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, 2005

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

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


Commission File Number     000-21391
                           ----------

                          TURBODYNE TECHNOLOGIES, INC.

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

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


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

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


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

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days [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: 320,559,444 shares of common stock
issued and outstanding as of JUNE 14, 2006.

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





<PAGE>




                         PART I - FINANCIAL INFORMATION


ITEM 1.           FINANCIAL STATEMENTS.



                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                   CONSOLIDATED FINANCIAL STATEMENTS
                                   FOR THE NINE-MONTH PERIODS ENDED
                                   SEPTEMBER 30, 2005 AND 2004
                                   (UNAUDITED - EXPRESSED IN US DOLLARS)



                                      F-1
<PAGE>


                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                               CONSOLIDATED FINANCIAL STATEMENTS
                                                FOR THE NINE-MONTH PERIODS ENDED
                                                     SEPTEMBER 30, 2005 AND 2004
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)







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

  CONSOLIDATED FINANCIAL STATEMENTS

       Balance Sheets                                                      F-3

       Statements of Operations                                            F-4

       Statements of Capital Deficit                                       F-5

       Statements of Cash Flows                                            F-6

       Notes to the Financial Statements                                   F-7







                                      F-2
<PAGE>

<TABLE>
<CAPTION>


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

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

                                                                            SEPTEMBER 30      December 31
                                                                                    2005            2004
---------------------------------------------------------------------------------------------------------

ASSETS
CURRENT
<S>                                                                        <C>              <C>
     Cash                                                                  $         339    $       1,615
     Prepaid expenses and other current assets                                       672           50,055
                                                                           -------------    -------------

          TOTAL CURRENT ASSETS                                                     1,011           51,670
PROPERTY AND EQUIPMENT, at cost, less accumulated depreciation                     2,884           45,002
CERTIFICATE OF DEPOSIT (NOTE 4(D))                                                  --            240,000
                                                                           -------------    -------------

TOTAL ASSETS                                                               $       3,895    $     336,672
=========================================================================================================

LIABILITIES AND CAPITAL DEFICIT

LIABILITIES

CURRENT
     Current portion of long-term debt (Note 3)                            $        --      $       6,460
     Accounts payable (Note 3)                                                 2,444,454        2,226,102
     Accrued liabilities (Note 2(e))                                             542,435          285,935
     Provisions for lawsuit settlements                                        6,366,189        6,013,198
     Loans payable                                                               148,600          148,600
                                                                           -------------    -------------

          TOTAL CURRENT LIABILITIES                                            9,501,678        8,680,295

LONG-TERM DEBT, LESS CURRENT MATURITIES (NOTE 3)                                    --             27,054

DEFERRED REVENUE                                                                 347,058          363,726
                                                                           -------------    -------------

          TOTAL LIABILITIES                                                    9,848,736        9,071,075
                                                                           -------------    -------------

CAPITAL DEFICIT
     Share Capital (Note 2)
         Authorized
               1,000,000 preferred shares, par value $0.001
               1,000,000,000 (150,000,000 - 2003) common
               shares, par value $0.001
         Issued
            12,675 preferred shares in 2005 (2004 - 52,175)                           12               52
            315,416,577 common shares in 2005 (2004 -160,157,955)                315,417          160,158
     Treasury stock, at cost (378,580 shares)                                 (1,907,612)      (1,907,612)
     Additional paid-in capital                                              120,796,762      120,544,963
     Accumulated other comprehensive income -
         foreign exchange translation gain                                        35,119           35,119
     Accumulated deficit                                                    (129,084,539)    (127,567,083)
                                                                           -------------    -------------

          TOTAL CAPITAL DEFICIT                                               (9,844,841)      (8,734,403)
                                                                           -------------    -------------

TOTAL LIABILITIES AND CAPITAL DEFICIT                                      $       3,895    $     336,672
=========================================================================================================








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


                                      F-3
<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
                                                   ----------------------------------------------------------------

                                                            2005            2004             2005            2004
-------------------------------------------------------------------------------------------------------------------

REVENUE


<S>                                                <C>              <C>              <C>              <C>
       Licensing fees                              $       5,556    $       5,556    $      16,668    $      16,668
                                                   -------------    -------------    -------------    -------------


EXPENSES
     Selling, general and administrative                 117,654          571,400          444,417          534,086
     Research and development                               --            486,640          371,486          940,890
     Litigation expense                                   66,496          353,586          694,679        1,649,425
     Depreciation and amortization                           573           29,133           10,821           58,159
                                                   -------------    -------------    -------------    -------------
         TOTAL EXPENSES
                                                         184,723        1,440,759        1,521,403        3,182,560
                                                   -------------    -------------    -------------    -------------

LOSS FROM OPERATIONS                                    (179,167)      (1,435,203)      (1,504,735)      (3,165,892)
OTHER INCOME (EXPENSES)
     Settlement of litigation (Note 4)                      --               --               --          6,375,000
     Interest expense                                       --             (1,466)          (1,030)          (6,698)
     Interest income                                        --              5,372            1,836           13,203
     Gain (loss) on sale of assets                       (14,297)           7,049          (13,527)           6,678
     Gain on settlement of term debt (Note 3)               --               --               --             43,360
                                                   -------------    -------------    -------------    -------------
NET INCOME (LOSS) FOR THE PERIOD
                                                   $    (193,464)   $ (1,424,248)    $  (1,517,456)   $   3,265,651
===================================================================================================================
INCOME (LOSS) PER COMMON SHARE
        BASIC AND DILUTED                          $       (0.00)   $      (0.01)    $       (0.01)   $        0.02
===================================================================================================================
WEIGHTED AVERAGE SHARES USED FOR BASIC  INCOME
(LOSS) PER SHARE                                     205,611,429     150,856,769       180,412,821      149,471,829
===================================================================================================================
WEIGHTED AVERAGE SHARES USED FOR DILUTED INCOME
(LOSS) PER SHARE                                     205,611,429      150,856,769      180,412,821      158,880,013
===================================================================================================================



