SECURITIES AND EXCHANGE COMMISSION
                                 WASHINGTON, D.C.  20549


                                        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.        
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      (Exact name of Registrant as specified in its charter)   

INAPPLICABLE  
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      (Translation of Registrant's name into English)

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

SUITE 510, 1090 WEST PENDER STREET 
VANCOUVER, BRITISH COLUMBIA, CANADA V6C 2N7 
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      (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
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                                    (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
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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>

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                                    TABLE OF CONTENTS
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                                                                    PAGE NO
                                                                    -------


ITEM 1.   DESCRIPTION OF BUSINESS. . . . . . . . . . . . . . . . . . . .  1

          INTRODUCTION. . . . . . .  . . . . . . . . . . . . . . . . . .  1
          COMPANY AND SUBSIDIARY CORPORATE BACKGROUND. . . . . . . . . .  1
          INDUSTRY BACKGROUND AND PRODUCT. . . . . . . . . . . . . . . .  1

ITEM 2.   DESCRIPTION OF PROPERTY. . . . . . . . . . . . . . . . . . .   17

ITEM 3.   LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . .18

ITEM 4.   CONTROL OF COMPANY. . . . . . . . . . . . . . . . . . . . . . .18

ITEM 5.   NATURE OF TRADING MARKET. . . . . . . . . . . . . . . . . . . .19

ITEM 6.   EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING
          SECURITY HOLDERS. . . . . . . . . . . . . . . . . . . . . . . .20

ITEM 7.   TAXATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .21

ITEM 8.   SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . .22

     
          SUMMARY OF FINANCIAL INFORMATION IN THE COMPANY
          FINANCIAL STATEMENTS (CANADIAN GAAP)(CANADIAN $). . . . . . . .22
          
          SUMMARY OF FINANCIAL INFORMATION IN THE COMPANY FINANCIAL
          STATEMENTS (U.S. GAAP)(CANADIAN $). . . . . . . . . . . . . . .23
          
          SUMMARY OF FINANCIAL INFORMATION IN PACIFIC BAJA FINANCIAL 
          STATEMENTS (U.S. GAAP)($U.S.) . . . . . . . . . . . . . . . . .24

ITEM 9.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . .25

ITEM 10.  DIRECTORS AND OFFICERS OF THE COMPANY . . . . . . . . . . . . .29

ITEM 11.  COMPENSATION OF DIRECTORS AND OFFICERS. . . . . . . . . . . . .31

ITEM 12.  OPTIONS TO PURCHASE SECURITIES FROM COMPANY OR SUBSIDIARIES . .33

ITEM 13.  INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS. . . . . . . . .36

ITEM 14.  DESCRIPTION OF SECURITIES TO BE REGISTERED. . . . . . . . . . .37

ITEM 15.  DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . . .37

ITEM 16.  CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR
          REGISTERED SECURITIES   . . . . . . . . . . . . . . . . . . . .37

<PAGE>

ITEM 17.  FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . .37

ITEM 18.  FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . .37

ITEM 19.  FINANCIAL STATEMENTS AND EXHIBITS . . . . . . . . . . . . . . .37

<PAGE>

                                  PART I


ITEM 1.                   DESCRIPTION OF BUSINESS
                          -----------------------

INTRODUCTION
------------
Turbodyne Technologies Inc. (the "Company") is a Canadian federal
corporation engaged in the following businesses through its U.S.
subsidiaries:

     (A)  the manufacture of aluminum cast automotive products, including
          engine components and speciality wheels (the "Pacific Baja
          Business"); and

     (B)  the development of products to enhance performance and reduce
          emissions of internal combustion engines (the "Turbodyne
          Business").

COMPANY AND SUBSIDIARY CORPORATE BACKGROUND
------------------------------------------
The Company was incorporated under the COMPANY ACT (British Columbia) on
May 18, 1983, under the name "Dundee Resources Corp.", by registration of
its Memorandum and Articles.  The name of the Company was changed from
"Dundee Resources Corp." to "Clear View Ventures Inc." on January 20, 1993
and from "Clear View Ventures Inc." to "Turbodyne Technologies Inc." on
April 28, 1994.  The Company has continued from British Columbia to the
Canadian federal jurisdiction under the CANADA BUSINESS CORPORATIONS ACT by
the filing of Articles of Continuation.  The continuation was effective
December 3, 1996.

The address of the head office of the Company is Suite 510, 1090 West
Pender Street, Vancouver, British Columbia, V6E 2N7.  The address of the
registered and records office of the Company is 12th Floor, 1190 Hornby
Street, Vancouver, British Columbia, V6Z 2L3.

The Company has two wholly owned subsidiaries, Turbodyne Systems, Inc.
("Turbodyne Systems") and Pacific Baja Light Metals Corp. ("Pacific Baja
Light Metals").

Turbodyne Systems was incorporated pursuant to the laws of the State of
Nevada, USA, on May 21, 1993.  The address of the head office of Turbodyne
Systems, Inc.  is  6155 Carpinteria Avenue, Carpinteria, California, 93013.

Pacific Baja Light Metals was incorporated as "Pacific Baja Acquisition
Corp."  pursuant to the laws of the State of Wyoming, USA, on April 15,
1996.   Pacific Baja Acquisition Corp. merged with Pacific Baja Light
Metals Holding Inc. on September 5, 1996 to form Pacific Baja Light Metals. 
The address of the head office of Pacific Baja Light Metals is 15300 Valley
View, La Mirada, California.  Pacific Baja Light Metals has two wholly
owned California subsidiaries, Optima Wheel Inc. ("Optima Wheel") and Baja
Pacific Light Metals Inc. ("Baja Pacific"), and a wholly owned Mexican
subsidiary, Baja Oriente S.A. de C.V. ("Baja Oriente").

During the period from its incorporation on May 18, 1983 until July of
1993, when it commenced funding the development of the Turbodyne
Technology, as described herein, the Company was engaged in the business of
mineral exploration.  The Company divested itself of any mineral properties
prior to the acquisition of the Turbodyne Technology and no longer holds
any interest in any mineral properties and does not carry on mineral
exploration.

INDUSTRY BACKGROUND AND PRODUCT
-------------------------------

The Pacific Baja Business is carried on through Pacific Baja Light Metals
from its head office in La Mirada, California.  The Turbodyne Business is
carried on through Turbodyne Systems from its head office in Carpinteria,
California.  The Pacific Baja Business and the Turbodyne Business are
summarized below.

<PAGE>

1.   PACIFIC BAJA BUSINESS
     ---------------------

Pacific Baja Light Metals is an established manufacturer of aluminum cast
products primarily for the automotive industry.  Pacific Baja Light Metals
manufactures turbocharger and compressor housings for Original Equipment
Manufacturers in the automotive industry ("OEMs") and aluminum wheels for
the automotive aftermarket.  Pacific Baja Light Metals also manufactures on
a contract basis, the housings for the Turbodyne products manufactured by
Turbodyne Systems, as discussed below in Section 2.2 of this Item 1 (the
"Turbodyne Products").

1.1  ACQUISITION OF PACIFIC BAJA LIGHT METALS BY THE COMPANY
     -------------------------------------------------------

The Company acquired Pacific Baja effective July 2, 1996 pursuant to an
acquisition agreement between the Company, Pacific Baja Light Metals
Holding, Inc. ("Pacific Baja") and the principal shareholders of Pacific
Baja (the "Acquisition Agreement").  The Company acquired all of the issued
and outstanding shares of Pacific Baja for total consideration consisting
of  a cash payment of US $12,000,670 and the issue of 3,076,923 common
shares of the Company.  

The principal reason for the acquisition was to form an alliance with a
manufacturer with a proven track record of volume manufacturing of quality
auto parts, particularly in the turbocharger field.   The Turbodyne
Products are comprised of precision automotive parts, including cast
aluminum components manufactured by Pacific Baja.  Through the acquisition
of Pacific Baja, the Company acquired a proven manufacturer for its
Turbodyne Products.  Management viewed the acquisition as a means to
establish the credibility of the Company with potential OEMs as a quality
manufacturer of automotive parts.   In addition, the acquisition brought to
the Company personnel experienced in manufacturing and who have contacts
with turbocharger manufacturers and potential customers for the Turbodyne
Products.

1.2  EXISTING PRODUCTS
     -----------------

Pacific Baja Light Metals manufactures and markets permanent mold and sand
aluminum castings, both machined and raw, for the automotive aftermarket as
well as automotive and industrial OEM's.  Pacific Baja Light Metals has
three operating units: Optima Wheel; Baja Oriente; and Baja Pacific.  

Pacific Baja Light Metals' present product lines and business segments
include the following:

(a)  CUSTOM WHEELS
     -------------

Pacific Baja Light Metals, through its Optima Wheel operating unit,
manufactures and markets styled aluminum road wheels for the automotive
aftermarket. Products consist of one-piece aluminum wheels for passenger
cars, light trucks, and motorcycles, as well as two-piece (steel outer,
aluminum center) wheels for the passenger car replacement wheel market. 
Sixty percent (60%) of Pacific Baja Light Metals' custom wheel sales are
private label brands produced  for other wheel manufacturers and
distributors with the remaining forty percent (40%) marketed under the
'Optima Wheels' brand name to approximately 25 wholesale distributors
located throughout the United States.   As Optima Wheel is not a dominant
aftermarket supplier of aluminum custom wheels and does not expend
significant efforts in connection with marketing and sales of its custom
wheels, there is a risk that revenues from these products will decline as
existing and new companies obtain additional market share.  Management
intends to minimize the risk of revenue loss to the Company as a whole by
focusing its efforts to increase revenues in the non-wheel, industrial
products areas.

(b)  NON-WHEEL ALUMINUM COMPONENTS
     -----------------------------

Pacific Baja Light Metals, through Baja Oriente's facility located in
Ensenada, Baja California, Mexico, casts and machines permanent mold
aluminum parts for the Garrett division of AlliedSignal Automotive, Inc. 
("AlliedSignal"), which manufactures turbo-charging systems for Class 8
trucks.  Pursuant to its agreement with AlliedSignal,  Pacific Baja Light
Metals is the sole source to AlliedSignal for air-to-air heat exchange
manifolds and is one of two aluminum 

<PAGE>

foundries manufacturing compressor housings, pedestals, and other aluminum
components for AlliedSignal.  Pacific Baja Light Metals manufactures a
ready-to-assemble product for AlliedSignal that is shipped directly to its
plant in Mexicali, Mexico.  The supply agreement between AlliedSignal and
Pacific Baja Light Metals commenced on January 1, 1994 for an initial three
year term.  Pursuant to a letter agreement, Pacific Baja Light Metals and
AlliedSignal have agreed to renew the supply agreement for an additional
three year term commencing on January 1, 1997 and expiring on December 31,
1999. 

Pacific Baja Light Metals, through its Baja Pacific operating unit,
manufactures, short-run sand and permanent mold aluminum castings for
automotive, aerospace, and other industrial applications.  Products
manufactured include turbine fan blades for maritime vessels, rotors for
fan blades, and short production runs for existing customers. 

1.3  NEW PRODUCT DEVELOPMENT
     -----------------------

Pacific Baja Light Metals develops new products in order to respond to
customer requests and to diversify its product lines.  Pacific Baja's
engineering team has on-site design and development capabilities that
enable it to design products utilizing computer aided design and computer
aided manufacturing (CAD/CAM) drawings.  Pacific Baja Light Metals' new
product development activities among its various product lines are as
follows:

(a)  CUSTOM WHEELS
     -------------

Pacific Baja Light Metals does not design new and unproven custom aluminum
road wheels.  Pacific Baja Light Metals solicits market information from
its customers and attends auto shows to determine which styles are popular,
and uses its CAD/CAM system to make new molds and manufacture those wheels. 
Pacific Baja Light Metals typically manufactures approximately ten new
wheel products annually, however based on many factors, including but not
limited to, technological developments and customer demands, Pacific Baja
Light Metals may change the number of new wheels produced annually.

(b)  NON-WHEEL ALUMINUM COMPONENTS
     -----------------------------

Pacific Baja has implemented a strategy to develop relationships with OEMs
in addition to AlliedSignal in the automotive industry to provide new 
non-wheel aluminum components in order to expand its product line.  
New products developed by Pacific Baja Light Metals start as short-run 
prototypes at the La Mirada facility.  Once these products are accepted 
by the OEM, production begins at the higher volume foundry in Ensenada, Mexico.

There can be no assurance that Pacific Baja Light Metals will be successful
in establishing relationships with OEMs or if established that Pacific Baja
Light Metals will develop new products or that any new products developed
will be commercially accepted or profitable to Pacific Baja Light Metals. 
See "Cautionary Statements and Risk Factors -- Technological Changes" and
"Cautionary Statements and Risk Factors -- Customer Preferences."

1.4  MANUFACTURING
     -------------

Pacific Baja Light Metals manufactures products such as manifolds,
compressor housings, and pedestals at its Ensenada foundry, performs its
short-run foundry and prototype production in La Mirada, and manufactures
aluminum cast custom wheels at both locations.  The La Mirada and Ensenada
foundries perform manufacturing activities ranging from casting to heat
treating, powder painting (Ensenada only), finished machining, and
packaging.

(a)  ENSENADA FOUNDRY
     ----------------

Pacific Baja Light Metals operates an aluminum permanent mold foundry at
Ensenada, Baja California, Mexico, which occupies approximately 120,000
square feet.  The Ensenada facility serves as Pacific Baja Light Metals'
primary long run, high volume casting operation, where custom wheels are
cast, heat treated, painted, machined to a semi-finished state, and shipped
to Pacific Baja Light Metals' La Mirada facility. The Ensenada facility
also houses Pacific Baja Light Metals' Baja Pacific operating unit, which
manufactures aluminum components under contract for AlliedSignal, 

<PAGE>

casts, machines, and ships manifolds directly to AlliedSignal's assembly
plant in Mexicali, Mexico and casts, machines and ships compressor housings
and pedestals to their Torrance, California facility.  As of December 31,
1996 Pacific Baja Light Metals employed approximately 325 persons at its
Ensenada foundry with two production shifts and one maintenance shift
operating five and one half days a week.

(b)  LA MIRADA FOUNDRY
     -----------------

Pacific Baja Light Metals operates a sand and permanent mold 95,000 square
foot foundry facility at La Mirada, California.  In addition, Pacific
Baja Light Metals's corporate offices and distributing facility are located
in the La Mirada building.  The La Mirada facility receives semi-finished
custom wheels, shipped from the Ensenada foundry, which are finished,
packaged, and prepared for shipment to Pacific Baja Light Metals private
label customers and Optima Wheel distributors.  The La Mirada facility also
facilitates short-run and prototype aluminum casting production for
customers and serves as Pacific Baja Light Metals' 'feeder' operation for
longer run production in Ensenada, Mexico.  As of December 31, 1996,
Pacific Baja Light Metals employed approximately 100 persons at its La
Mirada facility working two shifts, five days a week.

