SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                  FORM 10-Q


[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999

                                      OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934


                          Commission File No. 0-21391



                          TURBODYNE TECHNOLOGIES INC.
            (Exact Name of Registrant as Specified in its Charter)


         DELAWARE                                              95-4699061
(State or other Jurisdiction of                            (I.R.S. Employer
Incorporation or Organization)                            Identification No.)


      21700 Oxnard Street, Suite 1550, Woodland Hills, California  91367
                   (Address of Principal Executive Offices)           (Zip Code)


                                (818) 593-2282
             (Registrant's Telephone Number, Including Area Code)






Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                       Yes              No   X
                           -----           -----

Shares of Common Stock, par value $0.001, outstanding as of November 18, 1999:
50,220,558 shares.


<PAGE>


                         TURBODYNE TECHNOLOGIES INC.
                               AND SUBSIDIARIES

                                  FORM 10-Q

                              TABLE OF CONTENTS



                        PART I. FINANCIAL INFORMATION

                                                                   PAGE

Item 1.     Financial Statements

            Condensed Consolidated Balance Sheets as of September 30, 1999
                  and December 31, 1998                                        3

            Condensed Consolidated Statements of Operations - Three and
                  Nine months ended September 30, 1999 and 1998                4

            Condensed Consolidated Statements of Cash Flows - Nine months
                  ended September 30, 1999 and 1998                            5

            Notes to Condensed Consolidated Financial Statements            6-11

Item 2.     Management's Discussion and Analysis of Financial Condition
                  and Results of Operations                                11-18


Item 3.     Quantitative and Qualitative Disclosures about Market Risks       18



                          PART II. OTHER INFORMATION



Item 1.     Legal Proceedings                                                 19

Item 2.     Changes in Securities                                             21

Item 3.     Default Upon Senior Securities                                    21

Item 4.     Submission of Matters to Vote of Security Holders                 21

Item 5.     Other Information                                                 21

Item 6.     Exhibits and Reports on Form 8-K                                  22


                                     Page 2
<PAGE>




                             TURBODYNE TECHNOLOGIES INC.
                                   AND SUBSIDIARIES
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                       SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                                     (UNAUDITED)

<TABLE>
<CAPTION>
                                        ASSETS
                                                         1999              1998
                                                  -------------------------------------
Current Assets:
<S>                                                      <C>               <C>
 Cash                                                        156,000         1,257,000
  Trade accounts receivable, net                           8,281,000        10,623,000
  Inventories                                              5,892,000         6,507,000
  Prepaid expenses and other current assets                1,591,000         1,816,000
                                                  -------------------------------------

           Total current assets                           15,920,000        20,203,000

Property, Plant and Equipment, at cost, net               20,897,000        20,616,000
Goodwill, net                                             12,431,000        12,992,000
Other Assets                                               1,161,000         1,235,000
                                                  -------------------------------------

                                                          50,409,000        55,046,000
                                                  =====================================

                         LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
 Current maturities of long term debt                     10,171,000           497,000
 Current maturities of obligations under capital leases    1,102,000           778,000
 Accounts payable                                         12,173,000         8,916,000
 Accrued liabilities                                       3,890,000         5,127,000
 Income taxes payable                                                          700,000
                                                  -------------------------------------

           Total current liabilities                      27,336,000        16,018,000

      Long term debt, less current maturities              1,557,000         9,941,000

Convertible debentures                                       400,000                 -
Obligations under capital leases, less current
maturities                                                 2,743,000         3,138,000
                                                  -------------------------------------

                                                          32,036,000        29,097,000
                                                  -------------------------------------
Stockholders' Equity:
 Preferred stock, $0.001 par value.  Authorized
 1,000,000 shares;
      issued 10,000 Series A Convertible
 Preferred and 10,000
      Series B Convertible Preferred shares and
 outstanding none
      in 1999 and 1998                                            -                 -
 Common stock, $0.001 par value.  Authorized
      60,000,000 shares; issued and outstanding
      48,058,627 shares in 1999 and 41,313,816
      shares in 1998                                         49,000             42,000
 Treasury stock, at cost, 378,580 shares in 1999
 and 330,080 shares in 1998                              (1,759,000)        (1,500,000)
 Additional paid in capital                              89,625,000         81,770,000
 Cumulative other comprehensive income                     (251,000)           (94,000)
 Accumulated deficit                                    (69,291,000)       (54,269,000)
                                                  -------------------------------------

           Total stockholders' equity                    18,373,000         25,949,000
                                                  -------------------------------------

                                                         50,409,000         55,046,000
                                                  =====================================
</TABLE>
 See accompanying notes to condensed consolidated financial statements.

                                     Page 3
<PAGE>


                         TURBODYNE TECHNOLOGIES INC.
                               AND SUBSIDIARIES

               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                 (UNAUDITED)




<TABLE>
<CAPTION>
                                            THREE MONTHS                  NINE MONTHS
                                                ENDED                        ENDED
                                            SEPTEMBER 30,                SEPTEMBER 30,
                                          1999          1998           1999          1998
                                      ---------------------------- ----------------------------

<S>                                 <C>              <C>           <C>             <C>
Net sales                           $  11,137,000    9,058,000     $ 41,390,000    29,808,000

Cost of goods sold                     12,035,000    7,462,000       37,928,000    24,996,000
                                      ---------------------------- ----------------------------

        Gross profit                     (898,000)   1,596,000        3,462,000     4,812,000

Selling, general and                    6,286,000    3,170,000       14,001,000    10,421,000
   administrative expenses
Research and development costs            549,000    1,249,000        3,414,000     4,374,000
Relocation costs                                -    1,471,000                -     1,471,000
                                      ----------------------------  ----------------------------

        Loss from operations           (7,733,000)  (4,294,000)     (13,954,000)  (11,454,000)

Other expense (income):
   Interest expense, net                  472,000      (22,000)       1,185,000       559,000
   Other, net                               (7000)     (15,000)        (122,000)      (11,000)
                                      ----------------------------  ----------------------------

        Loss before income taxes       (8,198,000)  (4,257,000)     (15,018,000)  (12,002,000)

Income tax expense                              -      (24,000)           4,000             -
                                      ----------------------------  ----------------------------

        Net loss                    $  (8,198,000)  (4,233,000)    $(15,022,000)  (12,002,000)
                                      ============================  ============================


Net loss per common share:
   Basic loss per share             $       (0.19)       (0.11)    $      (0.37)        (0.35)
   Diluted loss per share                   (0.19)       (0.11)           (0.37)        (0.35)
                                      ============================  ============================


Weighted average shares used for
   basic and diluted loss per share    42,798,000   37,054,000       40,648,000    34,296,000
                                      ============================  ============================
</TABLE>


See accompanying notes to condensed consolidated financial statements.


