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 JUNE 30, 2007

[ ]      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)


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


State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 365,459,444 shares of common stock
issued and outstanding as of AUGUST 6, 2007.

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



<PAGE>




                          TURBODYNE TECHNOLOGIES, INC.
                              INDEX TO FORM 10-QSB
                                  JUNE 30, 2007

                                                                     PAGE NUMBER

PART I -    FINANCIAL INFORMATION

Item 1.     Financial Statements:                                              3

            Consolidated Balance Sheets as of June 30, 2007
                and December 31, 2006                                          4

            Consolidated Statements of Operations for the three-month
                 and six-month periods ended
                 June 30, 2007 and June 30, 2006                               5

            Consolidated Statements of Cash Flows for the six-month
                 periods ended June 30, 2007 and June 30, 2006                 6

            Notes to the Consolidated Financial Statements                     7

Item 2.     Management's Discussion and Analysis or Plan of Operations        19

Item 3.     Controls and Procedures                                           28

PART II -   OTHER INFORMATION

Item 1.     Legal Proceedings                                                 29

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds       29

Item 6.     Exhibits                                                          30

SIGNATURES                                                                    31


                                      -2-
<PAGE>

PART 1 - FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS












                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                   CONSOLIDATED FINANCIAL STATEMENTS
                                   FOR THE SIX-MONTH PERIODS ENDED
                                   JUNE 30, 2007 AND 2006
                                   (UNAUDITED - EXPRESSED IN US DOLLARS)





                                      -3-
<PAGE>
<TABLE>
<CAPTION>


=================================================================================================

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

                                                                         JUNE 30      December 31
                                                                            2007             2006
-------------------------------------------------------------------------------------------------

ASSETS                                                                           (UNAUDITED)
CURRENT
<S>                                                                <C>              <C>
   Cash                                                            $       8,765    $      14,745
   Prepaid expenses and other current assets                                 672              672
                                                                   ------------------------------

        TOTAL CURRENT ASSETS                                               9,437           15,417
PROPERTY AND EQUIPMENT, net                                                 --                537
                                                                   ------------------------------

TOTAL ASSETS                                                       $       9,437    $      15,954
=================================================================================================

LIABILITIES AND CAPITAL DEFICIT

LIABILITIES

CURRENT
   Accounts payable                                                $   2,161,295    $   2,302,417
   Accrued liabilities                                                   402,243          444,193
   Provision for lawsuit settlements (Note 4)                          4,834,655        4,675,137
   Loans payable                                                         690,548          551,121
                                                                   ------------------------------

        TOTAL CURRENT LIABILITIES                                      8,088,741        7,972,868

DEFERRED LICENSING FEE                                                   308,166          319,278
                                                                   ------------------------------

        TOTAL LIABILITIES                                              8,396,907        8,292,146
                                                                   ------------------------------

CAPITAL DEFICIT
   Share Capital (Note 2)
       Authorized
              1,000,000 preferred shares, par value $0.001
           1,000,000,000 common shares, par value $0.001
       Issued
            45,175 preferred shares in 2007 (2006 - 45,175)                   12               12
          365,316,577 common shares in 2007 (2006 - 345,316,577)         365,317          345,317
   Treasury stock, at cost (1,778,580 shares)                         (1,963,612)      (1,963,612)
   Additional paid-in capital                                        123,258,888      122,132,286
   Other comprehensive income -
       Foreign exchange translation gain                                  35,119           35,119
   Accumulated deficit                                              (130,083,194)    (128,825,314)
                                                                   ------------------------------

        TOTAL CAPITAL DEFICIT                                         (8,387,470)      (8,276,192)
                                                                   ------------------------------

TOTAL LIABILITIES AND CAPITAL DEFICIT                              $       9,437    $      15,954
=================================================================================================





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


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


==============================================================================================================
                                                                 TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                                                         CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                         (Unaudited - Expressed in US Dollars)

                                                            THREE-MONTH                         SIX-MONTH
                                                           PERIODS ENDED                     PERIODS ENDED
                                                             JUNE 30                           JUNE 30
                                                       2007             2006             2007            2006
--------------------------------------------------------------------------------------------------------------

REVENUE
<S>                                           <C>              <C>              <C>              <C>
      Licensing fees                          $       5,556    $       5,556    $      11,112    $      11,112
                                              ----------------------------------------------------------------

              TOTAL REVENUE                           5,556            5,556           11,112           11,112
                                              ----------------------------------------------------------------

EXPENSES (RECOVERY)
     General and administrative                     249,159          175,361          484,199          360,919
     Research and development                       144,735           47,394          225,676           70,109
     Litigation expense                              79,765           67,109          159,524          152,980
     Depreciation and amortization                     --                363              537              854
                                              ----------------------------------------------------------------
         TOTAL EXPENSES
                                                    473,659          290,227          869,936          584,862
                                              ----------------------------------------------------------------

LOSS FROM OPERATIONS                               (468,103)        (284,671)        (858,824)        (573,750)
OTHER INCOME (EXPENSES)
     Interest expense                               (12,323)          (6,406)         (21,313)         (10,703)
     Amortization of discount on
     convertible notes                             (101,341)            --           (187,114)            --
     Debt conversion expense                           --               --           (422,400)            --
     Gain on extinguishment of debt                 109,721             --            231,771             --
                                              ----------------------------------------------------------------

