<PAGE>

                                  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  September  30,  2002

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

        For  the  transition  periodto


          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
incorporation or organization)                       Identification  No.)


6155 Carpinteria Avenue,
Carpinteria, California                         93013
---------------------------------------         ----------
(Address of principal executive offices)        (Zip Code)

Issuer's telephone number, including area code:    (805) 684-4551
                                                   --------------

                                 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  [X]  Yes    [  ]  No

State the number of shares outstanding of each of the issuer's classes of common
stock,  as  of  the latest practicable date:  103,493,885 shares of common stock
issued  and  outstanding  as  of  October  31,  2002.


<PAGE>

                         PART 1 - FINANCIAL INFORMATION

Item  1.          Financial  Statements


<PAGE>








          Turbodyne  Technologies,  Inc.  and  Subsidiaries
          Consolidated  Financial  Statements
          For  the  nine-month  periods  ended  September  30,  2002  and  2001
          (Unaudited  -  Expressed  in  US  Dollars)










<PAGE>





          Turbodyne  Technologies,  Inc.  and  Subsidiaries
          Consolidated  Financial  Statements
          For  the  nine-month  periods  ended  September  30,  2002  and  2001
          (Unaudited  -  Expressed  in  US  Dollars)




                                                                        Contents
--------------------------------------------------------------------------------


Consolidated  Financial  Statements

     Balance  Sheets

     Statements  of  Operations

     Statements  of  Changes  in  Capital  Deficit

     Statements  of  Cash  Flows

     Notes  to  the  Financial  Statements



<PAGE>


<TABLE>
<CAPTION>
                                           Turbodyne Technologies, Inc. and Subsidiaries
                                                             Consolidated Balance Sheets
                                                               (Expressed in US Dollars)

                                                           September         December 31
                                                              2002               2001
----------------------------------------------------------------------------------------
<S>                                                 <C>                   <C>

Assets                                                    (Unaudited)

Current
  Cash                                              $            39,320   $      20,257
  Prepaid expenses and other current assets                       4,775               -
                                                    ------------------------------------
  Total current assets                                           44,095          20,257

Property and equipment, at cost, less accumulated
 depreciation                                                   183,918         210,550
Licenses, at cost less accumulated amortization                 884,000       1,040,000
                                                    ------------------------------------
Total Assets                                        $         1,112,013   $   1,270,807
========================================================================================

Liabilities and Capital Deficit

Liabilities

Current
  Current maturities of long-term debt              $            73,071   $      73,071
  Accounts payable                                            2,899,405       2,751,769
  Accrued liabilities                                           727,571         354,474
  Loans payable (Note 3)                                        498,210               -
  Accrual for lawsuit settlements                             6,169,238       6,169,238
                                                    ------------------------------------
  Total liabilities                                          10,367,495       9,348,552
                                                    ------------------------------------

Capital Deficit
  Share Capital
    Authorized
      1,000,000 preferred shares, par value $0.001
      150,000,000 common shares, par value $0.001
    Issued
      102,261,028 common shares in 2002
      (2001 - 84,036,915)                                       102,261          84,037
  Treasury stock, at cost (378,580 shares)                   (1,907,612)     (1,755,534)
  Additional paid-in capital                                111,614,806     108,147,994
  Accumulated other comprehensive income -
    Foreign exchange translation gain                            35,119          35,119
  Accumulated deficit                                      (119,100,056)   (114,589,361)
                                                    ------------------------------------
  Total capital deficit                                      (9,255,482)     (8,077,745)
                                                    ------------------------------------
Contingencies (Note 4)

Total Liabilities and Capital Deficit               $         1,112,013   $   1,270,807
========================================================================================
</TABLE>


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

<PAGE>

<TABLE>
<CAPTION>
                                                   Turbodyne Technologies, Inc. and Subsidiaries
                                                           Consolidated Statements of Operations
                                                           (Unaudited - Expressed in US Dollars)

                                                 Three-month                 Nine-month
                                                periods ended               periods ended
                                                September 30                September 30
                                            2002           2001          2002           2001
                                                                     -------------  ------------
<S>                                     <C>            <C>           <C>            <C>
Net sales                               $          -   $         -   $          -   $     9,470

Cost of goods sold                                 -         9,740              -       (12,640)
                                        --------------------------------------------------------
    Gross profit (loss)                            -        (9,740)             -        (3,170)
                                        --------------------------------------------------------
Expenses
  Selling, general and administrative        396,701     1,530,645        761,973     2,656,507
  Research and development                 1,509,945     1,831,088      2,853,033     3,254,015
  Litigation                                 242,399       285,678        701,979       542,916
  Depreciation and amortization               67,000        23,070        199,075        69,211
                                        --------------------------------------------------------
    Total expenses                         2,216,045     3,670,481      4,516,060     6,522,649
                                        --------------------------------------------------------
Loss from operations                      (2,216,045)   (3,680,221)    (4,516,060)   (6,525,819)

Other income (expenses)
  Other, net                                       -       (16,200)         5,491           992
  Interest expense, net                            -             -           (126)       (3,338)
                                        --------------------------------------------------------
Net loss and comprehensive
  loss for the period                   $ (2,216,045)  $(3,696,421)  $ (4,510,695)  $(6,528,165)
================================================================================================
Net loss per common share
  Basic and diluted                     $      (0.02)  $     (0.05)  $      (0.04)  $     (0.10)
================================================================================================

Weighted average shares outstanding
  used for basic and diluted loss per
  share                                  101,799,071    70,565,009    101,773,848    65,770,333
================================================================================================

</TABLE>



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

<PAGE>

<TABLE>
<CAPTION>

                                                           Turbodyne Technologies, Inc. and Subsidiaries
                                                   Consolidated Statements of Changes in Capital Deficit
                                                                   (Unaudited - Expressed in US Dollars)

                                                                  Common Stock          Treasury Stock
                                                          -----------------------------------------------
                                                               Shares      Amount     Shares      Amount
<S>                                                       <C>           <C>        <C>       <C>
Balance, December 31, 2001                                 84,036,915   $ 84,037   $378,580  $(1,755,534)
Private placement of common stock                          11,073,113     11,073          -            -
Exercise of stock options                                   3,920,000      3,920          -            -
Issuance of stock for services                              2,731,000      2,731          -            -
Issuance of stock options to non-employees
  for services (Note 2(b))                                          -          -          -            -
Inception of Turbodyne Technologies Inc.
  (Nevada Company) at August 15, 2002 (Note 2(f))                   1          1          -            -
Adjustment for reverse acquisition of Turbodyne
  Technologies Inc. (Delaware Company) at
  September 12, 2002                                               (1)        (1)         -            -
Cash paid to acquire Company shares (Note 2)                        -          -          -     (152,078)
Private placement of common stock                             500,000        500          -            -

Net loss and comprehensive loss for the period                      -          -          -            -
                                                          -----------------------------------------------

Balance, September 30, 2002                               102,261,028   $102,261   $378,580  $(1,907,612)
=========================================================================================================


                                                                     Other
                                                      Additional  Comprehensive                  Total
                                                        Paid-in      Income     Accumulated     Capital
                                                        Capital      (Loss)      Deficit        Deficit
<S>                                                 <C>           <C>       <C>             <C>
Balance, December 31, 2001                          $108,147,994  $ 35,119  $(114,589,361)  $(8,077,745)
Private placement of common stock                        876,624         -              -       887,697
Exercise of stock options                                388,080         -              -       392,000
Issuance of stock for services                           898,499         -              -       901,230
Issuance of stock options to non-employees
  for services (Note 2(b))                             1,281,609         -              -     1,281,609
Inception of Turbodyne Technologies Inc.
  (Nevada Company) at August 15, 2002 (Note 2(f))              -         -              -             1
Adjustment for reverse acquisition of Turbodyne
  Technologies Inc. (Delaware Company) at
  September 12, 2002                                           -         -              -            (1)
Cash paid to acquire Company shares (Note 2)                   -         -              -      (152,078)
Private placement of common stock                         22,000         -              -        22,500
Net loss and comprehensive loss for the period                 -         -     (4,510,695)   (4,510,695)
                                                    ----------------------------------------------------
Balance, September 30, 2002                         $111,614,806  $ 35,119  $(119,100,056)  $(9,255,482)
========================================================================================================
</TABLE>


