UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, DC 20549

                                 FORM 10-Q


(Mark One)

[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934
                   For the quarterly period ended June 30, 2001

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


                        Commission File Number:  0-27524

-------------------------------------------------------------------------------
                     DYNAMOTIVE TECHNOLOGIES CORPORATION
            (Exact name of Registrant 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)



Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes [X] No []


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

         Class                               Outstanding at July 31, 2001
------------------------------------------------------------------------------
         Common Stock, no par value                   37,667,744



<PAGE>

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 16 of the Company's annual
report on Form 10-K which discuss the material variations in the accounting
principles in Canada as compared to those followed in the United States.

<TABLE>
<CAPTION>


Interim Financial Statements                                         Page

<S>                                                                   <C>
  Consolidated Balance Sheet                                          3
  Consolidated Statement of Loss and Deficit                          4
  Consolidated Statement of Cashflow                                  5
  Notes to Interim Financial Statement                                6 - 27

</TABLE>

<PAGE>











            CONSOLIDATED FINANCIAL STATEMENTS (in U.S. dollars)

                   DYNAMOTIVE ENERGY SYSTEMS CORPORATION

                             June 30, 2001







































<PAGE>


                     DynaMotive Energy Systems Corporation


                     CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                              (expressed in U.S. dollars)


                                              June 30,      December 31,
                                                2001             2000
                                                  $                $
------------------------------------------------------------------------
<S>                                           <C>           <C>
ASSETS

Current
Cash and cash equivalents                         350,144     1,095,715
Accounts receivable                               193,779       298,676
Government grants receivable [note 5b and 8]      549,861       661,046
Inventory                                          17,571        20,528
Prepaid expenses and deposits                     173,115       136,848
------------------------------------------------------------------------
Total current assets                            1,284,470     2,212,813
------------------------------------------------------------------------
Deferred project costs                          2,788,388            --
Capital assets                                  2,192,998     1,526,369
Goodwill                                          121,750            --
Patents                                           709,441       729,938
------------------------------------------------------------------------
                                                7,097,047     4,469,120
========================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities        1,554,542       560,906
Bank indebtedness -short term [note 3a]           266,587       233,520
Deferred Revenue                                   82,424       103,948
Minority interest                                  91,399            --
------------------------------------------------------------------------
Total current liabilities                       1,994,952       898,374
------------------------------------------------------------------------
Bank Indebtedness - long term [notes 3[b,c]]    1,937,347            --
Shareholders loan                                 333,437            --
Other loan                                         42,456            --
------------------------------------------------------------------------
Total liabilities                               4,308,192       898,374
------------------------------------------------------------------------
Commitments and contingencies [note 1, 5 and 6]
Shareholders' equity
Share capital, [note 4]                        22,498,977    21,040,882
Shares to be issued                               453,623       250,713
Convertible shareholders loan                     154,529            --
Contributed surplus [note 4f]                   2,092,711     1,584,997
Cumulative translation adjustment                (397,052)     (371,062)
Deficit                                       (22,013,933)  (18,934,784)
------------------------------------------------------------------------
Total shareholders' equity                      2,788,855     3,570,746
------------------------------------------------------------------------
                                                7,097,047     4,469,120
========================================================================
</TABLE>
See accompanying notes

                                             3
<PAGE>


                     DynaMotive Energy Systems Corporation

                     CONSOLIDATED STATEMENT OF LOSS AND DEFICIT

                     Period ended June 30      (expressed in U.S. dollars)

<TABLE>
<CAPTION>
                                    Three       Three        Six       Six
                                    months      months      months    months
                                    ended       ended       ended      ended
                                   June 30,    June 30,    June 30,   June 30,
                                     2000        2000        2001       2000
                                       $           $          $           $
------------------------------------------------------------------------------
<S>                                                         <C>         <C>
REVENUE
Sales                              345,817     178,809     442,935     445,751
------------------------------------------------------------------------------
                                   345,817     178,809     442,935     445,751
------------------------------------------------------------------------------

EXPENSES
Cost of sales                      240,537     143,798     316,317     277,006
Amortization and depreciation       72,848      77,458     160,292     145,096
Interest expense                     5,136       3,895      11,312       7,227
Marketing                          224,031     353,328     403,124     502,224
Office supplies, telephone
      and insurance                105,911      67,502     169,721     120,318
Professional fees [note 6]         787,097     277,840   1,284,464     800,317
Royalties                            1,805       5,426       1,805      18,252
Rent                                86,658      36,678     170,374      68,931
Research and Development
      [note 5b and 9]              144,827       1,647     219,821     171,025
General and administrative
  salaries and benefits [note 6]   505,975     314,537     799,075     891,944
------------------------------------------------------------------------------
                                 2,174,825   1,282,109   3,536,305   3,002,340
------------------------------------------------------------------------------
Loss from operations            (1,829,008) (1,103,300 )(3,093,370) (2,556,589)

OTHER REVENUE AND EXPENSES
Interest income                    (11,439)     98,290      10,425     111,955
Loss on asset disposals                 (7)    (24,615)       (467)    (24,615)
Capital tax expenses               (53,765)         --     (53,765)         --
------------------------------------------------------------------------------
                                   (65,211)     73,675     (43,807)     87,340
------------------------------------------------------------------------------
                                (1,894,219) (1,029,625) (3,137,177) (2,469,249)

Minority interest                   58,028          --      58,028          --
------------------------------------------------------------------------------
Loss for the Period             (1,836,191) (1,029,625) (3,079,149) (2,469,249)

Deficit, beginning of period   (20,177,742)(15,617,534)(18,934,784)(14,177,910)
------------------------------------------------------------------------------
Deficit, end of period         (22,013,933)(16,647,159)(22,013,933)(16,647,159)
==============================================================================

Weighted average number of
common shares Outstanding       35,002,334  33,915,151  34,751,246  31,173,833
------------------------------------------------------------------------------
Loss per common share              (0.05)      (0.03)       (0.09)      (0.08)
==============================================================================
</TABLE>
See accompanying notes
                                             4
<PAGE>



                     DynaMotive Energy Systems Corporation


                     CONSOLIDATED STATEMENT OF CASHFLOW

                     Period ended June 30       (expressed in U.S. dollars)

<TABLE>
<CAPTION>
                                                   Six months    Six months
                                                      ended         ended
                                                     June 30,      June 30,
                                                      2001          2000
                                                        $             $
-----------------------------------------------------------------------------
<S>                                                <C>               <C>
OPERATING ACTIVITIES
Loss for the period                                (3,079,149)    (2,469,248)
Add items not involving cash:
     Amortization and depreciation                    160,292        145,096
     Minority interest                                (58,028)            --
     Loss on asset disposal                             7,612             --
     Stock based compensation                       1,370,045        845,232
Net change in non-cash working capital
balances related to operations [note 7]               343,908        (42,950)
------------------------------------------------------------------------------
Cash used in operating activities                  (1,255,320)    (1,521,870)
------------------------------------------------------------------------------

FINANCING ACTIVITIES
Increase in bank indebtedness                          14,316         116,302
Decrease in loan from shareholder                      (8,190)             --
Share subscriptions                                        --         170,719
Share capital issued                                  798,674       4,433,129
------------------------------------------------------------------------------
Cash provided by financing activities                 804,800       4,720,150
------------------------------------------------------------------------------

INVESTING ACTIVITIES
Increase in patents costs                             (25,120)        (10,532)
Purchase of capital assets (net of
  government grants)                                 (245,129)       (280,500)
------------------------------------------------------------------------------
Cash used in investing activities                    (270,249)       (291,032)
------------------------------------------------------------------------------

Effect of exchange rate changes on cash               (26,822)        (77,140)
------------------------------------------------------------------------------

Increase (decrease) in cash and cash
   equivalent during the period                      (747,591)       2,830,108
Cash and cash equivalent at beginning of period     1,097,735          223,769
------------------------------------------------------------------------------
Cash and cash equivalent at end of period             350,144        3,053,877
==============================================================================
</TABLE>

See accompanying notes
                                             5
<PAGE>




1. NATURE OF BUSINESS

DynaMotive Energy Systems Corporation ("the Company") was incorporatedon
April 11, 1991 under the laws of the Province of British Columbia under
the name of DynaMotive Canada Corporation. The Company changed its name to
DynaMotive Technologies Corporation in 1995, and changed to its current
name in June 2001. Since its inception the Company has been engaged in the
process of commercializing several technologies that are in various stages of
development.

The Company's primary focus is to commercialize its patented BioOil
production technology and establish this technology as the worldwide industry
standard for production of BioOil clean fuels. With the recent acquisition of
Border Biofuels Ltd, the Company will gain access to BioOil fuelled
electricity projects in the UK over a 15-year period. The Company has
developed, patented, or acquired three primary technologies: (1) BioTherm(TM),
a biomass-to-energy technology that converts low value forest waste and
agricultural by-products into liquid BioOil, which can be used as a fuel or
as a raw material for the production of various derivative products; (2)
DynaPower(R), a metal cleaning process that does not involve the use of
chemicals; and (3) actuator technologies used in both steel and aluminum
welding. To date, the Company's principal revenues have been derived from the
sales of the actuators and sales of DynaPower(R) systems to various customer
applications. The principal market for the Company's metal cleaning business
is in the United States, while the principle market for near term BioOil
related business is in the UK.

