================================================================================

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

   
                                   FORM 10-K/A
    

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

                     For the fiscal year ended December 31,
                                      1998

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

                        Commission file number 000-21391

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

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

                         21700 Oxnard Street, Suite 1550
                            Woodland Hills, CA 91367
              (Address of principal executive offices and zip code)

                                 (818) 593-2282
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:

                                      None

           Securities registered pursuant to Section 12(g) of the Act:

                          Common stock, $.001 par value



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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this 10-K or any Amendment to this Form
10-K. [ ]

At April 14, 1999, there were outstanding 41,963,816 shares of the Common Stock
of Registrant, and the aggregate market value of the shares held on that date by
non-affiliates of Registrant, based on the closing price ($ 1.89 per share) of
the Registrant's Common Stock on the Easdaq Market on that date, was $
68,033,309. For purposes of this computation, it has been assumed that the
shares beneficially held by directors and officers of Registrant were "held by
affiliates"; this assumption is not to be deemed to be an admission by such
persons that they are affiliates of Registrant.

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                                     Page 1
<PAGE>

       

   
         GENERAL

         Turbodyne Technologies Inc. hereby amends its Annual Report on Form
10-K for the fiscal year ended December 31, 1998, by deleting its responses for
Items 9, 10, 11 and 12 contained in its Annual Report on Form 10-K filed April
16, 1999 and replacing such Items as set forth in this Amendment No. 1 to Form
10-K.
    

                                      PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The following table sets forth certain information with respect to the
directors and executive officers of the Company as of April 14, 1999:


         NAME AND POSITION              AGE             COMMENCEMENT OF SERVICES

         Robert Taylor(1)               59                   July 12, 1996
         Director

         Walter F. Ware                 55                   October 1, 1997
         President and Chief 
         Executive Officer

         Edward M. Halimi               54                   October 18, 1993
         Chairman of the Board

         Leon E. Nowek(1)               42                   October 18, 1993
         Vice Chairman,
         Secretary and Director

         Daniel Geronazzo(1)(2)(3)      68                   January 24, 1995
         Director

         Dr. Sadayappa Durairaj         55                   September 16, 1996
         Director

         Wendell R. Anderson(2)(3)      66                   November 20, 1995
         Director

         Khal A. Kader                  26                   July 6, 1998
         Chief Financial Officer

         Duane Rosenheim                66                   June 16, 1998
         Chief Operating Officer

         -------------------------------------
         (1) Member of the Audit Committee
         (2) Member of the Compensation Committee
         (3) Member of the Stock Option Committee


                                     Page 2
<PAGE>

   
         EDWARD M. HALIMI is Chairman of the Board of Directors. From October
18, 1993 to March 11, 1998, Mr. Halimi served as President and Chief Executive
Officer of the Company. Mr. Halimi developed a patented technology (the
"Turbodyne Technology") designed to optimize air flow to internal combustion
engines resulting in efficient fuel combustion in both diesel and gasoline
engines. The Turbodyne Technology also has proved to reduce the production and
emission of harmful pollutants. The Company has incorporated the Turbodyne
Technology into its two primary products. Mr. Halimi 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. From 1988 to 1991, Mr.
Halimi was the President and Chief Executive Officer of Technodyne Corporation,
a manufacturer of heat management and temperature control units and since 1989
serves as 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 Vice Chairman, Secretary and a director of the Company
and is responsible for business development activities as well as regulatory
affairs. Mr. Nowek was appointed a director of the Company in 1993, as Vice
Chairman in February 1998 and as Secretary in July 1998. From June 1995 to
February 1998, Mr. Nowek served as the Company's Chief Financial Officer. Prior
thereto, since July 1993, Mr. Nowek was an independent management consultant.

         WENDELL R. ANDERSON is a director of the Company. Mr. Anderson is an
attorney with the firm of Larkin, Hoffman, Daly and Lindgren Ltd. of
Bloomington, Minnesota and has been practicing law since 1963. Mr. Anderson has
held several positions of public office. From 1959 to 1963 Mr. Anderson 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 various committees including
the environment and public works committee, the budget committee, the natural
resources committee and armed services committee. Mr. Anderson serves as a
director of FingerHut Companies Inc., a database marketing company listed on the
New York Stock Exchange which sells a broad range of products through catalogs,
direct marketing and the Internet, National City Bancorp, a Nasdaq listed
company and ECOS Group, Inc., a company listed on the OTC Bulletin Board and
involved in waste management services.

