTHS     Nine Months 
                                                      ENDED          ended           ENDED           ended    
                                                  SEPTEMBER 30,  September 30,   SEPTEMBER 30,   September 30,
                                                      2000           1999            2000            1999     
                                                        $              $               $               $      
--------------------------------------------------------------------------------------------------------------
                                                                                                              
Loss for the period, as reported                     753,903        553,088       2,805,668        1,964,688  
Adjustment for patent cost amortization               (1,127)        11,423          (8,940)          19,868  
--------------------------------------------------------------------------------------------------------------
Adjustment for stock based compensation employee          --             --              --            7,642  
Adjustment for stock based                                                                                    
    compensation (commercial)(1)                     623,237             --         816,133               --  
Adjustment for variable accounting expenses(2)      (188,574)            --         308,142               --  
Unrealized gain/(loss) from foreign currency                                                                  
    translation                                      (25,596)            --          51,357               --  
--------------------------------------------------------------------------------------------------------------
Loss for the period, as adjusted                   1,161,843        564,511       3,972,360        1,992,198  
==============================================================================================================

Weighted average number of                                                                                    
common shares outstanding                         34,048,212     23,020,981      32,138,953       20,552,431  
==============================================================================================================

LOSS PER COMMON SHARE                               (0.03)         (0.02)           (0.12)          (0.10)    
==============================================================================================================

(1)  Stock-based compensation during the third quarter of 2000 based on the     
Black-Scholes option pricing model. Stock-based compensation paid to  
    employees during the same quarter amounts to $68,953 under the same model.

(2)  Variable accounting expenses arise from re-pricing of options in December  
1999.                                                                 

CONSOLIDATED BALANCE SHEET ITEMS UNDER ACCOUNTING PRINCIPLES GENERALLY ACCEPTED 
IN THE UNITED STATES WOULD BE AS FOLLOWS:                                       

                                                                [Download Table]


                                                 SEPTEMBER 30,     December 31, 
                                                     2000              1999     
                                                       $                 $      
------------------------------------------------------------------------------- 
                                                                                
Patents                                              657,486            449,440 
=============================================================================== 

Total assets                                       4,708,826          2,232,666 
=============================================================================== 

Convertible debentures                                    --                 -- 
Share deposit                                        336,013             36,912 
Share capital                                     21,954,593         16,852,369 
Contributed surplus                                  409,030            409,030 
Cumulative translation adjustment                   (361,742)          (310,385 
Deficit                                          (19,620,470)       (15,648,110)
------------------------------------------------------------------------------- 
Shareholders' equity                               2,717,424          1,339,816 
=============================================================================== 


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DYNAMOTIVE TECHNOLOGIES CORPORATION                                             

NOTES TO CONSOLIDATED 
FINANCIAL STATEMENTS

September 30, 2000                                             (in U.S. dollars)

7. STAFF & BOARD COMPENSATION                                                   

                                                                [Download Table]

                                                                    NINE MONTHS 
                                                                       ENDED    
                                                                   SEPTEMBER 30,
                                                                       2000     
                                                                         $      
--------------------------------------------------------------------------------
                                                                                
Regular payroll                                                        790,723  
Consulting fees                                                        350,256  
--------------------------------------------------------------------------------
Sub Total                                                           $1,140,979  
--------------------------------------------------------------------------------

Board compensation(1)                                                  109,722  
Staff Bonus(2)                                                         166,943  
Overtime settlement(3)                                                  65,616  
SAR(4)                                                                   7,960  
--------------------------------------------------------------------------------
Total                                                               $1,491,220  
================================================================================


(1)  Board compensation was for services rendered for all of 1999 and for the   
first quarter of 2000. Payment was made in restricted common shares.  

(2)  Staff bonus, approximately 10% of the gross annual amount, for services    
rendered in 1999. A significant portion of the payment was made in    
restricted common shares.                                             

(3)  A one-time settlement of overtime accumulated during previous years.       
Payment was made in restricted common shares.                         

