<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

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

     For  the  quarterly  period  ended  March  31,  2002

[ ]  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)

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


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

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

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

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

State the number of shares outstanding of each of the issuer's classes of common
stock,  as  of  the  latest practicable date:  86,340,043 shares of common stock
issued  and  outstanding  as  of  May  10,  2002.


<PAGE>

                         PART 1 - FINANCIAL INFORMATION

Item  1.          Financial  Statements

The accompanying unaudited financial statements have been prepared in accordance
with  the  instructions  to Form 10-QSB and Item 310 (b) of Regulation S-B, and,
therefore, do not include all information and footnotes necessary for a complete
presentation  of  financial  position,  results  of  operations, cash flows, and
stockholders'  equity  in  conformity  with  generally  accepted  accounting
principles.  In  the opinion of management, all adjustments considered necessary
for a fair presentation of the results of operations and financial position have
been  included  and  all  such  adjustments  are  of  a normal recurring nature.
Operating  results for the three months ended March 31, 2002 are not necessarily
indicative  of the results that can be expected for the year ending December 31,
2002.




                                       2

<PAGE>







          Turbodyne  Technologies,  Inc.  and  Subsidiaries
          Consolidated  Financial  Statements
          For  the  three-month  periods  ended  March  31,  2002  and  2001
          (Unaudited  -  Expressed  in  US  Dollars)










                                       3

<PAGE>





          Turbodyne  Technologies,  Inc.  and  Subsidiaries
          Consolidated  Financial  Statements
          For  the  three-month  periods  ended  March  31,  2002  and  2001
          (Unaudited  -  Expressed  in  US  Dollars)




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


Consolidated  Financial  Statements
-----------------------------------
     Balance  Sheets

     Statements  of  Operations

     Statements  of  Capital Deficit

     Statements  of  Cash  Flows

     Notes  to  the  Financial  Statements





                                       4

<PAGE>

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


                                                       March 31     December 31
                                                           2002            2001
--------------------------------------------------------------------------------
<S>                                               <C>             <C>
                                                     (Unaudited)
Assets

Current
   Cash                                           $      22,320   $      20,257
   Prepaid expenses and other current assets              2,131               -
                                                  ------------------------------
      Total current assets                               24,451          20,257

Property and equipment, at cost, net less
 accumulated depreciation                               196,475         210,550
Licenses, at cost less accumulated
 amortization                                           988,000       1,040,000
                                                  ------------------------------

Total Assets                                      $   1,208,926   $   1,270,807
================================================================================

Liabilities and Capital Deficit

Liabilities

Current
   Current maturities of long-term debt           $      73,071   $      73,071
   Accounts payable                                   2,810,832       2,751,769
   Accrued liabilities                                1,184,447         354,474
   Related party loan payable (Note 3)                  443,000               -
   Reserve for lawsuit settlements                    6,169,238       6,169,238
                                                  ------------------------------
      Total liabilities                              10,680,588       9,348,552
                                                  ------------------------------

Capital Deficit
   Share Capital
     Authorized
       1,000,000 preferred shares, par value $0.001
      99,000,000 common shares, par value $0.001
     Issued
      84,853,582 common shares in 2002
       (2001 - 84,036,915)                               84,854          84,037
   Treasury stock, at cost (378,580 shares)          (1,755,534)     (1,755,534)
   Additional paid-in capital                       108,309,994     108,147,994
   Accumulated other comprehensive income -
     Foreign exchange translation gain                   35,119          35,119
   Accumulated deficit                             (116,146,095)   (114,589,361)
                                                  ------------------------------
      Total capital deficit                          (9,471,662)     (8,077,745)

Commitments and contingencies (Note 4)                        -               -

Total Liabilities and Capital Deficit
 (Deficiency)                                     $   1,208,926   $   1,270,807
================================================================================
</TABLE>



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


                                       5

<PAGE>

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

For the three-month periods ended March 31                    2002          2001
                                                      --------------------------
<S>                                                   <C>           <C>
Net sales                                             $         -   $    10,443

Cost of sales, including inventory write-downs                  -         2,660
                                                      --------------------------
  Gross profit                                                  -         7,783
                                                      --------------------------

Expenses
  Selling, general and administrative                     267,675       628,036
  Research and developments costs                         954,853       731,279
  Litigation expense                                      270,901        15,052
  Depreciation and amortization                            66,075        23,071
                                                      --------------------------
    Total expenses                                      1,559,504     1,397,438
                                                      --------------------------