         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. Since 1994, he has served as 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 Holdings which was acquired by
the Company effective July 2, 1996. Dr. Durairaj is also Chairman of Brentwood
Bank (California) and VSK Ferro Alloys (India).

         DANIEL GERONAZZO is a director of the Company. Mr. Geronazzo was an
attorney in private practice located in the Province of British Columbia for the
past 35 years.


                                     Page 3
<PAGE>


         ROBERT F. TAYLOR is a director of the Company. Mr. Taylor served as
Chief Operating Officer of the Company from January 1, 1997 to June 30, 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 ("Shell") 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. Mr. Taylor is a director and
member of the Audit Committees of Pembina Pipeline Income Fund and WestCastle
Energy Trust, each of which company trades on the Toronto Stock Exchange.

         WALTER F. WARE was appointed Chief Executive Officer and President of
the Company effective March 11, 1998. Prior thereto, since October 1997, Mr.
Ware served as the Company's Chief Operating Officer. Mr. Ware has served as a
director of the Company since December 1, 1997. From October 1995 to September
1997, Mr. Ware served as Senior Vice President and Corporate Officer of Detroit
Diesel Corporation and as a director of several of its subsidiary corporations.
Prior thereto, Mr. Ware served in several senior management positions with the
Garrett Automotive Group division of Allied Signal Corporation including Group
Vice President, North American Automotive Operations, Managing Director Garrett
Automotive - Europe and Chief Technical Officer.

         KHAL KADER was appointed Controller of the Company in July 1998 and
became Chief Financial Officer of the Company later that month. Prior to joining
the Company, since 1994, Mr. Kader practiced as a certified public accountant
with KPMG Peat Marwick LLP in Los Angeles, California. Mr. Kader is a member of
the Institute of Certified Public Accountants.

         DUANE ROSENHEIM was appointed Chief Operating Officer of the Company in
June 1998. Prior thereto, and for the past six years, Mr. Rosenheim was an
independent consultant working primarily with the Company to develop its
prototype product which has been incorporated into the TurbopacTM and
DynachargerTM products. Prior thereto, Mr. Rosenheim served in several positions
at the Delco Electronics Division of General Motors Corporation including
Quality Engineering Manager and Manager of the Quality, Manufacturing and
Operations Administration Departments.
    

         Certain other information regarding directors and executive officers of
the Company will appear in the Proxy Statement for the 1999 Annual Meeting of
Stockholders and is incorporated herein by this reference. The Proxy Statement
will be filed with the SEC within 120 days following December 31, 1998.

   
BOARD MEETINGS AND COMMITTEES

         The Board of Directors has an Audit Committee, a Compensation Committee
and a Stock Option Committee. The Audit Committee currently consists of Messrs.
Nowek, Geronazzo and Taylor. The Audit Committee recommends the engagement of
the Company's independent public accountants, reviews the scope of the audit to
be conducted by such independent public accountants, and meets with the
independent public accountants and the Chief Financial Officer of the Company to
review matters relating to the Company's financial statements, the Company's
accounting principles and its system of internal accounting controls, and
reports its recommendations as to the approval of the financial statements of
the Company to the Board of Directors. One meeting of the Audit Committee was
held during the year ended December 31, 1998.


                                     Page 4
<PAGE>


         The Compensation Committee currently consists of Messrs. Geronazzo and
Anderson. The Compensation Committee is responsible for considering and making
recommendations to the Board of Directors regarding executive compensation. One
meeting of the Compensation Committee was held during the year ended December
31, 1998.

         The Stock Option Committee currently consists of Messrs. Geronazzo and
Anderson. The Stock Option Committee is responsible for administering the
Company's stock option and executive incentive compensation plans. One meeting
of the Stock Option Committee was held during the year ended December 31, 1998.

         The Board of Directors held two meetings and acted by written consent
on three occasions during fiscal 1998. No director attended less than 75% of all
the meetings of the Board of Directors and those committees on which he or she
served in fiscal 1998 other than Mr. Robert Taylor, who acted by written consent
on three occassions and attended no meetings of the Board of Directors during
fiscal 1998.

