UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

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

      For the quarterly period ended SEPTEMBER 30, 2009

[ ]   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)

888 SEVENTH AVENUE, 17TH FLOOR, NEW YORK, NY                 10106
--------------------------------------------                 -----
(Address of principal executive offices)                   (Zip Code)

Issuer's telephone number, including area code:         (805) 512-9511
                                                        --------------

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

Indicate by checkmark 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 registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). [ ] Yes [X] No

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer' and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]                        Accelerated filer [ ]
Non -accelerated filer [ ]                         Smaller reporting company [X]
(do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) [ ] 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: 550,513,491 shares of common stock
issued and outstanding as of NOVEMBER 6, 2009.

<PAGE>

                          TURBODYNE TECHNOLOGIES, INC.
                               INDEX TO FORM 10-Q
                               SEPTEMBER 30, 2009

                                                                           PAGE
                                                                          NUMBER

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements:

         Condensed Consolidated Balance Sheets as of September 30, 2009
            and December 31, 2008                                             4

         Condensed Consolidated Statements of Operations for the three
            and nine month periods ended September 30, 2009 and
            September 30, 2008                                                5

         Condensed Consolidated Statements of Cash Flows for the nine
            month periods ended September 30, 2009 and September 30, 2008     6

         Notes to the Condensed Consolidated Financial Statements             7

Item 2.  Management's Discussion and Analysis or Plan of Operations           25

Item 3.  Quantitative and Qualitative Disclosures About Market Risk           NA

Item 4.  Controls and Procedures                                              34

PART II -OTHER INFORMATION

Item 1.  Legal Proceedings                                                    35

Item 1A. Risk Factors                                                         NA

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds          35

Item 3.  Defaults Upon Senior Securities                                      NA

Item 4.  Submission of Matters to a Vote of Security Holders                  NA

Item 5.  Other Information                                                    35

Item 6.  Exhibits                                                             36

SIGNATURES                                                                    37


                                       2
<PAGE>

PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

            TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            FOR THE NINE MONTHS ENDED
            SEPTEMBER 30, 2009 AND 2008
            (UNAUDITED - EXPRESSED IN US DOLLARS)
<PAGE>

<TABLE>
<CAPTION>
                                                    TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                                            CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                        (EXPRESSED IN US DOLLARS)

                                                                    SEPTEMBER 30      DECEMBER 31
                                                                            2009             2008
-------------------------------------------------------------------------------------------------
<S>                                                                <C>              <C>
ASSETS                                                               (UNAUDITED)

CURRENT
   Cash                                                            $          69    $          68
                                                                   ------------------------------
        TOTAL CURRENT ASSETS                                                  69               68
PROPERTY AND EQUIPMENT, net                                               13,323           17,829
                                                                   ------------------------------
TOTAL ASSETS                                                       $      13,392    $      17,897
=================================================================================================
LIABILITIES AND STOCKHOLDERS' DEFICIT

LIABILITIES

CURRENT
   Accounts payable                                                $   1,999,312    $   1,869,757
   Accrued liabilities                                                   348,600          320,000
   Provision for lawsuit settlements (Note 5)                          5,634,637        5,345,113
   Loans payable (Note 3)                                                540,139          508,227
                                                                   ------------------------------
        TOTAL CURRENT LIABILITIES                                      8,522,688        8,043,097
                                                                   ------------------------------
LONG-TERM

   Loans payable (Note 4)                                                130,567               --

   Deferred licensing fee                                                258,162          274,830
                                                                   ------------------------------
        TOTAL LONG-TERM LIABILITIES                                      388,729          274,830
                                                                   ------------------------------
        TOTAL LIABILITIES                                              8,911,417        8,317,927
                                                                   ------------------------------
STOCKHOLDERS' 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
            12,675 preferred shares in 2009 and 2008                          12               12
          550,513,491 common shares in 2009 and 549,513,491 2008         550,514          549,514
   Treasury stock, at cost (5,278,580 shares)                         (1,963,612)      (1,963,612)
   Additional paid-in capital                                        127,952,523      127,897,291
   Other comprehensive income -
       Foreign exchange translation gain                                  35,119           35,119
   Accumulated deficit                                              (135,472,581)    (134,818,354)
                                                                   ------------------------------
        TOTAL STOCKHOLDERS' DEFICIT                                   (8,898,025)      (8,300,030)
                                                                   ------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                        $      13,392    $      17,897
=================================================================================================
</TABLE>

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


                                       4
<PAGE>

<TABLE>
<CAPTION>
                                                                         TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                                                       CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                 (UNAUDITED - EXPRESSED IN US DOLLARS)

                                                            THREE-MONTH                           NINE-MONTH
                                                           PERIODS ENDED                         PERIODS ENDED
                                                           SEPTEMBER 30                          SEPTEMBER 30
                                                         2009               2008               2009               2008
----------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                <C>                <C>                <C>
REVENUE
      Licensing fees
                                              $         5,556    $         5,556    $        16,668    $        16,668
                                              ------------------------------------------------------------------------
              TOTAL REVENUE                             5,556              5,556             16,668             16,668
                                              ------------------------------------------------------------------------
EXPENSES
     General and administrative                       134,214            168,094            326,346            598,451
     Research and development                              --             77,703             74,029            280,623
     Litigation expense                                96,508             88,017            289,524            268,412
     Depreciation and amortization                      1,502                890              4,506              2,670
                                              ------------------------------------------------------------------------
         TOTAL EXPENSES
                                                      232,224            334,704            694,405          1,150,156
                                              ------------------------------------------------------------------------
LOSS FROM OPERATIONS                                 (226,668)          (329,148)          (677,737)        (1,133,488)
OTHER INCOME (EXPENSES)
     Interest expense                                 (15,138)            (6,209)           (38,198)           (63,841)
     Amortization of discount on
     convertible notes                                 (4,317)           (80,339)            (7,201)          (414,915)
     Debt conversion expense                               --            (91,200)                --         (1,247,657)
     Gain on extinguishment of debt                        --                 --             70,510                 --
                                              ------------------------------------------------------------------------
LOSS BEFORE TAXES                                    (246,123)          (506,896)          (652,626)        (2,859,901)

INCOME TAX EXPENSE                                         --                 --             (1,600)            (1,600)
                                              ------------------------------------------------------------------------
NET LOSS FOR THE PERIOD                       $      (246,123)   $      (506,896)   $      (654,226)   $    (2,861,501)
                                              ========================================================================
Loss per common share

 BASIC AND DILUTED                            $         (0.00)   $         (0.00)   $         (0.00)   $         (0.01)
======================================================================================================================
WEIGHTED AVERAGE SHARES - BASIC AND DILUTED       550,513,491        496,245,781        549,850,487        442,678,078
======================================================================================================================
</TABLE>

