UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

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

         For the quarterly period ended MARCH 31, 2005

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

         For the transition period                 to
                                   ----------------  -------------------


                        Commission File Number 000-21391

                          TURBODYNE TECHNOLOGIES, INC.

        (Exact name of small business issuer as specified in its charter)

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


2848 SIOUX
VENTURA, CALIFORNIA                                                93001
----------------------------------------                        ----------
(Address of principal executive offices)                        (Zip Code)

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

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

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

State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 320,559,444 shares of common stock
issued and outstanding as of JUNE 13, 2006.

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



<PAGE>



                         PART 1 - FINANCIAL INFORMATION





                              TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                              CONSOLIDATED FINANCIAL STATEMENTS
                              FOR THE THREE-MONTH PERIODS ENDED
                              MARCH 31, 2005 AND 2004
                              (UNAUDITED -- EXPRESSED IN US DOLLARS)





                                      F-1
<PAGE>



ITEM 1.           FINANCIAL STATEMENTS

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                               CONSOLIDATED FINANCIAL STATEMENTS
                                               FOR THE THREE-MONTH PERIODS ENDED
                                                         MARCH 31, 2005 AND 2004
                                          (UNAUDITED -- EXPRESSED IN US DOLLARS)



                                                                       CONTENTS
  ------------------------------------------------------------------------------

  CONSOLIDATED FINANCIAL STATEMENTS

     Balance Sheets                                                         F-3

     Statements of Operations                                               F-4

     Statements of Capital Deficit                                          F-5

     Statements of Cash Flows                                               F-6

     Notes to the Financial Statements                                      F-7





                                      F-2
<PAGE>
<TABLE>
<CAPTION>


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

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

                                                                    MARCH 31         December 31
                                                                        2005                2004
  -----------------------------------------------------------------------------------------------

  ASSETS                                                            (UNAUDITED)
  CURRENT
<S>                                                                <C>              <C>
   Cash                                                            $       4,284    $       1,615
   Prepaid expenses and other current assets                               3,672           50,055
                                                                   -------------    -------------

        TOTAL CURRENT ASSETS                                               7,956           51,670
PROPERTY AND EQUIPMENT, net                                               36,074           45,002
CERTIFICATE OF DEPOSIT (NOTE 4(D))                                       240,000          240,000
                                                                   -------------    -------------

TOTAL ASSETS                                                       $     284,030    $     336,672
=================================================================================================

LIABILITIES AND CAPITAL DEFICIT

LIABILITIES

CURRENT
   Current portion of long-term debt (Note 3)                      $       6,923    $       6,460
   Accounts payable (Note 3)                                           2,314,906        2,226,102
   Accrued liabilities (Note 2(e))                                       250,935          285,935
   Provision for lawsuit settlements (Note 4)                          6,264,992        6,013,198
   Loans payable                                                         148,600          148,600
                                                                   -------------    -------------

        TOTAL CURRENT LIABILITIES                                      8,986,356        8,680,295

LONG-TERM DEBT (NOTE 3)                                                   25,498           27,054

DEFERRED LICENSING FEE                                                   358,170          363,726
                                                                   -------------    -------------

        TOTAL LIABILITIES                                              9,370,024        9,071,075
                                                                   -------------    -------------

CAPITAL DEFICIT
   Share Capital (Note 2)
       Authorized
              1,000,000 preferred shares, par value $0.001
           1,000,000,000 common shares, par value $0.001
       Issued
            45,175 preferred shares in 2005 (2004 - 52,175)                   45               52
          168,965,355 common shares in 2005 (2004 - 160,157,955)         168,965          160,158
   Treasury stock, at cost (378,580 shares)                           (1,907,612)      (1,907,612)
   Additional paid-in capital                                        120,780,570      120,544,963
   Other comprehensive income -
       Foreign exchange translation gain                                  35,119           35,119
   Accumulated deficit                                              (128,163,081)    (127,567,083)
                                                                   -------------    -------------

        TOTAL CAPITAL DEFICIT                                         (9,085,994)      (8,734,403)
                                                                   -------------    -------------

TOTAL LIABILITIES AND CAPITAL DEFICIT                              $     284,030    $     336,672
=================================================================================================





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



                                      F-3
<PAGE>



<PAGE>
<TABLE>
<CAPTION>


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

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

  FOR THE THREE-MONTH PERIODS ENDED MARCH 31                              2005               2004
  -----------------------------------------------------------------------------------------------


<S>                                                                <C>              <C>
LICENSING FEES                                                     $       5,556    $       5,556
                                                                   -------------    -------------

EXPENSES (RECOVERY)
   Selling, general and administrative                                   126,021         (300,505)
   Research and development costs                                        210,437          196,385
   Litigation expense                                                    257,081          781,108
   Depreciation and amortization                                           8,928           14,513
                                                                   -------------    -------------

       TOTAL EXPENSES                                                    602,467          691,501
                                                                   -------------    -------------

LOSS FROM OPERATIONS                                                    (596,911)        (685,945)

OTHER INCOME (EXPENSE)
   Settlement of litigation (Note 4)                                        --          6,375,000
   Interest income                                                         1,173             --
   Interest expense                                                       (1,030)          (2,070)
   Gain on sale of asset                                                     770            4,100
   Gain on settlement of term debt (Note 3)                                 --             43,360
                                                                   -------------    -------------

NET INCOME (LOSS)                                                  $    (595,998)   $   5,734,445
=================================================================================================

NET INCOME (LOSS) PER COMMON SHARE - BASIC AND DILUTED             $       (0.00)   $        0.04
=================================================================================================

WEIGHTED AVERAGE SHARES USED FOR BASIC INCOME (LOSS) PER SHARE       164,011,132      148,771,749
=================================================================================================

WEIGHTED AVERAGE SHARES USED FOR DILUTED INCOME (LOSS) PER SHARE     164,011,132      159,983,338
=================================================================================================










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


                                      F-4
<PAGE>
<TABLE>
<CAPTION>


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

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

                                        Preferred Stock              Common Stock                      Treasury Stock
                                ----------------------------------------------------------------------------------------------
                                  Shares          Amount         Shares         Amount               Shares         Amount
                                ----------------------------------------------------------------------------------------------
<S>                               <C>       <C>               <C>            <C>                    <C>       <C>

Balance,
  January 1, 2004                 97,175    $          97      148,771,749    $     148,772          378,580   $  (1,907,612)

Private placement
  of common stock                   --               --          1,000,000            1,000             --              --

Reversal of liability
  for settlement  of                --               --               --               --               --              --
  equity  instruments
  from prior periods
  (Note 2 (a))

Exercise of stock
  options                           --               --          2,935,000            2,935             --              --

Issuance of stock
  for services                      --               --            332,500              332             --              --

