SECURITIES AND EXCHANGE COMMISSION
                                 WASHINGTON, D.C.  20549

                                     AMENDMENT NO. 1
                                           TO
                                        FORM 20-F

(Mark One)

 [  ]       REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
            OF THE SECURITIES EXCHANGE ACT OF 1934

                                           OR


 [X]        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended DECEMBER 31, 1996
                          -----------------
                                           OR

 [  ]       TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934


For the transition period from               to                  
                               ------------     -----------------
Commission file number 0-21391
                       -------

TURBODYNE TECHNOLOGIES INC.        
--------------------------------------------------------------------------
      (Exact name of Registrant as specified in its charter)   

INAPPLICABLE  
--------------------------------------------------------------------------
      (Translation of Registrant's name into English)

CANADA (FEDERAL JURISDICTION)            
--------------------------------------------------------------------------
      (Jurisdiction of incorporation or organization)

SUITE 510, 1090 WEST PENDER STREET 
VANCOUVER, BRITISH COLUMBIA, CANADA V6C 2N7 
--------------------------------------------------------------------------
      (Address of principal executive offices)

<PAGE>


Securities registered or to be registered pursuant to Section 12(b) of the
Act.

                                          NAME OF EACH EXCHANGE
      TITLE OF EACH CLASS                  ON WHICH REGISTERED  
      -------------------                -----------------------
      Inapplicable




Securities registered or to be registered pursuant to Section 12(g) of the
Act.

            Inapplicable  

Securities for which there is a reporting obligation pursuant to Section
15(d) of the Act.

COMMON SHARES WITHOUT PAR VALUE
--------------------------------------------------------------------------
                                    (Title of Class)

Indicate the number of outstanding shares of each of the registrant's
classes of capital or common stock as of the close of the period covered by
the annual report.

COMMON SHARES WITHOUT PAR VALUE:  23,580,098 AS AT DECEMBER 31, 1996
--------------------------------------------------------------------------

Indicate by check mark 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
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

Yes   X      No       
    ------      ------


Indicate by check mark which financial statement item the registrant has
elected to follow.

Item 17   X     Item 18      
       ------           ------


Except as otherwise noted, all dollar amounts are presented in Canadian
dollars.

Exchange Rates:  As at June 30, 1997, the exchange rate of Canadian dollars
into United States dollars was $1.4015 Canadian to $1.00 United States.

<PAGE>

                                  PART IV


ITEM 17.  FINANCIAL STATEMENTS
          --------------------

See "Item 19. Financial Statements and Exhibits" for a list of those
Financial Statements of the Company which follows.

ITEM 18.  FINANCIAL STATEMENTS
          --------------------

Inapplicable

ITEM 19.  FINANCIAL STATEMENTS AND EXHIBITS
          ---------------------------------

(a)  INDEX TO FINANCIAL STATEMENTS
     -----------------------------

     (a)  Audited Financial Statements of the Company for the period ending
          December 31, 1996, with U.S. GAAP reconciliation:

          - Auditors Report
          - Consolidated Balance Sheet
          - Consolidated Statements of Operations and Deficit
          - Consolidated Statements of Stockholders' Equity
          - Consolidated Statements of Cash Flows
          - Notes to Consolidated Financial Statements

     (b)  Consent letter of Morgan & Company, in regard to the inclusion of
          Independent Auditors' Reports in the Report.


(b)  EXHIBITS
     --------
     1(a)      Certificate of Incorporation of Dundee Resources Corp. dated
               May 18, 1983.  Incorporated herein by reference to Exhibit
               1(a) to the Company's Registration Statement on Form 20-F
               filed on September 18, 1996.

     1(b)      Articles of Dundee Resources Corp. Incorporated herein by
               reference to Exhibit 1(b) to the Company's Registration
               Statement on Form 20-F filed on September 18, 1996.
<PAGE>


     1(c)      Memorandum of Dundee Resources Corp.  Incorporated herein by
               reference to Exhibit 1(c) to the Company's Registration
               Statement on Form 20-F filed on September 18, 1996.

     1(d)      Certificate of Name Change from Dundee Resources Corp. to
               Clear View Ventures Inc. dated January 20, 1993. 
               Incorporated herein by reference to Exhibit 1(d) to the
               Company's Registration Statement on Form 20-F filed on
               September 18, 1996.

     1(e)      Amended Memorandum of Clear View Ventures Inc.  Incorporated
               herein by reference to Exhibit 1(e) to the Company's
               Registration Statement on Form 20-F filed on September 18,
               1996.

     1(f)      Certificate of Name Change from Clear View Ventures Inc. to
               Turbodyne Technologies Inc. dated April 28, 1994. 
               Incorporated herein by reference to Exhibit 1(f) to the
               Company's Registration Statement on Form 20-F filed on
               September 18, 1996.                                          
                                 
     1(g)      Amended Memorandum of the Company.  Incorporated herein by
               reference to Exhibit 1(g) to the Company's Registration
               Statement on Form 20-F filed on September 18, 1996.

     1(h)      Articles of the Company. Incorporated herein by reference to
               Exhibit 1(h) to the Company's Registration Statement on Form
               20-F filed on September 18, 1996.

     1(i)      Articles of Continuation of the Company.  Incorporated
               herein by reference to Exhibit 1(i) to the Company's
               Registration Statement on Form 20-F filed on September 18,
               1996.

     1(j)      By-laws of the Company adopted upon Continuation. 
               Incorporated herein by reference to Exhibit 1(j) to the
               Company's Registration Statement on Form 20-F filed on
               September 18, 1996.

     1(k)      Certificate of Continuation under the CANADA BUSINESS
               CORPORATIONS ACT.*

     2(a)      Specimen Common Share Certificate. Incorporated herein by
               reference to Exhibit 2(a) to the Company's Registration
               Statement on Form 20-F filed on September 18, 1996.

     3(i)      Employment Agreement between the Company and Edward M.
               Halimi.  Incorporated herein by reference to Exhibit 3(i) to
               the Company's Registration Statement on Form 20-F filed on
               September 18, 1996.

     3(ii)     Management Agreement between the Company and Seeds
               Investment Corporation.  Incorporated herein by reference to
               Exhibit 3(ii) to the Company's Registration Statement on
               Form 20-F filed on September 18, 1996.