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

<PAGE>

<TABLE>
<CAPTION>
                                          Turbodyne  Technologies,  Inc.  and  Subsidiaries
                                                      Consolidated Statements of Cash Flows
                                                      (Unaudited - Expressed in US Dollars)

For the nine-month periods ended September 30                        2002          2001
-------------------------------------------------------------------------------------------
<S>                                                              <C>           <C>
Cash provided by (used in)

Operating activities
  Net loss for the period                                        $(4,510,695)  $(6,528,165)
  Adjustments to reconcile net loss for the period to
   net cash used in operating activities:
    Depreciation and amortization                                    199,075        69,211
    Issuance of stock for services                                   901,230       793,800
    Stock option compensation                                      1,281,609       758,350
    Stock and warrants issued on settlement of guarantee                   -       252,000
    Issuance of stock recorded as compensation                             -     1,470,000
  (Increase) decrease in operating assets
    Trade accounts receivable                                              -       279,848
    Employee advances receivable                                           -        (1,000)
    Inventories                                                            -         2,900
    Prepaid expenses and other current assets                         (4,775)            -
    Other assets                                                           -          (330)
  Increase in operating liabilities
    Accounts payable                                                 147,636       350,154
    Accrued liabilities and reserve for lawsuit settlements          373,097        25,268
                                                                 --------------------------
                                                                  (1,612,823)   (2,527,464)
                                                                 --------------------------
Investing activity
  Purchase of property and equipment                                 (16,443)       (8,211)
                                                                 --------------------------
Financing activities
  Net proceeds from (repayment of) short-term borrowings                   -       (96,275)
  Loans payable                                                      498,210             -
  Issuance of common stock and stock subscriptions                 1,302,197     2,631,950
  Amounts paid for acquisition of Company stock                     (152,078)            -
                                                                 --------------------------
                                                                   1,648,329     2,535,675
                                                                 --------------------------
Net increase in cash                                                  19,063             -

Cash, beginning of period                                             20,257             -
                                                                 --------------------------
Cash, end of period                                              $    39,320   $         -
===========================================================================================
Supplementary disclosure of cash flow information

  Cash paid during the period
    Interest                                                     $         -   $       629
    Income taxes                                                 $         -   $     3,200
Supplementary disclosure of non-cash investing and
 financing activities
  Issuance of stock for services                                 $   901,230   $   793,800


  Stock option compensation                                      $ 1,281,609   $   758,850
  Stock and warrants issued on settlement of a guarantee         $         -   $   252,000
  Issuance of stock recorded as compensation                     $         -     1,470,000
===========================================================================================
</TABLE>


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


<PAGE>

                                   Turbodyne Technologies, Inc. and Subsidiaries
                                  Notes to the Consolidated Financial Statements
                                           (Unaudited - Expressed in US Dollars)

September  30,  2002  and  2001
--------------------------------------------------------------------------------

1.     Basis  of  Presentation  and  Ability  to  Continue  as  a  Going Concern

Turbodyne  Technologies,  Inc.,  a  Nevada  corporation,  and  subsidiaries (the
Company),  is  a  design  and  engineering  company  engaged  in  the design and
development of air changing technology that enhances the performance of internal
combustion  engines.

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, 2001 and
2000  included in the Company's 10-K Annual Report. The Company follows the same
accounting  policies  in  the  preparation  of  interim  reports.

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

The  accompanying  consolidated financial statements have been prepared assuming
that  the Company will continue as a going concern. The Company has suffered net
losses  in recent periods resulting in an accumulated deficit of $119,100,056 at
September 30, 2002, has used cash in its operating activities in recent periods,
is subject to lawsuits brought against it by shareholders and other parties, and
based  on  the  Company's  projected  cash flows for the ensuing year it will be
required  to  seek  additional equity or debt financing in order to continue its
present  operations,  irrespective  of  the  amounts  to  be  paid,  if  any, in
connection  with  the  aforementioned  lawsuits. These matters raise substantial
doubt  about the Company's ability to continue as a going concern.

The Company's operations have been financed principally through a combination of
private  and  public  sales  of equity and debt securities. Although the Company
continues  to  raise  operating  funds  with  a  combination  of debt and equity
instruments  there  is no guarantee that the Company will be able to continue to
finance  operations by this method. The Company is also limited in raising funds
through  the  sale  of equity because of the limited remaining authorized shares
available  for  sale.

The Company continues to examine its operation and processes for further methods
of  cutting  costs and gaining efficiencies. However, there is no assurance that
the  cost  reductions  will  be  realized  in  the  full  amount. The Company is
examining  alternatives  for  financing and fulfilling its working capital needs
based  on  its  working  capital  projections.  If  the  Company  is  unable  to
satisfactorily  settle  litigation,  including  its  dispute with Honeywell, the
present  holder of the Company's core technology and raise substantial monies to
meet  its  working capital needs, it may have to cease operating and seek relief
under  appropriate  statutes.


<PAGE>

                                   Turbodyne Technologies, Inc. and Subsidiaries
                                  Notes to the Consolidated Financial Statements
                                           (Unaudited - Expressed in US Dollars)

September  30,  2002  and  2001
--------------------------------------------------------------------------------

2.     Common  Stock

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

a)   Stock  Options

     In  addition  to  the  existing  stock  option  plans, on June 3, 2002, the
     Company established the 2002 stock option plan (the "2002 Plan"). Under the
     2002  Plan,  the  Company  may  grant  options  to its directors, officers,
     employees  and  consultants for up to 6,000,000 shares of common stock. The
     option's  maximum  term  is  ten  years.  The  Stock  Option Committee will
     determine  the  terms of any options or other rights granted under the 2002
     Plan,  including  the  grant date of any option, the exercise price and the
     term,  which in any event shall not exceed ten years. The maximum number of
     options to be granted under the 2002 Plan to any participant is 180,000 per
     year.

     The following summarizes information relating to stock options during 2002:


<TABLE>
<CAPTION>
                                                                  2002
                                           Non-employees       Employees           Total
                                      ---------------------------------------------------------
                                                   Weighted         Weighted          Weighted
                                                   Average          Average           Average
                                                   Exercise         Exercise          Exercise
                                        Options    Price   Options  Price     Options    Price
<S>                                   <C>          <C>     <C>      <C>     <C>          <C>
  Outstanding at beginning of period   1,913,415   $ 0.33        -  $    -   1,913,415   $ 0.33
  Granted                              4,605,000     0.10  525,000    0.35   5,130,000     0.13
  Exercised                           (3,920,000)    0.12        -       -  (3,920,000)    0.12
                                      ---------------------------------------------------------
  Outstanding at end of period         2,598,415   $ 0.30  525,000  $ 0.35   3,123,415   $ 0.35
                                      =========================================================
  Options exercisable at end of
   Period                              2,598,415   $ 0.30  525,000  $ 0.35   3,123,415   $ 0.31
                                      =========================================================
</TABLE>


b)   Issuance  of  Stock  Options  to  Non-employees  for  Services

     The  Company  has  recorded  $1,281,609  (2001  - $758,850) in compensation
     expense  in  2002  relating  to  stock  options issued to non-employees for
     services  rendered  during  the  period  based  on the Black-Scholes option
     pricing  model,  using  the  following  assumptions:

     Dividend yield                       Nil
     Risk-free interest rate     2.33 - 2.64%
     Expected volatility                 100%
     Expected lives                 12 months

c)   Stock  Purchase  Warrants

     At  September  30, 2002, the Company had 26,744,750 stock purchase warrants
     outstanding,  respectively.  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
     $0.08  to  $4.00  and  expiration  dates  between  2003  and  2005.