Loss from operations                                   (1,559,504)   (1,389,655)

Other income (expense)
  Interest expense, net                                      (126)       (2,997)
  Other, net                                                2,896        16,470
                                                      --------------------------
Net loss for the period                               $(1,556,734)  $(1,376,182)
================================================================================

Loss per common share
  Basic and diluted                                   $     (0.02)  $     (0.02)
================================================================================

Weighted average shares outstanding used
 for basic and diluted loss per share                  84,397,619    62,051,646
================================================================================
</TABLE>


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



                                       6

<PAGE>

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

                                                                                               Additional
                                                   Common Stock         Treasury Stock            Paid-in
                                                   Shares     Amount    Shares       Amount       Capital
-----------------------------------------------------------------------------------------------------------
<S>                                             <C>         <C>      <C>         <C>           <C>
Balance, December 31, 2000                      58,151,821  $58,152     378,580  $(1,755,534)  $101,126,022

Exercise of stock options                        3,874,566    3,875           -            -        461,463

Private placement of common stock               11,930,528   11,930           -            -      1,897,692

Issuance of stock for services                   3,780,000    3,780           -            -        790,020

Issuance of stock recorded as compensation       3,500,000    3,500   1,466,500            -              -

Issuance of stock and warrants for licenses      2,000,000    2,000           -            -      1,038,000

Issuance of stock and warrants for
  settlement of a guarantee                        800,000      800           -            -        251,200

Issuance of stock options for non-employees
  for services                                           -        -           -            -      1,117,097

Net loss and comprehensive loss for the year             -        -           -            -              -
                                                -----------------------------------------------------------
Balance, December 31, 2001                      84,036,915   84,037     378,580   (1,755,534)   108,147,994

Private placement of common stock                  816,667      817           -            -        162,000

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

Balance, March 31, 2002                         84,853,582  $84,854  $  378,580  $(1,755,534)  $108,309,994
===========================================================================================================



                                                                   Other
                                                           Comprehensive                           Total
                                                                  Income     Accumulated         Capital
                                                                  (Loss)         Deficit         Deficit
--------------------------------------------------------------------------------------------------------
<S>                                                           <C>          <C>             <C>

Balance, December 31, 2000                                    $    35,119  $(107,224,141)  $ (7,760,382)

Exercise of stock options                                               -              -        465,338

Private placement of common stock                                       -              -      1,909,622

Issuance of stock for services                                          -              -        793,800

Issuance of stock recorded as compensation                              -              -      1,470,000

Issuance of stock and warrants for licenses                             -              -      1,040,000

Issuance of stock and warrants for settlement of a guarantee            -              -        252,000

Issuance of stock options for non-employees for services                -              -      1,117,097

Net loss for the year                                                   -     (7,365,220)    (7,365,220)
                                                              ------------------------------------------

Balance, December 31, 2001                                         35,119   (114,589,361)    (8,077,745)

Private placement of common stock                                       -              -        162,817

Net loss for the year                                                   -     (1,556,734)    (1,556,734)
                                                              ------------------------------------------

Balance, March 31, 2002                                       $    35,119  $(116,146,095)  $ (9,471,662)
========================================================================================================
</TABLE>



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


                                       7

<PAGE>

<TABLE>
<CAPTION>

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

For the three-month periods ended March 31                           2002          2001
------------------------------------------------------------------------------------------
<S>                                                             <C>           <C>
Cash provided by (used in)

Operating activities
  Net loss for the period                                       $(1,556,734)  $(1,376,182)
  Adjustments to reconcile net loss for the period
   to net cash used in operating activities:
    Depreciation and amortization                                    66,075        23,071
  (Increase) decrease in operating assets
    Trade accounts receivable                                             -        25,433
    Employee advances receivable                                          -          (804)
    Inventories                                                           -         2,660
    Prepaid expenses and other current assets                        (2,131)            -
    Other assets                                                          -         3,595
  Increase (decrease) in operating liabilities
    Accounts payable                                                 59,063       120,975
    Accrued liabilities and reserve for lawsuit
     settlements                                                    829,973         5,543
                                                                --------------------------
                                                                   (603,754)   (1,195,709)
                                                                --------------------------
Financing activities
  Net proceeds from short-term borrowings                                 -        20,500
  Issuance of common stock and stock subscriptions                  162,817     1,235,849
  Related party loan payable                                        443,000             -
  Increase in cash overdraft                                              -       (60,640)
                                                                --------------------------
                                                                    605,817     1,195,709
                                                                --------------------------
Net increase in cash                                                  2,063             -