     3(iii)    Sub-Lease between American Appliance, Inc. and Carole D.
               King dated December 1, 1994 for Carpinteria Property.
               Incorporated herein by reference to Exhibit 3(iii) to the
               Company's Registration Statement on Form 20-F filed on
               September 18, 1996.

     3(iv)     Distribution Agreement between Turbodyne Systems and
               Granatelli Performance, Inc.  Incorporated herein by
               reference to Exhibit 3(iv) to the Company's Registration
               Statement on Form 20-F filed on September 18, 1996.

     3(v)      Acquisition Agreement between the Company, Pacific Baja
               Light Metals Holding Inc., and Lenart Renberg, Michael
               Joyce, Sadayappa Durairaj Family Trust, Naresh Saxens and
               Mugerdish Balabanian dated March 15, 1996.  Incorporated
               herein by reference to Exhibit 3(v) to the Company's
               Registration Statement on Form 20-F filed on September 18,
               1996.
<PAGE>


     3(vi)     Amendment Agreement between the Company, Pacific Baja Light
               Metals Holding Inc., and Lenart Renberg, Michael Joyce,
               Sadayappa Durairaj Family Trust, Naresh Saxens and Mugerdish
               Balabanian dated June 14, 1996.  Incorporated herein by
               reference to Exhibit 3(vi) to the Company's Registration
               Statement on Form 20-F filed on September 18, 1996.

     3(vii)    Line of Credit Agreement between Optima Wheel and Wells
               Fargo Bank dated September 1, 1995.*

     3(viii)   Line of Credit Agreement between  Pacific Baja Light Metals
               and Wells Fargo Bank dated September 1, 1995.*

     3(ix)     Employment Agreement between Pacific Baja Light Metals, the
               Company  and Michael Joyce dated September 5, 1996.*

     3(x)      Consulting Agreement between Pacific Baja Light Metals, the
               Company and Lykar Specialties, Inc. dated September 5, 1996.*

     3(xi)     Agreement in Principle between Turbodyne Systems, Inc. and
               Kuhnle, Kopp & Kausch AG dated April 11, 1997.*    

     3(xii)    Supply Agreement between Baja Oriente and AlliedSignal dated
               September 1, 1994.*
______________________
*Previously filed
     
                                 SIGNATURE
                                 ---------


Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Company certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this Amendment No. 1 to Annual 
Report to be signed on its behalf by the undersigned, thereunto duly
authorized.




               TURBODYNE TECHNOLOGIES INC.
               (COMPANY)

               
               /s/ Leon Nowek

               LEON NOWEK
               CHIEF FINANCIAL OFFICER
               (AUTHORIZED SIGNATORY)


DATE:  July 28, 1997

<PAGE>


                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------


                        CONSOLIDATED FINANCIAL STATEMENTS
                        ---------------------------------

                           DECEMBER 31, 1996 AND 1995
                           --------------------------
                          (Stated in Canadian Dollars)
                                    (Revised)

<PAGE>


             [LETTERHEAD OF MORGAN & COMPANY, CHARTERED ACCOUNTANTS]


                                AUDITORS' REPORT

To the Shareholders of
Turbodyne Technologies Inc.


We have audited the revised consolidated balance sheets of Turbodyne
Technologies Inc. as at December 31, 1996 and 1995 and the revised consolidated
statements of operations and deficit, stockholders' equity and cash flows for
the years ended December 31, 1996, 1995, and 1994.  These revised consolidated
financial statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these revised consolidated financial
statements based on our audits.  

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial
statements.  An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
revised financial statement presentation.

In our opinion, these revised consolidated financial statements present fairly,
in all material respects, the financial position of the Company as at December
31, 1996 and 1995 and the results of its operations and its cash flows for the
years ended December 31, 1996, 1995, and 1994 in accordance with generally
accepted accounting principles.  As required by the British Columbia Company
Act, we report that, in our opinion, these principles have been applied on a
consistent basis.

In our report dated February 14, 1997, except for the last paragraph of Note
5(A) which is as of March 12, 1997, we reported that in our opinion the
consolidated financial statements presented fairly, in all material respects,
the financial position of the Company as at December 31, 1996 and 1995 and the
results of its operations and the changes in its cash flows for the years then
ended in accordance with generally accepted accounting principles.  Subsequent
to March 12, 1997, the Company has revised these consolidated financial
statements as explained in Note 13.  Therefore, our report dated February 14,
1997, except for the last paragraph of Note 5(A) which is as of March 12, 1997,
has been withdrawn.


Vancouver, B.C.                                          /s/ Morgan & Company


February 14, 1997, except for the last paragraph         Chartered Accountants
  of Note 5(A) which is as of March 12, 1997, 
  Note 2, Note 13 and Note 14(a) which are as of 
  May 14, 1997 and Notes 14(b), 14(c), 14(d),
  and 14(e), which are as of June 17, 1997.

Page 1
<PAGE>

<TABLE>
                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------

                           CONSOLIDATED BALANCE SHEETS
                           ---------------------------
                    (Stated in thousands of Canadian dollars)
<CAPTION>
                                        December 31,   December 31,
                                            1996            1995
                                        ----------     -----------
                              ASSETS     (revised)
<S>                                      <C>           <C>
CURRENT
   Cash                                   $  4,304      $   309
   Accounts receivable                       8,161           51
   Advances receivable                         113          113
   Inventories (Note 3)                      4,730          -  
   Prepaid expenses and deposits             1,166           93
   Deferred tax asset                          341          -  
                                          --------      -------
                                            18,815          566
CAPITAL ASSETS (Note 4)                     15,703          638
PRODUCT DEVELOPMENT COSTS                    8,705        3,771
GOODWILL                                    21,234         -   
OTHER                                           38          227
                                          --------      -------
                                          $ 64,495      $ 5,202
                                          ========      =======

                             LIABILITIES                                   
CURRENT
   Accounts payable and accrued 
     liabilities                          $  6,169      $   251
   Notes payable (Note 5)                    1,286          223
   Current portion of long term debt         1,396            9
                                          --------      -------
                                             8,851          483
LONG TERM DEBT (Note 6)                      7,211           20
DEFERRED INCOME TAXES                        1,455          -  
                                          --------      -------
                                            17,517          503
                                          --------      -------