                                     Page 4
<PAGE>


                         TURBODYNE TECHNOLOGIES INC.
                               AND SUBSIDIARIES

               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

                                 (UNAUDITED)

<TABLE>
<CAPTION>
                                                              1999               1998
                                                          -------------      --------------

Cash flows from operating activities:
<S>                                                    <C>                     <C>
   Net loss                                            $  (15,022,000)     $   (12,002,000)
   Adjustments to reconcile net loss to net cash
      used in operating activities:
      Depreciation and amortization of property and         2,635,000            2,670,000
       equipment
      Stock compensation                                           --              375,000
      (Increase) decrease in operating assets:
       Trade accounts receivable                            2,342,000           (1,071,000)
       Inventories                                            615,000           (2,680,000)
       Prepaid expenses and other current assets              204,000             (175,000)
       Other assets                                            74,000           (1,393,000)
      Increase (decrease) in operating liabilities:
       Trade accounts payable                               3,257,000            1,090,000
       Accrued expenses                                    (1,094,000)           1,399,000
       Income taxes payable                                        --              (86,000)
                                                          -------------        --------------

            Net cash used in operating activities          (6,990,000)         (11,873,000)
                                                          -------------        --------------

Cash flows from investing activities:
   Purchase of property and equipment                  $   (2,355,000)       $  (4,046,000)
                                                          -------------        --------------

            Net cash used in investing activities          (2,355,000)          (4,046,000)
                                                          -------------        --------------

Cash flows from financing activities:
   Net proceeds from long-term borrowings and capital
    lease obligations                                  $      468,000      $     1,642,000
   Net proceeds from short-term borrowings                         --                   --
   Repurchase of treasury stock                              (259,000)                  --
   Proceeds from subordinated convertible debentures          500,000            3,000,000
   Issuance of common stock                                        --                   --
   Proceeds from exercise of stock options and warrants     7,380,000           20,715,000
   Issuance costs paid                                              --            (159,000)
                                                          -------------        --------------

            Net cash provided by financing activities       7,899,000           25,198,000
                                                          -------------        --------------

Effect of exchange rate changes on cash                      (157,000)            (217,000)
                                                          -------------        --------------

            Net increase (decrease) in cash                (1,101,000)           9,062,000

Cash at beginning of period                                 1,257,000              949,000
                                                          -------------        --------------

Cash at end of period                                  $      156,000      $    10,011,000
                                                          =============        ==============

Supplemental disclosure of cash flow information:
  Cash paid during the year for:
    Interest                                           $       62,355            1,265,000
    Income taxes                                                4,000               47,000
                                                          =============        ==============
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                     Page 5
<PAGE>


                         TURBODYNE TECHNOLOGIES INC.
                               AND SUBSIDIARIES

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                   SEPTEMBER 30, 1999 AND DECEMBER 31, 1998

                                 (UNAUDITED)




NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

THE COMPANY

Turbodyne Technologies Inc., a Delaware corporation, and subsidiaries (the
Company) manufactures aluminum cast automotive products, including engine
components and specialty wheels, and develops products to enhance performance
and reduce emissions of internal combustion engines.

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries, Turbodyne
Systems, Inc., Turbodyne U.K. Ltd., Turbodyne Europe GmbH and Pacific Baja Light
Metals Corp. (Pacific Baja). All material intercompany accounts and transactions
have been eliminated in consolidation.

Effective July 18, 1997, the Company formally delisted its shares from trading
on the Vancouver Stock Exchange. Effective March 24, 1997, the Company's shares
became listed on the Nasdaq Small Capital Market. Effective July 15, 1997, the
Company's shares became listed on the Easdaq market. On April 1, 1999, the
Company's common stock was delisted from the Nasdaq Small Capital Market.
Effective January 1, 1998, the Company changed its reporting currency from the
Canadian dollar (Cdn$) to the U.S. dollar (U.S.$).

Additionally, a cumulative translation adjustment of $251,000 has been included
as other comprehensive income in stockholders' equity reflecting the translation
of the Cdn$ reporting currency consolidated financial statements to the newly
adopted and retroactively applied U.S.$ reporting currency and other translation
adjustments associated with the Company's foreign operations. There are no other
items of comprehensive income in the nine months ended September 30, 1999. The
adoption of Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("SFAS No. 130") did not have a material impact on the
Company's unaudited condensed consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with U.S. generally accepted accounting principles. These
unaudited consolidated financial statements do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. Operating results for the nine months ended
September 30, 1999 are not


                                     Page 6
<PAGE>


necessarily indicative of the results that may be expected for the full year
ending December 31, 1999. For further information refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1998.

GOODWILL

Goodwill is associated with the purchase of Pacific Baja on July 2, 1996 by the
Company and is being amortized on a straight-line basis over 20 years. The
Company assesses the recoverability of goodwill by determining whether the
amortization of the balance over the remaining life can be recovered through
undiscounted future operating cash flows of the Company's operations.
Accumulated amortization was $2,491,000 and $1,930,000 at September 30, 1999 and
December 31, 1998, respectively. Goodwill will be disposed of in the period that
Pacific Baja is sold. See Note 2.

RECOGNITION OF REVENUE AND SIGNIFICANT CUSTOMERS

The Company recognizes revenue upon shipment of product. The Company had sales
to three significant customers constituting approximately 36%, 25% and 12% and
47%, 15% and 12%, respectively, of net sales for the nine months ended September
30, 1999 and 1998, respectively. The Company had sales to three significant
customers constituting approximately 33%, 24% and 15% and 44%, 17% and 12%,
respectively, of net sales for the three months ended September 30, 1999 and
1998, respectively. Additionally, these customers comprised 31%, 29%, and 13%
and 42%, 17% and 20%, respectively, of accounts receivable at September 30, 1999
and December 31, 1998, respectively. The bankruptcy proceedings of Pacific Baja
will have a significant impact on the recognition of sales from these three
customers. See Note 2 - Pacific Baja Bankruptcy.

EARNINGS (LOSS) PER SHARE

Net loss per share is computed using the weighted average number of common
shares outstanding. For the nine months ended September 30, 1999 and 1998,
options and warrants to purchase 4,391,941 and 6,074,502 shares of common stock,
respectively, at prices ranging from $1.25 to $8.50 were outstanding during the
periods.

RESEARCH AND DEVELOPMENT

Research and development costs related to present and future products are
charged to operations in the year incurred. Research and development costs
aggregated $3,414,310 and $4,374,000 for the nine months ended September 30,
1999 and 1998, respectively, and $549,310 and $1,249,000 for the three months
ended September 30, 1999 and 1998, respectively.

USE OF ESTIMATES

Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting periods.
Significant assumptions in the accompanying financial statements relate to the
Company's ability to continue as a going concern as described in Note 2. The
ultimate resolution of the reasonableness of the related assumptions cannot
presently be determined. Actual results could differ from the Company's
estimates.