Cash, beginning of period                                            20,257             -
                                                                --------------------------
Cash, end of period                                             $    22,320   $         -
==========================================================================================

Supplementary disclosure of cash flow information
  Cash paid during the period
    Interest                                                    $         -   $     3,000
    Income taxes                                                $         -   $       800

Supplementary disclosure of non-cash investing and
 financing activities
  Stock and warrants issued on settlement of a guarantee        $         -   $   252,000
==========================================================================================

</TABLE>


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


                                       8

<PAGE>

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

March  31,  2002  and  2001
--------------------------------------------------------------------------------

1.     Nature  of  Business  and  Ability  to  Continue  as  a  Going  Concern

Turbodyne  Technologies,  Inc.  and  subsidiaries  (the  Company),  a  Delaware
corporation,  engineers,  develops  and  markets  products  designed  to enhance
performance  and  reduce  emissions  of  internal  combustion  engines.

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

These  financial  statements  reflect  all  adjustments,  consisting  of  normal
recurring  adjustments,  which  in  the opinion of management, are necessary for
fair  presentation  of  the  information contained therein. It is suggested that
these  interim  financial  statements  be  read  in conjunction with the audited
financial  statements  of  the Company for the years ended December 31, 2001 and
2000  included in the Company's 10-K Annual Report. The Company follows the same
accounting  policies  in  the  preparation  of  interim  reports.

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

The  accompanying  consolidated financial statements have been prepared assuming
that  the Company will continue as a going concern. The Company has suffered net
losses  in recent periods resulting in an accumulated deficit of $116,146,095 at
March 31, 2002, has used cash in its operating activities in recent periods, has
disposed  of  its  most significant subsidiary through bankruptcy, is subject to
lawsuits  brought against it by shareholders and other parties, and based on the
Company's  projected cash flows for the ensuing year it will be required to seek
additional equity or debt financing in order to continue its present operations,
irrespective  of  the  amounts  to  be  paid,  if  any,  in  connection with the
aforementioned  lawsuits.  These  matters  raise  substantial  doubt  about  the
Company's  ability  to  continue  as  a  going  concern.

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

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


                                       9

<PAGE>

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

March  31,  2002  and  2001
--------------------------------------------------------------------------------

2.     Stockholders'  Equity

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

a)     Stock  Options

The  following  summarizes information relating to stock options during 2002:


<TABLE>
<CAPTION>
                                                         2002

                                       Non-employees       Employees         Total
                                    ----------------------------------------------------
                                             Weighted          Weighted         Weighted
                                              Average          Average           Average
                                             Exercise          Exercise         Exercise
                                    Options    Price  Options  Price    Options    Price
                                    ----------------------------------------------------
<S>                                 <C>        <C>     <C>     <C>     <C>        <C>

Outstanding at beginning
  of period                         1,913,415  $ 0.33       -  $    -  1,913,415  $ 0.33
Granted                                     -       -       -       -          -       -
Exercised                                   -       -       -       -          -       -
Forfeited                                   -       -       -       -          -       -
                                    ----------------------------------------------------
Outstanding at end of period        1,913,415    0.33       -       -  1,913,415    0.33
Options exercisable at end of
  period                            1,913,415  $ 0.33       -  $    -  1,913,415  $ 0.33
                                    ====================================================
</TABLE>


b)     Stock  Purchase  Warrants

At  March  31,  2002,  the  Company  had  19,537,332  stock  purchase  warrants
outstanding, respectively. These warrants were issued in connection with private
placements  and  other  means  of  financing.  The holders of these warrants are
entitled  to  receive  one  share of common stock of the Company for one warrant
exercised.  The  warrants  have  exercise prices ranging from $0.22 to $4.00 and
expiration  dates  between  2002  and  2004.

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

3.     Loan Payable

During  the  quarter  ended March 31, 2002, the Company received from a director
$443,000 in unsecured and non-interest bearing advances. Management expects that
the amounts owing will be settled through the issuance of common stock and share
purchase  warrants.