Pacific Baja Light Metals outsources the chrome plating and polishing of
its custom wheels due to the presence of hazardous materials associated
with this process and the resulting risk of environmental liabilities.

1.5  SUPPLIERS
     ---------

The raw materials used in Pacific Baja Light Metals' production of cast
aluminum custom wheels for the automotive aftermarket and cast aluminum
parts for automotive and industrial OEMs consist primarily of aluminum and
sand.  Aluminum ingots are purchased from aluminum suppliers such as TST
Inc., Vista Corporation, and Noranda Company and are melted, poured into
sand and/or permanent mold castings, heat treated, machined, and finished
into the final product.  Aluminum purchases are based predominantly on
price and typically net 60 days.  Pacific Baja Light Metals does not expect
any disruption in its ability to obtain aluminum in the foreseeable future.


Sand is used in manufacturing the cores that are placed within permanent
molds prior to pouring aluminum and is used in sand aluminum castings
produced by Pacific Baja Light Metals.  Pacific Baja Light Metals purchases
approximately 90% of its sand from one supplier.  However, in the event
this supplier is unable to meet the needs of Pacific Baja Light Metals, the
Company does not anticipate any significant additional cost or time delays
to procure sand from another party.

Pacific Baja Light Metals' two-piece composite steel wheels are supplied by
American Wheel, a division of Titan Wheel Corporation, and are fitted with
aluminum centers manufactured at Pacific Baja Light Metals' facility in
Ensenada, Mexico.  Two-piece composite custom wheels comprise approximately
15% of total custom wheel revenues.

Pacific Baja Light Metals' facility in Ensenada, Mexico is supplied with
raw materials which are purchased in, and delivered from, the United
States.  This arrangement is intended to insulate Pacific Baja Light Metals
from adverse foreign exchange fluctuations.

1.6  MANAGEMENT
     ----------

Key personnel of Pacific Baja Light Metals are summarized as follows:

(a)  MICHAEL J. JOYCE, PRESIDENT
     ---------------------------

Mr. Joyce, 52, graduated from Kent State University with a BA in Physics
and from Ohio State University with an MBA and has over 25 years of
manufacturing and management experience.  He has 15 years of experience in 
the aluminum casting and machining industry as a supplier to both
automotive OEM's and aftermarket companies. Prior 

<PAGE>

to joining Pacific Baja Light Metals in 1990, Mr. Joyce was Group President
of Western Wheel Corporation, a major automotive supplier for 13 years.

(b)  MR. LENNART RENBERG, EXCLUSIVE CONSULTANT
     -----------------------------------------

Mr. Renberg, 52, possesses over 30 years experience in both the 'tool and
die' industry as well as the aluminum foundry industry.  Mr. Renberg owned
and operated a tool and die business and an aluminum foundry in the Los
Angeles area.  Mr. Renberg's services are provided pursuant to a consulting
agreement between Lykar Specialties Inc. and Pacific Baja Light Metals
pursuant to which Lykar Specialties Inc. provides the consulting services
of Mr. Renberg to Pacific Baja Light Metals.  The consultant agreement
obligates  Lykar Specialties Inc. to provide the full-time services of Mr.
Renberg on a day to day basis in connection with management of the
operations of Pacific Baja Light Metals for a three year term commencing
September 5, 1996.

(c)  MR. THOMAS ZASTERA, VICE PRESIDENT OF FINANCE
     ---------------------------------------------

Mr. Zastera, 58, earned a BS degree in Business Administration from the
University of Nebraska.  Mr. Zastera worked as controller for several
foundry related companies, including 15 years with Western Wheel
Corporation as National Credit Manager from 1979 to 1990.  He joined
Pacific Baja Light Metals in 1990.

The involvement of the Company's directors and officers in the day to day
operations of Pacific Baja Light Metals is limited to fundamental decisions
materially affecting the business of Pacific Baja Light Metals and to
discussions as to the production by Pacific Baja Light Metals of parts for
the Turbodyne Products.  Management of Pacific Baja Light Metals reports to
the Company as to the financial and operational conditions of the Pacific
Baja Business on a monthly basis and as otherwise required.  Day to day
management of the Pacific Baja Business is the responsibility of management
of Pacific Baja Light Metals.

1.7  BAJA ORIENTE
     ------------

Baja Oriente is incorporated under Mexican law and is 100% beneficially
owned by Pacific Baja Light Metals. Ownership of Baja Oriente by its U.S.
parent is permitted under an exemption to Mexican foreign investment law
for "maquiladora" ventures.  Baja Oriente operates as a maquiladora
pursuant to a maquiladora license granted by the Mexican Ministry of
Commerce.  As a maquiladora, Baja Oriente is able to import raw material
from the U.S. and export final products to Pacific Baja Light Metals in the
U.S. without being subject to import and export duties levied under Mexican
Federal Customs law.  Baja Oriente purchases raw materials and receives
payment for its products in U.S. currency and accordingly is insulated from
fluctuations in the exchange rate of the Mexican peso in respect of its
purchases of raw materials and sales revenues.  

1.8  COMPETITION
     -----------

Pacific Baja Light Metals faces significant competition in both the cast
aluminum wheels automotive aftermarket industry and cast aluminum product
industry.  In general, the barriers to entry to the aluminum foundry
business are not prohibitive as capital costs are less than those
associated with steel mills in large part because foundry operations
incorporate little high technology.  The competition in each industry
segment is summarized as follows:

(a)  CAST ALUMINUM WHEELS FOR AUTOMOTIVE AFTERMARKET
     -----------------------------------------------

Pacific Baja Light Metals faces competition in the United States from
approximately 85 wheel companies of which approximately one-third have
manufacturing capability. Pacific Baja Light Metals limits its sales of
aftermarket wheels to the North American automotive market.

<PAGE>

(b)  CAST ALUMINUM PRODUCTS FOR OEM'S
     --------------------------------

Pacific Baja Light Metals faces competition in the cast aluminum product
manufacturing industry from a large number of competitors which have
greater revenues and financial resources than Pacific Baja Light Metals.

Barriers to entry for the cast aluminum product industry for automotive and
industrial OEMs are significantly higher than the barriers to entry for
cast aluminum wheels as OEMs impose high standards of quality control.

The Mexican manufacturing facility of Pacific Baja Light Metals operated by
Baja Oriente provides Pacific Baja Light Metals with a cost advantage over
competitors with operations in the U.S.

The sales of the cast aluminum products to OEMs by Pacific Baja Light
Metals is limited to OEMs operating within the United States.

1.9  CAUTIONARY STATEMENTS AND RISK FACTORS
     --------------------------------------

Several of the matters discussed in this document contain forward looking
statements that involve risks and uncertainties.  Factors associated with
the forward looking statements which could cause actual results to differ
materially from those projected in the statements appear below.  In
addition to the other information contained in this document, readers
should carefully consider the following cautionary statements and risk
factors.

COMPETITION.  The industry in which Pacific Baja Light Metals operates is
highly competitive and subject to technological change.  Certain existing
and potential competitors of Pacific Baja Light Metals have greater
financial, marketing and other resources than Pacific Baja Light Metals. 
Increased competition could result in price reductions, reduced margins and
loss of market share, all of which could materially adversely effect
Pacific Baja Light Metals.

LIMITED NUMBER OF CUSTOMERS.  A large proportion of Pacific Baja Light
Metals' sales are concentrated in a small number of major customers.  Loss
of any major customer, or a significant decrease in product shipment to, or
an inability to collect amounts due from, or any deterioration of the
relationship with, or any change in the financial circumstances of, any of
these customers could have an adverse effect on Pacific Baja Light Metals' 
business and operating results. 

CUSTOMER PREFERENCES.  Some of Pacific Baja Light Metals' products are
subject to short term changes in consumer preferences and demands.  Changes
in consumer preferences could render existing products or products under
development unmarketable which could adversely effect the sales and results
of operations of Pacific Baja Light Metals.

INTERNATIONAL RISKS.  A significant amount of Pacific Baja Light Metals'
production takes place at the Ensenada facility and is imported into the
United States under favorable trade agreements negotiated between the
governments of the United States and Mexico.  Changes in these trade
arrangements and in North American trade agreements generally could
adversely affect the production costs and profitability of Pacific Baja
Light Metals.  In addition, changes in the foreign exchange rates for
Mexican Peso's and US Dollars or changes in economic conditions in Mexico
could adversely affect certain operating costs and the results of
operations of Pacific Baja Light Metals.

RAW MATERIALS.  Pacific Baja Light Metals buys the raw aluminum material
for its products at market prices.  Changes in demand and price of aluminum
could affect Pacific Baja Light Metals' ability to deliver products
pursuant to its contractual commitments and could materially adversely
effect results of operations.

TECHNOLOGICAL CHANGES.  Technological changes in aluminum casting and
machining technology could affect Pacific Baja Light Metals's
competitiveness or require Pacific Baja Light Metals to make significant
expenditures on new plant and equipment all of which could adversely affect
Pacific Baja Light Metals' operating costs and results of operations. 
There can be no assurance that in the event of technological changes,
Pacific Baja Light Metals will remain competitive.

<PAGE>


DEPENDENCE ON KEY PERSONNEL.  Pacific Baja Light Metals is dependent upon
the efforts and commitment of Michael Joyce and Lennart Renberg.  The loss
of the services of either Mr. Joyce or Mr. Renberg could adversely impact
on the business of Pacific Baja Light Metals.


2.   TURBODYNE BUSINESS
     ------------------

Turbodyne Systems develops products to enhance performance and reduce
emissions of internal combustion engines.  The Turbodyne Technology is
designed to optimize air flow to internal combustion engines resulting in
efficient fuel combustion in both diesel and gasoline engines.
 
2.1  ACQUISITION OF THE TURBODYNE SYSTEMS
     ------------------------------------

Turbodyne Systems was acquired by the Company pursuant to an agreement
between the Company and Edward M. Halimi dated July 15, 1993 and amended by
amendment agreements dated October 1, 1993 and December 31, 1993.  The
Company issued 1,000,000 common shares of the Company to Edward M. Halimi
in consideration for all of the issued and outstanding shares of Turbodyne
Systems.  This transaction is characterized as a reverse takeover
transaction and was effected in accordance with the policies of the
Vancouver Stock Exchange.

Prior to the acquisition by the Company, Turbodyne Systems acquired the
Turbodyne Technology from Edward M. Halimi, a director, in consideration of
the issue to Mr. Halimi of 100 common shares of Turbodyne Systems, being
all of the issued and outstanding shares of Turbodyne Systems. 

2.2  PRODUCTS
     --------

Turbodyne Systems has developed three principal products employing the
Turbodyne Technology more particularly described as follows:

(a)  TURBODYNE SYSTEM
     ----------------

The Turbodyne System is an air flow enhancement product designed to improve
the performance of internal combustion engines by increasing air flow to
the cylinders.  As a result of increased air flow, more efficient
combustion takes place within the cylinders resulting in increased power
for the same amount of fuel and reduction of engine emissions.

In order for combustion to take place in an internal combustion engine,
both oxygen and fuel must be present within the combustion chamber
(cylinder).  Typically, the vacuum created by the action of the piston
causes air to be sucked into the engine through the carburetor.  The fuel
is supplied to the cylinder under pressure through the action of the fuel
pump and fuel injectors.  While engineers attempt to design engines so that
optimal combustion occurs, the variation in the air fuel ratio which occurs
as a result of the difficulty in controlling air intake pressure results in
intervals of inefficient combustion, especially during rapid acceleration
or deceleration and on cold start up.  These variations in air fuel ratios
result in lack of or inconsistent engine power, fuel wastage and emissions. 
The two principal attempts to solve this problem are superchargers and
turbocharger.  A supercharger is essentially an air compressor which is
driven by the engine and supplies positive air intake pressure to the
cylinder through the carburetor.  Although superchargers solve most of the
air fuel ratio problems they have become unpopular because they are
expensive, rob engine power and increase fuel consumption.  Turbocharger
perform the same function as superchargers by delivering positive air
intake pressure through the carburetor to the cylinders.  Unlike
superchargers, turbocharger are driven through the pressure of exhaust
gases exiting the engine.  Although turbocharger solve many of the power
and fuel consumption problems of superchargers they are designed to work
efficiently at relatively high speeds.  Until the pressure of exhaust gases
spins the turbine blades of the turbocharger above relatively high speeds,
there is insufficient air flow to the engine causing the engine to burn a
fuel rich mixture.  This results in the phenomenon known as turbo lag. 
Turbo lag occurs during the period from initial acceleration to the time
when the turbine blades spin at full boost (30,000 + RPM).  The inefficient
operation of the engine during the turbo lag period 

<PAGE>

presents safety problems due to lurches in the acceleration phase of the
driving cycle.  The inefficient operation of the engine during the turbo
lag period increases fuel consumption and maintenance problems and causes
an increase in emissions due to the incorrect air fuel ratio.  Although
turbocharger solve air fuel ratio problems during peak operating periods,
they actually exacerbate the problems during the turbo lag period.

The Turbodyne System is an add on device for turbocharged engines which
uses an electric motor to drive the turbine and provide positive intake
pressure through the carburetor during the turbo lag period.  

The Turbodyne System increases the speed of the turbocharger when exhaust
gases are insufficient to maintain appropriate turbocharger speed. The
Turbodyne System incorporates brushless electric motors and clutch designs 
that eliminate wear problems.  The brushless motor and an electronic
controller convert the automotive D.C. power into a three phase power
supply and feed-back circuit.  The motor is integrated as part of an air-
duct which is attached to the air intake port of a turbocharger. 
Rotational power is transmitted through an automatic Bendix type full
disconnecting clutch with a conical clutch interface.  When the electric
motor is engaged and the shaft rotates, the clutch assembly engages the
motor with the turbocharger rotor.  Upon acceleration of the clutch and
rotor assembly, radial load is entered using a clutch piloting bore.  The
motor is activated by remote sensors that monitor the demand for power and
turbo boost.

The earliest models of the Turbodyne System were developed primarily for
the purpose of overcoming turbo lag, modulating power delivery and avoiding
sudden power surges which may cause accidents in turbocharged vehicles. 
The ability of the Turbodyne System to reduce emissions was discovered
during the development of the Turbodyne System when it was observed that
vehicles equipped with the system did not generate customary smoke during
acceleration.  The absence of smoke results from the fact that turbocharger
equipped engines are calibrated to deliver fuel to the engine based on
optimal air flow that occurs when the turbocharger is running at 30,000+
rpms.  During the turbo-lag period the fuel to air ratio is too rich
resulting in inefficient combustion, excessive smoke, particulate matter
emissions and wasted fuel.  Initial independent laboratory results to date
indicate that the Turbodyne System reduces fuel consumption and emissions
by providing optimal air fuel ratio for combustion during acceleration. 
More efficient combustion also results in better power delivery and
elimination of turbolag.