LOSS FOR THE PERIOD                           $    (472,046)   $    (291,077)   $  (1,257,880)   $    (584,453)
                                              ================================================================

Loss per common share

BASIC AND DILUTED                             $       (0.00)   $       (0.00)   $       (0.00)   $       (0.00)
==============================================================================================================

WEIGHTED AVERAGE SHARES - BASIC AND DILUTED     360,833,061      320,416,577      355,084,533      320,416,577
==============================================================================================================

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


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


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


FOR THE SIX-MONTH PERIODS ENDED JUNE 30                                 2007            2006
----------------------------------------------------------------------------------------------

CASH PROVIDED BY (USED IN)

OPERATING ACTIVITIES
<S>                                                                <C>            <C>
   Net loss for the period                                         $(1,257,880)   $  (584,453)
   Adjustments to reconcile net loss to net
   cash provided by (used in) operating activities:
      Amortization of deferred licensing fees                          (11,112)       (11,112)
      Depreciation and amortization                                        537            854
      Gain on extinguishment of debt                                  (231,771)          --
      Debt conversion expense                                          422,400           --
      Amortization of discount on convertible debt                     187,114           --
      Warrant compensation (Note 2)                                    199,203         23,646
   (Increase) decrease in operating assets
       Prepaid expenses and other current assets                          --           (1,800)
   Increase (decrease) in operating liabilities
       Accounts payable                                                 90,649         89,407
       Accrued liabilities and provision for lawsuit settlements       138,880        149,236
                                                                   --------------------------
          Net cash used in operating activities                       (461,980)      (334,222)
                                                                   --------------------------

FINANCING ACTIVITIES
   Convertible Notes Payable                                           425,000        220,000
   Notes Payable                                                        31,000         15,000
                                                                   --------------------------
          Net cash provided by financing activities                    456,000        235,000
                                                                   --------------------------

NET INCREASE (DECREASE) IN CASH                                         (5,980)       (99,222)

CASH, beginning of  period                                              14,745        100,538
                                                                   --------------------------
CASH, end of period                                                $     8,765    $     1,316
==============================================================================================

SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
   Beneficial conversion feature of convertible debt               $   285,882    $      --
   Value of warrants issued with convertible debt                      241,303           --
   Conversion of note to common stock                                  100,000           --
==============================================================================================






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



                                             -6-
<PAGE>


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

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

JUNE 30, 2007 AND 2006
--------------------------------------------------------------------------------


1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   NATURE OF BUSINESS

   Turbodyne Technologies, Inc., a Nevada corporation, and its subsidiaries (the
   "Company") is a product development and engineering company engaged in the
   design, engineering, development and distribution of patented, proprietary,
   electrically powered air charging systems that improve the performance of gas
   or diesel internal combustion vehicles, and are used in air charging
   applications.

   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 and with the
   instruction to Form 10-QSB and Item 310(b) of Regulation S-B. Certain
   information and footnote disclosures normally included in financial
   statements prepared in accordance with generally accepted accounting
   principles have been condensed or omitted pursuant to such rules and
   regulations, although the Company believes that the disclosures are adequate
   to make the information presented not misleading.

   These financial statements reflect all adjustments, consisting of normal
   recurring adjustments, which, in the opinion of management, are necessary for
   fair presentation of the information contained therein. It is suggested that
   these interim financial statements be read in conjunction with the audited
   financial statements of the Company for the years ended December 31, 2006 and
   2005 included in the Company's 10-KSB/A Annual Report. The Company follows
   the same accounting policies in the preparation of interim reports.

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

                                      -7-
<PAGE>


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

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

JUNE 30, 2007 AND 2006
--------------------------------------------------------------------------------


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

   GOING CONCERN

   The accompanying consolidated financial statements have been prepared
   assuming that the Company will continue as a going concern. The Company has
   suffered net operating losses in recent periods, has an accumulated deficit
   of $130,083,194 at June 30, 2007 and a total capital deficit of $8,387,470 at
   June 30, 2007. 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:

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

   LICENSES

   Licenses are recorded at cost and are amortized over their estimated useful
   life of 18 years.

   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 2007 and 2006.


                                      -8-
<PAGE>

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

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

JUNE 30, 2007 AND 2006
--------------------------------------------------------------------------------


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

   RECOGNITION OF REVENUE

   License fee revenue is recognized over the term of the license agreement.
   During the year ended December 31, 2003, $400,000 in license fees were
   deferred and are being amortized over 18 years. As a result, for the three
   and six months ended June 30, $5,556 and $11,112, respectively, for both 2007
   and 2006, of licensing fees was recognized as income.

   Prior to the suspension of our operations in 2003, we recognized revenue upon
   shipment of product. Previously, research prototypes were sold and proceeds
   reflected by reductions in our research and development costs. As new
   technology pre-production manufacturing units are produced and related
   non-recurring engineer services are delivered we will recognize the sales
   proceeds as revenue.

   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 period. Diluted
   earnings per share reflects the potential dilution of securities that could
   share in earnings of an entity. In a loss period, 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.

   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.

   STOCK-BASED COMPENSATION

   The Company accounts for stock-based compensation under the fair value method
   in accordance with Statement of Financial Accounting Standards No. 123
   (revised 2004), "Share Based Payment" "SFAS 123(R)".