                              SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 7)
   Authorized:
      100,000,000 Common shares without par value
      100,000,000 Class A preference shares with a par value of $10
      100,000,000 Class B preference shares with a par value of $50
   Issued and outstanding:
      23,580,098 Common shares (of which
        4,150,000 are held in escrow) at
        December 31, 1996 and 16,542,121
        common shares (of which 4,150,000 
        shares are held in escrow) at 
        December 31, 1995                   30,438        7,139

      3,750,000 Series "A" special warrants 
        and 500,000 Series "C" special 
        warrants at December 31, 1996 and 
        0 at December 31, 1995              21,928          -  
      Add share subscriptions received
        0 at December 31, 1996 and
        129,767 shares at December 31, 1995    -            463
DEFICIT                                     (5,461)      (2,903)
CUMULATIVE TRANSLATION ADJUSTMENT               73          -  
                                          --------      -------
                                            46,978        4,699
                                          --------      -------
                                          $ 64,495      $ 5,202
                                          ========      =======
</TABLE>
Approved by the Board of Directors:


     "Leon E. Nowek"                          "Eugene A. Hodgson"           
----------------------------------       -----------------------------------

Page 2
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           ---------------------------
<TABLE>
                CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
               --------------------------------------------------
        (In thousands of Canadian dollars, except per share information)


<CAPTION>

                          Year ended     Year ended    Year ended
                          December 31,   December 31,  December 31,
                             1996            1995         1994 
                          ------------   -----------   -----------
                           (revised)
<S>                        <C>            <C>          <C>
                                          
NET SALES                    $ 19,007      $   -        $   -  

COST OF GOODS SOLD             16,498          -            -  
                            --------       -------     -------

GROSS PROFIT                    2,509          -            -  

OPERATING EXPENSES              5,061        1,528          936
                             -------       -------     --------

OPERATING LOSS                 (2,552)      (1,528)        (936)
                             -------       -------     --------

NON OPERATING ITEMS
   Interest income                373          -            -  
   Interest expense              (491)         -            -  
   Other                           56          -            -  
   Amortization of goodwill      (545)         -            -  
                             -------       -------     -------
                                 (607)         -            -  
                             -------       -------     -------

LOSS BEFORE PROVISION FOR 
  INCOME TAXES                 (3,159)      (1,528)        (936)

INCOME TAXES RECOVERED            601          -            -  
                             -------       -------     -------

NET LOSS FOR THE YEAR          (2,558)      (1,528)        (936)

DEFICIT, BEGINNING OF YEAR     (2,903)      (1,375)        (112)
                             -------       -------     -------
                               (5,461)      (2,903)      (1,048)
NET ASSET DEFICIENCY OF LEGAL
  PARENT AT DATE OF REVERSE 
  TAKE-OVER TRANSACTION           -            -           (327)
                             -------       -------     -------

DEFICIT, END OF YEAR         $ (5,461)     $(2,903)     $(1,375)
                            ========       =======     =======

LOSS PER SHARE                 $(0.15)      $(0.16)      $(0.18)           
                            ========       =======     =======

WEIGHTED AVERAGE NUMBER 
  OF COMMON SHARES 
   OUTSTANDING             16,641,217    9,805,870    5,106,385
                          ==========     =========   =========
</TABLE>
Page 3
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------
<TABLE>
<CAPTION>
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 -----------------------------------------------
                    (Stated in thousands of Canadian Dollars)
                                    (revised)

                               Number of                Accumulated
                                Shares        Amount      Deficit      Total
                               --------       ------    -----------    -----
<S>                             <C>          <C>         <C>        <C>
Balance at date of inception,
  April 30, 1993                    -        $    -       $   -     $   -   
Issuance of stock for
  project development
  costs                               100       1,147         -        1,147
Net loss                            -             -          (112)      (112)
                                ---------    ---------    -------    -------
Balance December 31, 1993             100       1,147        (112)     1,035
Exchange of stock to 
  acquire subsidiary
   Turbodyne Systems Inc.            (100)        -            -        -   
   Turbodyne Technologies Inc.  1,078,052         -            -        -   
Issuance of stock to acquire
  subsidiary
   Common stock                 1,100,000         -            -        -   
   Escrow performance stock     4,000,000          40          -          40

Issuance of common stock        4,485,000       1,629          -       1,629
Net asset deficiency of legal
  parent at date of reverse
  take-over transaction             -             -          (327)      (327)
Net loss                            -             -          (936)      (936)
                               ----------     -------     -------    -------
Balance December 31, 1994      10,663,052       2,816      (1,375)     1,441
Issuance of common stock        5,879,069       4,323         -        4,323
Share subscriptions received      129,767         463         -          463
Net loss                            -             -        (1,528)    (1,528)
                               ----------     -------     -------    -------
Balance December 31, 1995      16,671,888       7,602      (2,903)     4,699
Issuance of common stock        6,908,210      22,836                 22,836
Issuance of special warrants    4,250,000      21,928         -       21,928
Cumulative translation 
  adjustment                        -             -            73         73

Net Loss                            -             -        (2,558)    (2,558)
                               ----------     -------     -------   --------


Balance December 31, 1996      27,830,098    $ 52,366     $(5,388)  $ 46,978
                               ==========    ========     =======   ========
</TABLE>
Page 4
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------
<TABLE>
<CAPTION>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    (Stated in Thousands of Canadian Dollars)