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


                                       5
<PAGE>

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

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30                              2009            2008
-----------------------------------------------------------------------------------------------
<S>                                                                <C>             <C>
OPERATING ACTIVITIES
   Net loss for the period                                         $   (654,226)   $ (2,861,501)
   Adjustments to reconcile net loss to net
   cash provided by (used in) operating activities:
      Amortization of deferred licensing fees                           (16,668)        (16,668)
      Depreciation and amortization                                       4,506           2,670
      Amortization of discount on convertible debt (Note 3 & 4)           7,201         414,915
      Stock for services                                                  5,333          28,111
      Debt conversion expense (Note 3)                                       --       1,247,657
      Warrant compensation  (Note 2)                                     17,979         119,075
   (Increase) decrease in operating assets
       Prepaid expenses and other current assets                             --              --
   Increase (decrease) in operating liabilities
       Accounts payable                                                 129,555         387,073
       Accrued liabilities and provision for lawsuit settlements        356,321         379,761
                                                                   ----------------------------
          Net cash used in operating activities                        (149,999)       (298,907)
                                                                   ----------------------------
INVESTING ACTIVITIES
   Purchase assets                                                           --         (14,325)
                                                                   ----------------------------
           Net cash used in investing activities                             --         (14,325)
                                                                   ----------------------------
FINANCING ACTIVITIES
   Convertible Notes Payable                                            150,000         300,000
   Notes payable                                                             --          23,500
                                                                   ----------------------------
          Net cash provided by financing activities                     150,000         323,500
                                                                   ----------------------------
NET INCREASE (DECREASE) IN CASH                                               1          10,268

CASH, beginning of  period                                                   68           2,786
                                                                   ----------------------------
CASH, end of period                                                $         69    $     13,054
===============================================================================================
SUPPLEMENTARY DISCLOSURE OF NON-CASH INFORMATION
BENEFICIAL CONVERSION FEATURE OF CONVERTIBLE DEBT                  $         --    $    122,250
VALUE OF WARRANTS ISSUED WITH CONVERTIBLE DEBT                           34,257          72,250
CONVERSION OF CONVERTIBLE DEBT AND INTEREST TO COMMON STOCK                  --       1,281,123
CONVERSION OF SHORT-TERM NOTES AND INTEREST TO COMMON STOCK                  --          60,937
===============================================================================================
</TABLE>

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


                                       6
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                        NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                           (Unaudited - Expressed in US Dollars)

SEPTEMBER 30, 2009 AND 2008

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.

      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 $135,472,581 at September 30, 2009 and a total capital deficit
      of $8,898,025 at September 30, 2009. 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.

      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-Q and Rule 8-03 of Regulation S-X. 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, 2008 and 2007 included in the Company's 10-K 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.


                                       7
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

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.

      FASB ACCOUNTING STANDARDS CODIFICATION

      The Company follows accounting standards set by the Financial Accounting
      Standards Board, commonly referred to as the "FASB". The FASB sets
      generally accepted accounting principles (GAAP) that the Company follows
      to ensure consistent reporting of its financial condition, results of
      operations and cash flows. References to GAAP issued by the FASB in these
      footnotes are to the FASB Accounting Standards Codification, sometimes
      referred to as the Codification or ASC. The FASB finalized the
      Codification effective for periods ending on or after September 15, 2009.
      Prior FASB standards like FASB Statement No. 157, Fair Value Measurements,
      are no longer being issued by the FASB. For further discussion of the
      Codification see "FASB Codification Discussion" in Management's Discussion
      and Analysis of Financial Condition and Results of Operations (commonly
      referred to as MD&A) elsewhere in this report.

      DEPRECIATION AND AMORTIZATION

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

            Computers and measurement equipment             - 3 years
            Machinery and equipment                         - 7 to 15 years
            Furniture and fixtures                          - 5 to 10 years

      VALUATION OF LONG-LIVED ASSETS

      The Company periodically and at least, annually, 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 2009 and
      2008.


                                       8
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

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

      FAIR VALUE MEASUREMENTS

      Fair value is defined as the exchange price that would be received for an
      asset or paid to transfer a liability (an exit price) in the principal or
      most advantageous market for the asset or liability in an orderly
      transaction between market participants at the measurement date. The
      Company reports assets and liabilities that are measured at fair value
      using a three-level fair value hierarchy that prioritizes the inputs used
      to measure fair value. This hierarchy maximizes the use of observable
      inputs and minimizes the use of unobservable inputs. The three levels of
      inputs used to measure fair value are as follows:

            o     Level 1 -- Quoted prices in active markets for identical
                  assets or liabilities.

            o     Level 2 -- Observable inputs other than quoted prices included
                  in Level 1, such as quoted prices for similar assets and
                  liabilities in active markets; quoted prices for identical or
                  similar assets and liabilities in markets that are not active;
                  or other inputs that are observable or can be corroborated by
                  observable market data.

            o     Level 3 -- Unobservable inputs that are supported by little or
                  no market activity and that are significant to the fair value
                  of the assets or liabilities. This includes certain pricing
                  models, discounted cash flow methodologies and similar
                  techniques that use significant unobservable inputs.

      An asset's or liability's level within the fair value hierarchy is based
      on the lowest level of any input that is significant to the fair value
      measurement. At each reporting period, we perform a detailed analysis of
      our assets and liabilities that are measured at fair value. All assets and
      liabilities for which the fair value measurement is based on significant
      unobservable inputs or instruments which trade infrequently and therefore
      have little or no price transparency are classified as Level 3.

      All financial liabilities that are measured at fair value have been
      segregated into the most appropriate level within the fair value hierarchy
      based on the inputs used to determine the fair value at the measurement
      date in the table below. The Company has no financial assets and
      non-financial assets and liabilities that are measured at fair value.


                                       9
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

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

      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 nine
      months ended September 30, 2009 $16,668 ($16,668 in 2008) of licensing
      fees was recognized as income.

      EARNINGS (LOSS) PER SHARE

      Earnings (loss) per share is computed in accordance with the provisions of
      ASC Topic 260, "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 year. Diluted earnings per share reflect the potential dilution of
      securities that could share in earnings of an entity. In a loss year,
      dilutive common equivalent shares are excluded from the loss per share
      calculation as the effect would be anti-dilutive.

      For the quarter ended September 30, 2009, 12,675 preferred shares
      convertible into 1,267,500 shares of common stock and options and warrants
      to purchase 17,274,000 and 50,617,210 shares of common stock, convertible
      notes to purchase 29,415,873 shares of common stock were outstanding
      during the period. The weighted average cumulative equivalent shares of
      550,513,491 were included in the denominator for 2009 computation of
      diluted earnings (loss) per share. No other adjustments were made for
      purposes of per share calculations.

      For the quarter ended September 30, 2008, 12,675 preferred shares
      convertible into 1,267,500 shares of common stock and options and warrants
      to purchase 18,022,000 and 42,556,106 shares of common stock, convertible
      notes to purchase 20,191,110 shares of common stock were outstanding
      during the period. The weighted average cumulative equivalent shares of
      549,850,487 were included in the denominator for 2009 computation of
      diluted earnings (loss) per share. No other adjustments were made for
      purposes of per share calculations.

      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.


                                       10
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

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

      STOCK-BASED COMPENSATION

      The Company accounts for stock-based compensation under the fair value
      method in accordance with ASC Topic 718, "Compensation - Stock
      Compensation," which requires the Company to establish assumptions and
      estimates of the weighted-average fair value of stock options granted, as
      well as using a valuation model to calculate the fair value of stock-based
      awards. The Company uses the Black-Scholes option-pricing model to
      determine the fair-value of stock-based awards. All options are amortized
      over the requisite service periods of the awards, which are generally the
      vesting periods.

      RESEARCH AND DEVELOPMENT

      Research and development costs related to present and future products are
      charged to operations in the period 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. The components of the deferred tax assets and liabilities
      are classified as current and non-current based on their characteristics.
      The components of the deferred tax assets and liabilities are classified
      as current and non-current based on their characteristics. A valuation
      allowance is provided for certain deferred tax assets if it is more likely
      than not that the Company will not realize tax assets through future
      operations.

