UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

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

      For the quarterly period ended SEPTEMBER 30, 2008

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

      For the transition period ______________ to ______________

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

                          TURBODYNE TECHNOLOGIES, INC.
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

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

36 E. BARNETT STREET, VENTURA, CALIFORNIA             93001
-----------------------------------------             ----------
(Address of principal executive offices)              (Zip Code)

Issuer's telephone number, including area code:       (805) 512-9511
                                                      --------------

                                 NOT APPLICABLE

           (Former name, former address and former fiscal year end, if
                           changed since last report)

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

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer' and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]                                Accelerated filer [ ]
Non -accelerated filer [ ] (do not                 Smaller reporting company [X]
check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) [ ] Yes [X] No

State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 550,507,401 shares of common stock
issued and outstanding as of NOVEMBER 12, 2008.

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

                          TURBODYNE TECHNOLOGIES, INC.
                               INDEX TO FORM 10-Q
                               SEPTEMBER 30, 2008

                                                                           PAGE
                                                                          NUMBER
                                                                          ------

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements:

         Consolidated Balance Sheets as of September 30, 2008
            and December 31, 2007                                             4

         Consolidated Statements of Operations for the three
            and nine month periods ended September 30, 2008
            and September 30, 2007                                            5

         Consolidated Statements of Cash Flows for the nine
            month periods ended September 30, 2008 and
            September 30, 2007                                                6

         Notes to the Consolidated Financial Statements                       7

Item 2.  Management's Discussion and Analysis or Plan of Operations          21

Item 3.  Quantitative and Qualitative Disclosures About Market Risk          31

Item 4.  Controls and Procedures                                             32

PART II -OTHER INFORMATION

Item 1.  Legal Proceedings                                                   33

Item 1A. Risk Factors                                                        NA

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds         33

Item 3.  Defaults Upon Senior Securities                                     NA

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

Item 5.  Other Information                                                   NA

Item 6.  Exhibits                                                            33

SIGNATURES                                                                   34


                                       2
<PAGE>

PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

            TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
            CONSOLIDATED FINANCIAL STATEMENTS
            FOR THE NINE-MONTH PERIODS ENDED
            SEPTEMBER 30, 2008 AND 2007
            (UNAUDITED - EXPRESSED IN US DOLLARS)


                                       3
<PAGE>

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

                                                                     SEPTEMBER 30      DECEMBER 31
                                                                             2008             2007
--------------------------------------------------------------------------------------------------
<S>                                                                 <C>              <C>
ASSETS                                                                (UNAUDITED)
CURRENT
   Cash                                                             $      13,054    $       2,786
   Prepaid expenses and other current assets                                  672              672
                                                                    ------------------------------
        TOTAL CURRENT ASSETS                                               13,726            3,458

PROPERTY AND EQUIPMENT, net                                                21,168            9,513
                                                                    ------------------------------
TOTAL ASSETS                                                        $      34,894    $      12,971
==================================================================================================
LIABILITIES AND STOCKHOLDERS' DEFICIT

LIABILITIES

CURRENT
   Accounts payable                                                 $   2,339,512    $   2,132,439
   Accrued liabilities                                                    353,267          292,000
   Provision for lawsuit settlements (Note 5)                           5,257,378        4,994,173
   Loans payable (Note 4)                                                 464,777        1,200,973
                                                                    ------------------------------
        TOTAL CURRENT LIABILITIES                                       8,414,934        8,619,585

DEFERRED LICENSING FEE                                                    280,386          297,054
                                                                    ------------------------------
        TOTAL LIABILITIES                                               8,695,320        8,916,639
                                                                    ------------------------------
STOCKHOLDERS' DEFICIT
   Share Capital (Note 3)
       Authorized
              1,000,000 preferred shares, par value $0.001
           1,000,000,000 common shares, par value $0.001
       Issued
            12,675 preferred shares in 2008 and 2007                           12               12
          542,513,491 common shares in 2008 (380,459,434 in 2007)         542,514          380,460
   Treasury stock, at cost (5,278,580 shares)                          (1,963,612)      (1,963,612)
   Additional paid-in capital                                         127,774,077      124,831,388
   Other comprehensive income -
       Foreign exchange translation gain                                   35,119           35,119
   Accumulated deficit                                               (135,048,536)    (132,187,035)
                                                                    ------------------------------
        TOTAL STOCKHOLDERS' DEFICIT                                    (8,660,426)      (8,903,668)
                                                                    ------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                         $      34,894    $      12,971
==================================================================================================
</TABLE>

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


                                       4
<PAGE>

<TABLE>
<CAPTION>
                                                                 TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                                                         CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                         (Unaudited - Expressed in US Dollars)
                                                           THREE-MONTH                       NINE-MONTH
                                                           PERIODS ENDED                     PERIODS ENDED
                                                           SEPTEMBER 30                      SEPTEMBER 30
                                                       2008             2007             2008             2007
--------------------------------------------------------------------------------------------------------------
<S>                                           <C>              <C>              <C>              <C>
REVENUE                                                            (Restated)                        (Restated)
      Licensing fees
                                              $       5,556    $       5,556    $      16,668    $      16,668
                                              ----------------------------------------------------------------
              TOTAL REVENUE                           5,556            5,556           16,668           16,668
                                              ----------------------------------------------------------------
EXPENSES
     General and administrative                     168,094          250,503          598,451          734,702
     Research and development                        77,703          141,927          280,623          367,603
     Litigation expense                              88,017           80,355          268,412          239,880
     Depreciation and amortization                      890               --            2,670              537
                                              ----------------------------------------------------------------
         TOTAL EXPENSES                             334,704          472,785        1,150,156        1,342,722
                                              ----------------------------------------------------------------
LOSS FROM OPERATIONS                               (329,148)        (467,229)      (1,133,488)      (1,326,054)
OTHER INCOME (EXPENSES)

     Interest expense                                (6,209)         (15,259)         (63,841)         (36,571)
     Amortization of discount on
     convertible notes                              (80,339)        (219,708)        (414,915)        (565,184)
     Debt conversion expense                        (91,200)              --       (1,247,657)        (678,400)
     Gain on extinguishment of debt                      --           76,166               --          307,937
                                              ----------------------------------------------------------------
LOSS BEFORE TAXES                                  (506,896)        (626,030)      (2,859,901)      (2,298,272)

INCOME TAX EXPENSE                                       --               --           (1,600)              --
                                              ----------------------------------------------------------------
NET LOSS FOR THE PERIOD                       $    (506,896)   $    (626,030)   $  (2,861,501)   $  (2,298,272)
                                              ================================================================
Loss per common share

 BASIC AND DILUTED                            $       (0.00)   $       (0.00)   $       (0.01)   $       (0.01)
==============================================================================================================

WEIGHTED AVERAGE SHARES - BASIC AND DILUTED     496,245,781      366,751,360      442,678,078      320,907,262
==============================================================================================================
</TABLE>