(4)  Employee SARs redemption.                                                  

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND         
RESULTS OF OPERATIONS                                           

This Form 10-QSB may contain forward-looking statements, within the meaning of  
the United States Securities Act of 1933, as amended, and the United States     
Securities Exchange Act of 1934, as amended, regarding DynaMotive Technologies  
Corporation. Actual events or results may differ materially from the Company's  
expectations, which are subject to a number of known and unknown risks and      
uncertainties including but not limited to the Company's ability to obtain      
financing in the near future, changes and/or delays in product development plans
and schedules, customer acceptance of new products, changes in pricing or other 
actions by competitors, and general economic and market conditions. Other risk  
factors discussed in the Company's past filings with the United States          
Securities and Exchange Commission may also affect the actual results achieved  
by the Company.                                                                 

INTRODUCTION                                                                    

DynaMotive Technologies Corporation (the "Company") develops and      
commercializes environmental technologies that provide clean, competitive       
alternatives to traditional industrial processes. Over the past five years, the 
Company has successfully commercialized two technologies and is in the process  
of bringing its BioOil production technology to market. The Company intends to  
be the world's leading developer of technology for the production of BioOil     
fuels and derivative products.                                                  

    DynaMotive was incorporated in 1991, became publicly traded in 1996 and is
currently traded on the OTCBB under the symbol "DYMTF." The Company is          
headquartered in Vancouver, BC, Canada and currently has a staff of 50,         
including consultants. DynaMotive Europe Limited (formerly named DynaMotive     
Technologies UK Ltd.), a wholly owned subsidiary located in London, UK,         
coordinates European BioOil activities. The Company's US subsidiary, DynaMotive 
Corporation, oversees BioOil activities in the United States from its office in 
Los Angeles, CA. A Canadian subsidiary, DynaMotive Canada Inc., was recently    
established to develop, build and operate BioOil production facilities in       
Canada.                                                                         

DynaMotive's primary focus is to commercialize its BioOil production  
technology and establish this technology as the worldwide industry standard for 
production of BioOil clean fuels. To support this goal we plan over the next two
years to expand upon our existing operations in Europe, the U.S. and Canada as  
well as to develop commercial presence in Asia and Latin America.               

  The Company has previously brought two technologies to market: DynaPower
industrial metal cleaning systems, and motion control actuator systems used in  
the automotive manufacturing industry. These technologies were commercialized in
1995 and have produced sales to date in eleven countries. The Company sold      
certain of its rights to the actuator technology in 1997 but continues to have  
ongoing royalty revenue rights.                                                 

   As of September 30, 2000 DynaMotive has active inventions protected by 25
patents issued and 56 patents pending via in-house development or license, with 
the earliest U.S. patent scheduled to expire on September 30, 2013. It has also 
entered into license agreements with others that provide for the Company to     
receive rights to new patents for technologies and inventions that may be       
developed in the future.                                                        

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     The principal executive office of the Company is Suite 105 - 1700 West 75th
Avenue, Vancouver, British Columbia, Canada V6P 6G2. Telephone: 604-267-6000.   

STRATEGIC BUSINESS UNITS                                                        

   The Company is presently organized into two strategic business units. The
BioOil Business Unit is commercializing a unique waste-to-energy technology that
converts low value forest and agricultural biomass wastes into liquid BioOil    
that can be used as a "green" fuel for power generation or as the base source   
for a range of derivative products. The DynaPower Business Unit develops and    
markets industrial metal wire cleaning systems that provide exceptional levels  
of product cleanliness while eliminating the need for toxic chemical cleaning   
systems traditionally used by the wire industry. The Company recently           
established the DynaPower division as a wholly owned operating subsidiary named 
DynaPower, Inc.                                                                 

BIOOIL BUSINESS UNIT                                                            

   DynaMotive's BioOil Business Unit develops and markets technology for the
production of BioOil, a renewable "green" fuel made from organic waste that can 
be used for power generation in gas turbines, diesel engines and boilers.       
DynaMotive aims to position its technology as the worldwide industry standard   
for the production of BioOil clean fuels and plans to develop a commercial      
presence in key markets -- Canada, Europe, the U.S., Latin America and the Far  
East -- over the next five years to support expansion efforts.                  

 BioOil can also be used as the basis for a range of derivative products
including, but not limited to, blended fuels for transportation, slow release   
fertilizers and specialty chemicals. The Company continues to pursue its        
strategy to secure industrial partners to develop commercial products from      
BioOil derivative prototypes developed by DynaMotive. This strategy allows the  
Company to leverage its resources.                                              

By virtue of being derived from biomass waste, all BioOil fuels are   
considered to be carbon dioxide ("CO2") and greenhouse gas neutral. When        
combusted, they produce virtually no sulfur dioxide ("SOX") and significantly   
reduced nitrogen oxide ("NOX") emissions compared with diesel fuel, therefore   
having significant advantages over fossil fuels with respect to reduction of    
atmospheric pollution.                                                          

  BioOil is produced using DynaMotive's patented fast pyrolysis process --
trade named BioTherm(TM) -- that converts waste forest and agricultural biomass 
including, but not limited to, forest industry residues (sawdust, bark,         
shavings), sugar cane bagasse and wheat straw into a liquid fuel.               

