UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                  FORM 10-QSB/A

                                (AMENDMENT NO. 1)

[X]   Quarterly Report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

      For the quarterly period ended MARCH 31, 2007

[ ]   Transition Report pursuant to 13 or 15(d) of the Securities Exchange
      Act of 1934

      For the transition period ______________ to ______________

      Commission File Number 000-21391

                          TURBODYNE TECHNOLOGIES, INC.
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

            NEVADA                                         95-4699061
-------------------------------                ---------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

36 E. BARNETT STREET, VENTURA, CALIFORNIA                     93001
-----------------------------------------                   ----------
 (Address of principal executive offices)                   (Zip Code)

Issuer's telephone number, including area code:           (805) 201-3133

                                 NOT APPLICABLE
                                 --------------
                 (Former name, former address and former fiscal
                     year end, if changed since last report)

Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days Yes [ ] No [ X ]

State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 357,459,444 shares of common stock
issued and outstanding as of MAY 14, 2007.

Transitional Small Business Disclosure Format (check one): Yes [ ] NO [X]
<PAGE>

                          TURBODYNE TECHNOLOGIES, INC.
                             INDEX TO FORM 10-QSB/A
                                 MARCH 31, 2007

                                                                           PAGE
                                                                          NUMBER
                                                                          ------

PART I -  FINANCIAL INFORMATION

Item 1.   Financial Statements:

          Consolidated Balance Sheets as of March 31, 2007 and
              December 31, 2006                                              6

          Consolidated Statements of Operations for the three month
              periods ended March 31, 2007 and March 31, 2006                7

          Consolidated Statements of Cash Flows for the three month
              periods ended March 31, 2007 and March 31, 2006                8

          Notes to the Consolidated Financial Statements                     9

Item 2.   Management's Discussion and Analysis or Plan of Operations         21

Item 3a.  Controls and Procedures                                            31

PART II - OTHER INFORMATION

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds        32

Item 6.   Exhibits                                                           32

SIGNATURES                                                                   33


                                       2
<PAGE>

                                EXPLANATORY NOTE

Turbodyne Technologies, Inc. (the "Company") is filing this Amendment No. 1 to
its Quarterly Report on Form 10-QSB for the quarterly period ended March 31,
2007 (the March 31, 2007 10-QSB), which was originally filed on May 15, 2007.
This Amendment No. 1 is being filed to restate the Company's financial
statements for the three months ended March 31, 2007 since the liabilities were
overstated, expenses and net loss were understated and additional paid in
capital was understated.

The Company is restating its previously issued consolidated financial statements
for the following reasons: unrecorded beneficial conversion feature of
convertible debt and related amortization, unrecorded value of detachable
warrants issued with the convertible debt, unrecorded debt conversion expense as
a result of Company's modification of conversion terms and terms for the
exercise of warrants to induce conversion and warrants exercise.

During the quarter ended March 31, 2007, the Company issued $325,000 convertible
notes. The notes bear interest at 5% and mature within one year from date of
issuance. The Notes are convertible, at the option of the holder, to shares of
the Company's common stock. On February 22, 2007 the Board of Directors changed
the per share conversion price from $0.005 to $0.02 for new lenders. Therefore,
$50,000 is at a conversion price per share equal to $0.005 and $275,000 is at
$0.02.

In addition, the Company issued, to the holders of convertible notes, warrants
to purchase 6,500,000 shares of the Company's common stock. The warrants have
$0.025 exercise price and expire five years from date of issuance. In accordance
with generally accepted accounting principles, the proceeds, received from debt
or convertible debt with detachable warrants, are allocated using the relative
fair value of the individual elements at the time of issuance. Using the
Black-Scholes valuations model, the aggregate value of the 6,500,000 warrants is
$290,049. Assumptions used to value the warrants: expected volatility of 155%;
risk-free interest rate of 4.46%, 4.57%, and 4.69% and an expected life of 5
years. The amount allocated to the warrants amounts to $104,413 and has been
recognized as a decrease in loans payable and an increase in additional paid in
capital.

This Amendment No. 1 does not reflect events occurring after the original filing
of the Company's March 31 2007 10-Q, and does not update or modify the
disclosures therein in any way other than as required to reflect the amendment
described above.


                                       3
<PAGE>

PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                        TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS
                        FOR THE THREE-MONTH PERIODS ENDED
                        MARCH 31, 2007 AND 2006
                        (UNAUDITED - EXPRESSED IN US DOLLARS)


                                       4
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                                     CONSOLIDATED BALANCE SHEETS
                                                       (EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
                                                                  MARCH 31      DECEMBER 31
                                                                      2007             2006
-------------------------------------------------------------------------------------------
ASSETS                                                          (UNAUDITED     (AS RESTATED)
                                                              AND RESTATED)
<S>                                                          <C>              <C>
CURRENT
   Cash                                                      $      89,559    $      14,745
   Prepaid expenses and other current assets                           672              672
                                                             ------------------------------
        TOTAL CURRENT ASSETS                                        90,231           15,417
PROPERTY AND EQUIPMENT, net                                             --              537
                                                             ------------------------------
TOTAL ASSETS                                                 $      90,231    $      15,954
===========================================================================================
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
CURRENT
   Accounts payable                                          $   2,152,157    $   2,302,417
   Accrued liabilities                                             419,793          444,193
   Provision for lawsuit settlements (Note 5)                    4,754,896        4,675,137
   Loans payable (Note 4)                                          616,884          551,121
                                                             ------------------------------
        TOTAL CURRENT LIABILITIES                                7,943,730        7,972,868
DEFERRED LICENSING FEE                                             313,722          319,278
                                                             ------------------------------
        TOTAL LIABILITIES                                        8,257,452        8,292,146
                                                             ------------------------------
STOCKHOLDERS' DEFICIT
   Share Capital (Note 3)
      Authorized
          1,000,000 preferred shares, par value $0.001
          1,000,000,000 common shares, par value $0.001
      Issued
          12,175 preferred shares in 2007 and 2006                      12               12
          357,316,577 common shares in 2007 (2006 -
          345,316,577)                                             357,317          345,317
   Treasury stock, at cost (1,778,580 shares)                   (1,963,612)      (1,963,612)
   Additional paid-in capital                                  123,015,091      122,132,286
   Other comprehensive income -
      Foreign exchange translation gain                             35,119           35,119
   Accumulated deficit                                        (129,611,148)    (128,825,314)
                                                             ------------------------------
        TOTAL STOCKHOLDERS' DEFICIT                             (8,167,221)      (8,276,192)
                                                             ------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                  $      90,231    $      15,954
===========================================================================================
</TABLE>

         The accompanying notes are an integral part of these unaudited
                       consolidated financial statements.


                                       5
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENTS OF OPERATIONS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
FOR THE THREE-MONTH PERIODS ENDED MARCH 31                          2007             2006
-----------------------------------------------------------------------------------------
                                                           (AS RESTATED)
-----------------------------------------------------------------------------------------
<S>                                                        <C>              <C>
LICENSING FEES                                             $       5,556    $       5,556
                                                           ------------------------------

EXPENSES
   Selling, general and administrative                           235,040          185,557
   Research and development costs                                 80,941           22,715
   Litigation expense                                             79,759           85,872
   Depreciation and amortization                                     537              491
                                                           ------------------------------
      TOTAL EXPENSES                                             396,277          294,635
                                                           ------------------------------

LOSS FROM OPERATIONS                                            (390,721)        (289,079)

OTHER INCOME (EXPENSE)
  Interest expense                                                (8,990)          (4,297)
  Amortization of discount on convertible notes (Note 4)         (85,773)              --
  Debt conversion expense (Note 4)                              (422,400)              --
  Gain on extinguishment of debt                                 122,050               --
                                                           ------------------------------

NET LOSS                                                   $    (785,834)   $    (293,376)
=========================================================================================

NET LOSS PER COMMON SHARE - BASIC AND DILUTED              $       (0.00)   $       (0.00)
=========================================================================================

WEIGHTED AVERAGE SHARES - BASIC AND DILUTED                  349,272,133      320,416,577
=========================================================================================
</TABLE>

         The accompanying notes are an integral part of these unaudited
                       consolidated financial statements.