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

</TABLE>


                                      F-4
<PAGE>

<TABLE>
<CAPTION>


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

                                            Preferred Stock             Common Stock              Treasury Stock
                             -----------------------------------------------------------------------------------------------
                                   Shares        Amount           Shares         Amount               Shares        Amount
----------------------------------------------------------------------------------------------------------------------------
<S>                              <C>       <C>                <C>            <C>                 <C>           <C>
BALANCE,
  JANUARY 1, 2004                 97,175    $          97      148,771,749    $     148,772          378,580   $  (1,907,612)

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

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

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

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

Issuance of stock
  for debt                          --               --          2,589,036            2,589          209,963            --

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

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

Issuance of warrants
  to non-employees
  for services                      --               --               --               --               --              --

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

Conversion of
  preferred
  Series  X
  shares                         (45,000)             (45)       4,500,000            4,500             --              --

Escrow shares                       --               --         (4,150,000)          (4,150)            --              --

Net loss for the year               --               --               --               --               --              --
                             -----------------------------------------------------------------------------------------------
BALANCE,
  DECEMBER 31, 2004               52,175               52      160,157,955          160,158          378,580      (1,907,612)

Exercise of stock
  options
  (Note 2(c))                       --               --         10,816,400           10,816             --              --

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

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

Conversion of
  preferred
  Series  X
  shares
  (Note 2 (c))                   (39,500)             (40)       3,950,000            3,950             --              --

Merger share accrual
 (Notes 1 and 2 (c))         140,492,222          140,493         (127,493)          13,000


Net loss for
  the period                        --               --               --               --               --              --
                             -----------------------------------------------------------------------------------------------
BALANCE,
  SEPTEMBER 30, 2005              12,675    $          12      315,416,577    $     315,417          378,580   $  (1,907,612)
============================================================================================================================








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

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

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

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

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

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

Issuance of stock
  for debt                          --            212,552

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

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

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

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

Conversion of
  preferred
  Series  X
  shares                          (4,455)            --              --               --

Escrow shares                      4,150             --              --               --

Net loss for the year               --               --         2,909,740        2,909,740
                             -------------------------------------------------------------
BALANCE,
  DECEMBER 31, 2004          120,544,963           35,119    (127,567,083)      (8,734,403)

Exercise of stock
  options
  (Note 2(c))                    178,196             --              --            189,012

Issuance of
  stock options
  to non-employees
  for services
  (Note 2 (d))                    63,254             --              --             63,254

Issuance of stock
  options to employees
  (Note 2(d))                    141,752             --              --            141,752

Conversion of
  preferred
  Series  X
  shares
  (Note 2 (c))                    (3,910)            --              --               --

Merger share accrual
 (Notes 1 and 2 (c))


Net loss for
  the period                        --               --        (1,517,456)      (1,517,456)
                             -------------------------------------------------------------

BALANCE,
  SEPTEMBER 30, 2005       $ 120,796,762    $      35,119   $(129,084,539)   $  (9,844,841)
==========================================================================================







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



                                      F-5
<PAGE>

<TABLE>
<CAPTION>

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

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


FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30                                2005           2004
----------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
<S>                                                                      <C>            <C>
     Net income (loss) for the period                                    $(1,517,456)   $ 3,265,651
     Adjustments  to reconcile net income (loss) for the period to net
     cash
       used in operating activities:
        Amortization of deferred licensing fees                              (16,668)       (16,668)
        Depreciation and amortization                                         10,821         58,159
        Gain on settlement of debt                                              --          (43,360)
        Loss (gain) on sale of asset                                          13,527         (6,678)
        Recovery on lawsuit reserve from TST share sales (Note 4(a))            --          (23,345)
        Stock option compensation                                            205,006        352,645
        Stock issued for services                                               --             --
        Stock issued for settlement of lawsuit                                  --           11,005
        Liability in connection with settlement of equity instrument            --         (406,000)
        Warrants to be issued                                                   --           59,741
        Extension of warrants (Note 2(e))                                       --          122,635

     (Increase) decrease in assets
         Prepaid expenses and other current assets                           289,383        (65,115)
     Increase (decrease) in liabilities
         Accounts payable                                                    200,924     (1,628,304)
         Accrued liabilities and provisions for lawsuit settlements          609,491       (774,303)
                                                                         -----------    -----------

            Net cash provided by (used in) operating activities             (204,972)       906,063
                                                                         -----------    -----------
INVESTING ACTIVITIES
     Purchase of property and equipment                                         --         (123,137)
     Sale of capital assets                                                   17,770         11,149
     Purchase of certificate of deposit                                         --         (315,000)
                                                                         -----------    -----------
                 Net cash provided by (used in) investing activities
                                                                              17,770       (426,988)
                                                                         -----------    -----------
FINANCING ACTIVITIES
     Net proceeds from term debts                                               --           34,944
     Payments of long term debts                                             (16,086)          --
     Issuance of common stock and stock subscriptions                           --           16,000
     Repayment of loans payable                                                 --         (504,612)
     Accrual for merger                                                       13,000           --
     Exercise of Options                                                     189,012           --
                                                                         -----------    -----------

            Net cash provided by (used in) financing activities              185,926       (453,668)
                                                                         -----------    -----------