      LEGAL FEES

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


                                       11
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

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

      COMPREHENSIVE INCOME

      ASC Topic 323, "Investments - Equity Method and Joint Ventures,"
      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 foreign currency translation adjustments were immaterial to the
      Company's consolidated financial statements, net earnings (loss)
      approximated comprehensive income for the quarter ended September 30, 2009
      and 2008.

      NEW ACCOUNTING PRONOUNCEMENTS

      In June 2009, the FASB established the "FASB Accounting Standards
      Codification" (Codification) as the single source of authoritative U.S.
      generally accepted accounting principles (U.S. GAAP) recognized by the
      FASB to be applied by nongovernmental entities. Rules and interpretive
      releases of the SEC under authority of federal securities laws are also
      sources of authoritative U.S. GAAP for SEC registrants. The Codification
      is effective for the Company this period ended September 30, 2009 and
      references to pre-codification statements have been removed or replaced in
      the Company's consolidated financial statements.

      In June 2009, the FASB issued SFAS No. 166, "Accounting for Transfers of
      Financial Assets," which has not been added to the Codification. It is an
      amendment of ASC Topics 310 (Receivables), 405 (Liabilities), 470 (Debt),
      740 (Income Taxes) and 810 (Consolidation) as they pertain SFAS No. 140,
      "Accounting for Transfers and Servicing of Financial Assets and
      Extinguishments of Liabilities," and requires entities to provide more
      information about sales of securitized financial assets and similar
      transactions, particularly if the seller retains some risk to the assets.
      This statement will improve the relevance, representation faithfulness,
      and comparability of the information that a reporting entity provides in
      its financial statements about a transfer of financial assets. It will
      also take into account the effects of a transfer on its financial
      position, financial performance, and cash flows, and a transferor's
      continuing involvement. SFAS No. 166 is effective for annual periods
      beginning after November 15, 2009. This statement is effective for the
      Company beginning January 1, 2010 and is expected to have no material
      impact on the consolidated financial statements.


                                       12
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

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

      NEW ACCOUNTING PRONOUNCEMENTS

      In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB
      interpretation No. 46(R)," which has not been added to the Codification.
      It establishes how a company determines when an entity that is
      insufficiently capitalized or not controlled through voting should be
      consolidated. This statement improves financial reporting by enterprises
      involved with variable interest entities, which addresses the effects on
      certain provisions of ASC Topic 810 (Consolidation) as it pertains to FASB
      interpretation No. 46, "Consolidation of Variable Interest Entities," as a
      result of the elimination of the qualifying special-purpose entity concept
      in FASB No. 166, "Accounting for Transfers of Financial Assets," and
      constituent concerns about the application of certain key provisions of
      Interpretation 46(R). SFAS No. 167 is effective for annual periods
      beginning after November 15, 2009. This statement is effective for the
      Company beginning January 1, 2010 and is expected to have no material
      impact on the consolidated financial statements.

      In August 2009, the FASB published Accounting Standards Update 2009-05,
      Fair Value Measurements and Disclosures (Topic 820) Measuring Liabilities
      at Fair Value. It clarifies that in circumstances in which a quoted market
      price in an active market for the identical liability is not available, a
      reporting entity is required to measure fair value using one of several
      acceptable valuation techniques. ASU 2009-05 also clarifies (i) that when
      estimating the fair value of a liability, a reporting entity is not
      required to include a separate input or adjustments to other inputs
      relating the existence of a restriction that prevents the transfer of the
      liability, and (ii) that both a "quoted price in an active market for the
      identical liability at the measurement date" and the "quoted price for the
      identical liability when traded as an asset in a active market when no
      adjustments to the quoted price of the asset are required" are Level 1
      fair value measurements. ASU 2009-05 is effective in the fourth quarter of
      2009. The Company has not yet determined the impact of the adoption of ASU
      2009-05 on its financial statements.

      In September 2009, the FASB published FASB Accounting Standards Update No.
      2009-12, "Fair Value Measurements and Disclosures (Topic 820) -
      Investments in Certain Entities That Calculate Net Asset Value per Share
      (or Its Equivalent)". It amends Subtopic 820-10, "Fair Value Measurements
      and Disclosures--Overall," to permit a reporting entity to measure the
      fair value of certain investments on the basis of the net asset value per
      share of the investment (or its equivalent). It also requires new
      disclosures, by major category of investments, about the attributes
      includes of investments within the scope of this amendment to the
      Codification. The provisions of ASU 2009-12 is effective for interim and
      annual periods ending after December 15, 2009. Early application is
      permitted. The provisions of ASU 2009-12 are not expected to have an
      impact on the Company's consolidated financial statements.


                                       13
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

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

      NEW ACCOUNTING PRONOUNCEMENTS

      In October 2009, the FASB published FASB Accounting Standards Update
      2009-13, "Revenue Recognition (Topic 605) - Multiple-Deliverable Revenue
      Arrangements." It addresses the accounting for multiple-deliverable
      arrangements to enable vendors to account for products or services
      (deliverables) separately rather than as a combined unit. Specifically,
      this guidance amends the criteria in Subtopic 605-25, "Revenue
      Recognition-Multiple-Element Arrangements," for separating consideration
      in multiple-deliverable arrangements. This guidance establishes a selling
      price hierarchy for determining the selling price of a deliverable, which
      is based on: (a) vendor-specific objective evidence; (b) third-party
      evidence; or (c) estimates. This guidance also eliminates the residual
      method of allocation and requires that arrangement consideration be
      allocated at the inception of the arrangement to all deliverables using
      the relative selling price method. In addition, this guidance
      significantly expands required disclosures related to a vendor's
      multiple-deliverable revenue arrangements. The provisions of ASU 2009-13
      is effective prospectively for revenue arrangements entered into or
      materially modified in fiscal years beginning on or after June 15, 2010.
      Early adoption is permitted. The provisions of ASU 2009-13 are not
      expected to have an impact on the Company's consolidated financial
      statements.

      In October 2009, the FASB published FASB Accounting Standards Update
      2009-14 Software (Topic 985) - Certain Revenue Arrangements that Include
      Software Elements." It changes the accounting model for revenue
      arrangements that include both tangible products and software elements.
      Under this guidance, tangible products containing software components and
      non-software components that function together to deliver the tangible
      product's essential functionality are excluded from the software revenue
      guidance in Subtopic 985-605, "Software-Revenue Recognition." In addition,
      hardware components of a tangible product containing software components
      are always excluded from the software revenue guidance. The provisions of
      ASU 2009-14 is effective prospectively for revenue arrangements entered
      into or materially modified in fiscal years beginning on or after June 15,
      2010. Early adoption is permitted. The provisions of ASU 2009-14 are not
      expected to have an impact on the Company's consolidated financial
      statements.

      In October 2009, the FASB published FASB Accounting Standards Update
      2009-15, "Accounting for Own-Share Lending Arrangements in Contemplation
      of Convertible Debt Issuance or Other Financing." It includes amendments
      to Topic 470, Debt, (Subtopic 470-20), and Topic 260, "Earnings per Share"
      (Subtopic 260-10), to provide guidance on share-lending arrangements
      entered into on an entity's own shares in contemplation of a convertible
      debt offering or other financing. The provisions of ASU 2009-15 is
      effective for fiscal years beginning on or after December 15, 2009, and
      interim periods within those fiscal years FOR ARRANGEMENTS OUTSTANDING AS
      OF THE BEGINNING OF THOSE YEARS. Retrospective application is required for
      such arrangements. The provisions of ASU 2009-15 is effective FOR
      ARRANGEMENTS ENTERED INTO ON (NOT OUTSTANDING) or after the beginning of
      the first reporting period that begins on or after June 15, 2009. Certain
      transition disclosures are also required. Early application is not
      permitted. The provisions of ASU 2009-15 are not expected to have an
      impact on the Company's consolidated financial statements.