                                       6
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
FOR THE THREE-MONTH PERIODS ENDED MARCH 31                             2007             2006
--------------------------------------------------------------------------------------------
                                                               (AS RESTATED)
<S>                                                           <C>              <C>
OPERATING ACTIVITIES
   Net loss for the period                                    $    (785,834)   $    (293,376)
   Adjustments to reconcile net loss to net
   cash provided by (used in) operating activities:
      Amortization of deferred licensing fees                        (5,556)          (5,556)
      Depreciation and amortization                                     537              491
      Gain on extinguishment of debt                               (122,050)              --
      Amortization of discount on convertible debt (Note 4)          85,773               --
      Debt conversion expense (Note 4)                              422,400               --
      Warrant compensation  (Note 3)                                 87,405               --
   (Increase) decrease in operating assets
      Prepaid expenses and other current assets                          --               --
   Increase (decrease) in operating liabilities
      Accounts payable                                              (28,210)          37,142
      Accrued liabilities and provision for lawsuit
      settlements                                                    64,349           52,314
                                                              ------------------------------
         Net cash used in operating activities                     (281,186)        (208,985)
                                                              ------------------------------

FINANCING ACTIVITIES
   Notes Payable                                                    356,000          160,000
                                                              ------------------------------
         Net cash provided by financing activities                  356,000          160,000
                                                              ------------------------------

NET INCREASE (DECREASE) IN CASH                                      74,814          (48,985)

CASH, beginning of  period                                           14,745          100,538
                                                              ------------------------------
CASH, end of period                                           $      89,559    $      51,553
============================================================================================
SUPPLEMENTARY DISCLOSURE OF NON-CASH INFORMATION

BENEFICIAL CONVERSION FEATURE OF CONVERTIBLE DEBT             $     220,587    $          --
============================================================================================
</TABLE>

         The accompanying notes are an integral part of these unaudited
                       consolidated financial statements.


                                       7
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)

MARCH 31, 2007 AND 2006

1.    NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Nature of Business

      Turbodyne Technologies, Inc., a Nevada corporation, and its subsidiaries
      (the "Company") engineer, develop and market products designed to enhance
      performance and reduce emissions of internal combustion engines.

      The Company's operations have been financed principally through a
      combination of private and public sales of equity and debt securities. If
      the Company is unable to raise equity capital or generate revenue to meet
      its working capital needs, it may have to cease operating and seek relief
      under appropriate statutes. These consolidated financial statements have
      been prepared on the basis that the Company will be able to continue as a
      going concern and realize its assets and satisfy its liabilities and
      commitments in the normal course of business and do not reflect any
      adjustment which would be necessary if the Company is unable to continue
      as a going concern.

      Basis of Presentation

      The interim financial statements included herein, presented in accordance
      with United States generally accepted accounting principles and stated in
      US dollars, have been prepared by the Company, without audit, pursuant to
      the rules and regulations of the Securities and Exchange Commission and
      with the instruction to Form 10-QSB and Item 310(b) of Regulation S-B..
      Certain information and footnote disclosures normally included in
      financial statements prepared in accordance with generally accepted
      accounting principles have been condensed or omitted pursuant to such
      rules and regulations, although the Company believes that the disclosures
      are adequate to make the information presented not misleading.

      These financial statements reflect all adjustments, consisting of normal
      recurring adjustments, which in the opinion of management are necessary
      for fair presentation of the information contained therein. It is
      suggested that these interim financial statements be read in conjunction
      with the audited financial statements of the Company for the years ended
      December 31, 2006 and 2005 included in the Company's 10-KSB Annual Report.
      The Company follows the same accounting policies in the preparation of
      interim reports.

      Results of operations for the interim periods are not indicative of annual
      results.

      Going Concern

      The accompanying consolidated financial statements have been prepared
      assuming that the Company will continue as a going concern. The Company
      has suffered net operating losses in recent periods, has an accumulated
      deficit of $129,611,148 at March 31, 2007 and a total capital deficit of
      $8,167,221 at March 31, 2007. It has used most of its available cash in
      its operating activities in recent years, has a significant working
      capital deficiency and is subject to lawsuits brought against it by other
      parties. These matters raise substantial doubt about the Company's ability
      to continue as a going concern.


                                       8
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)

MARCH 31, 2007 AND 2006

1.    NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
      CONTINUED

      Principles of Consolidation

      The accompanying consolidated financial statements, stated in United
      States dollars, include the accounts of Turbodyne Technologies, Inc. and
      its wholly owned subsidiaries, Turbodyne Systems, Inc., Turbodyne Germany
      Ltd., Electronic Boosting Systems, Inc. and Pacific Baja Light Metals
      Corp. ("Pacific Baja"). All intercompany accounts and transactions have
      been eliminated on consolidation.

      Depreciation and Amortization

      Depreciation and amortization of property and equipment is computed using
      the straight-line method over estimated useful lives as follows:

                                   Machinery and equipment      - 7 to 15 years
                                   Furniture and fixtures       - 5 to 10 years

      Licenses

      Licenses are recorded at cost and are amortized over the estimated useful
      life of 18 years.

      Valuation of Long-Lived Assets

      The Company periodically reviews the carrying value of long-lived assets
      for indications of impairment in value and recognizes impairment of
      long-lived assets in the event the net book value of such assets exceeds
      the estimated undiscounted future cash flows attributable to such assets.
      Long-lived assets to be disposed of by sale are to be measured at the
      lower of carrying amount or fair value less cost of sale whether reported
      in continuing operations or in discontinued operations. No impairment was
      required to be recognized during 2007 and 2006.

      Recognition of Revenue

      License fee revenue is recognized over the term of the license agreement.
      During the year ended December 31, 2003, $400,000 in license fees were
      deferred and are being amortized over 18 years. As a result, for the
      quarter ended March 31, 2007 $5,556 ($5,556 - 2006) of licensing fees was
      recognized as income.

     Prior to the suspension of our operations in 2003, we recognized revenue
     upon shipment of product. Previously, research prototypes were sold and
     proceeds reflected by reductions in our research and development costs. As
     new technology pre-production manufacturing units are produced and related
     non-recurring engineer services are delivered we will recognize the sales
     proceeds as revenue.


      Earnings (Loss) Per Share

      Earnings (loss) per share is computed in accordance with SFAS No. 128,
      "Earnings Per Share". Basic earnings (loss) per share is calculated by
      dividing the net income (loss) available to common stockholders by the
      weighted average number of shares outstanding during the period. Diluted
      earnings per share reflects the potential dilution of securities that
      could share in earnings of an entity. In a loss period, dilutive common
      equivalent shares are excluded from the loss per share calculation as the
      effect would be anti-dilutive.