These financial statements have been prepared on the going concern basis,
which presumes the Company will be able to realize its assets and discharge
its liabilities in the normal course of operations for the foreseeable future.

The Company incurred a net loss of $3,079,149 for first six months of 2001 and
as at June 30, 2001 has a deficit of $22,013,933.

The ability of the Company to continue as a going concern is uncertain and is
dependent on achieving profitable operations, and continuing development of
new technologies, the outcome of which cannot be predicted at this time.
Accordingly, the Company will require, for the foreseeable future, ongoing
capital infusions in order to continue its operations, fund its research and
development activities, and ensure orderly realization of its assets at their
carrying value. The financial statements do not reflect adjustments in
carrying values and classifications of assets and liabilities that would be
necessary should the Company not be able to continue in the normal course of
operations.

<PAGE>

2. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared by management in
accordance with accounting principles generally accepted in Canada. A
reconciliation of amounts presented in accordance with United States
accounting principles is detailed in note 11.

The following is a summary of significant accounting policies used in the
preparation of these consolidated financial statements:


                                             6
<PAGE>


2. SIGNIFICANT ACCOUNTING POLICIES (cont'd.)

PRINCIPLES OF CONSOLIDATION

These consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries DynaMotive Corporation, incorporated under
the laws of Rhode Island, U.S.A.; DynaMotive Europe Limited (formerly known
as DynaMotive Technologies Corporation (UK) Limited), incorporated under the
laws of the United Kingdom; DynaMotive Canada Inc., federally incorporated
under the laws of Canada; DynaPower  Inc., incorporated under the laws of
British Columbia; DynaMotive Puerto Rico, Inc., incorporated under the laws
of Puerto Rico; DynaMill Systems Ltd. and  DynaMotive Electrochem Corporation,
incorporated under the laws of British Columbia. The consolidated financial
statements also include 75% of Border Biofuels Limited, incorporated under
the law of United Kingdom, acquired through DynaMotive Europe Limited.
DynaMotive Electrochem Corporation, and DynaMotive Puerto Rico, Inc. are
companies with no significant net assets or operations.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from these estimates.

FOREIGN CURRENCY TRANSLATION

The accounts of the Company and its consolidated subsidiaries are measured
using the Canadian dollar as the functional currency. Monetary items
denominated in foreign currencies are translated into Canadian dollars using
exchange rates in effect at the balance sheet date and non-monetary items are
translated using historical exchange rates. Exchange gains or losses arising
on the translation or settlement of foreign currency denominated monetary
items are included in the determination of net income, except for gains or
losses related to long-term monetary items which are deferred and amortized
over the life of the item.

The Company uses the U.S. dollar as the reporting currency for its
consolidated financial statements. Assets and liabilities are translated into
U.S. dollars using current exchange rates in effect at the balance sheet date
and revenue and expense accounts are translated using the average exchange
rate during the year. Gains and losses resulting from this process are
recorded in shareholders' equity as an adjustment to the cumulative
translation adjustment account.

FINANCIAL DERIVATIVES

Foreign currency derivative financial instruments, such as forward contracts,
are used from time to time to manage the effects of exchange rate changes on
foreign currency exposures. Gains and losses on forward foreign exchange
contracts are not recognized until realized and are then charged to income on
a basis that corresponds with changes in the related amounts of foreign
currency expenses.


2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

REVENUE RECOGNITION

Revenue from the sale of products is recognized upon shipment of the product
to the customer. Revenue from contracts relating to implementation of the
Company's metal cleaning systems in a commercial application is recognized on
a completed contract basis, except for those which are greater than three
months in duration, for which revenue is recognized on a percentage of
completion basis where the basis of measure of performance is based on
engineering estimates of completion. Revenue from power purchase projects of
acquired Border Biofuels operations (Note 12) is recognized on a completed
contract basis. Losses on contracts are recognized when they become known.

GOVERNMENT ASSISTANCE AND INVESTMENT TAX CREDITS

Government assistance towards current expenses is included in the determination
of income for the period as a reduction of the expenses to which it relates.
Government assistance towards the acquisition of capital assets is deducted
from the cost of the related capital assets.

Investment tax credits are accounted for under the cost reduction method
whereby they are netted against the expense or capital asset to which they
relate.

Investment tax credits are recorded when the Company has incurred the
qualifying expenditures and there is reasonable assurance the tax credits
will be realized.

INVENTORY

Inventory comprises of work in progress relating to the Company's products
under construction and is recorded at the lower of average cost and net
realizable value. Inventory work in progress costs include the cost of raw
materials, direct labour and overhead.

RESEARCH AND DEVELOPMENT COSTS

Research costs are expensed in the year incurred. Development costs are
expensed in the year incurred unless the Company believes the development
project meets generally accepted accounting criteria for deferral and
amortization. In evaluating these criteria the Company considers technological
feasibility to be established only when a product demonstrates it operates
under conditions which are acceptable to target customers.

If management determines that the development of products to which such costs
have been capitalized is not reasonably certain, or that costs exceed
recoverable value, such costs are charged to operations.


2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D.)

PRODUCT WARRANTIES

A liability for estimated warranty expense is established by a charge against
cost of goods sold. The subsequent costs incurred for warranty claims serve to
reduce the product warranty liability.

PATENTS

Patents consist of the consideration paid for the patents and related legal
costs and are amortized over the lesser of the estimated useful life of the
related technology and the life of the patent commencing with commercial
production. If management determines that development of products to which
patent costs relate is not reasonably certain, or that costs exceed
recoverable value, such costs are charged to operations.

Due to the long-term nature of estimates inherent in determining future cash
flows, it is possible that the amounts or the estimated useful life of such
assets could be reduced in the future.


CAPITAL ASSETS

Capital assets are recorded at cost, net of government assistance, and
amortized using the following methods and annual rates:

<TABLE>
<CAPTION>
     <S>                        <C>
     Furniture and fixtures      20% declining balance
     Computer equipment          30% declining balance
     Computer software          100% declining balance
     Test equipment              20% declining balance
     Leasehold improvements      Straight line over the term of the lease
</TABLE>


CASH EQUIVALENTS

The Company considers all highly liquid financial instruments purchased with
an original maturity of three months or less to be cash equivalents and are
recorded at the amortized cost which approximates fair value.


FINANCIAL INSTRUMENTS

The fair values of the financial instruments approximates their carrying value
except as otherwise disclosed in the financial statements.


INCOME TAXES

The Company follows the liability method of tax allocation in accounting for
income taxes.


STOCK BASED COMPENSATION PLAN

The Company has two stock based compensation plans - a stock appreciation
rights (SAR) plan and a stock option plan for directors, employees and others,
which are described in Note 4. Under the terms of the stock option plan the
Company may grant fixed options or options whose vesting is contingent on
future performance. No compensation is recognized when SAR's and fixed or
performance based stock options are granted to employees and directors.

The Company has a compensation arrangement with an officer of the Company
whereby the officer receives a fixed number of common shares per month. The
Company records compensation expense monthly based on the month-end quoted
market price of the Company's stock.

In addition, the Company has entered into compensation arrangements, which
entitle non-employees to specific amounts, which can only be settled by
applying the amounts to exercise outstanding options to purchase common
shares monthly over a period of up to twelve months. The Company recognizes
compensation expense based on the fair value of the common stock issuable
under the arrangement, when related services are performed. The common shares
issuable under these arrangements are generally issued in the quarter
following the period in which they are earned.

The Company may also issue stock options, SAR's and warrants as consideration
for services rendered by non-employees. Such equity awards are recorded at
their fair value, as compensation expense when the Company receives the
related services and the equity awards vest. No compensation is recognized
in connection with options and warrants awarded in connection with private
placements, since the share issue costs are net against the proceeds raised.

If shares or stock options are repurchased, the excess of the consideration
paid over the carrying value of the shares or stock options cancelled is
charged to contributed surplus or deficit.

LOSS PER COMMON SHARE

Loss per common share is based on the weighted average number of shares
outstanding for the year including escrowed shares. The effect of potential
issues of shares under share option, share purchase warrants and conversion
agreements have not been disclosed, as they are antidilutive.


3. BANK INDEBTEDNESS

[a] The Company has an authorized credit facility up to a maximum of $330,142
[$Cdn. 500,000]. As collateral for the loan, the Company has provided the
lender a General Security Agreement providing a charge on all present and
future assets. Amounts borrowed are repayable within 120 days from the date
of borrowing and as at June 30, 2001 $264,114 (Cdn. $400,000) has been drawn
down on this loan.