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


                                       5
<PAGE>

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

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30                             2008           2007
---------------------------------------------------------------------------------------------
                                                                                    (Restated)
---------------------------------------------------------------------------------------------
<S>                                                                <C>            <C>
OPERATING ACTIVITIES
   Net loss for the period                                         $(2,861,501)   $(2,298,272)
   Adjustments to reconcile net loss to net
   cash provided by (used in) operating activities:
      Amortization of deferred licensing fees                          (16,668)       (16,668)
      Depreciation and amortization                                      2,670             --
      Gain on extinguishment of debt                                        --       (307,937)
      Amortization of discount on convertible debt (Note 4)            414,915        565.184
      Stock for services                                                28,111         60.000
      Debt conversion expense (Note 4)                               1,247,657        678,400
      Warrant compensation  (Note 3)                                   119,075        317,799
   (Increase) decrease in operating assets
       Prepaid expenses and other current assets                            --             --
   Increase (decrease) in operating liabilities
       Accounts payable                                                387,073        158.354
       Accrued liabilities and provision for lawsuit settlements       379,761        258,348
                                                                   --------------------------
          Net cash used in operating activities                       (298,907)      (584,792)
                                                                   --------------------------
INVESTING ACTIVITIES
   Purchase assets                                                     (14,325)       (11,351)
                                                                   --------------------------
          Net cash used in investing activities                        (14,325)       (11,351)
                                                                   --------------------------
FINANCING ACTIVITIES
   Convertible Notes Payable                                           300,000        622,000
   Notes Payable                                                        23,500
                                                                   --------------------------
          Net cash provided by financing activities                    323,500        622,000
                                                                   --------------------------
NET INCREASE (DECREASE) IN CASH                                         10,268         25,857
CASH, beginning of  period                                               2,786         14,745
                                                                   --------------------------
CASH, end of period                                                $    13,054    $    40,602
=============================================================================================
SUPPLEMENTARY DISCLOSURE OF NON-CASH INFORMATION
BENEFICIAL CONVERSION FEATURE OF CONVERTIBLE DEBT                  $   122,250    $   318,941
VALUE OF WARRANTS ISSUED WITH CONVERTIBLE DEBT                     $    72,250    $   106,059
CONVERSION OF CONVERTIBLE DEBT AND INTEREST TO COMMON STOCK        $ 1,281,123    $   100,000
CONVERSION OF SHORT-TERM NOTES AND INTEREST TO COMMON STOCK        $    60,937    $        --
=============================================================================================
</TABLE>

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


                                       6
<PAGE>

                                   TURBODYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                           (Unaudited - Expressed in US Dollars)

SEPTEMBER 30, 2008 AND 2007

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

      BASIS OF PRESENTATION

      The interim financial statements included herein, presented in accordance
      with United States generally accepted accounting principles and stated in
      US dollars, have been prepared by the Company, without audit, pursuant to
      the rules and regulations of the Securities and Exchange Commission and
      with the instruction to Form 10-Q and Rule 8-03 of Regulation S-X. 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, 2007 and 2006 included in the Company's 10-KSB Annual Report
      as amended. The Company follows the same accounting policies in the
      preparation of interim reports.

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

      GOING CONCERN

      The accompanying consolidated financial statements have been prepared
      assuming that the Company will continue as a going concern. The Company
      has suffered net operating losses in recent periods, has an accumulated
      deficit of $135,048,536 and a total capital deficit of $8,660,426 at
      September 30, 2008. 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.


                                       7
<PAGE>

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

SEPTEMBER 30, 2008 AND 2007

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

      PRINCIPLES OF CONSOLIDATION

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

      DEPRECIATION AND AMORTIZATION

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

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

      LICENSES

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

      VALUATION OF LONG-LIVED ASSETS

      The Company periodically reviews the carrying value of long-lived assets
      for indications of impairment in value and recognizes impairment of
      long-lived assets in the event the net book value of such assets exceeds
      the estimated undiscounted future cash flows attributable to such assets.
      Long-lived assets to be disposed of by sale are to be measured at the
      lower of carrying amount or fair value less cost of sale whether reported
      in continuing operations or in discontinued operations. No impairment was
      required to be recognized during 2008 and 2007.

      RECOGNITION OF REVENUE

      License fee revenue is recognized over the term of the license agreement.
      During the year ended December 31, 2003, $400,000 in license fees were
      deferred and are being amortized over 18 years. As a result, for the three
      months and nine months ended September 30, 2008 $5,556 and $16,668,
      respectively, ($5,556 and $16,668 in 2007) 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 period. Diluted
      earnings per share reflects the potential dilution of securities that
      could share in earnings of an entity. In a loss period, dilutive common
      equivalent shares are excluded from the loss per share calculation as the
      effect would be anti-dilutive.


                                       8
<PAGE>

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

SEPTEMBER 30, 2008 AND 2007

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

      FAIR VALUE OF FINANCIAL INSTRUMENTS

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

      USE OF ESTIMATES

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

      STOCK-BASED COMPENSATION

      The Company accounts for stock-based compensation under the fair value
      method in accordance with Statement of Financial Accounting Standards No.
      123 (revised 2004), "Share Based Payment" "SFAS 123(R)". SFAS No. 123R
      requires the Company to establish assumptions and estimates of the
      weighted-average fair value of stock options granted, as well as using a
      valuation model to calculate the fair value of stock-based awards. The
      Company uses the Black-Scholes option-pricing model to determine the
      fair-value of stock-based awards. All options are amortized over the
      requisite service periods of the awards, which are generally the vesting
      periods.

      RESEARCH AND DEVELOPMENT

      Research and development costs related to present and future products have
      been charged to operations in the period incurred.

      INCOME TAXES

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

      LEGAL FEES

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


                                       9
<PAGE>

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

SEPTEMBER 30, 2008 AND 2007

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

      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
      three months and nine months ended September 30, 2008 and 2007.

      NEW ACCOUNTING PRONOUNCEMENTS

      In September 2006, the FASB issued Statement No. 157, "Fair Value
      Measurements" ("SFAS 157"). SFAS No. 157 provides accounting guidance on
      the definition of fair value, establishes a framework for measuring fair
      value and requires expanded disclosures about fair value measurements.
      SFAS 157 is effective for the Company starting January 1, 2008 and did not
      have an impact on the Company as the Company does not have financial
      instruments subject to the expanded disclosure requirements of SFAS 157.
      In February 2008, the FASB issued FASB Staff Position FAS 157-2,
      "Effective Date of FASB Statement No. 157", which provides a one year
      delay of the effective date of SFAS 157 as it relates to nonfinancial
      assets and liabilities, except those that are recognized or disclosed at
      fair value in the financial statements on a recurring basis (at least
      annually). The provisions of SFAS 157 relating to nonfinancial assets and
      liabilities will be effective as of the beginning of the Company's 2009
      fiscal year.

      Effective January 1, 2008, the Company adopted Statement No. 159, "The
      Fair Value Option for Financial Assets and Financial Liabilities -
      Including an Amendment of FASB Statement No. 115 ("SFAS 159")." SFAS 159
      permits entities to choose to measure many financial instruments and
      certain other items at fair value, and establishes presentation and
      disclosure requirements designed to facilitate comparisons between
      entities that choose different measurement attributes for similar types of
      assets and liabilities. The adoption of SFAS 159 had no impact on the
      Company's financial statements as the Company did not elect the fair value
      option.