                                       9
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)

MARCH 31, 2007 AND 2006

1.    NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
      CONTINUED

      Fair Value of Financial Instruments

      The fair values of the Company's cash, term debts, accounts payable,
      accrued liabilities and loans payable approximate their carrying values
      because of the short-term maturities of these instruments.

      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 reported amounts of assets and liabilities and
      the disclosure of contingent assets and liabilities at the date of the
      financial statements and the reported amounts of revenue and expenses
      during the reporting period. Actual results could differ from those
      estimates.

      Stock-Based Compensation

      The Company accounts for stock-based compensation under the fair value
      method in accordance with Statement of Financial Accounting Standards No.
      123 (revised 2004), "Share Based Payment" "SFAS 123(R)".

      Research and Development

     Research and development costs related to present and future products are
     charged to operations in the year incurred. Previously, research prototypes
     were sold and proceeds reflected by reductions in our research and
     development costs. As new technology pre-production manufacturing units are
     produced and related non-recurring engineer services are delivered we will
     recognize the sales proceeds as revenue.

      Income Taxes

      The Company accounts for income taxes under the asset and liability method
      of accounting for income taxes, which recognizes deferred tax assets and
      liabilities for the estimated future tax consequences attributable to
      differences between the financial statement carrying amounts of existing
      assets and liabilities and their respective tax bases. Deferred tax assets
      and liabilities are measured using enacted tax rates in effect for the
      years in which those temporary differences are expected to be recovered or
      settled. The effect on deferred tax assets and liabilities of a change in
      tax rates is recognized in income in the period that includes the
      enactment date.

      Legal Fees

      The Company expenses legal fees in connection with litigation as incurred.


                                       10
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)

MARCH 31, 2007 AND 2006

1.    NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
      CONTINUED

      Comprehensive Income

      The Company has adopted SFAS No. 130, "Reporting Comprehensive Income".
      SFAS No. 130 establishes standards to measure all changes in equity that
      result from transactions and other economic events other than transactions
      with owners. Comprehensive income is the total of net earnings (loss) and
      all other non-owner changes in equity. Except for net earnings (loss) and
      foreign currency translation adjustments, the Company does not have any
      transactions and other economic events that qualify as comprehensive
      income as defined under SFAS No. 130. As foreign currency translation
      adjustments were immaterial to the Company's consolidated financial
      statements, net earnings (loss) approximated comprehensive income for the
      quarter ended March 31, 2007 and 2006.

      New Accounting Pronouncements

      In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
      Financial Assets and Financial Liabilities" ("SFAS 159") which permits
      entities to choose to measure many financial instruments and certain other
      items at fair value that are not currently required to be measured at fair
      value. SFAS 159 will be effective for the Company on January 1, 2008. The
      Company is currently evaluating the impact SFAS 159 may have on its
      financial condition or results of operations.

      In September 2006, the Financial Accounting Standards Board (FASB) issued
      Statement of Financial Accounting Issues No. 157, "Fair Value
      Measurements" ("SFAS 157"), which defines the fair value, establishes a
      framework for measuring fair value and expands disclosures about fair
      value measurements. This statement is effective for financial statements
      issued for fiscal years beginning after November 15, 2007, and interim
      periods within those fiscal years. Early adoption is encouraged, provided
      that the Company has not yet issued financial statements for that fiscal
      year, including any financial statements for an interim period within that
      fiscal year. The Company is currently evaluating the impact SFAS 157 may
      have on its financial condition or results of operations.

      In June 2006, the FASB released FASB Interpretation No. 48, Accounting for
      Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109
      (FIN 48). FIN 48 clarifies the accounting and reporting for uncertainties
      in income tax law. This interpretation prescribes a comprehensive model
      for the financial statement recognition, measurement, presentation and
      disclosure of uncertain tax positions taken or expected to be taken in
      income tax returns. This statement is effective for fiscal years beginning
      after December 15, 2006. The Company is currently evaluating the impact
      FIN 48 may have on its financial condition or results of operations.


                                       11
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)

MARCH 31, 2007 AND 2006

 2    RESTATEMENT OF FINANCIAL STATEMENTS

      The Company is restating its previously issued consolidated financial
      statements for the three months ended March 31, 2007 for the following
      reasons: unrecorded beneficial conversion feature of convertible debt and
      related amortization.

      The following is a summary of the restatements for the quarter ended March
      31, 2007:

      Unrecorded debt conversion expense                             $ (255,543)
      Overstatement of amortization of beneficial conversion
      feature of convertible debt                                       107,168
                                                                     ----------
                                                                     $ (148,375)
                                                                     ==========

      The effect on the Company's previously issued 2007 financial statements is
      summarized as follows:

                                   AS PREVIOUSLY      INCREASE
BALANCE SHEET DATA                   REPORTED        (DECREASE)       RESTATED
TOTAL ASSETS                       $     90,231    $         --    $     90,231
Loans payable                           995,094        (378,210)        616,884
Total Current Liabilities             8,321,940        (378,210)      7,943,730
TOTAL LIABILITIES                     8,635,662        (378,210)      8,257,452
Additional paid in capital          121,815,108       1,199,983     123,015,091
TOTAL STOCKHOLDER'S DEFICIT          (8,545,431)        378,210      (8,167,221)

STATEMENT OF OPERATIONS DATA
Interest expense                        201,931        (192,941)          8,990
Amortization of convertible notes            --          85,773          85,773
discount
Debt conversion expense                 166,857         255,543         422,400
NET LOSS                           $   (637,459)   $   (148,375)   $   (785,834)

      PRIOR PERIOD ADJUSTMENT

      The Company is restating its previously issued 2006 consolidated financial
      statements for the following reasons: unrecorded beneficial conversion
      feature of convertible debt and related amortization, unrecorded value of
      detachable warrants issued with the convertible debt, unrecorded debt
      conversion expense as a result of Company's modification of conversion
      terms and terms for the exercise of warrants to induce conversion and
      warrants exercise. The accompanying financial statement information for
      2006 has been restated to reflect the corrections and errors noted above.

      The following is a summary of the restatements for the year ended December
      31, 2006:

      Unrecorded debt conversion expense                              $(166,857)
      Unrecorded inducement expense for the exercise of warrants       (178,500)
      Unrecorded amortization of beneficial conversion feature of
      convertible debt                                                 (293,733)
      Unrecorded amortization of additional beneficial conversion
      feature arising from modification of conversion terms             (34,308)
                                                                      ---------
                                                                      $(673,398)
                                                                      =========


                                       12

                                       1
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)

MARCH 31, 2007 AND 2006

2     RESTATEMENT OF FINANCIAL STATEMENTS - CONTINUED

      The effect on the Company's previously issued 2006 financial statements is
      summarized as follows:

                                        AS
                                    PREVIOUSLY       INCREASE
BALANCE SHEET DATA                   REPORTED        (DECREASE)       RESTATED
                                    ----------       ----------       --------
TOTAL ASSETS                       $     15,954    $         --    $     15,954

Loans payable                           811,784        (260,663)        551,121
Total Current Liabilities             8,233,531        (260,663)      7,972,868
TOTAL LIABILITIES                     8,552,809        (260,663)      8,292,146
Additional paid in capital          121,198,225         934,061     122,132,286
TOTAL STOCKHOLDER'S DEFICIT          (8,536,855)        260,663      (8,276,192)

STATEMENT OF OPERATIONS DATA

Amortization of convertible notes            --         328,041         328,041
discount

Debt conversion expense                      --         345,357         345,357
NET LOSS                           $   (806,161)   $   (673,398)   $ (1,479,559)

3.    SHARE CAPITAL

      Transactions not disclosed elsewhere in these consolidated interim
      financial statements are as follows:

      a)    Authorized Capital

            At the Annual General Meeting held on June 30, 2004, the
            shareholders approved an increase of authorized capital to
            1,000,000,000 common shares.

