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DynaMotive announces findings of report on market manipulation

1 February 1999

DynaMotive announces findings of report on market manipulation and reaches settlement with one of its CD holders

    VANCOUVER, Feb. 1 /CNW-PRN/ - DynaMotive Technologies Corporation
today announced the findings of the consultant's report
commissioned by a Special Committee of the Board of Directors to investigate
the falling price of its stock since it entered into the previously announced
convertible debenture financing which took place in April, 1998. The report
confirms ``a pattern of trading consistent with stock manipulation'' of
DynaMotive's share price.
    The Company also announced that one of its current 23 convertible
debentures holders has accepted the Company's settlement offer.
    The report was prepared by Robert W. Lowry whose experience includes more
than 28 years with the U.S. Securities and Exchange Commission (SEC),
including 23 years with the Division of Market Regulation. Mr. Lowry has
conducted investigations into broker dealer trading activities and market
manipulation. He has also given expert witness testimony in federal court
relating to matters of market manipulation.
    In conducting his investigation, Mr. Lowry examined and analyzed
DynaMotive's trading records including price and volume reports and market
maker concentration reports. In addition, Mr. Lowry examined the trading
history of the stock of other companies which also had business relationships
with certain CD holders that participated in the DynaMotive CD financing.
    Lowry's conclusion is that ``the price decline in DynaMotive stock does
not reflect the operation of free economic forces of supply and demand.'' The
report also indicates that a short selling scheme orchestrated by certain CD
holders is the most likely cause for the price decline. It goes on to say that
``the NASDAQ trading volume reflects either pre-arranged or circular trading
by market makers...and...that a pattern of this type of trading is consistent
with market manipulation.''
    Commenting on the report, DynaMotive CEO Bayne Boyes said, ``The Lowry
report clearly indicates that the dramatic decline in the price of our stock
appears to have been due to manipulation. These activities have caused
considerable harm to our shareholders and the Company.
    ``DynaMotive will, however, continue to pursue a fair and equitable
settlement with CD holders which is in the best interests of all stakeholders,
but is also taking all necessary steps to protect and vigorously defend the
rights of the Company's shareholders.''
    The Company expects that most, if not all, of the CD holders who did not
participate in the stock manipulation and who share in the Company's optimism
for the growth of its business will quickly come to accept the Company's
settlement proposal for repayment of the debentures.

    Forward Looking Statement
    Statements in this news release concerning the company's business outlook
or future economic performance; anticipated profitability, revenues, expenses,
or other financial items; and statements concerning assumptions made or
expectations as to any future events, conditions, performance or other
matters, are ``forward-looking statements'' as that term is defined under the
Federal Securities Laws.
    Forward-looking statements are subject to risks, uncertainties and other
factors which could cause actual results to differ materially from those
stored in such statements.  Such risks, uncertainties and factors include, but
are not limited to, changes and delays in product development plans and
schedules, customer acceptance of new products, changes in pricing or other
actions by competitors, patents owned by the Company and its competitors, and
general economic conditions, as well as other risks detailed in the Company's
filings with the Securities and Exchange Commission.