NET INCREASE (DECREASE) IN CASH                                               (1,276)        25,407

CASH, beginning of period                                                      1,615          2,145
                                                                         -----------    -----------

CASH, end of period                                                      $       339    $    27,552
====================================================================================================


SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
     Cash paid during the period
         Interest                                                        $      --      $     2,254
         Income taxes                                                    $      --      $     7,200

SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
     Accounts payable transferred to loans payable                       $      --      $   159,386
     Stock issued for settlement of loans payable                        $      --      $   212,552
     Issuance of stock for merger consideration                          $    13,000           --
     Return of asset to settle term debt                                 $      --      $    76,082

     Reversal of liability in connection with settlement of equity       $      --      $ 2,134,322
     instrument
====================================================================================================




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


                                      F-6
<PAGE>


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

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)
SEPTEMBER 30, 2005 AND 2004
--------------------------------------------------------------------------------


1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   NATURE OF BUSINESS

   Turbodyne Technologies, Inc., a Nevada corporation, and its subsidiaries (the
   "Company") engineer, develop and market products designed to enhance
   performance and reduce emissions of internal combustion engines.

   The Company had a period of activity during 2004 and early 2005. Lack of
   funds caused the Company to gradually curtail its operations until it ceased
   almost all activities. In March 2005 the Company moved out of the business
   premises and relinquished the majority of the fixed assets to the landlord to
   sell and offset against rent payable.

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

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

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


   BASIS OF PRESENTATION

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



                                      F-7
<PAGE>




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

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)
SEPTEMBER 30, 2005 AND 2004
--------------------------------------------------------------------------------

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

   BASIS OF PRESENTATION - CONTINUED

   These financial statements reflect all adjustments, consisting of normal
   recurring adjustments, which in the opinion of management are necessary for
   fair presentation of the information contained therein. It is suggested that
   these interim financial statements be read in conjunction with the audited
   financial statements of the Company for the years ended December 31, 2004 and
   2003 included in the Company's 10-KSB Annual Report. The Company follows the
   same accounting policies in the preparation of interim reports. Results of
   operations for the interim periods are not indicative of annual results.

   GOING CONCERN

   The accompanying consolidated financial statements have been prepared
   assuming that the Company will continue as a going concern. The Company has
   suffered recurring net operating losses, has an accumulated deficit of
   $129,084,539 and a total capital deficit of $9,844,841 at September 30, 2005.
   It has used most of its available cash in its operating activities in recent
   years, has a significant working capital deficiency and is subject to
   lawsuits brought against it by other parties. These matters raise substantial
   doubt about the Company's ability to continue as a going concern.

   PRINCIPLES OF CONSOLIDATION

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

   DEPRECIATION AND AMORTIZATION

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

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

   LICENSES

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


                                      F-8
<PAGE>



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

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)
SEPTEMBER 30, 2005 AND 2004
--------------------------------------------------------------------------------

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

   VALUATION OF LONG-LIVED ASSETS

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

   RECOGNITION OF REVENUE

   License fee revenue is recognized over the term of the license agreement.
   During the year ended December 31, 2003, $400,000 in license fees were
   deferred and are being amortized over 18 years. As a result, for the
   nine-month period ended September 30, 2005 $16,668 ($16,668 - 2004) of
   licensing fees was recognized as income.

   EARNINGS (LOSS) PER SHARE

   Earnings (loss) per share is computed in accordance with SFAS No. 128,
   "Earnings Per Share". Basic earnings (loss) per share is calculated by
   dividing the net income (loss) available to common stockholders by the
   weighted average number of shares outstanding during the year. Diluted
   earnings per share reflects the potential dilution of securities that could
   share in earnings of an entity. In a loss year, dilutive common equivalent
   shares are excluded from the loss per share calculation as the effect would
   be anti-dilutive.

   FAIR VALUE OF FINANCIAL INSTRUMENTS

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

   STOCK-BASED COMPENSATION

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


                                      F-9
<PAGE>



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

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)
SEPTEMBER 30, 2005 AND 2004
--------------------------------------------------------------------------------

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

   STOCK-BASED COMPENSATION - CONTINUED

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

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

   If the fair value based method under FAS 123 had been applied in measuring
   stock-based compensation expense for the nine-month period ended September
   30, 2004, the pro forma on net income and net income per share would have
   been as follows, as previously disclosed: Nine month period ended September
   30, 2004

            Net Income, as reported                          $ 3,265,651
            Add: Stock based employee compensation
                 expense included
                 In reported net income,
                 net of related tax effects                      152,730

            Deduct:  Total Stock-based employee
                     compensation expense determined
                     under fair-value based method
                     for all awards not included in
                     net income                                 (475,591)
                                                             -----------

            Pro-forma net income                             $ 2,942,790
                                                             ===========
            Income (loss) per share:
              Basic and diluted - as reported                $      0.02
                                                             -----------
              Basic and diluted - proforma                   $      0.02
                                                             -----------

   RESEARCH AND DEVELOPMENT

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

   USE OF ESTIMATES

   The preparation of financial statements in conformity with generally accepted
   accounting principles requires management to make estimates and assumptions
   that affect the reported amounts of assets and liabilities and the disclosure
   of contingent assets and liabilities at the date of the financial statements
   and the reported amounts of revenue and expenses during the reporting period.
   Actual results could differ from those estimates.