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

4.     Contingencies

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


                                       10

<PAGE>

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

March  31,  2002  and  2001
--------------------------------------------------------------------------------

5.     New  Accounting  Pronouncements

In  June  2001, the Financial Accounting Standards Board finalized SFAS No. 141,
"Business  Combinations",  and  SFAS  No.  142,  "Goodwill  and Other Intangible
Assets".  SFAS  141  requires  the  use of the purchase method of accounting and
prohibits  the use of the pooling-of-interests method of accounting for business
combinations  initiated  after  June  30,  2001. SFAS 141 also requires that the
Company recognize acquired intangible assets apart from goodwill if the acquired
intangible  assets  meet  certain  criteria.  SFAS  141  applies to all business
combinations  initiated  after  June  30,  2001  and  for  purchase  business
combinations completed on or after July 1, 2001. It also requires, upon adoption
of  SFAS  142,  that  the  Company reclassify the carrying amounts of intangible
assets  and  goodwill  based  on  the  criteria  in  SFAS  141.

SFAS  142  requires,  among  other  things,  that  companies  no longer amortize
goodwill,  but  instead  test  goodwill  for  impairment  at  least annually. In
addition,  SFAS  142  requires that the Company identify reporting units for the
purposes  of  assessing  potential  future impairments of goodwill, reassess the
useful  lives  of  other  existing  recognized  intangible  assets,  and  cease
amortization  of intangible assets with an indefinite useful life. An intangible
asset  with  an  indefinite  useful  life  should  be  tested  for impairment in
accordance  with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal  years  beginning  after  December  15,  2001  to  all goodwill and other
intangible  assets recognized at that date, regardless of when those assets were
initially  recognized.  SFAS 142 requires the Company to complete a transitional
goodwill  impairment  test  six months from the date of adoption. The Company is
also required to reassess the useful lives of other intangible assets within the
first  interim  quarter  after  adoption  of  SFAS  142.

The  Company's  previous  business  combinations  were  accounted  for using the
purchase method. The adoption of SFAS 141 and SFAS 142 is not expected to have a
material  effect  on  the  Company's  financial  statements.

In  October  2001, the Financial Accounting Standards Board issued SFAS No. 144,
"Accounting  for  the Impairment or Disposal of Long-Lived Assets". SFAS No. 144
requires  that  those  long-lived  assets  be  measured at the lower of carrying
amount  or  fair  value  less  cost  to  sell,  whether  reported  in continuing
operations  or  in  discontinued  operations. Therefore, discontinued operations
will  no  longer  be  measured  at  net  realizable value or include amounts for
operating  losses  that  have  not  yet  occurred. SFAS No. 144 is effective for
financial  statements  issued for fiscal years beginning after December 15, 2001
and,  generally,  is to be applied prospectively. The implementation of this new
standard  is  not  expected to have a material effect on the Company's financial
statements.

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

6.     Comparative  Amounts

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



                                       11

<PAGE>

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

FORWARD  LOOKING  STATEMENTS

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

OVERVIEW

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

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

We are presently finalizing the development of additional products incorporating
new  technology,  including a product known as the TurboAir.  These new products
are  in  various stages of design and development.  Our ability to commercialize
these  new products is conditional upon us entering into arrangements with OEM's
that  provide  for  the  final  development and manufacturing of these products.

We  are  currently  in  a transition phase of our business to an engineering and
design business from a business model that originally included manufacturing and
marketing  of products incorporating our technology.   Our operating results for
the  three  months  ended  March 31, 2002 reflect the fact that Honeywell is not
proceeding  with  the commercialization of the Turbopac and Dynacharger products
and  we  are  not  earning  revenues under our license agreement with Honeywell.

We  are  currently  not  earning  any  revenues under our license agreement with
Honeywell  or  through  sales  of  products  incorporating  our  new technology.


                                       12

<PAGE>

RESULTS  OF  OPERATIONS

Net  Sales

We  did not achieve any sales during the three months ended March 31, 2002.  Our
net  sales were $10,443 for the three months ended March 31, 2001.  Sales during
the  three  months  ended  March 31, 2001 consisted entirely of refurbishment of
Turbopac  products sold under our contract with Detroit Diesel Corporation.  Our
current  inability  to  earn  revenues reflects the fact that we are not able to
earn  any revenues pursuant to our license agreement with Honeywell as Honeywell
is  not completing any sales of the Turbopac or Dynacharger products and we have
yet  to commercialize our newly developed products.  There have been no sales of
the  Turbopac(TM)  product  by  Honeywell  since  June  2000 and our Dynacharger
product  remains  in  development.

