UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

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

      For the quarterly period ended JUNE 30, 2006

[ ]   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)


2848 SIOUX, 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 [ X ] No


State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 325,559,444 shares of common stock
issued and outstanding as of JULY 26, 2006.

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



<PAGE>




                          TURBODYNE TECHNOLOGIES, INC.
                              INDEX TO FORM 10-QSB
                                  JUNE 30, 2006

         PAGE
                                     NUMBER

PART I -    FINANCIAL INFORMATION

Item 1.     Financial Statements:

            Consolidated Balance Sheets as of June 30, 2006
                  and December 31, 2005                                       4

            Consolidated Statements of Operations for the
                  three-month and six-month periods ended
                  June 30, 2006 and June 30, 2005                             5

            Consolidated Statements of Cash Flows for the
                  six-month periods ended June 30, 2006
                  and June 30, 2005                                           6

            Notes to the Consolidated Financial Statements                    7

Item 2.     Management's Discussion and Analysis of
                 Financial Condition and Results of Operations               18

Item 3a.    Controls and Procedures                                          26

PART II -   OTHER INFORMATION

Item 2.     Changes in Securities                                            27

Item 6.     Exhibits                                                         27

SIGNATURES                                                                   28



                                      -2-
<PAGE>



PART 1 - FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS












                                  TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  CONSOLIDATED FINANCIAL STATEMENTS
                                  FOR THE SIX-MONTH PERIODS ENDED
                                  JUNE 30, 2006 AND 2005
                                  (UNAUDITED - EXPRESSED IN US DOLLARS)



                                      -3-
<PAGE>

<TABLE>
<CAPTION>

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

                                                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                                                                     CONSOLIDATED BALANCE SHEETS
                                                                                       (EXPRESSED IN US DOLLARS)
                                                                                     JUNE 30         December 31
                                                                                        2006                2005
-----------------------------------------------------------------------------------------------------------------

ASSETS                                                                           (UNAUDITED)
CURRENT
<S>                                                                        <C>                  <C>
   Cash                                                                  $             1,316  $          100,538
   Prepaid expenses and other current assets                                           2,472                 672
                                                                       ------------------------------------------

        TOTAL CURRENT ASSETS                                                           3,788             101,210
PROPERTY AND EQUIPMENT                                                                 1,455               2,309
                                                                       ------------------------------------------

TOTAL ASSETS                                                             $             5,243  $          103,519
================================================================================================================

LIABILITIES AND CAPITAL DEFICIT

LIABILITIES

CURRENT
   Accounts payable                                                      $         2,580,666  $        2,491,259
   Accrued liabilities                                                               482,748             476,048
   Provision for lawsuit settlements (Notes 4)                                     4,516,937           4,385,105
   Loans payable                                                                     711,366             465,662
                                                                       ------------------------------------------

        TOTAL CURRENT LIABILITIES                                                  8,291,717           7,818,074

DEFERRED LICENSING FEE                                                               330,390             341,502
                                                                       ------------------------------------------

        TOTAL LIABILITIES                                                          8,622,107           8,159,576
                                                                       ------------------------------------------

CAPITAL DEFICIT
   Share Capital (Note 2)
       Authorized
              1,000,000 preferred shares, par value $0.001
           1,000,000,000 common shares, par value $0.001
       Issued
            45,175 preferred shares in 2006 (2005 - 45,175)                               12                  12
          320,416,577 common shares in 2006 (2005 - 320,416,577)                     320,417             320,417
   Treasury stock, at cost (378,580 shares)                                       (1,907,612)         (1,907,612)
   Additional paid-in capital                                                    120,865,408         120,841,762
   Other comprehensive income -
       Foreign exchange translation gain                                              35,119              35,119
   Accumulated deficit                                                          (127,930,208)       (127,345,755)
                                                                       ------------------------------------------

        TOTAL CAPITAL DEFICIT                                                     (8,616,864)         (8,056,057)
                                                                       ------------------------------------------

TOTAL LIABILITIES AND CAPITAL DEFICIT                                    $             5,243  $          103,519
================================================================================================================