Issuance of stock
  for settlement of debt            --               --          2,589,036            2,589             --              --

Issuance of stock for
  settlement of legal               --               --          4,179,670            4,180             --              --
action (Note 4)

Issuance of stock
  options to
  non-employees                     --               --               --               --               --              --
  for services

Issuance of stock
  options to employees              --               --               --               --               --              --

Issuance of warrants
  to non-employees                  --               --               --               --               --              --

Escrow share returned
  to treasury                       --               --         (4,150,000)          (4,150)            --              --

Conversion of
  Preferred Series
  X share                        (45,000)             (45)       4,500,000            4,500             --              --

Net Income
  for the period                    --               --               --               --               --              --
------------------------------------------------------------------------------------------------------------------------------

BALANCE
  DECEMBER 31, 2004               52,175    $          52      160,157,955    $     160,158          378,580   $  (1,907,612)

Exercise of stock
  options (Note 2 (c))              --               --          8,107,400            8,107             --              --

Issuance of stock
  options to
   non-employees                    --               --               --               --               --              --
  for services
  (Note 2 (d))

Issuance of stock
  options to
  employees
  (Note 2 (d))                      --               --               --               --               --              --


Conversion of
  preferred
  Series X
  shares (7,000)                      (7)         700,000              700             --               --              (693)
  (Note 2 (c))

Net loss
  for the period                    --               --               --               --               --              --
------------------------------------------------------------------------------------------------------------------------------

BALANCE,
  MARCH 31, 2005                  45,175    $          45      168,965,355    $     168,965          378,580   $  (1,907,612)
------------------------------------------------------------------------------------------------------------------------------







                             Additional        Other
                              Paid-in       Comprehensive     Accumulated        Capital
                              Capital           Income         Deficit          Deficit

Balance,
  January 1, 2004          $ 117,233,800    $      35,119   $(130,476,823)   $ (14,966,647)

Private placement
  of common stock                 48,678             --              --             49,678

Reversal of liability
  for settlement  of           2,134,322             --              --          2,134,322
  equity  instruments
  from prior periods
  (Note 2 (a))

Exercise of stock
  options                        103,989             --              --            106,924

Issuance of stock
  for services                    26,067             --              --             26,399

Issuance of stock
  for settlement of debt         209,963             --              --            212,552

Issuance of stock for
  settlement of legal            288,173             --              --            292,353
action (Note 4)

Issuance of stock
  options to
  non-employees                  268,192             --              --            268,192
  for services

Issuance of stock
  options to employees           172,343             --              --            172,343

Issuance of warrants
  to non-employees                59,741             --              --             59,741

Escrow share returned
  to treasury                      4,150             --              --               --

Conversion of
  Preferred Series
  X share                         (4,455)            --              --               --

Net Income
  for the period                    --               --         2,909,740        2,909,740

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

BALANCE
  DECEMBER 31, 2004        $ 120,544,963    $      35,119   $(127,567,083)   $  (8,734,403)

Exercise of stock
  options (Note 2 (c))           132,293             --              --            140,400

Issuance of stock
  options to
   non-employees                  40,810             --              --             40,810
  for services
  (Note 2 (d))

Issuance of stock
  options to
  employees
  (Note 2 (d))                    63,197             --              --             63,197


Conversion of
  preferred
  Series X
  shares (7,000)                    --               --              --
  (Note 2 (c))

Net loss
  for the period                    --               --          (595,998)        (595,998)

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

BALANCE,
  MARCH 31, 2005           $ 120,780,570    $      35,119   $(128,163,081)   $  (9,085,994)

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



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


                                      F-5
<PAGE>
<TABLE>
<CAPTION>


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

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


  FOR THE THREE-MONTH PERIODS ENDED MARCH 31                                       2005           2004
  --------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
<S>                                                                           <C>            <C>
   Net income (loss)                                                          $  (595,998)   $ 5,734,445

   Adjustments to reconcile net income (loss) to net cash provided by (used
   in) operating activities:
      Amortization of deferred licensing fees                                      (5,556)        (5,556)
      Depreciation and amortization                                                 8,928         14,513
      Gain on settlement of debt                                                     --          (43,360)
      Gain on sale of asset                                                          --           (4,100)
      Recovery on lawsuit reserve from TST share sales (Note 4(a))                   --          (23,345)
      Stock option compensation  (Note 2)                                         104,007           --
      Liability in connection with settlement of equity instrument                   --         (406,000)
   (Increase) decrease in operating assets                                           --             --
       Prepaid expenses and other current assets                                   46,383        (74,906)
   Increase (decrease) in operating liabilities
       Accounts payable                                                            88,804     (1,399,539)
       Accrued liabilities and provision for lawsuit settlements                  216,794     (1,616,148)
                                                                              -----------    -----------
          Net cash provided by (used in) operating activities                    (136,638)     2,176,004
                                                                              -----------    -----------
INVESTING ACTIVITIES
   Purchase of property and equipment                                                --           (5,001)
   Proceeds on sale of assets                                                        --            4,100
                                                                              -----------    -----------
                 Net cash used in investing activities                               --             (901)
                                                                              -----------    -----------
FINANCING ACTIVITIES
   Net proceeds term debt                                                          (1,093)          --
   Repayment of loans payable                                                        --         (508,100)
   Proceeds from exercise of options                                              140,400           --
                                                                              -----------    -----------
          Net cash provided by (used in) financing activities                     139,307       (508,100)
                                                                              -----------    -----------

NET INCREASE IN CASH                                                                2,669      1,667,003

CASH, beginning of year                                                             1,615          2,145
                                                                              -----------    -----------
CASH, end of year                                                             $     4,284    $ 1,669,148
========================================================================================================


SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
   Cash paid during the year
       Interest                                                               $       692    $       788
       Income taxes                                                           $      --      $      --

SUPPLEMENTARY DISCLOSURE OF NON-CASH
 INVESTING AND FINANCING ACTIVITIES:
   Accounts payable transfer to loans payable                                 $      --      $   159,386
   Liability in connection with settlement
   of equity  instruments (Note 2)                                            $      --      $   581,000

   Return of asset to settle term debts                                       $      --      $    76,082






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



                                      F-6
<PAGE>


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

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

                                                         MARCH 31, 2005 AND 2004
--------------------------------------------------------------------------------


1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   NATURE OF BUSINESS

   Turbodyne Technologies, Inc., a Nevada corporation, and its subsidiaries (the
   "Company") engineer, develop and market products designed to enhance
   performance and reduce emissions of internal combustion engines. The Company
   had a period of activity during 2004 and early 2005. Lack of funds caused the
   Company to gradually curtail its operations until it ceased almost all
   activities. In March 2005 the Company moved out of the business premises and
   relinquished the majority of the fixed assets to the landlord to sell and
   offset against rent payable.