<PAGE>

                                   Turbodyne Technologies, Inc. and Subsidiaries
                                  Notes to the Consolidated Financial Statements
                                           (Unaudited - Expressed in US Dollars)

September  30,  2002  and  2001
--------------------------------------------------------------------------------

2.     Stockholders'  Equity  -  Continued

d)   Share  Proceeds  Receivable

     As  at  September  30,  2002,  3,287,500  shares  had been issued for which
     $263,000  in  payments  remained  outstanding.

e)   Treasury  Shares

     During  the  period  ended  September  30,  2002,  the  Company  entered an
     agreement to acquire, from a director for cancellation, 3,500,00 shares for
     $152,078  and  3,142,000  shares  for $0.17 per share. The Company has paid
     $87,254 in installments in connection with the acquisition of the 3,500,000
     shares,  has  recorded  amounts  paid  as  a  charge to Treasury shares and
     accrued the balance owing, which is in arrears. The related shares have not
     yet  been  received  or  cancelled.  The remaining 3,142,000 shares will be
     acquired  as  the  Company's  financial  position  allows  it  to  do  so.

f)   Authorized  capital

     The  Company  completed  a  merger  with  an inactive shell company and was
     reincorporated on September 12, 2002 as a Nevada corporation. In connection
     therewith,  the  authorized  number  of  common  shares  was  increased  to
     150,000,000  and  all  outstanding  shares,  options  and  warrants  in the
     previous  company  were  converted  into  similar instruments of the Nevada
     corporation.

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

3.     Loans  Payable

During  the  period  ended  September  30,  2002,  the  Company  received  from
shareholders  and  other  parties  $498,210  in  unsecured, non-interest bearing
advances.  Management expects that the amounts owing will be settled through the
issuance  of  common  stock  and  share  purchase  warrants.

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

4.     Contingencies

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


<PAGE>

                                   Turbodyne Technologies, Inc. and Subsidiaries
                                  Notes to the Consolidated Financial Statements
                                           (Unaudited - Expressed in US Dollars)

September  30,  2002  and  2001
--------------------------------------------------------------------------------

5.     New  Accounting  Pronouncements

In April 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No.
145,  "Rescission  of  FASB  Statements  No.  4,  44,  and 64, Amendment of FASB
Statement  No.  13,  and  Technical  Corrections".  This  Statement rescinds the
requirement  to  report  gains  and  losses  from  extinguishment  of debt as an
extraordinary  item. Additionally, this statement amends Statement 13 to require
sale-leaseback  accounting  for  certain  lease modifications that have economic
effects similar to sale-leaseback transactions. The provisions of this statement
relating  to  Statement 4 are applicable in fiscal years beginning after May 15,
2002. The provisions of this Statement related to Statement 13 are effective for
transactions  occurring  after  May  15,  2002.  All  other  provisions  of this
Statement  are  effective  for  financial  statements issued on or after May 15,
2002.  The  adoption  of  SFAS  No.  145  did  not have a material effect on the
Company's  financial  statements.

In  June  2002,  the  FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities". SFAS 146 nullifies Emerging Issues Task Force
("EITF") Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits  and  Other Costs to Exit an Activity". For purposes of this Statement,
an exit activity includes, but is not limited to a restructuring as that term is
defined  in  International  Accounting  Standard  37,  "Provisions,  Contingent
Liabilities,  and  Contingent  Assets".  The  Statement is effective for exit or
disposal  activities  initiated  on  or  after  December 31, 2002. Management is
evaluating  the  impact  of  adopting  SFAS  No.  146 on the Company's financial
statements.

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

6.     Subsequent  Event

The  Company  entered  into  a  Licensing  and  Joint Development Agreement with
Ishikawajima-Harima  Heavy Industries Co., Ltd. ("IHI"). The Licensing and Joint
Development Agreement provides for the grant by the Company to IHI of a ten-year
non-exclusive  license  for the Company's motor assisted turbocharger technology
for  the  territories  of  Asia and Europe. IHI is required to pay approximately
$66,300  as  an  initial  license  fee  and  additional  license  fees (equal to
approximately $165,900) upon a decision by IHI to enter into mass production and
delivery  to  IHI  by  the  Company  of  complete design, engineering, drawings,
specifications  and parts lists. In addition to the additional license fees, IHI
will  also pay to the Company a royalty based on the number of units sold by IHI
that  incorporate  the  licensed  technology.  The  royalty will equal 3% of the
amount  of the sales price of motor assisted turbochargers sold that incorporate
the  Company's  technology less the price of a conventional turbocharger product
for  sales of the first 200,000 units. For sales in excess of 200,000 units, the
royalty  will  be  reduced  to  1%  of  the  price  differential.

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

7.     Comparative  Amounts

Certain  comparative  amounts  have  been  restated  to  conform  to the current
period's  presentation.

<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.

OVERVIEW

We are a design and engineering company engaged in the design and development of
air  charging  technology  that  enhances the performance of internal combustion
engines.  Our  technology  is  based  on  DC/AC,  high-speed,  high-powered,
electronically  commutated  electric  motors.   Our  business  strategy involves
entering into license agreements with original equipment manufacturers ("OEM's")
in  the  automotive  industry  who  would  incorporate our technology into their
product  lines in exchange for the payment of royalties or other similar license
fees.

We have incorporated our technology into two initial primary products, which are
(1)  the  Dynacharger(TM)  and  (2)  the  Turbopac(TM).  We  transferred  the
intellectual  property  associated with our Dynacharger and Turbopac products to
Honeywell, Inc. ("Honeywell") in 1999.  Our rights to these products are now the
subject of a license agreement and a joint development agreement with Honeywell.
We  are  now  involved  in  legal  proceedings  regarding  our  agreements  with
Honeywell.  See  Item  1  of  Part  II  -  Legal  Proceedings.

We are presently finalizing the development of additional products incorporating
new  technology,  including a product known as the TurboAir.  These new products
are  in  various stages of design and development.  Our ability to commercialize
these  new products is conditional upon us entering into arrangements with OEM's
that  provide for the final development and manufacturing of these products.  We
have begun to enter into development agreements for the manufacture of prototype
TurboAir units that will be used for testing and evaluation purposes by original
equipment  manufacturers.

We  are  currently  in  a transition phase of our business to an engineering and
design business from a business model that originally included manufacturing and
marketing  of products incorporating our technology.   Our operating results for
the  nine months ended September 30, 2002 reflect the fact that Honeywell is not
proceeding  with  the commercialization of the Turbopac and Dynacharger products
and  we  are  not  earning  revenues under our license agreement with Honeywell.


                                       4

<PAGE>


We  are  currently  not  earning  any  revenues under our license agreement with
Honeywell  or  through sales of products incorporating our new technology, other
than  through  development  agreements  for  manufacture  of  prototypes.

PLAN  OF  OPERATIONS

Our  plan  of  operations  over  the  next  twelve  months  is  to undertake the
following:

1.     We plan to continue research and development of our TurboAir product with
the objective of completing the necessary development work for commercialization
of  this  product.  This  work  will  include  development  of  prototypes under
development  agreements with original equipment manufacturers.  We plan to spend
approximately  $650,000  in pursuing this research and development over the next
twelve  month  period;

2.     We  plan  to pursue negotiations with original equipment manufacturers in
the automobile industry ("OEM's") for the incorporation of our TurboAir products
into the OEM's product lines. We plan to spend approximately $85,000 in pursuing
these  negotiations  over  the  next  twelve  month  period;

3.     We  plan  to continue research and development of our products, including
new  products  incorporating  our  e-boosting  technology, with the objective of
completing  the  necessary  development  work  for  commercialization  of  these
products.  We plan to spend approximately $450,000 in pursuing this research and
development  over  the  next  twelve  month  period;

4.     We  plan  to  pursue resolution of the outstanding litigation against us,
including  resolution  of  the  claims  summarized  in Item 1 of Part II of this
Quarterly  Report  on  Form  10-QSB.  We plan to spend approximately $450,000 in
litigation  expenses  over  the  next  twelve  month  period;

5.     We  anticipate spending approximately $750,000 in administrative expenses
over  the  next  twelve  months  in maintaining our head office and staff in our
Carpenteria,  California  office.

We had cash of $39,320 as at September 30, 2002 and a working capital deficit of
$10,323,400  as  at  September 30, 2002.  Our plan of operations calls for us to
spend  approximately  $2,385,000 over the next twelve months, with approximately
half  of  this amount being incurred over the next nine months.  Accordingly, we
are  not  able  to  pursue  our  stated  plan  of operations without substantial
additional  financing.  We are pursuing additional sales of our common stock and
share  purchase  warrants  to  raise  the financing necessary for us to continue
operations.  We  have  no  arrangements in place for additional equity financing
and there is no assurance that additional equity financing will be obtained.  We
believe  that conventional debt financing is not a financing option to us due to
the  development  stage of our products, our lack of revenues and the litigation
to which we are party.  Based on these risks, there is no assurance that we will
be  able  to carry out our plan of operations. If we achieve less financing than
required  to  pursue  our  stated  plan of operations, then we will be forced to
reduce  our  research and development activities and our administrative overhead
costs.