Management of Turbodyne Systems views the Turbodyne System as a prototype
product which was fundamental in establishing the technical viability of
the Turbodyne products.  The technology employed in the Turbodyne System
has been incorporated into the Turbopac and Dynacharger products
subsequently developed by Turbodyne Systems, as discussed below. The
Company believes that the technology employed in the Turbopac and
Dynacharger products supersedes the Turbodyne System for a majority of
applications in the automotive industry.  There may remain limited
applications within the automotive industry and general applications
outside the automotive industry where the Turbodyne System may be
commercially employed.

(b)  TURBOPAC
     --------

Turbopac applies technology similar to the Turbodyne System to make
combustion more efficient in both turbocharged and non-turbocharged
gasoline and diesel engines by optimizing the air to fuel ratio.   The
Turbopac products are designed to provide an air boost into the engine in-
take manifold during the acceleration phase. Testing to date indicates that
Turbopac extends the benefits of the Turbodyne System of increased engine
power, reduced fuel consumption and reduced emissions to non-turbocharged
vehicles.    Turbopac employs a high speed, electronically controlled
brushless electric motor which runs continuously once the engine has
started, providing positive air intake pressure to optimize the air to fuel
ratio.  Turbopac essentially serves as an electronic supercharger. 
Turbopac can also be installed on turbocharger equipped engines.  Unlike
the Turbodyne System, Turbopac can be installed without the need for
precision machining of a turbocharger.  The Company believes that the most 
significant aspect of Turbopac is that it allows Turbodyne Systems to
target much larger international markets because of its ability to be
installed on non-turbocharged engines.

Turbodyne Systems plans to design and produce three separate Turbopac
models which may be installed on both turbocharged and non-turbocharged
engines:

<PAGE>

     (1)  the Turbopac 1200 model for naturally aspirated (ie. carburetted)
          two-cycle gasoline engines installed in motorcycles, water-ski
          jets and snowmobiles;

     (2)  the Turbopac 1500 model for cars, performance vehicles and light
          trucks with either fuel injected or naturally aspirated gasoline
          engines and with displacements up to 3.5 litres;

     (3)  the 2200 Turbopac model for cars, performance vehicles and light
          trucks with either fuel injected or carburetted engines with
          displacements greater than 3.5 litres;

     (4)  the Turbopac 2500 model for heavy duty trucks and buses for
          either fuel injected or naturally aspirated diesel engines.

Turbodyne Systems has completed development and commenced production of the
1500 Turbopac model.  Development of each of the 1200 Turbopac, 2200
Turbopac and the 2500 Turbopac models is in progress.  Due to unanticipated
production delays, production of the 1200 Turbopac model initially intended
to commence in June, 1997 currently is scheduled to commence by the end of
September, 1997.  Production of the 2200 Turbopac also is anticipated to
commence in September, 1997 and production of the 2500 Turbopac model is
anticipated to commence in December 1997.
            
(c)  DYNACHARGER
     -----------

The Dynacharger is Turbodyne Systems's newest product.  It is essentially
the Company's Turbopac product incorporated into a turbocharger. 
Dynacharger was developed primarily as a result of feedback from
evaluations conducted by potential customers who indicated that they would
prefer to see the Turbodyne Technology built into a turbocharger rather
than provided by an additional external component.  Its principal
advantages over the Turbodyne System attached to a turbocharger are in
cost, weight and space economies.  Operation of the Dynacharger is similar
to the Turbodyne System, except that the electric motor is part of the
internal design of the turbocharger and does not require a clutch to attach
it to the turbocharger's rotating assembly.  The Dynacharger can be
interchangeable with an original equipment turbocharger, thus making it
appropriate for sale to both the original equipment manufacturer's market
and the after market.   Turbocharger incorporating the Dynacharger products
can be installed on both fuel injected and naturally aspirated (I.E.,
carburetted) diesel and gasoline engines.

Turbodyne Systems also has designed a product described as a Motor-Assisted
Variable Geometry Turbocharging System ("Motoassist") which is a
Dynacharger with a valve system to concentrate exhaust gases resulting in
faster turbine acceleration.

2.3  STATUS OF PRODUCT DEVELOPMENT
     -----------------------------

The Turbodyne System, 1200 Turbopac, 2200 Turbopac and Dynacharger products
are not yet commercially produced.  Turbodyne Systems has commenced
preliminary commercial production of the 1500 Turbopac products at its
facility in Carpinteria, California.  Pacific Baja Light Metals produces
housings for Turbodyne Systems prototype products which are then assembled
at the Carpinteria facility.  It has commenced preliminary commercial
production of the housing for the 1500 Turbopac product.

Turbopac specification and design for the 1500 Turbopac products is
essentially complete.  Turbodyne Systems' engineering staff is in the
process of finalizing parts and vendor lists and coordinating delivery
schedules for all components.  Milestones yet to be completed prior to
commencing full-scale commercial production and sale of product include:
completion of production equipment procurement and tooling; establishment
of manufacturing and testing standards/procedures; establishment of the
production/assembly lines; creation of installation procedures and related
documentation; and completion of environmental and other performance tests
on the final production units.  There is no assurance that commercial
production will be achieved in the foreseeable future or at all  or that
the products will be commercially successful.  In addition, no commercial
order is currently in place and there is no assurance that the Company will
ever receive such an order.

<PAGE>


Turbodyne Systems expects to complete specification and design for its
Dynacharger product in late 1997.  Turbodyne Systems' management
expects to ready the first Dynacharger model for production at the end of
1997, subject to a commercial order being in place.  No assurance can be
given that this product will be produced and if produced that it will be
commercially successful.

Turbodyne Systems' production plan calls for the electronic components of
Turbopac and Dynacharger to be assembled and tested at Turbodyne Systems'
facility in Carpinteria.   Final assembly and testing of the products is
scheduled to occur at the La Mirada facility.  Turbodyne Systems has
adequate space at its Carpinteria facility for these purposes and Pacific
Baja Light Metals intends to commit approximately 30,000 square feet at its
La Mirada plant for final assembly and inventory of Turbodyne products. 
Turbodyne Systems expects to concentrate its production and sales efforts
on the Turbopac and Dynacharger products, although limited sales and
production of the Turbodyne System are expected for customers interested in
an add on product for existing turbocharged vehicles.

Turbodyne Systems' limited production to date has served to meet the
requirements of potential customers and testing agencies retained by the
Company undertaking evaluations of Turbodyne Systems' products. 
Evaluations underway are primarily for the purpose of allowing potential
customers to determine the suitability and performance of the products for
their applications with the goal of obtaining purchase orders.  To date,
Turbodyne Systems has had no significant sales of its products other than
sales to Grand Technologies.  See "Distribution Agreements -- Grand
Agreement."

Turbodyne Systems has spent approximately $8,705,000 developing the
Turbodyne System, Turbopac and Dynacharger products to date.  Management
anticipates that an additional $1,500,000 will be spent in connection with
research and development efforts in order to bring all Turbopac models and
the Dynacharger product into full scale commercial production.  This is a
forward looking statement however and the actual amounts spent on research
and development activities may differ.  See "Cautionary Statements and Risk
Factors -- Product Development."

2.4  MARKETING OF THE TURBOPAC PRODUCTS
     ----------------------------------

The Company is undertaking the marketing efforts described below.  There is
no assurance this marketing will result in commercial sale of the Company's
products.

(a)  TURBODYNE SYSTEM
     ----------------

The Company is not currently marketing the Turbodyne System as it believes
that the Turbopac and Dynacharger products, each of which incorporate the
technology developed in the Turbodyne System, have superseded the Turbodyne
System and are more marketable products.

(b)  TURBOPAC PRODUCTS
     -----------------

The Company is marketing its Turbopac products in both the OEM sector and
the aftermarket installation sector.

The Company is providing each Turbopac product to OEMs, including Navistar,
AlliedSignal, Volkswagen and MANN, for testing in an attempt to convince
these manufacturers as to the performance and marketability of the Turbopac
products.  These evaluation programs are long-term and, accordingly, the
Company does not anticipate a contract with an OEM for its Turbopac
products until 1998 at the earliest.  The Company hopes to enter into joint
venture manufacturing agreements with the OEMs who agree to purchase the
Turbopac products.

The Company is marketing the 1500 Turbopac product in the aftermarket
automobile markets pursuant to the Grand Distribution Agreement (see
"Distribution Agreements--Grand Agreement").  Grand has yet to achieve
significant sales of the 1500 Turbopac product due to delays in full scale
production of the product by Turbodyne Systems.  

The Company intends to market the 2500 Turbopac product for the heavy duty
trucks and bus aftermarket installation market.  The 2500 Turbopac product
is undergoing final testing at Southwest Research Laboratories for
compliance with the pollution standards imposed by the U.S. Environmental
Protection Agency for the U.S. Urban Bus Retrofit program.  
The Company hopes to receive certification of the 2500 Turbopac product 
during the third quarter of 1997 at which time it will commence
marketing activities.  The 

<PAGE>

Company may produce the 2500 Turbopac product alone or under a joint
venture relationship with an existing retrofitter in the truck and bus
industry.

(c)  DYNACHARGER PRODUCTS
     --------------------

The Company intends to pursue evaluation programs with OEMs upon completion
of the development of the Dynacharger product.  As with the Turbopac
products, the Company intends to secure OEM supply contracts pursuant to
which the Dynacharger products will be incorporated directly into OEM
products.   The Company anticipates that it will commence these evaluation
programs in early 1998.

(d)  GEOGRAPHICAL MARKET
     -------------------

Initially, the Company is targeting OEMs in the United States and Europe
who are involved in automobile and truck and related parts manufacture. 
The ultimate consumers of these products may be located worldwide.  

The Company's geographical market for aftermarket products initially is the
United States and the U.S. urban bus retrofit market. (See "Distribution
Agreements--Grand Agreement").

2.5  COMPETITION
     -----------

While the Company believes there is no direct competition to the Turbodyne
Technology, competition to the Turbodyne Technology exists from competing
technologies marketed by companies who may have more resources and who may
be better financed than the Company.  In addition, there is no assurance
that new competitors will not attempt to enter the industry.  

Competition for the Turbopac Products is expected from improvements and
refinement to conventional internal combustion engines which may be able to
increase fuel efficiency and decrease emissions.  The cost of incorporating
these improvements and refinements into existing internal combustion
engines may be less than the cost of installing a Turbopac Product.  In
addition, improvements and modifications to existing technology may be more
readily accepted by OEMs and consumers.

Competition for the Dynacharger products is expected from improvements and
refinements to existing turbocharger technology.  Turbocharger
incorporating improvements and refinements to existing turbocharger
technology may be less expensive than turbocharger incorporating the
Dynacharger products.  In addition, OEMs and consumers may be more willing
to accept improvements and refinements to existing turbocharger technology 
than turbocharger installed with the Dynacharger product.

Both the Turbopac and Dynacharger products may realize competition from
existing products manufactured by OEMs who do not incorporate Turbodyne
products into their final products.  A relatively small number of OEMs have
a significant share of the automotive market and accordingly an OEM's
failure to incorporate the Turbodyne products into its product lines could
pose a significant barrier to entry to the Company.

2.6  IMPACT OF GOVERNMENT REGULATION
     -------------------------------

As pollution standards increase, the automotive market is expected to
increase its demand for technical improvements to existing internal
combustion engine technology in order to meet these standards. 
Accordingly, an imposition of increased pollution standards by government
regulatory agencies is expected to cause an increase in demand for the
Turbodyne Products, assuming these products had been commercially developed
and accepted.

In the United States, emissions standards for diesel engines are imposed 
by the US Environmental Protection Agency (the "US EPA") and by other
regulatory agencies such as the California Air Resources Board ("CARB"). 
The Company believes, based on its testing, that vehicles equipped with
Turbodyne Products meet the US EPA's emissions standards as specified in
the Clean Air Act Amendments of 1990 (the "Clean Air Act") which 
established the US emission standards for on-highway diesel engines
produced through 2001.  Insofar as light and medium heavy-duty diesel
engines are concerned, the CARB standards are similar to those adopted by
the US EPA.  There can be no 

<PAGE>

assurance that the government will not increase emission standards to a
level that the Turbodyne Products currently do not satisfy, in which event,
the Company may be required to expend significant amounts to develop and
incorporate the technology necessary to meet these standards.  Any such
expenditure and any delays in product development or sales as a result of
more stringent emission standards could have a material adverse effect on
the results of operations of the Company.

2.7  PROPRIETARY PROTECTION OF PRODUCTS
     ----------------------------------

Turbodyne Systems has filed and will continue to file patent applications
for its products and inventions.  Turbodyne Systems has made patent
applications for its Turbodyne Technology as described below.  Except as
indicated, there is no assurance that patents will be granted in respect of
these patent applications.

A U.S. patent application was made by Edward M. Halimi, as inventor, in
1993 for Turbodyne Systems' original Turbodyne Systems product.  This
patent application was assigned by Mr. Halimi to Turbodyne Systems pursuant
to an asset purchase agreement between Mr. Halimi and Turbodyne Systems
dated August 18, 1993.  Turbodyne Systems has been advised by the U.S.
Patent Office that all claims in respect of this patent application have
been approved.  Turbodyne Systems has submitted final drawings to the
Patent Office and has paid the patent issuance fee required for the issue
of the formal patent.  The issue of the formal patent is subject only to
the acceptance by the Patent Office of the final drawings.  No royalty is
payable in respect of this patent.  The patent will expire 17 years from
the date of formal issuance.

Two U.S. patent applications were submitted by Edward M. Halimi, William
Woolenweber and Ralph Maloof, as inventors, in 1995 in respect of Turbodyne
Systems' proprietary Dynacharger products.  The U.S. Patent Office has
approved all claims with respect to the earlier of the patent applications
and a formal patent has been issued in the name of the inventors.  With
respect to the second of the patent applications, the U.S. Patent Office
has approved 40 out of 42 claims and a formal patent has been issued in the
name of the inventors.  In respect of the first patent which has been
issued, this patent will expire on July 28, 2015.  In respect of the second
patent, this patent will expire on September 18, 2015.  The inventors have
executed formal patent assignment documents in favour of Turbodyne Systems
for each of the issued patents.  Turbodyne Systems has agreed to pay a
royalty to each of the inventors equal to 1% of the gross revenues directly
attributable to the Dynacharger products, for a total royalty equal to 3%
of gross revenues.

Two U.S. patent applications were submitted in late 1995 by Edward Halimi,
William Woolenweber and Ralph Maloof, as inventors, in respect of Turbodyne
Systems' Turbopac products and were re-filed with additional disclosed
embodiments in late 1996 in conjunction with international patent
applications filed pursuant to the Patent Cooperation Treaty (the "PCT"). 
Examination of the international patent applications has been requested by 
Turbodyne Systems.  The inventors have executed formal patent assignments
in favour of Turbodyne Systems in respect of these patent applications
which have been submitted to the U.S. Patent Office for registration. 
Turbodyne Systems has agreed to pay a royalty to each of the inventors
equal to 1.5% of gross revenues directly attributable to the Turbopac
products, for a total royalty equal to 4.5% of gross revenues.