We  anticipate  that  we will not be able to generate any revenues from sales of
the  Turbopac or Dynacharger products until we are successful in entering into a
new  license  and  manufacturing  arrangement  with  a  new  automotive OEM.  We
anticipate  that  we will not be able to generate sales of our TurboAir products
until  we  are  able  to  enter into an agreement with an automotive OEM for the
final  development  and  manufacture  of  this  product.

Costs  of  Sales

We  did not have any costs of sales during the three months ended March 31, 2002
in  view  of  the  fact  that  we had no sales. Cost of goods sold for the three
months ended March 31, 2001 were $2,660.  We did not engage in any manufacturing
activity  during the three months ended March 31, 2002 and we anticipate that we
will  not  undertake  any  manufacturing  activity  during  2002,  other  than
manufacturing  of  prototypes  for  evaluation  and  demonstration  purposes.

Gross  Profit

Gross  profit  for  the three months ended March 31, 2002 was $NIL compared to a
gross  profit  of  $7,783  for the three months ended March 31, 2001.  The gross
profit  for the first quarter of 2002 reflects our lack of revenues and the fact
that  we  are  currently  not  engaged  in  any  manufacturing  activities.

Selling,  General  and  Administrative  Expenses

Selling,  general  and  administrative expenses for the three months ended March
31,  2002  decreased  to $267,675 from $628,036 for the three months ended March
31,  2001,  representing  a decrease of $360,361 or 57.4%.   The decrease in our
selling,  general  and  administrative  expenses  was  attributable  to  our
determination  in 2001 to scale back our business operations to reflect our lack
of financing and reduced marketing expenses as a result of the fact that we were
no longer directly marketing the Turbopac and Dynacharger products.  General and
administrative  costs  included  expenses  associated  with  our  Carpinteria,
California  office, our European office, management compensation, administrative
staff  and  overhead.  Selling expenses were minimal as we did not undertake any
marketing  efforts  with respect to the Turbopac and Dynacharger products in the
first  quarter  of  2002  as these products were governed by our agreements with
Honeywell.  Our  European  office  was  closed  subsequent  to  March  31, 2002.


                                       13

<PAGE>

Research  and  Development

Research  and  development  costs  for  the  three  months  ended March 31, 2002
increased  to  $954,853  from  $731,279  for  three months ended March 31, 2001,
representing  an  increase of $223,574 or approximately 30.6%.  Our research and
development  activities  during  the  three  months ended March 31, 2002 did not
include any joint research and development with Honeywell and involved primarily
developing  and  testing  prototypes  of  our  TurboAir  products.  Research and
development  costs  for the three months ended March 31, 2001 primarily included
our participation in our joint development agreement with Honeywell.  This joint
research  and  development  with  Honeywell  was  terminated  on  June 28, 2001.

Litigation  Expense

We  incurred  expenses  related  to litigation in the amount of $270,901 for the
three months ended March 31, 2002 compared to $15,052 for the three months ended
March  31,  2001.  The  increase in litigation expense in the amount of $255,849
was attributable to our involvement in the legal proceedings described in Item 1
of  Part  II  of  this  Quarterly  Report  on Form 10-QSB.  The most significant
component  of  our  litigation  expense  during  the  first  quarter of 2002 was
attributable  to  our  litigation  with  Honeywell.

Net  Loss

Our  net loss for the three months ended March 31, 2002 was $1,556,734, compared
to  a  net  loss  of  $1,376,182 for the three months ended March 31, 2001.  The
increase  to  our net loss in the amount of $180,552 was primarily reflective of
the  increase  to  our  total  operating  expenses.

FINANCIAL  CONDITION

We had cash of $22,320 as at March 31, 2002, compared with cash of $20,257 as at
December  31,  2001.  Our working capital deficit increased to $10,656,137 as at
March  31,  2002,  compared  to  a  working  capital deficit of $9,328,295 as at
December  31,  2001.  The  largest component of our working capital deficit is a
reserve  for  lawsuit  settlements  in  the amount of $6,169,238 as at March 31,
2002.

