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, 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 MAY 10, 2006.

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

<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, 2005 AND 2004
                                           (UNAUDITED - EXPRESSED IN US DOLLARS)






                                      F-1
<PAGE>


                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                               CONSOLIDATED FINANCIAL STATEMENTS
                          FOR THE SIX-MONTH PERIODS ENDED JUNE 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)

                                                                 JUNE 30          December 31
                                                                    2005                 2004
----------------------------------------------------------------------------------------------

ASSETS
CURRENT
<S>                                                             <C>              <C>
     Cash                                                       $         458    $       1,615
     Prepaid expenses and other current assets                          1,272           50,055
                                                                -------------    -------------

          TOTAL CURRENT ASSETS                                          1,730           51,670
PROPERTY AND EQUIPMENT, net                                            34,754           45,002

CERTIFICATE OF DEPOSIT (NOTE 4(D))                                       --            240,000
                                                                -------------    -------------

TOTAL ASSETS                                                    $      36,484    $     336,672
==============================================================================================

LIABILITIES AND CAPITAL DEFICIT

LIABILITIES

CURRENT
     Current portion of long-term debt (Note 3)                 $      32,525    $       6,460
     Accounts payable (Note 3)                                      2,375,177        2,226,102
     Accrued liabilities (Note 2)                                     512,935          285,935
     Provisions for lawsuit settlements (Note 4)                    6,300,273        6,013,198
     Loans payable                                                    148,600          148,600
                                                                -------------    -------------

          TOTAL CURRENT LIABILITIES                                 9,369,510        8,680,295

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

DEFERRED REVENUE                                                      352,614          363,726
                                                                -------------    -------------

          TOTAL LIABILITIES                                         9,722,124        9,071,075
                                                                -------------    -------------

CAPITAL DEFICIT
     Share Capital (Note 2)
         Authorized
                1,000,000 preferred shares, par value $0.001
                1,000,000,000 common shares, par value $0.001
         Issued
            45,175 (52,175 - 2004) preferred shares                        45               52
            171,674,355 (160,157,955 - 2004) common shares            171,674          160,158
     Treasury stock, at cost (378,580 shares)                      (1,907,612)      (1,907,612)
     Additional paid-in capital                                   120,906,209      120,544,963
     Accumulated other comprehensive income -
         foreign exchange translation gain                             35,119           35,119
     Accumulated deficit                                         (128,891,075)    (127,567,083)
                                                                -------------    -------------

          TOTAL CAPITAL DEFICIT                                    (9,685,640)      (8,734,403)
                                                                -------------    -------------

TOTAL LIABILITIES AND CAPITAL DEFICIT                           $      36,484    $     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                          SIX-MONTH
                                                           PERIODS ENDED                       PERIODS ENDED
                                                              JUNE 30                             JUNE 30
                                                       2005             2004              2005              2004
----------------------------------------------------------------------------------------------------------------


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)
     Selling, general and administrative              200,742          262,579          326,763          (37,314)
     Research and development                         161,049          257,865          371,486          454,250
     Litigation expense                               371,102          514,732          628,184        1,295,840
     Depreciation and amortization                      1,320           14,513           10,248           29,026
                                                -------------    -------------    -------------    -------------

         TOTAL EXPENSES                               734,213        1,049,689        1,336,681        1,741,802
                                                -------------    -------------    -------------    -------------


LOSS FROM OPERATIONS                                 (728,657)      (1,044,133)      (1,325,569)      (1,730,690)
OTHER INCOME (EXPENSES)
     Settlement of litigation (Note 4)                   --               --               --          6,375,000
     Interest expense                                    --             (3,162)          (1,030)          (5,232)
     Interest Income                                      663            7,220            1,837            7,832
     Gain (loss) on sale of asset                      (4,471)             770             (371)
     Gain  on  settlement  of  term  debt                --               --               --             43,360
     (Note 3)
                                                -------------    -------------    -------------    -------------

NET INCOME (LOSS) FOR THE PERIOD                $    (727,994)   $  (1,044,546)   $  (1,323,992)   $   4,689,899
                                                ================================================================