                                       14
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

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 September 30, 2009,
            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.

      b)    During the nine months ended September 30, 2009 the Company issued
            1,000,000 shares of common stock for payment of services.

            During the nine months ended September 30, 2008 the Company issued
            162,054,057 shares of common stock, 142,114,317 for conversion of
            notes and interest payable, 13,939,740 for additional merger shares
            and 6,000,000 for payment of services.

      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 behaviours.
            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.


                                       15
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

2.    SHARE CAPITAL - CONTINUED

      c)    Stock Options - Continued

            Grant of Stock Options to Non-employees for Services

            During 2006 and 2007, we granted warrants to purchase 78,200,000
            shares of our common stock to various consultants that we deemed
            essential to our operations. Details of the consultant warrants for
            the quarter ended September 30, 2009 are as follows:

               Total consultant warrants granted                    78,200,000
               Vested prior to January 1, 2009                     (22,805,549)
               Vested January through September 30, 2009            (3,691,661)
               Cancelled January through December 2008             (22,044,436)
                                                                   -----------
               Warrants not vested                                  29,658,354
                                                                   ===========

            During the nine months ended September 30, 2009 the Company using
            the Black-Scholes model recorded $17,979 ($119,075 in 2008) of
            compensation expense, relating to the vesting of stock warrants
            previously issued to non-employees for services. The non cash
            warrant expense is allocated with $16,171 ($86,209 in 2008) to
            general and administrative expenses and $1,808 ($32,866 in 2008) to
            research and development.

            The estimated fair value of warrants issued to non-employees during
            the nine months ended September 30, 2009 ranged from $0.0032 to
            $0.0088. Assumptions used to value the warrants: expected dividend
            yield Nil%; expected volatility ranging from 113.23% to 139.34%;
            risk-free interest rate ranging from 2.27% to 3.19% and an expected
            life of 7 years.

      d)    Stock Purchase Warrants

            At September 30, 2009 the Company had 50,617,210 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 $0.01 to
            $0.04 per share with a weighted average exercise price of $0.016 per
            share and expiration dates between 2011 and 2016. Details of share
            purchase warrants for the quarter ended September 30, 2009 are as
            follows:


                                       16
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

2.    SHARE CAPITAL - CONTINUED

<TABLE>
<CAPTION>
                                            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   21,120,000      $0.02   22,805,549      $0.01   43,925,549      $0.02
Vested                                3,000,000      $0.01    3,691,661      $0.01    6,691,661      $0.01
                                     ----------              ----------              ----------
Warrants outstanding and
exercisable at end of period         24,120,000      $0.02   26,497,210      $0.01   50,617,210      $0.02
                                     ----------              ----------              ----------
Weighted average fair value of
warrants granted during the period           --      $0.01                   $0.01                   $0.01
                                     =====================================================================
</TABLE>

      At September 30, 2009, 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                28,663,882                 5.05             $0.01
       $0.025 - 0.04           21,953,328                 2.95              0.02
                           --------------
                               50,617,210                 4.14             $0.02
                           ==============

3.    CURRENT LOANS PAYABLE
                                                         September      December
                                                          30, 2009      31, 2008
                                                         -----------------------
      Unsecured, non-interest bearing loan payable,
      due on demand to stockholders and other parties    $ 138,600     $ 138,600

      Note payable, 5% per annum (see note 6)               52,629        50,905

      Convertible notes payable                            348,910       318,722
                                                         -----------------------
      Total Current Loans Payable                        $ 540,139     $ 508,227
                                                         =======================


                                       17
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

3.    CURRENT LOANS PAYABLE - CONTINUED

      As of September 30, 2009, convertible notes consist of:

<TABLE>
<CAPTION>
                                     Issued        Issued        Issued        Issued        Issued       Issued
                                     through        From          from          from          From         From
                                      Sept       Nov 06 to      Mar07 to     Sep 07 to     Jan 08 to     Apr 08 to
                                      2006         Feb 07        Aug 07        Dec 07        Mar 08       Jun 08         Total
                                  -----------   -----------   -----------   -----------   -----------   -----------   -----------
<S>                               <C>           <C>           <C>           <C>           <C>           <C>           <C>
Proceeds from issuances of $
convertible debt                  $   615,000   $    95,000   $   441,000   $   200,000       100,000   $   200,000   $ 1,651,000
Less: Debt conversions               (530,000)      (95,000)     (441,000)     (200,000)     (100,000)           --    (1,366,000)
                                  -----------   -----------   -----------   -----------   -----------   -----------   -----------
                                       85,000            --            --            --            --       200,000       285,000
                                  -----------   -----------   -----------   -----------   -----------   -----------   -----------
Discount on convertible debt
   Value allocated to warrants         88,144         8,041       118,485        51,035        24,198        48,052       337,955
   Beneficial conversion feature      521,756        86,959       322,515       148,965        54,198        68,052     1,202,445
                                  -----------   -----------   -----------   -----------   -----------   -----------   -----------
                                      609,900        95,000       441,000       200,000        78,396       116,104     1,540,400
   Accumulated amortization of
   value allocated to warrants        (88,144)       (8,041)     (118,485)      (51,035)      (24,198)      (48,052)     (337,955)
   Accumulated amortization of
   beneficial conversion feature     (521,756)      (86,959)     (322,515)     (148,965)      (54,198)      (68,052)   (1,202,445)
                                  -----------   -----------   -----------   -----------   -----------   -----------   -----------
                                           --            --            --            --            --            --            --
                                  -----------   -----------   -----------   -----------   -----------   -----------   -----------
   Accrued Interest                    15,010            --            --            --            --        48,900        63,910
                                  -----------   -----------   -----------   -----------   -----------   -----------   -----------
Net Convertible Debt              $   100,010   $        --   $        --   $        --   $        --   $   248,900   $   348,910
                                  ===========   ===========   ===========   ===========   ===========   ===========   ===========
                                     Lower of
                                       70% of
                                    market or
Original conversion price              $0.025   $     0.005   $     0.020   $     0.020   $     0.020   $     0.020            --
Modified conversion price              $0.005           N/A           N/A           N/A           N/A           N/A            --
Interest rate                               5%            5%            5%           18%           18%           18%           --
Maturity from date of issuance         1 year        1 year        1 year      6 months      6 months      6 months            --
Warrants issued                    12,300,000     1,900,000     8,820,000     4,000,000     2,000,000     4,000,000    33,020,000
Warrants exercised                (11,900,000)           --            --            --            --            --   (11,900,000)
                                  -----------   -----------   -----------   -----------   -----------   -----------   -----------
Warrants remaining                    400,000     1,900,000     8,820,000     4,000,000     2,000,000     4,000,000    21,120,000
                                  -----------   -----------   -----------   -----------   -----------   -----------   -----------
Market value of warrants at
date of issuance                  $   150,884   $    48,863   $   398,872   $   140,612   $    41,498   $    69,572
Assumptions for Black-Scholes
valuation of warrants
   Original exercise price        $     0.025   $     0.025   $     0.020   $     0.020   $     0.020   $     0.020
   Modified exercise price        $     0.010           N/A           N/A           N/A           N/A           N/A
   Term                               5 years       5 years       5 years       5 years       5 years       5 years
   Volatility rate                   146%-151%     153%-155%     112%-155%     112%-155%          109%          107%
   Risk free interest rate         4.61%-5.02%   4.45%-4.69%   4.46%-5.01%   2.93%-5.01%         2.93%         1.90%
</TABLE>