                                     Page 7
<PAGE>


RECLASSIFICATIONS

Certain reclassifications have been made to the prior years' financial
statements to conform with the 1999 presentation.

NOTE 2.  PACIFIC BAJA BANKRUPTCY AND GOING CONCERN

In July 1999, a major creditor of 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 in the United
States Bankruptcy Court for the Central District of California on September 30,
1999. Pacific Baja has arranged Court-approved bank financing with Wells Fargo
Bank which will finance Pacific Baja to the end of the fourth quarter.

Pursuant to a Bankruptcy Court order, an auction sale is scheduled for December
9, 1999 at which time substantially all of the assets of Pacific Baja and its
affiliates will be sold to the highest bidder. There are currently three bidders
for the assets. At this time, it is not known what the ultimate sales price for
the assets will be, but it appears unlikely that substantial proceeds will be
available for distribution to unsecured creditors, of which the Company is one,
after the payment of Pacific Baja's secured debt. The Company is currently owed
approximately $6,000,000.

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. No provision for losses pending the result of the
sale of Pacific Baja have been made at this time. The sale of Pacific Baja will
raise substantial doubt about the Company's ability to continue as a going
concern. Pacific Baja accounted for approximately 98% of total Company sales for
the nine months ended September 30, 1999. Absent these sales, for the nine
months ended September 30, 1999, total Company sales would have been $720,000.
In addition, the Company has suffered net losses in each of the last three years
ended September 30, 1999 and has an accumulated deficit of $69,291,000 at
September 30, 1999, has used cash in its operating activities in each of the
last three years ended September 30, 1999, has violated covenants and defaulted
under its debt facilities, has received an adverse award and a judgment in the
amounts of approximately $6.7 million and $600,000 related to the Grand
arbitration and a building lease, respectively, and is subject to several class
action lawsuits brought against it by certain of its stockholders. Please refer
to Part II, Item I Legal Proceedings for more detail regarding these matters.
The judgment creditors in the Grand arbitration have filed liens with respect to
substantially all of the Company's patents relating to the Engine Technology
Division. If the Company cannot resolve the Grand arbitration, either on appeal,
by settlement or otherwise, the judgment creditors may execute on the Grand
judgment and take ownership of the Company's patents relating to its Engine
Technology Division.

The Company has developed a strategy of working with original equipment
manufactures in an effort to enter into joint development, licensing, and
royalty arrangements similar to the joint development and licensing agreements
between the Company and AlliedSignal Inc. The Company expects that through such
an agreement it would have access to a channel of distribution that would
facilitate high volume sales. However, no assurance can be given that any such
relationships will be developed timely or at all, of if developed, will result
in substantial sales to the Company.


                                     Page 8
<PAGE>


In light of the Pacific Baja bankruptcy, the $7.3 million in judgments against
the Company and the other factors identified above, there is substantial doubt
that the Company will continue as a going concern. The Company will be required
to resolve the outstanding judgments against it and to seek substantial
additional equity or debt financing in order to continue the Engine Technology
Division. These matters raise substantial doubt about the Company's ability to
continue as a going concern.

NOTE 3.  INVENTORIES

Inventories are comprised of the following at September 30, 1999 and December
31, 1998:

<TABLE>
<CAPTION>
                           1999           1998
                       -------------  -------------

<S>                 <C>                 <C>
Raw materials       $    2,711,000      3,220,000
Work in process            988,000      1,158,000
Finished goods           2,193,000      2,129,000
                       -------------  -------------

                    $    5,892,000      6,507,000
                       =============  =============
</TABLE>


NOTE 4.  LONG-TERM DEBT

Long-term  debt at September  30, 1999 and  December 31, 1998  consists of the
following:

<TABLE>
<CAPTION>
                                                              1999                   1998
                                                        -------------            ------------

<S>                                                    <C>                         <C>
    Revolving bank lines of credit (A)                 $  10,023,000               9,703,000
    Revolving bank lines of credit (B)                       320,000                 320,000
    Notes payable to bank, with monthly installments
       of $12,534                                            313,000                 389,000
       plus interest payable monthly at prime plus
      .25% through
      June 2001
    Other                                                    924,000                  26,000
                                                        -------------             -----------

    Total long-term debt                                  11,580,000              10,483,000

    Less current maturities                                1,409,000                 497,000
                                                        -------------            ------------

    Long-term debt, excluding current maturities       $  10,171,000               9,941,000
                                                        =============             ===========
</TABLE>


(A)  The Company's wholly owned subsidiary, Pacific Baja, has a revolving line
     of credit with a bank permitting borrowings up to $11.5 million, secured by
     all receivables and inventory, of which $10,023,000 remains outstanding as
     of September 30, 1999. The borrowings bear interest at the Company's option
     at LIBOR plus 2% or at prime. The line of credit expires June 1, 2000. The
     Company is a guarantor on this line of credit.


                                     Page 9
<PAGE>


(B)  The Company also entered into an additional line of credit agreement for
     $350,000 of which $320,000 remains outstanding at September 30, 1999. The
     borrowings bear interest at prime plus 2%. The line of credit expired June
     30, 1999. The Company is a guarantor on this line of credit.

On July 21, 1999, the Company received a notice from the bank, which holds both
lines of credit and the term loan, informing the Company that it was in default
under its credit facility. As a result of the default, the bank informed the
Company that all indebtedness of the Company to the bank under the terms of the
loan agreements was immediately due and payable. Subsequent to this event, a
major creditor of Pacific Baja began collection efforts against Pacific Baja
which threatened its banking relationship with Wells Fargo Bank. As a result,
Pacific Baja and its subsidiaries commenced chapter 11 bankruptcy proceedings
and have arranged Court-approved bank financing with Wells Fargo Bank to finance
Pacific Baja to the end of the fourth quarter. See Note 2.

NOTE 5.  STOCKHOLDERS' EQUITY AND STOCK OPTIONS

On September 4, 1998 the Board of Directors approved an incentive stock option
plan (the "1998 Plan"). The 1998 Plan was approved by the stockholders at the
1998 Annual Meeting. Under the 1998 Plan, the Company may grant options to its
directors, officers, employees and consultants for up to 4,000,000 shares of
common stock. The Stock Option Committee shall determine the terms of any
options or other rights granted under the 1998 Plan, including the grant date of
any option, the exercise price and the term, which in any event shall not exceed
10 years. The maximum number of shares of common stock with respect to which
options or rights may be granted under the 1998 Plan to any participant is
200,000 per year. As of September 30, 1999, options to purchase the maximum
number of shares of common stock allowable under the 1998 Plan had been granted.

On March 3, 1997, the Company established an incentive stock option plan (the
"1997 Plan"). Under the 1997 Plan, the Company may grant options to its
directors, officers and employees for up to 2,840,000 shares of common stock. As
of September 30, 1998, options to purchase the maximum number of shares of
common stock allowable under the 1997 Plan had been granted.