Covenants under the credit facility include, among other things, a requirement
for the Company to obtain written consent prior to declaring dividends,
significantly changing ownership control, committing to mergers, acquisitions,
or changes in Company's principal line of business or entering other guarantees
or other contingent liabilities and assets are not to be further encumbered.

The fair market value of the loan on June 30, 2001 approximates its carrying
value.

[b] The Company's subsidiary Border Biofuels Limited (BBL) has extended a
credit facility agreement with Bank of Scotland for a maximum of $1,645,567
(1,162,789 pound sterling). Under this agreement, Bank of Scotland has the
security right over the assets of BBL and its subsidiaries. Interest charge is
calculated daily on annaulized based rate plus 3%. The borrowed amount must be
repaid together with interest by Mach 30, 2004 or earlier from audited profits
generated in BBL and its subsidiaries prepared in accordance with UK GAAP. As
of June 30, 2001, $1,624,117 (1,147,632 pound sterling) has been drawn down
on the credit facility. The fair market value of the loan on June 30, 2001
approximates its carrying value.


Covenants to BBL under the credit facility include, among others, a
requirement for the Company to obtain written consent prior to declaring
dividends, significantly changing ownership control, committing to mergers,
acquisitions, or changes in Company's principal line of business, changing
the auditor, or providing other guarantees or entering contingent liabilities
and assets are not  to be further encumbered.


[c] The Company's subsidiary Border Biofuels Limited (BBL) has entered a loan
facility with Bank of Scotland for a maximum of $283,038 (200,000 pound
sterling). Under this agreement, Bank of Scotland has the security right over
the assets of BBL and its subsidiaries. Interest charge is calculated daily
on annaulized based rate plus 3%. The borrowed amount must be repaid together
with interest by March 30, 2003. The Company has provided a guarantee for this
amount. As of June 30, 2001, $276,687 (195,512 pound sterling) has been drawn
down on this facility. The fair market value of the loan on June 30, 2001
approximates its carrying value

Covenants to BBL under the credit facility include, among others, a
requirement for the Company to obtain written consent prior to declaring
dividends, significantly changing ownership control, committing to mergers,
acquisitions, or changes in Company's principal line of business, changing
the auditor, or providing other guarantees or entering contingent liabilities
and assets are not  to be further encumbered.



4. SHARE CAPITAL

[a]  AUTHORIZED SHARE CAPITAL AND ISSUED COMMON SHARES

<TABLE>
<CAPTION>
                                                 June 30,        December 31,
                                                   2001               2000
                                                     $                 $
------------------------------------------------------------------------------
<S>                                               <C>              <C>

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

Issued and outstanding

37,546,196 [December 31, 2000 - 35,851,060]      $22,498,977      $21,040,882
------------------------------------------------------------------------------
</TABLE>


    [i]   Pursuant to a private placement on February 20, 2001, the Company
          issued 417,246 common shares for total cash proceed of $500,695.

    [ii]  Pursuant to an interim close of a private placement on June 22, 2001,
          the Company issued 399,686 common shares for a total cash proceed of
          $250,000 and $69,750 in settlement of commercial fees.

    [iii] 37,416 common shares were issued to directors in lieu of cash
          compensation based upon reported share prices ranging from $0.81
          to $0.94 per common share.

    [iv]  720,842 common shares were issued as payment for commercial
          services based upon reported share prices ranging from $0.50 to
          $2.00 per common share.

    [v]   119,946 common shares were issued pursuant to the exercise of
          options at $0.40 per common share

<TABLE>
<CAPTION>
                                                     $         Number of Shares
-------------------------------------------------------------------------------
<S>                                                  <C>             <C>

Share Capital, December 31, 2000                   21,040,882      35,851,060

Private placement issued for cash                     750,695         729,746
Private placement issued, non cash                     69,750          87,186
Shares issued from exercise of options for cash        47,978         119,946
Shares issued, directors & employees compensation      31,661          37,416
Shares issued, for commercial services                558,011         720,842
------------------------------------------------------------------------------
Balance, June 30, 2001                             22,498,977      37,546,196
------------------------------------------------------------------------------
At June 30, 2001, the Company has 182,100 Common shares to be issued to an
officer and non-employees for services rendered under compensation arrangements
</TABLE>




4. SHARE CAPITAL (cont'd.)

[b]  ESCROW AGREEMENT

At December 31, 1998, 1,232,000 common shares were held in escrow to be
released at a rate of one share for each $0.17 of "cash flow" as defined
in the agreement, generated by the Company.

During 1999, the Board approved an amendment to the Escrow agreement's
release provisions that applied to 676,000 of the shares held in escrow.
The amended release provisions are: 1/3 of the common shares in escrow will
be released upon the Company achieving a capitalized stock value of $30
million for a consistent twenty day trading period; 1/3 of the common shares
in escrow will be released upon the Company achieving a capitalized stock
value of $50 million for a consistent twenty day trading period; 1/3 of the
common shares in escrow will be released upon the Company achieving a
capitalized stock value of $100 million for a consistent twenty day trading
period.

During the first half of 2001 no common shares were released from escrow and
at June 30, 2001,  781,334 common shares are held in escrow.

[c]  STOCK OPTIONS

At June 30, 2001 the following stock options to Directors, employees and
others were outstanding:

<TABLE>
<CAPTION>
   No. of common      Exercise Price
  shares issuable            $           Date of expiry
------------------------------------------------------------------------------
<S>                        <C>           <C>
        579,236            0.40          October 28, 2001 - December 10, 2004
        100,000            0.50          January 31, 2005
        504,995            0.75          January 31, 2002 - January 31, 2004
        861,500            1.00          January 31, 2002 - February 28, 2005
      2,610,000            1.50          May 30, 2002 - May 31, 2006
         20,000            1.95          June 14, 2005
         41,722            2.00          July 31, 2001 - December 19, 2002
          6,000            2.75          December 1, 2002
         12,000            3.13          November 15, 2001
          3,985            4.00          October 31, 2002
         50,000            5.50          November 12, 2001
------------------------------------------------------------------------------
      4,789,438
==============================================================================
</TABLE>

From time to time, the Company has provided incentives in the form of share
purchase options to the Company's directors, officers and employees. The
Company has reserved 5,631,929 (15%) of common  shares for issuance upon
the exercise of stock options of which at June 30, 2001 842,491 are available
to be granted. The exercise price and the vesting terms of the options
are determined by the Compensation Committee. The exercise price will
generally be at least equal to the market price  of  the common shares at
the date of the grant and the term may not exceed  five  years  from
the date of the grant. Stock options granted are also subject to certain
vesting provisions as determined by the Compensation Committee.



4. SHARE CAPITAL (cont'd.)

Stock option transactions for the respective periods and the number of stock
options outstanding are summarized as follows:

<TABLE>
<CAPTION>
                                       No. of Common       Weighted Average
                                      SHARES ISSUABLE       EXERCISE PRICE
------------------------------------------------------------------------------
<S>                                   <C>                       <C>
BALANCE, DECEMBER 31, 1997            1,547,385                 2.58
------------------------------------------------------------------------------
Options granted                         872,635                 0.46
Options cancelled                      (478,566)                2.48
Options exercised                       (96,943)                0.75
------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998            1,844,511                 0.73
------------------------------------------------------------------------------
Options granted                       1,070,863                 1.11
Options cancelled                      (262,634)                0.97
Options exercised                      (242,601)                0.46
------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999            2,410,139                 0.90
------------------------------------------------------------------------------
Options granted                       3,885,500                 1.17
Options cancelled                      (265,278)                1.63
Options expired                         (63,600)                2.19
Options exercised                      (737,119)                0.54
------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2000            5,229,642                 1.14
------------------------------------------------------------------------------
Options granted                         234,445                 1.22
Options cancelled                            --                   --
Options expired                         (15,000)                2.00
Options exercised                      (659,649)                0.69
------------------------------------------------------------------------------
BALANCE, JUNE 30, 2001                4,789,438                 0.85
------------------------------------------------------------------------------
</TABLE>

During 2000, the Company re-priced 234,278 options issued to non-employees
from original exercise prices ranging from $1.50 to $2.00 to a new exercise
price of $0.75, the then market price of the shares.

On December 14, 1998, the Company re-priced 318,000 options issued to
Directors from an original exercise price of $2.00 to $0.40. On December 10,
1999 these same options were re-priced again from $0.40 to $1.00.

Included in the options granted in 2001, were 60,000 options to a non-
employee for services rendered.  The valuation of this stock based
compensation is to be recorded at fair value when related services are
performed.