                                       10
<PAGE>

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

SEPTEMBER 30, 2008 AND 2007

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

      NEW ACCOUNTING PRONOUNCEMENTS - CONTINUED

      In December 2007, the FASB issued Statement No. 141R, "Business
      Combinations" ("SFAS 141R"). SFAS 141R revises the principles and
      requirements for how the acquirer recognizes and measures in its financial
      statements the identifiable assets acquired, the liabilities assumed, any
      non controlling interest in the acquiree, and the goodwill acquired in a
      business combination or gain from a bargain purchase. SFAS 141R also
      revises the principles and requirements for how the acquirer determines
      what information to disclose to enable users of the financial statements
      to evaluate the nature and financial effects of the business combination.
      This pronouncement will be effective for the Company on January 1, 2009.
      The Company is currently evaluating the impact, if any, that SFAS 141R
      will have on its financial position or results of operations.

      Also in December 2007, the FASB issued Statement No. 160, "Non controlling
      Interest in Consolidated Financial Statements -- an amendment of ARB No.
      51" ("SFAS 160"). SFAS 160 amends ARB No. 51 to establish accounting and
      reporting standards for the non controlling interest in a subsidiary and
      for the deconsolidation of a subsidiary. This pronouncement will be
      effective for the Company on January 1, 2009. The Company is currently
      evaluating the impact, if any, that SFAS 160 will have on its financial
      position or results of operations.

      In March 2008, the FASB issued Statement No. 161, "Disclosures about
      Derivative Instruments and Hedging Activities" ("SFAS 161"). SFAS 161
      requires companies with derivative instruments to disclose information
      that should enable financial-statement users to understand how and why a
      company uses derivative instruments, how derivative instruments and
      related hedged items are accounted for under FASB Statement No. 133
      "Accounting for Derivative Instruments and Hedging Activities" and how
      derivative instruments and related hedged items affect a company's
      financial position, financial performance and cash flows. SFAS 161 is
      effective for financial statements issued for fiscal years and interim
      periods beginning after November 15, 2008. The Company is currently
      evaluating the impact, if any, that SFAS 161 will have on our financial
      position or results of operations.

      In May 2008, the FASB issued Statement No. 162, "The Hierarchy of
      Generally Accepted Accounting Principles ("SFAS 162"). SFAS 162 identifies
      a consistent framework, or hierarchy, for selecting accounting principles
      to be used in preparing financial statements that are presented in
      conformity with U.S. generally accepted accounting principles for
      nongovernmental entities (the "Hierarchy"). The Hierarchy within SFAS 162
      is consistent with that previously defined in the AICPA Statement on
      Auditing Standards No. 69, "The Meaning of Present Fairly in Conformity
      With Generally Accepted Accounting Principles" ("SAS 69"). SFAS 162 is
      effective 60 days following the United States Securities and Exchange
      Commission's (the "SEC") approval of the Public Company Accounting
      Oversight Board amendments to AU Section 411, "The Meaning of Present
      Fairly in Conformity With Generally Accepted Accounting Principles". The
      adoption of SFAS 162 will not have a material effect on the Consolidated
      Financial Statements because the Company has utilized the guidance within
      SAS 69.


                                       11
<PAGE>

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

SEPTEMBER 30, 2008 AND 2007

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

      NEW ACCOUNTING PRONOUNCEMENTS - CONTINUED

      In May 2008, the FASB issued Statement No. 163, "Accounting for Financial
      Guarantee Insurance Contracts--an interpretation of FASB Statement No. 60
      ("SFAS No. 163"). SFAS 163 requires recognition of an insurance claim
      liability prior to an event of default when there is evidence that credit
      deterioration has occurred in an insured financial obligation. SFAS 163 is
      effective for financial statements issued for fiscal years beginning after
      December 15, 2008, and all interim periods within those fiscal years.
      Early application is not permitted. The Company's adoption of SFAS 163
      will not have a material effect on the Consolidated Financial Statements.

2     RESTATEMENT OF 2007 FINANCIAL STATEMENTS

      The Company is restating its previously issued September 30, 2007
      consolidated financial statements for the following reasons: unrecorded
      beneficial conversion feature of convertible debt and related
      amortization, unrecorded value of detachable warrants issued with the
      convertible debt and related amortization, unrecorded inducement expense
      as a result of Company's modification of conversion terms and terms for
      the exercise of warrants to induce conversion of debt and warrants
      exercise.

                                       Previously     Increase
                                         Reported    (Decrease)
                                        (Original)                     Restated

TOTAL ASSETS                        $      53,162    $      --    $      53,162

Loans payable                             829,776       87,901          917,677
Total Current Liabilities               8,323,867       87,901        8,411,768
TOTAL LIABILITIES                       8,626,477       87,901        8,714,378

Additional paid in capital            123,600,485      662,177      124,262,662
Accumulated deficit                  (130,613,636)    (750,078)    (131,363,714)
TOTAL CAPITAL DEFICIT                  (8,573,315)     (87,901)      (8,661,216)

STATEMENT OF OPERATIONS
Amortization of convertible notes
 discount relating to -
 Beneficial conversion feature*          (311,234)    (190,008)        (501,242)
 Warrants                                      --      (63,942)         (63,942)
 Debt conversion expense                 (422,400)    (256,000)        (678,400)
NET LOSS                            $  (1,788,322)   $(509,950)   $  (2,298,272)


                                       12
<PAGE>

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

SEPTEMBER 30, 2008 AND 2007

3.    SHARE CAPITAL

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

      a)    Authorized Capital

            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.

            In 2003, 150,000 of the 1 million preferred shares were designated
            as Series X preferred shares. These shares have a par value of
            $0.001 per share with each share being convertible into 100 common
            shares at the discretion of the holder. As of September 30, 2008,
            12,675 of Series X preferred shares convertible into 1,267,500
            common shares are outstanding.