COMPENSATION OF DIRECTORS

         Directors are reimbursed for reasonable out-of-pocket expenses in
connection with attendance at Board of Director and Committee meetings, and are
periodically granted options to purchase shares of the Common Stock of the
Company at the discretion of the Stock Option Committee. Directors are not
otherwise provided any remuneration for their services as directors of the
Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         The Company has no interlocking relationships involving any of its
Compensation Committee or Stock Option Committee members which would be required
by the Securities and Exchange Commission to be reported in this Report, and no
officer or employee of the Company currently serves on its Compensation
Committee.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the executive officers, directors and persons who own more than ten
percent of a registered class of equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission (the
"SEC"). Executive officers, directors and greater-than-ten percent stockholders
are required by SEC regulations to furnish us with all Section 16(a) forms they
file. Based solely on our review of the copies of the forms received by us and
written representations from certain reporting persons that they have complied
with the relevant filing requirements, we believe that, during the year ended
December 31, 1998, all of our elective officers, directors and greater-than-ten
percent stockholders complied with all Section 16(a) filing requirements other
than: Dr. Sadayappa  Durairaj, a member of the Company's Board of Directors, who
filed a Form 5 reporting the acquisition of 5,000 shares of Common Stock in 
transactions which were reportable on a Form 4.
    


                                     Page 5
<PAGE>


ITEM 11.  EXECUTIVE COMPENSATION  

         SUMMARY COMPENSATION TABLE

         The following table sets forth, as to the Chief Executive Officer and
as to each of the other four most highly compensated officers whose compensation
exceeded $100,000 during the last fiscal year (the "Named Executive Officers"),
information concerning all compensation paid for services to the Company in all
capacities for each of the three years ended December 31 indicated below.

<TABLE>
<CAPTION>
                                                                    LONG TERM
                                                                    COMPENSATION

                                                                    NUMBER OF
                              FISCAL YEAR                           SECURITIES
                              ENDED         ANNUAL COMPENSATION     UNDERLYING    ALL OTHER
NAME AND POSITION (1)         DECEMBER 31   SALARY       BONUS       OPTIONS     COMPENSATION
---------------------------   ----------    -------    --------     -----------  ------------
<S>                           <C>         <C>          <C>             <C>         <C>    
Edward M. Halimi(2)           1998        $180,000     $     --        200,000     $    --
Chairman of the Board         1997         180,000      162,000        200,000          --
                              1996          60,000           --             --          --
                              -----       --------     --------       --------    -----------  
Leon E. Nowek(3)              1998        $162,000     $     --        200,000     $    --
Vice  Chairman of the Board,  1997         162,000      145,800        200,000          --
Secretary                     1996          30,000 Cdn       --             --          --
                              -----       --------     --------       --------    -----------  
Walter F. Ware                1998        $180,000     $     --        200,000     $    --
Chief Executive  Officer and  1997        $ 60,000           --        150,000          --
President(4)                                                                            --
                              -----       --------     --------       --------    ----------   
</TABLE>
----------
(1)  For a description of the employment contract between certain officers and
     the Company, see "Employment Contracts," below.
(2)  Mr. Halimi served as Chief Executive Officer of the Company from October
     1993 to March 1998. Currently Mr. Halimi serves as Chairman of the Board
(3)  Mr. Nowek served as Chief Financial Officer of the Company from June 1995
     to February 1998. Currently, Mr. Nowek serves as Vice-Chairman of the Board
     and Secretary of the Company.
(4)  Mr. Ware served as Chief Operating Officer of the Company from October 1997
     to March 1998. Currently Mr. Ware serves as Chief Executive Officer and
     President.


                                     Page 6
<PAGE>

         OPTION GRANTS IN LAST FISCAL YEAR

         The following table sets forth certain information regarding the grant
of stock options made during the fiscal year ended December 31, 1998 to the
Named Executive Officers.
<TABLE>
<CAPTION>
                                                                                                 POTENTIAL REALIZABLE    
                             NUMBER OF      PERCENT OF                                         VALUE AT ASSUMED RATE OF
                             SECURITIES     TOTAL OPTIONS                                      STOCK PRICE APPRECIATION
                             UNDERLYING     GRANTED TO        EXERCISE                             FOR OPTION TERM(4)  
                             OPTIONS        EMPLOYEES IN      OR BASE        EXPIRATION        -------------------------
NAME OF OFFICER              GRANTED (1)    FISCAL YEAR(2)    PRICE(3)       DATE                  5%             10%
---------------              -----------    -------------     --------      ----------------   -----------   -----------
<S>                          <C>            <C>               <C>           <C>                <C>           <C>        
Edward M. Halimi             200,000        3.15%             $2.35         March 11, 2003     $ 1,182,000   $ 1,491,000
Leon E. Nowek                200,000        3.15%             $2.35         March 11, 2003       1,182,000     1,491,000
Walter F. Ware               200,000        3.15%             $2.35         March 11, 2003       1,182,000     1,491,000
</TABLE>

----------
(1)  These options are immediately exercisable upon grant.