We  had  loans  payable  in  the  amount  of  $443,000 as of March 31, 2002.  We
anticipate  that  these  loans  payable  will be converted into shares of common
stock at prices based on the trading price of our common stock during the second
quarter  of  2002.

We  had  accounts  payable  of  $2,810,832  as  of  March  31,  2002 and accrued
liabilities  of  $1,184,447 as of March 31, 2002.  Subsequent to March 31, 2002,
we  converted  liabilities  in  the  amount  of  $901,230  into  an aggregate of
2,731,000  shares  of  our common stock.  These shares were registered on a Form
S-8  registration  statement  that  we  filed  with  the Securities and Exchange
Commission.

We  financed  our  business  operations during the first quarter of 2002 through
private  placement  sales  of  our  common  stock and through an increase in our
accounts  payable  and  accrued  liabilities.

Cash  used in operating activities for the three months ended March 31, 2002 was
$603,754, compared to $1,195,709 for the three months ended March 31, 2001.  The
decrease  in  cash used in operating activities was primarily attributable to an
increase  to  our  accounts  payable in the amount of $829,973 from December 31,
2001 to March 31, 2002 and our net loss of $1,556,734 for the three months ended
March  31,  2002.


                                       14

<PAGE>

Cash  provided by financing activities for the three months ended March 31, 2002
was  $605,817, compared to $1,195,709 for the three months ended March 31, 2001.
Cash  provided  by  financing activities during the three months ended March 31,
2002  consisted  primarily  of  private  placement sales of our common stock and
share  purchase  warrants  and  advances  of  loans.  Cash provided by financing
activities during the three months ended March 31, 2001 was primarily the result
of  sales  of  our  common  stock and exercises of outstanding stock options and
share  purchase  warrants.

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

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

We  will  require  additional financing if we are to continue as a going concern
and  to  finance  our  business  operations.  We  anticipate that any additional
financing  would  be  through  the  sales  of  our  common or preferred stock or
placement  of  convertible  debt. We are presently in the process of negotiating
private  placements  of  our  securities to raise working capital to finance our
operations.  However,  we  do not have any arrangements in place for the sale of
any  of  our  securities and there is no assurance that we will be able to raise
the additional capital that we require to continue operations. In the event that
we  are  unable  to  raise additional financing on acceptable terms, then we may
have  to  scale  back  our  plan  of operations and operating expenditures.   We
anticipate that we will continue to incur losses until such time as the revenues
we  are  able  to  generate  from licensing of our products exceed our increased
operation  expenses. We base this expectation in part on the expectation that we
will  incur  increased  operating  expenses  in  completing  our  stated plan of
operations  and there is no assurance that we will generate revenues that exceed
these  expenses.

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

The  consolidated  financial  statements  included with this Quarterly Report on
Form  10-QSB  have  been  prepared  assuming  that  we  will continue as a going
concern.  We  have  suffered  net  losses  in  recent  periods  resulting  in an
accumulated  deficit  of  $116,146,095  at March 31, 2002, have used cash in our
operating  activities  in  recent periods, have disposed of our most significant
subsidiary  through  bankruptcy,  are  subject to lawsuits brought against us by
shareholders  and  other  parties, and based on our projected cash flows for the
ensuing year, we will be required to seek additional equity or debt financing in
order  to  continue  our  present  operations, irrespective of the amounts to be
paid,  if  any,  in  connection with the aforementioned lawsuits.  These matters
raise  substantial  doubt  about  our  ability  to  continue as a going concern.


                                       15

<PAGE>

                           PART II - OTHER INFORMATION

Item  1.  Legal  Proceedings

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

Honeywell  International,  Inc.

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

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

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

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

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

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

We  have  claimed  damages  in  excess  of $3 billion arising as a result of the
alleged  breaches of the Sherman Act by Honeywell.  Honeywell has filed a motion
to dismiss our claim on the basis that we lack standing to sue under the Sherman
Act  and  the  Racketeer Influenced and Corrupt Organizations Act.  A hearing on
the motion to dismiss was originally scheduled for May 6, 2002.  The date of the
motion  to  dismiss  will  be adjourned to a later date to be agreed upon due to
illness  suffered  by  our  legal  counsel  in  the  matter.   We  will  contest
Honeywell's  motion  to  dismiss.