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

      b)    During the nine months ended September 30, 2008 the Company issued
            162,054,057 shares of common stock, 142,114,317 for conversion of
            notes and interest payable, 13,939,740 for additional merger shares
            and 6,000,000 for payment of services. During the nine months ended
            September 30, 2007, the Company issued 20,000,000 shares of common
            stock for conversion of notes payable.

      c)    The Company issued 13,939,740 shares of the Company's common stock
            to comply with the anti-dilution clause of the Agreement and Plan of
            Merger (the "Agreement") dated September 1, 2005. The Agreement
            among the Company. Turbodyne Acquisition Corp. a wholly owned
            subsidiary of Parent and Aspatuck Holdings Nevada Inc. provides that
            "it is the intent of the parties that the Merger Consideration
            Shares shall constitute 40% of the post merger fully diluted shares
            outstanding taking into account the issuance of shares of Parent
            Common Stock in settlement of the Pacific Baja Litigation and other
            shares relating in any manner to events or transactions prior to the
            Effective Date." A significant portion of the proceeds of the
            Company's private placements were used to settle prior obligations
            of the Company. Based on calculations presented to the board and the
            terms of the aforesaid Agreement the issuance of aforesaid shares
            was authorized.

      d)    Stock Options

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


                                       13
<PAGE>

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

SEPTEMBER 30, 2008 AND 2007

3.    SHARE CAPITAL - CONTINUED

            Grant of Stock Options to Non-employees for Services

            During 2006 and 2007, we granted warrants to purchase 78,200,000
            shares of our common stock to various consultants that we deemed
            essential to our operations. Details of the consultant warrants for
            the quarter ended September 30, 2008 are as follows:

                 Total consultant warrants granted            78,200,000
                 Vested prior to January 1, 2008              16,172,220)
                 Vested January through September 2008        (5,263,886)
                 Cancelled January through September 2008     22,044,436)
                                                              ----------
                 Warrants not vested                          34,719,458
                                                              ==========

            During the nine months ended September 30, 2008 the Company recorded
            $119,075 ($317,799 in 2007) of compensation expense relating to
            stock warrants issued to non-employees for services rendered during
            the period.

            The estimated fair value of warrants vested to non-employees during
            the nine months ended September 30, 2008 ranged from $0.0124 to
            $0.0352. Assumptions used to value the warrants: expected dividend
            yield Nil%; expected volatility ranging from 91.39% to 157.41%;
            risk-free interest ranged from 2.88% to 3.68% and an expected life
            of 7 years.

      e)    Stock Purchase Warrants

            At September 30, 2008 the Company had 42,556,106 share purchase
            warrants outstanding and exercisable. These warrants were issued in
            connection with private placements, non-employee compensation and
            other means of financing. The holders of these warrants are entitled
            to receive one share of common stock of the Company for one warrant
            exercised. The warrants have exercise prices ranging from $0.0117 to
            $0.04 per share with a weighted average exercise price of $0.017 per
            share and expiration dates between 2011 and 2015. Details of share
            purchase warrants for the quarter ended September 30, 2008 are as
            follows: 2008

<TABLE>
<CAPTION>
                                 INVESTORS         EMPLOYEES & CONSULTANTS        TOTAL
                           --------------------------------------------------------------------
                                       WEIGHTED                WEIGHTED                WEIGHTED
                                        AVERAGE                 AVERAGE                 AVERAGE
                                       EXERCISE                EXERCISE                EXERCISE
                             WARRANTS     PRICE      WARRANTS     PRICE      WARRANTS     PRICE
                           --------------------------------------------------------------------
<S>                        <C>            <C>      <C>            <C>      <C>            <C>
Outstanding at beginning
of period                  15,120,000     $0.02    16,172,220     $0.01    31,292,220     $0.02

Granted                     6,000,000     $0.02     5,263,886     $0.01    11,263,886     $0.02
                           ----------              ----------              ----------
Warrants outstanding and
exercisable at end of
period                     21,120,000     $0.02    21,436,106     $0.01    42,556,106     $0.02
                           ==========              ==========              ==========
Weighted average fair
value of warrants
granted during the period                 $0.02                   $0.01                   $0.01
</TABLE>


                                       14
<PAGE>

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

SEPTEMBER 30, 2008 AND 2007

3.    SHARE CAPITAL - CONTINUED

            At September 30, 2008, the following is a summary of share purchase
            warrants outstanding and exercisable:

                                             Weighted-
                                               Average     Weighted
                                             Remaining      Average
                                           Contractual     Exercise
            Exercise Price       Number   Life (Years)        Price
            -------------------------------------------------------
                $0.01        20,602,778           5.75        $0.01
             $0.025 - 0.04   21,953,328           3.95         0.02
                             --------------------------------------
                             42,556,106           4.82        $0.02
            -------------------------------------------------------

4.    LOANS PAYABLE

<TABLE>
<CAPTION>
                                                                        September    December 31,
                                                                         30, 2008           2007
                                                                       -------------------------
<S>                                                                    <C>            <C>
Unsecured, non-interest bearing loan payable, due on
demand from stockholders and other parties                             $  138,600     $  138,600

Note payable, 5% per annum                                                 50,329         46,000

Note payable, 18% per annum                                                    --         33,300

Convertible notes payable net of unamortized discount of $19,232 and
$199,726 and warrant valuation of $13,580 and $53,501 in 2008
and 2007, respectively                                                    275,848        983,073
                                                                       -------------------------
Total Loans Payable                                                    $  464,777     $1,200,973
                                                                       =========================
</TABLE>


                                        15
<PAGE>

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

SEPTEMBER 30, 2008 AND 2007

4.    LOANS PAYABLE - CONTINUED

      As of September 30, 2008, convertible notes consist of:

<TABLE>
<CAPTION>
                                   Issued          Issued         Issued          Issued       Issued       Issued
                                  through           from           from            from         From         From
                                    Sept         Nov 06 to       Mar07 to       Sep 07 to     Jan 08 to   Apr 08 to
                                    2006           Feb 07         Aug 07          Dec 07       Mar 08       Jun 08         Total
-----------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>            <C>            <C>             <C>            <C>          <C>          <C>
Proceeds from issuances of
convertible debt                $    615,000   $     95,000   $    441,000    $    200,000   $  100,000   $  200,000   $  1,651,000
Less: Debt conversions              (530,000)       (95,000)      (441,000)       (200,000)    (100,000)          --     (1,366,000)
                                ---------------------------------------------------------------------------------------------------
                                      85,000             --             --              --           --      200,000        285,000
                                ---------------------------------------------------------------------------------------------------
Discount on convertible debt
  Value allocated to warrants         88,144          8,041        118,485          51,035       24,198       48,052        337,955
  Beneficial conversion feature      521,756         86,959        322,515         148,965       54,198       68,052      1,202,445
                                ---------------------------------------------------------------------------------------------------
                                     609,900         95,000        441,000         200,000       78,396      116,104      1,540,400
  Accumulated amortization of
  value allocated to warrants        (88,144)        (8,041)      (118,485)        (51,035)     (24,198)     (34,472)      (324,375)
  Accumulated amortization of
  beneficial conversion feature     (521,756)       (86,959)      (322,515)       (148,965)     (54,198)     (48,820)    (1,183,213)
                                ---------------------------------------------------------------------------------------------------
                                          --             --             --              --           --       32,812         32,812
                                ---------------------------------------------------------------------------------------------------
  Accrued Interest                    10,760             --             --              --           --       12,900         23,660
                                ---------------------------------------------------------------------------------------------------
Net Convertible Debt            $     95,760   $         --   $         --    $         --   $       --   $  180,088   $    275,848
                                ===================================================================================================
                                Lower of 70%
                                of market or
Original conversion price       $      0.025   $      0.005   $      0.020    $      0.020   $    0.020   $    0.020             --
Modified conversion price       $      0.005            N/A            N/A             N/A          N/A          N/A             --
Interest rate                              5%             5%             5%             18%          18%          18%            --
Maturity from date of issuance        1 year         1 year         1 year        6 months     6 months     6 months             --
Warrants issued                   12,300,000      1,900,000      8,820,000       4,000,000    2,000,000    4,000,000     33,020,000
Warrants exercised               (11,900,000)            --             --              --           --           --    (11,900,000)
                                ---------------------------------------------------------------------------------------------------
Warrants remaining                   400,000      1,900,000      8,820,000       4,000,000    2,000,000    4,000,000     21,120,000
                                ---------------------------------------------------------------------------------------------------
Market value of warrants at
date of issuance                $    150,884   $     48,863   $    398,872    $    140,612   $   41,498   $   69,572
Assumptions for Black-Scholes
valuation of warrants
  Original exercise price       $      0.025   $      0.025   $      0.020    $      0.020   $    0.020   $    0.020
  Modified exercise price       $      0.010            N/A            N/A             N/A          N/A          N/A
  Term                               5 years        5 years        5 years         5 years      5 years      5 years
  Volatility rate                146% - 151%    153% - 155%    112% - 155%     112% - 155%          109%         107%
  Risk free interest rate       4.61% - 5.02%  4.45% - 4.69%  4.46% - 5.01%   2.93% - 5.01%        2.93%        1.90%
</TABLE>