4. SHARE CAPITAL (cont'd.)

[d]  COMMON SHARE PURCHASE WARRANTS

At June 30, 2001 common share purchase warrants outstanding were as follows:

<TABLE>
<CAPTION>
                     Number of Common  Exercise  Expiration
                      Shares Issuable   Price      Date
-----------------------------------------------------------------------------
<S>                    <C>              <C>      <C>
   Series F Warrants   2,075,000        $1.50    March 5, 2005
   Series G Warrants     300,000        $2.50    March 01, 2003
   Series H Warrants      15,000        $1.75    May 31, 2002
   Series I Warrants      15,000        $2.50    May 31, 2002
   Series J Warrants   1,005,000        $2.00    July 31, 2002 - July 31, 2003
   Series K Warrants      75,000        $1.50    July 31, 2003
   Series L Warrants      83,448        $2.00    February 20, 2003
   Series M Warrants     272,500        $1.50    June 22, 2003
------------------------------------------------------------------------------
</TABLE>


(1) 2,000,000 of the Series F warrants were issued as an integral part of a
    private placement. These warrants vested upon successful completion of
    the private placement.

    75,000 of the Series F warrants were issued to an employee of the Company
    for past services.

(2) The Series G warrants were issued as a placement fee for a private
    placement. These warrants vested upon successful completion of the private
    placement.

(3) The Series H, I, J, and K warrants have been issued for services. Of
    these warrants, 75,000 have been issued to an employee of the Company for
    past services. The remaining warrants have been issued to non-employees.
    The warrants remaining have the following vesting terms: 675,000 warrants
    vest monthly based on the consulting agreement term; 120,000 warrants vest
    upon completion of performance criteria; and, 315,000 warrants vested
    immediately upon grant.

(4) The Series L and M warrants have been issued as an integral part of private
    placements. These warrants vested upon successful completion of the private
    placements.


As at June 30, 2001, 275,125 warrants are unvested. Compensation for the
first six months of 2001 in respect of the vested warrants has been recorded
at a fair value of $402,486.


[e]  STOCK APPRECIATION RIGHTS

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 ("SAR's") 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 SAR's vest as the Company achieves stock values as defined in the
agreement: 1/3 of the SAR's issued may be redeemed upon the Company achieving
a capitalized stock value of $30 million for a consistent twenty day trading
period; 1/3 of the SAR's issued may be redeemed upon the Company achieving a
capitalized stock value of $50 million for a consistent twenty day trading
period; 1/3 of the SAR's issued may be redeemed upon the Company achieving a
capitalized stock value of $100 million for a consistent twenty day trading
period.

The Company also has the right to redeem the SAR's at its option under
certain circumstances. The number of SAR's that can be granted under the
plan until December 31, 2008 cannot exceed 2,500,000.

Stock appreciation rights transactions and the number of stock appreciation
rights outstanding at June 30, 2001 are summarized as follows

<TABLE>
<CAPTION>
                                                           No. of
                                                        SAR's Issued
--------------------------------------------------------------------
<S>                                                         <C>
Balance, December 31, 1999 and 1998                       1,747,500
SAR's redeemed                                              (11,667)
--------------------------------------------------------------------
Balance, December 31, 2000                                1,735,833
--------------------------------------------------------------------
Balance, June 30, 2001                                    1,735,833
--------------------------------------------------------------------
</TABLE>

At June 30, 2001, the following stock appreciation rights all of which were
issued to employees, were outstanding:

<TABLE>
<CAPTION>
           SAR's        Initial Value	                Expiration Date
---------------------------------------------------------------------
<S>                       <C>                      <C>
       1,253,333          $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
---------------------------------------------------------------------
       1,735,833
---------------------------------------------------------------------
</TABLE>



4. SHARE CAPITAL (cont'd.)

[f]  CONTRIBUTED SURPLUS

During 1994, the Company entered into an escrow agreement with certain
shareholders, Directors and employees, whereby the Company issued 2,512,720
common shares for cash consideration of $22,300.  During 1995, the Company
repurchased for cash 1,280,720 of these common shares at their original issue
price of $11,366. The excess of the weighted average cost of the 1,280,720
common shares repurchased and cancelled over the purchase price, amounting to
$409,030 ($Cdn. 560,315), has been credited to contributed surplus.

Contributed surplus also includes the fair value of stock options and
arrants issued to non-employees for services rendered.


5. COMMITMENTS AND CONTINGENCIES

Commitments

[a] 	Pursuant to an agreement to purchase certain patents, the Company is
committed to pay a royalty of $7,100 on each sale of a unit of related
product to a maximum of $106,500. No sales have occurred to June 30, 2001
on which the Company owes such royalty.

[b] During the year ended December 31, 1997, the Company entered into a
contribution agreement with Industry Canada-Technology Partnerships Canada
whereby the Company is entitled to receive a maximum of approximately $6.1
million or 37% of eligible expenditures, as defined in the agreement. In the
event that commercial viability is achieved, then the assistance is repayable,
denominated in Canadian dollars, commencing February 15, 2002 based on
royalties from sales of specified products after December 31, 2001 resulting
from the project to a maximum of $11 million. During the first six months of
2001, $383,934 was claimed and is included in government grants receivable
[see note 9]. The Company has yet to achieve commercial viability.

[c] 	The Company has available a maximum aggregate forward exchange contract
facility of up to $750,000 U.S. dollars or the equivalent thereof in other
approved currencies. The daily settlement limit is $250,000. No such
instruments were outstanding at June 30, 2001.

[d] The Company has the following future minimum lease commitments for
premises and equipment expiring through 2005:

<TABLE>
<CAPTION>
                                                              $
--------------------------------------------------------------------
<S>                                                          <C>
2001                                                        114,500
2002                                                        219,000
2003                                                        214,000
2004                                                        124,000
2005                                                        119,000
--------------------------------------------------------------------
                                                            790,500
--------------------------------------------------------------------
</TABLE>


5. COMMITMENTS AND CONTINGENCIES (Cont'd.)

Contingencies

In the ordinary course of business activities, the Company may be contingently
liable for litigation and claims with customers, suppliers and former
employees. Management believes that adequate provisions have been recorded in
the accounts where required. Although it is not possible to estimate the
extent of potential costs and losses, if any, management believes that the
ultimate resolution of such contingencies will not have a material adverse
effect on the consolidated financial position of the Company.

[a]  In 1996 the Company was named as a co-defendant in a legal action for
unspecified damages for alleged interference with the rights to a
disintegration technology held by a subsidiary of the Company. The outcome of
the action is not determinable at this time and the amount of any liability,
if any, cannot be reasonably estimated. Accordingly, no provision for loss
has been made in these consolidated financial statements.

[b]	  The Company is a party to a legal proceeding filed by HPG Research Ltd
for an alleged breach of a royalty agreement and a potential claim of a
certain percentage of DynaPower sales. The parties have agreed to proceed
with arbitration, as provided for under the agreement.

[c] At the end of the first quarter 2001, the Company was named a party to a
legal proceeding filed by Southwestern Wire, Inc. (SWI), an Oklahoma
corporation, in the District Court of Cleveland County, State of Oklahoma for
an alleged breach of contract by the Company with respect to SWI's purchase
of a 24 wire DynaPower(R) cleaning system for a potential claim of $101,000.
The outcome of the action is not determinable at this time and the amount of
any liability, if any, cannot be reasonably estimated. Accordingly, no
provision for loss has been made in these consolidated financial statements.

6. RELATED PARTY TRANSACTIONS

In addition to the transactions described in Note 4, the Company had the
following transactions with related parties:

[a]  Consulting fees and salaries of $278,811 for first six months of 2001
and $278, 329 for the first six months of 2000 have been paid to Directors
(or companies controlled by Directors) of the Company.

[b] The Company's subsidiary Border Biofuels Limited has loan agreement with
two of its directors totalling $326,926 (231,012 pound sterling). The loan
bear interest at annual LIBOR rate plus 3.5% calculated monthly. The loan,
which has the similar repayment term as that of Bank of Scotland loan
(Note 3[b]), is repayable upon Border Biofuels Ltd. achieving net positive
relevant profit under UK General Accepted Accounting Principles (UK GAAP).
Relevant profit is defined as the amount obtained by deducting the
accumulated liabilities from the retained profit, at any given time.

The Company 's subsidiary Border Biofuels Limited also has loan agreements
with its shareholders totalling, $158,796 (112,208 pound sterling). These
loans can be conditionally converted to DynaMotive's common shares at the
higher rate of $3.00 per share or the prevailing market price at the time
BBL achieves net positive relevant profit under UK General Accepted
Accounting Principles (UK GAAP). Relevant profit is defined as the amount
obtained by deducting the accumulated liabilities from the retained profit,
at any given time. As of June 30, 2001, the outstanding loan amount,
approximating its carrying value, is $154,529, (109,193 pound sterling).

[c] The Company has entered into:

  [i]  	A royalty agreement, pursuant to an agreement to purchase certain
patents for an unlimited term with a company controlled by a previous
Director of the Company, based on 4% of the gross receipts from unit sales.
No sales have occurred to date.

 [ii]	  A royalty agreement during 1993, pursuant to the use of certain
proprietary information, with a company controlled by a former officer of
the Company to pay the greater of $7,100 in 1996 and increasing by $3,600
each subsequent anniversary or 10% of the net proceeds of the sale of the
components, for each anniversary date, developed from certain proprietary
information for an unlimited term. If the Company fails to make a payment
as required, it will forfeit all rights relating to the agreement including
any patents or sub-licenses to third parties. No royalty expense has been
recorded for 2001.