                                     Year ended    Year ended      Year ended
                                     December 31,  December 31,    December 31,
                                          1996        1995            1994 
                                      ----------   -----------     -----------
                                       (revised)
<S>                                   <C>          <C>            <C>
CASH FLOW FROM OPERATING 
  ACTIVITIES
   Loss for the year                   $ (2,558)    $(1,528)       $  (936)
                                       --------     -------        -------
ADJUSTMENTS TO RECONCILE 
  LOSS TO NET CASH USED 
  BY OPERATING ACTIVITIES
   Depreciation and amortization          1,591           6              1
   Change in accounts 
     receivable                          (8,110)        (51)           -  
   Change in advances
     receivable                             -          (112)           -  
   Change in inventories                 (4,730)        -              -  
   Changed in deferred tax asset           (383)        -              -  
   Change in prepaid expense             (1,073)        (62)           (32)    
   Change in accounts payable             5,918        (162)            77
                                        -------      ------         ------
TOTAL ADJUSTMENTS                        (6,787)       (381)            46
                                        -------      ------         ------
NET CASH USED IN OPERATING 
  ACTIVITIES                             (9,345)     (1,909)          (890)
                                        -------      ------         ------
CASH FLOW FROM INVESTING 
  ACTIVITIES
   Capital assets (net of
     depreciation allocated
     to product development
     costs)                              (4,502)       (482)            (4)
   Product development costs             (4,820)     (2,066)          (493)
   Acquisition of subsidiary            (31,705)        -              -  
   Net asset deficiency of 
     legal parent
     at date of reverse 
     take-over transaction                  -           -             (327)
   Other                                    (38)       (227)           -  
                                        -------      ------         ------
NET CASH USED IN INVESTING 
  ACTIVITIES                            (41,065)     (2,775)          (824)
                                        -------      ------         ------
CASH FLOW FROM FINANCING 
  ACTIVITIES
   Issuance of common stock              22,836       4,323          1,669
   Issuance of special warrants          21,928         -              -  
   Share subscriptions 
     received                               -           463            -  
   Change in notes payable                1,063         178             45
   Change in long term debt               8,578          29            -  
                                        -------      ------         ------
NET CASH PROVIDED BY FINANCING 
  ACTIVITIES                             54,405       4,993          1,714
                                        -------      ------         ------
NET INCREASE IN CASH AND CASH 
  EQUIVALENTS                             3,995         309            -  
CASH AND CASH EQUIVALENTS, 
  BEGINNING OF YEAR                         309         -              -  
                                        -------      ------         ------
CASH AND CASH EQUIVALENTS, 
  END OF YEAR                          $  4,304     $   309        $   -  
                                       ========     =======        =======
</TABLE>
<PAGE>


                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------
<TABLE>
<CAPTION>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     --------------------------------------
                                   (Continued)

         (Stated in Thousands of Canadian Dollars, except share amounts)




SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

   Cash paid during the year for:


                          Year ended      Year ended      Year ended
                         December 31,    December 31,    December 31,
                             1996           1995              1994 
                          ----------     -----------     -----------
<S>                       <C>             <C>              <C>
      Interest             $ 499             $ 84            $ 9
                           =====             ====            ===
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:

   Effective March 8, 1994, Turbodyne Technologies Inc. acquired 100% of the
   issued and outstanding shares of Turbodyne Systems, Inc. by issuing
   5,100,000 common shares.

   During the year ended December 31, 1994, the Company paid a loan bonus in
   the amount of $20,000 by issuing 25,000 common shares.

   During the year ended December 31, 1995 the Company made loan bonus payments
   totalling $94,000 by issuing 258,333 common shares, paid a finder's fee of
   $42,000 by issuing 116,667 common shares and settled debts totalling
   $157,006 by issuing 301,933 common shares.

   During the year ended December 31, 1996, Turbodyne Technologies Inc.
   acquired 100% of Pacific Baja Light Metals Corp. by making a cash payment of
   $16,320 and by issuing 3,076,923 common shares.

Page 6
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                           DECEMBER 31, 1996 AND 1995
                           --------------------------
                    (Stated in thousands of Canadian Dollars)
                                    (revised)




1.    a) NATURE OF OPERATIONS    

      The Company was incorporated under the Company Act of the Province of
      British Columbia, Canada, and was continued under the Canada Business
      Corporations Act on December 3, 1996.  The Company is engaged in the
      following business operations through its U.S. subsidiaries:

      i)   the manufacture of aluminum cast automotive products, including  
           engine components and specialty wheels; and

      ii)  the development of products to enhance performance and reduce
           emissions of internal combustion engines.

   b) SIGNIFICANT ACCOUNTING POLICIES

      i)   Consolidation

           These financial statements include the accounts of the Company and
           its wholly owned U.S. subsidiaries Turbodyne Systems, Inc. and
           Pacific Baja Light Metals Corp.  All significant intercompany
           accounts and transactions have been eliminated in consolidation.

      ii)  Cash and Cash Equivalents

           For the purpose of reporting cash flows, the Company considers all
           time deposits, certificates of deposit and highly liquid debt
           instruments with original maturities of three months or less to be
           cash equivalents.

      iii) Fair Value of Financial Instruments

           The respective carrying value of certain on-balance-sheet financial
           instruments, approximate their fair values.  These financial
           instruments include cash, accounts receivable, advances receivable,
           accounts payable and accrued liabilities, bank credit lines and
           other conventional debt financing.

      iv)  Inventories

           Inventories are stated at the lower of cost or market.  For the
           materials portion of inventories, the cost is determined using the
           LIFO (last-in, first-out) method.  For the other components of
           inventories (labour and overhead) the cost is determined using the
           FIFO (first-in, first-out) method.

Page 7
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           ---------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                           DECEMBER 31, 1996 AND 1995
                           --------------------------
                    (Stated in thousands of Canadian Dollars)
                                    (revised)

   b) SIGNIFICANT ACCOUNTING POLICIES (Continued)

      v)   Depreciation

           Property, plant and equipment is recorded at its historical cost and
           is being depreciated using the straight-line method over their
           estimated useful lives.  Leasehold improvements are depreciated over
           the lesser of its useful life or the life of the lease.  The
           following is a summary of depreciable life by asset type:

           Building                                          30 years
           Furniture and fixtures                        5 - 10 years
           Machinery and equipment                       7 - 15 years
           Transportation equipment                           5 years
           Leasehold improvements                        8 - 10 years

      vi)  Product Development Costs

           The Company is deferring all engineering, design consulting and
           other costs directly related to the ongoing development and
           commercialization of its Turbodyne System to be amortized against
           related revenues when production commences.

      vii) Goodwill

           Goodwill, representing the excess of acquisition costs of shares
           over the assigned value of net assets acquired, is being amortized
           on a straight line basis over 20 years.

      viii)  Leases

           Leases are classified as capital or operating leases.  Leases which
           transfer substantially all of the benefits and risks incident to
           ownership of property are accounted for as capital leases.  Assets
           acquired under capital leases are amortized on a straight-line
           method over five years.  All other leases are accounted for as
           operating leases and the related lease payments are charged to
           expense as incurred.

      ix)  Non-Monetary Transactions

           Shares of common stock of the Company issued for non-monetary
           consideration are valued at the quoted market price per share at the
           close of trading on the day of completion of the transaction except
           for those circumstances where, in the opinion of the Company and due
           to the nature of the transaction, the trading price does not fairly
           represent the value of the transaction.  In such circumstances, the
           value of the shares is determined based on the estimated fair value
           of the consideration received.