                                       16
<PAGE>

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

SEPTEMBER 30, 2008 AND 2007

4.    LOANS PAYABLE - CONTINUED

      For the years ended December 31, 2007 and 2006, the Company issued
      $691,000 and $660,000, respectively, of convertible notes. For the nine
      months ended September 30, 2008 the Company issued $300,000 of convertible
      notes. All of the convertible notes were issued with detachable warrants
      to purchase 13,820,000, 13,200,000 and 6,000,000 shares of the Company's
      common stock, respectively, at $0.0250 per share. For the nine months
      ended September 30, 2008 the Company allocated the $300,000 according to
      the value of the convertible notes and the warrants based on their
      relative fair values. Fair value of the warrants was determined using the
      Black-Scholes valuation model. It was also determined that the convertible
      notes contained a beneficial conversion feature since the fair market
      value of the common stock issuable upon the conversion of the notes
      exceeded the value allocated to the notes.

      The value of the beneficial conversion feature and the value of the
      warrants have been recorded as a discount to convertible notes and are
      being amortized over the term of the notes using the straight-line method.
      For the years ended December 31, 2007 and 2006, amortization of the
      discount was $864,485 and $568,168, respectively. For the nine months
      ended September 30, 2008 the amortization of the discount was $414,915.

      In September 2006, the Company offered to decrease the note conversion
      price to $0.005 per share if the note holders exercised their warrants at
      the reduced exercise price of $0.01 by September 30, 2006. In
      consideration for the reduction of conversion price, the maturity of the
      notes extended for another year. As a result of the inducement to exercise
      the warrants and to convert the notes, the Company recognized an expense
      of $988,686 and $345,357 for the years ended December 31, 2007 and 2006,
      respectively, with a corresponding increase in additional paid in capital.
      For the nine months ending September 30, 2008 the Company recognized an
      expense of $1,247,657.

      Prior to the nine months ended September 30, 2008, 11,900,000 of the
      warrants have been exercised.

      The modification of conversion terms was substantial such that it was
      considered an extinguishment of debt. Accordingly, the unamortized
      discount from the original issuance of the convertible notes was written
      off and included in total amortization for 2006. At date of original
      issuance, the debt discount resulting from beneficial conversion feature
      amounting to $339,980 has been completely replaced with the new beneficial
      conversion feature arising from the modification of conversion terms.

      In February 2007, the Company changed the per share conversion price from
      $0.005 to $0.02 for new lenders.

      The notes, issued prior to September 1, 2007, bear interest at 5% and
      mature within one year from date of issuance. The notes, issued after
      September 1, 2007, bear interest at 18% and mature within nine months from
      date of issuance. The warrants are to purchase the Company's common stock
      at $0.02 per share expiring in five years.

      For the year ended December 31, 2007, the Company recognized $864,485 in
      interest expense related to the amortization of the value of the
      detachable warrants and beneficial conversion feature recorded on these
      convertible notes. As of September 30, 2008, the remaining balance of the
      beneficial conversion feature was $19,232 and detachable warrants were
      $13,580.


                                       17
<PAGE>

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

SEPTEMBER 30, 2008 AND 2007

5     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 5(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.

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

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

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

      At September 30, 2008, the Company has included $3,855,593 ($3,592,387 in
      2007) in regard to this matter in provision for lawsuit settlements. It
      was determined that TST received payment in preference to other creditors
      before Pacific Baja filed its Chapter 11 petition in bankruptcy. TST and
      Pacific Baja settled the preference payment issue with TST paying $20,000
      to Pacific Baja and TST relinquishing the right to receive $63,000;
      therefore $83,000 has also been included in the provision for lawsuit
      settlements. December 31, 2007 September 30, 2008

            Settlement amount                  $2,068,079      $2,068,079

            Interest                            1,727,859       1,464,653

            Preference payment                     83,000          83,000

            Proceeds of stock sale               (23,345)        (23,345)
                                             ----------------------------
            Total                              $3,855,593      $3,592,387
                                             ============================


                                       18
<PAGE>

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

SEPTEMBER 30, 2008 AND 2007

5.    COMMITMENTS AND CONTINGENCIES - LITIGATION CONTINUED

      b)    Pacific Baja Bankruptcy

            In July 1999, a major creditor of the Company's wholly-owned major
            subsidiary, Pacific Baja, began collection activities against
            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 Company vigorously contested the Complaint until April 22, 2005
            when the Company entered into a stipulation for entry of judgment
            and assignment in the Pacific Baja bankruptcy proceedings for
            $500,000 to be issued in common stock or cash or a combination.
            Additionally the Company assigned to the bankruptcy Trust the rights
            to $9,500,000 claims under any applicable directors and officers
            liability insurance policies. The bankruptcy Trust also agreed to a
            covenant not to execute against the Company regardless of the
            outcome of the insurance claims.

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

      c)    Former 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 September 30,
            2008, the Company has included $405,785 in regard to this matter in
            the provision for lawsuit settlements.


                                       19
<PAGE>

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

SEPTEMBER 30, 2008 AND 2007

5.    COMMITMENTS AND CONTINGENCIES - CONTINUED

      d)    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.


                                       20
<PAGE>

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

FORWARD LOOKING STATEMENTS

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

As used in this Quarterly Report on Form 10-Q, 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-Q
are in U.S. dollars unless otherwise stated.

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. Traditional engineered solutions for this problem 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.

Since it took office in September 2005, management has obtained some additional
financing and has conducted limited business activity including:

      o     Updating our financial statements and required SEC filings
      o     Assessment of our technology including patents and other rights
      o     Limited development of our Turbopac(TM) and related product line
      o     Filing for protection of new intellectual properties related to our
            products
      o     Review and negotiate to settle outstanding litigation and
            liabilities
      o     Formulating business and marketing plans


                                       21
<PAGE>

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

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

Turbodyne's longer term goal is to be able to work with the vehicle
manufacturers to improve new cars' miles per gallon or liters per 100
kilometers. By combining our products with exhaust turbochargers, smaller
engines can be used to reduce vehicle weight while maintaining initial
acceleration. Also identified were the product requirements we needed to be
successful in the vehicle marketplace. These were:

      1. Reduce the unit cost,
      2. Simplify the manufacturing process,
      3. Increase unit reliability, and
      4. Reduce electrical power consumption.