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

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


   BASIS OF PRESENTATION

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

   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, 2004 and
   2003 included in the Company's 10-KSB Annual Report. The Company follows the
   same accounting policies in the preparation of interim reports. Results of
   operations for the interim periods are not indicative of annual results.



                                      F-7
<PAGE>


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

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

                                                         MARCH 31, 2005 AND 2004
--------------------------------------------------------------------------------


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

   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 $128,163,081 at March 31, 2005 and a total capital deficit of $9,085,994
   at March 31, 2005. It has used most of its available cash in its operating
   activities in recent years, has a significant working capital deficiency and
   is subject to lawsuits brought against it by other parties. These matters
   raise substantial doubt about the Company's ability to continue as a going
   concern.

   PRINCIPLES OF CONSOLIDATION

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

   DEPRECIATION AND AMORTIZATION

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

              Machinery and equipment        - 7 to 15 years
              Transportation equipment       - 5 years
              Furniture and fixtures         - 5 to 10 years
                                             - length of lease, not to exceed
              Leasehold improvements           economic lifelength of lease, not
                                               to exceed

   LICENSES

   Licenses were recorded at cost and were being amortized at $208,000 per year
   over their estimated useful life, which was estimated to be five years. At
   December 31, 2003, management determined that the licenses had been impaired
   and a $624,000 impairment provision was recorded.

   VALUATION OF LONG-LIVED ASSETS

   The Company periodically reviews the carrying value of long-lived assets for
   indications of impairment in value and recognizes impairment of long-lived
   assets in the event the net book value of such assets exceeds the estimated
   undiscounted future cash flows attributable to such assets. Long-lived assets
   to be disposed of by sale are to be measured at the lower of carrying amount
   or fair value less cost of sale whether reported in continuing operations or
   in discontinued operations. No impairment was required to be recognized
   during 2005 and 2004.


                                      F-8
<PAGE>

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

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

                                                         MARCH 31, 2005 AND 2004
--------------------------------------------------------------------------------


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 quarter
   ended March 31, 2005 $5,556 ($5,556 - 2004) of licensing fees was recognized
   as income.


   EARNINGS (LOSS) PER SHARE

   Earnings (loss) per share is computed in accordance with SFAS No. 128,
   "Earnings Per Share". Basic earnings (loss) per share is calculated by
   dividing the net income (loss) available to common stockholders by the
   weighted average number of shares outstanding during the year. Diluted
   earnings per share reflects 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.


   FAIR VALUE OF FINANCIAL INSTRUMENTS

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


   STOCK-BASED COMPENSATION

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

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



                                      F-9
<PAGE>


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

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

                                                         MARCH 31, 2005 AND 2004
--------------------------------------------------------------------------------


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


   STOCK-BASED COMPENSATION - CONTINUED

   SFAS 123R requires forfeitures to be estimated at the time of grant and
   revised, if necessary, in subsequent periods if actual forfeitures differ
   from initial estimates. Stock-based compensation expense was recorded net of
   estimated forfeitures for the quarter ended March 31, 2005 such that expense
   was recorded only for those stock-based awards that are expected to vest.
   Previously under APB 25 to the extent awards were forfeited prior to vesting,
   the corresponding previously recognized expense was reversed in the period of
   forfeiture.

   If the fair value based method under FAS 123 had been applied in measuring
   stock-based compensation expense for the quarter ended March 31, 2004, the
   pro forma on net income and net income per share would have been as follows,
   as previously disclosed:

                                                         Quarter ended
                                                           March 31,
                                                             2004
                                                        --------------

         Net income, as reported                        $   5,734,445
         Add: Stock based employee
           compensation expense included
           in reported net income, net of
           related tax effects                                    --

         Deduct:  Total Stock-based employee
           compensation expense determined
           under fair-value based method for
           all awards not included in net income                  --
                                                        -------------

         Pro-forma net income (loss)                    $   5,734,445
                                                        =============
         Income (loss) per share:
           Basic and diluted - as reported              $        0.04
                                                        -------------
          Basic and diluted - proforma                  $        0.04
                                                        -------------

   RESEARCH AND DEVELOPMENT

   Research and development costs related to present and future products are
   charged to operations in the year incurred. The sale of prototypes is offset
   against research and development costs.

   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.



                                      F-10
<PAGE>



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

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

                                                         MARCH 31, 2005 AND 2004
--------------------------------------------------------------------------------


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

   INCOME TAXES

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

   COMPREHENSIVE INCOME

   The Company has adopted SFAS No. 130, "Reporting Comprehensive Income". SFAS
   No. 130 establishes standards to measure all changes in equity that result
   from transactions and other economic events other than transactions with
   owners. Comprehensive income is the total of net earnings (loss) and all
   other non-owner changes in equity. Except for net earnings (loss) and foreign
   currency translation adjustments, the Company does not have any transactions
   and other economic events that qualify as comprehensive income as defined
   under SFAS No. 130. As foreign currency translation adjustments were
   immaterial to the Company's consolidated financial statements, net earnings
   (loss) approximated comprehensive income for the quarter ended March 31, 2005
   and 2004.

   LEGAL FEES

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



                                      F-11
<PAGE>


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

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

                                                         MARCH 31, 2005 AND 2004
--------------------------------------------------------------------------------


2. SHARE CAPITAL

   Transactions not disclosed elsewhere in these consolidated interim nancial
   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.
      Prior to this increase in authorized capital, the Company's potentially
      diluted common shares exceeded the authorized shares. Immediately prior to
      the increase in authorized capital, the Company had recorded $2,134,322 in
      accrued liabilities to account for the potential cash settlement of these
      financial instruments. As of June 30, 2004, the Company has reversed the
      $2,134,322 accrued liabilities since the potentially diluted common shares
      do not exceed authorized capital.

   b) In 2003, 150,000 of the 1 million preferred shares were designated as
      Series X preferred shares. These shares have a par value of $0.001 per
      share with each share being convertible into 100 common shares at the
      discretion of the holder. As of March 31, 2005 45,175 of Series X
      preferred shares convertible into 4,517,500 common shares are outstanding

   c) During the three months ended March 31, 2005, the Company issued 8,807,400
      shares of common stock, 8,107,400 for exercise of options and 700,000 for
      conversion of 7,000 preferred shares.

   d) Stock Options

      The following summarizes information relating to stock options outstanding
      at March 31, 2005:

<TABLE>
<CAPTION>

                                                2005

                                NON-EMPLOYEES        EMPLOYEES & DIRECTORS            TOTAL
                         --------------------------------------------------------------------------

