AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
                                       ON NOVEMBER 12, 1996


                                        SECURITIES AND EXCHANGE COMMISSION
                                              WASHINGTON, D.C.  20549


                                                  FORM 20-F / A-1

(Mark One)

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

                                                        OR


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

For the fiscal year ended

                                                        OR

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES

                  EXCHANGE ACT OF 1934 [NO FEE REQUIRED]


For the transition period from               to

Commission file number


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

Inapplicable
         (Translation of Registrant's name into English)

Province of British Columbia, CANADA
         (Jurisdiction of incorporation or organization)

Suite 510, 1090 West Pender Street
Vancouver, British Columbia, Canada V6C 2N7
         (Address of principal executive offices)



<PAGE>

                                                         2

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.

Common shares without par value:
                                                 (Title of Class)


                                                 (Title of Class)


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

None
                                                 (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:  23,436,319 as at November 6, 1996




Indicate by check mark whether the registrant (1) has filed all reports
 required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes         No   X


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 November 7, 1996, the exchange rate of Canadian dollars
into United States dollars was
$$1.3317 Canadian to $1.00 United States.




<PAGE>

                                                         3



                                                 TABLE OF CONTENTS


Part I
Item 1.
 Description of Business....................................           1-13
 Introduction...............................................           1
 Registrant and Subsidiary Company's Corporate Background...           1-2
 Industry Background and Product ...........................           2-6
                  Stage of Development......................           6-8
                  Development Costs to Date....................        8-9
                  Acquisition of Pacific Baja Light Metals Holding, Inc.  10-11
                  Marketing................................           11-12
                  Competition...................................      12-13
                  1996 Fiscal Year Period Operating Plan.........        13
                  Employees......................................        13

Item 2.           Description of Property...........................   13-14

Item 3.           Legal Proceedings.................................      14

Item 4.           Control of Registrant.............................   14-15

Item 5.           Nature of Trading Market..........................   15-16

Item 6.           Exchange Controls and Other Limitations
                  Affecting Securities Holders......................   16-17

Item 7.           Taxation..........................................   17-18

Item 8.           Selected Financial Data...........................   18-26
                  Financial Statements..............................     18
                  Statement of Operations Data (Canadian GAAP)......     19
                  Balance Sheet Data (Canadian GAAP)................     20
                  Statement of Operations Data (U.S. GAAP)............   21
                  Balance Sheet Data (U.S. GAAP)...................... 22-23
                  Financial Statements for Baja.......................    23
                  Statement of Operations Data (U.S. GAAP) for Baja...    24
                  Balance Sheet Data (U.S. GAAP) for Baja.............    25
                  Pro Forma Financial Statement.......................    26
                  Exchange Rates......................................    26

Item 9.           Management's Discussion and Analysis of
                  Financial Condition and Results of Operations.......  27-28
                  Results of Operations...............................    27
                  Liquidity and Capital Resources.....................    27



<PAGE>

                                                         4





                                                 TABLE OF CONTENTS


                                                                    Page No.


Item 11.          Compensation of Directors and Officers..........     28-31

Item 12.          Options to Purchase Securities from
                  Registrant or Subsidiaries......................        31

Item 13.          Interest of Management in Certain Transactions....      35
                  Stock Options......................................     35

Part II

Item 14.          Description of Securities to be Registered........     35-38


Part III

Item 15.          Defaults Upon Senior Securities...................      39

Item 16.          Changes in Securities and Changes in
                  Security for Registered Securities................     39

Part IV

Item 17.          Financial Statements..............................      39

Item 18.          Financial Statements..............................      39

Item 19.          Financial Statements and Exhibits.................    39-41
                  (a)      Financial Statements.....................      39
                  (b)      Exhibits.................................   40-41




<PAGE>

                                                         1


                                                      PART I

Item 1.           Description of Business

INTRODUCTION

Turbodyne  Technologies  Inc. (the  "Registrant")  is engaged in the business of
developing  products to enhance  performance  and reduce  emissions  of internal
combustion engines.  The Registrant's  products employ a technology known as the
Turbodyne  Technology  which is designed to optimize air flow to both diesel and
gasoline  engines  resulting in enhanced  performance  and more  efficient  fuel
consumption.  The  Registrant's  development  of its  products is  substantially
complete and the  Registrant  is in the final  stages of tooling for  commercial
production.  While the Registrant has not achieved any significant production or
sales of its products to date, the Registrant  anticipates commencing commercial
production by the end of 1996.  The Registrant  conducts its Turbodyne  business
through its subsidiary,  Turbodyne Systems, Inc. The Registrant has entered into
an agreement to acquire 100% of Pacific Baja Light Metals Holding, Inc. ("Baja")
which is a manufacturer  of aluminum cast products  primarily for the automotive
industry. The acquisition of Baja by the Registrant is described in detail below
in Item 1 of this Registration Statement. The acquisition was formally completed
in September, 1996.

REGISTRANT AND SUBSIDIARY COMPANY'S CORPORATE BACKGROUND

The Registrant was incorporated  pursuant to the laws of the Province of British
Columbia, Canada on May 18, 1983 as Dundee Resources Corp. By special resolution
dated August 21, 1992 and effective January 20, 1993, the outstanding  shares of
the Registrant were  consolidated on a 5:1 basis and the  Registrant's  name was
changed to Clear View Ventures, Inc. By special resolution dated October 8, 1993
and effective April 28, 1994, the  Registrant's  name was changed to its current
name  Turbodyne  Technologies  Inc.  The  Registrant  has  obtained the required
shareholder  approval to the  continuation  of the  Registrant  under the Canada
Business  Corporations Act as a Canadian federal corporation.  The Registrant is
in  the  process  of  completing  this  continuation.  Upon  completion  of  the
continuation,  the Registrant  will cease to be a British  Columbia  company and
will  exist as a  Canadian  federal  corporation  and  will  adopt  articles  of
continuation  and  by-laws.  The  continuation  will not  affect  the  assets or
liabilities of the Registrant and no new corporate entity will be created by the
continuation.  During the period  from its  incorporation  on May 18, 1983 until
July  of  1993  when it  commenced  funding  the  development  of the  Turbodyne
Technology, the Registrant was engaged in the

<PAGE>

                                                         2
business of mineral exploration.  The Registrant no longer holds any interest in
any mineral  properties.  The Registrant  owns 100% of Turbodyne  Systems,  Inc.
("Turbodyne  Systems").  Turbodyne Systems was incorporated pursuant to the laws
of the State of Nevada,  USA, on May 21, 1993.  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. The Registrant  subsequently
acquired  ownership of Turbodyne Systems pursuant to an agreement dated July 15,
1993  between  the  Registrant  and Mr.  Halimi  whereby the  Registrant  issued
1,000,000  common shares of the Registrant 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.  Turbodyne
Systems is the owner of the Turbodyne  Technology and carries on the business of
development and manufacturing  products  incorporating the Turbodyne Technology.
The Registrant  incorporated Pacific Baja Acquisition Corp. pursuant to the laws
of the State of Wyoming,  USA, on April 15, 1996. Pacific Baja Acquisition Corp.
was  incorporated  for the purposes of enabling the  Registrant  to complete the
acquisition of Baja. Pacific Baja Acquisition Corp. had no assets or liabilities
prior to the merger.  On completion  of the  Acquisition  of Baja,  Pacific Baja
Acquisition  Corp. was merged with Baja, with Pacific Baja Light Metals Corp. as
the surviving corporation. The Registrant owns 100% of Pacific Baja Light Metals
Corp.
INDUSTRY BACKGROUND AND PRODUCT

1.       Products

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

  i.     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  returning to top dead centre  position  causes air to be sucked into the
engine through the carburetor. The


<PAGE>

                                                         3

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   turbochargers.   A
supercharger is essentially an air compressor which is driven by a belt from 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.   Turbochargers   perform  the  same  function  as
superchargers by delivering  positive air intake pressure through the carburetor
to the cylinders.  Unlike  superchargers,  turbochargers  are driven through the
pressure of exhaust gases exiting the engine.  Although turbochargers solve many
of the power and fuel consumption problems of superchargers they are designed to
work  efficiently  at speeds from 30,000 to 120,000  RPM.  Until the pressure of
exhaust gases spins the turbine blades of the turbocharger  above 30,000 RPM the
air flow to the  engine  is too slow  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 lack of power during the turbo lag period
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  turbochargers 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  provides  constant speed to  turbochargers  when
exhaust gases are insufficient to maintain  appropriate  turbocharger  rpms. The
Turbodyne System incorporates  brushless electric motors and clutch designs that
eliminate  wear  problems.  The  brushless  motor and an  electronic  controller
commute 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  engages and the shaft  rotates,  the clutch  assembly
transmits down the lead screw and engages the turbocharger. Upon acceleration of
the clutch

<PAGE>

                                                         4
assembly,  radial load is centered  using a clutch  piloting  bore. The motor is
activated by remote  sensors  that monitor the demand for power and  turboboost.
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 turbolag 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.  More  efficient
combustion  also results in better power  delivery and  elimination of turbolag.
ii. Turbopac Turbopac applies similar technology as the Turbodyne System to make
combustion more efficient in non-turbocharged vehicles by optimizing air to fuel
ratio.  Testing to date  indicates  that  Turbopac  extends the same benefits 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 by unskilled  mechanics without the need for precision
machining of a turbocharger.  The most significant aspect of Turbopac is that it
allows the Registrant to target much larger international markets because of its
ease of installation and ability to install on  non-turbocharged  engines.  iii.
Dynacharger  The  Dynacharger  is  the  Registrant's   newest  product.   It  is
essentially a Turbopac built into a turbocharger.  It was developed primarily as
a result of feedback from evaluations by potential  customers who indicated that
they would  prefer to see the  Turbodyne  Technology  built into a  turbocharger
rather than provided by an additional  component.  Its principal advantages over
the Turbodyne  System attached to a turbocharger  are in cost,  weight and space
economies.  Unlike the  Turbodyne  System,  it does not switch off after the lag
period but continues to

<PAGE>

                                                         5

provide additional rotational speed to the turbocharger.  It is more appropriate
for the  original  equipment  manufacturers  market than the after  market.  The
Registrant has also developed a product  described as a motor assisted  variable
geometry  turbocharging system ("Motoassist") which is essentially a Dynacharger
with a valve system to  concentrate  exhaust gases  resulting in faster  turbine
acceleration. 2. Proprietary Protection of Products The Registrant has filed and
will continue to file patent  applications for its products and inventions.  The
Registrant  has  made  patent  applications  for  its  Turbodyne  Technology  as
described below.  Except as indicated below,  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 the
Registrant's  original  Turbodyne Systems product.  This patent  application was
assigned by Mr. Halimi to the Registrant pursuant to an asset purchase agreement
between Mr. Halimi and the Registrant  dated August 18, 1993. The Registrant has
been advised by the U.S. Patent Office that all claims in respect of this patent
application  have been approved.  The Registrant 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 the
Registrant's  proprietary  Dynacharger  products.  The U.S.  Patent  Office  has
approved all claims with respect to the earlier of the patent applications.  The
Registrant  has  submitted  final  drawings  in respect of this  earlier  patent
application  and has paid the patent  issuance  fee required for the issuance of
the  formal  patent.  The  issue of the  formal  patent is  subject  only to the
acceptance of final drawings by the Patent Office.  Patents issued in respect of
the  Dynacharger  products will expire 20 years from the date of  application of
each patent.  The inventors have executed formal patent assignment  documents in
favour of the Registrant which have been submitted to the U.S. Patent Office for
registration.  The  Registrant  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 the  Registrant's
Turbopac  products.  The  Registrant has yet to receive any notice from the U.S.
Patent  Office  approving  or  disapproving  the  claims  made in  these  patent
applications. The inventors have executed formal patent assignments in favour of
the Registrant in respect of these patent applications which have been submitted
to the U.S. Patent Office for registration. The Registrant has agreed to pay a

<PAGE>

                                                         6
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.  Application  has also been made and will  continue  to be made
under international  Patent Treaties for international  patent protection of the
Registrant's  Turbodyne Technology as deemed appropriate by the Registrant.  The
Registrant's  policy is to diligently defend any infringement of its patents. To
date the Registrant has not encountered  any challenges or potential  challenges
of its patents.  The  Registrant  has not  established a fund for defense of its
patents but may do so if  significant  sales of its products are  achieved.  The
Registrant  also requires all  employees,  consultants  and persons or companies
involved in the testing of the Registrant's products to execute  confidentiality
agreements and to agree to keep  confidential  all proprietary  information with
respect to the  Registrant's  products.  3. Impact of  Government  Regulation on
Products  Emissions  standards for diesel engines are imposed in the U.S. by the
US  Environmental  Protection  Agency  (the "US  EPA)  and by  other  regulatory
agencies such as the California Air Resources Board ("CARB").  Testing indicates
that vehicles  equipped  with  Turbodyne  Products  meet the US EPA's  emissions
standards as specified in the 1990 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. The current  trend  towards more  stringent  government  regulation  of air
pollution indicates increasing demand for Turbodyne's products,  particularly in
the Original Equipment Manufacturing sector. Government regulations,  especially
in the environmental and safety areas, have impacted and will continue to impact
trucking  operations and equipment  specifications.  OEM  Manufacturers  for the
trucking  industry  will be required to ensure that there  products  comply with
these regulations. The Registrant believes that the incorporation of Turbodyne's
Technology will enable OEM  Manufacturers  to meet these  requirements for their
products. STAGE OF DEVELOPMENT 1. Status of Commercial Production The Registrant
considers the Turbodyne  System,  Turbopac and Dynacharger  products to be ready
for commercial production. The Registrant has commenced limited scale production
of the products at its facility in  Carpinteria,  California and is in the final
stages of tooling for  commercial  production  at Baja's  facility in La Mirada,
California, which is expected to commence concurrent with completion of the Baja
Acquisition.  To date,  Baja has been  producing  housings for the  Registrant's
products which are then assembled at the Carpinteria facility.


<PAGE>

                                                         7

Turbopac  specification  and design is essentially  complete.  The  Registrant's
engineering  staff are in the process of  finalizing  parts and vendor lists and
coordinating  delivery  schedules for all  components.  The Registrant  plans to
commence commercial production of Turbopac by the end of 1996. Milestones yet to
be completed prior to being ready for 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  by the end of 1996 or that the  products  will be
commercially successful.  The Registrant is close to completion of specification
and design for its  Dynacharger  product.  As many of the components and vendors
for the Dynacharger are consistent with Turbopac,  the  Registrant's  management
expects to ready the first  Dynacharger  model for production very shortly after
Turbopac,  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.   The  Registrant's  production  plan  calls  for  the
electronic  components of Turbopac and Dynacharger to be assembled and tested at
the  Registrant's  facility in  Carpinteria.  Final  assembly and testing of the
products  will be done at the Baja  facility in La Mirada.  The  Registrant  has
adequate space at its  Carpinteria  facility for these purposes and Baja intends
to commit  approximately  30,000  square  feet at its La Mirada  plant for final
assembly  and  inventory  of  Turbodyne  products.  The  Registrant  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.  The Registrant's limited production to date has been for the purposes
of meeting  requirements of potential customers and testing agencies undertaking
evaluations of the Registrant's  products.  The Registrant believes that testing
of its Turbodyne System,  Turbopac and Dynacharger products and final production
designs are substantially  complete.  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, the  Registrant has had no significant  sales of its
products.   2.  Product  Evaluations  The  Registrant  is  currently  completing
evaluation   programs  and  joint   development   programs  with  potential  OEM
manufacturing  customers. The Registrant's goal is to convince OEM Manufacturers
as to the  effectiveness  of the Turbodyne  Technology  and to enter into supply
ucontracts with these OEM manufacturers. 


<PAGE>
   
3. Distributorship Agreements    
On June 13, 1996,  the  Registrant  entered  into an  exclusive  distributorship
agreement (the "Grand Agreement") with Grand Technologies,
Inc. ("Grand") of Camarillo,  California. Under the terms of the Grand
Agreement,  Grand  will act as the exclusive  worldwide  distributor of the
Registrant's Turbopac products for the automotive and motorcycle gasoline engine
performance aftermarket. Under the terms of the Grand Agreement, Grand
is 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 maintatin its distributorship rights. The Registrant
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.
The Registrant has received purchase orders from Grand under the Grand
Agreement in excess of $9,000,000 to date. The Registrant has recently completed
the initial delivery of Turbopac products under this Grand Agreement.

The  Grand  Agreement does not restrict the  Registrant's  right to appoint

<PAGE>

other  distributors for aftermarket  applications  other than the automotive and
motorcycle  gasoline  engine  performance  aftermarket,   or  for  the  original
equipment manufacturer market.
The  Grand  Agreement  is for an  initial  term of three  years and will be
automatically  renewed,  subject to Grand  complying  with the terms of the
Grand Agreement, for successive two year periods.
There is no  assurance  the  Registrant  will be able to  supply  the  Turbodyne
Products ordered under the Grand Agreement.

Grand is a recently incorporated corporation formed for the purpose of 
marketing the Company's Turbopac products under the Grand Agreement and has no
history of prior sales. 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.
    