Options granted under the 1997 Plan to participants, other than the Chairman,
President, Chief Executive Officer, Chief Financial Officer, Secretary and any
directors of the Company or its subsidiaries, are subject to a vesting formula.
The vesting formula provides that options shall vest equally over a three-year
period commencing on the date of grant so that the options can only be exercised
as to an aggregate of 33.3% in the first year, 66.6% in the second year and 100%
in the third year and each year thereafter. No options granted to an employee of
the Company or an affiliate of the Company shall be exercisable until the
optionee has been employed by the Company or affiliate for a period of six
months. The directors have the discretion to waive the vesting requirements at
their discretion in appropriate circumstances.

At September 30, 1999, the Company had options to purchase an aggregate of
3,815,440 shares of common stock outstanding. The options have exercise prices
ranging from $1.25 to $8.50 and expiration dates between December 1999 and May
2004.

During the nine months ended September 30, 1999, in an effort to raise capital,
the Company repriced options to purchase 3,116,667 shares of the Company's
common stock issued to several employees and


                                    Page 10
<PAGE>


consultants to exercise prices ranging from $1.00 to $3.50. All of these options
were exercised for gross proceeds to the Company of approximately $3,790,000.

SPECIAL WARRANTS

On July 2, 1996, the Company completed a private placement of 3,750,000 Series
"A" Special Warrants at a price of $5.00 (Cdn$) per special warrant. Commission
paid to the brokers was 10% of the gross proceeds and the brokers elected to
receive the commission in special warrants (375,000 Series "A" Special Warrants
issued). Each Series "A" Special Warrant can be exercised into one unit of the
Company for no additional consideration. Each unit consists of one share of
common stock and one nontransferable stock purchase warrant. The stock purchase
warrant entitled the holder to purchase one share of common stock at $5.50
(Cdn$) until July 2, 1997.

During 1997, all of the Series "A" Special Warrants were exercised for an
aggregate of 4,125,000 shares of common stock and stock purchase warrants for
the purchase of an additional 4,125,000 shares. Total net proceeds of
$12,943,000, received upon the issuance of these special warrants less issuance
costs, were transferred to paid-in capital. During 1997, 705,000 of the Series
"A" stock purchase warrants were exercised for common stock for total proceeds
of $2,791,800. The remaining Series "A" stock purchase warrants expired in 1997.

On December 6, 1996, the Company completed a brokered private placement of
500,000 Series "C" Special Warrants at a price of $9.00 (Cdn$) per special
warrant. Each Series "C" Special Warrant can be exercised into one unit of the
Company for no additional consideration. Each unit consists of one share of
common stock and one stock purchase warrant. Each Series "C" stock purchase
warrant will entitle the holder to purchase one share of common stock at $9.50
(Cdn$) per share for a period of one year. During 1997, a warrant amendment was
executed to change the exercise price of the Series "C" stock purchase warrant
from $9.50 (Cdn$) to $4.50 (U.S.$) and extend the exercise date of the Series
"C" Special Warrants and Series "C" stock purchase warrant.

During 1997, all of the Series "C" Special Warrants were exercised into common
stock with stock purchase warrants for an aggregate of 500,000 shares of common
stock and stock purchase warrants. Total net proceeds of $2,845,000, received
upon the issuance of these special warrants, were transferred to paid-in
capital. For the six months ended June 30, 1998, 272,000 Series "C" stock
purchase warrants were exercised for common stock. At June 30, 1998, no Series
"C" stock purchase warrants were outstanding.

STOCK PURCHASE WARRANTS

At September 30, 1999, the Company had 576,501 stock purchase warrants
outstanding. These warrants were issued in connection with private placements
and other means of financing. The holders of these warrants are entitled to
receive one share of common stock of the Company for one warrant exercised. The
warrants have exercise prices ranging from $1.74 to $5.00 and expiration dates
between September 2000 and July 2004.


                                    Page 11
<PAGE>


PREFERRED STOCK

On September 19, 1997, the Company completed a private placement of 10,000
shares of Series One Convertible Class A Preference stock, $0.001 par value (the
Class A Preferred), for net proceeds of $9,604,000. Conversion of the Class A
Preferred stock into common stock is at the option of the holder for any or all
the outstanding stock after January 8, 1998 or at the option of the Company
after September 8, 2000. Each share of the Class A Preferred stock may be
converted into common stock at a conversion price based on a floating price
formula. In the event of any liquidation, dissolution or winding up of the
affairs of the Company, holders of the Class A Preferred stock shall be paid the
redemption price plus all accrued dividends to the date of liquidation,
dissolution or winding up of affairs before any payment to other stockholders.
These shares have no voting rights and have a redemption price of $1,000 per
share, together with accrued and unpaid dividends thereon. Redemption of these
shares is at the option of the Company. Dividends on the Class A Preferred stock
is cumulative and at the rate of 7% per annum payable in cash or common stock at
the date of conversion.

During 1998, all the holders of the Class A Preferred stock elected to exercise
the conversion rights under this class of shares. The $10 million face value
amounts were converted into 4,742,522 common shares. The total stock issued on
conversion also includes the pay-out of 7% cumulative dividends in the form of
additional common stock. Dividends paid out for the Class A Preferred stock
amounted to $356,000.

SHARES IN ESCROW

Of the Company's issued and outstanding shares, 4,150,000 are held in escrow to
be released in accordance with a formula based on cumulative cash flow of the
Company.

SHARE BUY-BACK PLAN

On September 17, 1998, the Company announced that its Board of Directors
authorized the Company to buy up to $3.5 million of its shares. The actual
number of shares repurchased, and the timing of the purchases, will be based on
the stock price, general conditions and other factors. The Company has
repurchased 378,580 shares for a total of $1,759,000 at September 30, 1999.


ITEM 2.     MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
RESULTS OF OPERATIONS

      The following discussion and analysis should be read in conjunction with
the financial statements and notes thereto appearing elsewhere herein.

GENERAL

      Turbodyne Technologies Inc. and subsidiaries (the "Company" or
"Turbodyne") designs, develops, manufactures and markets proprietary products
that enhance performance and reduce emissions of internal combustion engines
(the "Engine Technology Division") and manufactures aluminum cast automotive
products, including automotive engine components and aftermarket specialty
wheels (the "Light Metals Division"). The Company has developed a patented
technology


                                    Page 12
<PAGE>


(the "Turbodyne Technology") designed to optimize air flow to
internal combustion engines resulting in efficient fuel combustion in both
diesel and gasoline engines. The Company has incorporated the Turbodyne
Technology into its two primary products: the Turbopac(TM) and the
Dynacharger(TM) (collectively, the "Turbodyne Products").

      Through Pacific Baja Light Metals Corp. ("Pacific Baja"), a wholly owned
subsidiary, the Company manufactures critical engine components and assemblies
including intake manifolds, oil pans, rocker arm covers, turbocharger and
compressor housings for OEMs in the automotive industry and aluminum wheels for
the automotive aftermarket. The Company also manufactures engineered aluminum
components for the Turbodyne Products. Please refer to Pacific Baja Bankruptcy
and Going Concern below.