                                       18
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

3.    LOANS PAYABLE - CONTINUED

      For the years ended December 31, 2008, 2007 and 2006, the Company issued
      $300,000, $691,000 and $660,000, respectively, of convertible notes. All
      of the convertible notes were issued with detachable warrants to purchase
      6,000,000, 13,820,000, and 13,200,000 shares of the Company's common
      stock, respectively. In recording the transaction, the Company allocated
      the value of the proceeds to the convertible notes and the warrants based
      on their relative fair values. Fair value of the warrants was determined
      using the Black-Scholes valuation model. It was also determined that the
      convertible notes contained a beneficial conversion feature since the fair
      market value of the common stock issuable upon the conversion of the notes
      exceeded the value allocated to the notes. The value of the beneficial
      conversion feature and the value of the warrants have been recorded as a
      discount to convertible notes and are being amortized over the term of the
      notes using the straight-line method. For the nine months ended September
      30, 2009 and 2008, amortization of the discount was $-0- and $414,915,
      respectively. As of September 30, 2009 and 2008, the remaining balance of
      the beneficial conversion feature was $-0- and $19,232, and detachable
      warrants was $-0- and $13,580, respectively.

      In September 2006, the Company offered to decrease the note conversion
      price to $0.005 per share if the note holders exercised their warrants at
      the reduced exercise price of $0.010 by September 30, 2006. 11,900,000 of
      the warrants were exercised. In consideration for the reduction of
      conversion price, the maturity of the notes extended for another year.

      The modification of conversion terms was substantial such that it was
      considered an extinguishment of debt. Accordingly, the unamortized
      discount on convertible notes was written off and included in total
      amortization for 2006. Conversion of notes in 2008 and 2007 also resulted
      in the write off of the corresponding unamortized discount.

      In addition, as a result of the inducement to exercise the warrants and to
      convert the notes, the Company recognized an expense of $-0- and
      $1,247,657 for the nine months ended September 30, 2009 and 2008,
      respectively, with a corresponding increase in additional paid-in capital.

      In February 2007, the Company changed the per share conversion price from
      $0.005 to $0.020 for new lenders. The notes, issued prior to September 1,
      2007, bear interest at 5% and mature within one year from date of
      issuance. The notes, issued after September 1, 2007, bear interest at 18%
      and mature within six months from date of issuance. The warrants are to
      purchase the Company's common stock at $0.025 per share expiring in five
      years.


                                       19
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

4.    LONG-TERM LOANS PAYABLE

      For the nine months ended September 30, 2009, the Company issued $150,000
      of convertible notes. All of the convertible notes were issued with
      detachable warrants to purchase 3,000,000 shares of the Company's common
      stock. In recording the transaction, the Company allocated the value of
      the proceeds to the convertible notes and the warrants based on their
      relative fair values. Fair value of the warrants was determined using the
      Black-Scholes valuation model. There was no beneficial conversion feature.

      The Convertible Notes have a two year maturity with 12% annual interest
      rate payable at maturity or at the time of conversion. The Note may be
      converted at any time after issuance until the note is paid in full. The
      conversion price is at a price equal to $.01; provided that Conversion
      shall be subject to a minimum conversion amount of $10,000, or if less,
      the remaining Outstanding Obligation. The warrants will have an exercise
      price of $.01 and a 5 year expiration date.

      The value of the warrants has been recorded as a discount to convertible
      notes and is being amortized over the term of the notes using the
      straight-line method. For the nine months ended September 30, 2009,
      amortization of the discount was $7,201. As of September 30, 2009, the
      remaining balance of the detachable warrants was $27,056. As of September
      30, 2009 the accrued interest on the convertible notes is $7,623.

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 5(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.


                                       20
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

5.    COMMITMENTS AND CONTINGENCIES - LITIGATION CONTINUED

      a)    TST, Inc. - Continued

            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.

      At September 30, 2009, the Company has included $4,232,852 ($3,943,328 in
      2008) 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 also been included in the provision for lawsuit
      settlements.

                                         September 30, 2009   December 31, 2008
                                         --------------------------------------
                Settlement amount               $ 2,068,079         $ 2,068,079
                Interest                          2,105,118           1,815,594
                Preference payment                   83,000              83,000
                Proceeds of stock sale              (23,345)            (23,345)
                                         --------------------------------------
                Total                           $ 4,232,852         $ 3,943,328
                ----------------------------------------------------------------

      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.


                                       21
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

5.    COMMITMENTS AND CONTINGENCIES - CONTINUED

      c)    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 September 30,
            2009, the Company has included $405,785 in regard to this matter in
            the provision for lawsuit settlements.

      d)    Crescent Fund, LLC

            A former consultant brought an action against the Company in the
            Supreme Court of the State of New York for the County of New York
            for an action entitled CRESCENT FUND, LLC v TURBODYNE TECHNOLOGIES,
            INC. The action sought $300,000 damages based upon claims for
            alleged breaches of contract and covenants of good faith and fair
            dealing allegedly arising because the Company failed to give
            plaintiff an opinion to sell the 5,000,000 shares of the Company's
            common stock received for services. The Company in the action sought
            the return of such shares and damages based upon plaintiff's breach
            and fraud based upon the failure to perform any of the duties and
            obligations required of it under the aforesaid contract which was
            fraudulently induced. The Company did not anticipate any liability
            and therefore did not include an amount in the provision for lawsuit
            settlements. The action has been settled pursuant to which the
            plaintiff retained a majority of the shares and released the Company
            from all liability with any payments.

      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.


                                       22
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

6.    RELATED PARTY TRANSACTIONS

      Aspatuck Holdings Ltd. and another entity affiliated with Jason Meyers
      have advanced an aggregate of $ 46,000 to the Company plus related
      interest expense of $6,629 for 2009 and $4,904 for 2008. The advances are
      repayable on demand and bear interest at 5 % per annum. See Note 3 Loan
      Payable. As of September 30, 2009 and December 31, 2008 the Company also
      owes Aspatuck Holdings Ltd consulting fees of $387,227 and $344,827,
      respectively, for the services of Jason Meyers. The Company has included
      these consulting fees in accounts payable in the balance sheet. The
      Company has included $30,000 of consulting compensation in the general and
      administrative expense for the quarters ended September 30, 2009 and 2008.
      The Company also included $4,684 and $15,248 of non cash warrant expense
      for the quarter ended September 30, 2009 and 2008 respectively.

      The Company has agreed to pay Aspatuck Holdings, Ltd. $64,000 of the
      accounts payable owed as funds become available and then $10,000 per month
      until repaid. The accounts payable is for the services of the primary
      shareholder of Aspatuck, Jason Meyers.

      John Adams, co-CEO has advanced an aggregate of $35,000 in convertible
      notes as a private investor. The notes were due in November 2006 and July
      2007 but remain unpaid as of September 30, 2009 and December 31, 2008,
      with total outstanding balance of $41,415 and $40,106, respectively, which
      includes accrued interest of $6,418 and $5,106, respectively.