Income (loss) per common share


 BASIC AND DILUTED                              $       (0.00)   $       (0.01)   $       (0.01)   $        0.03
================================================================================================================
WEIGHTED AVERAGE SHARES USED FOR BASIC INCOME
(LOSS) PER SHARE                                  171,262,122      148,771,749      167,685,557      148,771,749
================================================================================================================
WEIGHTED AVERAGE SHARES USED FOR DILUTED
INCOME (LOSS) PER SHARE                           171,262,122      148,771,749      167,685,557      160,012,360
================================================================================================================






              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                   --               --          4,179,670            4,180             --              --
  awsuit  (Note 4)

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                (7,000)              (7)         700,000              700             --              --
  (Note 2 (c))

Net loss for
  the period                       --               --               --               --               --              --
                              ----------------------------------------------------------------------------------------------
BALANCE,
  JUNE 30, 2005                  45,175    $          45      171,674,355    $     171,674          378,580   $  (1,907,612)
============================================================================================================================






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


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

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

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

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

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

Issuance of stock
  for debt                         --            212,552

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

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

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

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                     41,991             --              --             41,991
  non-employees
  for services
  (Note 2 (d))

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

Conversion of
  preferred
  Series X shares                  (693)            --              --               --
  (Note 2 (c))

Net loss for
  the period                       --               --        (1,323,992)      (1,323,992)
                            --------------------------------------------------------------
BALANCE,
  JUNE 30, 2005           $ 120,906,209    $      35,119   $(128,891,075    $  (9,685,640)
==========================================================================================





              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 SIX-MONTH PERIODS ENDED JUNE 30                                    2005           2004
--------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
<S>                                                                    <C>            <C>
     Net income (loss)                                                 $(1,323,992)   $ 4,689,899
     Adjustments to reconcile net loss for the  period  to net cash
     provided by
       (used in) operating activities:
        Amortization of deferred licensing fees                            (11,112)       (11,112)
        Depreciation and amortization                                       10,248         29,026
        Gain on settlement of term debt                                       --          (43,360)
        Loss on sale of asset                                                 --              371
        Recovery on lawsuit reserve from TST share sales (Note 4(a))          --          (23,345)
        Stock option compensation                                          183,743         42,476
        Liability in connection with settlement of equity instrument          --         (406,000)
     Increase in current assets
         Prepaid expenses and other current assets                         288,783        (83,844)
     Increase (decrease) in current liabilities
         Accounts payable                                                  149,075     (1,496,962)
         Accrued liabilities and provisions for lawsuit settlements        514,075     (1,161,703)
                                                                       --------------------------

            Net cash provided by (used in) operating activities           (189,180)     1,535,446
                                                                       --------------------------
INVESTING ACTIVITIES
      Purchase of property and equipment                                      --          (87,371)
      Proceeds on sale of assets                                              --            4,100
                                                                       --------------------------
                   Net cash used in investing activities                      --          (83,271)
                                                                       --------------------------
FINANCING ACTIVITIES
     Repayment of loans payable                                               --         (504,938)
     Net payments of term debts                                               (989)          --
     Exercise of Stock Options                                             189,012           --
                                                                       --------------------------

            Net cash provided by (used in) financing activities            188,023       (504,938)
                                                                       -----------    -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                        (1,157)       947,237

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

CASH AND CASH EQUIVALENTS, end of period                               $       458    $   949,382
==================================================================================================
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
     Cash paid during the period
         Interest                                                      $     1,030    $       788
         Income taxes                                                  $      --      $     7,200

SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
     Accounts payable transfer to loans payable                        $      --      $   159,386
     Return of asset to settle term debt                               $      --      $    76,082
     Liability in connection with settlement of
       equity instruments                                              $      --      $   581,000
     Reversal of liability in connection with
       settlement of equity instruments                                $      --      $ 2,134,322
==================================================================================================





              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)

JUNE 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.

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

   BASIS OF PRESENTATION

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

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


                                      F-7
<PAGE>


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

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

JUNE 30, 2005 AND 2004
--------------------------------------------------------------------------------


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


   GOING CONCERN

   The accompanying consolidated financial statements have been prepared
   assuming that the Company will continue as a going concern. The Company has
   suffered net operating losses in recent periods, has an accumulated deficit
   of $128,891,075 at June 30, 2005 and a total capital deficit of $9,685,640 at
   June 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., and
   Electronic Boosting Systems Inc. All intercompany accounts and transactions
   have been eliminated on consolidation.