                                      -9-
<PAGE>

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

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

JUNE 30, 2007 AND 2006
--------------------------------------------------------------------------------


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

   RESEARCH AND DEVELOPMENT

   Research and development costs related to present and future products are
   charged to operations in the period incurred. Previously, research prototypes
   were sold and proceeds reflected by reductions in our research and
   development costs. As new technology pre-production manufacturing units are
   produced and related non-recurring engineer services are delivered we will
   recognize the sales proceeds as revenue.

   INCOME TAXES -

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

   LEGAL FEES

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


   COMPREHENSIVE INCOME


   The Company has adopted SFAS No. 130, "Reporting Comprehensive Income". SFAS
   No. 130 establishes standards to measure all changes in equity that result
   from transactions and other economic events other than transactions with
   owners. Comprehensive income is the total of net earnings (loss) and all
   other non-owner changes in equity. Except for net earnings (loss) and foreign
   currency translation adjustments, the Company does not have any transactions
   and other economic events that qualify as comprehensive income as defined
   under SFAS No. 130. As foreign currency translation adjustments were
   immaterial to the Company's consolidated financial statements, net earnings
   (loss) approximated comprehensive income for the quarter ended June 30, 2007
   and 2006.


                                      -10-
<PAGE>


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

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

JUNE 30, 2007 AND 2006
--------------------------------------------------------------------------------


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

   NEW ACCOUNTING PRONOUNCEMENTS

   In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
   Financial Assets and Financial Liabilities" ("SFAS 159") which permits
   entities to choose to measure many financial instruments and certain other
   items at fair value that are not currently required to be measured at fair
   value. SFAS 159 will be effective for the Company on January 1, 2008. The
   Company is currently evaluating the impact SFAS 159 may have on its financial
   condition or results of operations. In September 2006, the Financial
   Accounting Standards Board (FASB) issued Statement of Financial Accounting
   Issues No. 157, "Fair Value Measurements" ("SFAS 157"), which defines the
   fair value, establishes a framework for measuring fair value and expands
   disclosures about fair value measurements. This statement is effective for
   financial statements issued for fiscal years beginning after November 15,
   2007, and interim periods within those fiscal years. Early adoption is
   encouraged, provided that the Company has not yet issued financial statements
   for that fiscal year, including any financial statements for an interim
   period within that fiscal year. The Company is currently evaluating the
   impact SFAS 157 may have on its financial condition or results of operations.
--------------------------------------------------------------------------------


2. SHARE CAPITAL

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

   a)   Authorized Capital/Outstanding Shares

        The Company has 1,000,000,000 common shares authorized.

        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 June 30, 2007 12,675 of Series X
        preferred shares convertible into 1,267,500 common shares are
        outstanding.

        In addition to outstanding shares of common stock, options and warrants
        described in these notes; additional shares are issuable in connection
        with the change of control transaction in September 2005 in the event
        the Company issues any securities directly or indirectly related to
        pre-merger events.


                                      -11-
<PAGE>


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

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

JUNE 30, 2007 AND 2006
--------------------------------------------------------------------------------


2. SHARE CAPITAL - CONTINUED

   b)   During the six months ended June 30, 2007 the Company issued 20,000,000
        shares of common stock for conversion of notes payable. During the six
        months ended June 30, 2006 there were no share issuances.

   c)   Stock Options and Warrants

        The determination of fair value of share-based payment awards to
        employees, directors and non-employees on the date of grant using the
        Black-Scholes model is affected by the Company's stock price as well as
        assumptions regarding a number of highly complex and subjective
        variables. These variables include, but are not limited to, the expected
        stock price volatility over the term of the awards, and actual and
        projected employee stock option exercise behaviors. Management has used
        historical data to estimate forfeitures. The risk-free rate is based on
        U.S. Treasury rates in effect during the corresponding period of grant.
        The expected volatility is based on the historical volatility of the
        Company's stock price. 2007
<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       2,505,000    $   0.08    16,033,300    $   0.06    18,538,300    $   0.06
  period

Expired               (380,000)       0.07      (136,300)       0.04      (516,300)       0.06
                    --------------------------------------------------------------------------
Outstanding at
  end of
  Period             2,125,000        0.06    15,897,000        0.06    18,022,000        0.06
                    --------------------------------------------------------------------------
Options
  exercisable at
  end of period      2,125,000    $   0.06    15,897,000    $   0.06    18,022,000    $   0.06
                    ==========================================================================
</TABLE>


   GRANT OF STOCK OPTIONS TO NON-EMPLOYEES FOR SERVICES

   During 2006, we granted warrants to purchase 77,200,000 shares of our common
   stock to various consultants that we deemed essential to our operations. Of
   these warrants, 4,338,888 were vested and reflected as an expense for the six
   months ended June 30, 2007.

   During the six months ended June 30, 2007 the Company recorded $199,203 (2006
   - $23,646) of compensation expense relating to stock warrants issued to
   non-employees for services rendered during the period. The non cash warrant
   expense is allocated with $161,054 to general and administrative expenses and
   $38,149 to research and development.


                                      -12-
<PAGE>


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

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

JUNE 30, 2007 AND 2006
--------------------------------------------------------------------------------


2. SHARE CAPITAL - CONTINUED

   The estimated fair value of warrants issued to non-employees during the six
   months ended June 30, 2007 was of $0.023, $0.054, $0.044, $0.049, $0.06 and
   $0.047. Assumptions used to value the warrants: expected dividend yield Nil%;
   expected volatility of 155%, 153%, 152% and 150%; risk-free interest rate of
   4.57%, 4.45%, 4.70%, 4.55% and 4.96%and an expected life of 7 years.