DEVELOPMENT COSTS TO DATE

The  Registrant  has been engaged  principally  in  researching  and  developing
products  incorporating  the Turbodyne  Technology  since the acquisition of the
Turbodyne  Technology in April, 1993. The Registrant's  research and development
policy is to  concentrate  the  business of  Turbodyne  Systems  exclusively  on
research and  development  of products  incorporating  the Turbodyne  Technology
until such time as the products are ready for commercial  production.  Turbodyne
Systems will continue research and development of further products incorporating
the Turbodyne Technology once commercial production commences.
The research and  development  costs incurred during the past three fiscal years
of the Registrant, and from incorporation to June 30, 1996 are as follows:

                         Inception, April 30, 1993         January 1, 1994 to
                         to December 31, 1993              December 31, 1994

Capital Assets                 44,500                            4,315



Product Development Costs      1,326,378                       492,982
Operating Costs                 112,142                        935,992

TOTAL                        1,483,020                       1,433,289


                          January 1, 1995 to               January 1, 1996 to
                          December 31, 1995                June 30, 1996

Capital Assets               481,850                            499,587
Product Development Costs    2,065,957                         1,815,521
Operating Costs              1,527,342                         1,081,407

TOTAL                        4,075,149                         3,396,515


                             Total From Inception,
                             April 30, 1993, to
                             June 30, 1996

Capital Assets                    1,030,252
Product Development Costs         5,700,838
Operating Costs                   3,656,883

TOTAL                            10,387,973




<PAGE>

                                                        10

ACQUISITION OF PACIFIC BAJA LIGHT METALS HOLDING, INC. ("Baja")

The  Registrant  agreed to acquire all of the issued and  outstanding  shares of
Baja pursuant to an agreement dated March 15, 1996 (the "Acquisition Agreement")
among the  Registrant,  Pacific Baja Light  Metals  Holding,  Inc.  ("Baja") and
Lenart Renberg,  Michael Joyce,  Sadayappa Durairaj Family Trust,  Naresh Saxena
and Mugerdish Balabanian (the "Principal Shareholders").  Under the terms of the
Acquisition   Agreement,   the  Registrant  paid  cash   consideration   to  the
shareholders  of Baja in the  amount of  $12,000,670  (U.S.)  and  issued to the
shareholders of Baja a total of 3,076,923  common shares of the Registrant.  The
common shares issued to the  shareholders of Baja were not registered  under the
Securities Act (1933). For accounting purposes, the total purchase price paid by
the Registrant  will be recorded at  $15,000,000  (U.S.) based on an independent
valuation report received by the Registrant. The Registrant and Baja have agreed
that all material  conditions  precedent to completion of the  acquisition  were
satisfied on July 2, 1996. The acquisition was formally  completed in September,
1996.
The Registrant has  incorporated  a  wholly-owned  subsidiary  under the Wyoming
Business  Corporations Act (hereinafter  referred to as "Acquisition  Corp.") in
order to complete the acquisition. Under the terms of the Acquisition Agreement,
Baja and Acquisition Corp.  entered into a merger agreement pursuant to sections
368(1)(A) and  368(a)(2)(D) of the US Federal  Internal Revenue Code pursuant to
which Baja and Acquisition Corp.  merged to form one corporation.  The surviving
corporation  is a  wholly-owned  subsidiary of the  Registrant and the share and
cash  consideration   referred  to  above  has  been  distributed  to  the  Baja
shareholders as part of the merger.
The Registrant  completed its obligation to pay $12,000,670 to the  shareholders
of Pacific Baja on completion of the Acquisition Agreement using the proceeds of
its Series 'A'  Special  Warrant  private  placement  financing.  The Series 'A'
Special  Warrant  private  placement  financing  consisted  of the  issue by the
Registrant of 3,750,000 Series A Special Warrants at a price of $5.00 per Series
A Special  Warrant  for total  proceeds  of  $18,750,000,  less  expenses of the
financing and  commissions.  The Series 'A' Special  Warrant  private  placement
financing is described in detail in Item 12 'Options to Purchase Securities from
Registrant or Subsidiaries'.

Baja is the owner of two  California  subsidiaries,  Baja Pacific  Light Metals,
Inc. and Optima Wheels, Inc. Baja also beneficially owns 100% of Baja Oriente SA
de CV as a Mexican  subsidiary  through which the group's Mexican operations are
conducted.  Formed in 1989,  Baja is a manufacturer  of permanent mould and sand
cast  aluminium  products,  both machined and raw, for automotive and industrial
applications.  Baja  produces  custom  wheels  for the  automotive  aftermarket,
manifolds,  compressor  housings and pedestals  manufactured on a contract basis
for  original  equipment  manufacturers  and  short  productions  runs  of  cast
aluminium products, including prototypes, for a variety of industrial customers.
Its  largest  operating  facility  is  an  Ensenada,   Mexico  (operating  as  a
maquiladora) facility providing finished machined and ready to assemble products
to customers.  Baja is one of a few aluminium foundries on the west coast of the
United  States.  Baja  employs some 100 people in  California  and 325 people in
Mexico.

<PAGE>

                                                        11
Baja's U.S.  headquarters and domestic  production  facilities are located in La
Mirada, CA in a 95,000 square foot leased facility.  The maquiladora  production
is located in Ensenada, Mexico in a 120,000 square foot leased facility which is
owned by certain  Pacific Baja's  shareholders.  The group's assets include full
sand cast and regular cast  aluminium  foundries in both Ensenada and La Mirada.
Baja owns  computer-numerically  controlled equipment,  transportation equipment
and other machinery  necessary for its business.  Baja sales are a mix of custom
wheels  and  other  automotive  parts  for the OEM  and  aftermarkets.  Contract
manufacturing  sales are to companies such as Allied  Signals,  Inc.'s  ("Allied
Signals") Garrett division, which manufacturers turbocharger systems for Class 8
trucks,  and Navistar  International  Transportation  Corporation  ("Navistar").
Approximately 26% of 1995 sales were to Allied Signals and a further 25% were to
a single distribution organization, Itco Tire Company.

Baja's business strategy is to enhance its contract manufacturing  operations by
obtaining   vehicle-  related  parts  contracts  with  up  to  five  substantial
organizations.  Discussions  with  Navistar  have been ongoing and Baja recently
obtained small production run orders from Navistar.  The trend in the automotive
and heavy equipment  manufacturing industry is for the consolidation of contract
part manufacturers to several dependable contract manufacturers.

For the six months ended June 30, 1996,  Baja had net income (before income tax)
of U.S.  $3,157,000  on sales of U.S.  $20,024,000.  The  total  purchase  price
represents   approximately   seven  times   earnings   (before  income  tax  and
amortization  (depreciation))  and approximately  one times sales,  based on the
financial  statements  of Baja for the year ending  December 31, 1995.  Baja has
been profitable  since 1992. The principal reason for the acquisition is to form
an  alliance  with  a  manufacturer   with  a  proven  track  record  of  volume
manufacturing of quality auto parts,  particularly in the turbocharger  field. A
number of potential customers who have been evaluating the Registrant's products
have  indicated  that such an  alliance  would have a  positive  impact on their
purchase  decision.  In addition,  the acquisition  will bring to the Registrant
personnel  experienced in manufacturing  and who have contacts with turbocharger
manufacturers and the potential  customers for the Registrant's  products.  Baja
currently manufactures the housings for the Registrant's Turbodyne, Turbopac and
Dynacharger products on a contract basis.

MARKETING

There are  essentially  two market sectors for the  Registrant's  products.  The
primary  market  is  the  OEM  (Original  Equipment  Manufacturer)  sector.  The
Registrant  hopes to convince  manufacturers  that its solution to turbo-lag and
emissions  problems  is best.  The  Registrant  would  attempt  to  license  the
Turbodyne Technology so that new vehicles would have factory-installed Turbodyne
products.  The units could be made by a supplier,  or the Registrant itself. The
secondary market is the "aftermarket," i.e., vehicles currently on the road. The
Registrant  proposes to sell its Turbodyne  System and  Dynacharger  products as
replacements for worn-out turbos,  or as an upgrade to a new vehicle's  standard
equipment.

<PAGE>

                                                        12
The  primary  OEM  market for  Turbodyne  System and  Dynacharger  products  are
manufacturers  of medium to heavy  diesel  engine  trucks.  The  Registrant  has
entered into a number of evaluation programs and joint development programs with
diesel truck and diesel engine  manufacturers with the objective of securing OEM
supply contracts under which the Turbodyne  System and the Dynacharger  products
will be incorporated  directly into new diesel trucks engines. An additional OEM
market  consists of small  manufacturing  companies that convert and upgrade new
vehicles from their original  factory  standards.  This market is anticipated to
grow as governement pollution regulations become more stringent.  The Registrant
believes that the key to its success will be obtaining a major  contract with an
original  equipment  manufacturer or aftermarket  company.  A marketing plan has
been designed to quickly  establish a wide  distribution of the Turbodyne System
and includes sales  materials such as brochures,  advertisements  and mail-outs.
Trade  shows  will be  attended  three or four  times  per year.  Sales  will be
solicited  through the assistance of marketing  departments of target  customers
which  will  be   followed  by   comprehensive   technical   presentations   and
demonstrations  to senior  management.  These  efforts  will be  directed to the
marketing  departments on the basis that the product will  contribute to vehicle
sales through  performance  enhancement and the reduction of emissions.  In this
way, both the OEM and after-  market levels can be pursued.  No assurance can be
given that the Registrant's marketing plan will be successful.

COMPETITION



The Registrant's competition to the Turbodyne Technology is summarized as
follows:

a.       existing turbocharger technology;

b.       existing supercharger technology; and

c.       other turbocharger enhancement technologies.

Conventional  turbocharging and supercharging  systems have achieved  commercial
and consumer  acceptance and are incorporated into existing automobile and truck
engines.  While the  Registrant  believes that its Turbodyne  Technology  offers
technical  and  performance   advantages   over  these  existing   technologies,
conventional  turbocharging and supercharging  systems will provide  competition
due to current market  acceptance and  established  product lines.  In addition,
refinement to current conventional  turbocharger and supercharger technology may
provide  additional  competition.  The  companies  currently  manufacturing  and
incorporating current conventional  turbocharging and supercharging systems have
more resources and are better financed than the Registrant.
The Registrant is unaware of any direct competition to the Turbodyne  Technology
in the form of competing turbocharger enhancement technologies,  other than from
current turbocharger and

<PAGE>

                                                        13

supercharger  technology and refinement to the existing technology.  There is no
assurance  that  competition  will not enter the industry upon  commencement  of
commercial production of products  incorporating the Turbodyne  Technology.  New
competition may have greater  resources and may be in better financial  position
than the Registrant.

1996 FISCAL YEAR PERIOD OPERATING PLAN

The Registrant  intends to complete the following  during the last six months of
its 1996 fiscal year and the first six months of its 1997 fiscal year:
         (a)      complete the acquisition of Baja;

(b) commence commercial production of the Registrant's Turbopac products;

(c) commence commercial production of the Registrant's Dynacharger products;

(d) secure contracts with Original Equipment Manufactures and major
retrofitters for
the commercial production and installation of the Registrant's products as 
original
equipment on diesel engines and diesel engine turbocharger products;

(e) continue the research and development of the Registrant's products and the
Turbodyne Technology;

(f) continue joint development and evaluation programs with Original Equipment
Manufacturers and major retrofitters with the objective of securing contracts 
with
Original Equipment Manufacturers and major retrofitters; and

(g) to manufacture and deliver the Turbopac products required to fill the
 purchase
orders received under the Registrant's agreement with Granatelli.

EMPLOYEES

As of October 31,  1996,  Turbodyne  Systems had 34 full-time  employees  and 13
consultants  and  Baja  had  approximately   425  employees.   The  Registrant's
relationship with its employees is satisfactory. Item 2. Description of Property
The  administrative  head office of the Registrant 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
Registrant's  monthly  rent  is  $2,500  (Cdn.).  See  Item  13 -  "Interest  of
Management in Certain Transactions". 

<PAGE>

                                                        14

The  Registrant's  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  Registrant's  monthly  rent is $15,000
(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  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
There are no material  legal  proceedings in progress or to the knowledge of the
Registrant, pending or threatened to which the Registrant is a party or to which
any of its properties is subject.

Item 4.           Control of Registrant

1. As far as is known to the  Registrant,  and except as disclosed  herein,  the
Registrant  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 October  31,  1996,  information  with
respect to (i) any person who is known to the Registrant to be the owner of more
than 10% of any class of the Registrant's  voting  securities and (ii) the total
amount of the class of the Registrant's  voting securities owned by the officers
and directors and by the directors and officers as a group:

                                                                   Percent of
Director/Officer                    Amount Owned                    Class(1)

Edward Halimi                       3,524,800 common shares(2)       15.04%
President &                         0  options
Director

Leon Nowek                          909,554 common shares(3)          3.88%
Director                            0  options



<PAGE>

                                                        
Daniel Geronazzo                    0     common shares                0.00%
Director                            115,000 options

Wendell R. Anderson                 1,000 common shares                0.005%
Director                            50,000 options

Eugene A. Hodgson                   1,000 common shares                0.005%
Director                             75,000 options

Robert F. Taylor                    0 common shares                    0.00%
Director                            50,000  options

Richard Donaldson                   0   common shares                 0.00%
Secretary                           0   options

Officers and Directors             4,436,354 common shares             18.93%
as a Group (7 persons)             290,000 options


(1)      Based upon 23,436,319 common shares issued and outstanding as at
August 13, 1996.

(2)      This figure includes 3,250,000 escrow shares held in the name of
 March Technologies Inc., a private company controlled by Mr. Halimi.

(3)      This figure includes 900,000 escrow  shares held in the name of L.N. 
Family Holdings Inc., a private company  controlled by Mr. Nowek.

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

Item 5.           Nature of Trading Market

The common shares of the Registrant  are listed on the Vancouver  Stock Exchange
in British Columbia,  Canada. The Registrant's  shares are not currently trading
on any United  States stock  exchange or in the  over-the-counter  market,  and,
accordingly,  there is  currently  no public  market for the common stock of the
Registrant in the United States.  There can be no assurance that any such market
will develop after the effective date of this Registration Statement.

As of November 6, 1996, the Registrant's share register indicates that 9,272,063
of the issued and outstanding  common shares were held by 61  shareholders  with
addresses in the United States.

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.

<PAGE>

                                                       



Year and Month                                         High*            Low*

July 1, 1996 - September 30, 1996                      $12.80           $ 9.00
April 1, 1996 - June  30, 1996                         $15.00           $ 8.50
January 1, 1996 - March 31, 1996                      $12.875           $ 4.90
October 1, 1995 - December 31, 1995                    $ 5.75           $ 4.10
July 1, 1995 - Sept 30, 1995                          $ 5.625           $ 3.30
April 1, 1995 - June 30, 1995                         $ 6.75            $ 1.21
January 1, 1995 - March 31, 1995                       $ 1.90           $ 0.30
October 1, 1994 - December 31, 1994                    $ 0.63           $ 0.28
July 1, 1994 - September 30, 1994                      $ 0.74           $ 0.37
April 1, 1994 - June  30, 1994                          $0.90            $0.45
January 1, 1994 - March 31, 1994                        $1.08            $0.36

* As quoted by the Vancouver Stock Exchange.  Expressed in Canadian dollars.


Item 6.           Exchange Controls and Other
                  Limitations Affecting Securities Holders

Except as  discussed  in Item 7, the  Registrant  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 Registrant 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 Memorandum or Articles of the Registrant.

The Investment Canada Act (the "Act") governs  acquisitions of Canadian business
by a non- Canadian person or entity. The Act provides, among other things, for a
review of an investment in certain Canadian  businesses  having in excess of $25
million in gross assets.

The Act provides that a United States  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 United States 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).  If a United  States  investor  wishes  to  acquire
"control"  of a  Canadian  corporation,  such  investor  is  required  to obtain
approval if the asset value of the corporation is greater than  $25,000,000.  If
the asset value of the  corporation  at the time of the proposed  acquisition is
less than $25,000,000,  the investor wishing to acquire "control" need only file
a form  indicating his or her  intentions.  The Act also provides that if United
States  investors   collectively  hold  greater  than  50%  of  the  issued  and
outstanding  shares of the corporation,  there is a rebuttable  presumption that
the  corporation's  status has changed to that of an American  corporation.  The
effect  of the  change in status is that if the  control  of the  Registrant  is
deemed to be held by United States

<PAGE>

                                                        17

investors, and if the Registrant then wished to make investments of greater than
$25,000,000 in Canada, it would need governmental approval.

Item 7.           Taxation

Security  holders who are  residents of the United  States and not  residents of
Canada ("Non- Resident Security  Holders"),  and who do not carry on business in
Canada  through  a  permanent  establishment  or  perform  independent  personal
services  from a fixed  base in Canada to which the  shares of the  Non-Resident
Security  Holder are effectively  connected,  will be subject to Canadian income
tax at the rate of 10% on the gross amount of dividends  paid by the  Registrant
if the Non- Resident  Security Holder is a company which owns a least 10% of the
voting stock of the Registrant,  and 15% of the gross amount of the dividends in
all other cases.  Such tax is deducted at source and remitted to Revenue  Canada
on behalf of the Non-Resident Security Holders.

If a  Non-Resident  Security  Holder  carries on  business  in Canada  through a
"permanent establishment" or performs independent personal services from a fixed
base in Canada,  and the holding of shares in respect of which the dividends are
paid is effectively  connected with such permanent  establishment or fixed base,
the limitations set out in the preceding paragraph will not apply.  Instead, the
dividends  will be  taxed  using  the  rates  and  rules of  taxation  generally
applicable to residents of Canada.

For present purposes,  a "permanent  establishment"  of a Non-Resident  Security
Holder can generally be described as a fixed place of business through which the
business of a resident is wholly or partly carried on.