              The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>



                                      -4-
<PAGE>

<TABLE>
<CAPTION>

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

                                                                    TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                                                            CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                            (Unaudited - Expressed in US Dollars)

                                                         THREE-MONTH                          SIX-MONTH
                                                       PERIODS ENDED                       PERIODS ENDED
                                                          JUNE 30                             JUNE 30
                                                   2006             2005              2006               2005
------------------------------------------------------------------------------------------------------------------

REVENUE
<S>                                           <C>              <C>              <C>              <C>
      Licensing fees                          $       5,556    $       5,556    $      11,112    $      11,112
                                              -------------    -------------    -------------    -------------

              TOTAL REVENUE                           5,556            5,556           11,112           11,112
                                              -------------    -------------    -------------    -------------


EXPENSES (RECOVERY)
     General and administrative                     175,361          200,742          360,919          326,763
     Research and development                        47,394          161,049           70,109          371,486
     Litigation expense                              67,109          371,102          152,980          628,184
     Depreciation and amortization                      363            1,320              854           10,248
                                              -------------    -------------    -------------    -------------
         TOTAL EXPENSES
                                                    290,227          734,213          584,862        1,336,681
                                              -------------    -------------    -------------    -------------

LOSS FROM OPERATIONS                               (284,671)        (728,657)        (573,750)      (1,325,569)
OTHER INCOME (EXPENSES)
     Interest expense                                (6,406)            --            (10,703)          (1,030)
     Interest Income                                   --                663             --              1,837
     Gain (loss) on sale of asset                      --               --               --                770
                                              -------------    -------------    -------------    -------------
INCOME (LOSS) FOR THE PERIOD
                                                   (291,077)        (727,994)        (584,453)      (1,323,992)
                                              ================================================================
Income (loss) per common share

 BASIC AND DILUTED                            $       (0.00)   $       (0.00)   $       (0.00)   $       (0.01)
==============================================================================================================


WEIGHTED AVERAGE SHARES - BASIC AND DILUTED     320,416,577      171,262,122      320,416,577      167,685,557
==============================================================================================================


               The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>



                                      -5-
<PAGE>

<TABLE>
<CAPTION>

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

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


FOR THE SIX-MONTH PERIODS ENDED JUNE 30                                2006            2005
-----------------------------------------------------------------------------------------------

CASH PROVIDED BY (USED IN)

OPERATING ACTIVITIES
<S>                                                                <C>            <C>
   Net loss for the period                                         $  (584,453)   $(1,323,992)
   Adjustments to reconcile net loss to net
   cash provided by (used in) operating activities:
      Amortization of deferred licensing fees                          (11,112)       (11,112)
      Depreciation and amortization                                        854         10,248
      Stock option compensation  (Note 2)                                 --          183,743
      Warrant compensation (Note 2)                                     23,646           --
   (Increase) decrease in operating assets
       Prepaid expenses and other current assets                        (1,800)       288,783
   Increase (decrease) in operating liabilities
       Accounts payable                                                 89,407        149,075
       Accrued liabilities and provision for lawsuit settlements       149,236        514,075
                                                                   --------------------------
          Net cash used in operating activities                       (334,222)      (189,180)
                                                                   --------------------------

FINANCING ACTIVITIES
   Notes Payable                                                       235,000           (989)
   Exercise of Stock Options                                              --          189,012
                                                                   --------------------------
          Net cash provided by financing activities                    235,000        188,023
                                                                   --------------------------

NET INCREASE (DECREASE) IN CASH                                        (99,222)        (1,157)

CASH, beginning of  period                                             100,538          1,615
                                                                   --------------------------
CASH, end of period                                                $     1,316    $       458
=============================================================================================

SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
   Cash paid during the period
       Interest                                                    $      --      $     1,030
       Income taxes                                                $      --      $      --
=============================================================================================






    The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>



                                      -6-
<PAGE>


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

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

  JUNE 30, 2006 AND 2005
--------------------------------------------------------------------------------


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 had no current business operations, place of business and no
     employees when in September 2005, new management took control with the
     purpose of attempting to resurrect the Company's business and seek
     financing for such purpose. The Company entered into a merger agreement in
     September 2005 that resulted in new management, which is examining
     alternatives for financing, and fulfilling its working capital needs based
     on its working capital projections.