   At June 30, 2007 the Company had 21,633,332 share purchase warrants
   outstanding and exercisable. These warrants were issued in connection with
   private placements, non-employee compensation and other means of financing.
   The holders of these warrants are entitled to receive one share of common
   stock of the Company for one warrant exercised. The warrants have exercise
   prices ranging from $0.0117 to $0.12 per share with a weighted average
   exercise price of $0.029 per share and expiration dates between 2007 and
   2014. Details of share purchase warrants for the period ended June 30, 2007
   are as follows:

<TABLE>
<CAPTION>
                                                         2007

                                     INVESTORS       EMPLOYEES & CONSULTANTS          TOTAL

                              ------------------------------------------------------------------------
                                                                  WEIGHTED                    WEIGHTED
                                                                   AVERAGE                    AVERAGE
                                                                  EXERCISE                    EXERCISE
                                WARRANTS    PRICE    WARRANTS      PRICE      WARRANTS         PRICE
                              ------------------------------------------------------------------------

<S>                       <C>             <C>         <C>          <C>         <C>           <C>
Outstanding at beginning
of period                     3,400,000    $ 0.07     6,494,444    $ 0.01      9,894,444     $  0.03
Granted                       8,500,000    $ 0.025    4,338,888    $ 0.01     12,838,888     $  0.02
Expired                      (1,100,000)   $ 0.12         --       $  --      (1,100,000)    $  0.12
                            -----------              ----------              -----------
Warrants outstanding and
exercisable at end of
period                       10,800,000    $ 0.03    10,833,332    $ 0.01      21,633,332    $  0.02
                             ===========            ===========              ============
Weighted average fair
value of
warrants granted during
the period                                $  0.02                  $ 0.02                    $  0.01
                            ========================================================================
</TABLE>


   At June 30, 2007, the following is a summary of share purchase warrants
   outstanding and exercisable:

                                                  Weighted-
                                                   Average       Weighted
                                                  Remaining       Average
                                                 Contractual     Exercise
Exercise Price                   Number         Life (Years)      Price

$    0.01                     10,277,780             6.42      $    0.01
$0.025 - 0.04                 10,355,552             4.78           0.026
$0.10 - 0.12                   1,000,000              .30           0.10
                              ----------         --------      ---------

                              21,633,332             5.35      $    0.02
                             ===========


                                      -13-
<PAGE>


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

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

JUNE 30, 2007 AND 2006
--------------------------------------------------------------------------------


3. LOANS PAYABLE
                                                        June 30,    December 31,
                                                          2007          2006
                                                        --------      --------

Unsecured, non-interest bearing loan payable, due on
demand from stockholders and other parties              $148,600      $148,600

Note payable, 5% per annum, due June 15, 2007             47,454        15,000

Convertible notes payable, net of unamortized
discount of $257,246 ($158,478 - 2006) and
warrant valuation of $241,303 ($102,185 - 2006) **       494,494       387,521
                                                        --------      --------

Total Loans Payable                                     $690,548      $551,121

   ** During the six-month period ended June 30, 2007, the Company issued
   $425,000 convertible notes. The notes bear interest at 5% and mature within
   one year from date of issuance. The Notes are convertible, at the option of
   the holder, to shares of the Company's common stock. On February 22, 2007 the
   Board of Directors changed the per share conversion price from $0.005 to
   $0.02 for new lenders. Therefore, $50,000 is at a conversion price per share
   equal to $0.005 and $375,000 is at $0.02.

   In addition, the Company issued, to the holders of convertible notes,
   warrants to purchase 8,500,000 shares of the Company's common stock. The
   warrants have $0.025 exercise price and expire five-years from date of
   issuance. In accordance with generally accepted accounting principles, the
   proceeds, received from debt or convertible debt with detachable warrants,
   are allocated using the relative fair value of the individual elements at the
   time of issuance. Using the Black-Scholes valuations model, the aggregate
   value of the 8,500,000 warrants to be $444,188. Assumptions used to value the
   warrants: expected volatility ranging from 113% to 155%; risk-free interest
   rate of 4.46%, 4.57%, 4.69% and 4.92% and an expected life of 5 years. The
   amount allocated to the warrants amounts to $139,118 and has been recognized
   as a decrease in loans payable and an increase in additional paid in capital.

   In accordance with generally accepted accounting principles, in the event the
   conversion price on notes is less than the Company's stock price on the date
   of issuance, the difference is considered to be a beneficial conversion
   feature and is amortized as interest expense over the period from the date of
   issuance to the earlier of the conversion date or the stated maturity date.
   The aggregate beneficial conversion feature of these convertible notes is
   $285,882. This was recorded as a decrease in loans payable and an increase in
   additional paid in capital. For the six months ended June 30, 2007, the
   Company recognized $74,278 in interest expense related to the amortization of
   the beneficial conversion feature recorded on these convertible notes. As of
   June 30, 2007, the remaining balance of the beneficial conversion feature was
   $211,603.