(2)  Options covering an aggregate of 6,346,610 shares were granted to eligible
     persons during the fiscal year ended December 31, 1998.

(3)  The exercise price and tax withholding obligations related to exercise may
     be paid by delivery of already owned shares, subject to certain conditions.

(4)  The potential realizable value is based on the assumption that the Common
     Stock appreciates at the annual rate shown (compounded annually) from the
     date of grant until the expiration of the option term. These amounts are
     calculated pursuant to applicable requirements of the Commission and do not
     represent a forecast of the future appreciation of the Company's Common
     Stock.

         STOCK OPTIONS HELD AT FISCAL YEAR END

         The following table sets forth, for each of the Named Executive
Officers, certain information regarding the exercise of stock options during the
fiscal year ended December 31, 1998, the number of shares of Common Stock
underlying stock options held at fiscal year end and the value of options held
at fiscal year end based upon the last reported sales price of the Common Stock
on the Nasdaq Small Cap Market on December 31, 1998 ($4.63).

<TABLE>
<CAPTION>
                                              NUMBER OF SECURITIES
                     SHARES                  UNDERLYING UNEXERCISED        VALUE OF UNEXERCISED
                     ACQUIRED              OPTIONS AT DECEMBER 31,       IN-THE-MONEY OPTIONS AT
                        ON       VALUE               1998                   DECEMBER 31, 1998
NAME OF OFFICER      EXERCISE  REALIZED    EXERCISABLE  UNEXERCISABLE   EXERCISABLE  UNEXERCISABLE
----------------     --------  ----------  -----------  -------------   -----------  -------------
<S>                  <C>       <C>           <C>               <C>       <C>              <C>
Edward M. Halimi     200,000   $1,809,400    200,000           --        $455,000         --
Leon E. Nowek        200,000    1,482,418    200,000           --         455,000         --
Walter F. Ware            --           --    350,000           --         623,750         --
</TABLE>


                                     Page 7
<PAGE>


         EMPLOYMENT CONTRACTS

         Edward Mr. Halimi and Leon E. Nowek each is a party to an employment
agreement dated August 1, 1997, as amended on January 27, 1998, (respectively,
the "Halimi Agreement" and the "Nowek Agreement" and together the "Employment
Agreements") between each officer, the Company and Turbodyne Systems. Mr. Halimi
initially was employed as President and Chief Executive Officer of the Company
and Turbodyne Systems. Effective March 11, 1998, Mr. Halimi, the Company and
Turbodyne Systems agreed, pursuant to the terms of the Halimi Agreement, to
change Mr. Halimi's position to Chairman of the Board and to modify his duties
and responsibilities accordingly. Mr. Nowek initially was employed as Chief
Financial Officer of the Company and Turbodyne Systems. Effective February 1998,
Mr. Nowek, the Company and Turbodyne Systems agreed, pursuant to the terms of
the Nowek Agreement, to change Mr. Nowek's position to Vice Chairman of the
Company and Turbodyne Systems. Pursuant to the terms of the Employment
Agreements, Mr. Halimi and Mr. Nowek are paid an annual salary of $180,000 and
$162,500, respectively, and are entitled to annual cash bonuses of up to 150% of
their respective base salaries based on the consolidated net operating income
(before taxes) of the Company, Turbodyne Systems or Pacific Baja, whichever is
greater. Each Employment Agreement also provides that in each year of the term
of the Employment Agreement, the Company shall grant to the officer options to
purchase 200,000 shares of Common Stock in accordance with the Company's stock
option plan then in effect. Each officer and the members of their respective
families are entitled to participate in any life and disability insurance,
pension dental, medical, pharmaceutical, hospitalization, health insurance and
any other employee benefit programs as may be provided from time to time by the
Company. Each Employment Agreement is for a ten year term and will renew for
successive one year periods unless one party to the Employment Agreement
provides written notice of its election not to renew at least 30 days prior to
the expiration of the initial term or any successive one year terms. Each
officer may terminate his Employment Agreement at any time upon three months
prior written notice of his intention to so terminate. In the event that either
officer is terminated by the Company without "cause," as defined in the
Employment Agreement, he is entitled to receive the compensation that otherwise
would have been payable to him from the date of termination to the expiration
date of the then current term.