[iii]  During 2000, the Company entered into a 24-month consulting and
research agreement, expiring February 9, 2002, with a company controlled by a
board member of the Company. The contract fees are $10,000 ($15,000 Cdn) per
month. The agreement is extendable annually by mutual agreement. Included in
research and development expenses are fees of $60,000 to this related party.


7. NET CHANGE IN NON-CASH WORKING CAPITAL BALANCES

<TABLE>
<CAPTION>
                                            Six months          Six months
                                              ended               ended
                                           June 30, 2001       June 30, 2000
                                                $                   $
-----------------------------------------------------------------------------
<S>                                         <C>                 <C>
Accounts and government
  grants receivable                          303,883              96,074
Work in progress/Inventory                    15,356              37,950
Prepaid expenses and deposits               (107,540)            (49,301)
Accounts payable and accrued liabilities     153,733            (126,110)
Deferred revenue                             (21,524)             (1,563)
-----------------------------------------------------------------------------
                                             343,908             (42,950)
=============================================================================
Supplementary information
-----------------------------------------------------------------------------
Interest paid                                 11,312               7,227
=============================================================================
</TABLE>



8. MAJOR CUSTOMERS

[a]	 The Company sells to multiple customers. The majority of sales for the
six months ended June 30, 2001 were derived from 3 customers each representing
41%, 23%, and 11%, respectively of consolidated sales. The majority of sales
for the year ended June 30, 2000 were also derived from 3 customers each
representing 45%, 43 and 14% respectively of consolidated sales.  As at
June 30, 2001 the aggregate accounts receivable balances relating to these
customers was $193,779 (June 30, 2001- $180,872).

[b] 	During the year ended December 31, 1997 the Company entered into an
exclusive royalty licensing agreement with a major customer which provides
that customer the rights to the use of certain technology developed by the
Company for the production of actuators for welding applications. The
licensing agreement provides for a five year non-competition period
specifically related to stud welding.  No licensing revenue have been
recognized for the period ended June 30, 2001



9. GOVERNMENT ASSISTANCE

Government assistance in the amount of $527,855 has been recorded as a
reduction of expenditures for the first six months of 2001.

In addition to government assistance disclosed in note 5 [b], during 2000,
the Company entered into a contribution agreement with Natural Resources
Canada whereby the Company is entitled to receive a maximum of $163,623
(Cdn - $250,000) as defined in the agreement. The contribution is non-
repayable. In 2000, $163,623 was claimed of which $22,006 is included in
government grants receivable as at June 30, 2001.

During the first quarter of 2001, the Company's subsidiary Border Biofuels
Limited (BBL) entered a contribution agreement with Department of Trade and
Industry (DTI), a department of UK government, whereby BBL and its
collaboration partners are entitled to receive $1,696,694 (1,161,300 pound
sterling) under the New & Renewable Energy Programme between January 9, 2001
and July 8, 2003. DynaMotive is named one of the collaboration partners to
the programme. Except for the proceeds from disposing project assets, the
contribution is none repayable. As at June 30, 2001, $143,921 have been
claimed and is included in government grants receivable as at June 30, 2001.


10. SEGMENTED INFORMATION

The Company has six reportable segments. The segments are DynaPower(R),
Actuators, BioTherm(TM), Corporate, Border Biofuels, 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
biomass-to-energy technology that converts low value forest waste and
agricultural by-products into BioOil, while Corporate consists of interest
and administrative costs. Acquired subsidiary operation Border Biofuels
specializes in the development of green power projects in UK. 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.

The Company's reportable business segments are strategic business units
that offer different products and services. They are managed separately
because each business requires different technology and marketing strategies.

<TABLE>
<CAPTION>
                                              June                  June
                                              2001                  2000
                                                $                     $
------------------------------------------------------------------------------
<S>                                       <C>                   <C>
REVENUE
Actuator                                        --                     --
DynaPower(R)                                 260,625              445,751
BioTherm(TM)                                    --                     --
Other                                           --                     --
Border Biofuels                              182,310                   --
Corporate                                         --                   --
------------------------------------------------------------------------------
                                             442,935               445,751
------------------------------------------------------------------------------
LOSS FOR THE PERIOD
Actuator                                     (14,122)               (9,800)
DynaPower(R)                                (152,930)              (90,987)
BioTherm(TM)                                (527,094)             (698,634)
Other                                        (11,735)               (8,504)
Border Biofuels                             (174,082)                   --
Corporate                                 (2,199,186)           (1,661,324)
------------------------------------------------------------------------------
                                          (3,079,149)           (2,469,249)
------------------------------------------------------------------------------
</TABLE>

10. SEGMENTED INFORMATION (cont'd.)

<TABLE>
<CAPTION>
                                              June              December
                                              2001                2000
                                                $                   $
----------------------------------------------------------------------------
<S>                                          <C>                   <C>
CAPITAL EXPENDITURES, INCLUDING PATENTS
(NET OF GRANT & DISPOSAL)
Actuator                                         --                    --
DynaPower(R)                                  (6,890)              111,557
BioTherm(TM)                                 186,948             1,110,863
Other                                         67,218                 3,984
Border Biofuels                               (7,146)                   --
Corporate                                     22,973               224,463
------------------------------------------------------------------------------
                                             263,103             1,450,867
------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
                                              June                  June
                                              2001                  2000
                                                $                     $
------------------------------------------------------------------------------
<S>                                           <C>                   <C>
AMORTIZATION
Actuator                                      14,122                 9,800
DynaPower(R)                                  49,586                54,276
BioTherm(TM)                                  56,460                55,250
Other                                          3,308                 8,504
Border Biofuels                                3,191                    --
Corporate                                     33,625                17,266
------------------------------------------------------------------------------
                                             160,292               145,096
------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
                                              June                December
                                              2001                  2000
                                                $                     $
------------------------------------------------------------------------------
<S>                                        <C>                  <C>
TOTAL ASSETS
Actuator                                      42,029               63,737
DynaPower(R)                                 409,223	              476,462
BioTherm(TM)                               1,560,061            1,429,496
Other                                        137,422               75,295
Border Biofuels                            3,163,850                   --
Corporate                                  1,784,462            2,424,130
------------------------------------------------------------------------------
                                           7,097,047            4,469,120
------------------------------------------------------------------------------
</TABLE>


10. SEGMENTED INFORMATION (cont'd.)

Geographic Information

The Company holds substantially all of its capital assets in Canada and UK,
and revenues from external customers by customer location is as follows:

<TABLE>
<CAPTION>
                                              June                  June
                                              2001                  2000
                                                $                     $
------------------------------------------------------------------------------
<S>                                           <C>                  <C>
Revenue
United States                                111,626               382,020
Italy                                          4,465                 5,136
Canada                                        95,383                57,978
France                                        48,787                   --
United Kingdom                               182,674                   --
Other                                             --                   617
------------------------------------------------------------------------------
                                             442,935               445,751
------------------------------------------------------------------------------
</TABLE>

11.  RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The Company prepares the consolidated financial statements in accordance with
accounting principles generally accepted in Canada ("Canadian GAAP"), which
conform in all material respects to those in the United States ("U.S. GAAP"),
except as follows:

[i]   Under U.S. GAAP, basic earnings per share excludes any dilutive effects
      of options, warrants, convertible securities and shares in escrow.
      Diluted earnings per share are calculated in accordance with the
      treasury stock method and are based on the weighted average number of
      common shares and dilutive common share equivalents outstanding.

[ii]  Under U.S. GAAP, the excess, if any, between the fair value of the shares
      in escrow and the nominal amount paid, will be recorded as compensation
      expense upon release from escrow.

[iii] Under U.S. GAAP, patent costs are amortized over the life of the patent
      commencing with the date the patent is granted.

[iv]  Under U.S. GAAP, stock based compensation to non-employees is recorded
      at the fair market value of the shares issued.

[v]   For reconciliation purposes to U.S. GAAP, the Company has elected to
follow Accounting Principles Board Opinion No. 25 "Accounting for Stock
Issued to Employees" (APB 25) in accounting for its employee stock options.
The exercise price of 70,000 (1999 - 33,196; 1998 - 316,969) fixed employee
stock options granted in 2000 was less than the market price of the underlying
stock on the date of the grant.   The exercise price of fixed employee stock
options granted in 2001 were greater than the market price of the underlying
stock on the date of the grant.

[vi]  For purposes of reconciliation to U.S. GAAP, the re-pricing of options
can give rise to additional compensation expense. During the first six months
of 2001 no compensation expense resulted from the re-pricing of options based
on the transition provision of FIN44, commencing July 1, 2000. Options re-
priced after December 15, 1998 are subject to variable plan accounting under
U.S. GAAP. In the pro forma information on net income and earnings per share,
pursuant to the provisions of Statement of Financial Accounting Standards No.
123 "Accounting for stock based compensation" ("SFAS 123"), additional
compensation expense in respect of the re-pricing of the options has been
reflected.