   DEPRECIATION AND AMORTIZATION

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

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

   LICENSES

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

   VALUATION OF LONG-LIVED ASSETS

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


                                      F-8
<PAGE>

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

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

JUNE 30, 2005 AND 2004
--------------------------------------------------------------------------------


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


   RECOGNITION OF REVENUE

   License fee revenue is recognized over the term of the license agreement.
   During the year ended December 31, 2003, $400,000 in license fees were
   deferred and are being amortized over 18 years. As a result, for the
   six-month period ended June 30, 2005 $11,112 ($11,112 - 2004) of licensing
   fees was recognized as income.

   EARNINGS (LOSS) PER SHARE

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

   FAIR VALUE OF FINANCIAL INSTRUMENTS

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

   STOCK-BASED COMPENSATION

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

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


                                      F-9
<PAGE>

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

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

JUNE 30, 2005 AND 2004
--------------------------------------------------------------------------------


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


   STOCK-BASED COMPENSATION - CONTINUED

   SFAS 123R requires forfeitures to be estimated at the time of grant and
   revised, if necessary, in subsequent periods if actual forfeitures differ
   from initial estimates. Stock-based compensation expense was recorded net of
   estimated forfeitures for the quarter ended June 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 six-month period ended
   June 30, 2004, the pro forma on net income and net income per share would
   have been as follows, as previously disclosed:

                                                                   Quarter ended
                                                                 ---------------
                                                                   June 30, 2004

       Net Income, as reported                                      $ 4,689,899
       Add: Stock based employee compensation expense included
                in reported net income, net of related tax effects        7,250
       Deduct:  Total Stock-based employee compensation expense
                      determined under fair-value based method
                      for all awards not included in net income         (76,581)
                                                                    -----------

       Pro-forma net income                                         $ 4,620,568
                                                                    -----------
       Income per share:
         Basic and diluted - as reported                            $      0.03
                                                                    -----------
         Basic and diluted - proforma                               $      0.03
                                                                    -----------

   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)

JUNE 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 quarter ended June 30, 2005
   and 2004.

   LEGAL FEES

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


                                      F-11
<PAGE>





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

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

JUNE 30, 2005 AND 2004
--------------------------------------------------------------------------------

2. SHARE CAPITAL

   Transactions not disclosed elsewhere in these consolidated interim nancial
   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 has reversed the $2,134,322 accrued liabilities since
      the potentially diluted common shares do not exceed authorized capital.

   b) In 2003, 150,000 of the 1 million preferred shares were designated as
      Series X preferred shares. These shares have a par value of $0.001 per
      share with each share being convertible into 100 common shares at the
      discretion of the holder. As of June 30, 2005 45,175 of Series X preferred
      shares convertible into 4,517,500 common shares are outstanding.

   c) During the six months ended June 30, 2005, the Company issued 11,516,400
      shares of common stock, 10,816,400 for exercise of options and 700,000 for
      conversion of 7,000 preferred shares.

   d) Stock Options The following summarizes information relating to stock
      options during 2005:
<TABLE>
<CAPTION>


                                                      2005
                            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       4,651,666    $   0.11    10,277,000    $   0.11    14,928,666    $   0.11
 period
 Granted              1,300,000        0.02    18,700,000        0.02    20,000,000        0.02
 Expired               (155,000)       0.23    (3,413,600)       0.08    (3,568,600)       0.09
 Exercised           (1,300,000)       0.02    (9,516,400)       0.02   (10,816,400)       0.02
                     ---------------------------------------------------------------------------
Outstanding at
 end of
   Period             4,496,666        0.12    16,047,000        0.06    20,543,666        0.07
                     ---------------------------------------------------------------------------
 Options
 exercisable at
   end of period      4,496,666    $   0.12    16,047,000    $   0.06    20,543,666    $   0.07
                     ===========================================================================
Weighted average
 fair value of
 options
   Granted during
   the Period              --      $   0.02          --      $   0.02          --      $   0.02
                     ===========================================================================
</TABLE>


                                      F-12
<PAGE>




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

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

JUNE 30, 2005 AND 2004
--------------------------------------------------------------------------------


2. SHARE CAPITAL - CONTINUED

   d) Stock Options - Continued

      As of June 30, 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 June 30,
      2005 the number of unoptioned shares available for granting under the plan
      was 2,176,000.