Non-Resident  Security  Holders  who hold  shares of the  Registrant  as capital
property are not subject to Canadian tax on any gain realized on the disposition
of such shares,  provided the shares are not "taxable  Canadian  property".  The
shares will be taxable  Canadian  property if the Non- Resident  Security Holder
disposing of such shares,  together  with parties  related to the Non-  Resident
Security Holder, have owned more than 25% of the issued shares of the Registrant
in the five years  immediately  preceding the  disposition  of the shares.  If a
Non-Resident  Security Holder together with related parties have owned more than
25% of the shares of the Registrant in the five years immediately  preceding the
disposition of such shares,  such security  holder will be subject to tax on the
capital gain arising on the  disposition  of the shares under the  provisions of
the  Income Tax Act  (Canada).  However,  the  Canada/United  States  Income Tax
Convention  (1980)  (the  "Convention")  will exempt the  Non-Resident  Security
Holder from the payment of Canadian income tax arising on the disposition of the
shares  provided the  Non-Resident  Security Holder was not a resident of Canada
for 120 months during the 20 consecutive  years preceding the disposition of the
shares,  and, if such is the case, the  Non-Resident  Security  Holder was not a
resident of Canada at any time  during the 10 years  immediately  preceding  the
disposition of the shares.

If a  Non-Resident  Security  Holder holds shares of the  Registrant  as capital
property  that  constitutes  taxable  Canadian  property,  and the  gains on the
disposition of such property are not protected  from Canadian  income tax by the
provisions of the  Convention,  the income of the Non- Resident  Security Holder
for the year in Canada will include the gains  realized from the  disposition of
the shares.  The gain is the  difference of the proceeds of  disposition  of the
share and their "adjusted cost base",  as determined  pursuant to the provisions
of the Income Tax Act (Canada). Three quarters of the gain is taxable.

Item 8.           Selected Financial Data

Financial Statements for the Registrant

The following selected financial information is for the completed fiscal periods
following  the  Registrant's  reverse  takeover of Turbodyne  Systems Inc.  This
information  should be read in conjunction  with such  Financial  Statements and
notes  thereto  included   elsewhere  in  this   Registration   Statement.   The
Registrant's  Financial  Statements are prepared according to Canadian Generally
Accepted  Accounting   Principles   (CGAAP).   In  addition,   the  Registrant's
accountants  have  reconciled  the Financial  Statements  for the periods ending
December 31, 1993, December 31, 1994, December 31, 1995, March 31, 1996 and June
30, 1996 in accordance with U.S.  Generally Accepted  Accounting  Principles (US
GAAP). The reconciliation is contained in the notes to the financial statements.

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.  Turbodyne  Systems was
acquired by the  Registrant  effective  March 8, 1994  pursuant to an  agreement
between the  Registrant  and Edward M. Halimi dated July 15, 1993 and amended by
amendment agreements dated October 1, 1993 and December 31, 1993.

To date, the  Registrant  has not paid any dividends on its common  shares.  The
Registrant'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  conditions of the  Registrant  and such other factors as the Board of
Directors of the  Registrant may consider  appropriate.  Since the Registrant is
currently in an expansion  stage, it is unlikely that earnings will be available
for the payment of dividends in the near future.

<PAGE>

                                                        18


Statement of Operations Data for the Registrant (Canadian GAAP)

                           January 1/96 to
                           June 30/96
                           (Cdn. $)

Gross Revenue              nil

Net Loss for                        $1,081,407
Period

Net Loss Per                        $0.07
Share

                           January 1/95 to                   January 1/94 to
                           December 31/95                     December 31/94
                           (Cdn. $)                                    (Cdn. $)

Gross Revenue              nil                                nil

Net Loss for                        $1,527,342                $935,992
Period

Net Loss Per                        $0.16                      $0.18
Share

                           April 30/93 to
                           Dec 31/93
                           (Cdn. $)

Gross Revenue              nil

Net Loss for                        $122,142
Period

Net Loss Per                        $0.06
Share



<PAGE>

                                                        19




Balance Sheet Data for the Registrant (Canadian GAAP)

                           June 30/96
                           (Cdn. $)

Total Assets                        $10,325,940

Working Capital                     $ 2,198,608

Long Term                  $   113,647
Liabilities

Total Liabilities                   $   587,849

Shareholder's                       $9,738,091
Equity

                           December 31/95            December 31/94
                           (Cdn. $)                           (Cdn. $)

Total Assets                        $5,201,899                $1,899,016

Working Capital                     $ 82,495                  ($426,910)

Long Term                  $ 20,010                  nil
Liabilities

Total Liabilities                   $503,122                  $458,451

Shareholder's                       $4,698,777                $1,440,565
Equity



<PAGE>

                                                        20


Statement of Operations Data for the Registrant (U.S. GAAP)

                           Jan 1/96 to
                           June 30/96
                           (Cdn. $)

Gross Revenue              nil

Net Loss for                        $2,896,928
Period

Net Loss Per                        $0.19
Share
                           Jan 1/95 to                        Jan1/94 to
                           Dec 31/95                          Dec 31/94
                           (Cdn. $)                           (Cdn. $)

Gross Revenue              nil                                 nil

Net Loss for                        $3,593,299               $1,428,974
Period

Net Loss Per                        $0.37                         $0.28
Share
                           April 30/93 to
                           Dec 31/93
                           (Cdn. $)

Gross Revenue              nil

Net Loss for                        $ 291,633
Period

Net Loss Per                        $0.14
Share



<PAGE>

                                                        21


Balance Sheet Data for the Registrant (U.S. GAAP)


                           June 30/96
                           (Cdn. $)

Total Assets                        $4,625,102

Working Capital                     $2,198,608

Long Term                  $   113,647
Liabilities

Total Liabilities                   $   587,849

Shareholder's                       $4,037,253
Equity


                           Dec 31/95                 Dec 31/94
                           (Cdn. $)                           (Cdn. $)

Total Assets                        $1,316,572                         $ 79,656

Working Capital                     $ 82,485                  ($426,910)
(deficit)

Long Term                  $ 20,010                  nil
Liabilities

Total Liabilities                   $503,122                  $458,451

Shareholder's                       ($813,460)                 ($378,451)
Equity (deficit)




<PAGE>

                                                        22


                           Dec 31/93
                           (Cdn. $)

Total Assets                        $ 44,500

Working Capital                     ($336,132)
(deficit)

Long Term                   nil
Liabilities

Total Liabilities                    $336,132

Shareholder's                       ($291,633)
Equity (deficit)

Financial information for the Registrant as of June 30, 1996 is unaudited.


Financial Statements for Baja

The following selected financial information for the completed fiscal periods of
Baja is derived from the Financial  Statements of Baja. This information  should
be read in conjunction with such Financial Statements and notes thereto included
elsewhere in this Registration Statement.  The Registrant's Financial Statements
are  prepared  according  to  U.S.  Generally  Accepted  Accounting  Principles.
Financial  information  for  Baja as of June  30,  1996 is  based  on  unaudited
financial statements prepared by management of Baja.



<PAGE>

                                                        

Statement of Operations Data (U.S. GAAP) for Baja

                           Jan 1/96 to                        Jan 1/95 to
                           June 30/96                         Dec 31/95
                           (U.S. $)                           (U.S. $)

Gross Revenue              $20,024,000                        $28,986,000

Net Income for                      $ 1,894,000               $   815,000
Period


                           Jan 1/94 to                        Jan 1/93 to
                           Dec 31/94                          Dec 31/93
                           (U.S. $)                           (U.S. $)

Gross Revenue              $19,392,000                        $13,871,000

Net Income for                      $    480,000             $   245,000
Period





<PAGE>

                                                       

Balance Sheet Data (U.S. GAAP) for Baja

                           June 30/96                         Dec 31/95
                           (U.S. $)                           (U.S. $)

Total Assets                        $18,773,000                 $16,118,000

Working Capital                     $     225,000               ($ 1,019,000)
(deficit)

Long Term                           $ 1,655,000                  $ 2,177,000
Liabilities

Total Liabilities                   $12,028,000                   $11,307,000

Shareholder's                       $ 6,705,000                   $4,811,000
Equity

                           Dec 31/94
                           (U.S. $)

Total Assets                        $12,213,000

Working Capital                     $343,000

Long Term                           $ 922,000
Liabilities

Total Liabilities                   $8,217,000

Shareholder's                       $3,996,000
Equity





<PAGE>

                                                        

Pro Forma Financial Statement for Registrant

The Registrant's auditors have prepared an unaudited pro-forma balance sheet and
an unaudited pro-forma consolidated statement of operations,  reconciled to U.S.
GAAP,  for the  Registrant  and Baja as of June 30, 1996 based on the  unaudited
financial statements of each of the Registrant and Baja as of June 30, 1996. The
Pro Forma Financial  Statements  assume the completion of the acquisition by the
Registrant of Baja and the completion of each of the Series 'A' Special  Warrant
and Series 'C' Special Warrant private placement financings as described in Item
12 'Options to Purchase  Securities  from  Registrant or  Subsidiaries',  on the
basis set forth in Note 1 'Organization and Basis of Presentations' in the notes
to the Pro Forma Financial  Statement.  Selected financial  information from the
consolidated financial statements is summarized below:

                                                     June 30, 1996
                                                     (U.S.$)

Total Assets                                               $35,470,614
Working Capital                                               $  6,887,819
Long Term Liabilities                                         $  1,738,337
Total Liabilities                                             $ 12,459,068
Shareholder's Equity                                           $23,011,096

Net Sales                                            $20,024,000
Net Income (loss)                                             $   (450,766)


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$/US$)
June 30, 1996              1.3637                    1.3613 (CDN$/US$)



<PAGE>

                                                        26



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 Registration Statement.

Results of Operations

Since the  acquisition  of the Turbodyne  Technology in April,  1993,  Turbodyne
Systems has been engaged  principally  in researching  and  developing  products
incorporating  the Turbodyne  Techology to enhance engine  perfomance and reduce
emissions of internal  combustion  engines.  The development of the Registrant's
Turbodyne System, Turbopac and Dynacharger products are essentially complete and
the  Registrant  is  now  tooling  for  the  commercial  production.  While  the
Registrant has undertaken  low volume  production of its products,  the products
produced  have been  primarily  used for testing and  evaluation  products  with
potential industry Original Equipment Manufacturer and major retrofit customers.
The Registrant  does not have any revenues from its products to the date of this
Registration  Statement  and  has  expended  $10,924,008  to  June  30,  1996 as
development costs for the Turbodyne products.
Liquidity and Capital Resources


The  operating  expenses  of the  Registrant  will  increase  as the  Registrant
finalizes its preparations for commercial  production of the Turbodyne products.
The  Registrant  believes  that  its  working  capital  upon  completion  of the
acquisition  of Baja will be  sufficient  to fund carry out its  operating  plan
through to mid-1997.
The liquidity of the Registrant will be affected if the Registrant is unable to:

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

(b) acheive sales of its Turbodyne  products directly to after-market  customers
at commercially viable rates.

The  Registrant is using its best efforts to enter into  contracts with Original
Equipment  Manufacturers  and major  retrofitters  for the  incorporation of its
Turbodyne products. The


<PAGE>

                                                        
Registrant  has received  purchase  orders in excess of $9,000,000  U.S. for its
after-market  products under its  distribution  agreement with  Granatelli.  The
liquidity  of the  Registrant  will be affected if the  Registrant  is unable to
commence  commercial  production of its products in time to meet these  purchase
orders.

The  Registrant  has financed its  operations  to date,  including  research and
development activities,  general and administrative expenditures, and evaluation
and joint development programs, from the sale of equity securities.  The initial
acquisition  of the  Turbodyne  Technology  was  completed  by reverse  takeover
whereby the Registrant  issued  1,000,000  common shares to the  shareholders of
Turbodyne Systems in order to acquire Turbodyne Systems.


The Registrant's  projection of its working capital being sufficient to fund its
operating plan to mid-1997 is exclusive of any funds which may be available from
the  business  of  Baja  after  completion  of  the  acquisition  of  Baja.  The
Registrant's  intent  is to keep the cash  flow  for the Baja  business  for the
operation and expansion of the Baja business.  The Registrant does not intend to
use the cash flow from the Baja business to fund the Turbodyne business.


Item 10.          Directors and Officers of the Registrant

The following table sets forth all current  directors and executive  officers of
the  Registrant,  with each position and office held by them in the  Registrant,
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
& Promoter

LEON E. NOWEK                       39                      October 18, 1993
Surrey, British Columbia
Director

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


<PAGE>


RICHARD W. DONALDSON              57                         October 18, 1993
Palm Desert, California
Secretary

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
Calgary, Alberta
Director

Edward Halimi is the President and Chief Executive Officer of the Registrant 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 Registrant  and has an accounting  background
and is  responsible  for corporate  finance,  finance  reporting and  regulatory
compliance.  He was appointed as a director of the Registrant 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 Registrant. 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 Registrant.  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  practise
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

<PAGE>



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.

Richard W. Donaldson is the secretary of the Registrant. He was appointed as the
secretary on October 18, 1993. Mr.  Donaldson has been a  self-employed  private
investor since 1978.

Eugene  A.  Hodgson  is  a  director  of  the  Registrant.   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 is a director of the Registrant.  Mr. Taylor is also a director
of Shell Canada Products.  Mr. Taylor is a chartered  accountant and is a member
of the Institute of Chartered  Accountants  of Alberta,  Canada.  Mr. Taylor was
appointed  president of Shell Canada  Products in 1993 and has served in various
capacities with Shell since 1967 in Calgary, Toronto and London, England.

Edward M.  Halimi and Leon E. Nowek  presently  devote 100% of their time to the
business of the Registrant. Daniel Geronazzo, Richard W. Donaldson and Robert F.
Taylor devote such  percentage of their time as is required by the Registrant to
the  business of the  Registrant.  Eugene A.  Hodgson  devotes a majority of his
business time to the business of the Registrant.

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.


MICHAEL J. JOYCE. Michael J. Joyce (52) is employed as President of Pacific Baja
Light Metals Corp. Mr. Joyce  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 to joining Baja in 1990, Mr. Joyce was Group
President of a major automotive supplier.

<PAGE>


LENNERT RENBERG.  Lennert Renberg (52) is the production and operations  manager
of Pacific Baj Light Metals Corp. Mr. Renberg possesses over 30 years experience
in both the "tool and die"  industry as well as aluminum  foundry.  Mr.  Renberg
owned and operated a tool and die  business  and an aluminum  foundry in the Los
Angeles area.

Item 11.          Compensation of Directors and Officers

The Registrant does not compensate directors for acting solely as directors.

The  Registrant  pays a salary of $60,000  per year to Mr.  Edward M.  Halimi as
President of the Registrant. Mr. Halimi was paid a salary of $60,000 per year in
1994 and  1995  and was  granted  options  to  purchase  500,000  shares  of the
Registrant in 1995. 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  Registrant's  shares for the period  immediately
prior to granting of the options.  Mr. Halimi did not receive any share purchase
options in 1994.

The Registrant is party to a management services agreement with Seeds Investment
Corporation ("Seeds") whereby the Registrant pays to Seeds a total of $2,500 per
month in  consideration  of Seeds  providing the management  services of Leon E.
Nowek to the Registrant.  Seeds is a private British Columbia company controlled
by Leon E. Nowek, a director of the Registrant.

In aggregate, the Registrant and its subsidiary, Turbodyne Systems, paid a total
of $90,000 to its directors and officers for services in all  capacities  during
its last fiscal year of the Registrant, ending December 31, 1995.

Item 12.          Options to Purchase Securities
                  from Registrant or Subsidiaries

As at October 31, 1996 the Registrant had outstanding options to purchase common
shares as follows:

Number of Shares                   Exercise Price        Expiry Date

 80,000                             $1.65                 April 20, 1997
265,000                             $4.20                 July 28, 1997
424,000                             $4.66                 December 27, 1997
250,000                             $4.75                 August 17, 1997
531,500                             $7.13                 February 27, 1998
475,000                             $ 9.00                September 3, 1998
305,000                             $ 9.00                September 9, 1998

<PAGE>


The  officers and  directors as a group hold an aggregate of 290,000  options to
purchase common shares.

The  granting  of options  by the  Registrant  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 Registrant has outstanding as of October 31, 1996, non-transferable warrants
to purchase  476,518  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  Registrant  issuable  upon  the  exercise  of the  warranty  in
connection with each private placement:

Number of Shares    Exercise Price of Warrants          Warrants Expiry Date


30,000                     $4.27                           Nov 24/96
24,752                     $4.14                           Dec 1/96
30,000                     $3.89                           Dec 5/96
27,027                     $3.80                           Dec 7/96
25,000                     $4.10                           Dec 18/96
23,530                     $4.35                           Jan 2/97
23,529                     $4.35                           Jan 18/97
23,529                     $4.35                           Jan 22/97
23,529                     $4.35                           Feb 1/97
19,047                     $5.35                           Feb 12/97
31,348                     $6.48                           Feb 23/97
15,873                     $6.40                           Feb 28/97
14,925                     $6.80                           Mar 5/97
15,948                     $6.37                           Mar 12/97
43,416                     $7.01                           Mar 15/97
13,793                     $7.35                           Mar 18/97
45,368                     $7.55                           Mar 19/97
12,562                     $8.06                           Mar 21/97
33,333                     $9.00                           Sept 3/97

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

The Registrant has completed a private placement of Series "A" special warrants,
as described  below,  in order to complete the  acquisition of Pacific Baja. The
Series "A" Special Warrant 

<PAGE>


Private  Placement  was a brokered  private  placement,  the terms of which were
determined by negotiation  between the Registrant and its underwriters,  subject
to the policies of the Vancouver Stock Exchange.  The proceeds of the Series "A"
Special  Warrant  private  placement in the amount of  $18,750,000  were held in
escrow by the Registrant's  registrar and transfer agent, Montreal Trust Company
of  Canada,  pending  completion  of the  acquisition  of  Pacific  Baja  by the
Registrant  in  accordance  with the  terms of the  Acquisition  Agreement.  The
proceeds of the Series "A" Special Warrant private  placement,  less expenses of
the  underwriters,  were  released  to  the  Registrant  on  completion  of  the
acquisition  of Baja and were used to pay the cash  portion  of the  acquisition
price to the Baja shareholders.