                                         WEIGHTED                 WEIGHTED                 WEIGHTED
                                         AVERAGE                  AVERAGE                   AVERAGE
                                        EXERCISE                  EXERCISE                 EXERCISE
                            OPTIONS      PRICE      OPTIONS        PRICE      OPTIONS       PRICE
                         --------------------------------------------------------------------------
<S>                       <C>          <C>         <C>           <C>         <C>           <C>
Outstanding at
  beginning of
  year                    4,651,666    $   0.11    10,277,000    $   0.11    14,928,666    $   0.11

  Granted                 1,300,000        0.02    16,010,000        0.02    17,310,000        0.02
  Exercised              (1,300,000)       0.02    (6,807,400)       0.02    (8,107,400)       0.02
  Expired                   (25,000)       0.30      (150,000)       0.30      (175,000)       0.30
                         --------------------------------------------------------------------------
  Options outstanding
    and Exercisable
    at end of year        4,626,666    $   0.12    19,329,600    $   0.06    23,956,266    $   0.08
                         ==========================================================================
  Weighted average
  fair value of
  options  granted
  during the period                   $   0.02                   $      0.02               $   0.02
                         ==========================================================================
</TABLE>


                                      F-12
<PAGE>


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

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

                                                         MARCH 31, 2005 AND 2004
--------------------------------------------------------------------------------

2. SHARE CAPITAL - CONTINUED

   d) Stock Options - Continued

      As of March 31, 2005, there was no unrecognized compensation costs since
      all options granted under the stock option plans were completely vested.
      Also, the options outstanding did not have an intrinsic value since the
      exercise price of all options is greater than the current market price.

      2005 STOCK INCENTIVE PLAN

      On January 11, 2005, the Company established the 2005 Nevada stock
      incentive plan (the "2005 Plan"). Under the 2005 Plan, the Company may
      grant common stock or incentive stock options to its directors, officers,
      employees and consultants for up to 20,000,000 shares. The maximum term of
      the 2005 Plan is ten years. The Board of Directors will determine the
      terms and matters relating to any awards under the 2005 Plan including the
      type of awards, the exercise price of the options and the number of common
      shares granted. The value of the shares of common stock used in
      determining the awards shall not be less than 70% of the fair market value
      of the common shares of the Company on the date of grant. As of March 31,
      2005 the number of unoptioned shares available for granting under the plan
      was 2,690,000.

      2004 STOCK INCENTIVE PLAN

      On April 8, 2004, the Company established the 2004 Nevada stock incentive
      plan (the "2004 Plan"). Under the 2004 Plan, the Company may grant common
      stock or incentive stock options to its directors, officers, employees and
      consultants for up to 15,000,000 shares. The maximum term of the 2004 Plan
      is ten years. The Board of Directors will determine the terms and matters
      relating to any awards under the 2004 Plan including the type of awards,
      the exercise price of the options and the number of common shares granted.
      The value of the shares of common stock used in determining the awards
      shall not be less than 85% of the fair market value of the common shares
      of the Company on the date of grant. As of March 31, 2005 the number of
      unoptioned shares available for granting under the plan was 1,703,500.

      2003 STOCK INCENTIVE PLAN

      On August 12, 2003, the Company established the 2003 Stock Incentive Plan
      (the "2003 Plan"). Under the 2003 Plan, the Company may grant common stock
      or incentive stock options to its directors, officers, employees and
      consultants for up to 15,000,000 shares. The maximum term of the 2003 Plan
      is ten years. The Board of Directors will determine the terms and matters
      relating to any awards under the 2003 Plan including the type of awards,
      the exercise price of the options and the number of common shares granted.
      The value of the shares of common stock used in determining the awards
      shall not be less than 85% of the fair market value of the common shares
      of the Company on the date of grant. As of March 31, 2005, the number of
      unoptioned shares available for granting of options under the plan was
      7,197,759.


                                      F-13
<PAGE>


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

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

                                                         MARCH 31, 2005 AND 2004
--------------------------------------------------------------------------------


2. SHARE CAPITAL - CONTINUED

   d) Stock Options - Continued

      GRANT OF STOCK OPTIONS TO NON-EMPLOYEES FOR SERVICES The Company has
      recorded $40,810 of compensation expense relating to stock options issued
      to non-employees for services rendered during the period.

      The per share weighted average fair value of stock options granted for the
      three-months ended March 31, 2005 of $0.01, $0.02 and $0.04, on the date
      of grant using the Black-Scholes option-pricing model with the following
      weighted average assumptions in 2005: expected dividend yield Nil;
      expected volatility of 141%, 159% and 163%; risk-free interest rate of
      2.89 and 3.75%, and expected life of 1 year and 5 years.

      GRANT OF STOCK OPTIONS TO EMPLOYEES FOR SERVICES

      Prior to January 1, 2005, the Company accounted for employee stock-based
      compensation using the intrinsic value method supplemented by pro forma
      disclosures in accordance with APB 25 and SFAS 123 "Accounting for
      Stock-Based Compensation" ("SFAS 123"), as amended by SFAS No.148
      "Accounting for Stock-Based Compensation--Transition and Disclosures."
      Under the intrinsic value method, compensation cost is measured as the
      excess of, if any, of the market price of the Company's common stock at
      the date of grant, or at any subsequent measurement date, over the amount
      an employee must pay to acquire the stock. Such amounts are amortized as
      compensation expense over the vesting period of the related stock options.
      Under the intrinsic value method, the Company was not required to
      recognize stock-based compensation. Effective January 1, 2005 the Company
      adopted SFAS 123R using the modified prospective approach and accordingly
      prior periods have not been restated to reflect the impact of SFAS 123R.
      Under SFAS 123R, stock-based awards granted prior to its adoption will be
      expensed over the remaining portion of their vesting period. These awards
      will be expensed under the accelerated amortization method using the same
      fair value measurements which were used in calculating pro forma
      stock-based compensation expense under SFAS 123. For stock-based awards
      granted on or after January 1, 2005, the Company will amortize stock-based
      compensation expense on a straight-line basis over the requisite service
      period, which is generally a five-year vesting period.

      Upon our adoption of SFAS(R), we recorded $63,197 of compensation costs
      relating to stock options granted to employees. The amounts recorded
      represent equity-based compensation expense related to options that were
      issued in January 2005. The compensation costs are based on the fair value
      at the grant date. There was no such expense recorded during our fiscal
      year 2004.


                                      F-14
<PAGE>



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

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

                                                         MARCH 31, 2005 AND 2004
--------------------------------------------------------------------------------


2. SHARE CAPITAL - CONTINUED

   d) Stock Options - Continued

      The per share weighted average fair value of stock options granted to
      employees during 2005 was $0.02, calculated on the date of grant using the
      Black-Scholes option pricing model with the following weighted average
      assumptions in 2005: expected dividend yield Nil%; expected volatility
      from 163%; risk-free interest rate from 3.75%; and an expected life of 5
      years. Effective from the date of the option repricing, the Company
      regularly remeasures compensation expense for the options where there has
      been a substantive change and modification to such options. No
      compensation expense was recorded as a result of repricing of options in
      the prior years.


   e) Stock Purchase Warrants

      At March 31, 2005, the Company had 11,446,563 stock purchase warrants
      outstanding. These warrants were issued in connection with private
      placements and other means of financing.