         The Compensation Committee has resolved to recommend to the Board of
Directors that it enter into a five year employment agreement with Mr. Ware,
pursuant to which Mr. Ware will be entitled to receive an annual base salary
equal to $180,000 plus an annual cash bonus based on the net operating profit of
the Company and its subsidiaries. The maximum bonus will be 150% of base salary.
Mr. Ware will be entitled to participate in share option plans, share purchase
plans, bonus plans and other financial assistance plans at the discretion of the
Board of Directors of the Company.


                                     Page 8
<PAGE>

       

   
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

         The Compensation Committee is charged with the responsibility of
administering all aspects of the Company's executive compensation programs. The
Compensation Committee, which is currently comprised of two independent,
non-employee directors, also grants all awards under and otherwise administers
the Company's 1997 Stock Incentive Plan and the 1998 Stock Incentive Plan.
Following review and approval by the Compensation Committee, all determinations
pertaining to executive compensation, other than stock award matters, are
submitted to the full Board of Directors for approval.

         COMPENSATION PHILOSOPHY. The Company's executive compensation program
is designed to (1) provide levels of compensation that integrate pay and
incentive plans with the Company's strategic goals, so as to align the interests
of executive management with the long-term interests of the Company's
stockholders, (2) attract, motivate and retain executives of outstanding
abilities and experience capable of achieving the strategic business goals of
the Company, (3) recognize outstanding individual contributions, and (4) provide
compensation opportunities which are competitive to those offered by other
companies of similar size and performance. To achieve these goals, the Company's
executive compensation program consists of three main elements: (i) base salary,
(ii) annual cash bonus and (iii) long-term incentives. Each element of
compensation has an integral role in the total executive compensation program.

         BASE SALARY. Base salaries are negotiated at the commencement of an
executive's employment with the Company, or upon renewal of his or her
employment agreement, and are designed to reflect the position, duties and
responsibilities of each executive officer, the cost of living in the area in
which the officer is located and the market for base salaries of similarly
situated executives at other companies engaged in businesses similar to that of
the Company. Messrs. Halimi and Nowek each is a party to an employment agreement
dated August 1, 1997, as amended on January 27, 1998 (as amended, the
"Employment Agreements"), between each officer, the Company and Turbodyne
Systems, Inc. ("Turbodyne Systems") pursuant to which these officers are paid
annual base salaries equal to $180,000 and $162,500, respectively. The
Compensation Committee has resolved to recommend to the Board of Directors that
it enter into a five year employment agreement with Mr. Walter Ware, pursuant to
which Mr. Ware will be entitled to receive an annual base salary equal to
$180,000. See "Employment Contracts," below.

         ANNUAL CASH BONUSES. Executive officers are eligible for annual
incentive bonuses in amounts determined at the discretion of the Board of
Directors. The Board considers an award of an annual bonus subjectively, taking
into account factors such as the financial performance of the Company, increases
in stockholder value, the achievement of corporate goals and individual
performance. Pursuant to their respective Employment Agreement, each of Messrs.
Halimi and Nowek is entitled to an annual cash bonus of up to 150% of such
officer's respective base salary based on the consolidated net operating income
(before taxes) of the Company, Turbodyne Systems or Pacific Baja, whichever is
greater. Similarly, Mr. Ware also shall be entitled to an annual cash bonus of
up to 150% of his base salary based on the consolidated net operating income
(before taxes) of the Company and its subsidiaries. For fiscal 1998, none of the
Named Executive Officers received any cash bonuses.

         The Company also provides to its employees (including Mr. Halimi and
the other officers) medical insurance and other customary employee benefits.


                                     Page 9
<PAGE>

         LONG-TERM INCENTIVES. The Company provides its executive officers with
long-term incentive compensation through grants of options under the Company's
1998 Stock Incentive Plan. The Compensation Committee currently is responsible
for selecting the individuals to whom grants of options should be made, the
timing of grants, the determination of the per share exercise price and the
number of shares subject to each option. The Compensation Committee believes
that stock options provide the Company's executive officers with the opportunity
to purchase and maintain an equity interest in the Company and to share in the
appreciation of the value of the Common Stock. The Compensation Committee
believes that stock options directly motivate an executive to maximize long-term
stockholder value. The options incorporate vesting periods in order to encourage
key employees to continue in the employ of the Company. All options granted in
fiscal 1998 were granted at the fair market value of the Company's Common Stock
on the date of grant. During fiscal 1998, each of Messrs. Halimi, Nowek and Ware
was granted options to purchase 200,000 shares of the Company's Common Stock.
The Board of Directors considers the grant of each option subjectively,
considering factors such as the individual performance of executive officers and
competitive compensation packages in the industry.