                                      F-10
<PAGE>
--------------------------------------------------------------------------------

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)
SEPTEMBER 30, 2005 AND 2004
--------------------------------------------------------------------------------

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

   INCOME TAXES

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

   COMPREHENSIVE INCOME

   The Company has adopted SFAS No. 130, "Reporting Comprehensive Income". SFAS
   No. 130 establishes standards to measure all changes in equity that result
   from transactions and other economic events other than transactions with
   owners. Comprehensive income is the total of net earnings (loss) and all
   other non-owner changes in equity. Except for net earnings (loss) and foreign
   currency translation adjustments, the Company does not have any transactions
   and other economic events that qualify as comprehensive income as defined
   under SFAS No. 130. As foreign currency translation adjustments were
   immaterial to the Company's consolidated financial statements, net earnings
   (loss) approximated comprehensive income for the nine-month period ended
   September 30, 2005 and 2004.

   LEGAL FEES

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


2. SHARE CAPITAL

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

   a) Authorized Capital

      In 2003, 150,000 of the 1 million preferred shares were designated as
      Series X preferred shares. These shares have a par value of $0.001 per
      share with each share being convertible into 100 common shares at the
      discretion of the holder. At the Annual General Meeting held on June 30,
      2004, the shareholders approved an increase of authorized capital to
      1,000,000,000 common shares. Prior to this increase in authorized capital,
      the Company's potentially diluted common shares exceeded the authorized
      shares. Immediately prior to the increase in authorized capital, the
      Company had recorded $2,134,322 in accrued liabilities to account for the
      potential cash settlement of these financial instruments. As of June 30,
      2004, the Company reversed the $2,134,322 accrued liabilities since the
      potentially diluted common shares no longer exceeded authorized capital.


                                      F-11
<PAGE>




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

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)
SEPTEMBER 30, 2005 AND 2004
--------------------------------------------------------------------------------


2. SHARE CAPITAL - CONTINUED

   b) In 2003, 150,000 of the 1 million preferred shares were designated as
      Series X preferred shares. These shares have a par value of $0.001 per
      share with each share being convertible into 100 common shares at the
      discretion of the holder. As of September 30, 2005 12,675 of Series X
      preferred shares convertible into 1,267,500 common shares are outstanding.

   c) During the nine months ended September 30, 2005, the Company issued a
      total of 155,258,622 shares of common stock, of which, 10,816,400 shares
      were issued upon exercise of options, 140,492,222 were issued as merger
      consideration and 3,950,000 shares for conversion of 39,500 preferred
      shares.

   d) Stock Options

      The following summarizes information relating to stock options during
      2005:
<TABLE>
<CAPTION>

                                 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     4,651,666    $   0.11    10,277,000    $   0.11    14,928,666    $   0.11
Granted                   1,300,000        0.02    18,700,000        0.02    20,000,000        0.02
Expired                  (1,755,000)       0.19    (3,463,600)       0.08    (5,218,600)       0.12
Exercised                (1,300,000)       0.02    (9,516,400)       0.02   (10,816,400)       0.02
                        ----------------------------------------------------------------------------
Outstanding at end
  of period               2,896,666        0.08    15,997,000        0.06    18,893,666        0.07
                        ---------------------------------------------------------------------------
Options exercisable
   at end of period       2,896,666    $   0.08    15,997,000    $   0.06    18,893,666    $   0.07
                        ===========================================================================

Weighted average fair
  value of options
  granted
  granted during the           --      $   0.02          --      $   0.02          --      $   0.02
  period
                        ===========================================================================
</TABLE>


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

      2005 STOCK INCENTIVE PLAN

      On January 11, 2005, the Company established the 2005 Nevada stock
      incentive plan (the "2005 Plan"). Under the 2005 Plan, the Company may
      grant common stock or incentive stock options to its directors, officers,
      employees and consultants for up to 20,000,000 shares. The maximum term of
      the 2005 Plan is ten years. The Board of Directors will determine the
      terms and matters relating to any awards under the 2005 Plan including the
      type of awards, the exercise price of the options and the number of common
      shares granted. The value of the shares of common stock used in
      determining the awards shall not be less than 70% of the fair market value
      of the common shares of the Company on the date of grant. As of September
      30, 2005 the number of unoptioned shares available for granting under the
      plan was 2,176,000.


                                      F-12
<PAGE>





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

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)
SEPTEMBER 30, 2005 AND 2004
--------------------------------------------------------------------------------


2. SHARE CAPITAL - CONTINUED

   d) Stock Options - Continued

      2004 STOCK INCENTIVE PLAN

      On April 8, 2004, the Company established the 2004 Nevada stock incentive
      plan (the "2004 Plan"). Under the 2004 Plan, the Company may grant common
      stock or incentive stock options to its directors, officers, employees and
      consultants for up to 15,000,000 shares. The maximum term of the 2004 Plan
      is ten years. The Board of Directors will determine the terms and matters
      relating to any awards under the 2004 Plan including the type of awards,
      the exercise price of the options and the number of common shares granted.
      The value of the shares of common stock used in determining the awards
      shall not be less than 85% of the fair market value of the common shares
      of the Company on the date of grant. As of September 30, 2005 the number
      of unoptioned shares available for granting under the plan was 1,703,500.

      2003 STOCK INCENTIVE PLAN

      On August 12, 2003, the Company established the 2003 Stock Incentive Plan
      (the "2003 Plan"). Under the 2003 Plan, the Company may grant common stock
      or incentive stock options to its directors, officers, employees and
      consultants for up to 15,000,000 shares. The maximum term of the 2003 Plan
      is ten years. The Board of Directors will determine the terms and matters
      relating to any awards under the 2003 Plan including the type of awards,
      the exercise price of the options and the number of common shares granted.
      The value of the shares of common stock used in determining the awards
      shall not be less than 85% of the fair market value of the common shares
      of the Company on the date of grant. As of September 30, 2005, the number
      of unoptioned shares available for granting of options under the plan was
      7,197,759.