      On June 30, 2009 we issued a certificate for 1,000,000 restricted shares
      of our common stock to John Adams for the October 2008 through June 30,
      2009 representing a portion of the 12,000,000 shares of service based
      stock according to the Consulting Agreement effective January 1, 2008. The
      Company recorded $1,889 and $10,000 general and administrative expense for
      the stock compensation to be issued to John Adams for the quarter ended
      September 30, 2009 and 2008, respectively.

      As of September 30, 2009 and December 31, 2008 the Company owes Debi
      Kokinos, CFO consulting fees of $82,970 and $41,830, respectively. The
      Company has included these consulting fees in accounts payable in the
      balance sheet. The Company has included $19,380 of consulting compensation
      in the general and administrative expense for the quarters ended September
      30, 2009 and 2008. The Company also included $1,405 and $4,574 of non cash
      warrant expense for the quarter ended September 30, 2009 and 2008
      respectively.


                                       23
<PAGE>

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

SEPTEMBER 30, 2009 AND 2008

7.    SUBSEQUENT EVENTS

      Subsequent to September 30, 2009, the Company issued a convertible note
      for $50,000. The convertible note was issued with detachable warrants to
      purchase 1,000,000 shares of the Company's common stock. The Convertible
      Note has a two year maturity with 12% annual interest rate payable at
      maturity or at the time of conversion. The Note may be converted at any
      time after issuance until the note is paid in full. The conversion price
      is at a price equal to $.01; provided that Conversion shall be subject to
      a minimum conversion amount of $10,000, or if less, the remaining
      Outstanding Obligation. The warrants will have an exercise price of $.01
      and a 5 year expiration date.

      Subsequent to September 30, 2009 the Company entered into Common Stock
      Purchase Agreements for 25,400,000 shares for a total of $89,900. The
      proceeds were used for payment of a contract with D. Brown Traktoren, GmbH
      for the services to the Company of Augustin Thalhofer for the development
      of the TurboPac.

      On November 7, 2009 we received notification that The People's Republic of
      China granted two patents to Turbodyne Technologies, Inc. on July 22, 2009
      for Charge Air Systems for Turbocharged Four-Cycle Internal Combustion
      Engines and Two Stage Charge Air System for Four-Cycle Internal Combustion
      Engine. The original applications for these patents were filed July 23,
      1998. The People's Republic of China represents one of the fastest growing
      markets for our products.

      The Company has evaluated its subsequent events through November 16, 2009,
      the date these financial statements were issued.


                                       24
<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-Q, 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-Q
are in U.S. dollars unless otherwise stated.

PLAN OF OPERATIONS

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
under development are designed to 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.

On November 7, 2009 we received notification that The People's Republic of China
granted two patents to Turbodyne Technologies, Inc. on July 22, 2009 for Charge
Air Systems for Turbocharged Four-Cycle Internal Combustion Engines and Two
Stage Charge Air System for Four-Cycle Internal Combustion Engine. The original
applications for these patents were filed July 23, 1998. The People's Republic
of China represents one of the fastest growing markets for our products.


                                       25
<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
2009 we need substantially more capital to complete development and continue our
business. There is no assurance that we will be able to raise the required
additional capital. 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. Accordingly, there is substantial doubt about
our ability to continue as a going concern.

We believe, however that recent technical developments provide the Company with
potential for substantial growth but this will require investment. There is no
assurance that we will obtain sufficient funding or otherwise be able to achieve
our goals.

CRITICAL ACCOUNTING POLICIES

      STOCK BASED COMPENSATION

      The Company accounts for stock-based compensation under the fair value
      method in accordance with the provisions of ASC Topic 718, "Compensation -
      Stock Compensation," which requires the Company to establish assumptions
      and estimates of the weighted-average fair value of stock options granted,
      as well as using a valuation model to calculate the fair value of
      stock-based awards. The Company uses the Black-Scholes option-pricing
      model to determine the fair-value of stock-based awards. All options are
      amortized over the requisite service periods of the awards, which are
      generally the vesting periods.

      FASB CODIFICATION

      The FASB recognized the complexity of its standard-setting process and
      embarked on a revised process in 2004 that culminated in the release on
      July 1, 2009 of the FASB Accounting Standards Codification, sometimes
      referred to as the Codification or ASC. The Codification does not change
      how the Company accounts for its transactions or the nature of related
      disclosures made. However, when referring to guidance issued by the FASB,
      the Company refers to topics in the ASC rather than the SFAS or FASB
      Statements. The above change was made effective by the FASB for periods
      ending on or after September 15, 2009. We have updated references to GAAP
      in this quarterly report on Form 10-Q to reflect the guidance in the
      Codification.


                                       26
<PAGE>

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                            Three Months Ended September 30                     Nine Months Ended September 30
                       ----------------------------------------        -------------------------------------------
                                                     Percentage                                         Percentage
                          2009         2008           Increase           2009              2008           Increase
                                                     (Decrease)                                         (Decrease)
                       ----------------------------------------        -------------------------------------------
<S>                    <C>          <C>                <C>             <C>              <C>                <C>
Total Revenue             $5,556       $5,556           Nil              $16,668            $16,668         Nil
Operating Expenses
                       ($232,224)   ($334,704)         (31%)           ($694,405)       ($1,150,156)       (40%)
                       ----------------------                          ----------------------------
Net Loss from
Operations             ($226,668)   ($329,148)         (31%)           ($677,737)       ($1,133,488)       (40%)
Other Income
(Expenses)              ($19,455)   ($177,748)         (89%)             $23,511        ($1,728,013)      (101%)
                       ======================                          ============================
Net (Loss)             ($246,123)   ($506,896)          51%            ($654,226)       ($2,861,501)       (77%)
                       ======================                          ============================
</TABLE>

NET REVENUE

              Three Months Ended September 30     Nine Months Ended September 30
              -------------------------------     ------------------------------
                                   Percentage                         Percentage
               2009       2008      Increase        2009      2008     Increase
              -------------------------------     ------------------------------
License Fee   $5,556     $5,556       Nil         $16,668   $16,668      Nil

We had no revenue in 2009 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 each of the quarters ended
September 30, 2009 and 2008, $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 commercial arrangements.

COST OF SALES

We had no sales in 2009 and 2008; therefore we did not have any costs of sales
during any portion of these years.


                                       27
<PAGE>

OPERATING EXPENSES

Due to a lack of funds we reduced our operations in the first and second quarter
of 2009 so that operating expenses decreased from the comparable period in 2008
by 43%. The primary components of our operating expenses are outlined in the
table below:

<TABLE>
<CAPTION>
                          Three Months Ended September 30    Nine Months Ended September 30
                          -------------------------------    ------------------------------
                                               Percentage                        Percentage
                                                Increase                          Increase
                            2009       2008    (Decrease)      2009       2008   (Decrease)
                          -------------------------------    ------------------------------
<S>                       <C>        <C>           <C>       <C>        <C>         <C>
General and
Administrative Expenses   $134,214   $168,094      (20%)     $326,346   $598,451    (45%)

Research and
Development Expenses          $-0-   $ 77,703     (100%)     $ 74,029   $280,623    (74%)

Litigation Expenses       $ 96,508   $ 88,017       10%      $289,524   $268,412      8%
</TABLE>

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses primarily included management compensation
costs as well as overhead. The decline of these expenses for the three and nine
months ended September 30, 2009 compared to prior periods in 2008 is due to
decreased spending due to lack of financing as well as a corresponding decrease
in the non cash warrant expense. Management compensation costs included non cash
(i) stock compensation expense of $1,889 and $5,333 for the three months and
nine months ended September 30, 2009 compared to $10,000 and $28,111 in 2008 and
(ii) warrant expense of $6,089 and $16,171 for the three months and nine months
ended September 30, 2009 compared to $19,822 and $86,209 in prior periods of
2008.