RESULTS  OF  OPERATIONS


                                       5

<PAGE>


Net  Sales

We  did  not  achieve any sales during the nine months ended September 30, 2002.
Our  net  sales were $9,470 for the nine months ended September 30, 2001.  Sales
during  the  nine  months  ended  September  30,  2001  consisted  entirely  of
refurbishment  of  Turbopac products sold under our contract with Detroit Diesel
Corporation.  Our  current inability to earn revenues reflects the fact that (i)
our new TurboAir product and other new products remain in the development stage;
and  (ii) we are not able to earn any revenues pursuant to our license agreement
with  Honeywell  as  Honeywell  is  not  completing any sales of the Turbopac or
Dynacharger  products.  There  have been no sales of the Turbopac(TM) product by
Honeywell  since  June  2000 and our Dynacharger product remains in development.

We anticipate that we will earn revenues during the fourth quarter in connection
with  sales  of  prototypes  that  are  designed  and  manufactured  pursuant to
development  agreements  that  we have entered into.  These revenues will not be
significant  in  relation to our overall operating costs.  We anticipate that we
will not be able to generate any significant revenues from sales of the Turbopac
or  Dynacharger  products until we are successful in entering into a new license
and  manufacturing arrangement with a new automotive OEM.  We anticipate that we
will not be able to generate sales of our TurboAir products until we are able to
enter  into  an  agreement  with an automotive OEM for the final development and
manufacture  of  this  product.

Costs  of  Sales

We  did  not  have any costs of sales during the nine months ended September 30,
2002  in  view of the fact that we had no sales. Cost of goods sold were $12,640
for  the  nine  months  ended September 30, 2001 and $9,740 for the three months
ended  September  30,  2002.  We  did  not  engage in any manufacturing activity
during  the  nine months ended September 30, 2001 and we anticipate that we will
not  undertake  any manufacturing activity during 2002, other than manufacturing
of  prototypes  for  evaluation  and  demonstration  purposes.

Gross  Profit

Gross  profit  was  nil for the nine months ended September 30, 2002 and nil for
the  three  months  ended September 30, 2002.  Gross profit was $(3,170) for the
nine  months  ended  September  30,  2001 and $(9740) for the three months ended
September  30,  2001.    Our  gross profit for 2002 to date reflects our lack of
revenues  and  the fact that we were not engaged in any manufacturing activities
during  this  period.

Selling,  General  and  Administrative  Expenses

Selling, general and administrative expenses for the nine months ended September
30,  2002  decreased  to  $761,973  from  $2,656,507  for  the nine months ended
September  30,  2001,  representing a decrease of $1,894,534 or 71.3%.  Selling,
general  and  administrative  expenses  for the three months ended September 30,
2002  decreased to $396,701 from $1,530,645 for the three months ended September
30,  2001, representing a decrease of $1,133,944 or 74.1%.   The decrease in our
selling,  general  and  administrative  expenses  was  attributable  to  our
determination  in 2001 to scale back our business operations to reflect our lack
of financing and reduced marketing expenses as a result of the fact that we were
no longer directly marketing the Turbopac and Dynacharger products.  General and
administrative  costs  included  expenses  associated  with  our  Carpinteria,
California  office, our European office, management compensation, administrative
staff  and  overhead.  Selling expenses were minimal as we did not undertake any
marketing  efforts  with


                                       6

<PAGE>

respect  to  the  Turbopac  and Dynacharger products in the first nine months of
2002  as  these  products  were  governed  by our agreements with Honeywell. Our
European  office  was  closed  in  the  second  quarter  of  2002.

Research  and  Development

Research  and  development  costs  for  the nine months ended September 30, 2002
decreased  to  $2,853,033  from  $3,254,015  for nine months ended September 30,
2001,  representing a decrease of $400,982 or approximately 12.3%.  Research and
development  costs  for  the  three months ended September 30, 2002 decreased to
$1,509,945  from  $1,831,088  for  three  months  ended  September  30,  2001,
representing  a  decrease  of $321,143 or approximately 17.5%.  Our research and
development  activities  during the nine months ended September 30, 2002 did not
include any joint research and development with Honeywell and involved primarily
developing  and  testing  prototypes  of  our  TurboAir  products   Research and
development  costs  for  the  nine  months ended September 30, 2001 included our
participation  in  our  joint development agreement with Honeywell for the first
six  months  of  2001.  This  joint  research and development with Honeywell was
terminated  on  June  28,  2001.   Current  research  and  development costs are
associated  with  our  development  of  our  TurboAir products and new products.

Litigation  Expense

We  incurred  expenses  related  to litigation in the amount of $701,979 for the
nine  months  ended  September 30, 2002 compared to $542,916 for the nine months
ended  September  30, 2001, representing an increase of $159,063 or 22.7%.    We
incurred  expenses related to litigation in the amount of $242,399 for the three

months  ended September 30, 2002 compared to $285,678 for the three months ended
September  30,  2001, representing a decrease of $43,279 or 15.1%.  The increase
in  litigation  expense  in  the  amount  of  $159,063 for the nine months ended
September  30, 2002 was attributable to our involvement in the legal proceedings
described  in  Item  1  of Part II of this Quarterly Report on Form 10-QSB.  The
most  significant  component  of  our  litigation  expense during the first nine
months  of  2002  was attributable to our litigation with Honeywell.  Litigation
expenses  decreased  in the third quarter of 2002 due to a reduction in activity
in  our  legal  proceedings.  Litigation expenses are anticipated to remain high
through  the  fourth  quarter  due to the pending arbitration proceedings in the
Honeywell  dispute  and  the  pending  trial  in  the  Sheppard  Mullin dispute.

Net  Loss

Our  net  loss  for  the  nine  months  ended  September  30,  2002 decreased to
$4,510,695 from a net loss of $6,528,165 for the nine months ended September 30,
2001,  representing  a  decrease  of  $2,017,470 or 30.9%.  Our net loss for the
three months ended September 30, 2002 decreased to $2,216,045 from a net loss of
$3,696,421  for  the  three  months  ended  September  30,  2001, representing a
decrease  of  $1,480,376 or 40.0%.  The decreases to our net loss were primarily
reflective  of the decreases to our total operating expenses in 2002 compared to
2001,  as  discussed  above.

FINANCIAL  CONDITION

We  had  cash of $39,230 as at September 30, 2002, compared with cash of $20,257
as  at  December 31, 2001.  Our working capital deficit increased to $10,323,400
as at September 30, 2002, compared to a working capital deficit of $9,328,295 as
at December 31, 2001.  The largest component of our working capital deficit is a
reserve  for lawsuit settlements in the amount of $6,169,238 as at September 30,
2002.


                                       7

<PAGE>


As of September 30, 2002, our current liabilities included a reserve for lawsuit

settlements  in  the  amount  of  $6,169,238,  accounts payable in the amount of
$2,899,405,  accrued  liabilities in the amount of $727,571 and loans payable in
the amount of $498,210.  The largest component of our working capital deficit is
the  reserve  for  lawsuit  settlements.  The  legal  proceedings to which these
reserves  relate are summarized in Item 1 to Part II of this Quarterly Report on
Form  10-QSB.  Our accrued liabilities increased to $727,571 as of September 30,
2002  from  $354,474 as of December 31, 2001 due to operating activities and our
ongoing  difficulties  in  obtaining financing to fund our operating activities.
We  have  continued  and  are continuing to negotiate with our creditors for the
payment  of our accounts payable.  Payment of these liabilities is contingent on
new  funding  being  received  that  would  enable  us  to  make  payment to the
creditors.

Cash  used  in operating activities for the nine months ended September 30, 2002
was  $1,612,823,  compared to $2,527,464 for the nine months ended September 30,
2001,  representing  a  decrease  of  $914,641  or  36%.