    In the BioTherm(TM) reactor, organic waste materials are rapidly heated in
the absence of oxygen. The rapidly vaporized volatiles are then quickly         
condensed, forming a liquid referred to as BioOil. Depending upon the feedstock 
used (many different sources of feedstock have been bench tested thus far), the 
process typically produces 60-70 tons of BioOil and 15-25 tons of charcoal from 
100 tons of waste with virtually no waste products. The overall simplicity of   
the BioTherm(TM) process gives the Company competitive advantages over other    
pyrolysis conversion                                                            

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technologies such as lower capital and operating costs, higher product yield, a 
significantly higher quality BioOil and the flexibility to process a wide       
variety of feedstocks.                                                          

     In February 2000 the Company acquired the exclusive worldwide patent rights
to the BioTherm(TM) process from Resource Transforms International Ltd. (RTI),  
the original developer of the technology, as well as a right of first refusal   
for new products derived from BioOil including fuels and slow release           
fertilizers that may be developed by RTI.                                       

   The Company began producing batch quantities of BioOil in 1997 in its 0.5
tonne per day BioTherm(TM) pilot plant located at the Company's research and    
development facility in Vancouver BC. By the end of 1998, the BioOil Business   
Unit had upgraded, commissioned and operated the plant to a capacity of two     
tonnes per day on a continuous basis. In 1999, further changes were made to the 
feed system, BioTherm(TM) reactor, cyclone, and instrumentation and control     
systems to provide increased stable operation. Once these changes were made, the
BioTherm(TM) was re-commissioned and produced BioOil of sufficiently high       
quality to meet fuel specification requirements as defined by our engine testing
partners.                                                                       

  In March 2000, the Company announced plans for a 10 tonne per day BioOil
pilot facility. Construction of the new demonstration plant is underway and the 
project is on schedule, on budget and expected to be completed by the end of    
2000. This will be followed by a commissioning period of 3-6 months. The new    
plant will be located at B.C. Research Inc. (BCR) in Vancouver BC where         
DynaMotive has expanded its operations.                                         

   Once the new 10 tpd BioOil plant is fully commissioned, the Company plans
to build a 25 tpd commercial demonstration plant in 2001 which is intended to   
serve as a springboard for design and construction of full scale, 100 to 400 tpd
commercial plants to be built in Canada, Europe, Brazil, Asia and other         
international markets.                                                          

    The nearest term and most appropriate commercial application for BioOil is
as a clean burning fuel to replace fossil fuels for generating power and heat in
stationary diesel engines, gas turbines and boilers. In late 1998, the Company  
began shipping BioOil from the pilot plant to various engine manufacturers and  
users for testing purposes.                                                     

   In October 1999, the Company signed an agreement with Orenda Aerospace, a
division of Magellan Aerospace Corporation, to test DynaMotive BioOil as a clean
fuel to generate "green" power in their gas turbines. The test program between  
DynaMotive and Orenda involves a series of combustion and turbine tests in      
Canada and Europe to determine the combustion characteristics, emissions        
profile, key aspects of engine performance and the economics for a packaged     
power system. In February 2000 Orenda Aerospace completed its initial round of  
gas turbine tests with very positive results. A second stage test plan has been 
developed and is currently in progress.                                         

     In June 2000, the Company signed an agreement with Genergy plc of the UK to
test DynaMotive's BioOil as a clean fuel to generate "green" power in the Solar 
Taurus 60 unit which is marketed by Genergy under license, within their Dale Gas
Power turbine range. This testing program is significant as it will further     
expand the gas turbine market for potential users of                            

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BioOil fuels. The testing, which is being coordinated by Genergy, is currently  
underway at the Solar facility in San Diego, California.                        

     Solar Turbines, a wholly owned subsidiary of Caterpillar Inc., is the world
leader in industrial turbines in the 1-15 megawatt (MW) capacity. Genergy, a    
wholly owned subsidiary of TT Group, has been packaging gas turbines for thirty 
years under their Dale brand and Solar Turbines for over twenty years for use in
cogeneration schemes or in static and mobile standby power applications.        

    The Company's initial target market for BioOil fuel is in Europe where, at
current price projections, BioOil fuel for power generation is likely to be     
competitive. Strong regulatory pressures coupled with high SOX, NOX and CO2     
taxes on fossil fuels, renewable energy tax incentives and subsidies make BioOil
an attractive renewable energy option in this market. Similar regulatory        
pressure and incentives are also creating opportunities in North America that   
are being pursued by the Company.                                               

     There are also significant opportunities for the application of BioOil as a
fuel for power generation in countries that are heavily reliant on fossil fuel  
imports and have a strong agricultural base as a means of replacing fossil fuels
while utilizing an abundant local resource. This is particularly applicable to  
island economies (Caribbean/South Pacific) and to certain regions in Latin      
America, the Far East, Australia and Africa.                                    