      From the date of the acquisition of the Turbodyne Technology in April 1993
to the completion of the acquisition of Pacific Baja, the Company was engaged,
through Turbodyne Systems, a wholly owned subsidiary, principally in researching
and developing products incorporating the Turbodyne Technology. During this
period, the Company commenced development of the Turbodyne System, the
Turbopac(TM) product and the Dynacharger(TM) product. In addition, the Company's
research and development activities resulted in the filing of patent
applications in respect of the Turbodyne Products. The Company undertook low
volume production of its products, for the purpose of testing and evaluation
with OEMs and major retrofit customers. The Company did not record any revenues
until the first quarter of 1998 and at September 30, 1999 had expended
$24,463,310 as research and development costs for the Turbodyne Products. The
development of the Turbodyne Products was financed during this period primarily
from private placement equity financings. The Company commenced limited sales of
the Turbopac(TM) 2500 model in fiscal 1998 and in the first nine months of 1999
pursuant to a contract with Detroit Diesel Corporation, a major global diesel
engine producer. Sales to Detroit Diesel represent approximately 95% of the
total Turbopac(TM) sales. Also in these periods, the Company commenced limited
sales of the Turbopac(TM) 1500 model to several small international automotive
high performance dealers.

PACIFIC BAJA BANKRUPTCY AND GOING CONCERN


In July 1999, a major creditor of 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 in the United
States Bankruptcy Court for the Central District of California on September 30,
1999. Pacific Baja has arranged Court-approved bank financing with Wells Fargo
Bank which will finance Pacific Baja to the end of the fourth quarter.

Pursuant to a Bankruptcy Court order, an auction sale is scheduled for December
9, 1999 at which time substantially all of the assets of Pacific Baja and its
affiliates will be sold to the highest bidder. There are currently three bidders
for the assets. At this time, it is not known what the ultimate sales price for
the assets will be, but it appears unlikely that substantial proceeds will be
available for distribution to unsecured creditors, of which the Company is one,
after the payment of Pacific Baja's secured debt. The Company is currently owed
approximately $6,000,000.


                                    Page 13
<PAGE>


The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. No provision for losses pending the result of the
sale of Pacific Baja have been made at this time. The sale of Pacific Baja will
raise substantial doubt about the Company's ability to continue as a going
concern. Pacific Baja accounted for approximately 98% of total Company sales for
the nine months ended September 30, 1999. Absent these sales, for the nine
months ended September 30, 1999, total Company sales would have been $720,000.
In addition, the Company has suffered net losses in each of the last three years
ended September 30, 1999 and has an accumulated deficit of $69,291,000 at
September 30, 1999, has used cash in its operating activities in each of the
last three years ended September 30, 1999, has violated covenants and defaulted
under its debt facilities, has received an adverse award and a judgment in the
amounts of approximately $6.7 million and $600,000 related to the Grand
arbitration and a building lease, respectively, and is subject to several class
action lawsuits brought against it by certain of its stockholders. Please refer
to Part II, Item I Legal Proceedings for more detail regarding these matters.
The judgment creditors in the Grand arbitration have filed liens with respect to
substantially all of the Company's patents relating to the Engine Technology
Division. If the Company cannot resolve the Grand arbitration, either by appeal,
settlement or otherwise, the judgment creditors may execute on the Grand
judgment and take ownership of the Company's patents relating to its Engine
Technology Division.

The Company has developed a strategy of working with original equipment
manufactures in an effort to enter into joint development, licensing, and
royalty arrangements similar to the joint development and licensing agreements
between the Company and AlliedSignal Inc. The Company expects that through such
an agreement it would have access to a channel of distribution that would
facilitate high volume sales. However, no assurance can be given that any such
relationships will be developed timely or at all, of if developed, will result
in substantial sales to the Company.

In light of the Pacific Baja bankruptcy, the $7.3 million in judgments against
the Company and the other factors identified above, there is substantial doubt
that the Company will continue as a going concern. The Company will be required
to resolve the outstanding judgments against it and to seek substantial
additional equity or debt financing in order to continue the Engine Technology
Division. These matters raise substantial doubt about the Company's ability to
continue as a going concern.

RESULTS OF OPERATIONS

      SALES. Net sales for the nine months ended September 30, 1999 increased to
$41,389,000 from $29,808,000 for the nine months ended September 30, 1998, an
increase of $11,581,000 or 39% and for the three months ended September 30, 1999
increased to $11,137,000 from $9,058,000 for the three months ended September
30, 1998, an increase of $2,079,000 or 23%.

      Sales in these periods were primarily attributable to the Light Metals
Division. Sales attributable to the Engine Technology Division were minimal
during these periods. For the nine months ended September 30, 1999 and 1998,
respectively, of the total sales, sales attributable to the Light Metals
Division accounted for sales of $40,670,000 and $29,390,332 respectively, and
sales attributable to the Engine Technology Division accounted for sales of
$720,000 and $418,000, respectively. The increase in sales in the Light Metals
Division is primarily due to an increase in orders from each of Navistar and
Allied Signal.


                                    Page 14
<PAGE>


      Profitability of the Light Metals Division is affected by seasonal factors
as sales of aftermarket wheel products typically peak in the spring of each year
while operating costs continue throughout the year and by increasing aluminum
costs as the prices of its cast aluminum products are fixed under contract in
advance of production. See "Cautionary Statements and Risk Factors - We Will
Likely Experience Potential Fluctuations in Quarterly Results and Seasonality"
and "Cautionary Statements and Risk Factors -- Raw Materials" in the Company's
Annual Report on Form 10-K filed on April 16, 1999.

      The Company does not expect to recognize sales from the automotive
components segment of its business in the future as a result of the sale of the
Light Metals Division pursuant to the bankruptcy proceedings.

COST OF GOODS SOLD. Cost of goods sold consists primarily of material and labor
costs attributable to the Light Metals Division. Cost of goods sold for the nine
months ended September 30, 1999 increased to $37,927,898 from $24,996,000 for
the nine months ended September 30, 1998, an increase of $12,931,898 or 52%, and
for the three months ended September 30, 1999 increase to $12,034,966 from
$7,462,000 for the three months ended September 30, 1998, an increase of
$4,572,966 or 61%. Cost of goods sold as a percentage of net sales for the nine
months ended September 30, 1999 increased to 91% from 83.9% for the nine months
ended September 30, 1998, and for the three months ended September 30, 1999
increased to 108% from 84% for the three months ended September 30, 1998.