RESEARCH AND DEVELOPMENT

The decrease in research and development costs in 2009 is due to decreased
spending for limited development operations due to a lack of funding and the
decrease in the non cash warrant expense amount of $1,808 compared to $32,866 in
2008 as a result of the termination of certain consulting agreements and the
decrease in the per share price of the Company's common stock. 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 2009 are associated with the development of our TurboPac.

On November 7, 2009 we received notification that The People's Republic of China
granted two patents to Turbodyne Technologies, Inc. on July 22, 2009 for Charge
Air Systems for Turbocharged Four-Cycle Internal Combustion Engines and Two
Stage Charge Air System for Four-Cycle Internal Combustion Engine. The original
applications for these patents were filed July 23, 1998. The People's Republic
of China represents one of the fastest growing markets for our products.

LITIGATION EXPENSE

The litigation expense is the accrued interest relating to the TST, Inc.
settlement.


                                       28
<PAGE>

COMPENSATION EXPENSE

Grant of Stock Options to Non-employees for Services

During 2006 and 2007, we granted warrants to purchase 78,200,000 shares of our
common stock to various consultants that we deemed essential to our operations.
Details of the consultant warrants for the year ended December 31, 2008 are as
follows:

            Total consultant warrants granted                     78,200,000
            Vested prior to January 1, 2009                     (22,805,549)
            Vested January through September 30 2009             (3,691,661)
            Cancelled January through December 2008             (22,044,436)
                                                                -----------
            Warrants not vested                                   29,658,354
                                                                ============

During the nine months ended September 30, 2009 the Company using the
Black-Scholes model recorded $17,979 ($119,075 in 2008) of compensation expense,
relating to the vesting of stock warrants previously issued to non-employees for
services. The non cash warrant expense is allocated with $16,171 ($86,209 in
2008) to general and administrative expenses and $1,808 ($32,866 in 2008) to
research and development.

OTHER INCOME (EXPENSE) AND INCOME TAX

<TABLE>
<CAPTION>
                                Three Months Ended September 30       Nine Months Ended September 30
                               ---------------------------------    -----------------------------------
                                                      Percentage                             Percentage
                                                       Increase                               Increase
                                  2009       2008     (Decrease)      2009          2008     (Decrease)
                               ---------------------------------    -----------------------------------
<S>                            <C>        <C>           <C>         <C>        <C>             <C>
Gain on Extinguishment
of debt                              --          --      Nil         $70,510            --      100%
                               --------------------                 ----------------------
OTHER EXPENSES

Interest Expense               ($15,138)    ($6,209)    (144%)      ($38,198)     ($63,841)     (40%)

Amortization of Discount
on Convertible Notes            ($4,317)   ($80,339)     (95%)       ($7,201)    ($414,915)     (98%)

Inducement Expense                   --    ($91,200)    (100%)            --   ($1,247,657)    (100%)

Income Tax Expense                   --          --       --         ($1,600)      ($1,600)     Nil
                               ------------------------------------------------------------------------
Total Other Expenses           ($19,455)  ($177,748)     (89%)      ($46,999)  ($1,728,013)     (97%)
                               ------------------------------------------------------------------------
Other Income and Expenses      ($19,455)  ($177,748)     (89%)       $23,511   ($1,728,013)    (101%)
                               ========================================================================
</TABLE>


                                       29
<PAGE>

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 debt
relief of accounts payable. For the nine months ended September 30, 2009, the
Company recorded a gain of $70,510 related to debt relief.

The Company had other expenses for the quarter ended September 30, 2009 of
$19,455 compared to $177,748 in 2008. As indicated above, the reduction resulted
from a reduction in the amortization of discounts on convertible notes and value
of detachable warrants and related debt conversion expenses.

NET LOSS

Our net loss for the Quarter Ended September 30 2009 decreased to $246,123 from
net loss of $506,896 for the Quarter Ended September 30, 2008, representing a
decrease of 47%. The decrease is directly related to limited activity, due to a
lack of funds and a significant decrease in expenses from the amortization of
discounts on convertible notes and value of detachable warrants and for related
debt conversion expenses.

FINANCIAL CONDITION

CASH AND WORKING CAPITAL

<TABLE>
<CAPTION>
                                                                       Percentage
                        September 30, 2009   December 31, 2008     Increase/(Decrease)
                        --------------------------------------------------------------
<S>                            <C>                 <C>                     <C>
Current Assets                         $69                 $68             (1%)

Current Liabilities            ($8,522,688)        ($8,043,097)             6%
                        --------------------------------------------------------------
Working Capital Deficit        ($8,522,619)        ($8,043,029)             6%
                        ==============================================================
</TABLE>

The increase to our working capital deficit was primarily attributable to an
increase in accounts payable and an increase in provision for lawsuit
settlements as discussed below.

LIABILITIES

<TABLE>
<CAPTION>
                                                                       Percentage
                        September 30, 2009   December 31, 2008     Increase/(Decrease)
                        --------------------------------------------------------------
<S>                             <C>                 <C>                    <C>
Provisions for
  Lawsuit Settlements           $5,634,637          $5,345,113             5%
Accounts Payable                $1,999,313          $1,869,757             7%
Accrued Liabilities               $348,600            $320,000             9%
Short-Term Loans                  $540,139            $508,227             6%
</TABLE>

The increase in provision for lawsuits is due to accrued interest on outstanding
judgments. Accounts payable increased due to a lack of funds to pay creditors.
Short-term loans increased due to interest expense.


                                       30
<PAGE>

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

Included in short-term loans at September 30, 2009 are unsecured, non-interest
bearing advances of $138,600 that we anticipate will be converted into shares of
our common stock.

CASH FLOWS

                                                             At September 30,
                                                         -----------------------
                                                              2009         2008
                                                              ----         ----
Net Cash provided by (used in) Operating Activities      ($149,999)   ($298,907)
Net Cash provided by (used in) Financing Activities             --     ($14,325)
Net Cash provided by (used in) Financing Activities       $150,000     $323,500
Net Increase (Decrease) in Cash During Period                   $1      $10,268

CASH USED IN OPERATING ACTIVITIES

The decrease in cash used in operating activities was due to the limited amount
of funds available compared to 2008.


                                       31
<PAGE>

NEW ACCOUNTING PRONOUNCEMENTS

In June 2009, the FASB established the "FASB Accounting Standards Codification"
(Codification) as the single source of authoritative U.S. generally accepted
accounting principles (U.S. GAAP) recognized by the FASB to be applied by
nongovernmental entities. Rules and interpretive releases of the SEC under
authority of federal securities laws are also sources of authoritative U.S. GAAP
for SEC registrants. The Codification is effective for the Company this period
ended September 30, 2009 and references to pre-codification statements have been
removed or replaced in the Company's consolidated financial statements.