            In 2003, 150,000 of the 1 million preferred shares were designated
            as Series X preferred shares. These shares have a par value of
            $0.001 per share with each share being convertible into 100 common
            shares at the discretion of the holder. As of March 31, 2007, 12,675
            of Series X preferred shares convertible into 1,267,500 common
            shares are outstanding.

            In addition to outstanding shares of common stock, options and
            warrants described in these notes; additional shares are issuable in
            connection with the change of control transaction in September 2005
            in the event the Company issues any securities directly or
            indirectly related to pre-merger events.


                                       13
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)

MARCH 31, 2007 AND 2006

3.    SHARE CAPITAL - CONTINUED

      b)    During the three months ended March 31, 2007 the Company issued
            12,000,000 shares of common stock for conversion of notes payable.
            During the three months ended March 31, 2006, the Company issued
            8,807,400 shares of common stock, 8,107,400 for exercise of options
            and 700,000 for conversion of 7,000 preferred shares.

      c)    Stock Options

            The determination of fair value of share-based payment awards to
            employees, directors and non-employees on the date of grant using
            the Black-Scholes model is affected by the Company's stock price as
            well as assumptions regarding a number of highly complex and
            subjective variables. These variables include, but are not limited
            to the expected stock price volatility over the term of the awards,
            and actual and projected employee stock option exercise behaviors.
            Management has used historical data to estimate forfeitures. The
            risk-free rate is based on U.S. Treasury rates in effect during the
            corresponding period of grant. The expected volatility is based on
            the historical volatility of the Company's stock price.

            Grant of Stock Options to Non-employees for Services

            During 2006, we granted warrants to purchase 77,200,000 shares of
            our common stock to various consultants that we deemed essential to
            our operations. Of these warrants, 2,169,444 were vested and
            reflected as an expense for the three months ended March 31, 2007.

            During the three months ended March 31, 2007 the Company recorded
            $87,405 (2006 - $0) of compensation expense relating to stock
            warrants issued to non-employees for services rendered during the
            period. There was no such expense recorded during the three months
            ended March 31, 2006.

            The estimated fair value of warrants issued to non-employees during
            the three months ended March 31, 2007 was of $0.023, $0.055 and
            $0.045. Assumptions used to value the warrants: expected dividend
            yield Nil%; expected volatility of 155% and 153%; risk-free interest
            rate of 4.57%, 4.45% and 4.70% and an expected life of 7 years.

      d)    Stock Purchase Warrants

            At March 31, 2007 the Company had 18,563,888 share purchase warrants
            outstanding and exercisable. These warrants were issued in
            connection with private placements, non-employee compensation and
            other means of financing. The holders of these warrants are entitled
            to receive one share of common stock of the Company for one warrant
            exercised. The warrants have exercise prices ranging from $0.0117 to
            $0.12 per share with a weighted average exercise price of $0.029 per
            share and expiration dates between 2007 and 2014. Details of share
            purchase warrants for the quarter ended March 31, 2007 are as
            follows:


                                       14
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)

MARCH 31, 2007 AND 2006

3.    SHARE CAPITAL - CONTINUED

<TABLE>
<CAPTION>
                                                                             2007

                                                INVESTORS           EMPLOYEES & CONSULTANTS           TOTAL
                                          -------------------------------------------------------------------------
                                                      WEIGHTED                   WEIGHTED                  WEIGHTED
                                                       AVERAGE                    AVERAGE                   AVERAGE
                                                      EXERCISE                   EXERCISE                  EXERCISE
                                           WARRANTS      PRICE       WARRANTS       PRICE       WARRANTS      PRICE
                                          -------------------------------------------------------------------------
<S>                                       <C>            <C>        <C>             <C>        <C>            <C>
Outstanding at beginning of period        3,400,000      $0.07      6,494,444       $0.01      9,894,444      $0.03
Granted                                   6,500,000      $0.03      2,169,444       $0.01      8,669,444      $0.02
                                          ---------                 ---------                 ----------
Warrants outstanding and
exercisable at end of  period             9,900,000      $0.04      8,663,888       $0.01     18,563,888      $0.03
                                          =========                 =========                 ==========
Weighted average fair value of
warrants granted during the period                       $0.02                      $0.02                     $0.01
                                          =========================================================================
</TABLE>

      At March 31, 2007, the following is a summary of share purchase warrants
      outstanding and exercisable:

                                               Weighted-
                                                 Average       Weighted
                                               Remaining        Average
                                             Contractual       Exercise
        Exercise Price         Number       Life (Years)          Price
        ---------------------------------------------------------------
             $0.01          8,247,224               6.55          $0.01
         $0.025 - 0.04      8,216,664               6.71           0.03
         $0.10 - 0.12       2,100,000               0.01           0.11
                           --------------------------------------------
                           18,563,888               5.91          $0.03
        ---------------------------------------------------------------

4.    LOANS PAYABLE

                                                         March 31,  December 31,
                                                             2007          2006
                                                        -----------------------
Unsecured, non-interest bearing loan payable, due on
demand from stockholders and other parties              $ 148,600     $ 148,600

Note payable, 5% per annum, due June 15, 2007              46,879        15,000

Convertible notes payable, net of unamortized discount
of $293,292 ($158,478 - 2006) and warrant valuation of
$206,598 ($102,185 - 2006) **                             421,405       387,521
                                                        -----------------------
Total Loans Payable                                     $ 616,884     $ 551,121
                                                        =======================

      ** During the quarter ended March 31, 2007, the Company issued $325,000
      convertible notes. The notes bear interest at 5% and mature within one
      year from date of issuance. The Notes are convertible, at the option of
      the holder, to shares of the Company's common stock. On February 22, 2007
      the Board of Directors changed the per share conversion price from $0.005
      to $0.02 for new lenders. Therefore, $50,000 is at a conversion price per
      share equal to $0.005 and $275,000 is at $0.02.


                                       15
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)

MARCH 31, 2007 AND 2006

4.    LOANS PAYABLE - CONTINUED

      In addition, the Company issued, to the holders of convertible notes,
      warrants to purchase 6,500,000 shares of the Company's common stock. The
      warrants have $0.025 exercise price and expire five-years from date of
      issuance. In accordance with generally accepted accounting principles, the
      proceeds, received from debt or convertible debt with detachable warrants,
      are allocated using the relative fair value of the individual elements at
      the time of issuance. Using the Black-Scholes valuations model, the
      aggregate value of the 6,500,000 warrants to be $290,049. Assumptions used
      to value the warrants: expected volatility of 155%; risk-free interest
      rate of 4.46%, 4.57%, and 4.69% and an expected life of 5 years. The
      amount allocated to the warrants amounts to $104,413 and has been
      recognized as a decrease in loans payable and an increase in additional
      paid in capital.

      In accordance with generally accepted accounting principles, in the event
      the conversion price on notes is less than the Company's stock price on
      the date of issuance, the difference is considered to be a beneficial
      conversion feature and is amortized as interest expense over the period
      from the date of issuance to the earlier of the conversion date or the
      stated maturity date. The aggregate beneficial conversion feature of these
      convertible notes is $220,587. This was recorded as a decrease in loans
      payable and an increase in additional paid in capital. For the quarter
      ended March 31, 2007, the Company recognized $14,095 in interest expense
      related to the amortization of the beneficial conversion feature recorded
      on these convertible notes. As of March 31, 2007, the remaining balance of
      the beneficial conversion feature was $206,492.