Turbodyne Systems also has made patent applications for recognition of each
of the patent applications for the Turbopac and Dynacharger products with
each country that is a party to the PCT in order to secure international
patent protection of Turbodyne Systems' Turbodyne Technology.  

Turbodyne Systems' policy is to diligently defend any infringement of its
patents. To date Turbodyne Systems has not encountered any challenges or
potential challenges of its patents.  Turbodyne Systems has not established
a fund for defense of its patents but may do so if significant sales of its
products are achieved.

Turbodyne Systems also requires all employees, consultants and persons or
companies involved in the testing of Turbodyne Systems' products to execute
confidentiality agreements and to agree to keep confidential all
proprietary information with respect to Turbodyne Systems' products.

<PAGE>

2.8  EMPLOYEES
     ---------
     
In addition to Edward Halimi, who serves as President of Turbodyne Systems
and whose qualifications are discussed in "Directors and Officers of the
Company," the following are considered to be the key employees of Turbodyne
Systems:

(a)  KIM MCDANIEL - VICE PRESIDENT, LEGAL
     ------------------------------------

Mr. McDaniel received his juris doctorate from the University of Puget
Sound School of Law, from which he graduated with honours.  He also holds a
B.A. in Political Science and Economics from the California State
University at San Diego.  He was Senior Counsel at Nestle Beverage Company
in San Francisco from 1992 until joining Turbodyne in 1996.  Prior thereto
he was an Associate with the law firm of Brobeck, Phleger & Harrison in San
Francisco.

(b)  DR. WILLIAM E. WOOLLENWEBER - VICE PRESIDENT, TURBOCHARGER TECHNOLOGY
     ---------------------------------------------------------------------

Dr. Woollenweber has a Bachelors degree in Mechanical Engineering from Yale
University and Masters and PhD degrees in Mechanical Engineering from
California Coast University. He has been granted over 25 patents, primarily
on turbocharger and turbo machinery and has authored several articles on
these subjects.  Prior to joining Turbodyne Systems in 1995 he served as
President of Turbo Design Inc. of Carlsbad, California, a technical
consulting firm specializing in turbocharger and superchargers.  He is a
former executive director of Cummins Engine Company, Inc., a former Vice-
President of Holset Corporation, a former Managing Director of BHD
Engineers and former Vice-President of Schwitzer Corporation.

(c)  RALPH P. MALOOF - VICE PRESIDENT AND CHIEF ENGINEER
     ---------------------------------------------------

Mr. Maloof is a professional engineer with degrees in Mechanical and
Aeronautical Engineering.  Prior to joining Turbodyne in 1994 he was an
engineering consultant in private practise.  He was formerly Senior Program
Manager and Manager of Manufacturing Research with Lockheed Aircraft
Corporation.

(d)  DR. ANATOLY MEZHERITSKY - VICE PRESIDENT, EMISSIONS TECHNOLOGY AND
     TURBOCHARGER
     ------------------------------------------------------------------

Dr. Mezheritsky holds M.Sc, Ph.D. and D.Sc. degrees in Mechanical
Engineering from the University of Transport Machine Production in the
former U.S.S.R.  Prior to joining Turbodyne Systems in 1996 he served as
President of M.A. Turbo/Engine Design.  He formerly served as a senior
mechanical engineer with Vicmar Engineering Ltd.  He was formerly
Department Manager, the All Union Design and Technical Institute of Power
Engineering in Leningrad, U.S.S.R.  He formerly served as  a professor with
the U.S.S.R. Navy Higher Academy and the High Marine Engineering Academy in
Murmansk, U.S.S.R.  He began his career in the 1950's as an engineer
researcher in a Turbine Engineering Plant in Leningrad, U.S.S.R.  He has
published 9 books and 76 articles in the field of mechanical engineering
and holds 8 U.S.S.R. patents and one U.S. patent.

(e)  DR. DORRIAH L. PAGE - VICE-PRESIDENT, EMISSION TECHNOLOGY AND
     ENVIRONMENTAL COMPLIANCE
     -------------------------------------------------------------
Dr. Page holds a Ph.D. and M.Sc. in Transportation Engineering from the
University of California.  She also holds a B.Sc (Biology) and a B.A.
(Political Science).  Prior to joining Turbodyne Systems in 1995 she was an
independent Air Quality and Environmental Research Consultant.  She has
authored numerous papers on air quality and engine performance subjects and
is an executive member of several transportation and emission related
boards and organizations.

(f)  LENARD WEDMAN - VICE-PRESIDENT, ELECTROMAGNETICS AND MOTOR TECHNOLOGY
     ---------------------------------------------------------------------

Mr. Wedman holds a B.Sc. in Electrical Engineering from the University of
Alberta and a M.Sc. in Electrical Engineering from the University of
British Columbia.

<PAGE>


(g)  DAVID WILLETT - VICE-PRESIDENT, ELECTRONICS AND CONTROL TECHNOLOGY
     ------------------------------------------------------------------

Mr. Willett holds a B.Sc. degree in Electrical Engineering from the
University of California and a M.Sc. degree in Electrical Engineering from
the University of Wisconsin.  Prior to joining Turbodyne Systems in 1996,
he was Engineering Design Manager with Pacific Scientific Company where he
was employed in various engineering capacities since 1987.

As of June 30, 1997, Turbodyne Systems had 47 full-time employees and 3
consultants.

2.9  DISTRIBUTORSHIP AGREEMENTS
     --------------------------

a.   GRAND AGREEMENT
     ---------------

On June 13, 1996, Turbodyne Systems entered into an exclusive
distributorship agreement (the "Grand Agreement") with Grand Technologies
Inc. ("Grand"), formerly Granatelli Performance Technologies, Inc. of
Camarillo, California.  Under the terms of the Grand Agreement, Grand will
act as the exclusive worldwide distributor of Turbodyne Systems' Turbopac
products for the automotive and motorcycle gasoline engine performance
aftermarket.

Under the terms of the Grand Agreement, Grand was required to purchase a
minimum of 15,000 units in 1996 at an aggregate cost of $9,375,000 US and
50,000 units at an aggregate cost of $31,250,000 US in each subsequent year
in order to maintain its distributorship rights.  Turbodyne Systems
completed the initial delivery of 85 Turbopac products under the Grand
Agreement during the week of October 14 - 18, 1996. These units were not
recorded as sales as they were delivered for product evaluation purposes. 
Turbodyne Systems completed a subsequent delivery of 125 Turbopac products
during the period ending December 31, 1996, which deliveries also were not
recorded as sales.  The Turbopac products shipped were produced in limited
scale production runs at Turbodyne Systems' Carpenteria facility.  While
Grand did not meet the minimum purchase requirement of 15,000 units in
1996, Turbodyne Systems elected not to terminate the Grand Agreement for
failure to meet the minimum distribution requirement in 1996 as Turbodyne
Systems has been satisfied with the marketing efforts of Grand to date and
because Turbodyne Systems commenced limited production of the 1500 Turbopac
Product in late 1996.  Through June 30, 1997, Grand has not made any 
significant additional purchases from Turbodyne Systems.  There is no 
assurance that Grand will satisfy its purchase obligations for 1997 or in 
subsequent years or that Turbodyne Systems will realize these revenues.  
Turbodyne Systems has agreed that it will not terminate the Grand Agreement 
for failure to meet these minimum orders if Grand has been diligent in 
promoting sales.  

Grand was recently incorporated for the purpose of marketing the Company's
Turbopac products under the Grand Agreement and has no history of prior
sales.  The principals of Grand include Mr. Harry Hibler, an automotive
publisher, and Mr. George Fencl, a director of Vector Automobiles Company.  
Mr. Hibbler was formerly Director of Sales and Marketing for Specialty
Events for Peterson Publishing Co. from 1994 to 1996.  During this time,
Mr. Hibbler was publisher of Event Scene Magazine.  Mr. Hibbler was
publisher of Hot Rod Magazine from 1980 to 1985 and from 1987 to 1994 and
publisher of Car Craft Magazine from 1976 to 1980.  Vector Automobile
Company is a manufacturer of limited production high performance
automobiles.  Each of Mr. Fencl and Mr. Hibbler have in excess of 20 years
experience in the automobile industry.

Grand has no revenue other than revenue which may be received from the sale
of Turbopac products delivered by the Company.  Capitalization of Grand has
been nominal and contribution to Grand from its principals is on an as
needed basis in order to meet necessary obligations and ongoing expenses. 
Grand has indicated to the Company that it intends to expend $250,000 U.S.
to $300,000 U.S. on advertising and promotion of Turbopac products in the
first six months of 1997.  The Company does not know of any assets which
may be owned by Grand other than the Turbopac products delivered to Grand
by the Company and the interest of Grand in the Grand Agreement.

Turbodyne Systems entered into the Grand Agreement based on the experience
and reputation of Mr.  Hibbler and Mr. Fencl.  While there is a risk that
Grand will not be able to complete its obligation under the Grand
Agreement, Turbodyne Systems has the right to terminate the Grand Agreement
for cause, as defined in the Grand Agreement, or without cause upon
delivery of 90 days notice.  If the Grand Agreement is terminated, all
rights of Grand to distribute Turbopac products terminate.  Grand is an
independent contractor under the Grand Agreement and will not become an
agent or consignee of Turbodyne Systems.  Any product ordered by Grand will
be purchased by Grand 

<PAGE>

from Turbodyne Systems.  Turbodyne Systems is not obligated to fund the
operations of Grand or to provide any personnel or material to Grand under
the Grand Agreement.

At the time the Grand Agreement was entered into, Grand was known as
Granatelli Performance Technologies Inc.  Granatelli Performance
Technologies Inc. subsequently changed its name to Grand Technologies Inc.  
GRAND HAS NO ASSOCIATION WITH THE ANDY GRANATELLI GROUP OF COMPANIES,
PAXTON PRODUCTS, INC., VINCE GRANATELLI RACING INC., ANDY GRANATELLI OR ANY
COMPANY OF WHICH ANDY GRANATELLI IS AN OWNER OR A PRINCIPAL.

The Grand Agreement is for an initial term of three years and automatically
will be renewed, subject to Grand's compliance with the terms of the Grand
Agreement, for successive two year periods.

The Grand Agreement does not restrict Turbodyne Systems' right to appoint
other distributors for aftermarket applications other than the automotive
and motorcycle gasoline engine performance aftermarket, or for the OEM
market.

Under the Grand Agreement, Turbodyne Systems will offer a limited warranty
for each Turbopac unit sold by Grand.  The warranty obligates Turbodyne
Systems to replace any defective Turbopac unit.  The warranty is limited to
the expiry of a two year period from purchase or 50,000 miles of use,
whichever is earlier.

There is no assurance that Grand will be sufficiently capitalized to enable
Grand to complete its obligations under the Grand Agreement or any purchase
orders delivered by Grand to the Company.

b.   VIESSMAN WERKE
     --------------

The Company has been advised by Viessman Werke GmbH & Company of Allendorf,
Germany that Viessman has received favorable results from its performance
evaluations of the Company's Turbopac products.  The evaluations were
completed by Viessman pursuant to a development and supply proposal agreed
to between the Company and Viessman in January, 1996.  The proposal
contemplated the supply of approximately 200,000 Turbopac units per year
upon completion of successful evaluations by Viessman.

There is no assurance that the Company and Viessman will enter into a
formal supply contract for the 200,000 Turbopac units, as contemplated in
the proposal, and to date, the Company has not received any purchase orders
from Viessman.

c.   KUHNLE, KOPP AND KAUSCHE AG
     ---------------------------

The Company has entered into an agreement in principle with Kuhnle, Kopp
and Kausche AG ("3K"), dated for reference April 11, 1997, for the design,
development and manufacture of a prototype line of turbocharger
incorporating the Company's technology and manufactured by 3K.  It is
anticipated that the prototype turbocharger will be developed for 3K's
major customers in the European automotive market.  3K is owned by the
Penske Automotive Organization and is the largest manufacturer of
turbocharger in Germany. 

The agreement in principle contemplates the formation of a joint venture
pursuant to which the Company will grant to the joint venture an exclusive
license of its Turbodyne technology for the design, manufacture and sale of
motor-driven turbocharger in Europe for auto and truck manufacturers and
such other territories as the parties agree.  3K will have overall
responsibility for marketing and sales of the joint venture products
through 3K's established distributor and dealer network.  The Company will
not receive any royalty from its license to the joint venture and will
participate in joint venture profits to be shared pursuant to a formula
based on cost contributions.  The agreement in principle also provides 3K
with the option to continue to use any technology licensed to the joint
venture for a period of three years after termination of the joint venture
relationship, in consideration for the payment of a royalty in an amount to
be agreed upon.

<PAGE>


There is no assurance that the agreement in principal between the Company
and 3K will result in the execution of a joint venture agreement between
the Company and 3K.  In addition, there is no assurance that a joint
venture between the Company and 3K will achieve sales of the turbocharger
incorporating the Company's Turbodyne Technology or that the Company will
ever realize any profits from the joint venture.

2.10.     DEVELOPMENT COSTS TO DATE
          -------------------------

Since the acquisition of the Turbodyne Technology, Turbodyne Systems has
principally engaged in the research and development of products that
incorporate the Turbodyne Technology.  The Company concentrates the
business of Turbodyne Systems exclusively on research and development of
products incorporating the Turbodyne Technology.  At such time as these
products are ready for commercial production, Turbodyne Systems intends to 
engage in research and development of additional products incorporating the
Turbodyne Technology.

The research and development costs incurred during the past three fiscal
years of the Company, and from incorporation to December 31, 1996 are as
follows:
<TABLE>
<CAPTION>

                       Inception
                       April 30, 1993         January 1, 1994 to    January 1, 1995 to     January 1, 1996 to
                   TO DECEMBER 31, 1993       DECEMBER 31, 1994     DECEMBER 31, 1995      DECEMBER 31, 1996
                   --------------------       -----------------     -----------------      -----------------
<S>                  <C>                        <C>                   <C>                    <C>
Product             
Development Costs        $ 1,124,198         $    629,959        $ 2,016,726                  $ 4,934,490
                         ===========         ============        ===========                  ===========
                         
                                Total From Inception,
                                 April 30, 1993, to
                                 DECEMBER 31, 1996 
                                -----------------
Product 
Development Costs                  $  8,705,373
                                   ============
</TABLE>


2.11 CAUTIONARY STATEMENTS AND RISK FACTORS
     --------------------------------------

Several of the matters discussed in this document contain forward looking
statements that involve risks and uncertainties.  Factors associated with
the forward looking statements which could cause actual results to differ
materially from those projected in the statements appear below.  In
addition to the other information contained in this document, readers
should carefully consider the following cautionary statements and risk
factors.

NO HISTORY OF PRODUCT SALES.  The Turbodyne Business has not yet achieved
commercial production of its Turbodyne Products, other than the limited
scale production of Turbopac products, and is being financed by equity and
debt.  Turbodyne Systems has had no significant sales to date. 
Accordingly, the Company is subject to risks associated with start-up
companies, including initial losses, uncertainty of revenues, markets and
profitability and the necessity of additional funding.