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

We  are  presently  seeking an order of the United States District Court against
Honeywell  enjoining  Honeywell  from  pursuing this arbitration proceeding.  We
maintain  that  the  filing  of  this  arbitration  proceeding  was in itself an
anti-competitive  act  under  the  Sherman  Act.

Litigation  Relating  to  Former  Subsidiary


                                       16

<PAGE>

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

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

The  Pacific  Baja  Liquidating  Trust  is  seeking:

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

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

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

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

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

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

In  March  2000,  TST,  Inc., a vendor to a subsidiary of Pacific Baja, filed an
action  against  us  in  the California Superior Court, County of San Bernardino
alleging  that  we were liable under a guarantee that we granted to TST in order
to induce TST to extend credit to our subsidiary, Pacific Baja. TST alleged that
Pacific  Baja  had  defaulted  on  the credit facility and that we are liable as
guarantor. TST originally sought damages of approximately $1.8 million. However,
if  it  is determined that TST received payment in preference to other creditors
before Pacific Baja filed its Chapter 11 petition in bankruptcy, TST will likely
increase  its  claim  by  $2,130,000.

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


                                       17

<PAGE>

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

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

(iii)   agree  to  the stipulation for the entry of judgment that will provide
for  the immediate entry of judgment against us in the amount of $2,066,078 plus
interest  form  the  date  of entry at the rate of 10% per annum. This amount of
this  judgment would immediately increase by any amount that TST is compelled by
judgment  or  court  order or settlement to return as a preferential transfer in
connection  with  the  bankruptcy  proceedings  of  Pacific  Baja;

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

We  have included an amount of $2,066,078 in our reserve for lawsuit settlements
on  our  consolidated  balance  sheet  as  at  March  31, 2002 in regard to this
settlement  with  TST.

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

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

We  filed  an action in Superior Court of the State of California for the County
of  Santa Barbara in March 2001 against Saddayapa K. Durairaj, one of our former
directors  and  Michael Joyce, Lennart Rennberg, Dr. Saxena, and Dr. Balabanian.
We  had  sought  damages for alleged fraud by the former shareholders of Pacific
Baja  in  connection  with  the  sale of their shares of Pacific Baja to us.  We
determined to abandon this law suit and we filed a request for dismissal of this
legal proceeding in the Superior Court of California, County of Santa Barbara on
February  20,  2002.

SEC  Investigation  and  Class  Action  Law  Suits

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

We consented to the entry of a final judgment of permanent injunction against us
as  part of a


                                       18

<PAGE>

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

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

2.     violating section 10(b) of the Securities Exchange Act of 1934 (the "1934
Act"), including Rule 10b-5.  Section 10(b) of the 1934 Act prohibits fraudulent
devices  and schemes, misstatements and omissions of material facts and acts and
practices that operate as a fraud or deceit in connection with the offer or sale
of  any  securities;

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

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

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


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

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


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

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


                                       19

<PAGE>

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

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

Sheppard,  Mullin  have  filed  a  defence  in this legal proceeding denying any
liability  to  us.  Discovery  consisting  of  the  production  of  documents,
interrogatories  and  the  taking  of oral dispositions has been pursued by both
parties.  This  action  has  been  set  for  trial  in  June  2002.

We  filed  an action in Superior Court of the State of California for the County
of  Santa  Barbara  (Case  No. 01046250) in March 2001 against Wendell Anderson,
Gerhard  Delf,  Sadayappa  K.  Durairaj, Naresh C. Saxena, Mugerdish Balabanian,
Kenneth  Fitzpatrick,  Alain  G. Chardon, Joseph D. Castano and Marsha Chandler.

We  have  determined to abandon this law suit against all defendants, other than
Mr.  Anderson  and  Mr.  Gelf.  We  filed  a request for dismissal of this legal
proceeding  in  the  Superior  Court  of  California, County of Santa Barbara on
January  29,  2002  with  prejudice  as  to the defendants Joseph D. Castano and
Marsha Chandler only.  We filed a request for dismissal of this legal proceeding
in  the  Superior  Court  of California, County of Santa Barbara on February 20,
2002  with  prejudice  as  to  the  defendants  Sadayappa K. Durairaj, Naresh C.
Saxena,  Mugerdish  Balabanian and Kenneth Fitzpatrick only.  We filed a request
for  dismissal  of  this  legal  proceeding in the Superior Court of California,
County  of Santa Barbara on February 26, 2002 with prejudice as to the defendant
Alain  G.  Chardon  only.