We  financed  our  business  operations  during  the  first  nine months of 2002
primarily  through  private  placement  sales  of our common stock, exercises of
stock  options,  short  term loans, conversion of accrued liabilities into stock
and through an increase in our accrued liabilities.   Cash provided by financing
activities for the nine months ended September 30, 2002 was $1,648,329, compared
to  $2,535,675  for  the  nine  months  ended  September  30,  2001.  Financing
activities included the issuance of common stock and share purchase warrants for
aggregate  proceeds  of  $1,302,197  during  the nine months ended September 30,
2002,  compared  to $2,631,950 for the nine months ended September 30, 2001.  We
received  loans  of $498,210 during the nine months ended September 30, 2002, of
which  $498,210  were  outstanding as of September 30, 2002.  These amounts were
received from shareholders and other parties and we anticipate these liabilities
will  be  converted  into common stock and share purchase warrants.   During the
three  months  ended  September  30,  2002,  we issued an aggregate of 3,200,000
shares  pursuant to the exercise of outstanding stock options for total proceeds
of  $288,000.  During  the  three  months  ended  June  30,  2002,  we converted
liabilities owed to our employees and consultants in the amount of $901,230 into
an  aggregate  of  2,731,000  shares  of  our  common  stock.  These shares were
registered  on  a  Form  S-8  registration  statement  that  we  filed  with the
Securities  and  Exchange  Commission.

We  are  continuing  with a restructuring program that began in 1999 in order to
reduce  our  working  capital  requirements.  This  restructuring  program  has
included  the  reduction  of  debts,  settlement  of  lawsuits, closing offices,
efforts  to  sublet  unused space at our headquarters, staff reduction and staff
attrition,  disposal  of  unnecessary  assets  and  overall attempts at reducing
operating  costs.  In  addition  we  focused  our  resources  on  research  and
development  of  our  products  incorporating our proprietary technology, rather
than  manufacture  of  our  developed  products.

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

We  will  require  additional financing if we are to continue as a going concern
and  to  finance  our  business  operations.  We  anticipate that any additional
financing  would  be  through  the  sales  of  our  common or preferred stock or
placement  of  convertible  debt. We are presently in the process of negotiating
private  placements  of  our  securities to raise working capital to finance our
operations.  However,  we  do not have any arrangements in place for the sale of
any  of  our  securities and there


                                       8

<PAGE>

is  no  assurance  that  we will be able to raise the additional capital that we
require  to  continue  operations.  In  the  event  that  we are unable to raise
additional  financing  on  acceptable  terms, then we may have to scale back our
plan  of  operations  and  operating  expenditures.  We  anticipate that we will
continue to incur losses until such time as the revenues we are able to generate
from  licensing of our products exceed our increased operation expenses. We base
this  expectation  in  part  on  the  expectation  that  we will incur increased
operating  expenses  in completing our stated plan of operations and there is no
assurance  that  we  will  generate  revenues  that  exceed  these  expenses.

Substantial  Doubt  as  to  Our  Ability  to  Continue  as  a  Going  Concern

The  consolidated  financial  statements  included with this Quarterly Report on
Form  10-QSB  have  been  prepared  assuming  that  we  will continue as a going
concern.  We  have  suffered  net  losses  in  recent  periods  resulting  in an
accumulated deficit of $119,100,056 at September 30, 2002, 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 will be required to seek additional equity or debt financing in
order  to  continue  our  present  operations, irrespective of the amounts to be
paid,  if  any,  in  connection with the aforementioned lawsuits.  These matters
raise  substantial  doubt  about  our  ability  to  continue as a going concern.

ITEM  3.     CONTROLS  AND  PROCEDURES.

As  required  by  Rule  13a-14  under  the  Securities Exchange Act of 1934 (the
"Exchange Act"), we carried out an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures within the 90 days prior
to  the  filing  date of this report.  This evaluation was carried out under the
supervision  and  with  the  participation  of  our Chief Executive Officer, Mr.
Daniel  Black  and our Chief Financial Officer, Mr. Charles Caverno.  Based upon
that  evaluation,  our  Chief  Executive  Officer  and  Chief  Financial Officer
concluded  that  our  disclosure controls and procedures are effective in timely
alerting  management  to  material  information  relating  to  us required to be
included in our periodic SEC filings.  There have been no significant changes in
our  internal  controls  or  in  other  factors  that could significantly affect
internal  controls  subsequent  to  the  date  we  carried  out  our evaluation.

Disclosure  controls  and  procedures are controls and other procedures that are
designed  to  ensure  that  information  required to be disclosed in our reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported,  within  the  time  periods  specified  in the Securities and Exchange
Commission's  rules  and  forms.  Disclosure  controls  and  procedures include,
without  limitation, controls and procedures designed to ensure that information
required  to  be  disclosed  in  our  reports  filed  under  the Exchange Act is
accumulated  and  communicated  to  management,  including  our  Chief Executive
Officer  and  our  Chief  Financial Officer, to allow timely decisions regarding
required  disclosure.

                           PART II - OTHER INFORMATION

Item  1.     Legal  Proceedings

We  are  a  party to the legal proceedings described below.  We are not party to
any  other  material legal proceedings and to our knowledge, no such proceedings
are  threatened  or  contemplated.

Honeywell  International,  Inc.


                                       9

<PAGE>


We  commenced  an  action against Honeywell in the United States District Court,
Central  District  of  California  in  August  2001.  We  have  alleged  that:

1.     Honeywell's  conduct  under  our  joint development agreement and license
agreement  constituted  a  restraint  of  trade in violation of the Sherman Act;

2.     the  individual  acts  and  decisions  of  Honeywell have resulted in the
suppression  of  our  technology  and  the  prevention  and  delay  of  the
commercialization  of  our  technology  in  contravention  of  the  Sherman Act;

3.     Honeywell's  actions  constitute instances of monopolization or attempted
monopolization  under  the  Sherman Act as a consequence of Honeywell's dominant
position  in  the  turbocharger  market;

4.     Honeywell's  wrongful  interference  with  our  attempts  to  enter  into
manufacturing  arrangements  for  components  of  the  Turbopac  and Dynacharger
products  constituted  the  unlawful  restraint  of  trade,  an  instance  of
monopolization  or  attempted  monopolization  and  unfair  competition;

5.     Honeywell's  actions  constitute racketeering activity within the meaning
of  the  Racketeer  Influenced  and  Corrupt  Organizations  Act

We  had  claimed  damages  in  excess  of  $3 billion arising as a result of the
alleged  breaches of the Sherman Act by Honeywell.  Honeywell has filed a motion
to dismiss our claim on the basis that we lack standing to sue under the Sherman
Act and the Racketeer Influenced and Corrupt Organizations Act.  This motion was
not  heard.  We determined in the third quarter of 2002 to withdraw our law suit
against  Honeywell  pending  the  outcome  of  the  arbitration proceedings with
Honeywell  on  the  advice of legal counsel.  We will evaluate reinstating these
proceedings  in  the  event  that  we  are  not  successful  in  the arbitration
proceedings.

Prior  to  our  commencing  the above legal proceedings, Honeywell had initiated
arbitration  proceedings  with the American Arbitration Association in June 2001
under  our  license  agreement  and  joint development agreement with Honeywell.
Honeywell  is  seeking  termination  of  the  license  agreement  and  the joint
development agreement based on their allegations that we breached the agreements
and  are  unwilling  and  unable  to  perform  our  future obligations under the
agreements.  We  have  disputed that Honeywell is entitled to termination of the
license  agreement  and  the  joint development agreement.  We filed a motion to
stay  the  arbitration.  The  arbitrator  refused  to  grant  us  our  motion.

We  began  the first phase of the arbitration proceeding in September 2002.  Due
to  the  volume  of  testimony  to  be  heard,  the arbitration proceedings were
recessed  and  extended by a few weeks and will resume on December 8, 2002.  The
parties  have  bifurcated  the  arbitration proceedings into a fault phase and a
damages  phase.  The  damages  phase  has  yet  to  be  scheduled.

Litigation  Relating  to  Former  Subsidiary

In  September  1999,  Pacific  Baja  Light Metals Corporation, our former wholly
owned subsidiary, filed a Chapter 11 petition in bankruptcy in the United States
Bankruptcy  Court,  Central  District  of  California (Case No. RS99-26477MG) in
Riverside,  California.  Substantially  all  of  the assets of Pacific Baja were
purchased  in  December  1999.