      GRANT OF STOCK OPTIONS TO NON-EMPLOYEES FOR SERVICES

      The Company has recorded $63,254 of compensation expense relating to stock
      options issued to non-employees. Included in compensation expense is
      $39,629 for services rendered during the nine months ended September 30,
      2005. Upon our adoption of SFAS123R, we recorded $23,625 of compensation
      costs relating to stock options granted to directors. There was no such
      expense recorded during our fiscal year 2004.

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


                                      F-13
<PAGE>


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

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)
SEPTEMBER 30, 2005 AND 2004
--------------------------------------------------------------------------------


2. SHARE CAPITAL - CONTINUED

      GRANT OF STOCK OPTIONS TO EMPLOYEES FOR SERVICES

      Prior to January 1, 2005, the Company accounted for employee stock-based
      compensation using the intrinsic value method supplemented by pro forma
      disclosures in accordance with APB 25 and SFAS 123 "Accounting for
      Stock-Based Compensation" ("SFAS 123"), as amended by SFAS No.148
      "Accounting for Stock-Based Compensation--Transition and Disclosures."
      Under the intrinsic value method, compensation cost is measured as the
      excess of, if any, of the market price of the Company's common stock at
      the date of grant, or at any subsequent measurement date, over the amount
      an employee must pay to acquire the stock. Such amounts are amortized as
      compensation expense over the vesting period of the related stock options.
      Under the intrinsic value method, the Company was not required to
      recognize stock-based compensation.

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

      Upon our adoption of SFAS(R), we recorded $141,752 of compensation costs
      relating to stock options granted to employees. The amounts recorded
      represent equity-based compensation expense related to options that were
      issued in January 2005 as well as those issued prior to 2005. The
      compensation costs are based on the fair value at the grant date. There
      was no such expense recorded during our fiscal year 2004.

      The per share weighted average fair value of stock options granted to
      employees during 2005 was $0.02 and $0.04, calculated on the date of grant
      using the Black-Scholes option pricing model with the following weighted
      average assumptions in 2005: expected dividend yield Nil%; expected
      volatility of 159% and 163%; risk-free interest rate of 3.75%; and an
      expected life of 5 years.

      Effective from the date of the option repricing, the Company regularly
      remeasures compensation expense for the options where there has been a
      substantive change and modification to such options. No compensation
      expense was recorded as a result of repricing of options in the prior
      years.


                                      F-14
<PAGE>



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

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)
SEPTEMBER 30, 2005 AND 2004
--------------------------------------------------------------------------------

2. SHARE CAPITAL - CONTINUED

   e) Stock Purchase Warrants

      As of September 30, 2005, the Company had 6,281,919 stock purchase
      warrants outstanding. These warrants were issued in connection with
      private placements and other means of financing. Details of share purchase
      warrants issued and expired during the nine-month period ended September
      30, 2005 are as follows: Weighted Average Exercise Price Warrants

                                                   ------------- -------------
               Outstanding at January 1, 2005        15,084,922      $   0.50
                   Expired                          (8,803,003)          0.37
                                                   ------------- -------------

               Outstanding at September 30, 2005      6,281,919      $   0.18
                                                   ------------- -------------

               WARRANT EXPIRATION DATE EXTENSION

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

                     Exercise Price           Number       Expiration Date
                     --------------- ---------------- ---------------------

                              $0.12        1,100,000        April 11, 2006
                              $0.22          464,273          July 2, 2005
                              $0.22        2,000,000         June 24, 2005
                     --------------- ---------------- ---------------------

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

               The warrants were extended for a financing fee provided to the
               Company in prior periods and were valued at $122,635 using the
               Black-Scholes option-pricing model with the following assumptions
               in 2005: expected dividend yield Nil%; expected volatility of
               117%; risk-free interest rate of 2.18% and an expected life of
               one year. The full value of the warrants was included in accrued
               liabilities as at September 30, 2005.

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

3. TERM DEBT

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

   In July 2005 the Company was unable to make the payments so the bank
   repossessed the automobile and sold it at auction. The remaining liability of
   $17,428, which is the difference between the note payable and the sales
   price, is included in accounts payable.

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

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


                                      F-15
<PAGE>





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

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)
SEPTEMBER 30, 2005 AND 2004
--------------------------------------------------------------------------------

4. COMMITMENTS AND CONTINGENCIES

   The Company is party to various legal claims and lawsuits that have arisen in
   the normal course of business. Other, than as discussed below, there have
   been no material changes in the status of these matters since the issuance of
   the most recent audited annual financial statements.

      Litigation

   a) TST, INC.

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

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

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

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

      iii)  Agreed to the immediate entry of judgment against the Company in the
            amount of $2,068,078 plus interest from the date of entry at the
            rate of 10% per annum. The amount of this judgment would immediately
            increase by any amount that TST is compelled by judgment or court
            order or settlement to return as a preferential transfer in
            connection with the bankruptcy proceedings of Pacific Baja; and

      iv)   Agreed that proceeds received by TST or its president from the sale
            of the issued shares will be automatically applied as a credit
            against the amount of the judgment against the Company in favor of
            TST. Prior to March 31, 2004, 147,000 shares issued in connection
            with the TST settlement had been sold which has reduced the
            provision for lawsuit settlement by $23,345.

      At September 30, 2005, the Company has included $4,964,404 (December 31,
      2004 - $4,766,656) in regard to this matter in provision for lawsuit
      settlements and accrued liabilities. If it is determined that TST received
      payment in preference to other creditors before Pacific Baja filed its
      Chapter 11 petition in bankruptcy, TST will likely increase its claim by
      $2,130,000, which is included in the provision for lawsuit settlements.