      Prior to 2007, the Company has issued $660,000 convertible notes with
      detachable warrants. The notes bear interest at 5% and mature within one
      year from date of issuance. The Notes are convertible, at the option of
      the holder, to shares of the Company's common stock at a conversion price
      per share equal to the lower of (i) 70% of the market price of common
      stock at date of issuance; or (ii) $0.025. The warrants are to purchase
      the Company's common stock at $0.025 per share expiring in five years. In
      September 2006 the board of directors offered to decrease the note
      conversion price to $0.005 per share if the note holders exercised their
      warrants at $0.01 by September 30, 2006. In consideration for the
      reduction, the maturity of the notes was extended for another year. As a
      result of the inducement, the Company recognized $422,400 of debt
      conversion expense and an increase in additional paid in capital for the
      quarter ended March 31, 2007 relating to note holders who converted during
      this period.

      The detachable warrants issued were five-year warrants to purchase
      13,200,000 shares of the Company's common stock at $0.025 per share. In
      accordance with generally accepted accounting principles, the proceeds,
      received from debt or convertible debt with detachable warrants, are
      allocated using the relative fair value of the individual elements at the
      time of issuance. Using the Black-Scholes valuations model, the aggregate
      value of the 13,200,000 warrants is $164,944. Assumptions used to value
      the warrants ranged between: 1.46% and 1.55% for expected volatility;
      4.36% and 5.02% for risk-free interest rate and an expected life of 5
      years. The amount allocated to the warrants amounts to $102,185 and has
      been recognized as a decrease in loans payable and an increase in
      additional paid in capital. As of March 31, 2007, 11,900,000 of the
      warrants have been exercised.


                                       16
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)

MARCH 31, 2007 AND 2006

4.    LOANS PAYABLE - CONTINUED

      In accordance with generally accepted accounting principles, in the event
      the conversion price on notes is less than the Company's stock price on
      the date of issuance, the difference is considered to be a beneficial
      conversion feature and is amortized as interest expense over the period
      from the date of issuance to the earlier of the conversion date or the
      stated maturity date. The aggregate beneficial conversion feature of these
      convertible notes to be $358,477. In relation to the inducement to
      convert, an additional beneficial conversion feature of $128,042 has been
      recognized. These were recorded as decreases in loans payable and
      increases in additional paid in capital. For the quarter ended March 31,
      2007, the Company recognized $71,677 in interest expense related to the
      amortization of the beneficial conversion feature recorded on these
      convertible notes. As of March 31, 2007, the remaining balance of the
      beneficial conversion feature was $86,800. Prior period adjustments were
      recorded to properly recognize convertible debt transactions in 2006 (see
      note 2).

5.    COMMITMENTS AND CONTINGENCIES

      The Company is party to various legal claims and lawsuits that have arisen
      in the normal course of business. There have been no material changes in
      the status of these matters since the issuance of the most recent audited
      annual financial statements.

      LITIGATION

      a)    TST, Inc.

            In March 2000, TST, Inc. ("TST"), a vendor to a subsidiary of
            Pacific Baja (Note 4(b)) filed an action against the Company
            alleging that in order to induce TST to extend credit to a
            subsidiary of Pacific Baja, the Company executed guarantees in favor
            of TST. TST alleged that the subsidiary defaulted on the credit
            facility and that the Company is liable as guarantor. Agreed to the
            immediate entry of judgment against the Company in the amount of
            $2,068,078 plus interest from the date of entry at the rate of 10%
            per annum. The amount of this judgment would immediately increase by
            any amount that TST is compelled by judgment or court order or
            settlement to return as a preferential transfer in connection with
            the bankruptcy proceedings of Pacific Baja; and TST cannot execute
            on its judgment until Turbodyne either: (a) files a voluntary
            bankruptcy case; (b) is the subject of an involuntary case; or (c)
            effects an assignment for the benefit of creditors.

            Any proceeds received by TST or its president from the sale of the
            issued shares will be automatically applied as a credit against the
            amount of the judgment against the Company in favor of TST. Prior to
            March 31, 2004, 147,000 shares issued in connection with the TST
            settlement had been sold which have reduced the provision for
            lawsuit settlement by $23,345.


                                       17
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)

MARCH 31, 2007 AND 2006

5.    COMMITMENTS AND CONTINGENCIES - LITIGATION CONTINUED

      a)    TST, Inc.- Continued

            At March 31, 2007, the Company has included $3,353,111 (December 31,
            2006 - $3,273,352) in regard to this matter in provision for lawsuit
            settlements. It was determined that TST received payment in
            preference to other creditors before Pacific Baja filed its Chapter
            11 petition in bankruptcy. TST and Pacific Baja settled the
            preference payment issue with TST paying $20,000 to Pacific Baja and
            TST relinquishing the right to receive $63,000 therefore; $83,000
            has been included in the provision for lawsuit settlements.

      b)    Pacific Baja Bankruptcy

            In July 1999, a major creditor of the Company's wholly-owned major
            subsidiary, Pacific Baja, began collection activities against
            Pacific Baja which threatened Pacific Baja's banking relationship
            with, and source of financing from, Wells Fargo Bank. As a result,
            Pacific Baja and its subsidiaries commenced Chapter 11 bankruptcy
            proceedings on September 30, 1999.

            In September 2001, the Pacific Baja Liquidating Trust (the "Trust")
            commenced action against us in the aforesaid Bankruptcy Court. The
            Trust was established under the Pacific Baja bankruptcy proceedings
            for the benefit of the unsecured creditors of Pacific Baja.

            The Company vigorously contested the Complaint until April 22, 2005
            when the Company entered into a stipulation for entry of judgment
            and assignment in the Pacific Baja bankruptcy proceedings for
            $500,000 to be issued in common stock or cash or a combination.
            Additionally the Company assigned to the bankruptcy Trust the rights
            to $9,500,000 claims under any applicable directors and officers
            liability insurance policies. The bankruptcy Trust also agreed to a
            covenant not to execute against the Company regardless of the
            outcome of the insurance claims. The Company has completed the
            assignment of its insurance claims, but has not completed the
            cash/stock payment that was to be paid to the Trust by December 9,
            2005. We are negotiating with the Trustee regarding this default.

      c)    Former Officer

            On May 20, 2004, one of the Company's former officers, Mr. Peter
            Hofbauer, filed a motion against the Company alleging that the
            Company failed to pay him the sum of $369,266 pursuant to the terms
            of a purported settlement agreement, allegedly made for the purposes
            of settling amounts owed to the former officer for services to the
            Company. On August 3, 2004 a writ of attachment was applied to the
            Company's Certificate of Deposit for $315,000. On October 25, 2004
            the former officer and the Company signed and filed with the court a
            Stipulation re: Settlement and Order. The stipulation ordered the
            Company to deliver 4,000,000 shares of common stock without
            restrictions to be used by the former officer to raise funds to
            settle amounts owed to him by the Company. As funds are raised to
            settle amounts owed, writs will be reversed from the Certificate of
            Deposit.