The  securities  issued  pursuant  to the Series  "A"  Special  Warrant  private
placement  consisted of a total of 3,750,000  Series "A" Special Warrants issued
by the  Registrant at a price of $5.00 per Series "A" Special  Warrant for total
proceeds of $18,750,000. Each Series "A" Special Warrant is exercisable into one
unit (an "A-Unit") of the Registrant for no additional consideration at any time
prior  to  July 2,  1997.  Each  A-Unit  consists  of one  common  share  of the
Registrant and one transferable  share purchase warrant (an  "A-Warrant").  Each
whole  A-Warrant  entitles the  subscriber to purchase a further common share of
the Registrant for a price of $5.50 per share at any time prior to July 2, 1997.
The price of the Series 'A' Special  Warrants  was  determined  by  negotiations
between the Registrant and its  underwriters on November 1, 1995. The negotiated
price was in compliance  with the policies of the Vancouver Stock Exchange which
required  the price to be no less than 15% less  than the  closing  price of the
Company's  shares,  as  traded  on the  VSE,  on the day  prior  to the  private
placement  announcement.  The Registrant is obligated to use its best efforts to
qualify the  distribution of the Series 'A' Special  Warrants by the filing of a
prospectus in the Provinces of British Columbia, Manitoba and Ontario.

The Series "A" 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 A-Units in the Provinces of British Columbia, Manitoba and Ontario; and

          (b)     the first anniversary of the closing of the financing.

The Registrant  intends to file a prospectus with the securities  commissions in
the Provinces of British Columbia,  Manitoba and Ontario in order to qualify for
re-sale  within these  provinces of the  4,125,000  common  shares and 4,125,000
A-Warrants  to be issued  to the  subscribers  of the  Registrant's  Series 'A'
Special  Warrant  private  placement  upon  conversion of the Series "A" Special
Warrants  .  Upon  issue  of a final  prospectus  receipt  by each of the  above
securities  commissions,  the 4,125,000  common shares and 4,125,000  A-Warrants
will be freely tradable within the Provinces of British  Columbia,  Manitoba and
Ontario,   subject  to  additional   restrictions  under  applicable  securities
legislations. If receipts for a final prospectus are not obtained, the 4,125,000
common  shares and  4,125,000  A-Warrants  will be subject to a hold  period and
additional  restrictions under applicable securities  legislation until at least
July 2, 1997. As the  Registrant was unable to qualify the  distribution  of the
common shares and A-Warrants by October
<PAGE>


2, 1996,  by the filing of a  prospectus,  as  described  above,  the Series "A"
Special  Warrants are convertible into one common share and one whole A-Warrant.
If the  Registrant  had been able to qualify the Series "A" Special  Warrants by
the filing of a  prospectus,  as described  above,  by September  30, 1996,  the
Series "A" Special  Warrants would have been  convertible  into one common share
and one-half of one A-Warrant.

At the election of the  underwriters  who  completed  the  Registrant's  special
warrant private  placement,  a total of 375,000 Series "A" Special Warrants were
issued to the underwriters in lieu of cash commissions  payable on completion of
the private  placement.  A total of 375,000 common shares and 375,000 A-Warrants
may be issued by the Registrant to the  underwriters  upon the conversion of the
Series "A" Special Warrants by the underwriters.

On April 2, 1996, the Registrant announced a private placement of 155,000 Series
'B" special warrants at a price of $12.00 per Series "B" Special Warrant,  based
on the closing price of the  Registrant's  shares prior to  announcement  of the
private placement.  The private placement of Series 'B' special warrants did not
complete due to the exercise by the  subscribers  of certain  retraction  rights
negotiated between the Registrant and its underwriters.

On August 19,  1996,  the  Registrant  announced a private  placement of 500,000
Series 'C' Special  Warrants to be issued by the  Registrant at a price of $9.00
per Series 'C' Special  Warrant for a total proceeds of $4,500,000.  Each Series
'C'  Special  Warrant  will be  exercisable  into one unit (a  'C-Unit')  of the
Registrant  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 Registrant  and one half of one  transferable
share purchase  warrant (a 'C- Warrant').  Each whole C-Warrant will entitle the
subscriber to purchase a further  Common Share of the Registrant at the price of
$9.50 per share at any time  prior to the one year  anniversary  of the issue of
the  Series  'C'  Special  Warrants.  At the  option  of the  Agent  who will be
completing the  Registrant's  Series 'C' Special  Warrant Private  Placement,  a
total of up to 50,000 Series 'C' Special  Warrants may be issued to the Agent in
lieu of cash commission payable on completion of the private  placement.  In the
event the Agent  elects to receive  payment in Series 'C'  Special  Warrants,  a
total of 50,000 Common Shares of the  Registrant  and 50,000  C-Warrants  may be
issued by the Registrant upon exercise of the Series 'C' Special Warrants.

The  difference in the offering  price of the Series 'A',  Series 'B' and Series
'C' special warrant private placements  announced by the Registrant is accounted
for by the variations of the Registrant's share price as traded on the Vancouver
Stock  Exchange.  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 Registrant is 15%
from the market price of the  Registrant's  shares,  assuming  the  Registrant's
shares are trading at a price greater than $2.00 per share.


<PAGE>

Item 13.          Interest of Management in Certain Transactions

Material Agreements

Edward  M.  Halimi,  a  director  of  the  Registrant,  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 Registrant  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 Registrant issued 1,000,000 common shares to Halimi.

Pursuant to an agreement  between the Registrant and  Centrepoint  Equities Inc.
("Centrepoint"),   the  Registrant   pays   Centrepoint   $2,500  per  month  in
consideration  of  Centrepoint   providing  office  space  and  secretarial  and
reception services to the Registrant.  During the fiscal year ended December 31,
1995 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 Registrant.

For the year  ended  December  31,  1995,  the  Registrant  also paid a total of
$30,000 to Seeds  Investment  Corporation  ("Seeds"),  in consideration of Seeds
providing management services to the Registrant at a salary of $2,500 per month.
Seeds is a private  British  Columbia  company  controlled  by Leon E. Nowek,  a
director of the Registrant.

Stock Options

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


                                                      PART II


Item 14.          Description of Securities to be Registered

The class of capital stock of the Registrant being registered hereby is the 
Registrant's common shares.

The issued and outstanding share capital of the Registrant is summarized as
 follow:


SHARE CAPITAL STRUCTURE


<PAGE>


The authorized  capital of the Registrant  consists of 100,000,000 common shares
without par value, 100,000,000 Class A preference shares with a par value of $10
per share and 100,000,000  Class B preference shares with a par value of $50 per
share.  As of June 30, 1996,  being the date of the most recent balance sheet of
the  Registrant  included in this  Registrant,  20,218,566  of the  Registrant's
common  shares  have been  issued and are  outstanding.  As of November 6, 1996,
23,436,319  of  the  Registrant's   common  shares  have  been  issued  and  are
outstanding.  None of the Registrant's Class A or Class B preference shares have
been issued or are outstanding.

Each of the common shares has equal  dividend,  liquidation  and voting  rights.
Holders of the common  shares are  entitled to one vote per share on all matters
that may be brought  before them.  Holders of the common  shares are entitled to
receive  dividends  when  declared by the Board of Directors  from funds legally
available  therefor.  The common shares are not  redeemable,  have no conversion
rights and carry no  pre-emptive  or other  rights to subscribe  for  additional
shares.  The outstanding  common shares are fully paid and  non-assessable.  The
Articles of the Registrant contain  provisions  granting certain priorities over
the holders of the common  shares to the  holders of the  classes of  preference
shares in the event of liquidation, dissolution or winding-up of the Registrant.

As a  reporting  issuer  in  British  Columbia  listed  on the  Vancouver  Stock
Exchange,  the  Registrant  is  governed  by  securities  laws  and  regulations
applicable in British Columbia and the policies of the Vancouver Stock Exchange.
Certain  regulations  of British  Columbia and the Vancouver  Stock Exchange set
forth  distinctions  between  "free  trading  common  shares" and common  shares
required to be placed in escrow or in a "pool".  Free trading  common shares are
not subject to any restrictions on resale,  and can be traded without regulatory
approval.  Free trading shares are generally  qualified by way of prospectus and
issued to the public. Conversely, shares issued by way of "private placement" to
certain  investors and not the public,  are usually  subject to a one- year hold
period and cannot be traded until the relevant hold period has expired. Once the
hold period expires, the shares would then become free trading shares. Under the
policies of the Vancouver Stock  Exchange,  a listed company is entitled to sell
"performance  shares" to its principals at a minimum price of $0.01 per share on
its original  organization,  or if the company is inactive,  then upon a reverse
takeover transaction or a substantial  corporate  reorganization,  provided that
the number of  performance  shareholders  not exceed 65% of the issuer's  shares
then  outstanding.  The principals of the company receiving  performance  shares
must pay for the performance shares at the price approved by the company and the
Vancouver  Stock  Exchange.  The  shares  are then  placed  in  escrow  with the
company's  escrow  agent  and  released  in  accordance  with  certain  earnings
performance  criteria to be met by the company.  Any of these escrow shares that
are not released within 10 years of issuance are cancelled.

As of November 6, 1996, the Registrant's issued and outstanding common shares 
consist of the following:

a.        none of the Registrant's shares were held in pool;

<PAGE>


b.    4,150,000 of the Registrant's common shares are held in escrow as 
      performance shares;

c.    18,809,801 common shares were free-trading common shares; and

d.    476,518 common shares were subject to varying hold terms pursuant to the 
      policies of the Vancouver Stock Exchange.

The Registrant issued the 4,125,000  performance  shares at a price of $0.01 per
common share at the time of the completion of the Registrant's  reverse takeover
of Turbodyne Systems (the "Reverse Take Over"). The performance shares are owned
as follows:

March Technologies Inc.*                                      3,250,000
L.N. Family Holdings Inc.**                                      900,000

* All of the voting shares of March  Technologies Inc. are beneficially owned by
Edward  Halimi,   President,   Chief  Executive  Officer  and  Director  of  the
Registrant.

** All of the voting shares of L.N. Family Holdings Inc. are beneficially  owned
by Leon E. Nowek, a Director of the Registrant.

The performance  shares described above are subject to an escrow agreement dated
March 17, 1994 among the  Registrant,  Montreal Trust Company of Canada Limited,
as escrow agent, and March Technologies Inc. and Leon E. Nowek, as principals of
the Registrant.  The Registrant's performance shares described above can only be
released in compliance with Local Policy  Statement 3-07 of the British Columbia
Securities   Commission.   Under  this  Local  Policy  Statement,   releases  of
Registrant's  performance  shares  from  escrow  shall be made on the basis of a
pro-rata release of that number of escrow shares determined as follows:

                        Number of Performance Amount of Cumulative Cash Flow
                   Shares to be Released = not Previously Applied to a Release
                                             Earn Out Price

"Cumulative  Cash  Flow"  means at any  time,  the  aggregate  Cash  Flow of the
Registrant up to that time from a date no earlier than the Registrants financial
year-end and  immediately  preceding  the date of the  completion of the Reverse
Take Over, net of any negative Cash Flow.


          (a)     depreciation;
          (b)     amortization of goodwill and amortization of research and
                  development, excluding
                  general and administrative costs;
          (c)     expended research and development costs, excluding general 
                  and administrative costs;

<PAGE>


          (d)     any other amounts permitted or required by the British 
                  Columbia Securities Commission.

"Earn Out Price" means the price of the  Registrant's  common shares at the time
of the agreement  for the Reverse Take Over was executed  multiplied by the Earn
Out Factor.
      
"Earn Out  Factor"  means the number  obtained  by  squaring  the  Escrow  Share
Percentage expressed as a decimal and multiplying by four.
  
"Escrow  Share  Percentage"  means the  percentage  that the issued  performance
shares  are of  the  total  issued  and  outstanding  voting  securities  of the
Registrant,  determined on the date of the  completion by the  Registrant of the
Reverse Take Over.

The  performance  shares issued by the Registrant were issued upon completion by
the Registrant of the Reverse Take Over. The escrow share percentage  applicable
to these  performance  shares is 49.5%,  based on 8,738,052 common shares of the
Registrant   being   outstanding   on  completion  of  the  Reverse  Take  Over.
Accordingly, the Earn Out Factor is 0.9801. The price of the registrant's common
shares used to  determine  the Earn Out Price is $0.35 per common share based on
the trading  price of the  Registrant's  common  shares on the  Vancouver  Stock
Exchange  at the time the  agreement  for the  Reverse  Take Over was  executed.
Accordingly,  the number of  performance  shares to be released is calculated as
follows:

Number of Performance Amount of Cumulative Cash Flow Shares to be Released = Not
Previously Applied to a Release 0.35 x (0.495)2 x 4

Number of Performance Amount of Cumulative Cash Flow Shares to be Released = Not
Previously Applied to a Release 0.343

The number of  performance  shares will be for an applicable  fiscal year of the
Registrant.  For subsequent  financial  periods,  only  Cumulative Cash Flow not
previously  applied to a release of performance  shares may be used to determine
subsequent releases of performance shares.


The transfer  agent and  registrar  for the common  shares of the  Registrant is
Montreal Trust Company of Canada of 2nd Floor,  510 Burrard  Street,  Vancouver,
British Columbia, V6C 3B9.

<PAGE>

                                                     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 Registrant which follows.

Item 18.          Financial Statements

Inapplicable

Item 19.          Financial Statements and Exhibits

(a)               INDEX TO FINANCIAL STATEMENTS

 (a)     Unaudited Financial Statements of the Registrant as at June 30, 1996

                  - Auditors Report
                  - Consolidated Balance Sheet
                  - Consolidated Statement of Operations and Deficit
                  - Consolidated Statement of cash flows
                  - Consolidated Statement of Shareholders Equity

(b)     Audited Financial Statements of the Registrant as at December 31, 1995,
                  December 31, 1994 and December 31, 1993:

                  - Auditors Report
                  - Consolidated Balance Sheet

<PAGE>

                  - Consolidated Statement of Operations and Deficit
                  - Consolidated Statement of cash flows
                  - Consolidated Statement of Shareholders Equity

          (c)     Auditors Report for Pacific Baja as at December 31, 1995:

                  - Consolidated balance sheet as at December 31, 1994 and 1995
    - Consolidated statements of income for the years ended 1993, 1994 and 1995
                  - Consolidated Statements of Shareholders Equity
   - Consolidated Statements of cash flow for years ending 1993, 1994, and 1995

(d) Unaudited financial statements of Pacific Baja as at June 30, 1996 and 
     June 30,  1995

(e)  Pro-Forma Consolidated Balance Sheet and Pro-Forma Consolidated Statement 
     of  Operations for the Registrant as at June 30, 1996.

(f) Consent letters of Morgan & Company and McGladrey & Pullen, LLP, in regard
    to the inclusion of Independent Auditors' Reports in the Registration 
    Statement.



(b)               EXHIBITS

          1(a)    Certificate of Incorporation of Dundee Resources Corp.
                  dated May 18, 1983.

          1(b)    Articles of Dundee Resources Corp.

          1(c)    Memorandum of Dundee Resources Corp.

          1(d)    Certificate of Name Change from Dundee Resources Corp. to 
                  Clear View Ventures
                  Inc. dated January 20, 1993.

          1(e)    Amended Memorandum of Clear View Ventures Inc.

          1(f)    Certificate of Name Change from Clear View Ventures Inc. to
                  Turbodyne
                  Technologies Inc. dated April 28, 1994.

          1(g)    Amended Memorandum of the Registrant.

          1(h)    Articles of the Registrant.

          1(i)    Proposed Articles of Continuation of the Registrant

<PAGE>

          1(j)    Proposed By-laws of the Registrant to be adopted upon 
                  Continuation

          2(a)    Specimen Common Share Certificate.

          3(i) Employment Agreement between the Registrant and Edward M. Halimi.

          3(ii) Management Agreement between the Registrant and Seeds 
                Investment Corporation.

          3(iii)   Sub-Lease between American Appliance, Inc. and Carole D. 
                   King dated December 1, 1994 for Carpinteria Property.

          3(iv)   Distribution Agreement between Turbodyne Systems and 
                  Granatelli Performance Technologies  Inc.

          3(v)    Acquisition Agreement between the Registrant, Pacific Baja 
                  Light Metals Holding Inc., and Lenart Renberg, Michael Joyce, 
                  Sadayappa Durairaj Family Trust, Naresh Saxens and Mugerdish 
                  Balabanian dated March 15, 1996 (the "Acquisition Agreement")

          3(vi)   Amendment Agreement between the Registrant, Pacific Baja 
                  Light Metals Holding Inc., and Lenart Renberg, Michael Joyce, 
                  Sadayappa Durairaj Family Trust, Naresh Saxens and Mugerdish
                  Balabanian dated June 14, 1996 



<PAGE>

issued by the Registrant upon exercise of the Ser5ies "C" Special Warrants.



Item 13. Interest of Management in Certain Transactions

Material Agreements

Edward M. Halimi, a director of the Registrant, 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 Registrant 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 Registrant issued 1,000,000 common shares to Halimi.

Pursuant to an agreement between the Registrant and Centrepoint Equities Inc.
("Centrepoint"), the Registrant pays Centrepoint $2,500 per month in
consideration of Centrepoint providing office space and secretarial and
reception services to the Registrant. During the fiscal year ended December 31,
1995 a total of $30,000 was paid or is payable to Centrepoint pursuant to this

<PAGE>

                                       33

agreement. Centrepoint is a non-reporting British Columbia company, the shares
of which are owned by Leon E. Nowek, a director of the Registrant.

For the year ended December 31, 1995, the Registrant also paid a total of
$30,000 to Seeds Investment Corporation ("Seeds"), in consideration of Seeds
providing management services to the Registrant at a salary of $2,500 per month.
Seeds is a private British Columbia company controlled by Leon E. Nowek, a
director of the Registrant.