                                      F-16
<PAGE>





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

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)
SEPTEMBER 30, 2005 AND 2004
--------------------------------------------------------------------------------


4. COMMITMENTS AND CONTINGENCIES - CONTINUED

   b) PACIFIC BAJA BANKRUPTCY

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

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

      The Trust is seeking, among other matters:

      i)    the re-characterization of Company advances to Pacific Baja as
            equity and the subordination of unsecured claims against Pacific
            Baja;

      ii)   the re-conveyance of an aggregate of up to approximately $7,190,000
            transferred by Pacific Baja to the Company on the basis of an
            allegation of fraudulent transfer;

      iii)  an order that the Company is liable for all of the previous debts of
            Pacific Baja totaling approximately $7,000,000; and

      iv)   damages and punitive damages against the Company and certain 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.

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

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



                                      F-17
<PAGE>




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

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)
SEPTEMBER 30, 2005 AND 2004
--------------------------------------------------------------------------------


4. COMMITMENTS AND CONTINGENCIES - CONTINUED

   c) HONEYWELL INTERNATIONAL, INC.

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

   d) FORMER OFFICER

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


      During 2004 the Company issued the 4,000,000 shares. Mr. Hofbauer has sold
      2,600,000 shares and released $125,000 of the Certificate of Deposit. On
      June 7, 2005 Mr. Hofbauer claimed the remaining $210,496 in the
      Certificate of Deposit. The remaining 1,400,000 shares are to be returned
      to the Company.

   e) FORMER DIRECTOR

      A former director of Turbodyne, Erwin Kramer (the "Plaintiff"),
      represented by his attorney Claus Schmidt, a former attorney of Turbodyne
      at the time of the alleged claim, filed a legal action in Germany against
      Turbodyne, our non-operating subsidiary Turbodyne Europe GmbH ("Turbodyne
      GmbH"), and ex-employees of Turbodyne GmbH, Peter Kitzinski and Marcus
      Kumbrick (collectively the "Defendants"), with the Regional Frankfurt
      court (the "German Court") in September, 2004. The Plaintiff claims
      damages of Euro 245,620 plus 5% interest per annum against the Defendants
      in respect of actions taken by the Defendants while employed with
      Turbodyne GmbH.


                                      F-18
<PAGE>




COMMITMENTS AND CONTINGENCIES - CONTINUED

4. COMMITMENTS AND CONTINGENCIES - CONTINUED

   e) FORMER DIRECTOR - CONTINUED

      On September 9, 2004, the German Court, on a motion by the Defendants to
      the suit, dismissed the Plaintiff's claims against Peter Kitzinski and
      Marcus Kumbrick, and ordered that Turbodyne's patents in Munich be
      attached pending the resolution of the Plaintiff's claim against Turbodyne
      and Turbodyne GmbH. On June 13, 2005 the Court in Frankfurt dismissed the
      claim. The Plaintiff filed an appeal against this judgment with the Higher
      Regional Court in Frankfurt.

      The Plaintiff's attorney, Claus Schmidt, also filed similar suits on
      behalf of Frank Walter and Herbert Taeuber. The German courts are
      indicating that all three suits need to be filed in the United States not
      Germany. Presently the suits have not been filed in the United States. We
      vigorously dispute this claim and have retained German counsel to defend
      it and seek its dismissal. At September 30, 2005, the Company has included
      $405,785 in regard to this matter in the provision for lawsuit
      settlements.

   f) OTHER

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

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



                                      F-19
<PAGE>




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

FORWARD LOOKING STATEMENTS

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

As used in this Quarterly Report on Form 10-QSB, the terms "we", "us", "our",
"Turbodyne" and "our company" mean Turbodyne Technologies, Inc., unless
otherwise indicated. All dollar amounts in this Quarterly Report on Form 10-QSB
are in U.S. dollars unless otherwise stated.


OVERVIEW

New management took control September 9, 2005 and began the process of revival
of the Company. We had suspended our business operations in April 2005 due to a
lack of financing. Accordingly, our ability to carry out our plan of operations
has been materially and adversely affected. The current status of our business
and the events that lead to the suspension of our business operations in April
2005 are discussed below under "Recent Corporate Developments". We are
attempting to enter into financing agreements with outside sources and with our
existing shareholders. See "Plan of Operations".

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


                                      -2-
<PAGE>


The focus of our business plan, now that we are implementing resumption of
operations, is to restructure the company's balance sheet and re-engineer our
financial plan. We are reviewing our plans for launching our products. Our
ability to complete commercialization of our products remains subject to our
ability to obtain additional financing. See "Plan of Operations", below.



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

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

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

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



PRIOR TO THE MERGER:

       1.   We became unable to sustain our business operations due to a lack of
            financing and our working capital deficit. In April 2005, we laid
            off our employees, vacated our premises and relinquished the
            majority of the fixed assets to the landlord to sell and offset
            against rent payable.

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

       3.   In April 2005 we suspended work on the development of our products
            and technologies as part of the suspension of our business
            operations.



                                      -3-
<PAGE>


PLAN OF OPERATIONS


Depending on sufficient financing our plan of operations over the next twelve
months will be to focus on continued development of our product line and the
re-launching of our TurboPacTM product line while we are reformulating our
financial plan and resolving outstanding litigation, accounts payable and other
liabilities. Our plan includes the following:

   1. Focusing on our core competencies - our designs and patents, as well as
      sales and marketing

   2. Reviewing the plans for re-launching our TurboPacTM product line,
      including research regarding independent product testing to assure product
      quality as well as specialty engineering, limited-run and mass-production
      manufacturing.

   3. Identifying qualified manufacturing or engineering firms for outsourcing
      wherever possible to minimize capital costs.