In addition, we have substantially reduced the weight of our products and made
the control systems smaller and more useful, something that is extremely
important for the small engine segment and the retrofit market.

We believe that these developments provide the Company with potential for
substantial growth but this will require investment. We have the following major
goals, given timely appropriate funding:-

o     To have products in the market place by the first quarter of 2009 or as
      soon as possible thereafter. We are working on three market areas.

o     To get operating income close to, or at breakeven by the second quarter of
      2009 or as soon as possible thereafter and positive for the rest of 2009.

There is no assurance that we will obtain sufficient funding or otherwise be
able to achieve our goals within the above timeframes if at all.

During the quarter ended June 30, 2008 the Company had entered into an
arrangement with American Transportation Systems of Los Angeles, CA for the
installation and testing of the Company's patented TurboPac. The arrangement
included a pilot phase to prove diesel fuel savings and emissions reduction, and
if successful, the purchase by American Transportation Systems of TurboPacs for
the retrofit of a select number of vehicles. At this point the Client has not
proceeded and we are not certain when and if they will proceed.


                                       22
<PAGE>

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                       ------------------------------------------------    -----------------------------------------------
                               Three Months Ended September 30                     Nine Months Ended September 30
                       ------------------------------------------------    -----------------------------------------------
                                                            Percentage                                        Percentage
                             2008             2007           Increase           2008              2007          Increase
                                           (Restated)       (Decrease)                         (Restated)     (Decrease)
                       ------------------------------------------------    -----------------------------------------------
<S>                       <C>              <C>                <C>           <C>               <C>               <C>
Total Revenue               $5,556           $5,556            Nil             $16,668          $16,668          Nil
Operating Expenses        ($334,704)       ($472,785)         (29%)         ($1,150,156)      ($1,342,722)      (14%)
                       ----------------------------------                  ---------------------------------
Net Loss from
Operations                ($329,148)       ($467,229)         (30%)         ($1,133,488)      ($1,326,054)      (15%)
Other Income
(Expenses)                ($177,748)       ($158,801)          12%          ($1,728,013)       ($972,218)        78%
                       ==================================                  =================================
Net (Loss)                ($506,896)       ($626,030)         (19%)         ($2,861,501)      ($2,298,272)       25%
                       ==================================                  =================================
</TABLE>

NET REVENUE

<TABLE>
<CAPTION>
                       ------------------------------------------------    -----------------------------------------------
                               Three Months Ended September 30                     Nine Months Ended September 30
                       ------------------------------------------------    -----------------------------------------------
                                                           Percentage                                         Percentage
                             2008            2007           Increase            2008             2007          Increase
                       ------------------------------------------------    -----------------------------------------------
<S>                         <C>             <C>              <C>               <C>             <C>               <C>
License Fee                 $5,556          $5,556           Nil               $16,668         $16,668           Nil
</TABLE>

We had no revenue in 2008 other than recognition of amortized license fees.
During the year ended December 31, 2003, $400,000 in license fees were deferred
and amortized over 18 years. As a result, for the three and nine month periods
ended September 30, 2008 and 2007, $5,556 and $16,668 of licensing fees was
recognized as income, respectively. Our continued net losses from operations
reflect our continued operating expenses and our inability to generate revenues.
We believe that we will not be able to generate any significant revenues from
TurboPac(TM)/TurboFlow(TM) until we complete our production models and enter
into commercial arrangements. See discussion above.

COSTS OF SALES

We had no sales in 2008 and 2007; therefore we did not have any costs of sales
during any portion of these years.


                                       23
<PAGE>

OPERATING EXPENSES

Operating expenses decreased from the comparable period in 2007. The primary
components of our operating expenses and principal reason for changes are
outlined in the table below:

<TABLE>
<CAPTION>
                               -----------------------------------------    -------------------------------------------
                                   Three Months Ended September 30                Nine Months Ended September 30
                               -----------------------------------------    -------------------------------------------
                                                            Percentage                                      Percentage
                                                             Increase                                        Increase
                                  2008          2007        (Decrease)          2008           2007         (Decrease)
                               -----------------------------------------    -------------------------------------------
<S>                               <C>           <C>           <C>                <C>            <C>          <C>
General and Administrative
Expenses                          $168,094      $250,503      (33%)              $598,451       $734,702     (19%)

Research and Development
Expenses                           $77,703      $141,927      (45%)              $280,623       $367,603     (24%)

Litigation Expenses                $88,017       $80,355       10%               $268,412       $239,880      12%
</TABLE>

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses primarily included management compensation
costs as well as overhead. The decline of these expenses for the three and nine
months ended September 30, 2008 compared to prior periods in 2007 is due to
decreased spending for consulting fees due to lack of financing as well as a
corresponding decrease in the non cash warrant expense. Management compensation
costs included non cash (i) stock compensation expense of $10,000 and $28,111
for the three months and nine months ended September 30, 2008 compared to none
in 2007 and (ii) warrant expense of $19,822 and $86,209 for the three months and
nine months ended September 30, 2008 compared to $64,390 and $225,444 in prior
periods of 2007. (Financial Statement Note 3). These non cash expenses are
discussed in "Compensation Expense" below.

RESEARCH AND DEVELOPMENT

The decrease in research and development costs in 2008 for the three months and
nine months ended September 30, 2008 is due to decreased spending for consulting
fees due to lack of financing as well as a corresponding decrease in the non
cash warrant expense. The amount of the latter was $3,669 and $32,866 for the
three months and nine months ended September 30, 2008 compared to $66,200 and
$92,355, respectively, for the prior periods. 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 2008 are associated
with the development of our TurboPac-related technology.

LITIGATION EXPENSE

The most significant component of our litigation expense was the accrued
interest relating to TST, Inc. settlement as well as additional legal fees to
defend a new action discussed in Financial Statement Note 5.


                                       24
<PAGE>

COMPENSATION EXPENSE

During 2006 and 2007, warrants to purchase 78,200,000 shares of our common stock
were included as additional compensation in the contracts of various consultants
that we deemed essential to our operations. The warrants are not expensed until
vested. The expense is allocated to selling general and administrative or
research and development as appropriate as discussed above.

Of these warrants, 22,044,436 were cancelled due to termination of the
consulting contracts and 5,263,886 were vested and reflected as an expense for
the nine months ended September 30, 2008. The total vested and expensed from the
grant date through September 30, 2008 was 21,436,106 warrants. We recognized
$119,075 of non-employee compensation expense during the nine months ended
September 30, 2008 compared to $317,799 during the nine months ended September
30, 2007. From time to time we may grant a significant number of options or
warrants to purchase common stock to non-employees.