      Details of share purchase warrants issued and expired during the quarter
      ended March 31, 2005 are as follows:

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

    Outstanding at December 31, 2004          15,084,922         $ 0.30
       Expired                               (3,638,359)           0.48
                                           -----------------------------

    Outstanding at March 31, 2005             11,446,563         $ 0.24
                                           -----------------------------

   Warrant Expiration Date Extension

      In November 2004, the Company extended the term for 3,564,273 warrants
      outstanding by one year previously expiring as follows:


                Exercise Price               Number     Expiration Date
               --------------- -------------------- ------------------
                        $0.12            1,100,000      April 11, 2006
                        $0.22              464,273        July 2, 2005
                        $0.22            2,000,000       June 24, 2005
               --------------- -------------------- ------------------

                                         3,564,273
               --------------- -------------------- ------------------

      The warrants were extended for a financing fee provided to the Company in
      prior periods and were valued at $122,635 using the Black-Scholes
      option-pricing model with the following assumptions in 2005: expected
      dividend yield Nil%; expected volatility of 117%; risk-free interest rate
      of 2.18% and an expected life of one year. The full value of the warrants
      was included in accrued liabilities as at March 31, 2005.


                                      F-15
<PAGE>


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

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

                                                         MARCH 31, 2005 AND 2004
--------------------------------------------------------------------------------


3. LONG-TERM DEBT

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

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

   During 2004, the Company returned an asset that was not in use as a
   settlement of outstanding note payable and recorded a gain on the debt
   settlement of $43,360.

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


4. COMMITMENTS AND CONTINGENCIES

   The Company is party to various legal claims and lawsuits that have arisen in
   the normal course of business. Except for the settlement of the dispute with
   Honeywell as described in Note 4 (c), there have been no material changes in
   the status of these matters since the issuance of the most recent audited
   annual financial statements.

   LITIGATION

   a) TST, INC.

      In March 2000, TST, Inc. ("TST"), a vendor to a subsidiary of Pacific Baja
      (Note 4(b)) filed an action against the Company alleging that in order to
      induce TST to extend credit to a subsidiary of Pacific Baja, the Company
      executed guarantees in favor of TST. TST alleged that the subsidiary
      defaulted on the credit facility and that the Company is liable as
      guarantor.

      The Company and TST entered a settlement agreement and release. Under the
      terms of the agreement, the Company:

      i)  Issued 1,000,000 shares of common stock to the president of TST and
          agreed to register the resale of these shares by filing a registration
          statement with the Securities and Exchange Commission; valued at
          $350,000 based on the common share trading price at the date the
          agreement was entered into;

      ii) Issued 2,000,000 shares of common stock to TST; valued at $700,000
          based on the common share trading price at the date the agreement was
          entered into; ----


                                      F-16
<PAGE>



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

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

                                                         MARCH 31, 2005 AND 2004
--------------------------------------------------------------------------------


4. COMMITMENTS AND CONTINGENCIES - LITIGATION CONTINUED

   a) TST, Inc. - Continued

      iii) 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

      iv) 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 March 31, 2005, the Company has included $4,832,572 (December 31, 2004
      - $4,766,656) in regard to this matter in provision for lawsuit
      settlements. If it is determined that TST received payment in preference
      to other creditors before Pacific Baja filed its Chapter 11 petition in
      bankruptcy, TST will likely increase its claim by $2,130,000, which is
      included in the provision for lawsuit settlements.

   b) Pacific Baja Bankruptcy

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

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

      The Company vigorously contested the Complaint until April 22, 2005 when
      the Company entered into a stipulation for entry of judgment and
      assignment in the Pacific Baja bankruptcy proceedings for $500,000 to be
      issued in common stock or cash or a combination. Additionally the Company
      assigned to the bankruptcy Trust the rights to $9,500,000 claims under any
      applicable directors and officers liability insurance policies. The
      bankruptcy Trust also agreed to a covenant not to execute against the
      Company regardless of the outcome of the insurance claims.

      The Company has completed the assignment of its insurance claims, but has
      not completed the cash/stock payment that was to be paid to the Trust by
      December 9, 2005. We are negotiating with the Trustee regarding this
      default.


                                      F-17
<PAGE>


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

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

                                                         MARCH 31, 2005 AND 2004
--------------------------------------------------------------------------------


4. COMMITMENTS AND CONTINGENCIES - CONTINUED

   c) Honeywell International, Inc.

      We entered into the Settlement Agreement with Honeywell effective January
      23, 2004. The Settlement Agreement resolved disputes between us and
      Honeywell that were the subject of arbitration proceedings initiated by
      Honeywell in June 2001 (the "Arbitration") and federal litigation
      commenced by us against Honeywell in August 2001 (the "Federal
      Litigation"). Honeywell agreed to pay us the aggregate amount of
      $8,500,000 in full settlement of our claims against Honeywell subject to
      $2,125,000 of contingency legal fees, $60,000 of legal costs, and $911,030
      owed to certain of our creditors and lienholders. The Directors also
      elected to pay the following amounts directly from settlement proceeds:
      $633,070 owed to note holders and $1,290,000 in bonuses to officers and
      employees. We received $3,480,900 ($4,770,900 less $1,290,000) which is
      the full settlement amount less legal fees, creditor liens, note payments
      and settlement bonuses. The Settlement Agreement also includes mutual
      releases of our Company and Honeywell in favor of the other and certain
      indemnification agreements. No payments were required to be made by us to
      Honeywell pursuant to the Settlement Agreement.

   d) Former Officer

      On May 20, 2004, one of the Company's former officers, Mr. Peter Hofbauer,
      filed a motion against the Company alleging that the Company failed to pay
      him the sum of $369,266 pursuant to the terms of a purported settlement
      agreement, allegedly made for the purposes of settling amounts owed to the
      former officer for services to the Company. On August 3, 2004 a writ of
      attachment was applied to the Company's Certificate of Deposit for
      $315,000. On October 25, 2004 the former officer and the Company signed
      and filed with the court a Stipulation re: Settlement and Order. The
      stipulation ordered the Company to deliver 4,000,000 shares of common
      stock without restrictions to be used by the former officer to raise funds
      to settle amounts owed to him by the Company. As funds are raised to
      settle amounts owed, writs will be reversed from the Certificate of
      Deposit. If the funds raised are not adequate to settle amounts owed, the
      Company will be obligated to issue further shares to the former officer in
      order to settle amounts owed.