         CHIEF EXECUTIVE OFFICER. The Compensation Committee has resolved to 
recommend to the Board of Directors that it enter into a five year employment
agreement with Mr. Walter Ware, pursuant to which Mr. Ware will be entitled to
receive an annual base salary equal to $180,000 plus an annual cash bonus based
on the net operating profit of the Company and its subsidiaries. The maximum
bonus will be 150% of base salary. Mr. Ware will be entitled to participate in
share option plans, share purchase plans, bonus plans and other financial
assistance plans at the discretion of the Board of Directors of the Company. In
determining the compensation of the Chief Executive Officer for fiscal 1998, the
Compensation Committee considered many factors including the milestones reached
by the Company in 1998 which include receipt of certification by the United
States Environmental Protection Agency of the Detroit Diesel Corporation
emission upgrade kit, which incorporates the Turbodyne Technology through the
use of a TurbopacTM, as an acceptable solution to reduce emissions of diesel
buses under the EPA's Urban Bus Retrofit/Rebuild Program, the execution by the
Company and Detroit Diesel Corporation of the Company's first commercial
contract, for the production of the Turbopac product and the award of two
additional patents relating to a completely different technology developed by
the Company jointly with Southwest Research Institute designed to reduce harmful
emissions from internal combustion engines which utilizes the Turbopac(TM)
product line. The Compensation Committee also considered the financial results
of the Company for fiscal 1998, including the substantial net loss incurred by
the Company and the increased net loss per share. The Compensation Committee
determined that Mr. Ware's base salary continued to be commensurate with his
responsibilities and that no bonus would be awarded for fiscal 1998.

         OMNIBUS BUDGET RECONCILIATION ACT IMPLICATIONS FOR EXECUTIVE
COMPENSATION. Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), places a limit of $1,000,000 on the amount of compensation that
may be deducted by the Company in any year with respect to each of the Company's
five most highly paid executive officers. Certain "performance-based"
compensation that has been approved by the Company's stockholders is not subject
to the deduction limit. The 1998 Stock Incentive Plan is intended to qualify so
that awards under the plan constitute performance based compensation not subject
to Section 162(m) of the Code.


                                    Page 10
<PAGE>

         All compensation paid to the Company's employees in fiscal 1998 will be
fully deductible. With respect to compensation to be paid to the Company's
senior executive officers in 1999 and in future years, in certain instances such
compensation may exceed $1,000,000. However, in order to maintain flexibility in
compensating executive officers in a manner designed to promote varying
corporate goals, the Compensation Committee has not adopted a policy that all
compensation must be deductible.

         SUMMARY. The Compensation Committee believes that its executive
compensation philosophy of paying its executive officers by means of base
salaries, annual cash bonuses and long-term incentives, as described in this
report, serves the interests of the Company and its stockholders.


                                               COMPENSATION COMMITTEE

                                               Wendall R. Anderson
                                               Daniel Geronazzo
    

                                    Page 11
<PAGE>

   
                               PERFORMANCE GRAPH

         The following graph sets forth the percentage change in cumulative
total stockholder return of the Company's Common Stock during the period from
April 25, 1994 to December 31, 1998, compared with the cumulative returns of the
Nasdaq Stock Market (US Companies) Index and the S&P Auto Parts & Equipment
Index. The Common Stock was listed on the Vancouver Stock Exchange on April 25,
1994 and was listed for quotation on the Nasdaq Small Cap Market on March 27,
1997. The trading values identified for the Company in the Comparison reflect
the price of the Common Stock on the Vancouver Stock Exchange from April 25,
1994 through March 26, 1997 (which were in Canadian dollars) and on the Nasdaq
Stock Market from March 27, 1997 through December 31, 1998 (which were in U.S.
dollars). The Comparison contains translations of the prices of the Common Stock
on the Vancouver Stock Exchange to U.S. dollars at specified rates. These
translations should not be construed as representations that the Canadian dollar
amounts actually represent U.S. dollar amounts or could be, or could have been,
converted into U.S. dollars at the rate indicated or at any other rate. The
translations of Canadian dollars into U.S. dollars have been made at the noon
buying rate in New York City for cable transfers of Canadian dollars as
certified for customs purposes by the Federal Reserve Bank of New York on each
of April 25, 1994 and December 31, 1994, 1995 and 1996. The Comparison assumes
$100 was invested on April 25, 1994 in the Common Stock and in each of the
foregoing indices. The stock price performance on the following graph is not
necessarily indicative of future stock price performance.