      2004 STOCK INCENTIVE PLAN

      On April 8, 2004, the Company established the 2004 Nevada stock incentive
      plan (the "2004 Plan"). Under the 2004 Plan, the Company may grant common
      stock or incentive stock options to its directors, officers, employees and
      consultants for up to 15,000,000 shares. The maximum term of the 2004 Plan
      is ten years. The Board of Directors will determine the terms and matters
      relating to any awards under the 2004 Plan including the type of awards,
      the exercise price of the options and the number of common shares granted.
      The value of the shares of common stock used in determining the awards
      shall not be less than 85% of the fair market value of the common shares
      of the Company on the date of grant. As of June 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 June 30, 2005, the number of
      unoptioned shares available for granting of options under the plan was
      7,197,759.


                                      F-13
<PAGE>


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

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

JUNE 30, 2005 AND 2004
--------------------------------------------------------------------------------

2. SHARE CAPITAL - CONTINUED

      GRANT OF STOCK OPTIONS TO NON-EMPLOYEES FOR SERVICES

      The Company has recorded $41,991 of compensation expense relating to stock
      options issued to non-employees. Included in compensation expense is
      $39,629 for services rendered during the six months ended June 30, 2005.
      Upon our adoption of SFAS(R), we recorded $2,362 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 in the
      six-month period ended June 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.

      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. The compensation costs are based on the fair value
      at the grant date. There was no such expense recorded during our fiscal
      year 2004.



                                      F-14
<PAGE>


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

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

JUNE 30, 2005 AND 2004
--------------------------------------------------------------------------------


2. SHARE CAPITAL - CONTINUED

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

   e) Stock Purchase Warrants

      At June 30, 2005, the Company had 10,346,943 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 six-month
      period ended June 30, 2005 are as follows:

                                                                       Weighted
                                                                        Average
                                                                       Exercise
                                                       Warrants          price
                                                   ---------------- -----------
             Outstanding at January 1, 2005             15,084,922        $0.30
                 Expired                                 4,737,979        $0.50
                                                   ---------------  -----------
             Outstanding at June 30, 2005               10,346,943        $0.20
                                                   ---------------- -----------


      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 June 30, 2005.

                                      F-15
<PAGE>





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

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

JUNE 30, 2005 AND 2004
--------------------------------------------------------------------------------


3. TERM DEBTS

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

       Subsequent June 30, 2005 the Company was unable to make the payments so
   the bank repossessed the automobile and sold it at auction. After the sale
   there is a remaining liability of $17,428, which is the difference
   between the note payable and the sales price and is included in
       accounts payable.

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

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


4. COMMITMENTS AND CONTINGENCIES

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

   LITIGATION

   a) TST, INC.

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

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

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

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

      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


                                      F-16
<PAGE>



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

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

JUNE 30, 2005 AND 2004
--------------------------------------------------------------------------------


4. COMMITMENTS AND CONTINGENCIES - CONTINUED
      TST, Inc.- Continued

      iv) Any proceeds received by TST or its president from the sale of the
          issued shares will be automatically applied as a credit against the
          amount of the judgment against the Company in favor of TST. Prior to
          March 31, 2004, 147,000 shares issued in connection with the TST
          settlement had been sold which has reduced the provision for lawsuit
          settlement by $23,345. At June 30, 2005, the Company has included
          $4,898,488 (December 31, 2004 - $4,766,656) in regard to this matter
          in provision for lawsuit settlements. If it is determined that TST
          received payment in preference to other creditors before Pacific Baja
          filed its Chapter 11 petition in bankruptcy, TST will likely increase
          its claim by $2,130,000, which is included in the provision for
          lawsuit settlements.

   b) Pacific Baja Bankruptcy

      In July 1999, a major creditor of the Company's wholly-owned major
      subsidiary, Pacific Baja, began collection activities against Pacific Baja
      which threatened Pacific Baja's banking relationship with, and source of
      financing from, Wells Fargo Bank. As a result, Pacific Baja and its
      subsidiaries commenced Chapter 11 bankruptcy proceedings on September 30,
      1999. In September 2001, the Pacific Baja Liquidating Trust (the "Trust")
      commenced action against us in the aforesaid Bankruptcy Court. The Trust
      was established under the Pacific Baja bankruptcy proceedings for the
      benefit of the unsecured creditors of Pacific Baja.