      During 2004 the Company issued the 4,000,000 shares. Mr. Hofbauer has sold
      2,600,000 shares and released $125,000 of the Certificate of Deposit.
      Subsequent to March 31, 2005 Mr. Hofbauer claimed the remaining $210,496
      in the Certificate of Deposit. The remaining 1,400,000 shares are to be
      returned to the Company.



                                      F-18
<PAGE>



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

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

                                                         MARCH 31, 2005 AND 2004
--------------------------------------------------------------------------------


4. COMMITMENTS AND CONTINGENCIES - CONTINUED

   e) Former Director

      A former director of Turbodyne, Erwin Kramer (the "Plaintiff"),
      represented by his attorney Claus Schmidt, a former attorney of Turbodyne
      at the time of the alleged claim, filed a legal action in Germany against
      Turbodyne, our non-operating subsidiary Turbodyne Europe GmbH ("Turbodyne
      GmbH"), and ex-employees of Turbodyne GmbH, Peter Kitzinski and Marcus
      Kumbrick (collectively the "Defendants"), with the Regional Frankfurt
      court (the "German Court") in September, 2004. The Plaintiff claims
      damages of Euro 245,620 plus 5% interest per annum against the Defendants
      in respect of actions taken by the Defendants while employed with
      Turbodyne GmbH. On September 9, 2004, the German Court, on a motion by the
      Defendants to the suit, dismissed the Plaintiff's claims against Peter
      Kitzinski and Marcus Kumbrick, and ordered that Turbodyne's patents in
      Munich be attached pending the resolution of the Plaintiff's claim against
      Turbodyne and Turbodyne GmbH. On June 13, 2005 the Court in Frankfurt
      dismissed the claim. The Plaintiff filed an appeal against this judgment
      with the Higher Regional Court in Frankfurt.

      The Plaintiff's attorney, Claus Schmidt, also filed similar suits on
      behalf of Frank Walter and Herbert Taeuber. The German courts are
      indicating that all three suits need to be filed in the United States not
      Germany. Presently the suits have not been filed in the United States. We
      vigorously dispute this claim and have retained German counsel to defend
      it and seek its dismissal. At March 31, 2005, the Company has included
      $405,785 in regard to this matter in the provision for lawsuit
      settlements.

   f) Other

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


5. SUBSEQUENT EVENT

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



                                      F-19
<PAGE>


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



FORWARD LOOKING STATEMENTS

The information in this discussion contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements involve risks and uncertainties, including statements
regarding the Company's capital needs, business strategy and expectations. Any
statements contained herein that are not statements of historical facts may be
deemed to be forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as "may", "will", "should",
"expect", "plan", "intend", "anticipate", "believe", "estimate", "predict",
"potential" or "continue", the negative of such terms or other comparable
terminology. Actual events or results may differ materially. In evaluating these
statements, you should consider various factors, including the risks outlined in
the Risk Factors section below, and, from time to time, in other reports the
Company files with the SEC. These factors may cause the Company's actual results
to differ materially from any forward-looking statement. The Company disclaims
any obligation to publicly update these statements, or disclose any difference
between its actual results and those reflected in these statements. The
information constitutes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. As used in this Quarterly
Report on Form 10-QSB, the terms "we", "us", "our", "Turbodyne" and "our
company" mean Turbodyne Technologies, Inc., unless otherwise indicated. All
dollar amounts in this Quarterly Report on Form 10-QSB are in U.S. dollars
unless otherwise stated.


GENERAL

We are filing this quarterly report on Form 10-QSB late. Information contained
herein is as of March 31, 2005 and, in some instances, as of April or May 2005
or the latest practicable date for these items. Where appropriate the Company
has supplied additional information to discuss subsequent events.

At the time this late-filed document was prepared, the person who had been Chief
Executive Officer and Chief Financial Officer was no longer with the Company. No
prior corporate officers or Directors participated in the preparation of this
document. The non-financial portion of this document is a re-construction of
events from records remaining with the Company after the departure of prior
management and was prepared by new management with some assistance of prior
employees.


                                      -2-
<PAGE>


OVERVIEW

 As discussed below, we suspended our business operations in April 2005 due to a
lack of funds. We are an engineering Company and have been engaged, for over ten
years, in the design and development of forced-air induction (air-charging)
technologies that improve the performance of gas and diesel internal combustion
engines. Optimum performance of an internal combustion engine requires a proper
ratio of fuel to air. Power available from the engine is reduced when a portion
of the fuel is not used. In a wide range of gas and diesel engines additional
air is needed to achieve an optimal result. The traditional engineered solution
for this problem is to use belts or exhaust gas (superchargers or turbochargers)
to supply additional air to an engine. Turbodyne, instead, uses electric motors
to supply additional air. Because an electric motor can be engaged more quickly,
compared to the mechanical delays inherent in a belt or exhaust gas device,
Turbodyne's products reduce this `turbolag' and otherwise adds to the
effectiveness of gas and diesel engines used in automotive, heavy vehicle,
marine, and other internal combustion installations. If we obtain financing we
intend to continue the development of our products.


RECENT AND POST QUARTER CORPORATE DEVELOPMENTS

While we were in operations for the quarter ended March 31, 2005, these
operations were limited by a lack of funds, which ultimately led to the
suspension of our business. Set forth below are recent corporate developments:


      1.    We became unable to sustain our business operations due to a lack of
            financing and our working capital deficit. In April 2005 we had to
            lay off our employees and vacated our premises and relinquished the
            majority of the fixed assets to the landlord to sell and offset
            against rent payable. The suspension of business also included the
            suspension of work on the development of our products and
            technologies.

      2.    On June 7, 2005 the Company's remaining cash was claimed in
            connection with a litigation settlement and prior attachment.

Our plan of operations in April 2005 was to obtain the necessary financing to
resume our business operations. In addition to the financing for our operations
and development of our products we intend to use financing to:

      1.    settle all legal proceedings that are currently against us, as
            disclosed in Item 3 of Part I of our Annual Report on Form 10-KSB
            for the year ended December 31, 2004. Our objective is to remove the
            uncertainty and potential liabilities associated with these legal
            proceedings. There is no assurance that we will be successful;

      2.    negotiate our outstanding accounts payable and accrued liabilities
            with our creditors. If we are unable to obtain financing we may need
            to seek relief under the appropriate statutes.