                                       10

<PAGE>


In  September  2001, the Pacific Baja Liquidating Trust commenced action against
us  in  the  United  States  Bankruptcy  Court, Central District of California -
Riverside  Division.  The  Pacific  Baja Liquidating Trust was established under
the  Pacific  Baja  bankruptcy  proceedings  for  the  benefit  of the unsecured
creditors  of  Pacific  Baja.   We did not become aware of this legal proceeding
until  February  2002.

The  Pacific  Baja  Liquidating  Trust  is  seeking:

1.     the re-characterization of our advances to Pacific Baja as equity and the
subordination  of  our  unsecured  claims  against  Pacific  Baja;

2.     the  re-conveyance  of  an  aggregate  of  up to approximately $7,190,000
transferred  by  Pacific  Baja  to  us  and Turbodyne Systems on the basis of an
allegation  of  fraudulent  transfer;

3.     an  order  that  we  are  liable  for  all  of  the debts of Pacific Baja
totalling  approximately  $7,000,000;

4.     damages  and  punitive  damages  against  us  and  certain  of our former
officers  and directors and the former officers and directors of Pacific Baja in
the  amount  of  up to approximately $12,000,000 based on various allegations of
fraud,  misrepresentation,  breach  of  contract,  alter  ego  and  negligence.

We  have filed an answer denying liability.  We also contend that if we did have
any  liability  to  the creditors of Pacific Baja, our liability would be setoff
against  the  full  amount  of  our claims against Pacific Baja in the amount of
approximately  $6,000,000,  which  the bankruptcy court has subordinated but did
not  disallow.

We  are  pursuing  settlement negotiations in this proceeding.  We have proposed
that  we  would  surrender  our  claims  as  a  creditor  of  Pacific  Baja  in
consideration  for  a  release  of the other claims asserted by the Pacific Baja
Liquidating  Trust against us and the former officers and directors of Turbodyne
Systems  and  Pacific  Baja.  We will vigorously contest and defend any claim by
the Pacific Baja Liquidating Trust that would exceed our claims as a creditor of
Pacific  Baja  and that would be satisfied other than by a set-off of our claims
against  Pacific  Baja.

In  March  2000,  TST,  Inc., a vendor to a subsidiary of Pacific Baja, filed an
action  against  us  in  the California Superior Court, County of San Bernardino
alleging  that  we were liable under a guarantee that we granted to TST in order
to induce TST to extend credit to our subsidiary, Pacific Baja. TST alleged that
Pacific  Baja  had  defaulted  on  the credit facility and that we are liable as
guarantor. TST originally sought damages of approximately $1.8 million. However,
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.

We  agreed  on  the  terms  of  settlement  with  TST  on October 4, 2001.  This
settlement  will  be  not be binding until a settlement agreement and release is
executed  between  TST  and  us.  We  have  agreed on the form of the settlement
agreement  and  release.  This  settlement  agreement  and  release has not been
executed  to  date.  Under  the  terms  of  the  settlement,  we  would:


(i)     issue  1,000,000  shares  of  our  common stock to Mr. Andrew Stein, the
president  of  TST, and we would agree to register the resale of these shares by
Mr.  Stein  by  filing a registration statement with the Securities and Exchange
Commission;

(ii)     issue  2,000,000  shares  of  our  common  stock  to  TST;


                                       11

<PAGE>


(iii)     agree  to  the stipulation for the entry of judgment that will provide
for  the immediate entry of judgment against us in the amount of $2,066,078 plus
interest form 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;

(iv)     any  proceeds  received by TST or Mr. Stein from the sale of the issued
shares  will  be  automatically  applied  as a credit against that amount of the
judgment  against  us  in  favor  of  TST.

We  have included an amount of $2,066,078 in our reserve for lawsuit settlements
on  our  consolidated  balance  sheet as at September 30, 2002 in regard to this
settlement  with  TST.

In  May  2000, Heartland Financial Corporation filed a complaint for arbitration
against  us seeking approximately $600,000 representing a success fee it claimed
it is entitled to for investment banking services provided to Pacific Baja based
on  a  letter agreement between Heartland, Turbodyne and Pacific Baja. After the
letter  agreement  was  signed,  Pacific  Baja  filed  a  Chapter 11 petition in
bankruptcy.  At  the  conclusion  of  the bankruptcy proceedings, the bankruptcy
court awarded Heartland a portion of its fees. Heartland then sought the balance
of  the  fees  from  us.

Heartland  obtained  an  arbitration  award  against  us  in  the  amount  of
approximately  $535,490.  This  arbitration  award  was  entered  as  a judgment
against  us in the Superior Court of the State of California, City and County of
San  Francisco  in  June 2001.  We have appealed this judgment to the California
Court  of  Appeal  for  the  First  District.  We  are  awaiting  the  filing of
Heartland's response to our appeal.  We may be subject to collection proceedings
should  they  be  instigated  pending  the  appeal.

SEC  Investigation  and  Class  Action  Law  Suits

In  June  1999,  we received a formal request from the SEC for the production of
documents  relating  to press releases issued by our previous management between
May  1997  and  September 1998.  This investigation included an investigation of
the actions of Mr. Edward Halimi, one of our former chief executive officers and
a  former  director.  The  SEC  expanded  its  investigation  to  include  an
investigation  as  to  whether  we  had  issued  unregistered  shares without an
exemption  from the registration requirements of the SEC in contravention of the
Securities  Act  of  1933  (the  "1933  Act").

We consented to the entry of a final judgment of permanent injunction against us
as  part of a settlement reached by us with the SEC in January 2002.   Under the
stipulated  terms  of  this  settlement,  the  SEC filed an action against us on
January  25,  2002.  This action was concluded during February 2002 by the entry
of a final judgment in the United States District Court for the Central District
of  California,  Western  Division  in  the agreed form.  Under the terms of the
final  judgment,  it was ordered that we are permanently restrained and enjoined
from:

1.     violating  section  17(a) of the 1933 Act.  Section 17(a) of the 1933 Act
prohibits  fraudulent  devices  and  schemes,  misstatements  and  omissions  of
material  facts  and  acts  and  practices  that operate as a fraud or deceit in
connection  with  the  offer  or  sale  of  any  securities;

2.     violating section 10(b) of the Securities Exchange Act of 1934 (the "1934
Act"), including Rule 10b-5.  Section 10(b) of the 1934 Act prohibits fraudulent
devices  and schemes,


                                      12

<PAGE>

misstatements  and  omissions  of  material  facts  and  acts and practices that
operate  as  a  fraud  or  deceit  in  connection  with the offer or sale of any
securities;

3.     violating  section  13(a)  of  the  1934  Act  by causing the filing of a
periodic report with the SEC containing any misstatement or omission of material
facts.

A  similar judgment was consented to by Mr. Halimi enjoining him from violations
of  section  17(a)  of  the  1933 Act, section 10(b) of the 1934 Act and section
13(a)  of the 1934 Act.  In addition, Mr. Halimi consented to a judgment against
him  in  the  amount  of  $50,000.

In  January  through  March  of 1999, six purported class action complaints were
filed  against us and certain of our officers and directors in the United States
District  Court  for  the  Central  District  of  California,  as  follows:

Abbreviated  Case  Name          Case  No.          Date  Filed
-----------------------          ---------          -----------

Takeda, et al. v. Turbodyne      CV-99-00697-MMM    1/22/99
 Technologies, et  al.
Zaks, et al. v. Turbodyne        CV-99-00743-MMM    1/25/99
 Technologies, et al.
Lincscott, et al. v. Turbodyne   CV-99-00933-MMM    1/28/99
 Technologies, et al.
Siebert, et al. v. Turbodyne     CV-99-01288-MMM    2/08/99
 Technologies,  et al.
Gentile, et al. v. Turbodyne
 Technologies,  et al.           CV-99-02194-MMM    3/01/99
Giammarco, et al. v. Turbodyne
 Technologies, et al.            CV-99-02751-MMM    3/16/99

In  June  1999,  the court consolidated the above actions for all purposes under
the  caption In Re Turbodyne Technologies Securities Litigation, Master File No.
CV-99-00697-MMM  (BQRx).