PRODUCT DEVELOPMENT.  The Turbodyne System, Turbopac and Dynacharger
products have yet to be commercially produced and unexpected problems and
changes to specifications may arise in the development of these products. 
These problems or changes may affect the overall feasibility of the
product, or could delay completion time and increase costs of development. 
Additionally, as product evaluations are not complete, the Company cannot
predict market acceptance of the Turbodyne Products.

RAW MATERIALS.  Turbodyne Systems is primarily dependent upon outside
suppliers for manufacturing components.  There is no assurance that these
suppliers will be able to meet all the demands of the Company or that price
increases in raw materials can be passed on to the Company's customers
through increases in product prices.

COMPETITION.  The Company is not aware of any product directly competitive
with the Turbodyne System; however, indirectly competitive products
currently are sold in the marketplace.  Other products or technologies may
be developed and may make Turbodyne Products less competitive or even
obsolete over time.  Certain existing 

<PAGE>

competitors and organizations researching and selecting solutions to turbo-
lag and unacceptable emissions have greater financial, managerial and
technical resources, operating histories and name recognition than the
Company.  There can be no assurance that the market will consider the
Turbodyne Products to be superior to existing or future competitive
products, or that the Company will be able to adapt to evolving markets and
technologies, develop new products or achieve or maintain technological
advantages.

PROPRIETARY PROTECTION.  The Company has filed patent applications in the
United Sates and in certain foreign jurisdictions relating to Turbodyne
Technology.  Application for a patent offers no assurance that a patent
will be issued or issued without material modification.  Moreover, there
can be no assurance that patents will be issued, that issued patents will
not be circumvented or invalidated, that proprietary information can be
maintained as such or that the Company will be able to achieve or maintain
a technological advantage.  Insofar as the Company relies on trade secrets
and proprietary know-how to achieve and maintain a competitive position,
there can be no assurance that others may not independently develop similar
or superior technologies or gain access to the Company's trade secrets or
know-how.

PRICING STRATEGY.  The Company has developed a pricing strategy and price
lists for its products in relation to retail selling prices of indirectly
competitive products and on estimated costs of producing the Turbodyne
System.  Market acceptance of the Turbodyne products will be heavily
dependent on the pricing policy established by the Company and the cost-
benefit of the Turbodyne Products.  There is no assurance that established
pricing levels will be accepted by the marketplace or that the cost-benefit
to manufacturers will be sufficient to encourage mass purchase of the
Turbodyne Products.

DEPENDENCE ON KEY PERSONNEL.  Turbodyne Systems is dependent upon the
personal efforts and commitment of the management team, particularly Mr.
Halimi who is responsible for the development of current and future
products.  In the event management's services become unavailable, the
Company would need to recruit, retain and motivate other skilled
executives, sales and technical personnel to manage and operate the
business.  There can be no assurance that the Company will be successful in
locating new management or retaining them.  In the case of Mr. Halimi, the
loss of his services would adversely affect development of the business and
its likelihood of continuing operations. 

INSURANCE.  The Company plans to carry product liability, business
interruption and keyman life insurance, but, to date, such insurance is not
in place.

CHANGING INDUSTRY ENVIRONMENT.  The Turbodyne Business may be affected by
other factors beyond its control.  For example, engine and turbocharger
configurations may change, the demand for turbocharged engines may diminish
regardless of the benefits of the Company's products, and the compartments
in which engines are installed might not offer sufficient space to install
the Company's Turbodyne products.


ITEM 2.                   DESCRIPTION OF PROPERTY
                          -----------------------

The administrative head office of the Company is located in leased premises
at Suite 510, 1090 West Pender Street, Vancouver, British Columbia.  The
office is approximately 2,000 square feet and is leased on a month to month
basis.  The Company's monthly rent is $2,500 (Cdn.).  See Item 13 -
"Interest of Management in Certain Transactions."

Turbodyne Systems' production and assembly facilities are located in leased
premises at 6155 Carpinteria Avenue, Carpinteria California, USA  93013. 
The facilities are approximately 28,000 square feet on 3.17 acres of land
and are leased on a month to month basis from American Appliance Inc., a
private company controlled by Mr. Halimi.  The term of the lease to
American Appliance Inc. expires on January 30, 2005.  The Company's monthly
rent is $16,850 (U.S.) plus operating costs, including taxes, insurance and
utilities.  

Baja's California manufacturing facility is located in leased premises at
15300 Valley View Avenue, La Mirada, California 90638.  The facility is
approximately 95,000 square feet.  The facility is leased from New England 
Mutual 

<PAGE>

Life Insurance Company for a seventy-five month term expiring March 31,
2001.  The rent payable by Baja is $24,269.50 (U.S.) per month, inclusive
of taxes, rent and operating expenses.

Baja's Mexican manufacturing facility is located in leased premises at #700
Miramar Y Calle, 18 Ensenada, Baja California, Mexico.  The facility is
approximately 120,000 square feet.  The facility is leased from Baja
Pacific Properties for a ten year term expiring September 5, 2005.  The
rent payable is $15,000 (U.S.) per month, inclusive of taxes, rent and
operating expenses, and escalates at a rate of 5% per annum during each
subsequent year of the lease.    


ITEM 3.                      LEGAL PROCEEDINGS
                             -----------------

The Company is a party to an action commenced in the Supreme Court of
British Columbia on October 2, 1996 by Brad Holt seeking specific
performance and/or damages for breach of an alleged agreement by the
Company to grant to Brad Holt options to purchase an aggregate of 650,000
common shares of the Company at prices varying from $3.50 per share to
$7.50 per share.  The Company has filed a defense denying the existence of
the agreement and, in the alternative, alleging that the agreement was
replaced by a subsequent agreement granting Brad Holt options on only
100,000 shares of the Company.  The Company's management is of the view
that the claim is without merit.

With the exception of the action commenced by Brad Holt, the Company and
its subsidiaries are not a party with respect to any material legal
proceedings, no legal proceedings by the Company are contemplated and the
Company is not aware of any possible material legal proceedings by other
parties against the Company.


ITEM 4.                     CONTROL OF COMPANY
                            ------------------

1.   As far as is known to the Company, and except as disclosed herein, the
Company is not directly or indirectly owned or controlled by any other
corporation or by any foreign government.

2.   The following table sets forth as of June 30, 1997, information with
respect to (I) any person who is known to the Company to be the owner of
more than 10% of any class of the Company's voting securities and (ii) the
total amount of the class of the Company's voting securities owned by the
officers and directors and by the directors and officers as a group:

                                                         PERCENT OF
DIRECTOR/OFFICER    NUMBER OF SHARES                     CLASS(1)
----------------    ----------------                     --------
Edward Halimi       3,250,000 common shares(2)              13.9%
President &           200,000 options
Director

Officers and        4,818,957 common shares                 22.0% 
Directors             753,000 options
as Group 
(8 persons)

<PAGE>

(1)  Based upon 24,539,112 common shares issued and outstanding as at June
     30, 1997 and including for Mr. Halimi and the directors and officers 
     as a group the common shares underlying their respective options. 
(2)  This figure includes 3,250,000 escrow shares held in the name of March
     Technologies Inc., a private company controlled by Mr. Halimi.

As of the date hereof, there are no arrangements known to the Company, the
operation of which may result in a future change of control in the Company.


ITEM 5.                  NATURE OF TRADING MARKET
                         ------------------------

The common shares of the Company are listed on the Vancouver Stock Exchange
in British Columbia, Canada and on the Nasdaq Small Cap Market.  

As of June 30, 1997, the Company's share register indicates that 10,713,679
of the issued and outstanding common shares were held by 85 shareholders
with addresses in the United States, representing approximately 44.4% of
the issued and outstanding common shares of the Company.

1.   VANCOUVER STOCK EXCHANGE
     ------------------------

The following table sets forth the reported high and low prices for the
common shares as quoted over the Vancouver Stock Exchange on a quarterly
basis for the most recent two fiscal periods.                    

YEAR AND MONTH                          HIGH*    LOW*      
--------------                          -----    ----

April 1, 1997 to June 30, 1997         $11.65   $ 5.00
January 1, 1997 to March 31 1997       $12.50   $ 9.20    
October 1, 1996 to December 31, 1996   $12.35   $ 9.70  
July 1, 1996 to September 30, 1996     $12.80   $ 9.00    
April 1, 1996 to June  30, 1996        $15.00   $ 8.50    
January 1, 1996 to March 31, 1996      $12.875  $ 4.90    
October 1, 1995 to December 31, 1995   $ 5.75   $ 4.10 
July 1, 1995 to Sept 30, 1995          $ 5.625  $ 3.30    
April 1, 1995 to June 30, 1995         $ 6.75   $ 1.21    
                                   
* As quoted by the Vancouver Stock Exchange.  Expressed in Canadian
dollars.

<PAGE>


2.   NASDAQ SMALL CAP MARKET
     -----------------------

The following table sets forth the reported high and low prices for the
common shares as quoted on the Nasdaq Small Cap Market on a monthly basis
since March 26, 1997, being the date the common shares of the Company were
listed on Nasdaq. 

YEAR AND MONTH                     HIGH*    LOW*      
--------------                     -----    ------

June 1, 1997 to June 30, 1997      $4.88    $3.50
May 1, 1997 to May 31, 1997        $6.88    $4.75
April 1, 1997 to April 30, 1997    $8.38    $5.63
March 26, 1997 to March 31, 1997   $9.38    $8.00

* As quoted by the Nasdaq Small Cap Market.  Expressed in U.S. dollars.


ITEM 6.   EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY
          HOLDERS
          ----------------------------------------------------------

Except as discussed in Item 7, the Company is not aware of any Canadian
federal or provincial laws, decrees, or regulations that restrict the
export or import of capital, including foreign exchange controls, or that
affect the remittance of dividends, interest or other payments to non-
Canadian holders of the common shares.  The Company is not aware of any
limitations on the right of non-Canadian owners to hold or vote the common
shares imposed by Canadian federal or provincial law or by the Articles of
Continuation or the By-laws of the Company.

The INVESTMENT CANADA ACT (the "Act") is applicable to acquisitions of a
Canadian business by a non-Canadian person or entity.  The Act provides,
among other things, for a review of an investment in the event of
acquisition of control in certain Canadian businesses in the following
circumstances:

(a)  if the investor is a non-Canadian and is not a member of a World Trade
     Organization ("WTO") country, any direct acquisition having an asset
     value exceeding $5,000,000 and any indirect acquisition having an
     asset value exceeding $50,000,000;

(b)  if the investor is a non-Canadian and is a WTO member, any direct
     acquisition having an asset value exceeding $168,000,000, unless the
     business is involved in uranium production, financial services,
     transportation services or a cultural business.  An indirect
     acquisition of control by an investor who is a WTO investor is not
     reviewable unless the value of the assets of the business located in
     Canada represents more than 50% of the asset value of the transaction,
     or the business is involved in uranium production, financial services,
     transportation services or a cultural business.

The Act provides that a non-Canadian investor can hold up to 1/3 of the
issued and outstanding capital of a Canadian corporation without being
deemed a "control person", and that a non-Canadian investor holding greater
than 1/3 but less than 1/2 of the issued and outstanding capital of a
Canadian corporation is deemed to be a control person subject to a
rebuttable presumption to the contrary (i.e. providing evidence of another
control or control group holding a greater number of shares). 

The Act provides for notification under the Act where a non-Canadian
investor acquires control, directly or indirectly, of a Canadian business
with assets under the thresholds for reviewable transaction.  The
notification process consists of filing a notification form within 30 days
following the implementation of an investment.

<PAGE>


ITEM 7.                          TAXATION
                                 --------

(a)  CANADIAN FEDERAL INCOME TAXATION
     --------------------------------

The following discussion is a summary of the principal Canadian federal
income tax considerations generally applicable to purchasers of the
Company's common shares ("Common Stock") who, for purposes of the Income
Tax Act (Canada) and Income Tax Regulations  (the "Canadian Act"), deal at
arm's length with the Company, hold shares of Common Stock as capital
property, are not residents of Canada at any time when holding Common Stock
and do not use or hold and are not deemed to use or hold Common Stock in
the course of carrying on business in Canada and, in the case of insurers
who carry on an insurance business in Canada and elsewhere, do not hold
Common Stock that is effectively connected with an insurance business
carried on in Canada.  Such a purchaser is referred to in this discussion
as a "shareholder."

This summary is based on the current provision of the Canadian Act, the
regulations thereunder and the Canada-United States Income Tax Convention
(1980) (the "Treaty") as amended.  This summary takes into account specific
proposals to amend the Canadian Act and the regulations thereunder publicly
announced by the Minister of Finance prior to the date hereof and the
Company's understanding of the current published administrative and
assessing practices of Revenue Canada, Taxation.  This summary does not
take into account Canadian provincial income tax laws or the income tax
laws of any country other than Canada.

A shareholder of the Company will generally not be subject to tax pursuant
to the Canadian Act on a capital gain realized on a disposition of Common
Stock unless the Common Stock is "taxable Canadian property" to the
shareholder for purposes of the Canadian Act and the shareholder is not
eligible for relief pursuant to an applicable bilateral tax treaty.  Under
proposals to amend the Canadian Act, the Common Stock will not be taxable
Canadian property to a shareholder provided that the Company is listed on a
prescribed Canadian or foreign stock exchange within the meaning of the
Canadian Act and provided that such shareholder, or persons with whom such 
shareholder did not deal at arm's length (within the meaning of the
Canadian Act), or any combination thereof, did not own 25% or more of the
issued shares of any class or series of the Company at any time within five
years immediately preceding the date of disposition.   In addition, the
Treaty will generally exempt a shareholder who is a resident of the United
States for purposes of the Treaty from tax in respect of a disposition of
Common Stock provided that the value of the shares of the Company is not
derived principally from direct or indirect real property interests
(including resource property) situated in Canada.

Under the Canadian Act, a disposition of shares that constitute taxable
Canadian property will give rise to a capital gain (or a capital loss)
equal to the amount by which the proceeds of disposition of such shares,
net of any cost of disposition, exceeds (or is less than) the adjusted cost
base of such shares to the shareholder.  Generally, three quarters of any
capital gain realized by the shareholder on a disposition or deemed
disposition of such shares is included in computing his Canadian income for
that year as a taxable capital gain.  Three quarters of any capital loss
realized by a shareholder on a disposition or deemed disposition of such a
share in a taxable year may generally be deducted from his Canadian taxable
capital gains for that year.

Under the Canadian Act, the disposition of a share by a shareholder may
occur or be deemed to occur in a number of circumstances including on sale
or gift of such share or upon the death of the shareholder.

The initial adjusted cost base of a share to a shareholder will be the cost
to him of that share.  Under the Canadian Act, certain addition or
reduction adjustments may be required to be made to the cost base of a
share.  The adjusted cost base of each common share of a corporation owned
by a shareholder at any particular time will be the average adjusted cost
base to him of all shares of the same class of that corporation owned by
him at that time.