                                       18
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)

MARCH 31, 2007 AND 2006

5.    COMMITMENTS AND CONTINGENCIES - CONTINUED

      c)    Former Officer - Continued

            During 2004 the Company issued the 4,000,000 shares. Mr. Hofbauer
            sold 2,600,000 shares and released $125,000 of the Certificate of
            Deposit. On June 7, 2005 Mr. Hofbauer claimed the remaining $210,496
            in the Certificate of Deposit. The remaining 1,400,000 shares were
            returned to the Company in October 2006.

      e)    Former Director

            A former director of Turbodyne, Erwin Kramer (the "Plaintiff"),
            represented by his attorney Claus Schmidt, a former attorney of
            Turbodyne at the time of the alleged claim, filed a legal action in
            Germany against Turbodyne, our non-operating subsidiary Turbodyne
            Europe GmbH ("Turbodyne GmbH"), and ex-employees of Turbodyne GmbH,
            Peter Kitzinski and Marcus Kumbrick (collectively the "Defendants"),
            with the Regional Frankfurt court (the "German Court") in September,
            2004. The Plaintiff claims damages of Euro 245,620 plus 5% interest
            per annum against the Defendants in respect of actions taken by the
            Defendants while employed with Turbodyne GmbH.

            On September 9, 2004, the German Court, on a motion by the
            Defendants to the suit, dismissed the Plaintiff's claims against
            Peter Kitzinski and Marcus Kumbrick, and ordered that Turbodyne's
            patents in Munich be attached pending the resolution of the
            Plaintiff's claim against Turbodyne and Turbodyne GmbH. On June 13,
            2005 the Court in Frankfurt dismissed the claim. The Plaintiff filed
            an appeal against this judgment with the Higher Regional Court in
            Frankfurt.

            The Plaintiff's attorney, Claus Schmidt, also filed similar suits on
            behalf of Frank Walter and Herbert Taeuber. The German courts are
            indicating that all three suits need to be filed in the United
            States not Germany. Presently the suits have not been filed in the
            United States. We vigorously dispute this claim and have retained
            German counsel to defend it and seek its dismissal. At March 31,
            2007, the Company has included $405,785 in regard to this matter in
            the provision for lawsuit settlements.

      f)    Other

            The Company is currently involved in various collection claims and
            other legal actions. It is not possible at this time to predict the
            outcome of the legal actions.


                                       19
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

FORWARD LOOKING STATEMENTS

The information in this discussion contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements involve risks and uncertainties, including statements
regarding the Company's capital needs, business strategy and expectations. Any
statements contained herein that are not statements of historical facts may be
deemed to be forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as "may", "will", "should",
"expect", "plan", "intend", "anticipate", "believe", "estimate", "predict",
"potential" or "continue", the negative of such terms or other comparable
terminology. Actual events or results may differ materially. In evaluating these
statements, you should consider various factors, including the risks outlined in
the Risk Factors section below, and, from time to time, in other reports the
Company files with the SEC. These factors may cause the Company's actual results
to differ materially from any forward-looking statement. The Company disclaims
any obligation to publicly update these statements, or disclose any difference
between its actual results and those reflected in these statements. The
information constitutes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.

As used in this Quarterly Report on Form 10-QSB, the terms "we", "us", "our",
"Turbodyne" and "our company" mean Turbodyne Technologies, Inc., unless
otherwise indicated. All dollar amounts in this Quarterly Report on Form 10-QSB
are in U.S. dollars unless otherwise stated.


                                       20
<PAGE>

RESTATEMENT OF FINANCIAL STATEMENTS

The Company concluded that our consolidated financial statements for September
30, 2006, December 31, 2006 and March 31, 2007 needed to be restated since the
liabilities were overstated liabilities, expenses and net loss were understated
and additional paid in capital was understated.

We are restating our previously issued consolidated financial statements for the
following reasons: unrecorded beneficial conversion feature of convertible debt
and related amortization, unrecorded value of detachable warrants issued with
the convertible debt, unrecorded debt conversion expense as a result of
Company's modification of conversion terms and terms for the exercise of
warrants to induce conversion and warrants exercise.

The following table sets forth the impact of these restatements on certain
amounts previously reported in our consolidated financial statements for the
quarter ended March 31, 2007:

                                               AS
                                           PREVIOUSLY    INCREASE
                                            REPORTED    (DECREASE)    RESTATED
                                            --------    ----------    --------
BALANCE SHEET DATA
Loans payable                              $   995,094  $(378,210)  $   616,884
Additional paid in capital                 121,815,108   1,199,983  123,015,091

STATEMENT OF OPERATIONS DATA

Interest expense                               201,931   (192,941)        8,990
Amortization of convertible notes discount          --      85,773       85,773
Debt conversion expense                        166,857     255,543      422,400
Net loss                                   $  (637,459) $ (148,375) $  (785,834)

PRIOR PERIOD ADJUSTMENT

The Company is restating its previously issued 2006 consolidated financial
statements for the following reasons: unrecorded beneficial conversion feature
of convertible debt and related amortization, unrecorded value of detachable
warrants issued with the convertible debt, unrecorded debt conversion expense as
a result of Company's modification of conversion terms and terms for the
exercise of warrants to induce conversion and warrants exercise. The effect on
the Company's previously issued 2006 financial statements is summarized as
follows:

                                               AS
                                           PREVIOUSLY    INCREASE
                                            REPORTED    (DECREASE)    RESTATED
                                            --------    ----------    --------
BALANCE SHEET DATA
Loans payable                              $   811,784  $(260,663)  $   551,121
Additional paid in capital                 121,198,225    934,061   122,132,286

STATEMENT OF OPERATIONS DATA

Amortization of convertible notes discount          --    328,041       328,041
Debt conversion expense                             --    345,357       334,357
Net Loss                                   $  (806,161) $(673,398)  $(1,479,559)


                                       21
<PAGE>

OVERVIEW

We are an engineering Company and have been engaged, for over ten years, in the
design and development of forced-air induction (air-charging) technologies that
improve the performance of gas and diesel internal combustion engines. Optimum
performance of an internal combustion engine requires a proper ratio of fuel to
air. Power available from the engine is reduced when a portion of the fuel is
not used. In a wide range of gas and diesel engines additional air is needed to
achieve an optimal result. Traditional engineered solutions for this problem use
belts or exhaust gas (superchargers or turbochargers) to supply additional air
to an engine. Turbodyne, instead, uses electric motors to supply additional air.
Because an electric motor can be engaged more quickly, compared to the
mechanical delays inherent in a belt or exhaust gas device, Turbodyne's products
reduce this `turbolag' and otherwise adds to the effectiveness of gas and diesel
engines used in automotive, heavy vehicle, marine, and other internal combustion
installations.

Since September 2005 when it took office management has obtained some additional
financing and has conducted limited business activity including:

      o     Updating our financial statements and required SEC filings
      o     Assessment of our technology including patents and other rights
      o     Limited development of our Turbopac(TM) and related product line
      o     Filing for protection of new intellectual properties related to our
            products
      o     Review and negotiate to settle outstanding litigation and
            liabilities
      o     Formulating business and marketing plans

There is no assurance we will be able to obtain sufficient financing to
implement full scale operations.

In February 2007 the Company filed a provisional application in the United
States Patent and Trademark Office for a TurboPac related technology. Referred
to as the 'TurboFlow', the patent disclosure includes application of the
technology to vehicle types commonly referred to as 'hybrids' or 'low emission
vehicles'. The disclosed technology applies advanced controls, energy
management, and a TurboPac related technology to avoid problems encountered when
using traditional turbo- or super- charging air injection units with a small
engine in those types of vehicles.