                                      -14-
<PAGE>



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

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

JUNE 30, 2007 AND 2006
--------------------------------------------------------------------------------


3. LOANS PAYABLE - CONTINUED


   Prior to 2007, the Company has issued $660,000 convertible notes with
   detachable warrants. The notes bear interest at 5% and mature within one year
   from date of issuance. The Notes are convertible, at the option of the
   holder, to shares of the Company's common stock at a conversion price per
   share equal to the lower of (i) 70% of the market price of common stock at
   date of issuance; or (ii) $0.025. The warrants are to purchase the Company's
   common stock at $0.025 per share expiring in five years. In September 2006
   the board of directors offered to decrease the note conversion price to
   $0.005 per share if the note holders exercised their warrants at $0.01 by
   September 30, 2006. In consideration for the reduction, the maturity of the
   notes was extended for another year. As a result of the inducement, the
   Company recognized $422,400 of debt conversion expense and an increase in
   additional paid in capital for the quarter ended March 31, 2007 relating to
   note holders who converted during this period.

   The detachable warrants issued were five-year warrants to purchase 13,200,000
   shares of the Company's common stock at $0.025 per share. In accordance with
   generally accepted accounting principles, the proceeds, received from debt or
   convertible debt with detachable warrants, are allocated using the relative
   fair value of the individual elements at the time of issuance. Using the
   Black-Scholes valuations model, the aggregate value of the 13,200,000
   warrants is $164,944. Assumptions used to value the warrants ranged between:
   1.46% and 1.55% for expected volatility; 4.36% and 5.02% for risk-free
   interest rate and an expected life of 5 years. The amount allocated to the
   warrants amounts to $102,185 and has been recognized as a decrease in loans
   payable and an increase in additional paid in capital. As of June 30, 2007,
   11,900,000 of the warrants have been exercised.

   In accordance with generally accepted accounting principles, in the event the
   conversion price on notes is less than the Company's stock price on the date
   of issuance, the difference is considered to be a beneficial conversion
   feature and is amortized as interest expense over the period from the date of
   issuance to the earlier of the conversion date or the stated maturity date.
   The aggregate beneficial conversion feature of these convertible notes to be
   $358,477. In relation to the inducement to convert, an additional beneficial
   conversion feature of $128,042 has been recognized. These were recorded as
   decreases in loans payable and increases in additional paid in capital. For
   the six months ended June 30, 2007, the Company recognized $112,836 in
   interest expense related to the amortization of the beneficial conversion
   feature recorded on these convertible notes. As of June 30, 2007, the
   remaining balance of the beneficial conversion feature was $45,643. Prior
   period adjustments were recorded to properly recognize convertible debt
   transactions in 2006.

   The total amount of interest expense related to the amortization of the
   beneficial conversion feature recorded on all convertible notes was $187,114
   during the six months ended June 30 2007. As of June 30, 2007, the remaining
   balance of the beneficial conversion feature of all notes was $257,246.


                                      -15-
<PAGE>



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

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

JUNE 30, 2007 AND 2006
--------------------------------------------------------------------------------

4. COMMITMENTS AND CONTINGENCIES


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

        LITIGATION

        a) TST, Inc.

           In March 2000, TST, Inc. ("TST"), a vendor to a subsidiary of Pacific
           Baja (Note 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.

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

           TST cannot execute on its judgment until Turbodyne either: (a) files
           a voluntary bankruptcy case; (b) is the subject of an involuntary
           case; or (c) effects an assignment for the benefit of creditors.

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

           At June 30, 2007, the Company has included $3,432,870 (December 31,
           2006 - $3,273,352) in regard to this matter in provision for lawsuit
           settlements. It was determined that TST received payment in
           preference to other creditors before Pacific Baja filed its Chapter
           11 petition in bankruptcy. TST and Pacific Baja settled the
           preference payment issue with TST paying $20,000 to Pacific Baja and
           TST relinquishing the right to receive $63,000 therefore; $83,000 has
           been included in the provision for lawsuit settlements.


                                      -16-
<PAGE>

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

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

JUNE 30, 2007 AND 2006
--------------------------------------------------------------------------------


4. COMMITMENTS AND CONTINGENCIES - LITIGATION 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
           Pacific3 Baja which threatened Pacific Baja's banking relationship
           with, and source of financing from, Wells Fargo Bank. As a result,
           Pacific Baja and its subsidiaries commenced Chapter 11 bankruptcy
           proceedings on September 30, 1999.

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

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

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

        c) 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 were raised to
           settle amounts owed, like amounts were released from the Certificate
           of Deposit. If the funds raised were not adequate to settle amounts
           owed, the Company would 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
           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 were
           returned to the Company in October 2006 and are included in treasury
           shares.


                                      -17-
<PAGE>
--------------------------------------------------------------------------------

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

JUNE 30, 2007 AND 2006
--------------------------------------------------------------------------------


4. COMMITMENTS AND CONTINGENCIES - CONTINUED

        d) Former Director

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

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


           The Plaintiff's attorney, Claus Schmidt, also filed similar suits on
           behalf of Frank Walter and Herbert Taeuber. The German courts are
           indicating that all three suits need to be filed in the United States
           not Germany. Presently the suits have not been filed in the United
           States. We vigorously dispute this claim and have retained German
           counsel to defend it and seek its dismissal. At June 30, 2007, the
           Company has included $405,785 in regard to this matter in the
           provision for lawsuit settlements.

        e) Other

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


                                      -18-
<PAGE>

5. SUBSEQUENT EVENTS

Subsequent to June 30, 2007 the Company was advised that documents for an action
entitled CRESCENT FUND, LLC V TURBODYNE TECHNOLOGIES, INC. have been filed in
Supreme Court of the State of New York for the County of New York. Service has
not been affected. The action, we understand, seeks $300,000 damages based upon
claims for alleged breaches of contract and covenants of good faith and fair
dealing. Plaintiff received a certificate for 5,000,000 shares of our common
stock to perform investor relations services for us under a contract. The
damages, it is claimed, arose because we failed to give plaintiff an opinion to
seel the shares. It is the Company's position that plaintiff failed to perform
any of the duties and obligations required of it under the aforesaid contract
which was fraudulently induced. Therefore plaintiff is not entitled to retain
the shares. The Company will assert a counterclaim for the return of such shares
and damages based upon plaintiff's breach and fraud.