Any dividend, including stock dividends, paid or credited, or deemed to be
paid or credited, by the Company to or for the benefit of a shareholder
will be subject to Canadian withholding tax at the rate of 25% on the gross
amount of the dividend, subject to the provisions of any applicable income
tax convention.  Pursuant to the Treaty, the rate 

<PAGE>

of withholding tax generally will be reduced to 15% in respect of dividends
paid to a shareholder who is a resident of the United States for purposes
of the Treaty and are further reduced to 5% if the beneficial owner of the
shares is a corporation that is a resident of the United States for
purposes of the Treaty owning at least 10% of the voting shares of the
Company.

(b)  UNITED STATES TAXATION
     ----------------------

For federal income tax purposes, an individual who is a citizen or resident
of the United States or a domestic corporation ("U.S. Taxpayer") will
recognize a gain or loss on the sale of the Company's Common Stock equal to
the difference between the proceeds from such sale and the adjusted cost
basis in the Common Stock.  The gain or loss will be a capital gain or
capital loss if the Company's Common Stock is a capital asset in the hands
of the U.S. Taxpayer.

For federal income tax purposes, a U.S. Taxpayer will be required to
include in gross income dividends received on the Company's Common Stock. 
A U.S. Taxpayer who pays Canadian tax on a dividend on the Common Stock
will be entitled, subject to certain limitations, to a credit (or
alternatively, a deduction) against federal income tax liability.  A
domestic corporation that owns at least 10% of the voting stock of the
Company should consult its tax advisor as to applicability of the dividends
received deduction or deemed paid foreign tax credit with respect to
dividends paid on the Company's Common Stock.



ITEM 8.                   SELECTED FINANCIAL DATA
                          -----------------------

This Report  includes financial statements for the Company and financial
statements for Pacific Baja.  The following is selected financial
information from these financial statements.  This information should be
read in conjunction with such Financial Statements and notes thereto
included elsewhere in this Report. 

(A)  COMPANY
     -------

Financial statements are given for the period commencing April 30, 1993,
being the effective date of the transfer of the assets comprising the
Turbodyne Technology to Turbodyne Systems from Edward M. Halimi. The
Company's Financial Statements are prepared according to Canadian Generally
Accepted Accounting Principles (CDN GAAP).  In addition, the Company's
accountants have reconciled the Financial Statements for the periods ending
December 31, 1993, December 31, 1994, December 31, 1995, and December 31,
1996 in accordance with U.S. Generally Accepted Accounting Principles (US
GAAP).  The reconciliation is contained in the notes to the financial
statements.

The financial condition and operating results for the Company described for
the period  from January 1, 1996 to December 31, 1996 includes the
financial condition and operating results of Pacific Baja Light Metals from
July 2, 1996 to December 31, 1996.

   SUMMARY OF FINANCIAL INFORMATION IN THE COMPANY FINANCIAL STATEMENTS
                        (CANADIAN GAAP)(CANADIAN $)

<TABLE>
<CAPTION>                     
                              Year Ending   Year Ending     Year Ending   April 30, 1993
                              DEC. 31, 1996 DEC. 31, 1995   DEC. 31, 1994 TO DEC. 31, 1993
                              ------------- -------------   ------------- ----------------
<S>                           <C>            <C>             <C>            <C> 
OPERATING DATA:

Sales                         $19,007,000        Nil             Nil        Nil
Gross Profit                  $ 2,509,000        Nil             Nil        Nil


<PAGE>

Net Loss                      ($2,558,000)  ($1,528,000)    ($ 936,000)   ($  112,000)

BALANCE SHEET DATA:

Working capital (Deficit)     $ 9,964,000    $   83,000     ($ 426,000)   ($  336,000)
Total Assets                  $64,495,000    $5,202,000     $1,899,000    $1,371,000
Long Term Liabilities         $ 8,666,000    $  483,000          Nil        Nil
Total Liabilities             $17,517,000    $  966,000     $  458,000    $  336,000
Shareholders Equity           $46,978,000    $4,236,000     $1,441,000    $1,035,000
Number of Shares Outstanding   23,580,098    16,542,121     10,663,052     1,078,052
</TABLE>

   SUMMARY OF FINANCIAL INFORMATION IN THE COMPANY FINANCIAL STATEMENTS
                          (U.S. GAAP)(CANADIAN $)


<TABLE>
<CAPTION>                     
                              Year Ending   Year Ending     Year Ending   April 30, 1993
                              DEC. 31, 1996 DEC. 31, 1995   DEC. 31, 1994 TO DEC. 31, 1993
                              ------------- -------------   ------------- ---------------
<S>                           <C>            <C>           <C>           <C> 
OPERATING DATA:

Sales                         $19,007,000        Nil             Nil          Nil
Gross Profit                  $ 2,509,000        Nil             Nil          Nil
Net Loss                     ($ 7,492,000) ($ 6,788,000)    ($2,867,000)  ($292,000)

BALANCE SHEET DATA:

Working capital (Deficit)     $  9,964,000  $    83,000     ($  426,000)  ($336,000)
Total Assets                  $ 59,561,000  $ 1,317,000      $   79,656    $ 44,500
Long Term Liabilities         $  8,666,000  $    20,000          Nil          Nil
Total Liabilities             $ 17,517,000  $   503,000      $  458,000    $336,000
Shareholders Equity           $ 38,273,000  $   813,460     ($  378,795)  ($291,632)
Number of Shares Outstanding    23,580,098   16,542,121      10,663,052   1,078,052
</TABLE>

(b)  PACIFIC BAJA
     ------------

The Financial Statements for Pacific Baja represent the financial condition
and operating results of Pacific Baja Light Metals Holding Inc. prior to
the acquisition by the Company for the fiscal years ending December 31,
1993, 1994 and 1995 and for the six months ending June 30, 1996.  The
financial information for the years ending December 31, 1993, 1994 and 1995
is based on audited financial statements.  The financial information for
the six months ending June 30, 1996 is based on unaudited financial
statements prepared by management.  The Financial Statements for Pacific
Baja Light Metals  are prepared according the U.S. GAAP.

   SUMMARY OF FINANCIAL INFORMATION IN PACIFIC BAJA FINANCIAL STATEMENTS
                            (U.S. GAAP)($U.S.)

<TABLE>
<CAPTION>
                                                                         YEARS ENDING  
                                SIX MONTHS ENDING                        DECEMBER 31
                                JUNE 30, 1996(1)                   1995(1)       1994(1) 
                                ----------------                   -------       -------
OPERATING DATA:
<S>                           <C>                               <C>           <C>
Sales
     Custom Wheels:           $13,665,000                        $17,262,000   $12,956,000
  Cast Aluminum Parts:        $ 6,359,000                        $11,724,000   $ 6,436,000
                               ----------                         ----------    ----------
                              $20,024,000                        $28,986,000   $19,392,000
Gross Profit   
  Custom Wheels:              $ 2,650,000                        $ 3,077,000   $ 1,749,000
  Cast Aluminum Parts:        $ 2,482,000                        $ 2,576,000   $ 2,240,000
                               ----------                         ----------    ----------
                              $ 5,132,000                        $ 5,653,000   $ 3,989,000

Net Income                    $ 1,894,000                        $   815,000   $   480,000
                               ==========                         ==========    ==========

BALANCE SHEET DATA:

Working Capital (Deficit)     $   225,000                       ($ 1,019,000)  $   343,000
Total Assets                  $18,733,000                        $16,118,000   $12,213,000
Long Term Liabilities         $ 1,655,000                        $ 2,177,000   $ 1,841,000
Total Liabilities             $12,028,000                        $11,307,000   $ 8,217,000
Shareholders' Equity               
  Dollar Amount:              $ 6,705,000                        $ 4,811,000   $ 3,996,000
  No. Of Common Shares          1,131,247                          1,131,247     1,131,247

</TABLE>

(1)  Financial Information is for Pacific Baja, prior to the merger of
     Pacific Baja Light Metals Holding Inc. with Pacific Baja Acquisition
     Corp. to form Pacific Baja Light Metals.


EXCHANGE RATES
--------------

The following table sets forth, for the periods and dates indicated,
certain information concerning exchange rates of United States and Canadian
dollars.  All the figures shown represent noon buying rates for cable
transfers in New York City, certified for customs purposes by the Federal
Reserve Bank of New York.  The source of this data is the Federal Reserve
Bulletin and Digest.

PERIOD                   PERIOD END               AVERAGE
------                   ----------               --------
December 1990            1.1635                   1.1670 (CDN$/US$)
December 1991            1.1467                   1.1460 (CDN$/US$)
December 1992            1.2725                   1.2088 (CDN$/US$)
December 1993            1.3308                   1.2902 (CDN$/US$)
December 1994            1.3893                   1.3659 (CDN$/US$)
December 1995            1.4018                   1.3725 (CDN$/US$)

<PAGE>

December, 1996           1.3697                   1.3632 (CDN$/US$)

DIVIDENDS
---------

To date, the Company has not paid any dividends on its common shares.  The
Company's policy at the present time is to retain earnings for corporate
purposes.  The payment of dividends in the future will depend on the
earnings and financial condition of the Company and such other factors as
the Board of Directors of the Company may consider appropriate.  Since the
Company is currently in an expansion stage, it is unlikely that earnings
will be available for the payment of dividends in the foreseeable future.

ITEM 9.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF
               FINANCIAL CONDITION AND RESULTS OF OPERATIONS
               ---------------------------------------------

The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this
Report.

1.   RESULTS OF OPERATIONS
     ---------------------

1.1  THE COMPANY
     -----------

From the date of the acquisition of the Turbodyne Technology in April, 1993
to the completion of the acquisition of Pacific Baja, the Company was
engaged, through Turbodyne Systems, principally in researching and
developing products incorporating the Turbodyne Technology to enhance
engine performance and reduce emissions of internal combustion engines. 
During this period, the Company commenced development of the Turbodyne
System, the Turbopac product and the Dynacharger product.  In addition, the
Company's research and development resulted in the filing of the patent
applications in respect of the Turbodyne System and the Turbopac and
Dynacharger products.  While Turbodyne Systems undertook low volume
production of its products, the products produced were used for testing and
evaluation with OEMs and major retrofit customers.  The Company did not
record any revenues during this period and has expended $8,705,000 to
December 31, 1996 as development costs for the Turbodyne products.  The
development of the Turbodyne products was financed during this period
primarily from private placement equity financings.  The Company's
financial results for the period from July 2, 1996 to December 31, 1996
include financial results from both the Turbodyne Business and the Pacific
Baja Business.

(a)  DECEMBER 31, 1996
     -----------------

The Company's audited financial statements for the year ending December 31,
1996 are based on the consolidation of the Company and Pacific Baja Light
Metals and its subsidiaries effective July 2, 1996.  The consolidation date
is the date agreed by the Company and Pacific Baja that all material
conditions precedent to the completion of the acquisition of Pacific Baja
had been satisfied.

Sales of the Company for the period ending December 31, 1996 increased from
nil in prior years to $19,007,000.  These sales are attributable solely to
the sales recorded by Pacific Baja Light Metals for the period from July 2,
1996 to December 31, 1996.  The Company recorded a gross profit of
$2,509,000 which also was attributable to the Pacific Baja Business.  Of
the total sales attributable to the Pacific Baja Business, sales of
aftermarket wheel products accounted for sales of $9,799,000 and sales of
cast aluminum products, including compressor housings and manifolds,
accounted for sales of $9,208,000.  Of the gross profit attributable to the
Pacific Baja Business, sales of aftermarket wheel products accounted for
gross profits of $1,309,000 and sales of cast aluminum products, including
compressor housings and manifolds, accounted for a gross profit of
$1,200,000.  Gross profit from sales of aftermarket wheel products declined
from $2,650,000 U.S. for the first six months of 1996 to $1,309,000 Cdn.
for the six month period from July 2, 1996 to December 31, 1996 due to
seasonal declines in the aftermarket wheel product business.  Sales of
aftermarket wheel products typically peak in the spring of each year while
operating costs continue throughout the year. Gross profit from sales of
cast aluminum products declined from $2,482,000 U.S. for the first six
months of 1996 to $1,200,000 Cdn. for the six month period from July 2,
1996 to December 31, 1996 due to increases in the 

<PAGE>

price of raw aluminum and increased labour costs.  Pacific Baja Light
Metals' profitability is affected by increasing aluminum costs as the
prices of its cast aluminum products are fixed under contract in advance of
production.  Increased labour costs resulted from Pacific Baja Light Metals
increased production of cast aluminum products in order to meet deliveries
required under contracts.  Revenues from this production are not realized
until such time as the product is delivered under the contract.

The Company recorded product development costs of $4,934,000 during the
period from January 1, 1996 to December 31, 1996.  These costs are
attributable solely to product development costs incurred by Turbodyne
Systems.  The costs for the year ending December 31, 1996 exceeded the
product development costs incurred in 1995.  The increase is attributable
to the finalization of development of the 1500 Turbopac product, ongoing
development of the 2500 Turbopac product and the Dynacharger product and
gearing up for full scale commercial production of the 1500 Turbopac
product. Product development costs included establishing a quality control 
laboratory at Turbodyne Systems, designing an electronic controller unit
for the Turbopac products and continuing development and evaluation of the
Turbopac and Dynacharger products.  Project staff salaries increased as a
result of the establishment of an electronic engineering department for
Turbodyne Systems and the continued hiring of technical staff for
development of the Turbopac and Dynacharger products.

Operating expenses for the year ending December 31, 1996 increased to
$5,060,678, in comparison to total operating expenses of $1,527,342 in
1995.  This increase is primarily attributable to the consolidation of
operating expenses for Pacific Baja Light Metals for the period from July
2, 1996 to December 31, 1996.   The increase resulted from the acquisition
of Pacific Baja and inclusion of salaries for its employees for the period
from July 2, 1996 to December 31, 1996.  In addition, in 1996 Turbodyne
Systems increased salaries payable to several of its vice-presidents.  See
"Executive Compensation." 

Liquidity of the Company during the year was enhanced by the completion of
the Series A Special Warrant Offering and the Series C Special Warrant
Offering, each as discussed in Item 12 "Options to Purchase Securities from
the Company and its Subsidiaries."  The Company received cash proceeds from
the Series A Special Warrant Offering of $17,918,000, which was used for
the acquisition of Pacific Baja and payment of expenses associated with
this offering.  The Company received cash proceeds of $4,010,000 after
completion of the Series C Special Warrant Offering on December 6, 1996.

(b)  DECEMBER 31, 1995 AND 1994
     -------------------------

During the 1994 and 1995 financial years, the Company's sole business was
the Turbodyne Business as carried on by Turbodyne Systems.  Turbodyne
Systems did not record any sales during this period. The business
activities consisted of research and development of the Turbodyne System
and the Turbopac and Dynacharger products.  The Company incurred product
development costs of $2,016,726 in 1995.  Cumulative product development
costs prior to December 31, 1994 totalled $1,754,157.  Operating expenses
increased from $935,992 in 1994 to $1,527,342 in 1995 as the Company
increased its product development activities.  Operating expenses included
travel and business development expenses equal to $335,811 for the year
ending December 31, 1995 and equal to $245,297 for the year ending December
31, 1994.  The travel and business development expenses were incurred in
connection with establishing relationships and joint evaluation testing
programs with potential OEM manufacturers and establishing contacts with
suppliers and manufacturers for the Turbodye products.