      The 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.



                                      F-17
<PAGE>




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

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

JUNE 30, 2005 AND 2004
--------------------------------------------------------------------------------

4. COMMITMENTS AND CONTINGENCIES - CONTINUED

   b) Pacific Baja Bankruptcy - Continued 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) 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.


                                      F-18
<PAGE>



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

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

JUNE 30, 2005 AND 2004
--------------------------------------------------------------------------------


4. COMMITMENTS AND CONTINGENCIES - CONTINUED

   e) Former Director

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

      On September 9, 2004, the German Court, on a motion by the Defendants to
      the suit, dismissed the Plaintiff's claims against Peter Kitzinski and
      Marcus Kumbrick, and ordered that Turbodyne's patents in Munich be
      attached pending the resolution of the Plaintiff's claim against Turbodyne
      and Turbodyne GmbH. On June 13, 2005 the Court in Frankfurt dismissed the
      claim. The Plaintiff filed an appeal against this judgment with the Higher
      Regional Court in Frankfurt. The Plaintiff's attorney, Claus Schmidt, also
      filed similar suits on behalf of Frank Walter and Herbert Taeuber. The
      German courts are indicating that all three suits need to be filed in the
      United States not Germany. Presently the suits have not been filed in the
      United States. We vigorously dispute this claim and have retained German
      counsel to defend it and seek its dismissal. At June 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.

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


5. SUBSEQUENT EVENT

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

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

                                      F-19
<PAGE>



                                                                  14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.


FORWARD LOOKING STATEMENTS

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

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


GENERAL

We are filing this quarterly report on Form 10-QSB late. Information contained
herein is as of June 30, 2005 and, in some instances, as of July or August 2005
or the latest practicable date for these items. Where appropriate the Company
has supplied additional information to discuss subsequent events.

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



OVERVIEW

As discussed below, we suspended our business operations in April 2005 due to a
lack of funds.


                                      -2-
<PAGE>


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



RECENT AND POST QUARTER CORPORATE DEVELOPMENTS

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



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

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

      3.    We have also suspended work on the development of our products and
            technologies as part of the suspension of our business operations.



PLAN OF OPERATIONS

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


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

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


                                      -3-
<PAGE>



SUBSEQUENT CHANGE OF CONTROL AND NEW EFFORTS

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

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

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

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


RESULTS OF OPERATIONS

SECOND QUARTER AND SIX MONTHS SUMMARY

<TABLE>
<CAPTION>

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

                                  Second Quarter Ended June 30                          Six Months Ended June 30
                         ------------------------------------------------    ---------------------------------------
                                                              Percentage                                 Percentage
                                                               Increase                                   Increase
                               2005            2004          (Decrease)       2005          2004         (Decrease)
                           ------------   ------------    -------------   -----------    -----------    ------------
<S>                        <C>            <C>              <C>            <C>            <C>            <C>
Total Income               $     5,556    $     5,556             Nil     $    11,112    $    11,112         Nil
Operating Expenses
                           ($  734,213)   ($1,049,689)            (30%)   ($1,336,681)   ($1,741,802)        (23%)
Net Loss from Operations
                           ($  728,657)   ($1,044,133)            (30%)   ($1,325,569)   ($1,730,690)        (23%)
Other Income (Expenses)    $       663    ($      413)            261%    $     1,577    $ 6,420,589        (100%)
                           ===========    ===========     ===========     ===========    ===========     ===========
Net Income (Loss)
                           ($  727,994)   ($1,044,546)             30%    ($1,323,992)   $ 4,689,899        (128%)
                           ===========    ===========     ===========     ===========    ===========     ===========
</TABLE>



                                      -4-
<PAGE>


The decrease in the net operating loss for the second quarter ended June 30,
2005 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 six months
ended June 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