Page 8
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                           DECEMBER 31, 1996 AND 1995
                           --------------------------
         (Stated in thousands of Canadian Dollars, except share amounts)
                                    (revised)

   b) SIGNIFICANT ACCOUNTING POLICIES (Continued)

      x)   Foreign Currency Translation

           The financial statements of Pacific Baja Light Metals Corp., a self-
           sustaining foreign subsidiary, are translated using the current
           method whereby the balance sheet is translated at year end exchange
           rates and revenues and expenses at the average exchange rate for the
           period.  Adjustments arising from the translation of the
           subsidiary's financial statements are included as a separate
           component of shareholders' equity.

           The financial statements of Turbodyne Systems, Inc., a fully
           integrated foreign subsidiary, are translated using the temporal
           method whereby monetary assets and liabilities are translated at
           year end rates, non-monetary items at historical rates and expenses
           at the average rate for the year.  Gains or losses from exchange
           translations are included in the results of operations.

      xi)  Income Taxes

           During 1993, the Company adopted Statement of Financial Accounting
           Standards No. 109 - "Accounting for Income Taxes" (SFAS 109).  This
           standard requires the use of an asst and liability approach for
           financial accounting and reporting on income taxes.  It is more
           likely than not that some portion of all of a deferred tax asset
           will not be realized, a valuation allowance is recognized.

      xii) Loss Per Share

           Loss per share is based on the weighted average number of common
           shares outstanding during the year.  Since the Company's stock
           options, warrants and escrow shares are anti-dilutive, they have not
           been included in the calculation.

      xiii)  Basis of Presentation

           These financial statements are prepared in accordance with
           accounting principles generally accepted in Canada.  Had they been
           prepared in accordance with accounting principles generally accepted
           in the United States, the following differences in the measurement
           of income, results of operations and shareholders' equity would have
           resulted:

           a) The $1,147 value attributed to the 100 shares of Turbodyne
              Systems, Inc., issued in consideration of the accumulated time
              and out-of-pocket expenditures incurred in the development of the
              "Turbodyne System" prior to its acquisition by Turbodyne Systems,
              Inc. would have been charged to shareholders' equity, not
              capitalized as project development costs. 

Page 9
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   -------------------------------------------

                           DECEMBER 31, 1996 AND 1995
                           --------------------------
     (Stated in thousands of Canadian Dollars, except per share information)
                                    (revised)

   b) SIGNIFICANT ACCOUNTING POLICIES (Continued)

      xiii)   Basis of Presentation (continued)

           b) Ongoing product development costs would have been charged to
              expense as incurred not capitalized on the balance sheet.

      As such, these financial statements would be changed as follows:
<TABLE>
<CAPTION>
               Consolidated Statement of Operations and Deficit:

                                      1996           1995          1994
                                     --------      --------      --------
<S>                                  <C>           <C>           <C>
Loss for the period shown on the
  financial statements               $ (2,558)     $(1,528)       $  (936)

Increase in loss resulting from
  charging project development
  costs to expense                     (4,820)      (2,066)          (493)
                                     --------      -------        -------

Loss according to generally 
  accepted accounting principles 
  in the U.S.                          (7,378)      (3,594)        (1,429)

Accumulated deficit, beginning 
  of period                            (6,788)      (3,194)        (1,439)
                                     --------      -------       --------
                                      (14,166)      (6,788)        (2,868)

Net asset deficiency of legal 
  parent at date of reverse 
  take-over transaction                   -            -             (327)
                                     --------      -------        --------
Accumulated deficit end of year 
  according to generally accepted 
  accounting principles
  in the U.S.                        $(14,166)     $(6,788)       $(3,195)
                                     ========      =======        =======

Loss per share - U.S. GAAP             $(0.44)      $(0.37)        $(0.28)
                                       ======       ======         ======
</TABLE>

Page 10
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------
<TABLE>
<CAPTION>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   -------------------------------------------

                           DECEMBER 31, 1996 AND 1995
                           --------------------------
                          (Stated in Canadian Dollars)
                                    (revised)

                                                      1996           1995
                                                      ----           ----
<S>                                              <C>              <C>
Consolidated Balance Sheet:
Product development costs as shown 
  on the balance sheet                            $  8,705        $ 3,885
Change as a result of (a) above
   Reverse capitalization of product
     development costs acquired for shares          (1,147)        (1,147)
Change as a result of (b) above
   Reverse capitalization of ongoing product
     development costs                              (7,558)        (2,738)
                                                  --------        -------
Product development costs according to
  generally accepted accounting principles
  in the U.S.                                     $    -          $   -  
                                                  ========        =======
Accumulated deficit as shown on the balance
  sheet                                           $ (5,461)       $(2,903)
Change as a result of (a) above
   Charge value attributed to product 
     development costs acquired for shares
     to shareholders' equity                        (1,147)        (1,147)
Change as a result of (b) above
   Charge ongoing product development costs
     to expense                                     (7,558)        (2,738)
                                                  --------        -------
Accumulated deficit according to generally
  accepted accounting principles in the U.S.      $(14,166)       $(6,788)
                                                  ========        =======
                                    
</TABLE> 
Page 11
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------
<TABLE>

<CAPTION>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                           DECEMBER 31, 1996 AND 1995
                           --------------------------
         (Stated in thousands of Canadian Dollars, except share amounts)
                                    (revised)



Consolidated Statement of Stockholders' Equity:

                           NUMBER                ACCUMULATED
                         OF SHARES     AMOUNT      DEFICIT        TOTAL
                         ----------    ------    -----------      -----
<S>                      <C>         <C>         <C>            <C>
Balance December 31, 
  1996 as shown on the
  consolidated
  financial 
  statements             27,830,098   $ 52,366    $ (5,461)     $ 46,905
 
Project development
  costs acquired
  for shares                                        (1,147)       (1,147)


Increase in net loss
  due to charging 
  ongoing project
  development
  costs to
  expense                                           (7,558)       (7,558)
                         ----------    -------     -------       -------