Product development costs for the year ended December 31, 1995 were
$3,770,883 in comparison to cumulative total product development costs
equal to $1,754,157 as of December 31, 1994.  The majority of product
development costs were accounted for by project development costs (testing,
evaluations and research and development ) for the Turbodyne products and
associated staff salaries and benefits.

The Company's business activities during 1994 and 1995 were financed
primarily from private placement financings of the Company's common shares.


<PAGE>


1.2  PACIFIC BAJA
     ------------

(a)  JUNE 30, 1996
     -------------

The consolidated net sales of Pacific Baja Light Metals for the first six
months of 1996 were $20,024,000 U.S., compared with $14,661,000 U.S. for
the first six months of 1995.  Net income for the six month period
increased to $1,894,000 U.S. as compared with net income of $664,000 U.S.
for the same period during 1995.  Operations during the six month period
were funded by revenues from product sales and advances under the credit
facilities of Pacific Baja Light Metals.  The outstanding balance of the
credit facilities as of June 30, 1996 area summarized as follows:

     COMPANY             CREDITOR            OUTSTANDING BALANCE
     -------             --------            -------------------
     Optima Wheel        Wells Fargo Bank    $3,239,000 U.S.
     Baja Pacific        Wells Fargo Bank    $1,246,000 U.S.

The increase in both sales and net income of Pacific Baja Light Metals is
attributable to continued expansion of both the aftermarket wheel business
and the cast aluminum products business of Pacific Baja Light Metals.

General and administrative expenses for the six month period ending June
30, 1996 totalled $1,386,000 U.S. in comparison to general and
administrative expenses of $3,128,000 U.S. for the year ended December 31,
1995.  Salaries payable to the employees of Pacific Baja Light Metals
accounted for $381,000 of the total general and administrative expenses for
this six month period.

(b)  DECEMBER 31 1995 AND 1994
     -------------------------

The consolidated sales of Pacific Baja for 1995 were $28,986,000 U.S.
compared with sales of $19,392,000 U.S. for 1994, an increase of 49%.  This
sales increase resulted from increases in both the wheel market and general
castings.  Wheel sales increased because of additional orders from
Interstate Tire Company in North Carolina, one of the United States'
largest buyers of after market styled wheels, as well as a broader and more
accepted product line.  The general castings sales increase resulted from
additional business from AlliedSignal.

Net income for 1995 was $815,000 U.S. compared with $480,000 U.S. for 1994. 
Gross margins remained consistent at approximately 20% for both years. 
Operating expenses decreased slightly as a percent of sales for 1994 to
1995.  Interest expenses increased to $519,000 U.S. in 1995 from $355,000
U.S. in 1994.  This increase resulted from the additional borrowing used to
support the capital additions in 1995.  These capital expenditures were
made at both the La Mirada and Ensenada facilities to support projected
sales increases in 1996 and beyond.

General and administrative expenses for the year ended December 31, 1995
increased to $3,128,000 U.S. from $2,019,000 U.S. for the period ending
December 31, 1994.  The increase was primarily due to salaries payable to
the employees of Pacific Baja Light Metals which accounted for $1,113,000 
of the total general and administrative expense for 1995.

(c)  DECEMBER 31, 1994 AND 1993
     --------------------------

The consolidated sales of Pacific Baja for 1994 were $19,392,000 U.S.
compared with 1993 sales of $13,871,000 U.S., an increase of 40%.  The
sales increase was a result of the addition of the compressor housing
product line from AlliedSignal, increased manifold sales and increased
wheel sales.  The increased wheel sales resulted mainly from the addition
of additional customers, resulting in greater distribution and product-line
acceptance.

Profits for 1994 were $480,000 U.S. compared to $245,000 U.S. for 1993. 
Gross margins increased from 18% in 1993 to approximately 20% in 1994. 
This increase resulted from greater manufacturing efficiencies due to
increased volume. 

<PAGE>


The installation of quality systems resulted in slightly higher operating
expenses in 1994.  Interest expenses were also slightly higher in 1994 but
were consistent with the sales and working capital increases.

2.   LIQUIDITY AND CAPITAL RESOURCES
     -------------------------------

(a)  CASH AND WORKING CAPITAL
     ------------------------
     
As of December 31, 1996, the Company had cash in the amount of $4,304,000
U.S.  As at December 31, 1996, the Company had working capital equal to
$9,964,000 U.S.  At March 31, 1997, the Company had working capital equal
to $10,899,000 U.S.
 
(b)  PACIFIC BAJA LINES OF CREDIT
     ----------------------------

Pacific Baja Light Metals has the following line of credit facilities for
the Pacific Baja Business:

     (a)  Optima Wheel has an operating line of credit facility with Wells
          Fargo Bank in the maximum amount of $6,000,000 (U.S.);

     (b)  Baja Pacific has an operating line of credit facility with Wells
          Fargo Bank in the maximum amount of $3,000,000 (U.S.).

The outstanding balances of the operating credit lines of Pacific Baja
Light Metals as at December 31, 1996 are as follows:
                                                      
                                              OUTSTANDING BALANCE
     COMPANY             CREDITOR               AT DECEMBER 31/96
     -------             --------            -------------------

     Optima Wheel        Wells Fargo Bank         $3,224,000 U.S.
     Baja Pacific        Wells Fargo Bank         $1,215,000 U.S.

As at December 31, 1995 and December 31, 1996, Pacific Baja was in
violation of certain covenants under its line of credit facilities with
respect to tangible net worth criteria, total liabilities to tangible net
worth ratios and delivery of projected financial statements. Pacific Baja
Light Metals has remedied these violations of covenants by obtaining the
agreement of Wells Fargo Bank to revise the covenants such that Pacific
Baja Light Metals is in good standing with respect to each line of credit
facility as of the date of this Report. 

The Company is a guarantor of each of these line of credit facilities.

(c)  CAPITAL REQUIREMENTS
     --------------------

The operating expenses of the Company are expected to increase as the
Company finalizes its preparations for commercial production of the
Turbodyne products.  The Company believes that its working capital will be
sufficient to fund its operating plan through 1997.  The Company's
projection of its working capital being sufficient to fund its operating
plan through 1997 is exclusive of any funds which may be available from the
Pacific Baja Business.  The Company intends to keep the cash flow from the
Pacific Baja Business for the operation and expansion of the Pacific Baja
Business. 

The Company believes that additional funding will be available upon the
commencement of commercial production of the Turbodyne products and sales
indicating market acceptance of the Turbodyne products.  The Company's
working capital should be sufficient to finance operations until additional
revenues are achieved or until additional financing becomes available, if
required.

<PAGE>

The Company is using its best efforts to enter into contracts with OEMs and
major retrofitters for the incorporation of its Turbodyne products.  The
liquidity of the Company will be affected if the Company is unable to:

     (a)  finalize agreements with OEMs and major retrofitters for the
          incorporation of its Turbodyne products in new diesel engines and
          after-market diesel engine products;

     (b)  achieve sales of its Turbodyne products directly to aftermarket
          customers at commercially viable rates.



ITEM 10.           DIRECTORS AND OFFICERS OF THE COMPANY
                   -------------------------------------

The following table sets forth as of June 30, 1997 all directors and
executive officers of the Company, with each position and office held by
them in the Company, and the period of service as such:

NAME AND POSITION
WITH THE COMPANY              AGE            COMMENCEMENT OF SERVICE
----------------              ---            -----------------------
EDWARD HALIMI                 51             October 18, 1993
Carpinteria, California
President, Director, CEO
& Promoter

LEON E. NOWEK                 40             October 18, 1993
Surrey, British Columbia
Director and CFO

DANIEL GERONAZZO              65             January 24, 1995
Christina Lake, British Columbia
Director


WENDELL R. ANDERSON           63             November 20, 1995
Minneapolis, Minnesota
Director

EUGENE A. HODGSON             40             May 27, 1996
Vancouver, British Columbia
Director

ROBERT F. TAYLOR              56             July 12, 1996 as Director
Calgary, Alberta                             January 1, 1997 as Chief
Director and Chief                           Operating Officer
Operating Officer 

DR. SADAYAPPA DURAIRAJ        54             September 16, 1996
Carpinteria, California
Director

ANDREW O.D. LEE               39             January 1, 1997
Vancouver, British Columbia
Secretary and Controller

<PAGE>

Edward Halimi is the President and Chief Executive Officer of the Company
and has served in those capacities since October 18, 1993.  Mr. Halimi is
the developer of the Turbodyne System.  He spent 11 years working with
FerroPlast Corporation, an international company specializing in the
engineering and manufacture of diesel engines, pumps, electric motors and
farm equipment.  As a Vice-President, Mr. Halimi worked in the engineering
and manufacturing divisions in the Middle East and Europe and was
responsible for the home building and housing operations in the United
States.  Mr. Halimi was also the President and Chief Executive Officer of
Technodyne Corporation, a manufacturer of heat management and temperature
control units and he is currently the Chief Executive Officer of Biosonics
Corporation, a research and development company in the fields of
ultrasonics, vibration control and semi-conductor research and electronics.


Leon E. Nowek is a director of the Company and has an accounting background
and is responsible for corporate finance, finance reporting and regulatory
compliance.  He was appointed as a director of the Company in October,
1993.  Mr. Nowek is also a director and senior officer of New Westwin
Ventures Inc.  Mr. Nowek has been involved in a similar role with a number
of public companies since 1983.

Daniel Geronazzo is a director of the Company.  He was appointed as a
director on January 24, 1995.  Mr. Geronazzo is an attorney in the Province
of British Columbia and has been in private legal practice for the past 35
years

Mr. Anderson is a director of the Company.  He was appointed as a director
on November 20, 1995.  Mr. Anderson has received his Doctor of Law Degree
from the University of Minnesota Law School in 1960.  He has been in
private practice since 1963 and is presently an attorney with the firm of
Larkin, Hoffman, Daly and Lindgren Ltd. of Bloomington, Minnesota.  Mr.
Anderson has held several positions of public office.  From 1959 to 1963 he
was a state representative from Minnesota and served as state senator from
1963 to 1971.  In 1971 Mr. Anderson was elected as Governor of the State of
Minnesota.  At that time, he was the nation's youngest governor.  In 1977
Mr. Anderson became a United States Senator from the State of Minnesota. 
He held office for a period of two years.  During his term, he served on
such committees as the environment and public works committee, the budget
committee, the natural resources committee and armed services committee. 
Mr. Anderson currently serves as a director of numerous corporations and
foundations including National City Bank Corporation and the University of 
Minnesota Board of Trustees.

Eugene A. Hodgson is a director of the Company.  Mr. Hodgson is a self-
employed management consultant.  Mr. Hodgson was previously Director of
Corporate Development at Intrawest Corporation, a company listed on the
Toronto Stock Exchange, for a period of five years.  Mr. Hodgson is
currently Director of the Vancouver Board of Trade and Chair of its
communications committee.  He is also currently treasurer of the Liberal
Party of Canada (British Columbia).  Mr. Hodgson has held a number of
positions in both the British Columbia and Yukon governments.

Robert F. Taylor was appointed a director of the Company as of July 12,
1996 and became the Chief Operating Officer of the Company on January 1,
1997.  Mr. Taylor is a chartered accountant and is a member of the
Institute of Chartered Accountants of Alberta, Canada.  Mr. Taylor was
appointed a director and president of Shell Canada Products in 1993 and has
served in various capacities with Shell since 1967 in Calgary, Toronto and
London, England.  Mr. Taylor retired from Shell in 1996.

Sadayappa Durairaj is a director of the Company.  Mr. Durairaj is a
cardiologist and businessman based in California.  He obtained his Medical
degree from Madural Medical College in India in 1966 and has been certified
by both the American Board of Internal Medicine and the Canadian Board of
Internal Medicine and Cardiology.  Currently he is the President and Chief
Executive Officer of the Pacifica Hospital and Sierra Medical Clinic.  Dr.
Durairaj also serves as associate Clinical Professor of Medicine at USC Los
Angeles.  Dr. Durairaj was Chairman and founder of Pacific Baja Light
Metals Holding Inc. which was acquired by the Company on September 5, 1996. 
Dr. Durairaj is also Chairman of Brentwood Bank (California) and VSK Ferro
Alloys (India).

<PAGE>


Andrew Lee was appointed controller of the Company as of January 1, 1997. 
Mr. Lee is a member of the Institute of Chartered Accountants of British
Columbia.  Prior to joining the Company, Mr. Lee practised as a chartered
accountant with Morgan & Company in Vancouver, British Columbia.  Mr. Lee
devotes his full time as controller of the Company.  Mr. Lee was appointed
secretary of the Company on April 25, 1997.

Edward M. Halimi, Andrew Lee, and Leon E. Nowek presently devote 100% of
their business time to the Company.  Daniel D. Geronazzo, Richard W.
Donaldson, Wendell R. Anderson, Dr. Sadayappa Durairaj  and Robert F.
Taylor devote such percentage of their time to the business of the Company
as is required by the Company.  Eugene A. Hodgson devotes a majority of his
business time to the business of the Company. 

Directors may be appointed at any time and are then re-elected annually by
the Stockholders.  Directors receive no compensation for serving as such,
other than stock options.  Officers are elected annually by the Board of
Directors and serve at the discretion of the Board.


ITEM 11.          COMPENSATION OF DIRECTORS AND OFFICERS
                  -------------------------------------

As of June 30, 1997, the compensation payable to directors and officers of 
the Company and its subsidiaries is summarized below:

1.   GENERAL
     -------

The Company does not compensate directors for acting solely as directors. 
Except for reimbursement of reasonable out-of-pocket expenses in connection 
with attendance at Board of Directors and Committee meetings, and as 
otherwise described below, the Company does not have any arrangements
pursuant to which directors are remunerated by the Company or its
subsidiaries for their services in their capacities as directors, other
than options to purchase shares of the Company which are granted to the
Company's directors from time to time.  The Company does not have any
pension plans.

2.   DIRECTORS AND OFFICERS OF THE COMPANY
     -------------------------------------

Edward M. Halimi is party to an employment agreement dated March 14, 1994
between the Company, Mr. Halimi, and Turbodyne Systems, Inc. ("Turbodyne
Systems"), a subsidiary of the Company.  Mr. Halimi is employed as
President and Chief Executive Officer of the Company and Turbodyne Systems
under the employment agreement. The employment agreement has a five year
term.  Mr. Halimi is paid a salary of US $60,000 per year and is entitled
to participate in share option plans, share purchase plans and other
financial assistance plans at the discretion of the Board of Directors of
the Company.  Mr. Halimi is entitled to terminate the employment agreement
upon three months written notice to the Company.  