     New management took control pursuant to a merger completed as of September
     9, 2005 pursuant to which a majority owned subsidiary of Aspatuck Holdings
     Ltd. ("Aspatuck") was merged into our newly formed wholly owned subsidiary.
     Prior to the merger, this subsidiary of Aspatuck entered into a consulting
     agreement ("Consulting Agreement") with Stamford Research, LLC that is
     obligated to provide the services of Mr. Albert Case to the Company. Upon
     completion of the merger, 139,192,222 shares of the Company's Common Stock
     were issuable to holders of the subsidiary of Aspatuck and 1,300,000 such
     shares became issuable to Stamford Research LLC, under the Consulting
     Agreement. At this time Mr. Albert Case became president and chief
     executive officer and Mr. Jason Meyers, principal shareholder of Aspatuck,
     became Chairman of the Board of Directors. Additional shares are issuable
     to the former shareholders of the Aspatuck subsidiary in the event the
     Company issues any securities related directly or indirectly to pre-merger
     events.

     The Company's operations have been financed principally through a
     combination of private and public sales of 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.
     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.




                                      -7-
<PAGE>


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

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

JUNE 30, 2006 AND 2005
--------------------------------------------------------------------------------


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

     BASIS OF PRESENTATION - CONTINUED

     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, 2005 and 2004 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 $127,930,208 at June 30, 2006 and a total capital deficit of $8,616,864
     at June 30, 2006. 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.

     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 their estimated useful
     life.


                                      -8-
<PAGE>


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

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

JUNE 30, 2006 AND 2005
--------------------------------------------------------------------------------


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

     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 2006 and 2005.

     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 June 30, 2006 $5,556 ($5,556 - 2005) of licensing fees was
     recognized as income.


     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.


     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.



                                      -9-
<PAGE>


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

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

JUNE 30, 2006 AND 2005
--------------------------------------------------------------------------------


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

     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

     Prior to January 1, 2005, the Company accounted for employee stock-based
     compensation using the intrinsic value method supplemented by pro forma
     disclosures in accordance with APB 25 and SFAS 123 "Accounting for
     Stock-Based Compensation" ("SFAS 123"), as amended by SFAS No.148
     "Accounting for Stock-Based Compensation--Transition and Disclosures."
     Under the intrinsic value based method, compensation cost is the excess,
     if any, of the quoted market price of the stock at grant date or other
     measurement date over the amount an employee must pay to acquire the
     stock.

     Effective January 1, 2005 the Company adopted SFAS 123R using the
     modified prospective approach and accordingly prior periods have not been
     restated to reflect the impact of SFAS 123R. Under SFAS 123R, stock-based
     awards granted prior to its adoption will be expensed over the remaining
     portion of their vesting period. These awards will be expensed under the
     accelerated amortization method using the same fair value measurements
     which were used in calculating pro forma stock-based compensation expense
     under SFAS 123. For stock-based awards granted on or after January 1,
     2005, the Company will amortize stock-based compensation expense on a
     straight-line basis over the requisite service period, which is generally
     a five-year vesting period.

     SFAS 123R requires forfeitures to be estimated at the time of grant and
     revised, if necessary, in subsequent periods if actual forfeitures differ
     from initial estimates. Stock-based compensation expense has been
     recorded net of estimated forfeitures for the periods ended June 30, 2006
     and 2005 such that expense was recorded only for those stock-based awards
     that are expected to vest. Previously under APB 25 to the extent awards
     were forfeited prior to vesting, the corresponding previously recognized
     expense was reversed in the period of forfeiture.

     RESEARCH AND DEVELOPMENT

     Research and development costs related to present and future products are
     charged to operations in the period incurred.


                                      -10-
<PAGE>



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

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

JUNE 30, 2006 AND 2005
--------------------------------------------------------------------------------


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

     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.

     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 June 30, 2006 and 2005.

     LEGAL FEES

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

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


  2.   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 June 30, 2006 45,175
             of Series X preferred shares convertible into 4,517,500 common
             shares are outstanding.