Balance December 31,
  1996, according to
  generally accepted
  accounting 
  principles
  in the U.S.            27,830,098   $ 52,366    $(14,166)     $ 38,200
                         ==========   ========    ========      ========

</TABLE>
Page 12
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   -------------------------------------------

                           DECEMBER 31, 1996 AND 1995
                           --------------------------
         (Stated in thousands of Canadian Dollars, except share amounts)
                                    (revised)



2.    BUSINESS ACQUISITION

   Effective July 2, 1996, the Company acquired all the issued and outstanding
   shares of Pacific Baja Light Metals Corp. ("Pacific Baja").  This
   acquisition has been accounted for using the purchase method with the
   results of operations of Pacific Baja Light Metals Corp. for the period
   subsequent to July 2, 1996 being included in these consolidated financial
   statements.  pacific Baja is a manufacturer and distributor of after-market
   automotive wheels, compressor housings and manifolds, to wholesale
   distributors and original equipment manufacturers in the United Sates and
   abroad.  

   Details of this acquisition are as follows:
<TABLE>
<CAPTION>
   Fair value of net assets acquired:
<S>                                               <C>          <C>
      Net working capital                         $  2,098
      Capital assets                                11,749
      Long term debt                                (1,635)
      Deferred income taxes                         (1,394)
                                                  --------
      Net tangible assets                           10,818
      Goodwill                                      20,887
                                                  --------
      Cost of the acquisition                     $ 31,705
                                                  ========
   Consideration:

      Cash resources                              $ 16,320

      Common shares issued (3,076,923 common 
        shares with a deemed fair market
        value of $5.00 per share)                   15,385
                                                  --------
                                                  $ 31,705
                                                  ========

3.    INVENTORIES

                                                    1996            1995
                                                   -------         ------
   Finished goods                                  $ 1,794         $  - 
   Work in progress                                    893            - 
   Raw materials                                     2,043            - 
                                                   -------         -----
                                                   $ 4,730         $  - 
                                                   =======         =====
</TABLE>
Page 13
<PAGE>
                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                           DECEMBER 31, 1996 AND 1995
                           --------------------------
                    (Stated in thousands of Canadian Dollars)
                                    (revised)

<TABLE>
<CAPTION>
4.    CAPITAL ASSETS

                                                 1996     1995
                                               ------    ------
<S>                                           <C>         <C>
   Land                                        $     95    $  -          
   Buildings                                         25       - 
   Furniture and fixtures                           343      149
   Machinery and equipment                       12,542      241
   Transportation equipment                         618       91
   Leasehold improvements                         2,642      116
                                               --------    -----
                                                 16,265      597
   Less accumulated depreciation                 (1,280)    ( 73)
                                               --------    -----
                                                 14,985      524
   Machinery under construction                     469       - 
   Patents and trademarks                           249      114
                                               --------    ------

                                               $ 15,703    $ 638         
                                               ========    ======
</TABLE>
   The Company was committed to purchase manufacturing machinery at December
   31, 1996 of $195.

   Of the property, plant and equipment listed above, the assets located at the
   production facility in Ensenada, Mexico have a net book value of
   approximately $5,108 (1995 - $4,678).


5.    NOTES PAYABLE
<TABLE>
<CAPTION>
                                                    1996      1995
                                                  -------    -----
<S>                                               <C>        <C>
   (A)     Lines of credit                        $ 6,080    $  - 
             Less amounts reclassified as 
               long-term debt                       4,794       - 
                                                  -------    -----
                                                    1,286       - 
                                                  -------    -----

   (B)     Promissory note                            -         11

   (C)     Short term interest free loan              -        212
                                                  -------    -----

                                                  $ 1,286    $ 223
                                                  =======    =====
</TABLE>
   (A)     The Company's subsidiary, Pacific Baja, has an $8,000 U.S. line of
           credit agreement with a bank, secured by all receivables, inventory
           and equipment.  The borrowings bear interest at LIBOR (5.55% at
           December 31, 1996) plus 2% or prime (8.25% at December 31, 1996). 
           The note is due November 1998 and is annually reviewed for a
           continuing two year commitment.  Advances are limited to 30% of
           eligible inventory (up to a maximum of $2,500) and 80% of eligible
           accounts receivable and contains a seasonal over advance up to $500
           from April through July each year.

Page 14
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                           DECEMBER 31, 1996 AND 1995
                           --------------------------
         (Stated in thousands of Canadian Dollars, except share amounts)
                                    (revised)


5.    NOTES PAYABLE (Continued)

      Management has classified the portion of the lines of credit that are not
      expected to be repaid during 1997 as long-term.

      At December 31, 1996, the Company was in violation of certain liquidity
      ratios and net worth covenants.  Subsequent to December 31, 1996, the
      bank waived these violations through June 30, 1997, and the bank has
      agreed to amend the covenants so that the Company is anticipated to be in
      compliance with all covenants through at least January 1, 1998.

   (B)   Promissory note, repayable at $517 per month, including interest at
         10% per annum.
   (C)   Short term interest free loan, secured by the personal guarantee of
         two of the Company's directors.  As additional consideration for the
         loan, the Company issued 233,333 shares at a deemed value of $0.36 per
         share and agreed to pay a royalty of $5 U.S. on each Turbodyne unit
         sold to a maximum of $1 million U.S.  A finder's fee of 116,667 common
         shares at a deemed value of $0.36 per share was issued in connection
         with the loan.