[vii] For purposes of reconciliation to U.S. GAAP, the stock appreciation
rights ("SAR's") and performance based stock options are accounted for as a
variable compensation plan under APB 25. Compensation relating to variable
plans is recorded in the reconciliation when it becomes probable that the
award will be earned.

[viii] For purposes of reconciliation to U.S. GAAP, the Company presents
the disclosure requirements of Financial Accounting Standard No. 130
("SFAS 130") in these consolidated financial statements. SFAS 130 requires
the presentation of comprehensive income and its components. Comprehensive
income includes all changes in equity during a period except shareholder
transactions. Other accumulated comprehensive income comprises only the
cumulative translation adjustment.


	If accounting principles generally accepted in the United States were
followed, the significant variations on the consolidated statements of loss
and comprehensive loss would be as summarized in the table below.

<TABLE>
<CAPTION>
                                       Three     Three      Six        Six
                                       months    months    months    months
                                       ended     ended      ended     ended
                                      June 30,  June 30,   June 30,  June 30,
                                        2001      2000      2001       2000
                                          $         $         $          $
------------------------------------------------------------------------------
<S>                                    <C>        <C>        <C>        <C>
Loss for the period, Canadian GAAP (1,836,191)(1,320,193)(3,079,149)(2,469,248)
Adjustment for patent
    cost amortization                  (2,128)     7,813     (3,913)     8,800
Adjustment for stock-based compensation(4,166)        --    (10,969)        --
------------------------------------------------------------------------------
Loss for the year, as adjusted     (1,842,485)(1,312,380)(3,094,031)(2,460,448)
------------------------------------------------------------------------------
Unrealized losses on foreign
    currency translation               30,562    (59,728)   (25,990)   (77,140)
-------------------------------------------------------------------------------
Loss for the year, as adjusted     (1,811,923)(1,372,108)(3,120,021)(2,537,588)
-------------------------------------------------------------------------------
Weighted average number of
      common shares outstanding    35,002,334  33,915,151 34,751,246 31,173,833
-------------------------------------------------------------------------------

Loss per common share                 (0.05)     (0.04)     (0.09)    (0.08)
==============================================================================
</TABLE>

11.  RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont'd.)

The three months ended March 31, 2000 and six months ended June 30, 2000
balances have been restated.  A schedule of the restatements is detailed
in note 13.

Consolidated balance sheet items which vary significantly under accounting
principles generally accepted in the United States would be as follows:


<TABLE>
<CAPTION>
                                           June 30,            December 31,
                                             2001                   2000
                                               $                      $
------------------------------------------------------------------------------
<S>                                    <C>                     <C>
Patents                                    627,147                 651,558
==============================================================================
Total assets                             7,014,753               4,390,740
==============================================================================

Convertibe shareholders loan              154,529                      --
Share capital                           24,878,471              23,409,409
Share to be issued                         453,623                 250,713
Contributed surplus                      2,092,711               1,584,997
Cumulative translation adjustment         (397,052)               (371,062)
Deficit                                (24,475,722)            (21,381,691)
------------------------------------------------------------------------------
Shareholders' equity                     2,706,561               3,492,366
==============================================================================
</TABLE>


The weighted-average fair value of options granted in 2001 where the stock
price is equal to the exercise price of the options, greater than the
exercise price of the options and less than the exercise of the options
was $0.00, $0.00, and $0.67 respectively.

The Black Scholes options valuation model was developed for use in
estimating the fair value of traded options, which have no vesting
restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions including
the expected stock price volatility. Because the Company's employee stock
options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the
fair value of its employee stock options.

Pro forma information regarding net income and earnings per share as required
by Statement of Financial Accounting Standard No. 123 "Accounting for stock
based compensation" ("SFAS 123"), is estimated at the date of grant using a
Black Scholes pricing model with the following assumptions: Risk free interest
rate for 2001 of 5.0%, dividend yields of 0%; volatility factors of the
expected market price of the Company's common stock of 1.303 and a weighted
average expected life of the option of 5 years.



11.  RECONCILIATION OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont'd.)

Supplemental disclosure of pro forma loss and loss per share:


<TABLE>
<CAPTION>
                                             June 30, 2001      June 30, 2000
------------------------------------------------------------------------------
<S>                                               <C>               <C>
Pro forma loss                                  3,116,731         2,545,889
Pro forma loss per share                          (0.09)            (0.08)
==============================================================================
</TABLE>





12. ACQUISTION OF BORDER BIOFUELS LIMITED

The Company acquired 75% of the outstanding common shares of Border Biofuels
Limited's (BBL), a UK Green Power project development company, on April 6, 2001
for a nominal cash consideration of 1 pound sterling. The Company has the
option to acquire the balance of BBL's equity (25%) for $1,570,704
(1,108,628 pound sterling) in DynaMotive stock at the higher rate of $3.00
per share or the prevailing market price at the time BBL achieve net positive
relevant profit under UK General Accepted Accounting Principles (UK GAAP).
Relevant profit is defined as the amount obtained by deducting the
accumulated liabilities from the retained profit, at any given time.

Furthermore, as part of the transaction, BBL restructured its debt with its
Bankers ($1,645,567 (1,162,789 pound sterling), see Note 3[b]). This debt will
be repaid from profits generated by BBL with no recourse to the Company.
Further in connection with the acquisition, the Company provided a guarantee
of $283,038 (200,000 pound sterling) to BBL's banker.

The acquisition of BBL was accounted using the purchase method. The
consolidated financial statement reflected the results of operation of Border
Biofuels Limited from the date of acquisition through June 30, 2001. The total
assets acquired amounted to $4,000,115 (2,825,730 pound sterling), and the
total liabilities acquired were $3,402,482 (2,404,258 pound sterling). The
net asset was calculated to be $597,633 (421,472 pound sterling), of which
$149,427 (105,368 pound sterling) represented minority interest. Given the
purchase price of 1 pound sterling, the acquisition resulted in a negative
goodwill (75%) of $448,225 (316,102 pound sterling). This amount is used to
reduce the corresponding portion of acquired BBL goodwill from prior
investments ($365,249, (257,798 pound sterling)). The remaining credit
balance was used to reduce deferred project costs ($82,606, (58,305 pound
sterling)).


13.  CHANGES IN PRIOR YEARS BALANCES

Certain options, warrants and shares issued to non-employees were issued at a
price other than market price in the prior year.  The prior year's six month
ended  June 30, 2001 balances have been restated as follows:



Analysis of Revised Deficit as of June 30, 2000
<TABLE>
<CAPTION>
                                            Three       Three        Six
                                            months     months       months
                                            ended       ended        ended
                                           March 31,    June 30,    June 30,
                                             2000        2000         2000
                                               $          $            $
----------------------------------------------------------------------------
<S>                                      <C>         <C>          <C>
Deficit as at December 31,1999           14,177,911  15,326,966   14,177,911
    Net loss for the period before
         Adjustments                      1,149,055     902,710    2,051,765
----------------------------------------------------------------------------
Deficit before adjustments               15,326,966  16,229,676   16,229,676
----------------------------------------------------------------------------
Adjustment and reclassification for the period
    Balance b/f from June 30, 2000              --      290,568           --
    Marketing expenses                        6,875      30,491       37,366
    Office supplies, Telephone & Insurance  (15,617)     75,418       59,801
    Professional fees                       283,693      96,424      380,117
    Interest & other income                  15,617     (75,418)     (59,801)
----------------------------------------------------------------------------
Total adjustments c/f to next period        290,568     417,483      417,483
-----------------------------------------------------------------------------

Adjusted Deficit after adjustments        15,617,534 16,647,159   16,647,159
============================================================================


Weighted average number of
     Common shares outstanding            29,626,768 33,915,151   31,173,833
----------------------------------------------------------------------------
Loss per common share                        (0.05)     (0.04)      (0.08)
----------------------------------------------------------------------------
</TABLE>



14. SUBSEQUENT EVENTS

	In July, continued from an on-going private placement Common Share offering,
the Company received subscription commitments for $770,000, of which $620,000
 has been received.



15. COMPARATIVE FIGURES

Certain comparative figures have been reclassified in order to conform with the
presentation adopted in the current year.



ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q 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 Energy Systems 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
changes and/or delays in product development plans and schedules, customer
acceptance of new products, changes in pricing or other actions by
competitors, the ability to integrate the acquisition of Border Biofuels Ltd.
with the business of the Company, 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.