The  plaintiff's  third amended consolidated class action complaint was filed on
or  about  January 27, 2001.  The amended class action complaint asserted claims
for  violations  of  sections  10(b) and 20(a) of the Securities Exchange Act of
1934  and  rule  10b-5  thereunder.  In  addition  to  Turbodyne, the defendants
included  Edward  Halimi, Leon Nowek and Walter Ware, each of whom is one of our
former  directors  and officers.  The consolidated action purports to be brought
on behalf of individuals claiming that they purchased shares of our common stock
during  the  period  from March 1, 1997 through January 22, 1999. The plaintiffs
seek  unspecified  damages  arising  from  alleged misstatements concerning such
matters  as  the  technological capability and actual and potential sales of our
Turbopac(TM)  products  and the demand and acceptance of this and other products
of ours. The plaintiffs allege that these alleged misstatements caused the price
of our common stock to be artificially inflated during the class period.   These
actions  were  tendered  to  our  insurance  carriers  who  appointed counsel to
represent  us.

We  have  reached  a  settlement agreement that we anticipate will result in the
final  disposition  of  these  legal proceedings.  This settlement agreement has
been approved by the insurance companies involved.  We have signed a stipulation
of  settlement  with  the  legal  counsel for the plaintiffs that sets forth the
terms  and  conditions of this settlement.  This settlement has been approved by
the court and the time for appeal has commenced.  The settlement will not become
final  until  such time as the time for appeal has lapsed and funds are released
in  accordance  with  the  settlement agreement.  The agreed terms of settlement
provide  for  a  stipulated  judgment  against us in the amount of $7.9 million.
This  judgment  will  be  satisfied  solely through our director's and officer's
liability  insurance  policies.  Our  primary  and  excess  insurers  will  pay
approximately  $2.9  million  of  this amount as a condition of settlement.  The
balance  of $5.0 million will be satisfied from the proceeds of the second layer
of  an  excess policy issued by Reliance Insurance Company to be assigned to the
plaintiffs.  The  plaintiff's  case  against  us  and  our co-defendants will be


                                      13

<PAGE>

dismissed.  The  plaintiffs  will not have any right to pursue execution against
us  or  our  assets  upon  finalization  of  the  settlement.

We have commenced an action in Superior Court of the State of California for the
County  of  Santa Barbara against Sheppard, Mullin, Richter & Hampton ("Sheppard
Mullin")  in  February  2001.   Sheppard, Mullin were by us engaged as our legal
counsel  for  securities  matters  in 2000.    We are claiming against Sheppard,
Mullin  for  damages  in  excess  of  $100  million dollars.  Our action against
Sheppard,  Mullin  is  based  on  attorney  malpractice arising from the alleged
failure  of  Sheppard  Mullin  to  advise Easdaq of our concern that we may have
issued  unregistered  securities  without  an  available  exemption  from  the
registration  requirements  of  the  1933  Act.  We  allege  that the failure of
Sheppard, Mullin to advise Easdaq of this issue in a timely manner caused Easdaq
to suspend the trading of our common stock on the Easdaq market, with the result
that  the  market  price  for  our  common  stock  was  significantly  devalued.

Sheppard,  Mullin  have  filed  a  defence  in this legal proceeding denying any
liability  to  us.  Discovery  consisting  of  the  production  of  documents,
interrogatories  and  the  taking  of oral dispositions has been pursued by both
parties.  Sheppard, Mullin made an application to the court for summary judgment
which  was  heard  on  November  12,  2002.  The  court refused to grant summary
judgment  in favour of Sheppard Mullin. This action was originally set for trial
in  June  2002  but  is  now  set  for  trial  in  December  2002.

We  filed  an action in Superior Court of the State of California for the County
of  Santa  Barbara  (Case  No. 01046250) in March 2001 against Wendell Anderson,
Gerhard  Delf,  Sadayappa  K.  Durairaj, Naresh C. Saxena, Mugerdish Balabanian,
Kenneth Fitzpatrick, Alain G. Chardon, Joseph D. Castano and Marsha Chandler. We
determined  to  abandon  this  law  suit  against all defendants, other than Mr.
Anderson and Mr. Delf.  Mr. Anderson is one of our former directors and Mr. Delf
is  one  of our former directors and our former chief executive officer.  We are
seeking  damages  for  alleged  breach of fiduciary duty by Mr. Anderson and Mr.
Delf  in  connection  with their handling of our dealings with Sheppard, Mullin,
our  former  securities  legal  counsel,  that have given rise to our litigation
against  Sheppard,  Mullin  and  our  acquisition  of  Pacific  Baja.

Mr.  Leon  Nowek, one of our former directors and former officer, has threatened
to  take  action  against  us  for an alleged breach of his employment agreement
dated August 1, 1997, as amended July 27, 1998.  Mr. Nowek claims to be entitled
to  payment of $1,620,000 in respect of alleged breaches by us of the employment
agreement.  An  additional  amount  of  $32,511  is  claimed  by  Mr.  Nowek for
reimbursement  of  legal  costs incurred by Mr. Nowek in connection with the SEC
investigation and class action lawsuit in which Mr. Nowek was named a party.  We
have a claim against Mr. Nowek in the amount of $225,000 in respect of a housing
loan  that  we  advanced  to Mr. Nowek and that has not been repaid.  We were in
settlement discussion with Mr. Nowek in 2000.  Negotiations broke down on August
11,  2000.  We  have  recommenced negotiations during the fourth quarter of this
year.  If  we  are unable to reach settlement, we intend to refer the dispute to
arbitration  under  the  terms  of  the  employment  agreement.

Other  Legal  Proceedings

In  December  2000,  Alain  F. Lombard, one of our former consultants, served us
with  a  demand  for  arbitration.  Mr. Lombard alleged breach of contract.   We
agreed  to  a stipulated judgment against us in the amount of $180,535 in August
2001.  Repayment of this judgment is stipulated at $15,000 per month, commencing
October  2001.  We have completed the first payment of this stipulated judgment.
We  are  currently  eleven  months  in  arrears.  Mr.  Lombard  has the right to
accelerate  the  unpaid  portion of the judgment and enter judgment for the full
amount  if  we  default  on  our payments to Mr. Lombard.  Mr. Lombard has again
commenced  working  for  us  as  a  consultant.


                                      14

<PAGE>


In  December 2000, Bowne of Los Angeles served us with a complaint for breach of
contract  for  services  rendered.  Bowne  sought payment for past services plus
attorneys' fees and costs. Bowne was granted a judgment in the Superior Court of
Los  Angeles  against us in the amount of $49,427.74.  We have not yet paid this
judgment  and  intend  to attempt to negotiate a settlement of the amount owing.

 Item  2.     Changes  in  Securities

During  the three months ended September 30, 2002, we completed the sales of the
following  securities that were not registered pursuant to the Securities Act of
1933  (the  "1933  Act"):

1.     We  completed  the  sale  of  464,273 units on July 2, 2002 at a price of
$0.11  per  unit  proceeds of $51,070, of which $5,290 has yet to be received  .
Each  unit was comprised of one share of our common stock and one share purchase
warrant.  Each  share purchase warrant entitles the holder to purchase one share
of  our  common  stock  at  a price of $0.22 per share for the three year period
following  closing.  A  total  of  464,273  shares  and  464,273  share purchase
warrants were issued. The purchasers consisted of ten "accredited investors", as
defined by Rule 501 of Regulation D of the Act. No commissions or fees were paid
in  connection  with the offering. The sales were completed pursuant to Rule 506
of  Regulation  D  of  the  Act.  Restrictive  legends  were  endorsed  on  all

certificates  representing  the  shares  and  warrants  comprising  the  units
confirming  that  the  securities  cannot  be  transferred  without registration
pursuant  to the 1933 Act or pursuant to an exemption from registration pursuant
to  the  1933  Act.