Stock Options

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

<PAGE>

                                       34


                                    PART II

Item 14. Description of Securities to be Registered

The class of capital stock of the Registrant being registered hereby is the
Registrant's common shares.

The issued and outstanding share capital of the Registrant is summarized as
follow:

SHARE CAPITAL STRUCTURE

   
The authorized capital of the Registrant consists of 100,000,000 common shares
without par value, 100,000,000 Class A preference shares with a par value of $10
per share and 100,000,000 Class B preference shares with a par value of $50 per
share. As of June 30, 1996, being the date of the most recent balance sheet of
the Registrant included in this Registrant, 20,218,566 of the Registrant's
common shares have been issued and are outstanding. As of September 3, 1996,
20,255,566 of the Registrant's common shares have been issued and are
outstanding. None of the Registrant's Class A or Class B preference shares have
been issued or are outstanding.
    

Each of the common shares has equal dividend, liquidation and voting rights.
Holders of the common shares are entitled to one vote per share on all matters
that may be brought before them. Holders of the common shares are entitled to
receive dividends when declared by the Board of Directors from funds legally
available therefor. The common shares are not redeemable, have no conversion
rights and carry no pre-emptive or other rights to subscribe for additional
shares. The outstanding common shares are fully paid and non-assessable. The
Articles of the Registrant contain provisions granting certain priorities over
the holders of the common shares to the holders of the classes of preference
shares in the event of liquidation, dissolution or winding-up of the Registrant.

Certain regulations of British Columbia and the Vancouver Stock Exchange set
forth distinctions between "free trading common shares" and common shares
required to be placed in escrow or in a "pool". Free trading common shares are
not subject to any restrictions on resale, and can be traded without regulatory
approval. Free trading shares are generally qualified by way of prospectus and
issued to the public. Conversely, shares issued by way of "private placement" to
certain investors and not the public, are usually subject to a one-year hold
period and cannot be traded until the relevant hold period has expired. Once the
hold period expires, the shares would then become free trading shares. Under the
policies of the Vancouver Stock Exchange, a listed company is entitled to sell
"performance shares" to principals of the Registrant at a minimum price of $0.01
per share on its original organization, or if the company is inactive, then upon
a reverse takeover transaction or a substantial corporate reorganization,
provided that the number of performance shareholders not exceed 65% of the
issuer's shares then outstanding. The shares


<PAGE>

                                       35


are then placed in escrow and released in accordance with certain earnings
performance criteria to be met by the Registrant. Any of these escrow shares
that are not released within 10 years of issuance are cancelled.

   
As of September 3, 1996, none of the Registrant's shares were held in pool,
4,150,000 of the Registrant's common shares were held in escrow, 15,614,893
shares were free-trading and 490,673 shares were subject to varying hold terms
pursuant to the policies of the Vancouver Stock Exchange.
    

The holders of the escrow shares are as follows:

March Technologies Inc.*                3,250,000
L.N. Family Holdings Inc.**               900,000

*    All of the voting shares of March Technologies Inc. are beneficially owned
     by Edward Halimi, President, Chief Executive Officer and Director of the
     Registrant.
**   All of the voting shares of L.N. Family Holdings Inc. are beneficially
     owned by Leon E. Nowek, a Director of the Registrant.

The escrow shares described above can only be released in complance with Local
Policy Statement 3-07 of the British Columbia Securities Commission. Under this
Local Policy Statement, releases of escrow shares from escrow shall be made on
the basis of a pro-rata release of that number of escrow shares equal to:

                         Amount of Cumulative Cash Flow
                       not Previously Applied to a Release
                       -----------------------------------
                                 Earn Out Price

"Cumulative Cash Flow" means at any time, the aggregate cash flow of the
Registrant up to that time from a date no earlier than the Registrants's
financial year-end and immediately preceding the date of its initial public
offering, net of any negative cash flow. "Cash Flow" means the net income or
loss of the Registrant before tax, adjusted to add the following expeneses:

     (a)  depreciation;
     (b)  amortization of goodwill and amortization of research and development,
          excluding general and administrative costs;
     (c)  expended research and development costs, excluding general and
          administrative costs;
     (d)  any other amounts permitted or required by the Manitoba Securities
          Commission.

"Earn Out Price" means the inital public offering price multiplied by the Earn
Out Factor. "Earn Out Factor" means the number obtained by squaring the escrow
share percentage expressed as a decimal and multiplying by four. The number of
escrow shares releasable from escrow during subsequent periods will be computed
by using the Escrow Release Formula (calculated above) provided that Cumulative
Cash Flow per share shall be for the period which has not already been


<PAGE>

                                       36


included in a previous computation which resulted in a release of a certain
number of escrow shares.

None of the Escrowed Shares will be released from escrow until all applicable
escrow terms are satisfied.

The transfer agent and registrar for the common shares of the Registrant is
Montreal Trust Company of Canada of 2nd Floor, 510 Burrard Street, Vancouver,
British Columbia, V6C 3B9.

<PAGE>

                                       37


                                    PART III

Item 15. Defaults Upon Senior Securities

Inapplicable

Item 16. Changes in Securities and Changes in Security for Registered Securities

Inapplicable

<PAGE>

                                       38


                                     PART IV

Item 17. Financial Statements

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

Item 18. Financial Statements

Inapplicable

Item 19. Financial Statements and Exhibits

(a)  INDEX TO FINANCIAL STATEMENTS

     (a)  Unaudited Financial Statements of the Registrant as at June 30, 1996
   
          - Auditors Report
          - Consolidated Balance Sheet
          - Consolidated Statement of Operations and Deficit
          - Consolidated Statement of cash flows
          - Consolidated Statement of Shareholders Equity
    

     (b)  Audited Financial Statements of the Registrant as at December 31,
          1995, December 31, 1994 and December 31, 1993:
   
          - Auditors Report
          - Consolidated Balance Sheet
          - Consolidated Statement of Operations and Deficit
          - Consolidated Statement of cash flows
          - Consolidated Statement of Shareholders Equity
    

     (c)  Auditors Report for Pacific Baja as at December 31, 1995:

          - Consolidated balance sheet as at December 31, 1994 and 1995
          - Consolidated statements of income for the years ended 1993, 1994
            and 1995
   
          - Consolidated Statement of Shareholders Equity
          - Consolidated Statement of cash flow for years ending 1993, 1994,
            and 1995
    

   
     (d)  Unaudited financial statements of Pacific Baja as at June 30, 1996 and
          June 30, 1995
    

   
     (e)  Pro Forma Consolidated Balance Sheet and Pro-Forma Consolidated
          Statement of Operations for the Registrant as at June 30, 1996

     (f)  Consent letters of Morgan & Company and McGladrey & Pullen, LLP, in
          regard to the inclusion of Independent Auditors' Reports in the
          Registration Statement.
    


<PAGE>

                                       39


(b)  EXHIBITS

     1(a)   Certificate of Incorporation of Dundee Resources Corp. dated May 18,
            1983.

     1(b)   Articles of Dundee Resources Corp.

     1(c)   Memorandum of Dundee Resources Corp.

     1(d)   Certificate of Name Change from Dundee Resources Corp. to Clear View
            Ventures Inc. dated January 20, 1993.

     1(e)   Amended Memorandum of Clear View Ventures Inc.

     1(f)   Certificate of Name Change from Clear View Ventures Inc. to
            Turbodyne Technologies Inc. dated April 28, 1994.

     1(g)   Amended Memorandum of the Registrant.

     1(h)   Articles of the Registrant.

     1(i)   Proposed Articles of Continuation of the Registrant

     1(j)   Proposed By-laws of the Registrant to be adopted upon Continuation

     2(a)   Specimen Common Share Certificate.

     3(i)   Employment Agreement between the Registrant and Edward M. Halimi.

     3(ii)  Management Agreement between the Registrant and Seeds Investment
            Corporation.

     3(iii) Sub-Lease between American Appliance, Inc. and Carole D. King dated
            December 1, 1994 for Carpinteria Property.

     3(iv)  Distribution Agreement between Turbodyne Systems and Granatelli
            Performance Technologies Inc.

     3(v)   Acquisition Agreement between the Registrant, Pacific Baja Light
            Metals Holding Inc., and Lenart Renberg, Michael Joyce, Sadayappa
            Durairaj Family Trust, Naresh Saxens and Mugerdish Balabanian dated
            March 15, 1996 (the "Acquisition Agreement")

<PAGE>

                                       40


     3(vi)  Amendment Agreement between the Registrant, Pacific Baja Light
            Metals Holding Inc., and Lenart Renberg, Michael Joyce, Sadayappa
            Durairaj Family Trust, Naresh Saxens and Mugerdish Balabanian dated
            June 14, 1996

<PAGE>



                           TURBODYNE TECHNOLOGIES INC.
                           ---------------------------
                          (A Development Stage Company)

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


                                  JUNE 30, 1996
                                  -------------
                          (Stated in Canadian Dollars)





<PAGE>






                           TURBODYNE TECHNOLOGIES INC.                    Page 1
                           ---------------------------
                          (A Development Stage Company)

                           CONSOLIDATED BALANCE SHEETS
                           ---------------------------
                          (Stated in Canadian Dollars)

                                                    June 30,    December 31,
                                                      1996          1995
                                                      ----          ----
                                                   (unaudited)

                                     ASSETS
CURRENT
   Cash                                           $  2,399,937   $   308,634
   GST refund receivable                                82,354        51,264

   Advances receivable                                  51,134       112,514

   Prepaid expenses and deposits                       139,385        93,185
                                                    ----------     ---------

                                                     2,672,810       565,597

CAPITAL ASSETS (Note 3)                              1,239,001       524,143

DEFERRED ACQUISITION COSTS                             713,291       226,842

PROJECT DEVELOPMENT COSTS                            5,700,838     3,885,317
                                                    ----------     ---------



                                                  $ 10,325,940   $ 5,201,899
                                                    ==========     =========



                                   LIABILITIES

CURRENT

   Accounts payable and accrued liabilities            434,336       251,215

   Loans payable (Note 4)                                5,634       223,304

   Current portion of long term debt                    34,232         8,593
                                                    ----------     ---------

                                                       474,202       483,112

LONG TERM DEBT (Note 5)                                113,647        20,010
                                                    ----------     ---------

                                                       587,849       503,122
                                                    ----------     ---------



<PAGE>



                              SHAREHOLDERS' EQUITY

SHARE CAPITAL (Note 6)
   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
      20,218,566 Common shares (of which
       4,150,000 are held in escrow) at
       June 30, 1996 and 16,542,121
       common shares (of which 4,150,000 shares
       are held in escrow) at December 31,
       1995                                         13,722,260     7,139,209

      Add share subscriptions received
       0 shares at June 30, 1996 and
       129,767 shares at December 31, 1995               -           462,330


DEFICIT ACCUMULATED DURING THE DEVELOPMENT
  STAGE                                             (3,984,169)   (2,902,762)
                                                    ----------     ---------
                                                     9,738,091     4,698,777
                                                    ----------     ---------

                                                  $ 10,325,940   $ 5,201,899
                                                    ==========     =========


<PAGE>






                           TURBODYNE TECHNOLOGIES INC.                    Page 2
                           ---------------------------
                          (A Development Stage Company)

                CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
                -------------------------------------------------

                     FOR THE SIX MONTH PERIODS ENDED JUNE 30
                     ---------------------------------------
                                   (unaudited)
                          (Stated in Canadian Dollars)





                                                    1996           1995
                                                    ----           ----

EXPENSES

   Advertising and trade shows                 $    26,689   $    23,862
   Bank charges, interest and exchange, net          4,401        82,260
   Consulting fees                                  93,612        38,108
   Depreciation                                      7,560         -
   Finders' fees                                     -            42,000
   Filing and transfer fees                         35,871        21,423
   Fiscal agency fees                               82,350         -
   Investor relations                               57,822        36,591
   Management fees                                  15,000        15,000
   Office rent, administration and sundry          177,041       100,391
   Printing                                         16,549        58,834
   Professional fees                               186,724       132,300
   Salaries and employee benefits                  212,512        66,017
   Telephone                                        24,590        18,515
   Travel and business development                 140,686       146,852
                                                 ---------     ---------

LOSS FOR THE PERIOD                             (1,081,407)     (782,153)

ACCUMULATED DEFICIT, BEGINNING OF PERIOD        (2,902,762)   (1,375,420)
                                                 ---------     ---------

ACCUMULATED DEFICIT, END OF PERIOD             $(3,984,169)  $(2,157,573)
                                                 =========     =========

LOSS PER SHARE                                      $(0.07)       $(0.09)
                                                      ====          ====

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING                                   15,689,098     8,278,646
                                                ==========     =========





<PAGE>






                           TURBODYNE TECHNOLOGIES INC.                    Page 3
                           ---------------------------
                          (A Development Stage Company)

                CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
                -------------------------------------------------

                     FOR THE SIX MONTH PERIODS ENDED JUNE 30
                     ---------------------------------------
                                   (unaudited)
                          (Stated in Canadian Dollars)

                                                            Inception
                                                            April 30,
                                                             1993 to
                                                            June 30,
                                                              1996
                                                              ----

EXPENSES

   Advertising and trade shows                           $   120,809
   Bank charges, interest and exchange, net                  164,597
   Consulting fees                                           370,494
   Depreciation                                               14,082
   Finders' fees                                              42,000
   Filing and transfer fees                                   74,039
   Fiscal agency fees                                         82,350
   Investor relations                                        236,493
   Management fees                                            70,000
   Office rent, administration and sundry                    536,066
   Printing                                                  120,035
   Professional fees                                         527,635
   Salaries and employee benefits                            469,283
   Telephone                                                  73,777
   Travel and business development                           755,223
                                                           ---------

LOSS FOR THE PERIOD                                      $ 3,656,883
                                                           =========




<PAGE>






                           TURBODYNE TECHNOLOGIES INC.                    Page 4
                           ---------------------------
                          (A Development Stage Company)

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 -----------------------------------------------
                          (Stated in Canadian Dollars)




                                                         Number of
                                                          Shares       Amount
                                                         --------      ------

Balance at date of inception, April 30, 1993                -      $      -

Issuance of stock for project development costs               100     1,146,887

Net loss                                                    -             -
                                                       ----------    ----------

Balance December 31, 1993                                     100     1,146,887

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        40,000

Issuance of common stock                                4,485,000     1,629,098

Net asset deficiency of legal parent
  at date of reverse take-over transaction                  -             -

Net loss                                                    -             -
                                                       ----------    ----------

Balance December 31, 1994                              10,663,052     2,815,985


<PAGE>






Issuance of common stock                                5,879,069     4,323,224

Share subscriptions received                              129,767       462,330

Net loss                                                    -             -
                                                       ----------    ----------

Balance December 31, 1995                              16,671,888     7,601,539

Issuance of common stock                                3,546,678     6,120,721

Net Loss
                                                       ----------    ----------

Balance June 30, 1996                                  20,218,566  $ 13,722,260
                                                       ==========    ==========



<PAGE>






                           TURBODYNE TECHNOLOGIES INC.                    Page 5
                           ---------------------------
                          (A Development Stage Company)

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 -----------------------------------------------
                          (Stated in Canadian Dollars)




                                                        Accumulated
                                                          Deficit       Total
                                                        -----------     -----

Balance at date of inception, April 30, 1993           $    -        $    -

Issuance of stock for project development
  costs                                                     -         1,146,887

Net loss                                                 (112,142)     (112,142)
                                                        ---------     ---------

Balance December 31, 1993                                (112,142)    1,034,745

Exchange of stock to acquire subsidiary
   Turbodyne Systems Inc.                                    -            -
   Turbodyne Technologies Inc.                               -            -

Issuance of stock to acquire subsidiary
   Common stock                                              -            -
   Escrow performance stock                                  -           40,000

Issuance of common stock                                     -        1,629,098

Net asset deficiency of legal parent at
  date of reverse take-over transaction                  (327,286)     (327,286)

Net loss                                                 (935,992)     (935,992)
                                                         --------      --------

Balance December 31, 1994                              (1,375,420)    1,440,565

Issuance of common stock                                    -         4,323,224

Share subscriptions received                                -           462,330

Net loss                                               (1,527,342)   (1,527,342)
                                                        ---------     ---------

Balance December 31, 1995                              (2,902,762)    4,698,777

Issuance of common stock                                              6,120,721

Net Loss                                               (1,081,407)   (1,081,407)
                                                        ---------     ---------

Balance June 30, 1996                                 $(3,984,169)  $ 9,738,091
                                                        =========     =========


<PAGE>



                           TURBODYNE TECHNOLOGIES INC.                    Page 6
                           ---------------------------
                          (A Development Stage Company)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------

                     FOR THE SIX MONTH PERIODS ENDED JUNE 30
                     ---------------------------------------
                                   (unaudited)
                          (Stated in Canadian Dollars)



                                                           1996         1995
                                                           ----         ----

CASH FLOW FROM OPERATING ACTIVITIES
   Loss for the period                                $(1,081,407)  $  (782,153)
                                                        ---------     ---------

ADJUSTMENTS TO RECONCILE LOSS TO NET
  CASH USED BY OPERATING ACTIVITIES
   Depreciation                                             7,560         -
   Change in GST refund receivable                        (31,090)        -
   Change in advances receivable                           61,380         -
   Change in prepaid expense                              (46,200)      (10,000)
   Change in accounts payable                             183,121      (383,596)
                                                        ---------     ---------

TOTAL ADJUSTMENTS                                         174,771      (393,596)
                                                        ---------     ---------

NET CASH USED IN OPERATING ACTIVITIES                    (906,636)   (1,175,749)
                                                        ---------     ---------