                                      -3-
<PAGE>


SUBSEQUENT CHANGE OF CONTROL AND NEW EFFORTS

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

The new management has obtained some additional financing and has resumed
limited business activity including:

      o     Updating our financial statements and required SEC filings
      o     Assessment of our technology including patents and other rights
      o     Limited development of our Turbopac(TM) product line
      o     Review and negotiate to settle outstanding litigation and
            liabilities.
      o     Formulating business and marketing plans

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

RESULTS OF OPERATIONS

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

                                       First Quarter Ended March 31
                            ----------------------------------------------------
                                                                      Percentage
                               2005                 2004              Increase /
                                                                      (Decrease)
                            ---------------- -------------------- --------------
Total Income                 $  5,556             $  5,556                Nil
Operating Expenses          ($602,467)           ($691,501)             (13%)
Net Loss from Operations    ($596,911)           ($685,945)             (13%)
Other Income, net            $    913           $6,420,390             (100%)
                            ================ ==================== ==============
Net Income (Loss)           ($595,998)          $5,734,445             (110%)
                            ================ ==================== ==============

We had a net loss for the three months ended March 31, 2005 compared to net
income for the three months ended March 31, 2004. This occurred primarily
because we recorded a one time recovery related to the Honeywell settlement in
the amount of $6,375,000 under Other Income for the three months ended March 31,
2004 but had no significant Other Income in the comparable quarter of 2005. Our
continued net losses from operations reflect our continued operating expenses
and our inability to generate revenues.



                                      -4-
<PAGE>

NET REVENUE

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

                                     First Quarter Ended March 31
                         ----------------- -------------------- ----------------
                                                                    Percentage
                             2005                 2004              Increase /
                                                                    (Decrease)
                         ----------------- -------------------- ----------------

License Fee                 $5,556               $5,556                Nil
                         ================= ==================== ================

During the year ended December 31, 2003, $400,000 in license fees were deferred
and amortized over 18 years. As a result, as of March 31, 2005, $5,556 ($5,556 -
2004) of licensing fees were recognized as income. Corporate revenues will
depend on our ability to perform effective operations.
Other Income

We recorded in non-operating income; a recovery related to the Honeywell
settlement in the amount of $6,375,000 for the three months ended March 31,
2004. Honeywell agreed to pay us the aggregate amount of $8,500,000 in full
settlement of our claims against Honeywell subject to $2,125,000 of contingency
legal fees.

COSTS OF SALES

Because we had no sales in 2004 and 2005, we did not have any costs of sales
during any portion of these years.


OPERATING EXPENSES

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

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

                                       First Quarter Ended March 31
                             ------------- ------------------- -----------------
                                                                     Percentage
                                2005                2004             Increase /
                                                                     (Decrease)
                             --------------- ------------------- ---------------

Selling, General and
  Administrative Expenses     $126,021           ($300,505)            142%
Research and Development
  Expenses                    $210,437            $196,385            7.15%
Litigation Expenses           $257,081            $781,108             (67%)


                                      -5-
<PAGE>




SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative costs included expenses associated with our
Carpinteria, California office, management compensation, administrative staff
and overhead. Selling expenses were minimal and reflected the fact that none of
our products are being commercially sold at present.



RESEARCH AND DEVELOPMENT

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 the three months ended March 31, 2005 are associated with the
development of our Turbopac product.



LITIGATION EXPENSE

We had litigation expenses of $257,081 during the three months ended March 31,
2005. The most significant component of our litigation expense was the accrual
of a potential liability for the termination of an employment contract.

We included in litigation expense items paid from the Honeywell settlement for
the three months ended March 31, 2004. Honeywell agreed to pay us the aggregate
amount of $8,500,000 in full settlement of our claims against Honeywell subject
to $2,125,000 of contingency legal fees, $60,000 of legal costs, and $1,290,000
in bonuses to officers and employees. Our litigation expenses are attributable
to our involvement in several ongoing legal proceedings. Litigation expenses
during the balance of 2005 are anticipated to consist primarily of legal
expenses relating to the proceedings involving our former subsidiary, Pacific
Baja.



STOCK BASED COMPENSATION

Stock based compensation included in expenses was $104,007 for the three months
ended March 31, 2005. We did not rely on stock based compensation during the
three month period ended March 31, 2004.

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


                                      -6-
<PAGE>


FINANCIAL CONDITION


CASH AND WORKING CAPITAL
<TABLE>
<CAPTION>

                              ------------------- --------------------- -----------------------
                                                                                Percentage
                               At March 31, 2005  At December 31, 2004    Increase / (Decrease)
                              ------------------- --------------------- -----------------------
<S>                                       <C>                  <C>                <C>
Current Assets                            $7,956               $51,670            (85%)
Current Liabilities                 ($8,986,356)          ($8,680,295)              4%
Working Capital Deficit             ($8,978,400)          ($8,628,625)              4%
                              =================== ===================== =======================
</TABLE>



We had cash of $4,284 as of March 31, 2005 compared with cash of $1,615 as of
December 31, 2004. The increase to our working capital deficit was primarily
attributable to a decrease in cash and an increase in accounts payable and
provision for lawsuit settlements as discussed below.



LIABILITIES
<TABLE>
<CAPTION>

                         ------------------ ---------------------- -----------------------
                         At March 31, 2005   At December 31, 2004         Percentage
                                                                     Increase / (Decrease)
                         ------------------ ---------------------- -----------------------
<S>                           <C>                    <C>                  <C>
Provision for Lawsuit
  Settlements                   $6,264,992             $6,013,198             4%
Accounts Payable                $2,314,906             $2,226,102             4%
Accrued Liabilities               $250,935               $285,935            (12%)
Short-Term Loans                  $148,600               $148,600             Nil
Long-Term Debt                     $32,421                $33,514            (3%)
                         ================== ====================== =======================
</TABLE>


Our accounts payable and accrued liabilities remain substantial due to our
inability to generate revenues and our limited ability to raise capital to fund
our operations. Payment of these liabilities is contingent on new funding being
received that would enable us to make payments to the creditors. Our ability to
continue our operations is also conditional upon the forbearance of our
creditors.

Short-term loans are unsecured, non-interest bearing advances that we anticipate
will be converted into shares of our common stock and share purchase warrants.
These loans have not been converted to date.

                                      -7-
<PAGE>



CASH FLOWS

                                       --------------------------------------
                                             Three Months Ended March 31
                                       --------------------------------------
                                              2005                      2004
                                              ----                      ----
Net Cash provided by (used in)
  Operating Activities                   ($136,638)               $2,176,004
Net Cash used in Investing
  Activities                                 Nil                       ($901)
Net Cash provided by (used in)
  Financing Activities                    $139,307                 ($508,100)
Net Increase in Cash During Period          $2,669                $1,667,003
                                       =====================================


The decrease in cash used in operating activities was due to the 2004 use of the
Honeywell settlement proceeds to decrease liabilities for the three months ended
March 31, 2004 and the fact that we had almost no cash to use in 2005.

CASH USED IN FINANCING ACTIVITIES

The increase in cash from financing activities is due to the exercise of options
in 2005 and the loan payments in 2004.