2.     We  completed  the sale of 2,312,500 units on July 12, 2002 at a price of
$0.08  per  unit  for  proceeds of $185,000 which have yet to be received.  Each
unit  was  comprised  of  one  share  of our common stock and one share purchase
warrant.  Each  share purchase warrant entitles the holder to purchase one share
of  our  common  stock  at  a price of $0.20 per share for the three year period
following  closing.  A  total  of  2,312,500 shares and 2,312,500 share purchase
warrants  were  issued. The purchaser consisted of one "accredited investor", as
defined by Rule 501 of Regulation D of the Act. No commissions or fees were paid
in  connection with the offering. The sale was completed pursuant to Rule 506 of
Regulation  D  of the Act. Restrictive legends were endorsed on all certificates
representing  the  shares  and warrants comprising the units confirming that the
securities  cannot  be transferred without registration pursuant to the 1933 Act
or  pursuant  to  an  exemption  from  registration  pursuant  to  the 1933 Act.

3.     We  completed the sale of 500,000 shares of common stock on September 27,
2002  at  a  price of $0.045 per unit.  We have received proceeds of $9,000 from
the sale of these shares.  The purchaser was a European investor. No commissions
or  fees  were  paid  in  connection with the offering. The sales were completed
pursuant  to Regulation S of the Act. The purchaser consisted of one "accredited
investor",  as defined by Rule 501 of Regulation D of the Act. No commissions or
fees  were paid in connection with the offering. The sale was completed pursuant
to Rule 506 of Regulation D of the Act. Restrictive legends were endorsed on all
certificates  representing  the  shares  confirming  that  the  shares cannot be
transferred  without  registration  pursuant  to  the 1933 Act or pursuant to an
exemption  from  registration  pursuant  to  the  1933  Act.


                                       15


<PAGE>

Item  3.     Defaults  upon  Senior  Securities

None.


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

Our  annual  general  meeting  of  stockholders  was held on July 16, 2002.  The
following  individuals  were  elected  to our board of directors as a classified
board  of directors to hold office until annual general meeting indicated below:

     Name  of  Director                 Class          Expiry  of  Term
     ------------------                 -----          ----------------

     MANFRED  HANNO  JANSSEN            Class  II      2005  AGM
     EUGENE  O'HAGAN                    Class  I       2004  AGM
     ANDREW  MARTYN-SMITH               Class  III     2003  AGM


Our  stockholders  also  approved  the  following  matters:

1.   our  merger  with  Turbodyne  Nevada,  Inc.  in  connection  with  our
     reincorporation  as  a  Nevada  corporation;
2.   the  increase  the  number  of  shares  of  our  authorized common stock to
     150,000,000  shares;
3.   our  2002  Stock  Option  Plan;
4.   the ratification of the appointment of BDO Dunwoody LLP as our auditors for
     the  year  ended  December  31,  2002.

The  matters  were  approved  by  our  stockholders  as  follows:

                                           Votes       Votes
Description of Matter                      For         Against       Abstentions
-----------

Election  of  Directors                    46,166,727       NIL          NIL
Approval of Nevada Reincorporation         46,242,827       700          NIL
Approval  of  Increase  to Common Stock    46,242,327       700          500
Approval  of 2002 Stock Option Plan        46,130,327   112,700          500
Ratification  of Auditor                   46,242,927       100          500

We  completed  our  reincorporation  as  a Nevada incorporation on September 12,
2002.  Our  authorized  capital  was  increased  to 150,000,000 shares of common
stock,  $0.001  par  value  and  1,000,000 shares of preferred stock, $0.001 par
value.


Item  5.     Other  Information

None.


                                      16

<PAGE>
Item  6.     Exhibits  and  Reports  on  Form  8-K.


EXHIBITS

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

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

--------------------------------------------------------------------------------
(1)     Filed  as  an  Exhibit  to  this  Quarterly  Report  on  Form  10-QSB
--------------------------------------------------------------------------------



REPORTS  ON  FORM  8-K

We  filed  a  Form  8-K  Current  Report  on  September 18, 2002 to disclose our
reincorporation  as  a  Nevada  corporation  as  of  September  12, 2002 and our
licensing  and  development  agreement with Ishikawajima-Harima Heavy Industries
Co.,  Ltd.


                                       17

<PAGE>

                                   SIGNATURES

In  accordance with the requirements of the Securities and Exchange Act of 1934,
the  Registrant  has  duly  caused this report to be signed on its behalf by the
undersigned,  thereunto  duly  authorised.


Date:   November 19, 2002


TURBODYNE  TECHNOLOGIES  INC.


By:  /s/ Daniel Black
     ___________________________________
     Daniel Black, President  and  Chief  Executive  Officer
     (Principal  Executive  Officer)
     Date:   November  19,  2002

     /s/ Charles Caverno
By:  ___________________________________
     Charles  Caverno,  Secretary  and  Chief  Financial  Officer
     (Principal  Financial  Officer  and  Principal  Accounting  Officer)
     Date:     November  19,  2002


<PAGE>

                                 CERTIFICATIONS

I,  DANIEL  BLACK,  Chief Executive Officer of Turbodyne Technologies, Inc. (the
"Registrant"),  certify  that;

1.     I  have  reviewed  this  quarterly  report  on  Form10-QSB  of  Turbodyne
Technologies,  Inc.;

2.     Based  on my knowledge, this quarterly report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not misleading with respect to the period covered by this quarterly
report;

3.     Based  on  my  knowledge,  the  financial statements, and other financial
information  included  in  this quarterly report, fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods presented in this quarterly report.

4.     The  registrant's  other  certifying  officers  and I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  have:

a)     designed  such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is  made  known  to  us by others within those entities, particularly during the
period  in  which  this  quarterly  report  is  being  prepared;

b)     evaluated  the  effectiveness of the registrant's disclosure controls and
procedures  as  of  a  date  within  90  days  prior  to the filing date of this
quarterly  report  (the  "Evaluation  Date");  and

c)     presented  in  this  quarterly  report  our  conclusions  about  the
effectiveness  of the disclosure controls and procedures based on our evaluation
as  of  the  Evaluation  Date;

5.     The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board  of  directors  (or  persons  performing  the equivalent
functions):

a)     all  significant  deficiencies  in  the  design  or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and  have  identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and

b)     any  fraud,  whether  or  not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6.     The  registrant's  other certifying officers and I have indicated in this
quarterly  report  whether  or  not  there  were significant changes in internal
controls  or  in  other  facts that could significantly affect internal controls
subsequent  to  the date of our most recent evaluation, including any corrective
actions  with  regard  to  significant  deficiencies  and  material  weaknesses.

                                   /s/ Daniel Black
Date:   November  19, 2002         ___________________________________
                                   (Signature)

                                   President  and  Chief  Executive  Officer
                                   ___________________________________
                                   (Title)


                                     19

<PAGE>

                                 CERTIFICATIONS

I, CHARLES CAVERNO, Chief Financial Officer of Turbodyne Technologies, Inc. (the
"Registrant"),  certify  that;

1.     I  have  reviewed  this  quarterly  report  on  Form10-QSB  of  Turbodyne
Technologies,  Inc.;

2.     Based  on my knowledge, this quarterly report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not misleading with respect to the period covered by this quarterly
report;


3.     Based  on  my  knowledge,  the  financial statements, and other financial
information  included  in  this quarterly report, fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods presented in this quarterly report.

4.     The  registrant's  other  certifying  officers  and I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  have:

a)     designed  such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is  made  known  to  us by others within those entities, particularly during the
period  in  which  this  quarterly  report  is  being  prepared;

b)     evaluated  the  effectiveness of the registrant's disclosure controls and
procedures  as  of  a  date  within  90  days  prior  to the filing date of this
quarterly  report  (the  "Evaluation  Date");  and

c)     presented  in  this  quarterly  report  our  conclusions  about  the
effectiveness  of the disclosure controls and procedures based on our evaluation
as  of  the  Evaluation  Date;

5.     The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board  of  directors  (or  persons  performing  the equivalent
functions):

a)     all  significant  deficiencies  in  the  design  or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and  have  identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and

b)     any  fraud,  whether  or  not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6.     The  registrant's  other certifying officers and I have indicated in this
quarterly  report  whether  or  not  there  were significant changes in internal
controls  or  in  other  facts that could significantly affect internal controls
subsequent  to  the date of our most recent evaluation, including any corrective
actions  with  regard  to  significant  deficiencies  and  material  weaknesses.

                                   /s/ Charles Caverno
Date:   November  19, 2002         ___________________________________
                                   (Signature)

                                   Chief  Financial  Officer
                                   ___________________________________
                                   (Title)


                                       20