<TABLE>
<CAPTION>
6.  LONG TERM DEBT

                                                       1996        1995
                                                     -------      ------
<S>                                                 <C>           <C>
   Notes payable to a bank, interest at 
     prime rate (8.25% at December 31, 
     1996) plus 1% with monthly installments 
     of $49, including interest, 
     secured by equipment, maturing
     September 1997.                                 $ 1,372       $  - 
   Notes payable, interest ranging from 
     7% to 15%, with monthly installments
     of $106, including interest, 
     secured by equipment, maturing at
     various dates through 1999.                       2,252          - 
   Long-term portion of lines of credit                4,794
   Other                                                  22          29

   Capital lease obligations                             167          - 
                                                     -------       -----
                                                       8,607          29
   Less:  current portion                              1,396           9
                                                     -------       -----
                                                     $ 7,211       $  20
                                                     =======       =====

</TABLE>
Page 15
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                           DECEMBER 31, 1996 AND 1995
                           --------------------------
                 (In thousands of dollars, except share amounts)
                                    (revised)




6.  LONG TERM DEBT (Continued)

   Aggregate maturities of long-term debt for the years ending December 31, are
   as follows:
<TABLE>
<CAPTION>
<S>                                        <C>
                         1997              $ 1,510
                         1998              $ 5,898
                         1999              $   863
                         2000              $    85
                         2001              $   251
</TABLE>
   The Company leases various equipment under the terms of a capital lease. 
   The following is a schedule of future minimum lease payments over the life
   of the lease:
<TABLE>
<CAPTION>
<S>                                        <C>
                         1997                $  54
                         1998                   59
                         1999                   45
                         2000                   32
                         2001                   15
                                             -----
                                               205
   Less amount representing interest
     ranging from 9.3% to 11.3%                 38
                                             -----
   Balance of obligation                     $ 167
                                             =====
</TABLE>

7.    SHARE CAPITAL

   a) Of the Company's issued and outstanding shares 4,150,000 are held in
      escrow to be released in accordance with a formula based on cumulative
      cash flow of the Company.

   b) As at December 31, 1996, the Company had outstanding share purchase
      warrants entitling the holders to acquire 339,730 common shares at
      exercise prices of $4.35 to $9.50 per share.  

   c) As at December 31, 1996, the Company had outstanding directors and
      employees incentive stock options to acquire 2,300,500 common shares at
      exercise prices of $1.65 to $9.00 per share.  


Page 16
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           ---------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                           DECEMBER 31, 1996 AND 1995
                           --------------------------
                 (In thousands of dollars, except share amounts)
                                    (revised)



8.    SPECIAL WARRANTS

   On July 2, 1996 the Company completed a private placement of 3,750,000   
   Series "A" special warrants at a price of $5.00 per special warrant for net
   proceeds of $17,976,595 after deducting costs of the issue.  Commission paid
   to the brokers was 10% of the gross proceeds and the brokers elected to
   receive the commission in special warrants (375,000 Series "A" Special
   Warrants issued). Each Series "A" special warrant can be exercised into one 

   unit of the Company for no additional consideration. Each unit consists of  
   one common share and one non transferable share purchase warrant.  The share
   purchase warrant will entitle the holder to purchase one common share at    

   $5.50 per share until July 2, 1997.

   On December 7, 1996 the Company completed a brokered private placement of
   500,000 Series "C" special warrants at a price of $9.00 per special warrant
   for net proceeds of $3,951,196 after deducting costs of the issue.  Each "C"
   special warrant can be exercised into one unit of the Company for no
   additional consideration.  Each unit consists of one common share and one-
   half of one non-transferable share purchase warrant.  Each whole Series "C"
   share purchase warrant will entitle the holder to purchase one common share
   at $9.50 per share for a period of one year.  Commissions paid to the broker
   was 10% of the gross proceeds and the broker elected to receive the
   commission in cash.

   The Company has undertaken to use its best efforts to file and obtain a
   receipt for a prospectus qualifying the distribution of the Series "A" and
   "C" units on the exercise of the Series "A" and "C" special warrants, within
   90 days following the closing date of the Series "C" special warrants.  In
   the event that the prospectus is not receipted in the 90 day period, then
   the Series "C" units will consist of one common share and one share purchase
   warrant.


9.    INCOME TAXES

   At December 31, 1996, the Company has approximately $11,750 in net operating
   loss carryforwards available to offset future taxable income.  These
   carryforwards, if unused, will expire from 2001 to 2010.  The potential
   income tax benefits related to these items have not been reflected in the
   accounts.


Page 17
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                           DECEMBER 31, 1996 AND 1995
                           --------------------------
                    (Stated in thousands of Canadian dollars)
                                    (revised)

10.   COMMITMENTS

   a) Consulting Commitments

      The Company has entered into consulting commitments for assistance in
      management development, international marketing, licensing and financing,
      technical and educational services.

      The commitment under these contracts for the next five years is as
      follows:
<TABLE>
<CAPTION>
<S>                                <C>
                        1997       $ 429
                        1998       $ 199
                        1999       $ 180
                        2000       $ 180
                        2001       $ 180
</TABLE>
      Certain of the consulting agreements are payable for a total of $16 U.S.
      per month and continue indefinitely until either party terminates the
      agreement in writing with advance notice ranging from two to three
      months.

   b) Lease Commitments

      The Company's subsidiaries lease certain factory and office premises in
      California, U.S.A. and Ensenada, Mexico until September, 2006.  The
      annual rents of the premises consist of a minimum rent plus realty taxes
      and utilities.  Minimum rents payable for the premises for the next five
      years is as follows:
<TABLE>
<CAPTION>
<S>                                <C>

                        1997       $ 646
                        1998       $ 717
                        1999       $ 736
                        2000       $ 750
                        2001       $ 457
</TABLE>
      The Company's head office and Turbodyne development factory premises are
      rented on a month to month basis.


11.   RELATED PARTY TRANSACTIONS

   a) The Company made payments to related parties as follows:
<TABLE>
<CAPTION>
                                              1996         1995
                                             -----         ---- 
<S>                                          <C>           <C>
          Project management fees            $  82         $ 80
          Consulting fees                    $  86         $ - 
          Management fees                    $  30         $ 30
          Rent and administrative services   $ 176         $ 30
</TABLE>
Page 18
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                           DECEMBER 31, 1996 AND 1995
                           --------------------------
                    (Stated in thousands of Canadian dollars)
                                    (revised)



11.   RELATED PARTY TRANSACTIONS (Continued)

   b)     The following amounts are due from (to) related parties:
<TABLE>
<CAPTION>
                                                       1996      1995
                                                       ----      ----
<S>                                                   <C>       <C>
          Advances receivable from a director,
            interest free and payable on demand       $ 113     $ 113
                                                      =====     =====
</TABLE>