    During first quarter 2000, the Company successfully completed a production
run of sugar cane bagasse -- an abundant, solid pulp material remaining after   
the extraction of juice from sugar cane. The bagasse was shipped from Usina     
Santa Helena, a large sugar mill owned by Cosan Bom Jesus, one of Brazil's      
largest sugar and ethanol producers. The resulting BioOil was of high quality.  
Validating production of BioOil from sugar cane bagasse was a major milestone in
the commercial development of the Company's BioOil technology, opening up       
significant opportunities for commercial applications of the technology in sugar
producing countries worldwide. A second stage bagasse testing program is now    
underway.                                                                       

    In May 2000, DynaMotive announced a CDN $250,000 contribution from Natural
Resources Canada (NRCan) to support ongoing research and development of BioOil. 
The investment from the Canadian federal government reinforces Canada's         
commitment to alternative, environmentally friendly fuels. It will help improve 
DynaMotive's BioOil production technology and further the development of        
renewable BioOil fuels and derivative products. NRCan's CANMET Energy Technology
Centre will provide laboratory support to DynaMotive and research data on the   
combustion of BioOils.                                                          

    The Company has participated in two important renewable energy conferences
and trade fairs this year. Chief Technology Officer Keith Morris presented a    
technical paper at the 1ST World Conference & Exhibition On Biomass For Energy &
Industry in Seville, Spain in June; DynaMotive Europe staff exhibited at the    
Renewable Energy 2000 conference and trade fair held in Brighton, UK July 1-4.  

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    Five patents have been issued and 16 patents are pending for the Company's
BioOil related technology. Thirteen patents are issued and active for the       
Company's BioLime(R) technology with three patents pending.                     

DYNAPOWER BUSINESS UNIT                                                         

     The Company's DynaPower(R) technology cleans ferrous and non-ferrous metals
in a cost-effective manner without acids, caustics or solvents traditionally    
used by the steel and wire industry, thus eliminating the risks and costs       
associated with handling harmful chemicals and disposing of hazardous waste. The
metal wire cleaning system uses bipolar electrolysis and ultrasound             
(DynaSonics(R)) to peel away scale, remove lubricants and create a metal surface
that is exceptionally clean, dry, pH-neutral and rust-resistant. The DynaPower  
Business Unit focuses on the following product applications: stainless steel,   
mid and high carbon steel, extrusion clad steel, copper and aluminum wire       
products.                                                                       

DynaPower(R) technology also allows the customer to use the process to
create specialized metal surfaces ready for standard industry metal treatments  
such as electroplating, hot-dip zinc coating and rubber adhesion. The Company's 
wire cleaning equipment can continuously process wire at a rate comparable to or
better than conventional chemical cleaning processes but without the added      
expenses and hazards otherwise encountered when using acid, caustics or         
solvents.                                                                       

 In the third quarter of 2000, DynaPower sold a cleaning system to Sural
S.p.A., Italy. The sale of this system follows successful cleaning trials it    
conducted at the company's facilities in Italy.                                 

    DynaPower recently completed delivery of wire cleaning systems to American
Spring Wire, Bedford Heights, OH; Greening Donald Ltd., Erin, ON; and Andrew    
Corporation, Orland Park, IL. All three systems have been commissioned and are  
operating at full production capacity. In addition, all three are repeat orders.
American Spring Wire is a world leader in the manufacture valve quality spring  
wire used in automotive engines. Greening Donald is one of North America's      
leading producers of stainless steel and specialty wire, woven wire cloth and   
perforated tube products. Andrew Corporation is a world leader in the           
manufacture of communications equipment.                                        

   An extensive study was conducted into the market for DynaPower systems in
China. DynaPower is currently working on establishing an agent for the Chinese  
market.                                                                         

The Company has also filed patents in the USA and Canada for a new    
application of its DynaSonics(R) cleaning technology that it believes has       
significant commercial potential for ultrasonic cleaning of wire drawing dies.  
The Company has developed a novel process for cleaning diamond or tungsten      
carbide dies which are used by the wire industry for drawing a variety of metal 
wires. Die makers and wire mills have been aggressively looking for an effective
cleaning process to replace old, ineffective and slow processes. DynaMotive     
believes that its new technology can be used by die makers to quickly and       
effectively clean their dies during the manufacturing or servicing processes and
by wire mills to clean their dies during regular maintenance. The Company       
anticipates it will begin in-plant trials shortly.                              

