Shareholder Attacks Exxadon's Business Practices.

SACRAMENTO, Calif.--(BUSINESS WIRE)--Aug. 28, 1996--A shareholder in a Canadian company that claims to have a toxic-free process that will benefit the environment by turning scrap automobile tires into profitable by-products said today she has received information casting doubt upon the company's claims and conduct.

Sonia Allen, a private industry management restructuring consultant, said she has retained attorney H. Herbert Jackson, who as District Attorney was the chief law enforcement officer of Sacramento County, Calif., to represent her in her review of Environmental Waste Management Corporation (EWMC), the Toronto firm that holds the patent on the microwave tire reduction process. EWMC is a wholly-owned subsidiary of Exxadon Technology Corporation (EXDN-Z; EXDNF-L). Exxadon is a public company trading over the counter on the Dealers Network in Toronto.

Allen said she recently made a minimal investment in Exxadon so that she could attend the firm's annual shareholders meeting in Toronto to learn more about the tire reduction technology before making a more substantial investment. The Sacramento businesswoman said she was unable to attend the shareholders meeting, but obtained disturbing information about Exxadon and EWMC's technology and business practices from other sources.

Allen said she has an understanding that millions of dollars worth of nearly-concluded sales of EWMC tire reduction systems in California have been sidetracked because EWMC improperly terminated its sales agreement with Geometra Pneumatic Energy Recovery Systems, Inc. (GPERS), the company which has been marketing EWMC's technology in California, Mexico, South Korea, Taiwan and Israel.

GPERS last month filed a $ 25 million (Canadian dollars) claim against EWMC alleging fraud, misrepresentation and breach of contract by the Canadian company. Exxadon is a co-defendant in the claim. The claim against EWMC/Exxadon is scheduled to be heard in December by a three-judge arbitration panel in Toronto.

GPERS, which has its staff headquarters in Sacramento, entered into its sales agreement with EWMC on March 1, 1996 and on the same date signed a separate agreement with Exxadon allowing it to purchase up to 500,000 shares in Exxadon at $6/$8 (Canadian) based upon 10 tire reduction systems being sold by GPERS.

Allen said the allegations in the complaint of fraudulent acts, omissions, misrepresentations, non-performance and other breaches of contract by EWMC are addressed in a tape recording in her possession of a conversation which took place on July 15, 1996 between GPERS President James E. Moore of Sacramento and David L. Holmes, president of Enercon America Distribution, Ltd., an Ohio company primarily consisting of engineers that markets EWMC's tire reduction system in the 49 U.S. states other than California.

In that conversation, Holmes cites a number of misrepresentations about EWMC's technology that EWMC and Exxadon officials made to him and to others. Holmes states that before the tire reduction technology was improved by Enercon it could not have met environmental standards despite EWMC's claims to the contrary. On one of many points, Holmes said that EWMC lied in stating that a methane gas by-product from the tire reduction process was running a particular engine at EWMC's demonstration plant in Ajax, just outside of Toronto. As a matter of fact, Holmes said, supplemental natural gas was being piped into the engine.

"We know that the machine...couldn't run on those methanes because of all the nitrogens in there," Holmes said. "And then we pointed out another little thing that they (EWMC) didn't know. If you were to strip that nitrogen out of there, the gases that are really in there, they're not methane, they would have blown this place sky high. They're acetylenes and propylenes and all the other kind of stuff, which are extremely explosive, and the only thing that kept the lid on that building there is because all the nitrogen was in there and prevented that kind of explosion."

EWMC attempted to cancel its sales agreement with GPERS on June 29, contending that GPERS had not met its deadline to sell a tire reduction system (EWMC Model 3000) within 120 days of the contract signing.

"I saw the documentation that GPERS apparently met the 120-day deadline but EWMC refused to honor it," Allen said. "It appears the only contractual failure was on the part of EWMC, which would not allow engineers representing the would-be purchaser to evaluate the tire reduction technology," Allen said. "It seems that this is because EWMC had not perfected its technology and could not afford to subject it to the scrutiny of outside engineers."

In his July 15 conversation with Moore, Holmes noted that under its contract with GPERS, EWMC is required to provide GPERS with a "full set of drawings" of "the whole, finished, commercialized (tire reduction) unit." Holmes said this was not done because "it's never been designed. It doesn't exist. I mean, those drawings are only being created today."

Holmes said the EWMC demonstration plant outside Toronto is a research and development unit and EWMC was wrong when it stated that the system was ready to go commercial.

Holmes said that technically the tire reduction system still is not ready to go commercial even though he is certain that modifications made by his firm, not EWMC, will make it commercially viable.

Allen understands that William E. Bateman, of the law firm of Nobbs, Woods and Clark, the attorney for Exxadon and current board member, stated at the annual shareholders meeting that the allegations of GPERS are "totally without grounds or merit" as was similarly stated in Exxadon's news release of July 3, 1996. Allen expressed that Bateman should be concerned about his comments and exposure as a director/legal counsel in that such comments were apparently intended to defuse the concerns of the shareholders about Geometra's allegations.

Allen's attorney said his client merely wants EWMC to honor its contract with GPERS so that, subject to the tire reduction system being completed, sales in California and elsewhere can proceed and she can comfortably increase her investment in what she hopes, based upon EWMC's promises, will be a profitable and environmentally beneficial technology.

Jackson said that he and his client are considering various legal courses of action that may be pursued if EWMC and Exxadon continue the type of conduct that has come to his client's and his attention.

"As a business woman," Allen said, "I am appalled at the way EWMC and Exxadon have conducted business to date and strongly feel that all Exxadon shareholders should be made aware of the facts."

Allen said shareholders or their attorneys as well as others wishing to discuss the EWMC/GPERS matter may contact her attorney, H. Herbert Jackson at 2651 K Street, Sacramento, California, 95816; Telephone: [phone].

CONTACT: H. Herbert Jackson, 916/444-2349