CASH FLOW FROM INVESTING ACTIVITIES
   Capital assets (net of depreciation
     allocated to project development costs)             (722,418)     (232,103)
   Project development costs                           (1,815,521)     (803,435)
   Deferred acquisition costs                            (486,449)        -
   Net asset deficiency of legal parent
     transaction at date of reverse
     take-over transaction                                  -             -
                                                        ---------     ---------

NET CASH USED IN INVESTING ACTIVITIES                  (3,024,388)   (1,035,538)
                                                        ---------     ---------

CASH FLOW FROM FINANCING ACTIVITIES
   Issuance of common stock                             6,120,721     3,061,337
   Change in loan payable                                (217,670)      182,220
   Change in long term debt                               119,276         -
                                                        ---------     ---------

NET CASH PROVIDED BY FINANCING ACTIVITIES               6,022,327     3,243,557
                                                        ---------     ---------

NET INCREASE IN CASH AND CASH EQUIVALENTS               2,091,303     1,032,270

CASH AND CASH EQUIVALENTS, BEGINNING OF
  PERIOD                                                  308,634         -
                                                        ---------     ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD              $ 2,399,937   $ 1,032,270
                                                        =========     =========



<PAGE>


                           TURBODYNE TECHNOLOGIES INC.                    Page 7
                           ---------------------------
                          (A Development Stage Company)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------

                     FOR THE SIX MONTH PERIODS ENDED JUNE 30
                     ---------------------------------------
                                   (unaudited)
                          (Stated in Canadian Dollars)

                                                           Inception,
                                                            April 30,
                                                            1993 to,
                                                            June 30,
                                                              1996
                                                              ----

CASH FLOW FROM OPERATING ACTIVITIES
   Loss for the period                                   $(3,656,883)
                                                          ----------

ADJUSTMENTS TO RECONCILE LOSS TO NET CASH
  USED BY OPERATING ACTIVITIES
   Depreciation                                               14,082
   Change in GST refund receivable                           (82,354)
   Change in advances receivable                             (51,134)
   Change in prepaid expense                                (139,385)
   Change in accounts payable                                434,336
                                                          ----------

TOTAL ADJUSTMENTS                                            175,545
                                                          ----------

NET CASH USED IN OPERATING ACTIVITIES                     (3,481,338)
                                                          ----------

CASH FLOW FROM INVESTING ACTIVITIES
   Capital assets (net of depreciation allocated
     to project development costs)                        (1,253,083)
   Project development costs                              (5,700,838)
   Deferred acquisition costs                               (713,291)
   Net asset deficiency of legal parent transaction
     at date of reverse take-over transaction               (327,286)
                                                          ----------

NET CASH USED IN INVESTING ACTIVITIES                     (7,994,498)
                                                          ----------

CASH FLOW FROM FINANCING ACTIVITIES
   Issuance of common stock                               13,722,260
   Change in loan payable                                      5,634
   Change in long term debt                                  147,879
                                                          ----------

NET CASH PROVIDED BY FINANCING ACTIVITIES                 13,875,773
                                                          ----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                  2,399,937

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                 -
                                                          ----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                $  2,399,937
                                                          ==========





<PAGE>






                           TURBODYNE TECHNOLOGIES INC.                    Page 8
                           ---------------------------
                          (A Development Stage Company)

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

                                  JUNE 30, 1996
                                  -------------
                                   (unaudited)
                          (Stated in Canadian Dollars)


1. BASIS OF PRESENTATION

   The unaudited consolidated financial statements as of June 30, 1996 and 1995
   included herein have been prepared without audit pursuant to the rules and
   regulations of the Securities and Exchange Commission.  Certain information
   and footnote disclosure normally included in financial statements prepared in
   accordance with Canadian generally accepted accounting principles have been
   condensed or omitted pursuant to such rules and regulations.  In the opinion
   of management, all adjustments (consisting of normal recurring accruals)
   considered necessary for a fair presentation have been included.  It is
   suggested that these financial statements be read in conjunction with the
   December 31, 1995 audited consolidated financial statements and notes
   thereto.

2. a)  NATURE OF OPERATIONS

       Development Stage Activities

       The Company, through its subsidiary Turbodyne Systems, Inc., is engaged
       in the development, production and sales of a device (the "Turbodyne
       System") designed to eliminate turbo-lag and reduce black smoke emissions
       in turbocharged engines.  The Turbodyne System consists primarily of a
       high speed electric motor coupled to the turbocharger at the intake by
       means of a unique proprietary combination of one-way bearing or magnetic
       clutches.  The development and commercialization of this device is the
       principal business of the Company and its subsidiary, Turbodyne Systems,
       Inc.

    b) SIGNIFICANT ACCOUNTING POLICIES

       i)    Consolidation

             These financial statements include the accounts of the Company and
             its wholly owned U.S. subsidiary Turbodyne Systems, Inc.

       ii)   Depreciation

             Depreciation is calculated on a straight-line basis at the rate of
             20% per annum.

       iii)  Deferred Acquisition Costs

             The Company is deferring all direct costs incurred in connection
             with the anticipated acquisition of Pacific Baja Light Metal
             Holdings Inc.


<PAGE>






                           TURBODYNE TECHNOLOGIES INC.                    Page 9
                           ---------------------------
                          (A Development Stage Company)

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

                                  JUNE 30, 1996
                                  -------------
                                   (unaudited)
                          (Stated in Canadian Dollars)



   b)  SIGNIFICANT ACCOUNTING POLICIES (Continued)

       iv)   Project 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.

       v)    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 at the rate of 20%.  All other leases are accounted for as
             operating leases and the related lease payments are charged to
             expense as incurred.

       vi)   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.


   
       vii)  Statement of Cash Flows


               The statement of cash flows has been prepared in accordance with
                U.S. generally accepted accounting principles.



     viii)   Foreign Currency Translation
    


             Transactions recorded in foreign currencies have been translated
             into Canadian dollars using the Temporal Method as follows:

             i)    monetary items at the rate prevailing at the balance sheet
                   date;
             ii)   non-monetary items at the historical exchange rate;
             iii)  revenue and expense at the average rate in effect during the
                   applicable accounting period.

             Gains or losses arising on translation are included in the results
             of operations.




<PAGE>


                           TURBODYNE TECHNOLOGIES INC.                   Page 10
                           ---------------------------
                          (A Development Stage Company)

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

                                  JUNE 30, 1996
                                  -------------
                                   (unaudited)
                          (Stated in Canadian Dollars)



   b)  SIGNIFICANT ACCOUNTING POLICIES (Continued)

   

ix)  Cash Equivalents

      The Company considers all highly liquid financial instruments purchased
with an original maturity of three months or less to be cash equivalents.

x)    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 an 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.

xi)  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. There were no stock options, warrants or escrow shares
outstanding prior to the December 31, 1994 fiscal year.

xii)  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 $1,146,887 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.

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


    




<PAGE>


                           TURBODYNE TECHNOLOGIES INC.
                           ---------------------------
                          (A Development Stage Company)

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

                                  JUNE 30, 1996
                                  -------------
                                   (unaudited)
                          (Stated in Canadian Dollars)



   b)  SIGNIFICANT ACCOUNTING POLICIES (Continued)


       As such, these financial statements would be changed as follows:


Consolidated Statement of Operations and Deficit:

                                                   1996            1995
                                                   ----            ----

Loss for the period shown on the
  financial statements                        $ (1,081,407)   $  (782,153)

Increase in loss resulting from
  charging project development
  costs to expense                              (1,815,521)      (803,435)
                                                ----------       --------

Loss according to generally
  accepted accounting principles
  in the U.S.                                   (2,896,928)    (1,585,585)


Accumulated deficit, beginning
  of period                                     (6,788,079)    (3,194,780)
                                                ----------      ---------

Accumulated deficit end of period
  according to generally accepted
  accounting principles
  in the U.S.                                 $ (9,685,007)   $(4,780,365)
                                                ==========      =========


Loss per share - U.S. GAAP                          $(0.19)        $(0.19)
                                                      ====           ====


<PAGE>






                           TURBODYNE TECHNOLOGIES INC.                   Page 12
                           ---------------------------
                          (A Development Stage Company)

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

                                  JUNE 30, 1996
                                  -------------
                                   (unaudited)
                          (Stated in Canadian Dollars)



                                                 June 30,      December 31,
                                                   1996            1995
                                                   ----            ----
Consolidated Balance Sheet:

Project development costs as shown
  on the balance sheet                        $  5,700,838    $ 3,885,317
Change as a result of (a) above
   Reverse capitalization of project
     development costs acquired for shares      (1,146,887)    (1,146,887)
Change as a result of (b) above
   Reverse capitalization of ongoing project
     development costs                          (4,553,951)    (2,738,430)
                                                ----------      ---------

Project development costs according to
  generally accepted accounting principles
  in the U.S.                                 $      -        $     -
                                                ==========      =========

Accumulated deficit as shown on the balance
  sheet                                        $(3,984,169)   $(2,902,762)
Change as a result of (a) above
   Charge value attributed to project
     development costs acquired for shares
     to shareholders' equity                    (1,146,887)    (1,146,887)

Change as a result of (b) above
   Charge ongoing project development costs
     to expense                                 (4,553,951)    (2,738,430)


Accumulated deficit according to generally
  accepted accounting principles in the U.S.  $ (9,685,007)   $(6,788,079)
                                                ==========      =========

<PAGE>






                           TURBODYNE TECHNOLOGIES INC.                   Page 13
                           ---------------------------
                          (A Development Stage Company)

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

                                  JUNE 30, 1996
                                  -------------
                                   (unaudited)
                          (Stated in Canadian Dollars)






Consolidated Statement of Stockholders' Equity:

                                                  NUMBER
                                                 OF SHARES        AMOUNT
                                                 ---------        ------

Balance June 30, 1996 as shown on the
  consolidated financial statements              20,218,566    $13,722,260

Project development costs acquired for shares         -              -

Increase in net loss due to charging
  ongoing project development costs to expense        -              -

Balance June 30, 1996, according to
  generally accepted accounting principles
  in the U.S.                                  $ 20,218,566   $ 13,722,260
                                                 ==========     ==========




<PAGE>






                           TURBODYNE TECHNOLOGIES INC.                   Page 14
                           ---------------------------
                          (A Development Stage Company)

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

                                  JUNE 30, 1996
                                  -------------
                                   (unaudited)
                          (Stated in Canadian Dollars)






Consolidated Statement of Stockholders' Equity:

                                                 ACCUMULATED
                                                   DEFICIT         TOTAL
                                                   -------         -----

Balance June 30, 1996 as shown on the
  consolidated financial statements            $ (3,984,169)   $ 9,738,091

Project development costs acquired for shares    (1,146,887)    (1,146,887)

Increase in net loss due to charging
  ongoing project development costs to expense
                                                 (4,553,951)    (4,553,951)
                                                 -----------    -----------


Balance June 30, 1996, according to
  generally accepted accounting principles
  in the U.S.                                  $ (9,685,007)   $ 4,037,253
                                                 ===========     =========





<PAGE>






                           TURBODYNE TECHNOLOGIES INC.                   Page 15
                           ---------------------------
                          (A Development Stage Company)

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

                                  JUNE 30, 1996
                                  -------------
                                   (unaudited)
                          (Stated in Canadian Dollars)


3.    CAPITAL ASSETS
                                                  June 30,     December 31,
                                                     1996          1995
                                                  --------      -----------
                                                  Net Book       Net Book
                                                    Value          Value
                                                  --------       ----------

   Office equipment                             $   172,202      $ 123,883
   Machinery                                        424,205        210,754
   Leasehold improvements                           124,858        106,090
   Automobiles                                      156,764         83,416
   Machinery under construction                     222,831           -
                                                  ---------        -------
                                                  1,100,860        524,143

   Assets Under Capital Lease:

   Machinery                                         85,531           -

   Automobiles                                       52,610           -
                                                  ---------        -------

                                                $ 1,239,001      $ 524,143
                                                  =========        =======

   The Company was committed to purchase tooling machinery at June 30, 1996 of
   $442,460.

4.    LOANS PAYABLE
                                                    June 30,     December 31,
                                                      1996           1995
                                                      ----           ----

   a) Promissory note, repayable at
      $517 per month, including interest
      at 10% per annum.                             $ 5,634      $  11,279

   b) Short term interest free loan,
      secured by the personal guarantee
      of two of the Company's director.
      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 $1,000,000 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.               -          212,025
                                                      -----        -------

                                                    $ 5,634      $ 223,304
                                                      =====        =======



<PAGE>






                           TURBODYNE TECHNOLOGIES INC.                   Page 16
                           ---------------------------
                          (A Development Stage Company)

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

                                  JUNE 30, 1996
                                  -------------
                                   (unaudited)
                          (Stated in Canadian Dollars)





5.    LONG TERM DEBT
                                                   June 30,      December 31,
                                                     1996            1995
                                                     ----            ----
      Bank term loan
          Repayable at $720 per month, including
            interest at 11% per annum, due
            October 11, 1998, secured by an
            automobile.                           $  24,172       $ 28,603

      Capital lease obligations                     123,707            -
                                                    -------         ------
                                                    147,879         28,603
      Less:  current portion                         34,232          8,593
                                                    -------         ------

                                                  $ 113,647       $ 20,010
                                                    =======         ======


      The Company leases machine tooling equipment and an automobile under the
      terms of a capital lease.  The following is a schedule of future minimum
      lease payments over the life of the lease:

              1997                                   39,642
              1998                                   48,667
              1999                                   29,790
              2000                                   32,272
                                                    -------
                                                    150,371
      Less amount representing interest
        ranging from 9.3% to 11.0%                   26,664
                                                    -------

      Balance of obligation                       $ 123,707
                                                    =======


6.    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 June 30, 1996 the Company had 490,673 outstanding share
           purchase warrants.

           The exercise prices and expiry dates range from $3.89 to $8.06 and
           October 16, 1996 to March 21, 1997, respectively.




<PAGE>






                           TURBODYNE TECHNOLOGIES INC.                   Page 17
                           ---------------------------
                          (A Development Stage Company)

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

                                  JUNE 30, 1996
                                  -------------
                                   (unaudited)
                          (Stated in Canadian Dollars)




6.    SHARE CAPITAL (Continued)

   

      c)   In accordance with the policy of the Vancouver Stock Exchange, all
           incentive stock options are granted at fair market value. As at
           June 30, 1996 the Company had 1,937,500 outstanding incentive stock
           options to directors and employees.
    

           The exercised prices and expiry dates range from $1.65 to $11.70 and
           April 20, 1997 to May 22, 1998, respectively.  Subsequent to June 30,
           1996, 37,000 incentive stock options were exercised for consideration
           totalling $99,410.

      d)   On July 2, 1996 the Company closed into escrow, brokered private
           placements of 3,750,000 Series A special warrants at a price of $5.00
           per special warrant and 155,000 Series B special warrants at a price
           of $12.00 per special warrant for gross proceeds of $20,610,000.  All
           of the proceeds are held in escrow by the Company's transfer agent
           Montreal Trust Company pending expiry of retraction rights which may
           arise based on the agent's final due diligence reviews by August 16,
           1996 or in the event that the Company's acquisition of Pacific Baja
           Light Metal Holdings, Inc. does not close within 120 days of July 2,
           1996.

           Commissions to the brokers will be 10% of the gross proceeds and the
           brokers may elect to receive the commission in cash or special
           warrants.

           Each special warrant can be exercised into one unit of the Company
           for no additional consideration.  Each unit will consist of one
           common share and one-half non-transferable share purchase warrant.
           Each whole non-transferable Series A and Series B share purchase
           warrants will entitle the holder to purchase one common share at
           $5.50 and $13.00 respectively for a period of one year.

           The Company has agreed to use its best efforts to file and obtain a
           receipt for a final prospectus qualifying the distribution of the
           Series A and Series B units on the exercise of the Series A and B
           special warrants, within 90 days from July 2, 1996.  In the event
           that the prospectus is not receipted in the 90 day period, then the
           Series A and B units will consist of one common share and one whole
           transferable warrant.



<PAGE>






                           TURBODYNE TECHNOLOGIES INC.                   Page 18
                           ---------------------------
                          (A Development Stage Company)

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

                                  JUNE 30, 1996
                                  -------------
                                   (unaudited)
                          (Stated in Canadian Dollars)

7.    COMMITMENTS

      a)  Subject to final due diligence requirements and regulatory approvals,
          the Company has entered into an acquisition agreement with the
          shareholders of Pacific Baja Light Metals Holdings Inc. ("Baja") for
          the acquisition of 100% of the issued and outstanding shares of Baja.
          Under the terms of the agreement, the Company will pay $12,000,670
          U.S. cash and $18,000,000 U.S. by way of issuance to the shareholders
          of Baja 3,076,923 common shares at a deemed price of $5.85 U.S.
          (approximately $8.00 Cdn.) per share.

      b)  The Company has entered into a Fiscal Agency Agreement with Pecunia
          GmbH as its exclusive European agent.  The Fiscal Agency Agreement is
          for a term expiring on the earlier of 30 days, following the closing
          of the Company's acquisition of Baja Pacific Light Metal Holdings Inc.
          or March 31, 1996.  The Company is committed to pay the agent a fee of
          $10,000 U.S. per month commencing November 1, 1995.  During the
          period, the Company has exercised its option to extend the Fiscal
          Agency Agreement by an additional 12 months, to March 31, 1997.

      c)  The Company's subsidiary has entered into contractual 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:
                      1997                         $ 325,996
                      1998                         $ 240,064
                      1999                         $ 163,680
                      2000                         $ 163,680
                      2001                         $ 163,680

          The management training agreement is payable at $10,000 U.S. per month
          and continues indefinitely until either party terminates the agreement
          in writing with three months advance notice.  Subject to regulatory
          approval, the Company is to grant additional consideration of 200,000
          common shares as part of the management training agreement.

      d)  The Company's subsidiary has entered into an agreement to lease
          additional office premises in Encinitas, California, U.S.A. until May,
          2000.  The annual rent of the premise consists of a minimum rent plus
          realty taxes and utilities.  Minimum rent payable for the premise for
          each of the next four years is as follows:

                      1997                         $ 36,150
                      1998                         $ 37,780
                      1999                         $ 39,420
                      2000                         $ 37,510



<PAGE>






                           TURBODYNE TECHNOLOGIES INC.                   Page 19
                           ---------------------------
                          (A Development Stage Company)

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

                                  JUNE 30, 1996
                                  -------------
                                   (unaudited)
                          (Stated in Canadian Dollars)




7.    COMMITMENTS (Continued)

      The Company's head office and factory premises are rented on a month to
      month basis.

      e)  As part of the consideration for short term financing during 1994, the
          Company has a commitment to pay a royalty of $1 U.S. on each Turbodyne
          unit sold, to a maximum of $500,000 U.S.