Mr. Halimi was paid a salary of US $60,000 per year in 1994, 1995, and 1996
and was granted options to purchase 500,000 shares and 200,000 shares of the 
Company in 1995 and 1997, respectively.  The options granted to Mr. Halimi 
were granted in accordance with the policies of the Vancouver Stock Exchange 
at a price equal to the 10 day average trading price of the Company's shares 
for the period immediately prior to granting of the options.  Mr. Halimi did 
not receive any share purchase options in 1994 or 1996.  The salary payable 
to Mr. Halimi is currently under review by the Company's Compensation 
Committee.  The Compensation Committee reports that it anticipates 
recommending a substantial increase to the salary paid to Mr. Halimi.

The Company has retained Robert Taylor, a director of the Company, as Chief
Operating Officer of the Company pursuant to a consultant agreement between
the Company and Mr. Taylor dated January 1, 1997.  Mr. Taylor will be based
at the office of Turbodyne Systems in Carpinteria, California and will be
responsible for managing the day to day operations of the Company and
providing direction on the business and financial affairs of the Company. 
The consultant agreement has an initial six month term with automatic
renewals for additional six month terms unless Mr. Taylor or the Company
elects not to renew.  Mr. Taylor is paid a consultant fee of Cdn. $20,833
per month.  In addition, the Company has agreed to grant to Mr. Taylor
options to acquire 100,000 shares of the Company at prices 

<PAGE>

determined in accordance with the policies of the Vancouver Stock Exchange. 
Thereafter, Mr. Taylor will be eligible for grants of additional options as
a director and officer of the Company.

The services of Leon Nowek, a director of the Company, are provided to the
Company pursuant to a management agreement dated August 1, 1994 between the
Company and Seeds Investment Corporation ("Seeds"), a private company
controlled by Mr. Nowek.  The Company pays a management fee of $2,500 per
month in consideration of Seeds providing the services of Mr. Nowek as
Chief Financial Officer of the Company.

The services of Eugene Hodgson, a director of the Company, are provided to
the Company pursuant to an agreement between the Company and E.A. Hodgson &
Associates Inc.  The Company pays a monthly consultant fee of $8,916 per
month in consideration for E.A. Hodgson & Associates Inc. providing the
consultant services of Mr. Hodgson in connection with providing investor
relations and corporate finance advice to the Company.  The consultant fee
payable on account of Mr. Halimi's services is currently under review by
the Company's Compensation Committee.  The Compensation Committee
anticipates recommending a substantial increase to the consultant fee
payable to Mr. Hodgson.

The Company pays to Wendell Anderson, a director of the Company, a
consultant fee of US $1,000 per month in connection with the services
provided by Mr. Anderson as a director of the Company.

3.   DIRECTORS AND OFFICERS OF PACIFIC BAJA 
     ---------------------------------------

Michael Joyce is party to an employment agreement with Pacific Baja Light
Metals and the Company dated September 5, 1996 whereby he is employed as
President of Pacific Baja Light Metals.  The employment agreement has a
three year term.  Mr. Joyce is paid a base salary of US $12,500 per month
plus an annual cash bonus based on the annual net operating profit of
Pacific Baja Light Metal which exceeds US $5,500,000.  The maximum bonus
payable is 150% of base salary.  Mr. Joyce is also entitled to receive
options to purchase 50,000 shares of the Company upon the completion of
each anniversary of the execution of the employment agreement.

The consulting services of Lennart Renberg are provided to Pacific Baja
Light Metals pursuant to a consulting agreement between Pacific Baja, the
Company and Lykar Specialties, Inc. ("Lykar Specialties") dated September
5, 1996. The consulting agreement has a three year term.  Pacific Baja pays
a base consulting fee for Mr. Renberg's services equal to US $12,500 per
month plus an annual bonus based on the annual net operating profit of
Pacific Baja Light Metals which exceeds US $5,500,000.  The maximum bonus
payable is 150% of base salary.  Options to purchase 50,000 shares of the
Company are also to be issued to Lykar Specialties upon each anniversary of
the term of the consulting agreement.

4.   OFFICERS OF TURBODYNE SYSTEMS
     -----------------------------

Dr. William Woollenweber is employed as Vice-President-Turbocharger
Technology of Turbodyne Systems pursuant to an employment agreement between
Dr. Woollenweber and Turbodyne Systems dated September 1, 1995.  Dr.
Woollenweber was paid an initial salary of $120,000 U.S. per annum for the
initial three year term of the employment agreement.  The salary was
increased to $158,400 U.S. per annum as of January 1997.  Dr. Woollenweber
provides engineering services related to the design and development for
turbocharger and turbocharging systems as applied to internal combustion
engines in connection with the Company's Turbodyne products.

David Willett is employed as Vice-President-Electronics and Controller
Technology of Turbodyne Systems pursuant to an employment agreement dated
January 30,1996 between Mr. Willett and Turbodyne Systems.  Mr. Willett was
paid an initial salary of $110,000 U.S. for the initial three year term of
the employment agreement.  The salary was increased to $130,000 U.S. per
annum as of January 1997.  Mr. Willett provides engineering services in
connection with electronic and controller technology for the Company's
Turbodyne products.

<PAGE>


Ralph Maloof is employed as Vice-President and Chief Engineer of Turbodyne
Systems pursuant to an employment agreement between Mr. Maloof and
Turbodyne Systems.  Mr. Maloof is paid a salary of $120,000 U.S. per annum.
Mr. Maloof provides engineering services to the Company as chief of
engineering for Turbodyne Systems.

5.   AGGREGATE COMPENSATION
     ----------------------

In aggregate, the Company and its subsidiaries, Turbodyne Systems and
Pacific Baja, paid a total of $1,529,600 to its directors and officers for
services in all capacities during the fiscal year ended December 31, 1996.


ITEM 12.  OPTIONS TO PURCHASE SECURITIES FROM COMPANY OR SUBSIDIARIES
          -----------------------------------------------------------

1.   OPTIONS TO PURCHASE COMMON SHARES
     ---------------------------------

As at June 30, 1997 the Company had outstanding options to purchase common
shares as follows:

NUMBER OF SHARES         EXERCISE PRICE      EXPIRY DATE
----------------         --------------      -----------

  150,000                $4.20               July 28, 1997
  250,000                $4.75               August 17, 1997
  422,000                $4.66               December 27, 1997
  431,000                $7.13               February 27, 1997
  475,000                $9.00               September 3, 1998
  305,000                $9.00               September 12, 1998
  480,000                $9.85               January 6, 1999
1,511,500                $6.25               June 6, 2002

The officers and directors of the Company as a group hold an aggregate of
753,000 options to purchase common shares.

The granting of options by the Company to its employees, officers and
directors is governed by the policies of the Vancouver Stock Exchange (the
"VSE") which require that a company not grant options at a price less than
the average 'Market Price' of the company's shares for the ten trading days
prior to granting of the options and delivery of notice to the VSE.  The
'Market Price' is determined as the closing price of the company's shares
as listed on the VSE.

The Board of Directors have approved options to purchase an additional
2,840,000 shares of the Company at a price of $6.25 on or before June 6,
2002.  These stock options are to be issued pursuant to a stock option plan
approved by the Board of Directors of the Company and the shareholders of
the Company.

2.   SHARE PURCHASE WARRANTS
     -----------------------

The Company has outstanding as of April 30, 1997, non-transferable warrants
to purchase 33,333 common shares.  These warrants were issued pursuant to
various private placement subscription agreements and are subject to
various hold periods.  The following are the particulars of the warrants
issued in connection with such private placements, with reference to the
number of common shares of the Company issuable upon the exercise of the
warrants in connection with each private placement:

NUMBER OF SHARES   EXERCISE PRICE OF WARRANTS        WARRANTS EXPIRY DATE
---------------    --------------------------        --------------------

33,333              $9.00                             September 3, 1997

<PAGE>


None of the warrants described above have been exercised as of the date of
this Registration Statement.  All of the  issued and outstanding options
and warrants are currently exercisable. 


<PAGE>

3.   SERIES C SPECIAL WARRANTS
     -------------------------

The Company completed a private placement of Series C special warrants on
December 6, 1996 (the "Series C Special Warrant Offering") for total
proceeds of $4,500,000.  Each Series C Special Warrant is exercisable into 
one unit (a 'C-Unit') of the Company for no additional consideration at any
time prior to the one year anniversary of the issue of the Series C Special
Warrant.  Each C-Unit shall consist of one Common Share of the Company and
one transferable share purchase warrant (a 'C-Warrant').  Each  C-Warrant
will entitle the subscriber to purchase a further Common Share of the
Company at the price of $9.50 per share at any time prior to December 8,
1997.  

The Series C Special Warrants will be deemed to be exercised on the earlier
of:

     (a)  the fifth business day following the date a receipt is issued by
          the applicable regulatory authorities for a prospectus qualifying
          the distribution of the C-Units in the Provinces of British
          Columbia and Ontario; and
     (b)  December 8, 1997.

The Company is obligated to use its best efforts to file a prospectus with
the securities commissions in the Provinces of British Columbia and Ontario
in order to qualify for re-sale within these provinces of the 500,000
common shares and 500,000 C-Warrants to be issued to the subscribers of the
Company's Series C Special Warrant private placement upon conversion of the
Series C Special Warrants .  Upon issue of a final prospectus receipt by
each of the above securities commissions, the 500,000 common shares and
500,000 C-Warrants will be freely tradable within the Provinces of British
Columbia and Ontario, subject to additional restrictions under applicable
securities legislations.  If receipts for a final prospectus are not
obtained, the 500,000 common shares and 500,000 C-Warrants will be subject
to a hold period and additional restrictions under applicable securities
legislation until at least December 6, 1997.  

The price for the Series C Special Warrants was determined in accordance
with the policies of the Vancouver Stock Exchange applicable to the Company. 
The policies of the Vancouver Stock Exchange require that a company listed
on the Vancouver Stock Exchange not announce private placements at a price
less than the closing price of the Company's shares on the trading day
immediately prior to the announcement of the private placement, less an
applicable discount.  The maximum discount available to the Company was 15%
from the market price of the Company's shares, assuming the Company's
shares are trading at a price greater than $2.00 per share.

4.   SERIES A CONVERTIBLE PREFERENCE SHARES
     --------------------------------------

The Company has entered into a private placement engagement agreement dated
June 17, 1997 with GEM Advisors, Inc. ("GEMA") a member of the Global
Emerging Markets Group ("GEM") for the placement of convertible preferred
shares and warrants with GEM or accredited investors introduced by GEMA.

The Company proposes to issue Class A Preference Shares pursuant to the
private placement agreement which will be issued at a price per share equal
to $1,000 U.S. and will be convertible into common shares at any time
during the period commencing four months from closing and ending three
years from closing at the lesser of:

1.   A fixed price equal to 110% of the bid price of the common shares at
     the time of closing, or

2.   A floating price varying from 80% to 90% (depending on time
     outstanding) of the 10-day average closing bid price of the Company's
     common shares at the time of conversion.

The preference shares will be deemed to be converted three years from
closing.

In the event the Company redeems the preference shares, the holders thereof
will receive a warrant entitling the holders to purchase for a period of
three years, at the fixed price described above, common shares having a
value of 

<PAGE>

33 1/3% of the amount of the funding.  The convertible preference 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 Company has the option to redeem the preference shares in consideration
for:

     i.   a cash payment equal to the value of the common shares issuable
          upon conversion based on the lesser of 110% of the bid price of
          the Company's shares at the date of closing or 80% of the 10 day
          average closing bid price at the time of conversion; and

     ii.  a warrant at 110% of the bid price of the Company's shares at the
          date of closing to purchase a number of common shares equal in
          value, based on 110% of the bid price of the Company's shares at
          the date of closing, to the preference shares, with a term
          expiring concurrently with that of the original preference
          shares.

Funding is expected to take place in two tranches, with the first tranche
of US $2,500,000 expected to close no later than July 30, 1997 and the
second tranche of US $2,500,000 to close at a date to be mutually agreed
approximately 120 days after the first closing.  The proceeds will be used
by the Company for working capital.  The Company will pay a fee equal to 3%
of the gross proceeds raised to GEM.

As a condition of funding, the Company will be required to delist it shares
from the Vancouver Stock Exchange. The shares will continue to trade on the
Nasdaq Small Cap Market.  The Company is also required to file a
registration statement with the United States Securities and Exchange
Commission for the common shares underlying the preference shares and
warrants and to use commercially reasonable efforts to cause the
registration statement to be effective on or before four months from the
issuance of the preference shares.

The financing is subject to completion of satisfactory due diligence
investigations by GEM and the execution of formal legal documents by the
Company and the investors.  There is no assurance the financing will be
completed timely or at all.


ITEM 13.      INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
              ----------------------------------------------

1.   MATERIAL AGREEMENTS
     -------------------

Edward M. Halimi, a director of the Company, transferred all assets
comprising the Turbodyne Technology, as of the date of the transfer, to
Turbodyne Systems in consideration for the issue to Halimi of 100 common
shares of Turbodyne Systems, being all of the issued and outstanding shares
of Turbodyne Systems.  The Company acquired all of the issued and
outstanding shares in Turbodyne Systems from Halimi pursuant to an
agreement dated July 15, 1993 and amended by amendment agreements dated
October 1, 1993 and December 31, 1993 whereby the Company issued 1,000,000
common shares to Halimi.

Pursuant to an agreement between the Company and Centrepoint Equities Inc.
("Centrepoint"), the Company pays Centrepoint $2,500 per month in
consideration of Centrepoint providing office space and secretarial and
reception services to the Company.  During the fiscal year ended December
31, 1996 a total of $30,000 was paid or is payable to Centrepoint pursuant
to this agreement.  Centrepoint is a non-reporting British Columbia
company, the shares of which are owned by Leon E. Nowek, a director of the
Company.

2.   STOCK OPTIONS
     -------------

Management has an interest in the stock options and share purchase warrants
described under Items 4 and Items 12 of this Report.

<PAGE>

                                 PART II


ITEM 14.  DESCRIPTION OF SECURITIES TO BE REGISTERED 
          -----------------------------------------

Inapplicable

                                 PART III


ITEM 15.  DEFAULTS UPON SENIOR SECURITIES
          -------------------------------

Inapplicable

ITEM 16.  CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR
          REGISTERED SECURITIES                            
          -------------------------------------------------

Inapplicable


                                  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.

     
                                 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 annual report to be signed on
its behalf by the undersigned, thereunto duly authorized.




               TURBODYNE TECHNOLOGIES INC.
               (COMPANY)

               
               /s/ Edward M. Halimi 

               EDWARD M. HALIMI
               PRESIDENT AND DIRECTOR
               (AUTHORIZED SIGNATORY)


DATE:  July 11, 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
                                          --------      -------
                                          $ 53,473      $ 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                 $(0.19)      $(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 the Company's Annual Report on Form 20F.  We also
consent to application of such report to the financial information in 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 11, 1997                           Chartered Accountants