In January 2008 the Company entered a consulting agreement to issue 12,000,000
shares of the Company's common stock as compensation. The shares vest in
accordance with a vesting schedule. Of these shares 1,000,000 have vested as of
September 30, 2008. As a result we recognized non cash stock compensation
expense of $10,000 and $28,111 (Nil in 2007) for the three and nine months ended
September 30, 2008. Subsequent to September 30, 2008 the 1,000,000 shares were
issued.

OTHER INCOME (EXPENSE)

<TABLE>
<CAPTION>
                           -------------------------------------------   ----------------------------------------------
                                Three Months Ended September 30                 Nine Months Ended September 30
                           -------------------------------------------   ----------------------------------------------
                                                           Percentage                                       Percentage
                                                            Increase                                         Increase
                               2008           2007         (Decrease)         2008             2007         (Decrease)
                                           (Restated)                                       (Restated)
                           -------------------------------------------   ----------------------------------------------
<S>                           <C>            <C>            <C>             <C>             <C>               <C>
Gain on Extinguishment
of debt
                                       -        $76,166     (100%)                   --        $307,937       (100%)
                           ----------------------------                  -------------------------------
OTHER EXPENSES

Interest Expense                ($6,209)      ($15,259)     (59%)              ($63,841)       ($36,571)        75%

Amortization of Discount
on Convertible Notes           ($80,339)     ($219,708)     (63%)             ($414,915)      ($565,184)       (27%)

Inducement Expense             ($91,200)            --       --             ($1,247,657)      ($678,400)        84%

Income Tax Expense                   --             --       --                 ($1,600)             --        100%
                           --------------------------------------------------------------------------------------------
Total Other Expenses          ($177,748)     ($234,967)     (24%)           ($1,728,013)    ($1,280,155)        35%
                           --------------------------------------------------------------------------------------------
Other Income and Expenses     ($177,748)     ($158,801)     (12%)           ($1,728,013)      ($972,218)        78%
                           ============================================================================================
</TABLE>


                                       25
<PAGE>

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

The Company had other expenses for the quarter ended September 30, 2008 of
$177,748 compared to $1,728,013 in 2007. As indicated above, these expenses
consisted mainly of amortization of discounts on convertible notes and value of
detachable warrants and for related debt conversion expenses (Financial
Statement Note 4).

The Company continues to negotiate with our creditors and trade debt holders to
settle accounts payable. If achieved, in an amount below the recorded amount,
could result in debt extinguishment income.

NET INCOME / LOSS

Our net loss for the quarter ended September 30 2008 decreased to $506,896 from
net loss of $626,030 for the quarter ended September 30, 2007, representing a
decrease of 19%. The decrease is directly related to the decrease in expenses
from the amortization of discounts on convertible notes and value of detachable
warrants and for related debt conversion expenses since the operating loss
decreased by $138,081 or 30%.

We believe, however that recent technical developments provide the Company with
potential for substantial revenue in three market areas but this will require
funding. Given appropriate funding we believe we could have the product in the
marketplace by the first quarter of 2009 and achieve operating income close to,
or at breakeven by the second quarter of 2009 and positive for the rest of 2009.
To the extent funding is delayed these goals will be delayed. We will continue
to have losses as we will incur operating expenses in completing our development
without any revenues. Such losses will continue until such time as we generate
revenue from sales or licensing of our products in excess of our operating
expenses.


                                       26
<PAGE>

FINANCIAL CONDITION

CASH AND WORKING CAPITAL

                          ------------------------------------------------------
                          September 30, 2008    December 31, 2007     Percentage
                                                                       Increase
                          ------------------------------------------------------
Current Assets                      $13,726               $3,458         297%
Current Liabilities             ($8,414,934)         ($8,619,585)        (2%)
                          ------------------------------------------------------
Working Capital Deficit         ($8,401,208)         ($8,616,127)        (2%)
                          ======================================================

The decrease to our working capital deficit was primarily attributable to a
decrease in convertible notes outstanding since the accounts payable, accrued
liabilities and provision for lawsuit settlements all increased as discussed
below.

LIABILITIES

<TABLE>
<CAPTION>
                                     ------------------------------------------------------------
                                     September 30, 2008   December 31, 2007       Percentage
                                                                             Increase/ (Decrease)
                                     ------------------------------------------------------------
<S>                                          <C>                 <C>                  <C>
Provisions for Lawsuit Settlements           $5,257,378          $4,994,173           5%
Accounts Payable                             $2,339,512          $2,132,439          10%
Accrued Liabilities                            $353,267            $292,000          21%
Short-Term Loans                               $464,777          $1,200,973         (61%)
</TABLE>

The increase in provision for lawsuits is primarily due to accrued interest on
outstanding judgments. Short-term loans decreased due to the conversion of
$1,281,123 of notes and accrued interest to the Company's common stock. The
decrease is offset by additional short term loans of $323,500 in connection with
our note financing to generate cash. Short-term loans are net of discounts of
$19,232 ($199,726 in 2007) and warrant allocation of $13,580 ($53,501 in 2007)
which nevertheless represents actual cash obligations (Financial Statement Note
4).

Included in short-term loans at September 30, 2008 are unsecured, non-interest
bearing advances of $138,600 that we anticipate will be converted into shares of
our common stock.


                                       27
<PAGE>

CASH FLOWS
                                                       -------------------------
                                                         At September 30,
                                                       -------------------------
                                                             2008          2007
                                                             ----          ----
                                                                      (Restated)
Net Cash provided by (used in) Operating Activities     ($298,907)    ($584,792)
Net Cash provided by (used in) Investing Activities      ($14,325)     ($11,351)
Net Cash provided by (used in) Financing Activities      $323,500      $622,000
Net Increase (Decrease) in Cash During Period             $10,268       $25,857

CASH USED IN OPERATING ACTIVITIES

The decrease in cash used in operating activities was due to the limited amount
of funds available compared to 2007.

Financing Requirements

We will require additional financing if we are to continue as a going concern
and to finance our business operations. While we have obtained some financing in
2008 we need substantially more capital to complete development and continue our
business. There is no assurance that we will be able to raise the required
additional capital. In the event that we are unable to raise additional
financing on acceptable terms, then we may have to cease operating and seek
relief under appropriate statutes. Accordingly, there is substantial doubt about
our ability to continue as a going concern.

We believe, however that recent technical developments provide the Company with
potential for substantial growth but this will require investment. Our major
goals, given appropriate funding are discussed above.

There is no assurance that we will obtain sufficient funding or otherwise be
able to achieve our goals.


                                       28
<PAGE>

CRITICAL ACCOUNTING POLICIES

STOCK BASED COMPENSATION

We account for stock-based compensation under the fair value method in
accordance with Statement of Financial Accounting Standards No. 123 (revised
2004), "Share Based Payment" "SFAS 123(R)". SFAS No. 123R requires us to
establish assumptions and estimates of the weighted-average fair value of stock
options granted, as well as using a valuation model to calculate the fair value
of stock-based awards. We use the Black-Scholes option-pricing model to
determine the fair-value of stock-based awards. All options are amortized over
the requisite service periods of the awards, which are generally the vesting
periods.