The following discussion and analysis should be read in conjunction with the
financial statements and notes thereto included elsewhere herein. The
Company's quarterly operating results have been and will continue to be
affected by a wide variety of factors that could materially and adversely
affect revenues and profitability. These include factors relating to
competition, such as competitive pricing pressure and the potential
introduction of new products by competitors; manufacturing factors, including
constraints in the Company's supply of products from outside manufacturing
and assembly operations and shortages or increases in the prices of raw
materials and components; sales and distribution factors, such as changes in
customer base or distribution channels resulting in lower margins or the loss
of a significant alliance partner; new product development and introduction
problems, such as increased research, development, marketing and beta test
expenses associated with new product introductions, and delays in the
introduction of new products and technologies; as well as other factors,
including levels of expenses relative to revenue levels, personnel changes,
expenses that may be incurred in litigation, and fluctuations in foreign
currency exchange rates. The Company has experienced and expects to continue
to experience fluctuations in operating results, and there can be no
assurance that the Company will achieve profitability in the future.

1. Introduction

DynaMotive Energy Systems Corporation is a world leader in the development of
technology to produce competitively priced fuels from renewable and non-
depleting biomass. DynaMotive's liquid fuel, known as BioOil, presents
significant market opportunities that the Company intends to exploit
commercially as a clean fuel to replace natural gas, diesel and other fossil
fuels to produce power and heat in industrial boilers, gas turbines and
diesel engines. The Company and its partners are also engaged in research and
development on a range of derivative products that, if successful, could
further enhance the market and value for BioOil as an alternative fuel and
product source.


DynaMotive Energy Systems Corporation was incorporated on April 11, 1991 in
the Province of British Columbia, Canada, by registration of its Memorandum of
Articles, pursuant to the Company Act of British Columbia, under the name of
DynaMotive Canada Corporation. On October 31, 1995, the shareholders approved
a change of name to DynaMotive Technologies Corporation and on June 26, 2001,
the shareholders again approved a change of name to the Company's current name.
 As of June 30, 2001, the Company had seven wholly-owned subsidiaries:
DynaMotive Corporation (incorporated in the State of Rhode Island in 1990),
DynaMotive ElectroChem Corporation (incorporated in the Province of British
Columbia in 1993), DynaMotive Europe Limited (formerly known as DynaMotive
Technologies (UK) Ltd., incorporated in the United Kingdom in 1996),
DynaMill(tm) Systems Limited (incorporated in the Province of British Columbia
in 1996), DynaMotive Puerto Rico, Inc. (incorporated in Puerto Rico in 1997),
DynaPower, Inc. (incorporated in the Province of British Columbia in May 2000
under the name 606620 B.C. Ltd which was officially changed to DynaPower Inc.
in July 2000) and DynaMotive Canada, Inc. (federally incorporated in November
2000). In this Report, unless the context otherwise requires, the terms the
"Company" and "DynaMotive" shall refer to DynaMotive Energy Systems
Corporation and its subsidiaries. The Company is currently listed on the
over-the-counter bulletin board (OTCBB). Symbol: DYMTF.OB

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

The Company has previously developed and commercialized two other innovative
industrial technologies which have produced commercial sales: DynaPower(r), an
acid free industrial metal cleaning system for wire manufacturing with sales
to date in twelve countries, and motion control actuator systems used for
robotic automotive manufacturing.

During the second quarter of 2001, the Company acquired 75% of the
outstanding common shares of Border Biofuels Limited (BBL), a UK Green Power
project development company, for a cash consideration of 1 pound sterling.
This transaction allowed the Company to gain access to 69 Megawatts of BioOil
fuelled electricity projects under 15-year power purchase agreements under
the Non Fossil Fuel Obligation and Scottish Renewable Obligation programmes
UK government, Revenues under these agreements could potentially exceed
$800,000,000 over the 15 years period.

As of  June 30, 2001, DynaMotive and its wholly owned subsidiaries have
active inventions protected by patents issued and patents pending via in-
house development or license, with the earliest U.S. patent scheduled to
expire on December 3, 2010.

The Company is organized into two strategic business units. The BioOil
Business Unit is commercializing a unique biomass-to-energy technology that
converts low value forest and agricultural wastes into liquid BioOil that can
be used as a "green" fuel for power generation or as the raw material 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. On May 1, 2001 the Company announced that it intends to
divest its metal cleaning subsidiary, DynaPower Inc. and had entered into a
Letter of Intent for a potential management buy-out

2. Results Of Operations

The Company's financial statements have been prepared in accordance with
accounting principles generally accepted in Canada.  A reconciliation of
amounts presented in accordance with United States accounting principles is
detailed in note 11 of the Company's consolidated financial statements.
Financial information concerning the Company's industry segments is
summarized in Note 10 to Consolidated Financial Statements.

Total sales revenues for the second quarter of 2001 increased to $345,817
while the same quarter for 2000 generated $178,809 of revenues.  Revenue for
the second quarter of 2001 was higher than the same quarter in 2000 due to
inclusion of revenue from newly acquired Border Biofuels Limited. On a
comparative basis, revenue generated from the Company's metal cleaning
business for the first 6 months in of 2001, and 2000 were $260,625 and
$445,751, respectively. This decrease was due to decline in commercial sales
volume of its DynaPower(r) metal cleaning systems. On May 1, 2001 the Company
announced that it intends to divest its metal cleaning subsidiary, DynaPower
Inc., and had entered into a Letter of Intent for a potential management buy-
out. The Company intends to retain ownership of certain patents connected
with its metal cleaning technology and to continue to receive royalty
payments from these patents. While the Company intends to complete the
divestiture by the third quarter of this year, there can be no assurance that
the divestiture will be completed by the end of third quarter of 2001 or at
all.

Cost of sales in the second quarter of 2001 increased to $240,537, from
$143,798 in the same period of 2000 due to corresponding increases in sales.
For the three months ended June 30, 2001, the gross margin was 30.4% compared
to 19.6% in the same period of 2000.  The quarter-to-quarter increase in gross
margin is due to higher profitability generated from the newly acquired Border
Biofuels Limited's operations.

For the second quarter of 2001 and 2000 the Company expended $208,398 and
$40,889 respectively on research and development. Of these amounts, $63,571
and $39,242 respectively were sponsored by government funding.  For the first
six months of 2001 and 2000, the Company expended $310,629 and $262,522,
respectively on research and development. Of these amounts, $90,808 and
$91,497 respectively were sponsored by government funding.  The increase in
research and development expenditures in 2001 reflects the increased
activities in the Company's commercialization effort.

General and administrative salaries and benefits increased to $505,975 in the
second quarter of 2001 compared to $314,537 in the same period of 2000.  The
increase reflects the increased cost structure with the acquisition of Border
Biofuels Limited.

Overall capital expenditures, net of government grants and disposals, for
developing and patenting the Company's technologies totaled $263,103 in the
first six months of 2001. For the same period in 2000, total capital
expenditures was $291,032.

The Company's total assets increased to $7,097,047 at June 30, 2001 from
$4,469,120 at December 31, 2000.  The increase is due primarily to the
acquisition of Border Biofuels Limited. Liabilities increased to $4,462,721
at the end of the second quarter from $898,374 at December 31, 2000 also due
to the acquisition of Border Biofuels Limited.

The operating loss for the six month period ending June 30 2001 was $3,079,149
as compared to $2,469,249 for the same period in 2000.  The increase in loss
is primarily due to an increase in occupancy and office expenses, and
increase in professional fees paid to independent consultants assisting in
the Company's commercialization effort. The majority of such fees were paid
in restricted common stock or subscriptions to purchase common stock.

Use of cash in operating activities for the six month period ending
June 30, 2001 decreased to $1,262,466 from $1,521,870 in the same period in
2000. The decrease in use of cash was primarily due to increase in non-cash
equity compensation, and changes in working capital consisting of accounts
and government grant receivables, deferred revenue, and accounts payables,
and increases in non-cash expenses paid in common stock or subscriptions to
purchase common stock.

The end-of-period deficit increased from $18,934,784 at December 31, 2000
to $22,092,438 at June 30, 2001.  The loss per common share for the second
quarter of 2001 increased to five cents ($0.05) as compared to four cents
($0.04) for the same quarter in 2000.

DynaMotive entered into a strategic alliance partnership with a major South
American based engineering firm, Tecna SA to develop commercial energy
systems based on DynaMotive's pyrolysis technology. The agreement provides
for an investment by Tecna in the equity of DynaMotive along with a
commitment by Tecna to provide large scale technical support. The alliance
also contemplates establishment of a joint technical committee for the scale-
up integration and construction supervision of projects worldwide. Commencing
June 1, 2001, the services to be provided by Tecna will have an estimated
fair market value of $580,000 based on standard Tecna billing rates. The
aggregate amounts are payable in the Company's common stock for a total of
425,000 common shares and warrants exercisable at $1.50 per common share. The
balance of $240,000 is payable to Tecna in cash.


3. Liquidity And Capital Resources

The Company's BioOil technologies are consistent with the environmental and
economic objectives of governments around the world. The Company has received
strong support from the Canadian federal government and is in discussion with
other governments and international agencies in target markets directly and
through project partners to examine BioOil financing and grant potential.
Canadian government support has been received from Industry Canada/
Technology Partnerships Canada (TPC) which has agreed to contribute Cdn. $8.2
million (US $6.1 million) to DynaMotive for the development and
commercialization of BioOil fuels and derivative products, and Natural
Resources Canada (NRCan) which has contributed $250,000 to support ongoing
research and development of BioOil at the CANMET national laboratory. In
addition, DynaMotive Europe Limited together with Border Biofuels Limited and
a strategic partner, received a grant commitment of $1.7 million from the UK
Department of Trade and Industry to support the development of an integrated
BioOil and electricity generating plant in the UK.