12.   SEGMENTED INFORMATION

      The Company manufactures and distributes, on credit terms determined for
      each customer, after-market automotive wheels, compressor housings, and
      manifolds to wholesale distributors and original equipment manufacturers
      and castings prepared to customer specifications on a contract basis. 
      Operations are considered to be in one geographical area - North America.
<TABLE>
<CAPTION>
                                                    Year ended     Year ended
                                                    December 31,   December 31,
                                                       1996            1995   
                                                  -----------    -----------
<S>                                                <C>             <C>
   NET SALES                                                               
      After-market automotive wheels                $  9,799        $   -  
      Compressor housings and manifolds                9,208            -  
                                                    --------        -------

                                                    $ 19,007        $   -  
                                                    ========        =======
   GROSS PROFIT 
      After-market automotive wheels                $  1,309        $   -  
      Compressor housings and manifolds                1,200            -  
                                                    --------        -------

                                                    $  2,509        $   -  
                                                    ========        =======

   GENERAL OPERATING COSTS                                  
      Manufacture of aluminum cast automotive
        products                                       2,666            -  
      Development of Turbodyne products                3,002          1,528
                                                    --------        -------

                                                    $  5,668        $ 1,528
                                                    ========        =======

   LOSS BEFORE PROVISION FOR INCOME TAXES             (3,159)        (1,528)

   INCOME TAXES RECOVERED                                601            -  
                                                    --------        -------

   NET LOSS                                         $ (2,558)       $(1,528)
                                                    ========        =======

Page 19
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           --------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                           DECEMBER 31, 1996 AND 1995
                           --------------------------
                    (Stated in thousands of Canadian dollars)
                                    (revised)



12.   SEGMENTED INFORMATION (Continued)

                                                    Year ended     Year ended
                                                    December 31,   December 31,
                                                       1996           1995 
                                                     ----------    -----------
   DEPRECIATION
      After-market automotive wheels                   $    348     $   -  
      Compressor housings and manifolds                     630         -  
      Turbodyne products                                     68           6
                                                       --------     -------
                                                       $  1,046     $     6
                                                       ========     =======
   IDENTIFIABLE ASSETS
      After-market automotive wheels                   $ 21,996     $   -  
      Compressor housings and manifolds                  26,779         -  
      Turbodyne products                                 15,720       5,202
                                                       --------     -------
                                                       $ 64,495     $ 5,202
                                                       ========     =======
</TABLE>
13.   REVISION TO FINANCIAL STATEMENTS

   The Company has revised the accounting for the acquisition of Pacific Baja
   Light Metals Holding Inc. ("Pacific Baja") by increasing the value assigned
   to the common share component of the consideration paid by the Company in
   connection with this acquisition.  This revision, which is in accordance
   with generally accepted accounting principles, reflects the fair market
   value of the shares issued as consideration for the Company's acquisition of
   Pacific Baja.  The Company had previously accounted for the acquisition
   using a purchase price of $20,400 based on the fair market value of the net
   assets of Pacific Baja resulting in the assignment of $4,080 to the common
   share component of the consideration paid by the Company.  The effect of
   using the fair market value of the Company's common shares issued results in
   the assignment of $15,385 to the common share component of the consideration
   paid by the Company.  This revision results in an increase in goodwill and
   share capital in the amount of $11,305 and an increase in amortization of
   goodwill and net loss for the year, and deficit of $262.


14.   SUBSEQUENT EVENTS

   Subsequent to December 31, 1996:

   a)    The Company has withdrawn its originally issued December 31, 1996
         consolidated financial statements and has issued revised December 31,
         1996 consolidated financial statements as detailed in Note 13.


Page 20
<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                           ---------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                           DECEMBER 31, 1996 AND 1995
                           ---------------------------
                    (Stated in thousands of Canadian dollars)
                                    (revised)



14.   SUBSEQUENT EVENTS (Continued)

   b)    The Company has issued 297,014 common shares for cash consideration of
         $1,801,680 as a result of the exercise of share purchase warrants.

   c)    The Company has issued 520,000 common shares for cash consideration of
         $2,164,395 as a result of the exercise of incentive stock options.

   d)    The Company has granted the following incentive stock options:

<TABLE>
<CAPTION>
          Number of Shares     Exercise Price       Expiry Date
          ----------------     --------------       -----------
<S>       <C>                  <C>                <C>
               480,000             $ 9.85         January 6, 1999
             1,511,500             $10.15         March 3, 1999
</TABLE>

   e)    The Company has entered into a private placement engagement agreement,
         subject to the agent's due diligence and the preparation of acceptable
         documentation, which proposes the issue of up to U.S. $5,000,000 of
         convertible preferred shares in two tranches, with the first tranche
         of U.S. $2,500,000 expected to close by July 15, 1997, and the second
         tranche of U.S. $2,500,000 to close within 120 days of the first
         closing.  The convertible preferred shares will have a dividend rate
         of 7% per annum payable in cash or common shares (at the Company's
         option) at the time of conversion.  The convertible preferred shares
         are convertible into common shares at any time during the period
         commencing four months from closing and ending three years from
         closing at the lessor of, a fixed price equal to 110% of the market
         price of the common shares at the time of closing, or a floating price
         varying from 80% to 90% (depending on time outstanding) of the 10 day
         average price of the Company's common shares at the time of
         conversion.  In conjunction with the issue of the preferred shares,
         the Company will issue warrants entitling the holders to purchase, for
         a period of three years, at the fixed price described above, common
         shares having a value of 33 1/3% of the convertible preferred shares
         issued.

Page 21

                              MORGAN & COMPANY
                             Chartered Accountants

                       P.O. Box 10007, Pacific Centre
                    Suite 1730 - 700 West Georgia Street
                           Vancouver, B.C. V7Y 1A1
                          Telephone (604) 687-5841
                             Fax (604) 687-0075



                       CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the inclusion of our report dated February 14, 1997,
except for the last paragraph of Note 5(A) which is as of March 12, 1997,
Note 2, Note 13 and Note 14(a) which are as of May 14, 1997 and Notes 14(b),
14(c), 14(d) and 14(e), which are as of June 17, 1997 on the revised
consolidated financial statements of Turbodyne Technologies Inc. for the year
ended December 31, 1996 in Amendment No. 1 to the Company's Annual Report on
Form 20F.  We also consent to application of such report to the financial 
information in Amendment No. 1 to the Annual Report on Form 20F, when such 
financial information is read in conjunction with the financial statements 
referred to in our report.



Vancouver, Canada                       /s/Morgan & Company
July 29, 1997                           Chartered Accountants