REVENUE RECOGNITION

Prior to the suspension of our operations in 2003, 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.
During the year ended December 31, 2003, $400,000 in license fees were deferred
and amortized over 18 years. As a result, for the nine months ended September
30, 2008, $16,668 ($16,668 in 2007) of licensing fees was recognized as income.

RESEARCH AND DEVELOPMENT

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


                                       29
<PAGE>

NEW ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements"
("SFAS 157"). SFAS No. 157 provides accounting guidance on the definition of
fair value and establishes a framework for measuring fair value and requires
expanded disclosures about fair value measurements. SFAS 157 is effective for
the Company starting January 1, 2008 and did not have an impact on the Company
as the Company does not have financial instruments subject to the expanded
disclosure requirements of SFAS 157. In February 2008, the FASB issued FASB
Staff Position FAS 157-2, "Effective Date of FASB Statement No. 157", which
provides a one year delay of the effective date of SFAS 157 as it relates to
nonfinancial assets and liabilities, except those that are recognized or
disclosed at fair value in the financial statements on a recurring basis (at
least annually). The provisions of SFAS 157 relating to nonfinancial assets and
liabilities will be effective as of the beginning of the Company's 2009 fiscal
year.

Effective January 1, 2008, the Company adopted Statement No. 159, "The Fair
Value Option for Financial Assets and Financial Liabilities - Including an
Amendment of FASB Statement No. 115 ("SFAS 159")." SFAS 159 permits entities to
choose to measure many financial instruments and certain other items at fair
value, and establishes presentation and disclosure requirements designed to
facilitate comparisons between entities that choose different measurement
attributes for similar types of assets and liabilities. The adoption of SFAS 159
had no impact on the Company's financial statements as the Company did not elect
the fair value option

In December 2007, the FASB issued Statement No. 141R, "Business Combinations"
("SFAS 141R"). SFAS 141R revises the principles and requirements for how the
acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, any non controlling interest in the
acquiree, and the goodwill acquired in a business combination or gain from a
bargain purchase. SFAS 141R also revises the principles and requirements for how
the acquirer determines what information to disclose to enable users of the
financial statements to evaluate the nature and financial effects of the
business combination. This pronouncement will be effective for the Company on
January 1, 2009. The Company is currently evaluating the impact, if any, that
SFAS 141R will have on its financial position or results of operations.

Also in December 2007, the FASB issued Statement No. 160, "Non controlling
Interest in Consolidated Financial Statements -- an amendment of ARB No. 51"
("SFAS 160"). SFAS 160 amends ARB No. 51 to establish accounting and reporting
standards for the non controlling interest in a subsidiary and for the
deconsolidation of a subsidiary. This pronouncement will be effective for the
Company on January 1, 2009. The Company is currently evaluating the impact, if
any, that SFAS 160 will have on its financial position or results of operations.

In March 2008, the FASB issued Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities" ("SFAS 161"). SFAS 161 requires companies
with derivative instruments to disclose information that should enable
financial-statement users to understand how and why a company uses derivative
instruments, how derivative instruments and related hedged items are accounted
for under FASB Statement No. 133 "Accounting for Derivative Instruments and
Hedging Activities" and how derivative instruments and related hedged items
affect a company's financial position, financial performance and cash flows.
SFAS 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. The Company is currently
evaluating the impact, if any, that SFAS 161 will have on our financial position
or results of operations.


                                       30
<PAGE>

In May 2008, the FASB issued Statement No. 162, "The Hierarchy of Generally
Accepted Accounting Principles ("SFAS 162"). SFAS 162 identifies a consistent
framework, or hierarchy, for selecting accounting principles to be used in
preparing financial statements that are presented in conformity with U.S.
generally accepted accounting principles for nongovernmental entities (the
"Hierarchy"). The Hierarchy within SFAS 162 is consistent with that previously
defined in the AICPA Statement on Auditing Standards No. 69, "The Meaning of
Present Fairly in Conformity With Generally Accepted Accounting Principles"
("SAS 69"). SFAS 162 is effective 60 days following the United States Securities
and Exchange Commission's (the "SEC") approval of the Public Company Accounting
Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles". The adoption of SFAS
162 will not have a material effect on the Consolidated Financial Statements
because the Company has utilized the guidance within SAS 69.

In May 2008, the FASB issued Statement No. 163, "Accounting for Financial
Guarantee Insurance Contracts--an interpretation of FASB Statement No. 60 ("SFAS
No. 163"). SFAS 163 requires recognition of an insurance claim liability prior
to an event of default when there is evidence that credit deterioration has
occurred in an insured financial obligation. SFAS 163 is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and all
interim periods within those fiscal years. Early application is not permitted.
The Company's adoption of SFAS 163 will not have a material effect on the
Consolidated Financial Statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

NOT APPLICABLE.


                                       31
<PAGE>

ITEM 4. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

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

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rule
13a-15(f). As required by Rule 13a-15 under the Exchange Act the Company's Chief
Executive Officer and its Chief Financial Officer assessed the effectiveness of
our internal control over financial reporting as of September 30, 2008. In
making its assessment of internal control over financial reporting, management
used the criteria described in Internal Control -- Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment management identified material weaknesses in the
Company's internal controls over financial reporting due in a significant part
to the pervasive effect of the lack of resources, specifically the limited
number of personnel involved in the financial reporting including the number of
persons that are appropriately qualified in the areas of U.S. GAAP and SEC
reporting. These limitations include an inability to segregate functions.
Because of this weakness there is a possibility that a material misstatement of
the annual financial statements would not have been prevented or detected.
Nevertheless 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 of the
accuracy of the Company's financial statements at year end. The adverse effect
of the material weakness over internal controls, however, will become magnified
if the Company increases operations.

Due to the complexity of the accounting for the convertible notes with
detachable warrants, there were material additional adjustments made to our
annual financial statements prior to their publication in this report as well as
interim financial statements after filing. In management's view, this was not
the result of a material weakness in internal control but due to the complexity
of the accounting rules and their interpretations affecting transactions of this
nature.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in our internal control over financial reporting that
occurred during our most recent fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.


                                       32
<PAGE>

PART II - OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS

N/A

ITEM 2. CHANGES IN SECURITIES.

The following issuances of securities occurred during the three months ended
September 30, 2008.

During the three months ended September 30, 2008 $596,000 of principal of the
Companies 18% convertible notes were converted into 52,907,029 shares of our
common stock at a conversion price of either one-half penny ($0.005) or two
cents ($0.02) per share. These shares were issued pursuant to Section 3a (9) of
the Securities Act of 1933 and are exempt from the registration requirements
under that act.

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

EXHIBITS

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

31.2      Certification of Chief Financial Officer pursuant to Section 302 of
          the Sarbanes-Oxley Act of 2002.

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

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


                                       33
<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.

Signature                 Title                             Date
---------                 -----                             ----

/s/ Jason Meyers          Co-Chief Executive Officer        November 14, 2008
                          and Director

/s/ Debi Kokinos          Chief Financial Officer           November 14, 2008
                          and Chief Accounting Officer