                                      -11-
<PAGE>


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

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

  JUNE 30, 2006 AND 2005
--------------------------------------------------------------------------------


2.   SHARE CAPITAL - CONTINUED

     b)    During the six months ended June 30, 2006 there were no share
           issuances. During the six months ended June 30, 2005, the Company
           issued 11,516,400 shares of common stock, 10,816,400 for exercise
           of options and 700,000 for conversion of 7,000 preferred shares.

     c)   Stock Options

     The following summarizes information relating to stock options for the
     period ended June 30, 2006:

<TABLE>
<CAPTION>

                                                     2006

                        NON-EMPLOYEES              EMPLOYEES                 TOTAL

                                  WEIGHTED                 WEIGHTED                WEIGHTED
                                  AVERAGE                  AVERAGE                 AVERAGE
                                 EXERCISE                 EXERCISE                 EXERCISE
                    OPTIONS       PRICE      OPTIONS       PRICE      OPTIONS       PRICE
<S>              <C>             <C>        <C>          <C>        <C>            <C>
Outstanding at
  beginning of     2,505,000    $   0.08   16,033,300    $   0.06   18,538,300    $   0.06
  period

Expired             (380,000)       0.07     (136,300)       0.04     (516,300)       0.06
                 -----------    --------   ----------    --------   ----------    --------
Outstanding at
end of
  Period           2,125,000        0.06   15,897,000        0.06   18,022,000        0.06
                 -----------    --------   ----------    --------   ----------    --------
Options
exercisable at
end of period      2,125,000    $   0.06   15,897,000    $   0.06   18,022,000    $   0.06
                 -----------    --------   ----------    --------   ----------    --------
</TABLE>


           GRANT OF STOCK OPTIONS TO NON-EMPLOYEES FOR SERVICES
           The Company has recorded $0 (2005 - $41,991) of compensation
           expense relating to stock options issued to non-employees for
           services rendered during the period.

           The per share weighted average fair value of stock options granted
           for the six-months ended June 30, 2005 was $0.01, $0.02 and $0.04
           on the date of grant using the Black-Scholes option-pricing model
           with the following weighted average assumptions in 2005: expected
           dividend yield Nil%; expected volatility of 141%, 159% and 163%;
           risk-free interest rate of 2.89% and 3.75%, and expected life of 1
           year and 5 years.


                                      -12-
<PAGE>


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

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

  JUNE 30, 2006 AND 2005
--------------------------------------------------------------------------------


2.   SHARE CAPITAL - CONTINUED

     c) Stock Options - continued

           GRANT OF STOCK OPTIONS TO EMPLOYEES FOR SERVICES

           The Company has recorded $0 (2005 - $63,197) of compensation
           expense relating to stock options issued to employees. The per
           share weighted average fair value of stock options granted to
           employees during 2005 was $0.02, calculated on the date of grant
           using the Black-Scholes option pricing model with the following
           weighted average assumptions in 2005: expected dividend yield Nil%;
           expected volatility of 163%; risk-free interest rate from 3.75%;
           and an expected life of 5 years.

     d)    Stock Purchase Warrants

           At June 30, 2006, the Company had 14,953,162 stock purchase
           warrants outstanding. These warrants were issued in connection with
           private placements and other means of financing.

           Details of share purchase warrants issued and expired during the
           quarter ended June 30, 2006 are as follows:

                                                                     Weighted
                                                                      Average
                                                                     Exercise
                                                        Warrants        Price
                                                     -------------------------

           Outstanding at December 31, 2005           11,573,510       $ 0.09
              Granted                                  6,341,667         0.02
              Expired                                (2,709,237)         0.21
                                                     -------------------------

           Outstanding at June 30, 2006               15,205,940       $ 0.04
                                                     -------------------------


          The Company has recorded $23,646 (2005 - $0) of compensation expense
          relating to warrants issued to consultants. The per share weighted
          average fair value of stock options granted to consultants during
          2006 was $0.02, calculated on the date of grant using the
          Black-Scholes option pricing model with the following weighted
          average assumptions in 2005: expected dividend yield Nil%; expected
          volatility of 158% and 146%; risk-free interest rate from 4.98%,
          5.06% and 5.11%; and an expected life of 7 years.