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.


                                      -19-
<PAGE>


OVERVIEW

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, and are
used in other air-charging applications. 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 solutions for this problem are 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. The ability to have `air on demand' also leads to other
applications for non-motive needs.



Since September 2005 when it took office management has obtained some additional
financing and has conducted 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) and related product line
     o    Filing for protection of new intellectual properties related to our
          products
     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 or to continue these activities.

In February 2007 the Company filed a provisional application in the United
States Patent and Trademark Office for a TurboPac related technology. Referred
to as the 'TurboFlow', the patent disclosure includes application of the
technology to vehicle types commonly referred to as 'hybrids' or 'low emission
vehicles'. The disclosed technology applies advanced controls, energy
management, and a TurboPac related technology to avoid problems encountered when
using traditional turbo- or super- charging air injection units with a small
engine in those types of vehicles.


                                      -20-
<PAGE>


RESULTS OF OPERATIONS
<TABLE>
<CAPTION>


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

                              Three Months Ended June 30                     Six Months Ended June 30
                     --------------------------------------------   -------------------------------------------
                                                     Percentage                                    Percentage
                         2007          2006           Increase          2007         2006           Increase
                                                     (Decrease)                                    (Decrease)
                     ------------   ------------   -------------    ------------   ------------   ------------
<S>                  <C>            <C>                  <C>       <C>               <C>             <C>
Total Revenue        $     5,556    $     5,556             Nil     $    11,112    $    11,112             Nil
Operating Expenses
                     ($  473,659)   ($  290,227)             63%    ($  869,936)   ($  584,862)             49%
Net Loss from
Operations           ($  468,103)   ($  284,671)             64%    ($  858,824)   ($  573,750)             50%
Other Income
(Expenses)           ($    3,943)   ($    6,406)             38%    ($  399,056)   ($   10,703)         (3,628%)
                     ===========    ===========     ===========     ===========    ===========     ===========

Net (Loss)           ($  472,046)   ($  291,077)            (62%)   ($1,257,880)   ($  584,453)           (115%)
                     ===========    ===========     ===========     ===========    ===========     ===========



NET REVENUE
                     --------------------------------------------   -------------------------------------------

                              Three Months Ended June 30                     Six Months Ended June 30
                     --------------------------------------------   -------------------------------------------

                         2007          2006         Percentage         2007         2006          Percentage
                                                     Increase                                      Increase
                     ------------   ------------   -------------    ------------   ------------   ------------
License Fee          $     5,556    $     5,556             Nil     $    11,112    $    11,112             Nil
</TABLE>


We had no revenue in 2007 and 2006 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 three and six months
ended June 30, 2007 and 2006, $5,556 and $11,112 of licensing fees was
recognized as income, respectively. Our continued net losses from operations
reflect our continued operating expenses and our inability to generate revenues.
We believe that we will not be able to generate any significant revenues from
TurboPac(TM) until we complete our production models and enter into
manufacturing and sales arrangements.


COSTS OF SALES

We had no sales in 2007 and 2006; therefore we did not have any costs of sales
during any portion of these years.


                                      -21-
<PAGE>


OPERATING EXPENSES

Operating expenses increased in both the three and six months ended June 30,
2007 from the comparable periods in 2006.


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

<TABLE>
<CAPTION>

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

                              Three Months Ended June 30                     Six Months Ended June 30
                     --------------------------------------------   -------------------------------------------
                                                     Percentage                                    Percentage
                         2007          2006           Increase          2007         2006           Increase
                                                     (Decrease)                                    (Decrease)
                     ------------   ------------   -------------    ------------   ------------   ------------
<S>               <C>             <C>               <C>              <C>           <C>              <C>
General and
Administrative
Expenses
                      $249,159        $175,361           42%            $484,199    $360,919          34%
Research and
Development
Expenses              $144,735       $  47,394          205%            $225,676     $70,109         222%

Litigation Expenses    $79,765       $  67,109           19%            $159,524    $152,980           4%
</TABLE>


GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative costs included management compensation and overhead
and increased due an increase in the number of consultants and the amount of
consulting fees. For the three and six month periods ended June 30, 2007
compensation includes the non cash warrant expense amount of $73,648 (2006 -
$23,646) and $161,054, respectively. (Financial Statement Note 2(c))


RESEARCH AND DEVELOPMENT

The increase in research and development costs in 2007 is due to the resumption
of limited development operations. For the three and six month periods ended
June 30, 2007 compensation includes the non cash warrant expense amount of
$38,149 (2006 - $0). (Financial Statement Note 2(c)) 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 2007 are associated with the development of our TurboPac-related
technology "TurboFlow".