RESULTS OF OPERATIONS

THIRD QUARTER AND NINE MONTHS SUMMARY

<TABLE>
<CAPTION>

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

                                Third Quarter Ended September 30                     Nine Months Ended September 30
                         -----------------------------------------------     -----------------------------------------------
                                                            Percentage                                          Percentage
                              2005              2004         Increase /           2005             2004          Increase /
                                                             (Decrease)                                          (Decrease)
                         ---------------- ----------------- ------------     ---------------- ---------------- -------------
<S>                           <C>                <C>          <C>              <C>              <C>              <C>
Total Income                  $5,556             $5,556         Nil               $16,668          $16,668          Nil
Operating Expenses         ($184,723)       ($1,440,759)       (87%)          ($1,521,403)     ($3,182,560)        (52%)
Net Income (Loss) from
Operations                 ($179,167)       ($1,435,203)       (88%)          ($1,504,735)     ($3,165,892)        (52%)
Other Income (Expenses)     ($14,297)           $10,955        (231%)            ($12,721)       $6,431,543       (100%)
Net Income (Loss)
                           ($193,464)       ($1,424,248)         86%          ($1,517,456)       $3,265,651       (146%)
</TABLE>


The decrease in the net operating loss for the third quarter ended September 30,
2005 and the nine months then ended is due to substantially reduced expenses as
a result of the suspension of our operations in April 2005. The decrease in our
net income for the nine months ended September 30, 2005 as compared to 2004 was
primarily because we recorded a one time recovery related to the Honeywell
settlement in the amount of $6,375,000 under Other Income for the six months
ended June 30, 2004 but had no significant Other Income in the comparable
quarter of 2005. Our continued net losses from operations reflect our continued
operating expenses and our inability to generate revenues.


                                      -4-
<PAGE>



NET SALES

<TABLE>
<CAPTION>

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

                 Third Quarter Ended September 30                  Nine Months Ended September 30
             --------------------------------------------     --------------------------------------------
                                               Percentage                                       Percentage
               2005              2004         Increase /        2005             2004          Increase /
                                              (Decrease)                                       (Decrease)
             ------------- ----------------- ------------     ------------- ---------------- -------------
<S>           <C>               <C>                            <C>              <C>
License Fee   $5,556            $5,556           Nil           $16,668          $16,668          Nil
</TABLE>


We had no revenue in 2005 other than recognition of amortized license fees.
During the year ended December 31, 2003, $400,000 in license fees were deferred
and amortized over 18 years. As a result, for the third quarter ended September
30, 2005 $5,556 ($5,556 - 2004) of licensing fees were recognized as income. We
anticipate that we will be able to generate sales of our TurboPac(TM) if we
complete adequate financing.

We had no sales in 2004 and 2005; therefore we did not have any costs of sales
during any portion of these years.

OPERATING EXPENSES

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

<TABLE>
<CAPTION>

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

                              Third Quarter Ended September 30              Nine Months Ended September 30
                            ---------------------------------------    ------------------------------------------
                                                        Percentage                                    Percentage
                              2005          2004        Increase /         2005          2004         Increase /
                                                        (Decrease)                                    (Decrease)
                            ----------- -------------- ------------    ------------- -------------- -------------
<S>                          <C>             <C>          <C>             <C>             <C>           <C>
Selling, General and
Administrative Expenses       $117,654       $571,400     (79%)            $444,417       $534,086     (17%)
Research and Development
Expenses                           $ -       $486,640    (100%)            $371,486       $940,890     (61%)
Litigation Expense             $66,496       $353,586     (81%)            $694,679     $1,649,425     (58%)
</TABLE>


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

The decrease in our selling, general and administrative expenses for the third
quarter ended September 30, 2005 and the nine months then ended is due to
substantially reduced expenses as a result of the suspension of our operations
in April 2005. General and administrative costs included expenses associated
with our Carpinteria, California office through March 2005, management
compensation, administrative staff and overhead.


                                      -5-
<PAGE>



RESEARCH AND DEVELOPMENT EXPENSES

The decrease in research and development costs for the third quarter ended
September 30, 2005 and the nine months then ended is due to the suspension of
our operations in April 2005. Our research and development costs related to
present and future products are charged to operations in the period incurred.
Our research and development activities during the nine months ended September
30, 2005 are associated with the development of our Turbopac product.


LITIGATION EXPENSES

Honeywell agreed to pay us the aggregate amount of $8,500,000 in full settlement
of our claims against Honeywell subject to $2,125,000 of contingency legal fees,
$60,000 of legal costs, and $1,290,000 in bonuses to officers and employees. Our
litigation expenses are attributable to our involvement in several ongoing legal
proceedings. The most significant component of our 2004 litigation expense was
attributable to our settlement with Honeywell since we included employee and
director bonuses, after settlement, as a litigation expense. Litigation expenses
during the balance of 2005 are anticipated to consist primarily of legal
expenses relating to the proceedings involving our former subsidiary, Pacific
Baja.

STOCK BASED COMPENSATION

Stock based compensation for the nine months ended September 30, 2005 decreased
to $205,006 from $352,645 for the nine months ended September 30, 2004,
representing a decrease of $147,639 or approximately 42%. We did not
significantly rely on stock based compensation during the nine month period
ended September 30, 2005.