     During 1998, the Light Metals Division incurred significant costs and
expenses attributable to the modernization and relocation of all existing
aluminum foundry and machining operations from its La Mirada, California
facility to its newly acquired facility in Ensenada, Mexico. During the first
nine months of 1999, the volume of product manufactured by the Light Metals
Division increased and the Company began to realize some favorable effects of
the modernization and relocation on its profit margins as a result of greater
productivity and reduced costs. However, the cost of goods sold remained
substantially higher than expected. The Company believes that the higher than
expected costs were due primarily to a high turnover rate of employees at its
manufacturing facilities in Mexico, higher than average scrap, which results in
increased remanufacturing, due in large part to the rate of employee turnover,
and a physical manufacturing process that did not provide for optimum
efficiencies. In addition, management at Pacific Baja devoted considerable time
during the third quarter to bankruptcy related matters which precluded
management from devoting substantial time to improving the manufacturing
processes of Pacific Baja.

      The Company had developed plans designed to continue reducing costs of
sales in the fourth quarter of 1999 and going forward. Due to the bankruptcy
proceedings commenced by Pacific Baja, the Company ceased implementation of
these plans.

      GROSS PROFIT. Gross profit for the nine months ended September 30, 1999
decreased to $3,461,710 from $4,812,000 for the nine months ended September 30,
1998, a decrease of $1,350,290 or 28% and for the three months ended September
30, 1999 decreased to $(898,000) from $1,596,000 for the three months ended
September 30, 1998, a decrease of $2,493,835. The decline in gross profit as a


                                    Page 15
<PAGE>


percentage of sales primarily is due to inefficiencies and manufacturing related
difficulties discussed in more detail under Cost of Goods Sold above. Gross
profit decreased to 8.4% of sales for the nine months ended September 30, 1999
from 12% for the nine months ended September 30, 1998. This decrease is the
result of increased costs and difficulties in inventory control as a result of
the Company's modernization and relocation of its operations as discussed in
more detail under Cost of Goods Sold above.

      SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the nine months ended September 30, 1999 increased
to $14,001,000 from $10,421,000 for the nine months ended September 30, 1998, an
increase of $3,580,000, or 34%, and for the three months ended September 30,
1999 increased to $6,285,861 from $3,170,000 for the three months ended
September 30, 1998, an increase of $3,115,861 or 98%. Selling, general and
administrative expenses as a percentage of sales decreased to 34% from 35% and
increased to 56% from 35% for the comparable nine and three month periods,
respectively. The substantial increase in selling, general and administrative
expenses for the three months ended September 30, 1999 is primarily due to the
extraordinary expenses incurred in connection with the Pacific Baja Bankruptcy.
See Extraordinary Expenses below.

      RESEARCH AND DEVELOPMENT COSTS. Research and development costs for the
nine months ended September 30, 1999 decreased to $3,414,310 from $4,374,000 for
the nine months ended September 30, 1998, a decrease of $959,690, or 22%, and
for the three months ended September 30, 1999 decreased to $549,310 from
$1,249,000 for the three months ended September 30, 1998, a decrease of
$699,690, or 56%. The decrease primarily is attributable to having earlier
finalized the Turbopac(TM) 1500 and 2500 models, the validation testing of the
Turbopac(TM) 2500 model and having earlier finalized preparation for full scale
commercial production of the Turbopac(TM) 2500 and 1500 models. Accordingly, by
the end of fiscal 1998, the Company had incurred the substantial portion of the
anticipated research and development costs associated with the Turbopac(TM) 2500
and 1500 models.

      In the first half of 1999, the Company executed joint development and
exclusive licensing agreements with AlliedSignal pursuant to which ongoing
research and development costs associated with the Dynacharger(TM) product will
be shared between Turbodyne and AlliedSignal. Prior to this agreement a
substantial portion of the research and development costs associated with the
Dynacharger had been borne solely by Turbodyne.

      Based on the Company's historical expenditures related to research and
development and its current development goals, the Company anticipates for the
foreseeable future, research and development expenses will continue to be
significant.

      OTHER INCOME AND EXPENSES. Other income and expense consists primarily of
interest expense on bank operating lines of credit and equipment finance
contracts. Interest expense for the nine months ended September 30, 1999
increased to $1,185,036 from $559,000 for the nine months ended September 30,
1998, an increase of $626,036, or 112%, and for the three months ended September
30, 1999 increased to $472,241 from $(22,000) for the three months ended
September 30, 1998, an increase of $494,241, or 2,247%. The increase was
primarily attributable to additional borrowings on the line of credit and
additional financing of property and equipment purchases.


                                    Page 16
<PAGE>


      EXTRAORDINARY EXPENSES. The following extraordinary expenses were incurred
relevant to the bankruptcy proceedings of Pacific Baja: Benefits $39,000;
Appraisal Fee $10,000; Consulting/Financial Services $110,000; Legal $206,000;
Internal Revenue Service $402,000; and Sales Tax Audit $62,000.

      NET LOSS. Net Loss for the nine months ended September 30, 1999 increased
to $15,022,000 from $12,002,000 for the nine months ended September 30, 1998, an
increase of $3,020,000, or 25%, and for the three months ended September 30,
1999 increased to $8,198,000 from $4,233,000 for the three months ended
September 30, 1999, an increase of $3,965,000, or 93%. The increase in net loss
primarily is attributable to a substantial increase in Costs of Goods sold,
increased interest expense and extraordinary expenses associated with the
Pacific Baja bankruptcy, which were not offset by a proportionate increase in
sales.

LIQUIDITY AND CAPITAL RESOURCES

      The Company's operations have been financed principally through a
combination of private and public sales of equity and debt securities,
borrowings under a bank credit facility and cash flows from the operations of
Pacific Baja.

      Cash used in operating activities for the nine months ended September 30,
1999 and 1998, was $6,989,654 and $11,873,000, respectively. For the nine months
ended September 30, 1999, cash used in operating activities decreased $2,622,000
from the comparable period a year earlier primarily as a result of less cash
available for use.

      Cash used in investing activities for the nine months ended September 30,
1999 and 1998 was $2,355,000 and $4,046,000, respectively, resulting primarily
from the purchase of property and equipment.

      Cash provided by financing activities for the nine months ended September
30, 1999 and 1998 was $7,898,654 and $25,198,000, respectively, resulting
primarily from the sale of equity and convertible debt securities as well as
bank borrowings.

     The sale of Pacific Baja pursuant to the bankruptcy proceedings as well as
other factors, will raise substantial doubt about the Company's ability to
continue as a going concern. Please refer to Pacific Baja Bankruptcy and Going
Concern above.


                                    Page 17
<PAGE>


YEAR 2000

      Computer based systems that require date/time calculations to operate
correctly are subject to miscalculations and system failure on and after year
2000. This is known as the Y2K problem. The Y2K problem affects systems that
were developed to accept two digit entries for the year in the date code field.
After midnight on December 31, 1999, these systems may recognize a date using
`00' as the year 1900 rather than the year 2000. Another known issue is that
many systems will not recognize the year 2000 as a leap year. The Y2K problem is
pervasive in that it goes beyond internal systems to involve supply and
distribution chains and extends to both public and private infrastructure
services including water, gas, electricity, transportation and communications.