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  DynaPower staff showcased its wire cleaning technology at two major wire
industry trade fairs so far this year: Wire 2000 -- Europe's largest wire       
industry trade show held in Dusseldorf, Germany and Wire Expo 2000 in Nashville 
TN. In-plant trials were arranged in North America and Europe from contacts     
obtained at these wire shows.                                                   

     DynaMotive currently holds seven patents on this technology with 37 patents
pending.                                                                        

RESULTS OF OPERATIONS                                                           

    Total revenues for the Company decreased to $179,215 for the third quarter
of 2000 compared to $376,165 for the same quarter in 1999. Sales revenue        
accounted for $138,760 of total revenues in the third quarter of 2000; the      
remainder $40,455 was from interest and other income. During the third quarter  
of 1999, sales revenue accounted for $369,015 while interest and other income   
totaled $7,150. Total revenue for the nine months ending September 30, 2000     
decreased to $677,120 from $811,693 for the same period in 1999. Sales revenue  
accounted for $584,511 of total revenues in the first nine months of 2000; the  
remainder, $92,609, was from interest and other income. During the first nine   
months of 1999, sales revenue accounted for $789,752 while interest and other   
income totaled $21,941.                                                         

     The loss for the third quarter of 2000 was $753,903 as compared to $553,087
for the same period in 1999. The result is a combination of lower sales, cost of
sales and higher marketing and general administrative salaries and benefits. Use
of cash in operating activities for the third quarter of 2000 increased to      
$599,687 compared to $464,776 in the same quarter in 1999. The result is due to 
an increased cash loss of $61,080 and increased working capital accounts of     
$73,831 over the same period in 1999, which included changes in accounts        
receivable, accounts payable, prepaid expenses and deferred revenues. The loss  
for the first nine months of 2000 was $2,805,668 as compared to $1,964,686 for  
the same period in 1999. The result is a combination of lower cost of sales and 
higher marketing and general administrative salaries and benefits. Use of cash  
in operating activities for the first nine months of 2000 increased to          
$1,954,946 compared to $1,736,444 during the same period in 1999. The result is 
due to an increased cash loss of $122,232 and increased working capital accounts
of $96,270 over the same period in 1999, which included changes in account      
receivable, in accounts payable and deferred revenues.                          

  The loss per common share was two cents ($0.02) for the third quarter of
2000 is the same as the third quarter in 1999. Even though the loss for the     
third quarter of 2000 increased as compared to the same quarter in 1999, the    
loss per share remained the same due to an increase in the weighted average     
number of shares outstanding at September 30, 2000. The loss per common share   
for the first nine months of 2000 was nine cents ($0.09) is slightly less than  
the loss per share ($0.10) for the same period in 1999. Even though the loss for
the first nine months of 2000 is higher, the loss per share decreased slightly  
due to an increase in the weighted average number of shares outstanding at      
September 30, 2000. The end-of-period deficit increased from $13,697,665 at     
September 30, 1999 to $16,983,579 at September 30, 2000 due to accumulated loss 
incurred during the period.                                                     

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LIQUIDITY AND CAPITAL RESOURCES                                                 

     As of September 30, 2000, the Company had cash equivalent and term deposits
of $2,128,402, an increase of $1,904,633 from the $223,769 as at December 31,   
1999. The primary sources of liquidity for the Company during the third quarter 
of 2000 were from the Company's private placement offerings totaling $4,389,900 
in the first quarter. At the end of the same quarter in 1999, the Company had   
cash and cash equivalents of $457,003. Primary sources of liquidity for the     
third quarter of 1999 were from the Company's private placement offerings.      

  During the third quarter of 2000, the Company used cash in operating, in
investing, and in financing activities in the amounts of $599,687, $335,041, and
$17,472, respectively. For the same quarter in 1999, the Company used cash in   
operating, in investing, and in financing activities in the amounts of $464,776,
$15,848, and $7,082, respectively.                                              

     Cash used in operating activities for the third quarter of 2000 consists of
a loss for the period of $753,903, was partially offset by amortization, and    
non-cash compensation expenses in the amount of $73,841 and $126,906,           
respectively. Non-cash working capital items increased by $46,531 during the    
third quarter of 2000. Cash used for the same quarter in 1999 in operating      
activities consisted of a loss of $553,088, which was partially offset by       
amortization of $60,012 and decrease in non-cash working capital balances of    
$28,300.                                                                        