                               [GRAPHICS OMITTED]


<TABLE>
<CAPTION>
                                                     CUMULATIVE TOTAL RETURN
                                     ---------------------------------------------------
                                     4/25/94    12/94    12/95    12/96    12/97   12/98
                                     -------    -----    -----    -----    -----   -----
<S>                                     <C>       <C>     <C>     <C>        <C>   <C>  
TURBODYNE TECHNOLOGIES INC.             100       60      842     1,867      901   1,076
NASDAQ STOCK MARKET (U.S.)              100      102      144       177      217     306
S & P AUTO PARTS & EQUIPMENT            100       95      117       131      164     238
</TABLE>
    

                                    Page 12
<PAGE>


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 

         The following table sets forth as of March 1, 1999 certain information
relating to the ownership of the Common Stock by (i) each person known by the
Company to be the beneficial owner of more than five percent of the outstanding
shares of the Common Stock, (ii) each of the Company's directors, (iii) each of
the Named Executive Officers, and (iv) all of the Company's executive officers
and directors as a group. Except as may be indicated in the footnotes to the
table and subject to applicable community property laws, each such person has
the sole voting and investment power with respect to the shares owned. The
address of each person listed is in care of the Company, 21700 Oxnard Street,
Suite 1550, Woodland Hills, California 91367, unless otherwise set forth below
such person's name.

<TABLE>
<CAPTION>
                                                    NUMBER OF SHARES OF 
                                                 COMMON STOCK BENEFICIALLY
          NAME AND ADDRESS                       OWNED           PERCENT(1)
          ----------------                     ---------         ----------

<S>                                            <C>                   <C> 
Edward Mr. Halimi(2) .......................   3,450,000             8.3%
Leon E. Nowek(3) ...........................   1,100,000             2.6
Wendell R. Anderson(4) .....................     200,000             *
Sadayappa Durairaj(5) ......................     874,000             2.1
Daniel Geronazzo(6) ........................     115,000             *
Robert Taylor(7) ...........................      32,000             *
Walter F. Ware(8) ..........................     351,690             *
Directors and executive officers as a ......   5,967,356            14.0
group(2)(3)(4)(5)(6)(7)(8)(9)
</TABLE>

----------
* less than 1%

(1)  Under Rule 13d-3, certain shares may be deemed to be beneficially owned by
     more than one person (if, for example, persons shares the power to vote or
     the power to dispose of the shares). In addition, shares are deemed to be
     beneficially owned by a person if the person has the right to acquire the
     shares (for example, upon exercise of an option) within 60 days of the date
     as of which the information is provided. In computing the percentage
     ownership of any person, the amount of shares outstanding is deemed to
     include the amount of shares beneficially owned by such person (and only
     such person) by reason of these acquisition rights. As a result, the
     percentage of outstanding share of any person as shown in this table does
     not necessarily reflect the person's actual ownership or voting power with
     respect to the number of shares of Common Stock actually outstanding at
     March 1, 1999.

(2)  Consists of (a) 3,250,000 escrow shares held in the name of March
     Technologies Inc., a private company controlled by Mr. Halimi and (b)
     200,000 shares of Common Stock reserved for issuance upon exercise of stock
     options which are or will become exercisable on or before April 29, 1999.

(3)  Consists of (a) 900,000 escrow shares held in the name of L.N. Family
     Holdings, Inc., a company controlled by Mr. Nowek and (b) 200,000 shares of
     Common Stock reserved for issuance upon exercise of stock options which are
     or will become exercisable on or before April 29, 1999. (4)



                                    Page 13
<PAGE>


(4)  Consists of 200,000 shares of Common Stock reserved for issuance upon
     exercise of stock options which are or will become exercisable on or before
     April 29, 1999. 

(5)  Includes 200,000 shares of Common Stock reserved for issuance upon exercise
     of stock options which are or will become exercisable on or before April
     29, 1999 (

6)   Includes 100,000 shares of Common Stock reserved for issuance upon exercise
     of stock options which are or will become exercisable on or before April
     29, 1999.