FINANCING REQUIREMENTS

We will require further financing if we are to resume our business operations.
We anticipate that any future financing will be achieved by sales of additional
shares of our common stock or other equity securities. These sales will result
in significant dilution to our current stockholders. In the event that we are
unable to raise additional financing on acceptable terms, then we may not be
able to resume our business operations.

We anticipate that we will continue to incur losses until such time as the
revenues we are able to generate from sales or licensing our products exceed our
increased operating expenses. We base this, in part, on the fact that we will
incur substantial expenses as we resume and increase business activity. We do
not believe we will generate offsetting revenues for some period of time after
resuming full scale development. Moreover, there is no assurance that we will
generate revenues that exceed these expenses.

GOING CONCERN
We currently have minimal cash and working capital resources. We do not have
adequate financial resources to enable us to resume or continue our business
operations without additional financing. Our current sources of working capital
are not sufficient for us to resume business operations. We may not be able to
obtain additional financing on acceptable terms, or at all. Accordingly, there
is substantial doubt about our ability to continue as a going concern.


                                      -8-
<PAGE>


Our consolidated interim financial statements included with this Quarterly
Report on Form 10-QSB have been prepared assuming that we will continue as a
going concern. We have suffered net losses in recent periods resulting in an
accumulated deficit of $128,163,081 at March 31, 2005. We have used cash in our
operating activities in recent periods, have disposed of our most significant
subsidiary through bankruptcy, and are subject to lawsuits brought against us by
shareholders and other parties. Based on our projected cash flows for the
ensuing year, we will be required to obtain additional equity or debt financing
in order to continue our present operations, irrespective of the amounts paid or
to be paid, if any, in connection with the aforementioned lawsuits.



CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America. As
such, some accounting policies have a significant impact on the amount reported
in these financial statements. A summary of those significant accounting
policies can be found in the Summary of Significant Accounting Policies in our
consolidated audited financial statements included in our Annual Report on Form
10-KSB for the year ended December 31, 2004, as filed with the SEC on July 7,
2006. Note that our preparation of this Quarterly Report on Form 10-QSB requires
us to make estimates and assumptions that affect the reported amount of assets
and liabilities, disclosure of contingent assets and liabilities at the date of
our financial statements, and the reported amounts of revenue and expenses
during the reporting period. There can be no assurance that actual results will
not differ from those estimates. We believe our most critical accounting
policies include stock-based compensation and legal contingencies as explained
below.

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

Our audited consolidated financial statements included with this Annual Report
on Form 10-KSB have been prepared assuming that we will continue as a going
concern. We have suffered net losses in recent periods resulting in an
accumulated deficit of $128,163,081 at March 31, 2005, have used cash in our
operating activities in recent periods, have disposed of our most significant
subsidiary through bankruptcy, are subject to lawsuits brought against us by
shareholders and other parties, and based on our projected cash flows for the
ensuing year, we are required to seek additional equity or debt financing in
order to resume operations, irrespective of the amounts paid or to be paid, if
any, in connection with the aforementioned lawsuits.


STOCK BASED COMPENSATION

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


                                      -9-
<PAGE>


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

SFAS 123R requires forfeitures to be estimated at the time of grant and revised,
if necessary, in subsequent periods if actual forfeitures differ from initial
estimates. Stock-based compensation expense was recorded net of estimated
forfeitures for the quarter ended March 31, 2005 such that expense was recorded
only for those stock-based awards that are expected to vest. Previously under
APB 25 to the extent awards were forfeited prior to vesting, the corresponding
previously recognized expense was reversed in the period of forfeiture.


REVENUE RECOGNITION

Prior to the suspension of our operations, we recognized revenue upon shipment
of product. Since the re-commencement of operations, we recognize license and
royalty fees over the term of the license or royalty agreement. The proceeds
from the sale of prototypes are recognized, upon shipment of the prototype, as a
reduction of the research and development expense.


RESEARCH AND DEVELOPMENT

Research and development costs related to present and future products are
charged to operations in the year incurred. The proceeds from the sale of
prototypes are recognized, upon shipment of the prototype, as a reduction of the
research and development expense.


NEW ACCOUNTING PRONOUNCEMENTS

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


                                      -10-
<PAGE>


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

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

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



                                      -11-
<PAGE>



ITEM 3.  CONTROLS AND PROCEDURES.



(A)   EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

      As required by Rule 13a-15 under the Securities Exchange Act of 1934, as
      amended (the "Exchange Act"), the Company's Chief Executive Officer and
      its Chief Financial Officer reviewed and evaluated the effectiveness of
      the Company's disclosure controls and procedures (as defined in Exchange
      Act Rule 13a-15(e)).These controls are designed to ensure that material
      information the Company must disclose in its reports filed or submitted
      under the Exchange Act is recorded, processed, summarized and reported on
      a timely basis. These officers have concluded, based on that evaluation,
      that as of such date, the Company's disclosure controls and procedures
      were effective at a reasonable assurance level for a Company with
      substantially no activities and no personnel. The Company believes it must
      devise new procedures as it increases its activity and its personnel. . As
      required by Rule 13a-15 under the Exchange Act the Company's Chief
      Executive Officer and its Chief Financial Officer reviewed and evaluated
      the effectiveness of the Company's internal control over financial
      reporting (as defined in Exchange Act Rule 13a-15(f)), The term "internal
      control over financial reporting" is a process designed by, or under the
      supervision of, the registrant's principal executive and principal
      financial officers, to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of financial
      statements for external purposes in accordance with generally accepted
      accounting principles.

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

      During our fiscal quarter ended March 31, 2005, the officers determined
      that there were no changes in our internal control over financial
      reporting that have materially affected, or are reasonably likely to
      affect, our internal control over financial reporting.




                                      -12-
<PAGE>



PART II - OTHER INFORMATION

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

EXHIBITS

  EXHIBIT
  NUMBER
             DESCRIPTION OF EXHIBIT
-------   ----------------------------------------------------------------------
   31.1   Certification of Chief Executive Officer and Chief Financial Officer
          pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   32.1   Certification of Chief Executive Officer and Chief Financial Officer
          pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
          of the Sarbanes-Oxley Act of 2002.
-------   ----------------------------------------------------------------------




                                      -13-
<PAGE>



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

                                                    Turbodyne Technologies, Inc.

Dated:   July 7, 2006                              BY: /S/ ALBERT F. CASE, JR.
                                                   ---------------------------
                                                   Albert F. Case, Jr,
                                                   Chief Executive Officer





                                                   BY: /S/ DEBI KOKINOS
                                                   --------------------
                                                   Debi Kokinos
                                                   Chief Financial Officer and
                                                   Chief Accounting Officer





                                      -14-