    Financing activities for the third quarter of 2000 included a repayment of
short-term debt of $24,336. Investing activities resulted in a net decrease of  
cash by $335,041 for the third quarter of 2000 consisted of $316,293 incurred in
acquisitions and upgrades of capital assets, and $18,748 in patent expenditures.
For the same quarter in 1999, investing activities resulted in the net decrease 
in cash by $15,848.                                                             

     Successful completion of the Company's product development program, and its
transition, ultimately, to attaining profitable operations is dependent upon    
obtaining additional financing adequate to continue its research and development
activities, and achieving a level of revenues adequate to support the Company's 
cost structure. Management intends to obtain this financing primarily through   
the offering of securities and other forms of financing. However, there can be  
no assurance that the Company will be able to obtain such financing, which may  
impact the Company's ability to continue as a going concern. While the Company  
believes that it has sufficient operating revenue and cash reserves to fund     
ongoing operations for the year 2000, it is in the process of seeking additional
funding in connection with further development for its BioOil division.         

RECENT DEVELOPMENTS AND FUTURE EVENTS                                           

BIOOIL BUSINESS UNIT                                                            

     During third quarter 2000, work continued on DynaMotive's new 10 tpd BioOil
demonstration plant located at the BC Research Inc. (BCR) facilities. BCR, a    
technology                                                                      

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development complex located at UBC in Vancouver, has taken an equity            
position in DynaMotive which plans to further expand its operations and R&D     
program at the facility.                                                        

The Technology Group has completed all detailed design engineering and
procurement for the new BioOil plant, and is now fully engaged in the next phase
of the project, construction and assembly, which is expected to completed by the
end of this year. The larger plant will enable the Company to validate the      
process technology at the next level of scale-up and to test the new equipment. 
The plant has been built to industrial specifications complete with state of the
art control systems used worldwide in commercial facilities. With a production  
capacity of 6,000 litres of BioOil per day, it will provide much larger         
quantities of BioOil for engine and combustion test programs.                   

Orenda Aerospace, a division of Magellan Aerospace Corporation, has   
initiated a second phase program to develop a commercial gas turbine package to 
operate on DynaMotive's BioOil fuel following a successful first round of fuel  
tests earlier this year. The program involves completion of turbine             
modifications required for Orenda's 2.5 MW (megawatt) GT2500 gas turbine to run 
on BioOil, coupled with a full scale engine testing program in Canada and Europe
to validate long-term commercial operation of BioOil fuelled gas turbines.      

  In a testing program earlier this year, DynaMotive's BioOil proved to be
the first pyrolysis oil capable of being used as a commercial fuel in Orenda's  
gas turbines for power generation purposes. The tests demonstrated that BioOil  
can both effectively power a gas turbine engine and simultaneously reduce       
emissions compared to traditional fossil fuels. Based on the results of these   
initial tests, Orenda has now started a development program to produce the      
technology to run its turbines successfully on this fuel. The engine            
modifications required are currently in progress. Orenda and DynaMotive are     
currently evaluating various commercial scenarios for the integrated package    
which involve stacking multiple turbines in combined cycle mode to produce      
15-20 MW of electricity.                                                        

Brazilian sugar producer Cosan Bom Jesus and DynaMotive have begun 2nd
stage testing of bagasse aimed at optimizing technical design for bagasse-based 
BioOil pyrolysis plants. Preliminary production runs earlier this year have     
proven DynaMotive's capabilities to produce BioOil from bagasse -- an abundant, 
solid pulp material remaining after the extraction of juice from sugar cane.    
Bagasse will be supplied from one of Cosan's sugar mills in Brazil for this     
program. The launching of the second phase testing program as a precursor for   
the development of bagasse-specific technology is a critical step in the        
development program. During this stage, the Company will concentrate on         
optimizing the design for a bagasse-fed BioOil pyrolysis plant and further      
validating the applications, fuel quality and chemical composition of BioOil    
made from bagasse.                                                              

   DynaMotive also recently completed a series of production runs converting
100% softwood bark derived from spruce, pine and fir into fuel quality BioOil.  
From a commercial perspective, demonstrating the capability to produce a fuel   
quality BioOil from both bark and bark/white wood blends is a significant       
milestone, opening up the entire wood residue market to the Company's BioOil    
production technology.                                                          

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  Lower value bark residues are a major problem for the forest industry as
bark has little or no value and is costly to dispose of. Canada produces        
approximately 18 million tonnes of sawmill residues per year of which 5 to 6    
million tonnes are considered wastes and are subsequently incinerated or        
landfilled. This wood waste could potentially be converted to 15 million barrels
of BioOil per year and represents a significant commercial opportunity for      
DynaMotive.                                                                     

DYNAPOWER BUSINESS UNIT                                                         

   In July 2000, the Company announced that it has established the DynaPower
wire cleaning division as a wholly owned operating subsidiary to be named       
DynaPower, Inc. James Alexander, formerly General Manager of the division, was  
appointed President & CEO and Andrew Kingston was appointed Chairman of the     
Board of the new Company. DynaMotive Technologies Corporation will continue to  
hold the intellectual property rights to the patented DynaPower(R) and          
DynaSonics(R) metal cleaning technologies and will license these technologies to
DynaPower, Inc. The subsidiary has moved to new headquarters in Vancouver, BC   
where it will conduct day to day operations and expand its marketing activities.