                                      -13-
<PAGE>


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

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

  JUNE 30, 2006 AND 2005
--------------------------------------------------------------------------------


3.   LONG-TERM DEBT

     During the quarter ended September 30, 2004, the Company entered into a
     loan agreement collateralized by an automobile for an aggregate of
     $36,035. The loan bears interest at 6.64%, paid monthly; the last payment
     of $707 is due August 4, 2009.

     Subsequent to March 31, 2005 the Company was unable to make the payments
     so the bank repossessed the automobile and sold it at auction. The
     Company currently owes $17,428 which is included in accounts payable.

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


4.   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.



                                      -14-
<PAGE>


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

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

  JUNE 30, 2006 AND 2005
--------------------------------------------------------------------------------


4.   COMMITMENTS AND CONTINGENCIES - LITIGATION CONTINUED

     a) TST, Inc.- continued

          At June 30, 2006, the Company has included $3,032,152 (December 31,
          2005 - $2,900,320) in regard to this matter in provision for lawsuit
          settlements. If it is determined that TST received payment in
          preference to other creditors before Pacific Baja filed its Chapter
          11 petition in bankruptcy, TST will likely increase its claim by
          $2,130,000. 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, the $2,130,000 that the
          Company had included in the provision for lawsuit settlements, has
          been reduced to $83,000. The $2,047,000 difference has been recorded
          as a lawsuit settlement income in the last quarter of 2005.

     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



                                      -15-
<PAGE>


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

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

  JUNE 30, 2006 AND 2005
--------------------------------------------------------------------------------


4.   COMMITMENTS AND CONTINGENCIES - CONTINUED

     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. If the funds raised are not adequate to settle amounts
          owed, the Company will be obligated to issue further shares to the
          former officer in order to settle amounts owed.
          During 2004 the Company issued the 4,000,000 shares. Mr. Hofbauer
          has 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 are to be returned to the Company.

     d)   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 June 30,
           2006, the Company has included $405,785 in regard to this matter in
           the provision for lawsuit settlements.


                                      -16-
<PAGE>

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

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

  JUNE 30, 2006 AND 2005
--------------------------------------------------------------------------------


4.    Commitments and Contingencies - Continued

     e) 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.







                                      -17-
<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.




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. The traditional engineered solutions for this problem
are to 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.



                                      -18-
<PAGE>




CHANGE OF CONTROL AND NEW EFFORTS


On September 9, 2005 a majority owned subsidiary of Aspatuck Holdings Ltd.
("Aspatuck") was merged into our newly formed wholly owned subsidiary pursuant
to an AGREEMENT AND PLAN OF MERGER (the "Agreement"). Prior to the merger, this
subsidiary of Aspatuck this subsidiary of Aspatuck entered into a consulting
agreement ("CONSULTING AGREEMENT") with Stamford Research LLC, which is
obligated to provide the services of Albert Case to the Company. Upon completion
of the merger, 139,192,222 shares of the Company's Common Stock were issuable to
holders of the subsidiary of Aspatuck and 1,300,000 such shares became issuable
to Stamford Research LLC, under the Consulting Agreement. At this time Mr.
Albert Case became President and Chief Executive Officer and Mr. Jason Meyers,
principal shareholder of Aspatuck, became Chairman of the Board of Directors.
Additional shares are issuable to the former shareholders of the Aspatuck
subsidiary when the Company issues any securities related directly or indirectly
to pre-merger events.

The new management has obtained some additional financing and has resumed
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) product line
     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.