      The Company is continuing the comprehensive evaluation of its internal
business systems. Certain infrastructure and information systems are being
upgraded to meet Year 2000 requirements. At the completion of these current
projects, the Company will be conducting transaction testing to evaluate
compliance of the overall system infrastructure. To date, the Company has
substantially completed the risk analysis on all systems. The Company believes
that the vast majority of Y2K-related issues with respect to internal business
systems have been inventoried and analyzed and that the Company has completed
successful certification and/or testing.

      The Company is continuing to review its suppliers to determine that the
suppliers' operations and the products and services they provide are Year 2000
compliant. The Company has completed a survey of substantially all of its
suppliers and has evaluated their individual risk potential as well as the risk
potential of their suppliers. These suppliers represent that they currently are
Y2K compliant or will be by December 31, 1999. Currently, the Company's
contingency strategies include seeking alternative sources of supplies or
acquiring sufficient material to support the Company's operations for the first
half of 2000. The Company believes it has sufficient alternative suppliers to
meeting this contingency strategy. However, in order to acquire sufficient
material to support its operations for the first half of 2000, the Company is
required to complete additional financings and there can be no assurance that
the Company will be successful in that regard. The failure by suppliers to by
Y2K compliant by December 31, 1999 remains a possibility and could have a
material adverse impact on the Company's results of operations and financial
condition.

      The Company has spent approximately $50,000 on the discovery, planning and
resolution phases of its Y2K program, which includes hardware and software
upgrades and replacements and consulting fees. Management anticipates that the
remainder of the Y2K redemption process to cost approximately $50,000. These
costs are being expensed as incurred.

      Readers are cautioned that forward-looking statements contained in this
Year 2000 disclosure should be read in conjunction with the Company's
disclosures under the heading, "Special Note Regarding Forward-looking
Information," set forth at below. Readers should understand that the dates on
which the Company believes Year 2000 issues will be resolved are based upon
management's best estimates, which were derived utilizing numerous assumptions
of future events, including the availability of certain resources, third-party
modification plans and other factors. However, there can be no guarantee that
these estimates will be achieved, or that there will not be a delay in, or
increased


                                    Page 18
<PAGE>


costs associated with, the implementation of the Company's Year 2000
compliance project. A delay in specific factors that might cause differences
between the estimates and actual results include, but are not limited to, the
availability and cost of personnel trained in these areas, timely responses to
and corrections by third parties and suppliers, the ability to implement
interfaces between the new systems and the systems not being replaced, and
similar uncertainties. Due to the general uncertainty inherent in the Year 2000
problem, resulting in part from the uncertainty of the Year 2000 readiness of
third parties and the inter-connection of national and international businesses,
the Company cannot ensure that it has the ability to timely and cost effectively
resolve problems associated with the Year 2000 issue that may affect its
operations and business, or expose it to third party liability.

NEW ACCOUNTING PRONOUNCEMENTS

   In 1998, the FASB issued Statement of Financial Statements No.133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133").
SFAS No. 133 modifies the accounting for derivative and hedging activities and
is effective for fiscal years beginning after December 15, 1999. The Company
believes that the adoption of SFAS No. 133 will not have a material impact on
the Company's financial reporting.

      In 1998, the AICPA issued Statement of Position (SOP) 98-1, "Accounting
for Costs of Computer Software Developed or Obtained for Internal Use." The
Company believes that the adoption of SOP 98-1 will not have a material impact
on the Company's financial reporting.

SPECIAL NOTE REGARDING FORWARD LOOKING INFORMATION

      This Report contains statements that constitute "forward-looking
statements" within the meaning of Section 21E of the Exchange Act and Section
27A of the Securities Act. The words "expect," "estimate," "anticipate,"
"predict," "believe," and similar expressions and variations thereof are
intended to identify forward-looking statements. Such statements appear in a
number of places in this filing and include statements regarding the intent,
belief or current expectations of the Company, its Directors or Officers with
respect to, among other things (a) trends affecting the financial condition of
results of operations of the Company and (b) the business and growth strategies
of the Company. The Company's Stockholders are cautioned not to put undue
reliance on such forward-looking statements. Such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties. Actual
results may differ materially from those projected in this Report, for the
reasons, among others, discussed under the caption, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Risk Factors" in
the Company's Annual Report on Form 10-K filed on April 16, 1999, with the
Securities and Exchange Commission. The Company undertakes no obligation to
publicly revise these forward-looking statements to reflect events or
circumstances that arise after the date hereof. Readers should carefully review
the risk factors referred to above and the other documents the Company files
from time to time with the Securities and Exchange Commission, including the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998, the quarterly reports on Form 10-Q filed by the Company during the
remainder of fiscal 1999, and any current reports on Form 8-K filed by the
Company.


                                    Page 19
<PAGE>


ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Not applicable.


                                    Page 20
<PAGE>


                          PART II. OTHER INFORMATION


ITEM 1.     LEGAL PROCEEDINGS

      CLASS ACTION LAWSUITS. In January-March 1999 six purported class action
complaints were filed against the Company and certain of its officers and
directors in the United States District Court for the Central District of
California, as follows:

<TABLE>
<CAPTION>
ABBREVIATED CASE NAME                                CASE NO.          DATE FILED

<S>                                                  <C>                <C>
TAKEDA, ET AL. V. TURBODYNE TECHNOLOGIES, ET AL.     CV-99-00697-MMM    01/22/99
ZAKS, ET AL. V. TURBODYNE TECHNOLOGIES, ET AL.       CV-99-00743-MMM    01/25/99
LINSCOTT, ET AL. V. TURBODYNE TECHNOLOGIES, ET AL.   CV-99-00933-MMM    01/28/99
SIEBERT, ET AL. V. TURBODYNE TECHNOLOGIES, ET AL.    CV-99-01288-MMM    02/08/99
GENTILE, ET AL. V. TURBODYNE TECHNOLOGIES, ET AL.    CV-99-02194-MMM    03/01/99
GIAMMARCO, ET AL. V. TURBODYNE TECHNOLOGIES, ET AL.  CV-99-02751-MMM    03/16/99
</TABLE>

      On June 4, 1999 the court entered an order consolidating these six actions
for all purposes under the caption IN RE TURBODYNE TECHNOLOGIES, INC. SECURITIES
LITIGATION, Master File No. CV-99-00697-MMM (BQRx) (the "Consolidated Action").
By the same order, the court appointed the "Kadner -7 Group," comprised of Ralf
Kadner, Gordon Williamson & Associates, Louis T. Inglehart, Ronald Shoen,
Gunther Wrieden, Combined Atlantic Carriers, and Dennis Jones, as Lead
Plaintiffs pursuant to the provisions of the Private Securities Litigation
Reform Act of 1995, 15 U.S.C. ss. 78u-4(a)(3)(B), anD approved the Lead
Plaintiffs' selection of lead counsel for the plaintiffs in the Consolidated
Action.