LITIGATION EXPENSE

The increase in litigation expense is due to accrued interest on outstanding
judgments.


                                      -22-
<PAGE>


STOCK BASED COMPENSATION

Stock based compensation included in expenses was $199,203 (2006 - $23,646) for
the six months ended June 30, 2007. The non cash warrant expense allocation
follows cash compensation with $161,054 (2006 - $23,646) to general and
administrative expenses and $38,149 to research and development.

During 2006, we granted warrants to purchase 77,200,000 shares of our common
stock to various consultants that we deemed essential to our operations. Of
these warrants, 4,338,888 were vested and reflected as an expense for the six
months ended June 30, 2007. As of December 31, 2006 6,494,444 were vested
therefore the total vested as of June 30, 2007 was 10,833,332

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


OTHER INCOME (EXPENSE)
<TABLE>
<CAPTION>

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

                                   Second Quarter Ended June 30                  Six Months Ended June 30
                            -----------------------------------------  ---------------------------------------
                                                       Percentage                                Percentage
                                                        Increase                                  Increase
                              2007          2006       (Decrease)          2007       2006        (Decrease)
                           ----------    -----------  --------------   ------------ -----------   -----------
<S>                      <C>            <C>              <C>            <C>          <C>            <C>
Gain on Extinguishment
of debt                    $ 109,721         --            100%         $ 231,770         --           100%

Interest Expense           ($ 12,323)   ($  6,406)          92%         ($ 21,313)   ($ 10,703)         99%

Amortization of Discount
on Convertible Notes       ($101,341)        --            100%         ($187,114)        --           100%

Debt Conversion Expense         --           --           --            ($422,400)        --           100%
</TABLE>


The Company continues to negotiate with our creditors and trade debt holders on
settlement of accounts payable from periods prior to the current management
assuming operation of the Company. When achieved this is represented as a gain
on extinguishment of accounts payable.

The Company had additional other expenses for the three and six month periods
ended June 30, 2007 for amortization of discount on convertible notes and for
related debt conversion expenses (Financial Statement Note 3).

                                      -23-
<PAGE>


FINANCIAL CONDITION


CASH AND WORKING CAPITAL

                                   ---------------------------------------------
                                                                   Percentage
                                    At June 30,   At December 31,   Increase /
                                       2007             2006        (Decrease)
                                   ---------------------------------------------
Current Assets                     $     9,437     $    15,417             (39%)
Current Liabilities                ($8,088,741)    ($7,972,868)              1%
Working Capital Deficit            ($8,079,304)    ($7,957,451)              2%
                                   =============================================


The increase to our working capital deficit was primarily attributable to a
decrease in cash and an increase in convertible notes and provision for lawsuit
settlements as discussed below.

LIABILITIES


                                   ---------------------------------------------
                                                                   Percentage
                                    At June 30,   At December 31,   Increase /
                                       2007             2006        (Decrease)
                                   ---------------------------------------------
Provision for Lawsuit
Settlements                         $4,834,655      $4,675,137               3%
Accounts Payable                    $2,161,295      $2,302,417              (6%)
Accrued Liabilities                 $  402,243      $  444,193              (9%)
Short-Term Loans                    $  690,548      $  551,121              25%


The increase in provision for lawsuits is due to accrued interest on outstanding
judgments. Accounts payable decreased due to a settlement of debt and payments
of debt. Short-term loans increased in connection with our note financing to
generate cash. Short-term loans are net of discounts of $257,246 (2006 -
$158,478) and warrant allocation of $241,303 (2006 - $102,185).

During the six months ended June 30, 2007, the Company issued $425,000
convertible notes. The notes bear interest at 5% and mature within one year from
date of issuance. The Notes are convertible, at the option of the holder, to
shares of the Company's common stock. On February 22, 2007 the Board of
Directors changed the per share conversion price from $0.005 to $0.02 for new
lenders. Therefore, $50,000 is at a conversion price per share equal to $0.005
and $375,000 is at $0.02.

In addition, the Company issued to the holders of convertible notes warrants to
purchase 8,500,000 shares of the Company's common stock. In accordance with
generally accepted accounting principles, the Company allocates the proceeds
received from debt or convertible debt with detachable warrants using the
relative fair value of the individual elements at the time of issuance.

                                      -24-
<PAGE>


We continue to negotiate with our creditors for the payment of our accounts
payable and accrued liabilities. Payment of these liabilities is contingent on
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 June 30, 2007 are unsecured, non-interest
bearing advances of $148,600 that we anticipate will be converted into shares of
our common stock.




CASH FLOWS

                                                  ------------------------------
                                                      Six Months Ended June 30
                                                  ------------------------------
                                                          2007            2006
                                                          ----            ----
Net Cash from (used in) Operating Activities        ($461,980)      ($334,222)
Net Cash from (used in) Financing Activities          $456,000        $235,000
Net Increase (decrease) in Cash During Period         ($5,980)       ($99,222)


The increase in cash used in operating activities was due to the fact that
additional funds were obtained in private financing in 2006 and 2007. This
enabled us to utilize more funds for development in 2007 than in 2006.




FINANCING REQUIREMENTS

We will require additional financing if we are to continue as a going concern
and to finance our business operations. While we have obtained some financing in
2006 and 2007 we need substantially more capital. We may not be able to obtain
additional working capital on acceptable terms, or at all. Accordingly, there is
substantial doubt about our ability to continue as a going concern. We are
presently in the process of negotiating to raise working capital to finance our
operations which is no assurance that we will be able to raise the additional
capital that we require to continue operations. In the event that we are unable
to raise additional financing on acceptable terms, then we may have to cease
operating and seek relief under appropriate statutes.