RESULTS OF OPERATIONS

<TABLE>
<CAPTION>

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

                                Second Quarter Ended June 30                          Six Months Ended June 30
                       ------------------------------------------------    -----------------------------------------------
                                                            Percentage                                         Percentage
                             2006             2005          (Decrease)          2006              2005          (Decrease)
                       ----------------- ---------------- -------------    ---------------- ----------------- ------------
<S>                         <C>              <C>              <C>              <C>             <C>              <C>
Total Income                $5,556           $5,556           Nil              $11,112          $11,112           Nil
Operating Expenses
                          ($290,227)       ($734,213)        (60%)           ($584,862)       ($1,336,681)       (56%)
Net Loss from
Operations                ($284,671)       ($728,657)        (61%)           ($573,750)       ($1,325,569)       (57%)
Other Income
(Expenses)                 ($6,406)           $663          (1,066%)          ($10,703)          1,577          (779%)
                       ================= ================ =============    ================ ================= ============

Net (Loss)                ($291,077)       ($727,994)        (60%)           ($584,453)       ($1,323,992)       (56%)
                       ================= ================ =============    ================ ================= ============


NET REVENUE

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

                                Second Quarter Ended June 30                          Six Months Ended June 30
                       ------------------------------------------------    -----------------------------------------------
                                                           Percentage                                         Percentage
                             2006            2005          Increase /           2006             2005         Increase /
                                                           (Decrease)                                         (Decrease)
                       ----------------- -------------- ---------------    ---------------- --------------- --------------
License Fee                 $5,556          $5,556           Nil               $11,112         $11,112           Nil
</TABLE>


                                      -19-
<PAGE>



We had no revenue in 2005 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 six months ended June 30, 2006
and 2005, $5,556 of licensing fees was recognized as income. Our limited
receipts (not reflected as revenue) are derived for the most part from selling
"shop" versions of our product and reflect the fact that our Turbopac(TM)
products are in the development stage. During 2005, we sold one prototype for
$27,319, which reduced our research and development expenses. 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 the TurboPac(TM) products until we complete our
production models and enter into manufacturing and sales arrangements.


COSTS OF SALES

Because we had no sales in 2006 and 2005, we did not have any costs of sales
during any portion of these years.


OPERATING EXPENSES

Operating expense decreased in second quarter 2006 from the comparable quarter
in 2005. This was primarily due to our attempt to continue operations in 2005
with significant research and litigation expense. While we resumed operations in
late 2005, we have not been able to devote substantial amounts to research nor
have we been compelled to spend substantial amounts on litigation expenses
through the second quarter of 2006.

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

<TABLE>
<CAPTION>

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

                                     Second Quarter Ended June 30                    Six Months Ended June 30
                               -----------------------------------------    -------------------------------------------
                                                           Percentage                                      Percentage
                                                             Increase                                        Increase
                                  2006          2005        (Decrease)          2006           2005         (Decrease)
                               ------------ ------------- --------------    -------------- -------------- -------------
<S>                            <C>             <C>           <C>              <C>              <C>          <C>
General and Administrative
Expenses                          $175,361      $200,742      (13%)              $360,919       $326,763      10%
Research and Development
Expenses                           $47,394      $161,049      (71%)               $70,109       $371,486     (81%)
Litigation Expenses                $67,109      $371,102      (82%)              $152,980       $628,184     (76%)
</TABLE>


                                      -20-
<PAGE>


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative costs included management compensation and overhead
and increased due to consulting fees to management.


RESEARCH AND DEVELOPMENT

The decrease in research and development costs in 2006 is due to the suspension
of our operations in April 2005 and the subsequent resumption of limited
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 2006 are associated with the development of our
Turbopac product.


LITIGATION EXPENSE

The most significant component of our litigation expense was the accrual of
interest relating to TST, Inc. settlement.

Our litigation expenses are attributable to our involvement in several ongoing
legal proceedings or the settlement of these proceedings. Litigation expenses
during the balance of 2006 are anticipated to consist primarily of legal
expenses relating to the proceedings involving our former subsidiary, Pacific
Baja and accrual of interest relating to TST, Inc.


STOCK BASED COMPENSATION

For the six months ended June 30, 2006 stock based compensation included in
expenses was $23,646 and $104,007 for the six months ended June 30, 2005.