    During the third quarter of 2000, the Company completed the general design
of its new die cleaning system using its patented DynaSonics(R) technology.     
Following successful pilot scale demonstration of the cleaning speed and        
effectiveness of the new system, the Company has received significant interest  
from major die makers in the U.S. It plans to build two prototype cleaning      
stations by the end of December 2000 which will be ready for in-plant trials in 
early 2001.                                                                     

OPERATING SUBSIDIARIES                                                          

  DynaMotive has now established operating companies in Europe, the US and
Canada; the Company intends to establish additional companies in Brazil, the Far
East and other key markets. The main function of these subsidiaries is the      
development and implementation of market specific strategies for the            
establishment of our technology in their specific markets. The subsidiaries will
develop, build and operate BioOil production facilities in their regions,       
license the BioTherm technology and market BioOil as a greenhouse gas neutral   
fuel in domestic and international markets. DynaMotive will continue to develop 
its BioOil technology, conduct R&D on BioOil fuels and derivative products, and 
provide services to the operating companies.                                    

   DynaMotive recently announced the establishment of DynaMotive Canada Inc.
and the appointment of its board and senior management team. The primary mandate
of the wholly owned subsidiary is to develop, build and operate BioOil          
production facilities in Canada and to market BioOil as a greenhouse gas neutral
fuel in domestic and international markets.                                     

The newly formed Canadian subsidiary has an experienced board and     
management team, with a proven track record in technology development, energy,  
environment and management. The Board of Directors is chaired by Ken McCready   
(former President & CEO of TransAlta Corporation) and includes Dr. Jim Miller   
(Chairman and former President & CEO of Inex Pharmaceuticals Inc.) and Andrew   
Kingston (President and CEO of DynaMotive Technologies).                        

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Jonathan Rhone has been appointed Chief Operating Officer. The team is supported
by a number of senior consultants including Alan Cornford, Brian McCloy and     
Christopher Henderson.                                                          

     Establishing DynaMotive Canada Inc. is an important step in commercializing
the Company's BioOil technology. The Company intends to tap Canada's vast       
reserves of biomass, particularly forest and agro waste by-products, to produce 
clean burning BioOil for domestic and export markets and believes that the      
application of BioOil as an alternative to fossil fuel, initially in power and  
heat markets and later in transportation markets, has the potential to help     
Canadian industry achieve significant reductions in greenhouse gases.           

 DynaMotive Europe Limited has moved to new corporate offices in Central
London and begun staffing the office in preparation for increased European      
BioOil development operations. A fuel testing agreement is currently underway to
test DynaMotive's BioOil in the Solar Taurus 60 unit which is marketed by       
Genergy under license. DynaMotive Europe continues to work with potential BioOil
strategic partners in the UK and Europe to conduct market and commercial        
research for BioOil production and applications in Europe and to broaden the    
awareness of the European and international activities of the DynaMotive group  
of operating companies to UK and European financial institutions and investors. 

   During the third quarter of 2000, the Company's US subsidiary, DynaMotive
Corporation, continued its preliminary market research program into             
opportunities in the US market. The Company intends to actively pursue those    
commercial opportunities in the 4th quarter of 2000 and into 2001. Being well   
positioned in the US renewable energy market is key to furthering the commercial
prospects of the Company, particularly with deregulation of electricity and the 
rising cost of fossil fuel. DynaMotive US is pursuing opportunities in agra     
waste products (sugar cane bagasse, wheat straw, etc.) as well as forest        
by-products. Furthermore DynaMotive US has established contacts with engine     
manufacturers for further testing of its greenhouse gas neutral fuel.           

    DynaMotive has been added to an investor tracker in the UK and an index in
Canada that track the growth of environmental and renewable energy public       
companies and compare their growth with that of established exchanges or        
investment funds. The Renewable Energy Tracker appears monthly in the Financial 
Times Renewable Energy Report. The Climate Change Innovative Technologies Index 
is published in Environmental Business Canada by Ottawa-based The Delphi Group. 