We  are  proceeding  with  the  actions  against Mr. Anderson, one of our former
directors,  and  Mr.  Delf,  one  of  our  former directors and our former chief
executive  officer.  We are seeking damages for alleged breach of fiduciary duty
by  Mr.  Anderson and Mr. Delf in connection with their handling of our dealings
with Sheppard, Mullin, our former securities legal counsel, that have given rise
to  our litigation against Sheppard, Mullin and our acquisition of Pacific Baja.
This  action  has  been  set  for  trial  on  June  26,  2002.


                                       20

<PAGE>

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

Other  Legal  Proceedings

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

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


Item  2.  Changes  in  Securities

During  the  three  months  ended  March 31, 2002, we completed the sales of the
following  securities that were not registered pursuant to the Securities Act of
1933  (the  "1933  Act"):

1.     We issued 50,000 units to one accredited investor on January 17, 2002 for
total  proceeds  of $10,000.  Each unit was comprised of one share of our common
stock and two share purchase warrants.  Each share purchase warrant entitles the
holder  to purchase one additional share of our common stock at a price of $0.40
per  share  for  a three year period. These units were issued in reliance on the
exemption from registration provided by Rule 506 of Regulation D of the 1933 Act
on  the  basis  that  the  investor  was an "accredited investor", as defined in
Regulation  D.

2.     We issued 60,000 shares of our common stock to one accredited investor on
February 19, 2002 for total proceeds of $11,000.  Each unit was comprised of one
share  of our common stock and two share purchase warrants.  Each share purchase
warrant entitles the holder to purchase one additional share of our common stock
at  a price of $0.367 per share for a three year period. These units were issued
in  reliance  on  the  exemption  from  registration  provided  by  Rule  506 of
Regulation  D  of the 1933 Act on the basis that the investor was an "accredited
investor",  as  defined  in  Regulation  D.

3.     We issued 66,667 shares of our common stock to one accredited investor on
February 21, 2002 for total proceeds of $10,000.  Each unit was comprised of one
share  of our


                                       21

<PAGE>

common  stock  and  two  share  purchase  warrants.  Each share purchase warrant
entitles  the  holder  to purchase one additional share of our common stock at a
price  of  $0.30  per  share for a three year period. These units were issued in
reliance on the exemption from registration provided by Rule 506 of Regulation D
of  the 1933 Act on the basis that the investor was an "accredited investor", as
defined  in  Regulation  D.

4.     We  issued  650,000 units to one accredited investor on February 21, 2002
for  total  proceeds  of  $130,000.  Each unit was comprised of one share of our
common  stock  and  two  share  purchase  warrants.  Each share purchase warrant
entitles  the  holder  to purchase one additional share of our common stock at a
price  of  $0.40  per  share for a three year period. These units were issued in
reliance on the exemption from registration provided by Rule 506 of Regulation D
of  the 1933 Act on the basis that the investor was an "accredited investor", as
defined  in  Regulation  D.


Item  3.  Defaults  upon  Senior  Securities

None.


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

No  matters  were submitted to our security holders for a vote during the fiscal
quarter  ending  March  31,  2002.


Item  5.  Other  Information

None.


Item  6.  Exhibits  and  Reports  on  Form  8-K.


EXHIBITS

None.

REPORTS  ON  FORM  8-K

The Registrant filed a Form 8-K Current Report on March 13, 2002 to disclose the
engagement  of  BDO  Dunwoody  LLP  as  independent  auditor.

The  Registrant  filed  a Form 8-K Current Report on May 3, 2002 to disclose the
Certificate  of Amendment to the Registrant's Certificate of Incorporation filed
with  the  Delaware  Secretary  of  State  on  September  17,  2001.


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<PAGE>

                                   SIGNATURES

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


Date:  May 14, 2002


TURBODYNE TECHNOLOGIES INC.


By:  /s/ Daniel Black
     ___________________________________
     Daniel Black, President and Chief Executive Officer
     (Principal Executive Officer)
     Date:  May 14, 2002


By:  /s/ Charles Caverno
     ___________________________________
     Charles Caverno, Secretary and Chief Financial Officer
     (Principal Financial Officer and Principal Accounting Officer)
     Date:  May 14, 2002