In June 2009, the FASB issued SFAS No. 166, "Accounting for Transfers of
Financial Assets," which has not been added to the Codification. It is an
amendment of ASC Topics 310 (Receivables), 405 (Liabilities), 470 (Debt), 740
(Income Taxes) and 810 (Consolidation) as they pertain SFAS No. 140, "Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities," and requires entities to provide more information about sales of
securitized financial assets and similar transactions, particularly if the
seller retains some risk to the assets. This statement will improve the
relevance, representation faithfulness, and comparability of the information
that a reporting entity provides in its financial statements about a transfer of
financial assets. It will also take into account the effects of a transfer on
its financial position, financial performance, and cash flows, and a
transferor's continuing involvement. SFAS No. 166 is effective for annual
periods beginning after November 15, 2009. This statement is effective for the
Company beginning January 1, 2010 and is expected to have no material impact on
the consolidated financial statements.

In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB interpretation
No. 46(R)," which has not been added to the Codification. It establishes how a
company determines when an entity that is insufficiently capitalized or not
controlled through voting should be consolidated. This statement improves
financial reporting by enterprises involved with variable interest entities,
which addresses the effects on certain provisions of ASC Topic 810
(Consolidation) as it pertains to FASB interpretation No. 46, "Consolidation of
Variable Interest Entities," as a result of the elimination of the qualifying
special-purpose entity concept in FASB No. 166, "Accounting for Transfers of
Financial Assets," and constituent concerns about the application of certain key
provisions of Interpretation 46(R). SFAS No. 167 is effective for annual periods
beginning after November 15, 2009. This statement is effective for the Company
beginning January 1, 2010 and is expected to have no material impact on the
consolidated financial statements.

In September 2009, the FASB published FASB Accounting Standards Update No.
2009-12, "Fair Value Measurements and Disclosures (Topic 820) - Investments in
Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)."
It amends Subtopic 820-10, Fair Value Measurements and Disclosures--Overall, to
permit a reporting entity to measure the fair value of certain investments on
the basis of the net asset value per share of the investment (or its
equivalent). It also requires new disclosures, by major category of investments,
about the attributes includes of investments within the scope of this amendment
to the Codification. The provisions of ASU 2009-12 is effective for interim and
annual periods ending after December 15, 2009. Early application is permitted.
The provisions of ASU 2009-12 are not expected to have an impact on the
Company's consolidated financial statements.


                                       32
<PAGE>

In October 2009, the FASB published FASB Accounting Standards Update 2009-13,
"Revenue Recognition (Topic 605) - Multiple-Deliverable Revenue Arrangements."
It addresses the accounting for multiple-deliverable arrangements to enable
vendors to account for products or services (deliverables) separately rather
than as a combined unit. Specifically, this guidance amends the criteria in
Subtopic 605-25, "Revenue Recognition-Multiple-Element Arrangements," for
separating consideration in multiple-deliverable arrangements. This guidance
establishes a selling price hierarchy for determining the selling price of a
deliverable, which is based on: (a) vendor-specific objective evidence; (b)
third-party evidence; or (c) estimates. This guidance also eliminates the
residual method of allocation and requires that arrangement consideration be
allocated at the inception of the arrangement to all deliverables using the
relative selling price method. In addition, this guidance significantly expands
required disclosures related to a vendor's multiple-deliverable revenue
arrangements. The provisions of ASU 2009-13 is effective prospectively for
revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010. Early adoption is permitted. The provisions
of ASU 2009-13 are not expected to have an impact on the Company's consolidated
financial statements.

In October 2009, the FASB published FASB Accounting Standards Update 2009-14,
"Software (Topic 985) - Certain Revenue Arrangements that Include Software
Elements." It changes the accounting model for revenue arrangements that include
both tangible products and software elements. Under this guidance, tangible
products containing software components and non-software components that
function together to deliver the tangible product's essential functionality are
excluded from the software revenue guidance in Subtopic 985-605,
"Software-Revenue Recognition." In addition, hardware components of a tangible
product containing software components are always excluded from the software
revenue guidance. The provisions of ASU 2009-14 is effective prospectively for
revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010. Early adoption is permitted. The provisions
of ASU 2009-14 are not expected to have an impact on the Company's consolidated
financial statements.

In October 2009, the FASB published FASB Accounting Standards Update 2009-15,
"Accounting for Own-Share Lending Arrangements in Contemplation of Convertible
Debt Issuance or Other Financing." It includes amendments to Topic 470, Debt,
(Subtopic 470-20), and Topic 260, Earnings per Share (Subtopic 260-10), to
provide guidance on share-lending arrangements entered into on an entity's own
shares in contemplation of a convertible debt offering or other financing. The
provisions of ASU 2009-15 is effective for fiscal years beginning on or after
December 15, 2009, and interim periods within those fiscal years FOR
ARRANGEMENTS OUTSTANDING AS OF THE BEGINNING OF THOSE YEARS. Retrospective
application is required for such arrangements. The provisions of ASU 2009-15 is
effective FOR ARRANGEMENTS ENTERED INTO ON (NOT OUTSTANDING) or after the
beginning of the first reporting period that begins on or after June 15, 2009.
Certain transition disclosures are also required. Early application is not
permitted. The provisions of ASU 2009-15 are not expected to have an impact on
the Company's consolidated financial statements.


                                       33
<PAGE>

ITEM 4. 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.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rule
13a-15(f). As required by Rule 13a-15 under the Exchange Act the Company's Chief
Executive Officer and its Chief Financial Officer assessed the effectiveness of
our internal control over financial reporting as of December 31, 2008. In making
its assessment of internal control over financial reporting, management used the
criteria described in Internal Control -- Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment management identified a material weaknesses in the
Company's internal controls over financial reporting due in a significant part
to the pervasive effect of the lack of resources, specifically the limited
number of personnel involved in the financial reporting including the number of
persons that are appropriately qualified in the areas of U.S. GAAP and SEC
reporting. These limitations include an inability to segregate functions.
Because of this weakness there is a possibility that a material misstatement of
the annual financial statements would not have been prevented or detected.
Nevertheless 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 of the
accuracy of the Company's financial statements at year end. The adverse effect
of the material weakness over internal controls, however, will become magnified
if the Company increases operations.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in our internal control over financial reporting that
occurred during our most recent fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.


                                       34
<PAGE>

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

NONE

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

NONE

ITEM 5. OTHER INFORMATION

The services of Jason Myers, the Company's Chairman of the Board and co Chief
Executive Officer are provided pursuant to a Consulting Agreement with Aspatuck
Holdings, Ltd. dated April 1, 2006 Under the Consulting Agreement. Aspatuck
Holdings is to provide the services of Mr. Myers and receive annual fees of
$120,000. As of September 30, 2009 there were $387,000 of unpaid fees. The
Company has agreed to pay, as funds become available, $64,000 of the unpaid fees
and then $10,000 per month until all amounts, are paid.

On November 7, 2009 we received notification that the Peoples Republic of China
granted two patents to Turbodyne Technologies, Inc. on July 22, 2009 for Charge
Air Systems for Turbocharged Four-Cycle Internal Combustion Engines and Two
Stage Charge Air System for Four-Cycle Internal Combustion Engine. The original
applications for these patents were filed July 23, 1998. The People's Republic
of China represents one of the fastest growing markets for our products.


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<PAGE>

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

EXHIBITS

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

31.2        Certification of Chief Financial Officer pursuant to Section 302 of
            the Sarbanes-Oxley Act of 2002.

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

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


                                       36
<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.

Signature               Title                                 Date
                        -----                                 ----

/s/ Jason Meyers        Co-Chief Executive Officer,           November 16, 2009
---------------------   Director
Jason Meyers

/s/ Debi Kokinos        Chief Financial Officer               November 16, 2009
---------------------   and Chief Accounting Officer
Debi Kokinos


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