(7)  Consists of 30,000 shares of Common Stock reserved for issuance upon
     exercise of stock options which are or will become exercisable on or before
     April 29, 1999.
     
(8)  Includes 350,000 shares of Common Stock reserved for issuance upon exercise
     of stock options which are or will become exercisable on or before April
     29, 1999.
   
(9)  Includes 46,666 shares of Common Stock reserved for issuance upon exercise
     of stock options held by certain executive officers of the Company which
     are or will become exercisable on or before April 29, 1999
    
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 

         Turbodyne Systems subleases its Carpinteria facility from American
Appliance, Inc., a private company controlled by Mr. Halimi, Chairman of the
Board of Directors of the Company. The lease is on a month to month basis and
the monthly rent is equal to $28,224.

         In fiscal 1998, the Company expended funds aggregating $1,464,000 to a
company controlled by Mr. Halimi, for research and development activities
related to the Company's product development which is included in research and
development costs at December 31, 1998.

         In March 1998, the Company completed a $1.0 million secured bridge loan
with Quest Ventures Ltd. (the "Quest Loan"). In connection with the financing,
the Company issued 37,500 shares of Common Stock, valued at $2.50 per share, to
Leon Nowek, the Vice Chairman and a director of the Company, in exchange for his
agreement to personally guarantee the Quest Loan.

         Pacific Baja leases one of its facilities in Ensenada from Baja Pacific
Properties, a company in which Dr. Sadayappa Durairaj, a director of the
Company, owns approximately 19% of the outstanding shares. The lease is for a
ten year term, expiring in September 2005 and the monthly rent is equal to
$15,000.

         Pursuant to the terms of the Employment Agreement between the Company
and Leon Nowek, the Company loaned $225,000 to Mr. Nowek in connection with the
purchase of his home. The loan bears no interest and is repayable on the earlier
to occur of the sale of Mr. Nowek's home or the termination of Mr. Nowek's
employment Agreement. At March 31, 1999, there was $225,000 outstanding under
this loan.

         Pursuant to the terms of the Employment Agreement between the Company
and Leon Nowek, the Company paid approximately $40,000 to Mr. Nowek as
reimbursement of relocation expenses incurred by him in connection with this
move to Los Angeles, California.


                                    Page 14
<PAGE>


         The Company agreed to loan up to $250,000 to Walter Ware, the President
and Chief Executive Officer of the Company, in connection with the purchase of
his home. The loan bears no interest and is repayable on the earlier to occur of
the sale of Mr. Ware's home or the termination of Mr. Ware's employment with the
Company. At March 31, 1999, there was $237,500 advanced under this loan.

         The Company has agreed to reimburse Mr. Ware for relocation expenses
incurred by him in connection with his move to Santa Barbara, California.

         The Company has advanced an aggregate of $164,000 to Edward M. Halimi
and $136,000 to Leon Nowek. These advances are against salaries and bonuses,
bear no interest and are payable on demand by the Company.

         See "Item 11. Executive Compensation - Employment Contracts" for a
description of employment agreements between the Company and certain of its
officers.


                                    Page 15
<PAGE>

       

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.


                                        TURBODYNE TECHNOLOGIES INC.

                                               /S/ KHAL KADER
                                        ----------------------------------------
                                        By:    Khal Kader
                                        Title: Chief Financial Officer 
                                               (Principal Financial Officer and
                                               Principal Accounting Officer
   
                                        Date:  April 30, 1999
    

                                POWER OF ATTORNEY

        Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant in the capacities and on the date indicates.

     SIGNATURE                       DATE                   TITLE
   
*
----------------------------      April 30, 1999      Chairman of the Board
Edward M. Halimi

*
----------------------------      April 30, 1999      Vice Chairman, Secretary 
Leon E. Nowek                                         and Director

/s/ Khal Kader
----------------------------      April 30, 1999      Chief Financial Officer 
Khal A. Kader                                         (Principal Financial 
                                                      Officer and Principal 
                                                      Accounting Officer)

*
----------------------------      April 30, 1999      Chief Executive Officer,
Walter F. Ware                                        President and Director

*
----------------------------      April 30, 1999      Director
Daniel Geronazzo

*
----------------------------      April 30, 1999      Director
Wendell R. Anderson

 
----------------------------      April __, 1999      Director
Robert Taylor

*
----------------------------      April 30, 1999      Director
Sadayappa Durairaj


*  By:  /S/ KHAL KADER
       --------------------
        Khal Kader
        Attorney-In-Fact
    

                                    Page 16