During the quarter ended June 30, 2001, the Company received a Canadian
government assistance grant of $170,484, which is included in government
grants receivable at June 30, 2001 as noted on notes 5 and 9 of the
consolidated financial statements.

As of the end of the second quarter of 2001, the Company had cash and cash
equivalents of $350,144, representing a decrease of $745,571 from cash and
cash equivalents as at December 31, 2000. The primary sources of liquidity
for the Company during the second quarter of 2001 was the Company's private
placement offerings and stock option exercise for cash totaling $280,400.

During the first six months of 2001, the Company generated cash in the amount
of $804,800 from financing activities, and used cash in operating and in
investing activities in the amounts of $1,262,466, and $263,103,
respectively. For the same period in 2000, the Company used cash in operating
and in investing activities in the amounts of $1,521,870 and $291,032,
respectively, while financing activities generated cash of $4,720,150.

Cash used in operating activities for the first six months of 2001, which
consists of a loss for the period of $3,079,149, was partially offset by
amortization, and stock based compensation in the amounts of $160,292, and
$1,448,550, respectively. Non-cash working capital items decreased by
$343,907 during the six month period of 2001. Cash used in operating
activities for the same period in 2000 consisted of a loss of $2,469,248,
which was partially offset by amortization and non-cash compensation expenses
in the amount of $145,096, and $845,232 respectively. Non-cash working
capital items increased by $42,950 during the same period in 2000.

Financing activities for the first six months of 2001 included private
placement offerings and common stock option exercises for cash totaling
$798,674.  Financing activities for the first six months of 2001 also
included an increase in bank indebtedness and repayment of shareholder loans
totaling $14,316, and $8,190, respectively. Financing activities for same
period in 2000 included common share subscriptions received and options
exercised for cash totaling $4,603,848, and an increase in bank indebtedness
of $116,302.

Investing activities during the second quarter of 2001 resulted in a net
decrease of cash by $263,103 which consisted of $237,983, net of government
grants, incurred in acquisitions and upgrades of capital assets, and $25,120
in patent costs. During the same period in 2000, the Company acquired capital
assets net of government grant, and technology patents in the amounts of
$280,500, and $10,532, respectively.

With the current cash on hand and anticipated divesting of its DynaPower
business division to focus on the commercial development of its BioOil
technologies, the Company will require additional financing for its continuing
operations and for the commercialization of its BioTherm(r) technologies during
this year.  The Company continues to work closely with a global investment
bank as well as other interested parties with the intent of raising up to $15
million in equity financing during the third and fourth quarter of 2001.
  Given market conditions and other factors, there can be no guarantee that
the Company will be successful in securing additional financing. If adequate
funds are not available on acceptable terms when needed, the Company may be
required to delay, scale-back or eliminate the manufacturing, marketing or
sales of one or more of its products or research and development programs.





ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is affected by fluctuations in foreign currencies and changes in
interest rates. The Company's revenue is primarily in US dollars while the
majority of its expenses are in Canadian currency. The Company holds cash in
both US and Canadian funds and exchanges from US currency to Canadian
currency as necessary.

The Company can be adversely affected when the Canadian currency appreciates.
The management has the ability, to some extent, to time exchanges and enter
into forward exchange contracts in an attempt to mitigate such risk. The
Company reports in US currencies. When translating the Company's financial
statements from Canadian dollars to US currencies, depending on the
prevailing exchange rate at the time, certain impact from prior exchange
transactions may be offset. The extent of the Company's exposure depends on
the degree of fluctuation in foreign currencies. Due to the nature of foreign
currency exchange, the exact exposure is difficult to estimate.

The Company holds its cash reserve in short-term deposits. The interest
revenue obtained from these instruments will depend on the market interest
rates prevailing at the time. Based on cash positions at June 30, 2001, the
change in interest revenue due to changes in market interest rates is not
material. The Company also has credit facilities, which it draws upon and
repays as necessary. The interest expense depends on the prevailing market
rate at the time. At the current level of debt instruments, the Company
estimates that for every 1% adverse change in the applicable interest rate,
the Company would be exposed to a $22,000 increase in interest expenses.

PART II - OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

ITEM 2.CHANGES IN SECURITIES AND USE OF PROCEEDS

On June 20, 2001, the Company closed the first tranche of a private placement
financing of equity units for total proceeds of $319,750, including $250,000
in cash and $69,750 in settlement of consulting fees payable by the Company.
Each equity unit sold for $0.80 and consisted of one common share, no par
value, of the Company and one warrant to purchase one half of a common share.
The warrants have a two year term, subject to acceleration under certain
circumstances, and are exercisable at a per share price equal to $1.50. A
total of 399,686 common shares and 272,500 warrants were issued to Cantai
Property Ltd., Chia Tai Chen, R. Andrew Kingston and James Acheson.

The offers and sales of securities to R. Andrew Kingston, president and
chief executive officer of the Company, and James Acheson, chief operating
officer of the Company, were made to Accredited Investors as defined under
Regulation D promulgated under the Securities Act of 1933, as amended, and
are therefore exempt from United States registration requirements.  The
offers and sales of securities to all other investors in the private
placement financing were made to investors who were not U.S. Persons as
defined under Regulation S promulgated under the Securities Act, and are
therefore exempt from United States registration requirements.

ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual General Meeting of Shareholders ("AGM") on June
26, 2001 at the BC Research facilities at 3650 Wesbrook Mall, Vancouver, B.C.
The shareholders approved the following actions, as indicated.


Action         Number of      Number of       Number of      Number of Broker
Voted Upon     Votes For     Votes Against    Abstentions       non-votes
-----------------------------------------------------------------------------
Election of
Director
Richard Lin   25,560,160        ----              9,624             ----
For 1-year term

Election of
Director
R Andrew Kingston 25,557,160      ----             9,624             3,000
For 1-year term

Action           Number of      Number of      Number of     Number of Broker
Voted Upon       Votes For     Votes Against   Abstentions      Non-votes
-----------------------------------------------------------------------------
Election of
Director
Bayne Boyes      25,557,160       ----            9,624            3,000
For 1-year term

Election of
Director
James Miller     25,553,160        ----           9,624            7,000
For 1-year term

Election of
Director
Michael McDowel  25,537,160        ----           9,624           23,000
For 1-year term

Election of
Director
Curtin Winsor, Jr. 25,536,160       ----           9,624          24,000
For 1-year term

Election of
Director
Desmond Radlein    25,557,160       ----           9,624           3,000
For 1-year term

Election of
Director
Shing-Cheng Hong  25,559,060        ----           9,624           1,100
For 1-year term

Election of
Director
Steve Ives        25,555,160        ----           9,624           5,000
For 1-year term

Election of
Director
Martha Salcudean  25,553,660        ----           9,624           6,500
For 1-year term

Election of
Director
Chih-Lin Chu      25,552,560        ----           9,624           7,600
For 1-year term

Appointment of
Ernst & Young
as Auditors       25,558,569      3,165            6,550           1,500
For 1-year term

Company Name   25,524,819       28,665            16,300            ----
Change


ITEM 5.OTHER INFORMATION

In June 2001, the Company's name was changed to DynaMotive Energy Systems
Corporation to better reflect the focus and direction of the Company. The
Company's over-the-counter symbol remains as DYMTF.OB.

ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K

(a)Exhibits

Exhibit Description

3.1 (a)Company Act Memorandum of DynaMotive Energy Systems Corporation, as
amended to date (filed as Exhibit 3.1 to the Company's Quarterly Report on
Form 10-QSB for the quarter ended June 30, 2000, and incorporated herein by
reference)

3.1 (b)Amendment to the Company Act Memorandum of DynaMotive Energy Systems
Corporation, dated July 3, 2001.

3.2 Articles of DynaMotive Energy Systems Corporation, as amended to date
(filed as Exhibit 3.2 to the Company's Quarterly Report on Form 10-QSB for
the quarter ended June 30, 2000, and incorporated herein by reference)


Agreements related to the purchase of shares of Border Biofuels Limited dated
April 6, 2001

Alliance agreement with Tecna S.A executed June 25, 2001

Contribution agreement between DTI, Border Biofuels Ltd, and Collaboration
partners executed March 8, 2001

DYNAMOTIVE ENERGY SYSTEMS CORPORATION

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized as of the 14th day of August 2001.

                                    DYNAMOTIVE ENERGY SYSTEMS CORPORATION


                                    /s/ Robert Andrew Kingston

                                    Robert Andrew Kingston,

                                    President & Chief Executive Officer


                                    /s/ Stephen Ives
                                    Stephen Ives
                                    Chief Financial Officer