NET REVENUE

<TABLE>
<CAPTION>

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

                   Second Quarter Ended June 30                          Six Months Ended June 30
             --------------------------------------------     -----------------------------------------------
                                             Percentage                                          Percentage
               2005             2004         Increase /            2005             2004         Increase /
                                             (Decrease)                                          (Decrease)
             ------------- --------------- --------------     ---------------- --------------- --------------
<S>           <C>              <C>            <C>             <C>                 <C>             <C>
License Fee   $5,556           $5,556           Nil               $11,112         $11,112           Nil
</TABLE>


During the year ended December 31, 2003, $400,000 in license fees were deferred
and amortized over 18 years. As a result, as of June 30, 2005, $5,556 ($5,556 -
2004) of licensing fees were recognized as income. Corporate revenues will
depend on our ability to perform effective operations.


COSTS OF SALES

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>

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

                               Second Quarter Ended June 30                     Six Months Ended June 30
                             -------------------------------------     -------------------------------------------
                                                      Percentage                                      Percentage
                                                        Increase                                        Increase
                             2005          2004        (Decrease)          2005           2004         (Decrease)
                             --------- ------------- -------------     -------------- -------------- -------------
<S>                        <C>              <C>            <C>           <C>          <C>                 <C>
Selling, General and
Administrative Expenses      $200,742      $262,579       (24%)          $326,763      ($37,314)           976%
Research and Development
Expenses                     $161,049      $257,865       (38%)          $371,486       $454,250           (18%)
Litigation Expenses          $371,102      $514,732       (28%)          $628,184     $1,295,840           (52%)
</TABLE>



                                      -5-
<PAGE>



SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

The decrease in our selling, general and administrative expenses, for the second
quarter ended June 30, 2005, is due to substantially reduced expenses as a
result of the suspension of our operations in April 2005. The increase for the
six months ended June 30, 2005 is due to the 2004 adjustment of the authorized
capital deficiency. Through March 2005 general and administrative costs included
expenses associated with our Carpinteria, California office, management
compensation, administrative staff and overhead.


RESEARCH AND DEVELOPMENT EXPENSES

The decrease in research and development costs for the second quarter ended June
30, 2005 and the six months then ended is due to substantially reduced expenses
as a result of 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 six months ended June 30, 2005 are associated with the development of
our Turbopac product.


LITIGATION EXPENSE

We had litigation expenses of $371,102 during the second quarter ended June 30,
2005. The most significant components of our litigation expense were the accrual
of a potential liability related to employment and potential legal fees for
contingent liabilities.

We included in litigation expense items paid from the Honeywell settlement for
the three months ended March 31, 2004. We had litigation expenses of $371,102
during the second quarter ended June 30, 2005. The most significant components
of our litigation expense were the accrual of a potential liability related to
employment and potential legal fees for contingent liabilities.

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

Our litigation expenses are attributable to our involvement in several ongoing
legal proceedings. Litigation expenses during the balance of 2005 are
anticipated to consist primarily of legal expenses relating to the proceedings
involving our former subsidiary, Pacific Baja.

STOCK BASED COMPENSATION

Stock based compensation included in expenses was $119,365 for the second
quarter ended June 30, 2005 and $183,743 for the six months ended June 30, 2005.

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


                                      -6-
<PAGE>


FINANCIAL CONDITION


CASH AND WORKING CAPITAL

<TABLE>
<CAPTION>

                            ------------------- ---------------------- -----------------------
                              At June 30, 2005   At December 31, 2004          Percentage
                                                                         Increase / (Decrease)
                            ------------------- ---------------------- -----------------------
<S>                                     <C>                   <C>                <C>
Current Assets                          $1,730                $51,670            (97%)
Current Liabilities               ($9,369,510)           ($8,680,295)              8%
Working Capital Deficit           ($9,367,780)           ($8,628,625)              9%
                            =================== ====================== =======================
</TABLE>


We had cash of $458 as of June 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, accrued liabilities and
provision for lawsuit settlements as discussed below.