8.    RELATED PARTY TRANSACTIONS

      a)  During the period the Company made payments to related parties as
          follows:
                                                 1996          1995
                                                 ----          ----

          Project Management Fees             $ 40,800      $ 41,316
                                                ======        ======
          Consulting Fees                     $ 68,386      $    -
                                                ======        ======

          Management Fees                     $ 15,000      $ 15,000
                                                ======        ======
          Rent and Administrative Services    $ 38,000      $ 15,000
                                                ======        ======


      b)  As at June 30, 1996 accounts payable and accrued liabilities in the
          amount of $13,495 (December 31, 1995 - $Nil) were owed to related
          parties.

      c)  As at June 30, 1996, advances receivable from a director in the amount
          of $51,134 (December 31, 1995 - $112,514) were interest free and
          payable on demand.



<PAGE>



                           TURBODYNE TECHNOLOGIES INC.
                     (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                        CONSOLIDATED FINANCIAL STATEMENTS


                          DECEMBER 31, 1995 AND 1994
                         (Stated in Canadian Dollars)


<PAGE>
                                        ----------------------------------------
                                        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
                                        ----------------------------------------

                               AUDITORS' REPORT

To the Shareholders
Turbodyne Technologies Inc.
(formerly Clear View Ventures Inc.)

We have audited the consolidated balance sheets of Turbodyne Technologies Inc.
(formerly Clear View Ventures Inc.) (A Development Stage Company) as at December
31, 1995 and 1994 and the consolidated statements of operations and deficit,
stockholders' equity and cash flows for the years ended December 31, 1995 and
1994 and the period ended December 31, 1993. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the consolidated 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 financial
statement presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 1995
and 1994 and the results of its operations and its cash flows for the years
ended December 31, 1995 and 1994 and the period ended December 31, 1993 in
accordance with Canadian 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.

Vancouver, Canada
                                                          /s/ Morgan & Company
April 26, 1996                                            Chartered Accountants

<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                           CONSOLIDATED BALANCE SHEETS

                                   DECEMBER 31
                         (Stated in Canadian Dollars)

                                                           1995            1994
                                                           ----            ----
                                    ASSETS
CURRENT
   Cash                                              $  308,634      $     --
   GST refund receivable                                 51,264            --
   Advances receivable                                  112,514            --
   Prepaid expense                                       93,185          31,541
                                                     ----------      ----------
                                                        565,597          31,541
CAPITAL ASSETS (Note 3)                                 524,143          48,115
DEFERRED ACQUISITION COSTS                              226,842            --
PROJECT DEVELOPMENT COSTS                             3,885,317       1,819,360
                                                     ----------      ----------
                                                     $5,201,899      $1,899,016
                                                     ==========      ==========

                                   LIABILITIES
CURRENT
   Accounts payable and accrued liabilities             251,215         413,451
   Loans payable (Note 4)                               223,304          45,000
   Current portion of long term debt                      8,593            --
                                                     ----------      ----------
                                                        483,112         458,451
LONG TERM DEBT (Note 5)                                  20,010            --
                                                     ----------      ----------
                                                        503,122         458,451
                                                     ----------      ----------

                             SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 6)
   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
        16,542,121 Common shares (of which
          4,150,000 are held in escrow) at
          December 31, 1995 and 10,663,052
          common shares (of which 4,150,000
          shares are held in escrow) at December 31,
          1994                                        7,139,209       2,815,985
        Add share subscriptions received
          (Note 6(e)) 129,767 common shares at
           December 31, 1995 and 0 at
           December 31, 1994                            462,330             --
DEFICIT ACCUMULATED DURING THE DEVELOPMENT
  STAGE                                              (2,902,762)     (1,375,420)
                                                     ----------      ----------
                                                      4,698,777       1,440,565
                                                     ----------      ----------
                                                     $5,201,899      $1,899,016
                                                     ==========      ==========
Approved by the Board of Directors:

<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

               CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
                         (Stated in Canadian Dollars)

                                                    Year Ended     Year Ended
                                                    December 31,   December 31,
                                                       1995           1994
                                                       ----           ----
EXPENSES
   Advertising and trade shows                    $    40,716       $    49,115
   Bank charges, interest and exchange                115,315            40,877
   Consulting fees                                    163,051           111,356
   Depreciation                                         5,822               700
   Finders' fees                                       42,000              --
   Filing and transfer fees                            30,362             7,806
   Investor relations                                 103,312            75,359
   Management fees                                     30,000            25,000
   Office rent, administration and sundry             187,284           148,247
   Printing                                           103,486              --
   Professional fees                                  194,089           136,782
   Salaries and employee
     benefits                                         127,652            86,465
   Telephone                                           42,549             5,272
   Travel and business development                    336,811           245,297
   Vehicle                                              4,893             3,716
                                                  -----------       -----------

LOSS FOR THE YEAR                                  (1,527,342)         (935,992)

ACCUMULATED DEFICIT, BEGINNING OF PERIOD           (1,375,420)         (112,142)
                                                  -----------       -----------
                                                   (2,902,762)       (1,048,134)

NET ASSET DEFICIENCY OF LEGAL PARENT AT DATE OF
  REVERSE TAKE-OVER TRANSACTION                          --            (327,286)
                                                  -----------       -----------

ACCUMULATED DEFICIT, END OF PERIOD                $(2,902,762)      $(1,375,420)
                                                  ===========       ===========

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

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING                                       9,805,870         5,106,385
                                                  ===========       ===========



<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

               CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
                         (Stated in Canadian Dollars)


                                                   Period from
                                                     Date of        Inception,
                                                  Incorporation,     April 30,
                                                  April 30, 1993     1993 to,
                                                  to December 31,  December 31,
                                                       1993            1995
                                                       ----            ----
EXPENSES
   Advertising and trade shows                    $     4,289       $    94,120
   Bank charges, interest and exchange                  4,004           160,196
   Consulting fees                                      2,475           276,882
   Depreciation                                          --               6,522
   Finders' fees                                         --              42,000
   Filing and transfer fees                              --              38,168
   Investor relations                                    --             178,671
   Management fees                                       --              55,000
   Office rent, administration and sundry              23,494           359,025
   Printing                                              --             103,486
   Professional fees                                   10,040           340,911
   Salaries and employee benefits                      42,654           256,771
   Telephone                                            1,366            49,187
   Travel and business development                     23,820           605,928
   Vehicle                                               --               8,609
                                                  -----------       -----------

LOSS FOR THE YEAR                                    (112,142)      $(2,575,476)
                                                                    ===========

ACCUMULATED DEFICIT, BEGINNING OF PERIOD                 --
                                                  -----------
                                                     (112,142)

NET ASSET DEFICIENCY OF LEGAL PARENT AT DATE OF
  REVERSE TAKE-OVER TRANSACTION                          --

ACCUMULATED DEFICIT, END OF PERIOD                $  (112,142)
                                                  ===========

LOSS PER SHARE                                    $     (0.06)
                                                  ===========

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING                                       2,028,052
                                                  ===========


<PAGE>

                         TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                         (Stated in Canadian Dollars)

                                                   Number of
                                                    Shares            Amount
                                                    ------            ------

Balance at date of inception, April 30, 1993             --         $      --

Issuance of stock for project development costs           100         1,146,887

Net loss                                                 --                --
                                                  -----------       -----------


Balance December 31, 1993                                 100         1,146,887

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            40,000

Issuance of common stock                            4,485,000         1,629,098

Net asset deficiency of legal parent at
  date of reverse take-over transaction                  --                --

Net loss                                                 --                --
                                                  -----------       -----------
Balance December 31, 1994                          10,663,052         2,815,985

Issuance of common stock                            5,879,069         4,323,224

Share subscriptions received                          129,767           462,330

Net loss                                                 --                --
                                                  -----------       -----------
Balance December 31, 1995                          16,671,888       $ 7,601,539
                                                  ===========       ===========

<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                         (Stated in Canadian Dollars)

                                                  Accumulated
                                                    Deficit            Total
                                                    -------            -----

Balance at date of inception, April 30, 1993      $      --         $      --

Issuance of stock for project development
  costs                                                  --             146,887

Net loss                                             (112,142)         (112,142)
                                                  -----------       -----------

Balance December 31, 1993                            (112,142)        1,034,745

Exchange of stock to acquire subsidiary
   Turbodyne Systems Inc.                                --                --
   Turbodyne Technologies Inc.                           --                --

Issuance of stock to acquire subsidiary
   Common stock                                          --                --
   Escrow performance stock                              --              40,000

Issuance of common stock                                 --           1,629,098

Net asset deficiency of legal parent at date
  of reverse take-over transaction                   (327,286)         (327,286)

Net loss                                             (935,992)         (935,992)
                                                  -----------       -----------
Balance December 31, 1994                          (1,375,420)        1,440,565

Issuance of common stock                                 --           4,323,224

Share subscriptions received                             --             462,330

Net loss                                           (1,527,342)       (1,527,342)
                                                  -----------       -----------
Balance December 31, 1995                         $(2,902,762)      $ 4,698,777
                                                  ===========       ===========



<PAGE>
                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (Stated in Canadian Dollars)



                                                  Year Ended        Year Ended
                                                  December 31,     December 31,
                                                     1995              1994
                                                     ----              ----

CASH FLOW FROM OPERATING ACTIVITIES
   Loss for the period                            $(1,527,342)      $  (935,992)
                                                  -----------       -----------

ADJUSTMENTS TO RECONCILE LOSS TO NET CASH
  USED BY OPERATING ACTIVITIES
   Depreciation                                         5,822               700
   Change in GST refund receivable                    (51,264)             --
   Change in advances receivable                     (112,514)             --
   Change in prepaid expense                          (61,644)          (31,541)
   Change in accounts payable                        (162,236)           77,318
                                                  -----------       -----------

TOTAL ADJUSTMENTS                                    (381,836)           46,477
                                                  -----------       -----------

NET CASH USED IN OPERATING ACTIVITIES              (1,909,178)         (889,515
                                                  -----------       -----------

CASH FLOW FROM INVESTING ACTIVITIES
   Capital assets (net of depreciation
     allocated to project development costs)         (481,850)           (4,315)
   Project development costs                       (2,065,957)         (492,982)
   Deferred acquisition costs                        (226,842)             --
   Net asset deficiency of legal parent
     at date of reverse take-over transaction            --            (327,286)
                                                  -----------       -----------

NET CASH USED IN INVESTING ACTIVITIES              (2,774,649)         (824,583)
                                                  -----------       -----------

CASH FLOW FROM FINANCING ACTIVITIES
   Issuance of common stock                         4,323,224         1,669,098
   Share subscriptions received                       462,330              --
   Change in loan payable                             178,304            45,000
   Change in long term debt                            28,603              --
                                                  -----------       -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES           4,992,461         1,714,098
                                                  -----------       -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS             308,634              --

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD           --
                                                  -----------       -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD          $   308,634       $      --
                                                  ===========       ===========



<PAGE>

                             TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (Stated in Canadian Dollars)

                                                  Period from
                                                    Date of         Inception,
                                                  Incorporation,     April 30,
                                                  April 30, 1993     1993 to,
                                                  to December 31,  December 31,
                                                       1993            1995
                                                       ----            ----
CASH FLOW FROM OPERATING ACTIVITIES
   Loss for the period                            $  (112,142)      $(2,575,476)
                                                  -----------       -----------

ADJUSTMENTS TO RECONCILE LOSS TO NET CASH
  USED BY OPERATING ACTIVITIES
   Depreciation                                          --               6,522
   Change in GST refund
     receivable                                          --             (51,264)
   Change in advances
     receivable                                          --            (112,514)
   Change in prepaid expense                             --             (93,185)
   Change in accounts payable                         336,133           251,215
                                                  -----------       -----------

TOTAL ADJUSTMENTS                                     336,133               774
                                                  -----------       -----------

NET CASH USED IN OPERATING ACTIVITIES                 223,991        (2,574,702)
                                                  -----------       -----------

CASH FLOW FROM INVESTING ACTIVITIES
   Capital assets (net of depreciation
     allocated to project development costs)          (44,500)         (530,665)
   Project development costs                       (1,326,378)       (3,885,317)
   Deferred acquisition costs                            --            (226,842)
   Net asset deficiency of legal parent
     at date of reverse take-over transaction            --            (327,286)
                                                  -----------       -----------

NET CASH USED IN INVESTING ACTIVITIES              (1,370,878)       (4,970,110)
                                                  -----------       -----------

CASH FLOW FROM FINANCING ACTIVITIES
   Issuance of common stock                         1,146,887         7,139,209
   Share subscriptions received                          --             462,330
   Change in loan payable                                --             223,304
   Change in long term debt                              --              28,603
                                                  -----------       -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES           1,146,887         7,853,446
                                                  -----------       -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                --             308,634

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD           --                --
                                                  -----------       -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD          $      --         $   308,634
                                                  ===========       ===========


<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Continued)
                         (Stated in Canadian Dollars)

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

   Cash paid during the year for:

                                                   Period from
                                                      Date of     Inception
                                                  Incorporation   April 30,
                       Year Ended  Year Ended     April 30, 1993   1993 to,
                      December 31, December 31,   to December 31, December 31,
                          1995         1994            1993          1995
                          ----         ----            ----          ----

           Interest    $ 84,000      $ 8,917        $ 2,110       $ 95,027
                         ======        =====          =====         ======

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.

<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          DECEMBER 31, 1995 AND 1994
                         (Stated in Canadian Dollars)

 1.  a)   NATURE OF OPERATIONS

          Development Stage Activities

          The Company, through its subsidiary Turbodyne Systems, Inc., is
          engaged in the development, production and sales of a device (the
          "Turbodyne System") designed to eliminate turbo-lag and reduce black
          smoke emissions in turbocharged engines. The Turbodyne System consists
          primarily of a high speed electric motor coupled to the turbocharger
          at the intake by means of a unique proprietary combination of one-way
          bearing or magnetic clutches. The development and commercialization of
          this device is the principal business of the Company and its
          subsidiary, Turbodyne Systems, Inc.

     b)   SIGNIFICANT ACCOUNTING POLICIES

          i)   Consolidation

               These financial statements include the accounts of the Company
               and its wholly owned U.S. subsidiary Turbodyne Systems, Inc.

          ii)  Depreciation

               Depreciation is calculated on a straight-line basis at the rate
               of 20% per annum.

          iii) Deferred Acquisition Costs

               The Company is deferring all direct costs incurred in connection
               with the anticipated acquisition of Pacific Baja Light Metal
               Holdings Inc. (Note 10(a)).

          iv)  Project 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.

<PAGE>

                           TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1995 AND 1994
                          (Stated in Canadian Dollars)


     b)   SIGNIFICANT ACCOUNTING POLICIES (Continued)

          v)   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.

   

          vi)  Statement of Cash Flows

               The statement of cash flows has been prepared in accordance
               with U.S. generally accepted accounting principles.



          vii)  Foreign Currency Translation

               Transactions recorded in foreign currencies have been translated
               into Canadian dollars using the Temporal Method as follows:

               i)   monetary items at the rate prevailing at the balance sheet
                    date;

               ii)  non-monetary items at the historical exchange rate;

               iii) revenue and expense at the average rate in effect during the
                    applicable accounting period.

               Gains or losses arising on translation are included in the
               results of operations.

          viii) Cash Equivalents

               The Company considers all highly liquid financial instruments
               purchased with an original maturity of three months or less to be
               cash equivalents.

         ix) 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.

<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          DECEMBER 31, 1995 AND 1994
                         (Stated in Canadian Dollars)

     b)   SIGNIFICANT ACCOUNTING POLICIES (Continued)

          x)  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. There were no stock
               options, warrants or escrow shares outstanding prior to the
               December 31, 1994 fiscal year.

          xi)   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 $1,146,887 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.