      On August 9, 1999, the plaintiffs filed their consolidated class action
complaint, which is now the operative complaint in the Consolidated Action. The
Consolidated Action purports to be brought on behalf of individuals claiming to
have purchased common stock of the Company during the time period from March 1,
1997 through January 22, 1999. Plaintiffs seek unspecified damages arising from
alleged misstatements concerning such matters as the technological capability
and actual and potential sales of the Company's Turbopac product, and the demand
for and market acceptance of Turbopac and other Company products. Plaintiffs
allege that these alleged misstatements caused the Company's stock price to be
"artificially inflated" during the purported class period.

      The Company has tendered these actions to its insurance carriers who have
appointed counsel to represent the Company and the other defendants in these
actions. The Company has yet to file a response to the consolidated class action
complaint; however, the Company intends to defend itself vigorously against the
allegations of the Consolidated Action. Since this action is in the very early
stages of litigation, the Company is unable to assess the likelihood of an
adverse result, and there can be no assurances as to the outcome of the action.


                                    Page 21
<PAGE>


      GRAND TECHNOLOGIES ET. AL. V. TURBODYNE TECHNOLOGIES, ET. AL. On March 3,
1999 in the matter of the binding arbitration between Grand Technologies Inc.
and the Company arising out of the exclusive distributorship agreement entered
into between the Company and Grand in June 1996, the arbitrator has determined
that the Company is liable to Grand for damages in the amount of approximately
$6.65 million as a result of negligent misrepresentation, breach of contract and
breach of a purchase order. The decision also provided that Grand recover its
attorney's fees and costs, which were set by the arbitrator at the sum of
$182,000 in a Supplemental Arbitration Award dated April 12, 1999. On April 13,
1999, the Los Angeles Superior Court entered an order confirming the
arbitrator's March 3, 1999 award, and on May 12, 1999 the Los Angeles Superior
Court entered an order confirming the arbitrator's April 12, 1999 Supplemental
Award. On June 4, 1999, judgment was entered against the Company based on these
Orders confirming the Arbitration Award and Supplemental Arbitration Award in
the total sum, including costs, of $6,941,000.

      On July 26, 1999, the Company filed a Notice of Appeal from the June 4,
1999 judgment.

      The Company strongly denies any wrongdoing and will vigorously prosecute
the appeal that it has taken from the judgment of the Superior Court, as it
believes that the judgment is based upon an award by the arbitrator that
exceeded his powers. There can be no assurance that the Company will be
successful in this effort.

      On May 3, 1999, the Company filed an action in the Superior Court of the
State of California for the County of Los Angeles against certain Underwriters
at Lloyd's London ("Lloyds") claiming breach of contract, breach of implied
covenant of good faith and fair dealing, promissory misrepresentation and
estoppel in connection with Lloyd's denial of coverage under the Company's
Directors and Officers and Company Reimbursement Indemnity Insurance Policy for
the Grand matter. The defendants filed a demurrer to the Company's complaint, or
alternatively, a motion to strike certain allegations. The court denied
defendant's demurrer, but granted the motion to strike the Company's allegations
regarding the lost opportunity to settle the underlying action. Thereafter, the
Company filed a writ of mandate to the court of appeal, seeking the
reinstatement of these allegations in the complaint. Defendants have served
their answer to the complaint and the parties are engaged in discovery. Although
the Company intends to vigorously prosecute this action, there can be no
assurance that the Company will be successful.

      JOHN P. SINGLETON V. TURBODYNE TECHNOLOGIES, INC., ET. AL. John P.
Singleton has filed an action against the Company and certain of its officers
and directors in the Superior Court of the State of California for the County of
Los Angeles Northwest District which alleges claims for tortuous constructive
discharge in violation of public policy, breach of express contract of continued
employment, breach of implied covenant of good faith and fair dealing, various
torts involving intentional and negligent misrepresentations, breach of contract
and specific performance. Mr. Singleton alleges among other matters that he
entered an oral contract with the Company to serve as its Chief Financial
Officer and later also as its Chief Operating Officer and that defendants
created intolerable working conditions which forced Mr. Singleton to resign. Mr.
Singleton seeks damages in excess of $25,000,000, punitive damages, reasonable
attorneys fees, costs of the lawsuit and such other and further relief as the
court deems proper. The Company answered the complaint, has denied all of


                                    Page 22
<PAGE>


the claims and has asserted affirmative defenses. This case is in the discovery
process. The Company has tendered this complaint to its insurance carriers who
have appointed counsel to represent the Company and the other defendants in this
matter.

      The Company strongly denies any wrongdoing and will vigorously defend
itself against this action. There can be no assurance that the Company will be
successful in this effort.

      POLLUTION RESEARCH & CONTROL CORP. ET. AL. V. TURBODYNE TECHNOLOGIES.
In June 1999 the parties executed a settlement agreement.  Under the
settlement, the Company was not required to pay out any sums and plaintiffs
repaid to the Company $106,500.  The claims against the Company and all other
defendants will be dismissed without presumption or admission of any
liability or wrongdoing.

     CW CALCATERRA V. TURBODYNE. In February 1997, the Company assumed a lease
with a remaining eight-month term and two five year options. The Company came
into dispute with its Landlord over entitlement to renewal options. The Company
has entered a tentative settlement agreement pursuant to which the Company will
pay $200,000.

      SEC INVESTIGATION. The Securities and Exchange Commission is conducting an
inquiry into the Company. The SEC indicated that its inquiry should not be
construed as an indication by the Commission or its staff that any violations of
law have occurred, nor should it be construed as an adverse reflection on the
merits of the Company's securities or on any person or entity. The Company has
cooperated fully with the SEC and intends to continue to fully cooperate with
any additional requests of the SEC.


ITEM 2.     CHANGES IN SECURITIES

None.

ITEM 3.     DEFAULT UPON SENIOR SECURITIES

None

ITEM 4.     SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

None

ITEM 5.     OTHER INFORMATION

None


                                    Page 23
<PAGE>


ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

   EXHIBITS
     11.1  Statement re computation of per share earnings
     27.1  Financial Data Schedule

  FORM 8-K

  Current Report on Form 8-K filed July 14, 1999, as amended on July 16, 1999
  Current Report on Form 8-K filed August 11, 1999
  Current Report on Form 8-K filed September 30, 1999


                                    Page 24
<PAGE>


                                  SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.


                                              TURBODYNE TECHNOLOGIES INC.




Date:  November 18, 1999                  By  /s/JOSEPH D. CASTANO
                                             ----------------------------------
                                              Joseph D. Castano
                                              Chief Financial Officer
                                              (Principal Accounting Officer)


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