                                       22
<PAGE>

RESULTS OF OPERATIONS

                                        First Quarter Ended March 31
                                  ----------------------------------------
                                                                Percentage
                                      2007           2006        Increase
                                                                (Decrease)
                                  ------------   ------------   ----------
Total Revenue                        $5,556         $5,556         Nil
Operating Expenses                 ($396,277)     ($294,635)       34%
Net Loss from Operations           ($390,721)     ($289,079)       35%
Other Income (expense), net        ($395,113)      ($4,297)      (9,095%)
                                  ============   ============   ==========
Net Loss                           ($785,834)     ($293,376)      (168%)
                                  ============   ============   ==========

NET REVENUE

                                        First Quarter Ended March 31
                                  ----------------------------------------
                                                                Percentage
                                      2007           2006        Increase
                                  ------------   ------------   ----------
License Fee                          $5,556         $5,556          Nil
                                  ============   ============   ==========

We had no revenue in 2006 other than recognition of amortized license fees.
During the year ended December 31, 2003, $400,000 in license fees were deferred
and amortized over 18 years. As a result, for the three months ended March 31,
2007 and 2006, $5,556 of licensing fees was recognized as income. Our continued
net losses from operations reflect our continued operating expenses and our
inability to generate revenues. We believe that we will not be able to generate
any significant revenues from TurboPac(TM) until we complete our production
models and enter into manufacturing and sales arrangements.

COSTS OF SALES

We had no sales in 2007 and 2006; therefore we did not have any costs of sales
during any portion of these years.

OPERATING EXPENSES

Operating expense increased in first quarter 2007 substantially from the
comparable quarter in 2006. This was primarily due to resumption of more
operations and research and development operations which included the filing of
a provisional application with the United States Patent and Trademark Office for
a TurboPac related technology.


                                       23
<PAGE>

The primary components of our operating expenses are outlined in the table
below:

<TABLE>
<CAPTION>
                                                     First Quarter Ended March 31
                                               ----------------------------------------
                                                                             Percentage
                                                   2007           2006        Increase
                                                                             (Decrease)
                                               ------------   ------------   ----------
<S>                                              <C>            <C>             <C>
Selling, General and Administrative Expenses     $235,040       $185,557         27%
Research and Development Expenses                 $80,941        $22,715        256%
Litigation Expenses                               $79,759        $85,872         (7%)
</TABLE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative costs included management compensation and
overhead and increased due to consulting fees to management.

RESEARCH AND DEVELOPMENT

The increase in research and development costs in 2007 is due to the resumption
of limited development operations. Our research and development costs related to
present and future products are charged to operations in the period incurred.
Our research and development activities during 2007 are associated with the
development of our Turbopac-related technology "TurboFlow".

LITIGATION EXPENSE

The decrease in litigation expense is primarily attributable to our settlement
of litigations and reduction of fees necessary to defend these actions.

STOCK BASED COMPENSATION

Stock based compensation included in expenses was $87,405 for the three months
ended March 31, 2007. We did not have any stock based compensation during the
three month period ended March 31, 2006.

During 2006, we granted warrants to purchase 77,200,000 shares of our common
stock to various consultants that we deemed essential to our operations. Of
these warrants, 2,169,444 were vested and reflected as an expense for the three
months ended March 31, 2007. As of December 31, 2006 6,494,444 were vested
therefore the total vested as of March 31, 2007 was 8,663,888.

The method by which we account for stock based compensation is discussed below
under "Critical Accounting Policies".


24
<PAGE>

OTHER INCOME (EXPENSE)

<TABLE>
<CAPTION>
                                                     First Quarter Ended March 31
                                               ----------------------------------------
                                                                             Percentage
                                                   2007           2006        Increase
                                                                             (Decrease)
                                               ------------   ------------   ----------
<S>                                              <C>            <C>             <C>
Gain on Extinguishment of debt                    $122,050         --           100%
Interest Expense                                  ($8,990)      ($4,297)        109%
Amortization of Discount on Convertible Notes     ($85,773)        --           100%
Debt Conversion Expense                          ($422,400)        --           100%
</TABLE>

The Company continues to negotiate with our creditors and trade debt holders on
settlement of accounts payable from periods prior to the current management
assuming operation of the Company. When achieved this is represented as a gain
on extinguishment of accounts payable.

The Company had additional other expenses for the quarter ended March 31, 2007
for amortization of discount on convertible notes and for related debt
conversion expenses.

FINANCIAL CONDITION

CASH AND WORKING CAPITAL

<TABLE>
<CAPTION>
                          ----------------------------------------------------------------
                                                                          Percentage
                           At March 31, 2007   At December 31, 2006  Increase / (Decrease)
                          ----------------------------------------------------------------
<S>                            <C>                  <C>                      <C>
Current Assets                      $90,231              $15,417             485%
Current Liabilities            ($7,943,730)         ($7,972,868)              0%
Working Capital Deficit        ($7,853,499)         ($7,957,451)             (1%)
</TABLE>

The decrease to our working capital deficit was attributable to an increase in
cash and a decrease in current liabilities due to a settlement of debt and
payments of debt.

LIABILITIES

<TABLE>
<CAPTION>
                          --------------------------------------------------------------
                                                                        Percentage
                          At March 31, 2007  At December 31, 2006  Increase / (Decrease)
                          --------------------------------------------------------------
<S>                              <C>                   <C>                  <C>
Provision for Lawsuit
Settlements                      $4,754,896            $4,675,137           2%
Accounts Payable                 $2,152,157            $2,302,417          (7%)
Accrued Liabilities                $419,793              $444,193          (5%)
Short-Term Loans                   $616,884              $551,121           12%
</TABLE>

The increase in provision for lawsuits is due to accrued interest on outstanding
judgments. Accounts payable decreased due to a settlement of debt and payments
of debt. Short-term loans increased in connection with our note financing to
generate cash. Short-term loans are net of discounts of $293,292 (2006 -
$158,478) and warrant allocation of $206,598 (2006 - $102,185).

During the quarter ended March 31, 2007, the Company issued $325,000 convertible
notes. The notes bear interest at 5% and mature within one year from date of
issuance. The Notes are convertible, at the option of the holder, to shares of
the Company's common stock. On February 22, 2007 the Board of Directors changed
the per share conversion price from $0.005 to $0.02 for new lenders. Therefore,
$50,000 is at a conversion price per share equal to $0.005 and $275,000 is at
$0.02.

In addition, the Company issued to the holders of convertible notes warrants to
purchase 6,500,000 shares of the Company's common stock. In accordance with
generally accepted accounting principles, the Company allocates the proceeds
received from debt or convertible debt with detachable warrants using the
relative fair value of the individual elements at the time of issuance.

We continue to negotiate with our creditors for the payment of our accounts
payable and accrued liabilities. Payment of these liabilities is contingent on
new funding being received that would enable us to make payments to the
creditors. Our ability to continue our operations is also conditional upon the
forbearance of our creditors.

Included in short-term loans at March 31, 2007 are unsecured, non-interest
bearing advances of $148,600 that we anticipate will be converted into shares of
our common stock.


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<PAGE>

CASH FLOWS

                                                 ---------------------------
                                                 Three Months Ended March 31
                                                 ---------------------------
                                                       2007           2006
                                                       ----           ----
Net Cash used in Operating Activities             ($281,186)     ($208,985)
Net Cash provided by Financing Activities          $356,000       $160,000
                                                  ---------      ---------
Net Increase (decrease) in Cash During Period       $74,814       ($48,985)
                                                  =========      =========

The increase in cash used in operating activities was due to the fact that
additional funds were obtained in private financing in 2006 and 2007. This
enabled us to utilize more funds for development in 2007 than in 2006.