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

FINANCIAL CONDITION


CASH AND WORKING CAPITAL

<TABLE>
<CAPTION>

                            ------------------ ----------------------- -----------------------
                                                                               Percentage
                             At June 30, 2006    At December 31, 2005    Increase / (Decrease)
                            ------------------ ----------------------- -----------------------
<S>                                    <C>                   <C>                 <C>
Current Assets                         $3,788                $101,210            (96%)
Current Liabilities              ($8,291,717)            ($7,818,074)              6%
Working Capital Deficit          ($8,287,929)            ($7,716,864)             (7%)
                            ================== ======================= =======================
</TABLE>


                                      -21-
<PAGE>


The increase to our working capital deficit was primarily attributable to a
decrease in cash and an increase in accounts payable, convertible notes and
provision for lawsuit settlements as discussed below.

LIABILITIES

<TABLE>
<CAPTION>

                                      ------------------ ---------------------- -----------------------
                                       At June 30, 2006   At December 31, 2005          Percentage
                                                                                  Increase / (Decrease)
                                      ------------------ ---------------------- -----------------------

<S>                                          <C>                    <C>                     <C>
Provision for Lawsuit Settlements            $4,516,937             $4,385,105              3%
Accounts Payable                             $2,580,666             $2,491,259              4%
Accrued Liabilities                            $482,748               $476,048              1%
Short-Term Loans                               $711,366               $465,662             53%
</TABLE>


Accounts payable and accrued liabilities increased due to a lack of funds to pay
creditors, short-term loans increased due to generate cash.

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.

The increase in short-term loans is due to the increase in convertible notes
payable and the related accrued interest on these unsecured notes, bearing
interest at 5% per annum, due in one year. Based on the June 30, 2006 market
price of our common stock the notes would be convertible into 40,197,570 shares
at any time prior to payment. The conversion price is equal to the lesser of (i)
70% of the Market Price of the Common Stock or (ii) $.025 ("Fixed Conversion
Price"); provided that the Conversion Price shall not be less than $.003. If the
Market Price of the Common Stock is $.04 for a period of 20 consecutive trading
days then the Conversion Price shall be the Fixed Conversion Price.


Included in short-term loans at June 30, 2006 are unsecured, non-interest
bearing advances of $148,600 that we anticipate will be converted into shares of
our common stock.


CASH FLOWS

                                                   -----------------------------
                                                    Six Months Ended June 30
                                                   -----------------------------
                                                           2006             2005
                                                           ----             ----
Net Cash from (used in) Operating Activities         ($334,222)       ($189,180)
Net Cash from (used in) Financing Activities          $235,000         $188,023
Net Increase (decrease) in Cash During Period         ($99,222)         ($1,157)


The increase in cash used in operating activities was due to the fact that we
had received significant cash from financing activities since October 2005
almost no cash in 2005 and were curtailing business and in 2006 we are
attempting to resurrect the business.


                                      -22-
<PAGE>



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
2005 and early 2006 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 reviewed 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 $127,930,208 at June 30, 2006, 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.


STOCK BASED COMPENSATION

Prior to January 1, 2005, the Company accounted for employee stock-based
compensation using the intrinsic value method supplemented by pro forma
disclosures in accordance with APB 25 and SFAS 123 "Accounting for Stock-Based
Compensation" ("SFAS 123"), as amended by SFAS No.148 "Accounting for
Stock-Based Compensation--Transition and Disclosures." Under the intrinsic value
based method, compensation cost is the excess, if any, of the quoted market
price of the stock at grant date or other measurement date over the amount an
employee must pay to acquire the stock.


                                      -23-
<PAGE>


Effective January 1, 2005 the Company adopted SFAS 123R using the modified
prospective approach and accordingly prior periods have not been restated to
reflect the impact of SFAS 123R. Under SFAS 123R, stock-based awards granted
prior to its adoption will be expensed over the remaining portion of their
vesting period. These awards will be expensed under the accelerated amortization
method using the same fair value measurements which were used in calculating pro
forma stock-based compensation expense under SFAS 123. For stock-based awards
granted on or after January 1, 2005, the Company will amortize stock-based
compensation expense on a straight-line basis over the requisite service period,
which is generally a five-year vesting period.