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


FINANCIAL CONDITION

CASH AND WORKING CAPITAL

<TABLE>
<CAPTION>

                            ---------------------- ---------------------- -------------
                            At September 30, 2005   At December 31, 2004    Percentage
                                                                             Increase
                                                                            (Decrease)
                            ---------------------- ---------------------- -------------
<S>                                        <C>                   <C>          <C>
Current Assets                             $1,011                $51,670      (98%)
Current Liabilities                  ($9,501,678)           ($8,680,295)        9%
Working Capital Deficit              ($9,500,667)           ($8,628,625)       10%
                            ====================== ====================== =============
</TABLE>


We had cash of $339 as of September 30, 2005, compared with cash of $1,615 as of
December 31, 2004. The increase to our working capital deficit was primarily
attributable to an increase in accounts payable and provision for lawsuit
settlements as discussed below.


                                      -6-
<PAGE>



LIABILITIES

<TABLE>
<CAPTION>
                                  ---------------------- ---------------------- -------------
                                    At September 30, 2005   At December 31, 2004    Percentage
                                                                                     Increase
                                    ---------------------- ---------------------- -------------
<S>                                            <C>                    <C>               <C>
Provisions for Lawsuit Settlements             $6,366,189             $6,013,198        6%
Accounts Payable                               $2,444,454             $2,226,102       10%
Accrued Liabilities                              $542,435               $285,935       90%
Short-Term Loans                                 $148,600               $148,600       Nil

</TABLE>

The increase in accrued liabilities is primarily from the accrual of a potential
liability related to employment and potential legal fees for contingent
liabilities.

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

Included in short-term loans at September 30, 2005 are unsecured, non-interest
bearing advances of $148,600 that we anticipate will be converted into shares of
our common stock and share purchase warrants. These loans have not been
converted to date.


CASH FLOWS

<TABLE>
<CAPTION>
                                                      ------------------------------------------
                                                              Nine Months Ended September 30
                                                       ------------------------------------------
                                                                  2005                      2004
                                                                  ----                      ----
<S>                                                         <C>                         <C>
Net Cash provided by (used in) Operating Activities         ($204,972)                  $906,063
Net Cash provided by (used in) Investing Activities            $17,770                ($426,988)
Net Cash provided by  (used in) Financing Activities          $185,926                ($453,668)
Net Increase (decrease) in Cash During Period                 ($1,276)                   $25,407
                                                       ================ =========================
</TABLE>


The decrease in cash used in operating activities was due to substantially
reduced expenses as a result of the suspension of our operations in April 2005
and the 2004 decrease in liabilities as a result of payments from the Honeywell
settlement proceeds for the three months ended March 31, 2004.

CASH USED IN FINANCING ACTIVITIES

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

CASH USED IN INVESTMENT ACTIVITIES

The decrease in cash used in investment activities is primarily as a result of
the 2004 purchase of $123,137 in new equipment for the development and
demonstration of prototypes and in 2004 a certificate of deposit was purchased.


                                      -7-
<PAGE>


FINANCING REQUIREMENTS

We will require further financing to continue our business operations. We
anticipate that any future financing will be achieved by sales of additional
shares of our common stock or other equity securities. These sales will result
in significant dilution to our current stockholders.

We anticipate that we will continue to incur losses until such time as the
revenues we are able to generate from licensing our products exceed our
increased operating expenses. We base this, 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.

Our consolidated interim financial statements included with this Quarterly
Report on Form 10-QSB have been prepared assuming that we will continue as a
going concern. We have suffered net losses in recent periods resulting in an
accumulated deficit of $129,084,539 at September 30, 2005. We have used cash in
our operating activities in recent periods, have disposed of our most
significant subsidiary through bankruptcy, and are subject to lawsuits brought
against us by shareholders and other parties. Based on our projected cash flows
for the ensuing year, we will be required to obtain additional equity or debt
financing in order to continue our present operations, irrespective of the
amounts paid or to be paid, if any, in connection with the aforementioned
lawsuits.





CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America. As
such, some accounting policies have a significant impact on the amount reported
in these financial statements. A summary of those significant accounting
policies can be found in the Summary of Significant Accounting Policies in our
consolidated audited financial statements included in Note 1 to our Annual
Report on Form 10-KSB for the year ended December 31, 2004, as filed with the
SEC on July 7, 2006. Note that our preparation of this Quarterly Report on Form
10-QSB requires us to make estimates and assumptions that affect the reported
amount of assets and liabilities, disclosure of contingent assets and
liabilities at the date of our financial statements, and the reported amounts of
revenue and expenses during the reporting period. There can be no assurance that
actual results will not differ from those estimates. We have identified certain
accounting policies, described below, that are the most important to the
portrayal of our current financial condition and results of operations.


STOCK BASED COMPENSATION

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

                                      -8-
<PAGE>


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

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






REVENUE RECOGNITION

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


RESEARCH AND DEVELOPMENT

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

NEW ACCOUNTING PRONOUNCEMENTS


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


                                      -9-
<PAGE>


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

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

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





                                      -10-
<PAGE>


ITEM 3.  CONTROLS AND PROCEDURES.

(A)       EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

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

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

         During our fiscal quarter ended September 30, 2005, the officers
         determined that there were no changes in our internal control over
         financial reporting that have materially affected, or are reasonably
         likely to affect, our internal control over financial reporting.




                                      -11-
<PAGE>


                           PART II - OTHER INFORMATION



ITEM 6.  EXHIBITS.


  Exhibit   Description of Exhibit
   Number
--------------------------------------------------------------------------------
      31.1  Certification of Chief Executive Officer and Chief Financial Officer
            pursuant to Sec 302 of the Sarbanes-Oxley Act of 2002.
      32.2  Certification of Chief Executive Officer and Chief Financial Officer
            pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
            906 of the Sarbanes-Oxley Act of 2002.
----------- --------------------------------------------------------------------







                                      -12-
<PAGE>




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


                                            Turbodyne Technologies, Inc.

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





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


                                      -13-