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. 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.

                                      -25-
<PAGE>




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

Our unaudited consolidated financial statements included with this Quarterly
Report on Form 10-QSB have been prepared assuming that we will continue as a
going concern. We have suffered net losses in recent periods and have an
accumulated deficit of $130,083,194 at June 30, 2007, have used cash in our
operating activities in recent periods, are subject to lawsuits brought against
us by shareholders and other parties, and based on our projected cash flows for
the ensuing year, we are required to seek additional equity or debt financing in
order to continue our present operations. These matters raise substantial doubt
about our ability to continue as a going concern.



STOCK BASED COMPENSATION

The Company accounts for stock-based compensation under the fair value method in
accordance with Statement of Financial Accounting Standards No. 123 (revised
2004), "Share Based Payment" "SFAS 123(R)".


REVENUE RECOGNITION

Prior to the suspension of our operations in 2003, we recognized revenue upon
shipment of product. Since the re-commencement of operations in 2004, we
recognize license and royalty fees over the term of the license or royalty
agreement. Previously, research prototypes were sold and proceeds reflected by
reductions in our research and development costs. As new technology
pre-production manufacturing units are produced and related non-recurring
engineer services are delivered we will recognize the sales proceeds as revenue.


RESEARCH AND DEVELOPMENT

Research and development costs related to present and future products are
charged to operations in the period incurred. Previously, research prototypes
were sold and proceeds reflected by reductions in our research and development
costs. As new technology pre-production manufacturing units are produced and
related non-recurring engineer services are delivered we will recognize the
sales proceeds as revenue.

                                      -26-
<PAGE>



NEW ACCOUNTING PRONOUNCEMENTS


In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities" ("SFAS 159") which permits entities
to choose to measure many financial instruments and certain other items at fair
value that are not currently required to be measured at fair value. SFAS 159
will be effective for the Company on January 1, 2008. The Company is currently
evaluating the impact SFAS 159 may have on its financial condition or results of
operations.


In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Issues No. 157, "Fair Value Measurements"
("SFAS 157"), which defines the fair value, establishes a framework for
measuring fair value and expands disclosures about fair value measurements. This
statement is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. Early adoption is encouraged, provided that the Company has not yet
issued financial statements for that fiscal year, including any financial
statements for an interim period within that fiscal year. The Company is
currently evaluating the impact SFAS 157 may have on its financial condition or
results of operations.




                                      -27-
<PAGE>



ITEM 3.  CONTROLS AND PROCEDURES.


EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Company's Chief Executive Officer and its Chief
Financial Officer reviewed and evaluated the effectiveness of the Company's
disclosure controls and procedures (as defined in Exchange Act Rule
13a-15(e)).These controls are designed to ensure that material information the
Company must disclose in its reports filed or submitted under the Exchange Act
is recorded, processed, summarized and reported on a timely basis. These
officers have concluded, based on that evaluation, that as of such date, the
Company's disclosure controls and procedures were effective at a reasonable
assurance level for a Company with substantially no activities and no personnel.
The Company believes it must devise new procedures as it increases its activity
and its personnel.

         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.


                                      -28-
<PAGE>



PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Subsequent to June 30, 2007 the Company was advised that documents for an action
entitled CRESCENT FUND, LLC V TURBODYNE TECHNOLOGIES, INC. have been filed in
Supreme Court of the State of New York for the County of New York. Service has
not been affected. The action, we understand, seeks $300,000 damages based upon
claims for alleged breaches of contract and covenants of good faith and fair
dealing. Plaintiff received a certificate for 5,000,000 shares of our common
stock to perform investor relations services for us under a contract. The
damages, it is claimed, arose because we failed to give plaintiff an opinion to
seel the shares. It is the Company's position that plaintiff failed to perform
any of the duties and obligations required of it under the aforesaid contract
which was fraudulently induced. Therefore plaintiff is not entitled to retain
the shares. The Company will assert a counterclaim for the return of such shares
and damages based upon plaintiff's breach and fraud.


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

The following issuances of securities occurred during the six months ended June
30, 2007.

During the three months ended June 30, 2007 we sold 1 unit of our securities in
a private placement. Each unit consisted of $100,000, a 5% convertible note and
warrants to purchase 2,000,000 of our shares at $0.02. The note is convertible
at any time prior to payment. The conversion price was two cents ($.02). The
securities were issued pursuant to Section 4(2) of the Securities Act of 1933
and are exempt from the registration requirements under that act. In addition
during such quarter $40,000 of principal of the aforesaid notes were converted
into 8,000,000 share of our common stock. The latter shares were issued pursuant
to Section 3a(9) of the Securities Act of 1933 and are exempt from the
registration requirements under that act.




                                      -29-
<PAGE>


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


EXHIBITS


  EXHIBIT
  NUMBER     DESCRIPTION OF EXHIBIT

     31.1      Certification of Chief Executive Officer and Chief Financial
               Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
               2002.
     32.2      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.

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



                                      -30-
<PAGE>



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


                                            TURBODYNE TECHNOLOGIES, INC.

Dated:   August 14, 2007                   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



                                      -31-