SFAS 123R requires forfeitures to be estimated at the time of grant and revised,
if necessary, in subsequent periods if actual forfeitures differ from initial
estimates. Stock-based compensation expense is recorded net of estimated
forfeitures such that expense is recorded only for those stock-based awards that
are expected to vest. Previously under APB 25 to the extent awards were
forfeited prior to vesting, the corresponding previously recognized expense was
reversed in the period of forfeiture.

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.


RESEARCH AND DEVELOPMENT

Research and development costs related to present and future products are
charged to operations in the year incurred.



                                      -24-
<PAGE>



NEW ACCOUNTING PRONOUNCEMENTS


In December 2004, FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets an
amendment of APB Opinion No. 29. SFAS 153 addresses the measurement of exchanges
of nonmonetary assets. It eliminates the exception from fair value measurement
for nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB
Opinion No. 29, Accounting for Nonmonetary Transactions, and replaces it with an
exception for exchanges that do not have commercial substance. This Statement
specifies that a nonmonetary exchange has commercial substance if the future
cash flows of the entity are expected to change significantly as a result of the
exchange. SFAS 153 is effective for monetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005. The Company is considering the provisions
of SFAS No. 153 and its effect on nonmonetary exchanges in the future.


In May 2005, FASB issued SFAS No. 154, Accounting Changes and Error Corrections,
a replacement of APB Opinion No. 20 and FASB Statement No. 3. SFAS 154 applies
to all voluntary accounting principle changes as well as the accounting for and
reporting of such changes. SFAS 154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after December 15, 2005.

SFAS 154 requires voluntary changes in accounting principle be retrospectively
applied to financial statements from previous periods unless such application is
impracticable. Changes in depreciation, amortization, or depletion for
long-lived, non-financial assets are accounted for as a change in accounting
estimate that is affected by a change in accounting principle, under the newly
issued standard.


SFAS 154 replaces APB Opinion No. 20 and SFAS 3. SFAS 154 carries forward many
provisions of Opinion 20 and SFAS 3 without change including those provisions
related to reporting a change in accounting estimate, a change in reporting
entity, correction of an error and reporting accounting changes in interim
financial statements. The FASB decided to completely replace Opinion 20 and SFAS
3 rather than amending them in keeping to the goal of simplifying U.S. GAAP. The
provisions of SFAS No. 154 are not expected to have a material effect on the
Company's consolidated financial position or results of operation. The
provisions of SFAS No. 154 are not expected to have a material effect on the
Company's consolidated financial position or results of operation.




                                      -25-
<PAGE>


ITEM 3A.          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 quarter end.
Nevertheless these controls indicated substantial weakness that must be
rectified if the Company increased operations, including a lack of segregation
of duties.



                                      -26-
<PAGE>




PART II - OTHER INFORMATION


ITEM 2.  CHANGES IN SECURITIES.

The following issuances of securities occurred during the six months ended June
30, 2006.

During the six months ended June 30, 2006 we sold 2.35 units of our securities
in a private placement. Each unit consisted of $100,000, 5% convertible note and
warrants to purchase 2,000,000 of our shares at $0.025. Each unit consisted of
$100,000, 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 is equal to the lesser of (i) 70% of the Market Price of (but not less
than $.003) or (ii) $.025 .If the Market Price of the Common Stock is $.04 for a
period of 20 consecutive trading days then the Conversion Price shall be $.025.
The shares were issued pursuant to Section 4(2) of the Securities Act of 1933
and are exempt from the registration requirements under that act.

As of April 1, 2006 we entered into agreements to engage various consultants.
These agreements call for the issuance of seven year warrants to purchase
72,200,000 shares of common stock at a per share exercise price of $ .0117. The
warrants are only exercisable upon certain milestones. These warrants were
issued pursuant to Section 4(2) of the Securities Act of 1933 and are exempt
from the registration requirements under that act.


As of June 1, 2006 we entered into an agreement to engage a consultant. This
agreement calls for the issuance of 5,000,000 shares of common stock as
consideration for services. These shares 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.

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



                                      -27-
<PAGE>



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


                                              TURBODYNE TECHNOLOGIES, INC.

Dated:   August 11, 2006                      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




                                      -28-