FINANCING REQUIREMENTS

We will require additional financing if we are to continue as a going concern
and to finance our business operations. While we have obtained some financing in
2006 and 2007 we need substantially more capital. We may not be able to obtain
additional working capital on acceptable terms, or at all. Accordingly, there is
substantial doubt about our ability to continue as a going concern. We are
presently in the process of negotiating to raise working capital to finance our
operations which is no assurance that we will be able to raise the additional
capital that we require to continue operations. In the event that we are unable
to raise additional financing on acceptable terms, then we may have to cease
operating and seek relief under appropriate statutes.

CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America. As
such, some accounting policies have a significant impact on the amount reported
in these financial statements. Note that our preparation of this Quarterly
Report on Form 10-QSB requires us to make estimates and assumptions that affect
the reported amount of assets and liabilities, disclosure of contingent assets
and liabilities at the date of our financial statements, and the reported
amounts of revenue and expenses during the reporting period. There can be no
assurance that actual results will not differ from those estimates. We have
identified certain accounting policies, described below, that are the most
important to the portrayal of our current financial condition and results of
operations.

THERE IS SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN

Our unaudited consolidated financial statements included with this Quarterly
Report on Form 10-QSB have been prepared assuming that we will continue as a
going concern. We have suffered net losses in recent periods and have an
accumulated deficit of $129,619,466 at March 31, 2007, have used cash in our
operating activities in recent periods, are subject to lawsuits brought against
us by shareholders and other parties, and based on our projected cash flows for
the ensuing year, we are required to seek additional equity or debt financing in
order to continue our present operations. These matters raise substantial doubt
about our ability to continue as a going concern.


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<PAGE>

STOCK BASED COMPENSATION

The Company accounts for stock-based compensation under the fair value method in
accordance with Statement of Financial Accounting Standards No. 123 (revised
2004), "Share Based Payment" "SFAS 123(R)".

REVENUE RECOGNITION

Prior to the suspension of our operations in 2003, we recognized revenue upon
shipment of product. Since the re-commencement of operations in 2004, we
recognize license and royalty fees over the term of the license or royalty
agreement. Previously, research prototypes were sold and proceeds reflected by
reductions in our research and development costs. As new technology
pre-production manufacturing unites are produced and related non-recurring
engineer services are delivered we will recognize the sales proceeds as revenue.

RESEARCH AND DEVELOPMENT

Research and development costs related to present and future products are
charged to operations in the year incurred. Previously, research prototypes were
sold and proceeds reflected by reductions in our research and development costs.
As new technology pre-production manufacturing units are produced and related
non-recurring engineer services are delivered we will recognize the sales
proceeds as revenue.


                                       28
<PAGE>

NEW ACCOUNTING PRONOUNCEMENTS

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities" ("SFAS 159") which permits entities
to choose to measure many financial instruments and certain other items at fair
value that are not currently required to be measured at fair value. SFAS 159
will be effective for the Company on January 1, 2008. The Company is currently
evaluating the impact SFAS 159 may have on its financial condition or results of
operations.

In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Issues No. 157, "Fair Value Measurements"
("SFAS 157"), which defines the fair value, establishes a framework for
measuring fair value and expands disclosures about fair value measurements. This
statement is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. Early adoption is encouraged, provided that the Company has not yet
issued financial statements for that fiscal year, including any financial
statements for an interim period within that fiscal year. The Company is
currently evaluating the impact SFAS 157 may have on its financial condition or
results of operations.

In June 2006, the FASB released FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (FIN
48). FIN 48 clarifies the accounting and reporting for uncertainties in income
tax law. This interpretation prescribes a comprehensive model for the financial
statement recognition, measurement, presentation and disclosure of uncertain tax
positions taken or expected to be taken in income tax returns. This statement is
effective for fiscal years beginning after December 15, 2006. The Company is
currently evaluating the impact FIN 48 may have on its financial condition or
results of operations.


                                       29
<PAGE>

ITEM 3A. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Company's Chief Executive Officer and its Chief
Financial Officer reviewed and evaluated the effectiveness of the Company's
disclosure controls and procedures (as defined in Exchange Act Rule
13a-15(e)).These controls are designed to ensure that material information the
Company must disclose in its reports filed or submitted under the Exchange Act
is recorded, processed, summarized and reported on a timely basis. These
officers have concluded, based on that evaluation, that as of such date, the
Company's disclosure controls and procedures were effective at a reasonable
assurance level for a Company with substantially no activities and no personnel.
The Company believes it must devise new procedures as it increases its activity
and its personnel.

      As required by Rule 13a-15 under the Exchange Act the Company's Chief
      Executive Officer and its Chief Financial Officer reviewed and evaluated
      the effectiveness of the Company's internal control over financial
      reporting (as defined in Exchange Act Rule 13a-15(f)), The term "internal
      control over financial reporting" is a process designed by, or under the
      supervision of, the registrant's principal executive and principal
      financial officers, to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of financial
      statements for external purposes in accordance with generally accepted
      accounting principles.

The Company's Chief Executive Officer and Chief Financial Officer believed that
for the limited operations of the Company internal controls over financial
reporting were adequate to provide reasonable assurance at yearend. Nevertheless
these controls indicated substantial weakness that must be rectified if the
Company increased operations, including a lack of segregation of duties.


                                       30
<PAGE>

PART II - OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES.

The following issuances of securities occurred during the three months ended
March 31, 2007.

During the three months ended March 31, 2007 we sold 1 unit of our securities in
a private placement. Each unit consisted of $100,000, a 5% convertible note and
warrants to purchase 2,000,000 of our shares at $0.025. The note is convertible
at any time prior to payment. The conversion price was one-half penny ($.005).
The securities were issued pursuant to Section 4(2) of the Securities Act of
1933 and are exempt from the registration requirements under that act. In
addition during such quarter $60,000 of principal of the aforesaid notes were
converted into 12,000,000 shares of our common stock. These latter shares were
issued pursuant to Section 3a(9) of the Securities Act of 1933 and are exempt
from the registration requirements under that act.

During the three months ended March 31, 2007 we sold 2.25 units of our
securities in a private placement. Each unit consisted of $100,000, a 5%
convertible note and warrants to purchase 2,000,000 of our shares at $0.02. The
note is convertible at any time prior to payment. The conversion price was two
cents ($.02). The securities were issued pursuant to Section 4(2) of the
Securities Act of 1933 and are exempt from the registration requirements under
that act.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

EXHIBITS

EXHIBIT
 NUMBER    DESCRIPTION OF EXHIBIT
-------    ---------------------------------------------------------------------
  31.1     Certification of Chief Executive Officer and Chief Financial Officer
           pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

  32.2     Certification of Chief Executive Officer and Chief Financial Officer
           pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
           906 of the Sarbanes-Oxley Act of 2002.


                                       31
<PAGE>

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has caused this amendment number 1 to this quarterly report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                        TURBODYNE TECHNOLOGIES, INC.

Dated:   June 4, 2007                   By: /s/ Albert F. Case, Jr.
                                        ---------------------------
                                        Albert F. Case, Jr.
                                        Chief Executive Officer

                                        By: /s/ Debi Kokinos
                                        ---------------------------
                                        Debi Kokinos
                                        Chief Financial Officer and
                                        Chief Accounting Officer


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