LIABILITIES

                         ------------------ ---------------------- -------------
                          At June 30, 2005   At December 31, 2004    Percentage
                                                                      Increase
                         ------------------ ---------------------- -------------
Provisions for Lawsuit
 Settlements                    $6,300,273             $6,013,198        5%
Accounts Payable                $2,375,177             $2,226,102        7%
Accrued Liabilities               $512,935               $285,935       79%
Short-Term Loans                  $148,600               $148,600       Nil

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

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

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



                                      -7-
<PAGE>

CASH FLOWS

                                                 -------------------------------
                                                      Six Months Ended June 30
                                                 -------------- ----------------
                                                          2005            2004
                                                          ----            ----
Net Cash from (used in) Operating Activities        ($189,180)      $1,535,446
Net Cash from (used in) Investing Activities               Nil       ($83,271)
Net Cash from (used in) Financing Activities          $188,023      ($504,938)
Net Increase (decrease) in Cash During Period         ($1,157)        $947,237
                                                 ============== ===============

The decrease in cash used in operating activities was due to the 2004 use of the
Honeywell settlement proceeds to decrease liabilities for the six months ended
June 30, 2004 and the fact that we had almost no cash to use in 2005.


CASH FROM 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.


FINANCING REQUIREMENTS

We will require further financing if we are to resume our business operations.
We anticipate that any future financing will be achieved by sales of additional
shares of our common stock or other equity securities. These sales will result
in significant dilution to our current stockholders. In the event that we are
unable to raise additional financing on acceptable terms, then we may not be
able to resume our business operations.
We anticipate that we will continue to incur losses until such time as the
revenues we are able to generate from sales or licensing our products exceed our
increased operating expenses. We base this, in part, on the fact that we will
incur substantial expenses as we resume and increase business activity. We do
not believe we will generate offsetting revenues for some period of time after
resuming full scale development. Moreover, there is no assurance that we will
generate revenues that exceed these expenses.

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


                                      -8-
<PAGE>


Our consolidated interim financial statements included with this Quarterly
Report on Form 10-QSB have been prepared assuming that we will continue as a
going concern. We have suffered net losses in recent periods resulting in an
accumulated deficit of $128,891,075 at June 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 our Annual Report on Form
10-KSB for the year ended December 31, 2004, as filed with the SEC on July 7,
2006. Note that our preparation of this Quarterly Report on Form 10-QSB requires
us to make estimates and assumptions that affect the reported amount of assets
and liabilities, disclosure of contingent assets and liabilities at the date of
our financial statements, and the reported amounts of revenue and expenses
during the reporting period. There can be no assurance that actual results will
not differ from those estimates. We believe our most critical accounting
policies include stock-based compensation and legal contingencies as explained
below.


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

Our audited consolidated financial statements included with this Annual Report
on Form 10-KSB have been prepared assuming that we will continue as a going
concern. We have suffered net losses in recent periods resulting in an
accumulated deficit of $128,891,075 at June 30, 2005, have used cash in our
operating activities in recent periods, have disposed of our most significant
subsidiary through bankruptcy, are subject to lawsuits brought against us by
shareholders and other parties, and based on our projected cash flows for the
ensuing year, we are required to seek additional equity or debt financing in
order to resume operations, irrespective of the amounts paid or to be paid, if
any, in connection with the aforementioned lawsuits.



STOCK BASED COMPENSATION

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


                                      -9-
<PAGE>


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

SFAS 123R requires forfeitures to be estimated at the time of grant and revised,
if necessary, in subsequent periods if actual forfeitures differ from initial
estimates. Stock-based compensation expense was recorded net of estimated
forfeitures for the six-month period ended June 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.



REVENUE RECOGNITION

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



RESEARCH AND DEVELOPMENT

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




NEW ACCOUNTING PRONOUNCEMENTS


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


                                      -10-
<PAGE>


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

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

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



                                      -11-
<PAGE>



ITEM 3.  CONTROLS AND PROCEDURES.


(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

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

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

   During our fiscal quarter ended June 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.




                                      -12-
<PAGE>


                           PART II - OTHER INFORMATION

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


EXHIBITS


EXHIBIT NUMBER       DESCRIPTION OF EXHIBIT
-------------- -----------------------------------------------------------------
     31.1      Certification of Chief Executive Officer and Chief Financial
               Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
               2002.

     32.2      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.

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




                                      -13-
<PAGE>



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

                                             Turbodyne Technologies, Inc.

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





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




                                      -14-