 The FT Renewable Energy Tracker is an indicator of the overall industry
performance of dedicated companies, now including DynaMotive, in the            
international renewable energy sector. The FT Renewable Energy Tracker is       
compared to the Impax Capital Environmental Technology-50 Index (ICET-50) -- a  
performance tracking index dedicated solely to public quoted companies that have
core businesses in the development and operation of environmental technologies. 

   The Delphi Group's Climate Change Innovative Technologies Index tracks 11
publicly traded companies in Canada, all engaged in developing solutions to     
tackle the growing issue of climate change by reducing greenhouse gases that are
being pumped into the atmosphere. In                                            

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addition to DynaMotive, companies on the index include Ballard Power Systems    
(fuel cell development), Westport Innovations (developers of a system to convert
diesel engines to natural gas) and Global Thermoelectric (electric generator and
cell-development).                                                              

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PART II -- OTHER INFORMATION

ITEM 1. CHANGES IN SECURITIES AND USE OF PROCEEDS                               

The Board approved during the third quarter of 2000, the allotment and
issuance of 1,075,000 Warrants to various consultants in lieu of cash           
compensation. Of these warrants, 890,000 were granted and the remaining 185,000 
are reserved for future allocation by the Compensation Committee of the Board.  

    During the first nine months of 2000, 1,111,667 of the Company's 1,742,500
total issued SARs vested, having met the first and second vesting provisions of 
the Company's 1998 SAR Plan as a result of the Capitalized Stock Value of the   
Company exceeding $50 million over a consistent 20-day trading period. The      
precise amount of the Company's liability presently cannot be established until 
such time that the SARs are, in fact, redeemed. Based upon the market closing   
price of $1.97 for the Company's shares as at September 30, 2000, the Company   
would have been obligated to pay $1,626,032 if all vested SARs had been redeemed
on that date. Under the SAR Plan, the Company may elect to make payment of any  
redemption liability either in cash or with shares. As of the end of the third  
quarter, the Company has redeemed a total of 5,000 vested SARs for a total of   
$7,690. During the first nine months of 2000, two thirds (2/3) of the Escrow    
shares (450,666) have also vested based on the release provisions of the SAR's  
Plan. Of the 450,666 shares, a total of 225,333 have been released from escrow  
in May, 2000 and balance was released in July, 2000.                            

ITEM 2. EXHIBITS AND REPORTS ON FORM 8-K                                        

(a)  Exhibits                                                                   

Exhibit      Description                                              
-------      -----------                                              

       3.1        Company Act Memorandum of DynaMotive Technologies Corporation,
as amended to date.                         

       3.2        Articles of DynaMotive Technologies Corporation, as amended to
date.                                       

The Exhibits are incorporated by reference to the Company's Quarterly Report on 
Form 10-QSB for the quarter ended June 30, 2000.                                

(b)  Reports on Form 8-K                                                        

None.                                                                 

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SIGNATURES

 In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.                                                                     

                             DYNAMOTIVE TECHNOLOGIES
                 CORPORATION

Date: November 13, 2000               /s/ Andrew Kingston             
                                           -------------------------------------
                     Andrew Kingston
                                           President and Chief Executive Officer

Date: November 13, 2000               /s/ Steve Ives                  
                                           -------------------------------------
                Steve Ives
                             Chief Financial Officer

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 EXHIBIT INDEX
Exhibit    Description                                                          
-------    -----------                                                          

3.1      Company Act Memorandum of DynaMotive Technologies Corporation,     
as amended to date.                                       

 3.2      Articles of DynaMotive Technologies Corporation, as amended to date.

29

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10QSB’ Filing		Date		First		Last			Other Filings
		9/30/13		16
		12/31/08		10					20-F,  6-K,  NT 20-F
		6/14/05		9
		3/5/05		10
		2/2/05		9
		1/31/05		9
		12/10/04		9
		5/1/04		10
		3/8/04		10
		1/28/04		10					6-K
		7/31/03		10
		3/1/03		10
		1/1/03		10
		12/19/02		9
		12/1/02		9
		10/31/02		9
		7/31/02		10
		5/31/02		10
		4/30/02		9
		11/15/01		9
		11/12/01		9
		4/30/01		9
		1/31/01		9
		12/22/00		10
		11/30/00		9
Filed on:		11/14/00
		11/13/00		28
		11/1/00		9
		10/31/00		9
For Period End:		9/30/00		1		27
		9/9/00		10
		6/30/00		27
		5/30/00		10
		2/29/00		8
		2/11/00		8
		2/10/00		8
		12/31/99		7		22
		9/30/99		21
		3/26/96		10
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