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




<PAGE>



                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          DECEMBER 31, 1995 AND 1994
                         (Stated in Canadian Dollars)

     b)   SIGNIFICANT ACCOUNTING POLICIES (Continued)

          As such, these financial statements would be changed as follows:

Consolidated Statement of Operations and Deficit:

                                                      1995              1994
                                                      ----              ----
Loss for the period shown on the
  financial statements                            $(1,527,342)      $  (935,992)

Increase in loss resulting from
  charging project development
  costs to expense                                 (2,065,957)         (492,982)
                                                  -----------       -----------

Loss according to generally
  accepted accounting principles
  in the U.S.                                      (3,593,299)       (1,428,974)

Accumulated deficit, beginning
  of period                                        (3,194,780)       (1,438,520)
                                                  -----------       -----------
                                                   (6,788,079)       (2,867,494)
Attributed value of project
  development costs acquired
  for shares                                             --                --

Net asset deficiency of legal
  parent at date of reverse
  take-over transaction                                  --            (327,286)

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


Accumulated deficit end of year
  according to generally accepted
  accounting principles
  in the U.S.                                     $(6,788,079)      $(3,194,780)
                                                  ===========       ===========

Loss per share - U.S. GAAP                        $     (0.37)      $     (0.28)
                                                  ===========       ===========



<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          DECEMBER 31, 1995 AND 1994
                         (Stated in Canadian Dollars)



   b)  SIGNIFICANT ACCOUNTING POLICIES (Continued)

       As such, these financial statements would be changed as follows:

Consolidated Statement of Operations and Deficit:

                                                      1993
                                                      ----
Loss for the period shown on the
  financial statements                            $  (112,142)

Increase in loss resulting from
  charging project development
  costs to expense                                   (179,491)
                                                  -----------
Loss according to generally
  accepted accounting principles
  in the U.S.                                        (291,633)

Accumulated deficit, beginning
  of period                                              --
                                                  -----------
                                                     (291,633)
Attributed value of project
  development costs acquired
  for shares                                       (1,146,887)

Net asset deficiency of legal
  parent at date of reverse
  take-over transaction                                  --
                                                  -----------


Accumulated deficit end of year
  according to generally accepted
  accounting principles
  in the U.S.                                     $(1,438,520)
                                                  ===========

Loss per share - U.S. GAAP                        $     (0.14)
                                                  ===========

<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          DECEMBER 31, 1995 AND 1994
                         (Stated in Canadian Dollars)

                                                      1995             1994
                                                      ----             ----
Consolidated Balance Sheet:

Project development costs as shown
  on the balance sheet                            $ 3,885,317       $ 1,819,360

Change as a result of (a) above
   Reverse capitalization of project
     development costs acquired for shares         (1,146,887)       (1,146,887)

Change as a result of (b) above
   Reverse capitalization of ongoing project
     development costs                             (2,738,430)         (672,473)
                                                  -----------       -----------

Project development costs according to
  generally accepted accounting principles
  in the U.S.                                     $      --         $      --
                                                  ===========       ===========


Accumulated deficit as shown on the balance
  sheet                                           $(2,902,762)      $(1,375,420)

Change as a result of (a) above
   Charge value attributed to project
     development costs acquired for shares
     to shareholders' equity                       (1,146,887)       (1,146,887)

Change as a result of (b) above
   Charge ongoing project development costs
     to expense                                    (2,738,430)         (672,473)


Accumulated deficit according to generally
  accepted accounting principles in the U.S.      $(6,788,079)      $(3,194,780)
                                                  ===========       ===========


<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          DECEMBER 31, 1995 AND 1994
                         (Stated in Canadian Dollars)

Consolidated Statement of Stockholders' Equity:

                                                     NUMBER
                                                   OF SHARES        AMOUNT
                                                   ---------        ------
Balance December 31, 1995 as shown on the
  consolidated financial statements                16,671,888       $ 7,601,539













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

Balance December 31,
  1995, according to
  generally accepted
  account principles
  in the U.S.                                     $16,671,888       $ 7,601,539
                                                  ===========       ===========



<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          DECEMBER 31, 1995 AND 1994
                         (Stated in Canadian Dollars)


Consolidated Statement of Stockholders' Equity:

                                                  ACCUMULATED
                                                    DEFICIT           TOTAL
                                                    -------           -----
Balance December 31, 1995 as shown on the
  consolidated financial statements               $(2,902,762)      $ 4,698,777

Project development costs acquired
  for shares                                       (1,146,887)       (1,146,887)

Increase in net loss due to charging
  ongoing project development costs to
  expense                                          (2,738,430)       (2,738,430)
                                                  ------------      ------------



Balance December 31, 1995, according to
  generally accepted accounting
  principles in the U.S.                          $(6,788,079)      $  (813,460)
                                                  ============      ============




<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          DECEMBER 31, 1995 AND 1994
                         (Stated in Canadian Dollars)

2.   ACQUISITION OF SUBSIDIARY

     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. Since the transaction resulted in the former
     shareholders of Turbodyne Systems Inc. owning the majority of the issued
     shares of Turbodyne Technologies Inc., the transaction, which is referred
     to as a "reverse take-over" has been treated for accounting purposes as an
     acquisition by Turbodyne Systems Inc. of the net assets and liabilities of
     Turbodyne Technologies Inc. Under this purchase method of accounting the
     results of operations of Turbodyne Technologies Inc. are included in these
     financial statements from March 8, 1994.

     Turbodyne Technologies Inc. had a net asset deficiency at the acquisition
     date therefore 1,100,000 of the 5,100,000 shares issued on acquisition were
     issued at an ascribed value of $Nil with the net asset deficiency of
     $327,286 charged to deficit. The balance of the shares, subject to
     performance and escrow provisions were issued for cash consideration of
     $40,000. Turbodyne Systems Inc. is deemed to be the purchaser for
     accounting purposes. Accordingly, its net assets are included in the
     balance sheet at their previously recorded values.

     The acquisition is summarized as follows:

     Current assets                               $   301,319
     Capital assets                                     1,747       $   303,066
                                                  -----------

     Current liabilities                              300,352
     Share subscriptions received                     330,000           630,352
                                                  -----------       -----------

     Net asset deficiency                                           $  (327,286)


3. CAPITAL ASSETS
                                                          1995         1994
                                                        ---------    --------
                                                        Net Book     Net Book
                                                          Value        Value
                                                        ---------    --------

   Office equipment                                    $ 123,883     $ 28,138
   Machinery                                             210,754       19,977
   Leasehold improvements                                106,090          --
   Automobiles                                            83,416          --
                                                       ---------     --------
                                                       $ 524,143     $ 48,115
                                                       =========     ========

<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          DECEMBER 31, 1995 AND 1994
                         (Stated in Canadian Dollars)




4. LOANS PAYABLE
                                                     1995               1994
                                                  -----------       -----------
   a)  Short term interest free loan,
       secured by the personal guarantee
       of two of the Company's director
       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 $1,000,000 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         $   212,025       $      --

   b)  Promissory note payable repayable at
       $517 per month, including interest
       at 10% per annum                                11,279              --

   c)  Short term interest free loan.  As
       additional consideration for the loan,
       the Company issued 25,000 shares at a
       deemed value of $0.40 per share and
       agreed to pay a royalty of $1 U.S. on
       each Turbodyne unit sold, to a maximum
       of $500,000 U.S.                                  --              45,000
                                                  -----------       -----------

                                                  $   223,304       $    45,000
                                                  ===========       ===========

5. LONG TERM DEBT
                                                     1995               1994
                                                  -----------       -----------
   Bank term loan
       Repayable at $720 per month, including
         interest at 11% per annum, due
         October 11, 1998, secured by an
         automobile                               $    28,603       $      --
   Less:  current portion                               8,593              --
                                                  -----------       -----------

                                                  $    20,010       $      --
                                                  ===========       ===========

<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          DECEMBER 31, 1995 AND 1994
                         (Stated in Canadian Dollars)

6.   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, 1995 the Company had 2,710,790 outstanding share
          purchase warrants.

          The exercise prices and expiry dates range from $0.60 to $4.27 and
          February 10, 1996 to November 24, 1996, respectively. Subsequent to
          the year end, 2,282,153 share purchase warrants were exercised for
          consideration totalling $1,627,825.
   

     c)   In accordance with the policy of the Vancouver Stock Exchange, all
          incentive stock options are granted at fair market value.
          As at December 31, 1995 the Company had 1,621,500 outstanding
          incentive stock options to directors and employees as follows:
    
         The exercise prices and expiry dates range from $0.55 to $4.75 and
          September 22, 1996 to December 20, 1997, respectively. Subsequent to
          the year end, 545,500 incentive stock options were exercised for
          consideration totalling $1,666,325.

     d)   Subject to regulatory approval, the Company has negotiated a brokered
          private placement of up to 3,750,000 special warrants at a price of
          $5.00 per special warrant, for gross proceeds of $18,750,000. Each
          special warrant can be exercised into one unit of the Company for no
          additional consideration. Each unit will consist of one common share
          and one-half non-transferable share purchase warrant. Each whole
          non-transferable share purchase warrant will entitle the holder to
          purchase one common share at $5.50 for a period of one year.
          Commissions to the broker will be 10% of the gross proceeds and the
          broker may elect to receive the commission in cash or special
          warrants.


<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          DECEMBER 31, 1995 AND 1994
                         (Stated in Canadian Dollars)

6.   SHARE CAPITAL (Continued)

     e)   The Company has arranged private placements totalling 129,767 units
          for total consideration of $513,700 less finders' fees of $51,370. The
          exercise price of the units range from $3.70 to $4.35 per unit. The
          exercise price of the warrants range from $3.80 to $4.45 per warrant.

          Each unit consists of one share and one non-transferable share
          purchase warrant for the purchase of an additional share for a period
          of one year. The expiry dates of the warrants range from October 25,
          1996 to December 18, 1996.

          Subsequent to December 31, 1995, the Company has issued 129,767 units
          pursuant to these private placement agreements.

7.   INCOME TAXES

     At December 31, 1995, the Company and its subsidiary have approximately
     $6,636,000 in net operating loss carryforwards available to offset future
     taxable income. These carryforwards, if unused, will expire from 2001 to
     2010. Due to net losses the Company did not record a provision for income
     taxes in 1995, 1994 or 1993.


8.   COMMITMENTS

     a)   During the year, the Company entered into a Fiscal Agency Agreement
          with Pecunia GmbH as its exclusive European agent. The Fiscal Agency
          Agreement is for a term expiring on the earlier of 30 days, following
          the closing of the Company's acquisition of Baja Pacific Light Metal
          Holdings Inc. or March 31, 1996. The Company is committed to pay the
          agent a fee of $10,000 U.S. per month commencing November 1, 1995.

     b)   During the year, the Company's subsidiary entered into a consultant
          agreement for assistance in international marketing, licensing and
          financing. The consultant agreement is for a term of three years,
          payable at $7,000 U.S. per month, commencing March 1, 1995.

<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          DECEMBER 31, 1995 AND 1994
                         (Stated in Canadian Dollars)

9.   RELATED PARTY TRANSACTIONS

     a)   During the year the Company made payments to related parties as
          follows:
                                                        1995           1994
                                                        ----           ----
           Project Management Fees                  $ 80,253       $ 93,455
                                                    ========       ========
           Consulting Fees                          $    -         $ 34,529
                                                    ========       ========
           Management Fees                          $ 30,000       $ 25,000
                                                    ========       ========
           Rent and Administrative Services         $ 30,000       $ 68,924
                                                    ========       ========

     b)   As at December 31, 1995 accounts payable and accrued liabilities in
          the amount of $Nil (1994 - $72,082) were owed to related parties.

     c)   As at December 31, 1995, advances receivable from a director in the
          amount of $112,514 (1994 - $Nil) were interest free and payable on
          demand.

10.  SUBSEQUENT EVENTS

     a)   Subject to due diligence requirements, regulatory and shareholder
          approvals, the Company has entered into an acquisition agreement with
          the shareholders of Pacific Baja Light Metals Holdings Inc. ("Baja")
          for the acquisition of 100% of the issued and outstanding shares of
          Baja. Under the terms of the agreement, the Company will pay
          $12,000,670 U.S. cash and $18,000,000 U.S. by way of issuance to the
          shareholders of Baja 3,076,923 common shares at a deemed price of
          $5.85 U.S. (approximately $8.00 Cdn.) per share.

     b)   Subject to regulatory approval, the Company has negotiated a brokered
          private placement of up to 500,000 special warrants at a price of
          $12.00 per special warrant, for gross proceeds of $6,000,000. Each
          special warrant can be exercised into one unit of the Company for no
          additional consideration. Each unit will consist of one common share
          and one-half non-transferable share purchase warrant. Each whole
          non-transferable share purchase warrant will entitle the holder to
          purchase one common share at $13.00 for a period of one year.
          Commissions to the broker will be 10% of the gross proceeds and the
          broker may elect to receive the commission in cash or special
          warrants.

     c)   Subject to regulatory approval, the Company has granted incentive
          stock options to directors and employees for the purchase of up to
          550,000 shares at $7.13 per share to February 27, 1998.

<PAGE>

                          TURBODYNE TECHNOLOGIES INC.
                       (formerly Clear View Ventures Inc.)
                          (A Development Stage Company)

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          DECEMBER 31, 1995 AND 1994
                         (Stated in Canadian Dollars)

10. SUBSEQUENT EVENTS (Continued)

     d)   Subsequent to December 31, 1995, the Company has arranged, subject to
          regulatory approval, private placements totalling 306,397 units for
          total consideration of $1,838,000 less finders' fees of $183,800. The
          exercise price of the units range from $3.70 to $4.35 per unit. The
          exercise price of the warrants range from $3.80 to $4.45 per warrant.

          Each unit consists of one share and one non-transferable share
          purchase warrant for the purchase of an additional share for a period
          of one year.

          The expiry dates of the warrants range from January 2, 1997 to March
          21, 1997.

<PAGE>



                            PACIFIC BAJA LIGHT METALS
                            HOLDING, INC. AND SUBSIDIARIES

                          CONSOLIDATED FINANCIAL REPORT

                                DECEMBER 31, 1995



<PAGE>
                                       CONTENTS





                                                                          Page
------------------------------------------------------------------------------

INDEPENDENT AUDITOR'S REPORT ON THE
   FINANCIAL STATEMENTS                                                     1

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

FINANCIAL STATEMENTS

   Consolidated balance sheets                                              2
   Consolidated statements of income                                        3
   Consolidated statements of stockholders' equity                          4
   Consolidated statements of cash flows                                    5
   Notes to consolidated financial statements                            6-15
------------------------------------------------------------------------------

INDEPENDENT AUDITOR'S REPORT ON THE
   FINANCIAL STATEMENT SCHEDULE                                            16

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

FINANCIAL STATEMENT SCHEDULE

   Schedule II - Valuation and qualifying
     accounts - allowance for doubtful accounts                            17


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

<PAGE>

                                    [LOGO]

                             MCGLADREY & PULLEN, LLP
                         -------------------------------
                   CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS



                         INDEPENDENT AUDITOR'S REPORT ON THE
                                 FINANCIAL STATEMENTS


To the Board of Directors
Pacific Baja Light Metals Holding, Inc.
Santa Fe Springs, California


We have audited the accompanying consolidated balance sheets of Pacific Baja
Light Metals Holding, Inc. and Subsidiaries as of December 31, 1995 and 1994 ,
and the related consolidated statements of income, stockholders' equity, and
cash flows for the years ended December 31, 1995, 1994 and 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these 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 the audits to obtain
reasonable assurance about 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 financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Pacific Baja Light
Metals Holding, Inc. and Subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for the years ended December
31, 1995, 1994 and 1993 in conformity with generally accepted accounting
principles.

As described in No. 14 to the consolidated financial statements, the Company
changed its method of accounting for "free" rent and for recording the benefits
realized for net operating loss carryforwards arising prior to the date of the
quasi-reorganization.



/s/ McGladrey & Pullen, LLP

Anaheim, California
May 15, 1996

<PAGE>

PACIFIC BAJA LIGHT METALS HOLDING, INC.
  AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995  AND 1994


<TABLE>
<CAPTION>
ASSETS                                                             1995         1994
-----------------------------------------------------------------------------------------
<S>                                                         <C>            <C>
Current Assets
   Cash                                                      $     279,000 $      39,000
   Accounts receivable, less allowance for doubtful
   accounts
     of $97,000 in 1995 and $30,000 in 1994 (Notes 4 and 9)      4,358,000     3,333,000
   Inventories (Notes 2 and 4)                                   3,080,000     2,526,000
   Prepaid expenses                                                201,000       464,000
   Deferred tax asset (Note 6)                                     193,000       357,000
                                                             ----------------------------

           TOTAL CURRENT ASSETS                                  8,111,000     6,719,000

Property, Plant and Equipment, net (Notes 3 and 4)               7,978,000     5,466,000

Other Assets                                                        29,000        28,000
                                                             ----------------------------

                                                             $  16,118,000 $  12,213,000
                                                             ----------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
-----------------------------------------------------------------------------------------


Current Liabilities
   Notes payable (Note 4)                                    $   3,480,000 $   2,218,000
   Current maturities of long-term debt (Note 4)                   762,000       462,000
   Accounts payable                                              3,619,000     2,942,000
   Accrued Compensation                                            610,000       565,000
   Accrued Other                                                   659,000       189,000
                                                             ----------------------------


           TOTAL CURRENT LIABILITIES                             9,130,000     6,376,000
                                                             ----------------------------

Long-Term Debt, less current maturities (Note 4)                 1,161,000       922,000
                                                             ----------------------------

Deferred Tax Liability (Note 6)                                  1,016,000       919,000
                                                             ----------------------------

Commitments (Notes 5 and 7)


Stockholders' Equity (Notes 6 and 7)
   Common stock, no par value; authorized 5,000,000
     shares; issued and outstanding 1,131,247 shares             2,386,000     2,386,000
   Additional Paid-in capital                                      492,000       492,000
   Retained earnings, since January 1, 1992                      1,933,000     1,118,000
                                                             ----------------------------

                                                                 4,811,000     3,996,000
                                                             ----------------------------

                                                             $  16,118,000 $  12,213,000
                                                             ----------------------------
See Notes to Consolidated Financial Statements.




</TABLE>
                                           2


<PAGE>
PACIFIC BAJA LIGHT METALS HOLDING, INC.
  AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1994  AND
1993

<TABLE>
<CAPTION>

                                                  1995          1994          1993
--------------------------------------------------------------------------------------
<S>                                         <C>            <C>         <C>


Net Sales (Note 9)                           $  28,986,000 $ 19,392,000 $  13,871,000

Cost of Goods Sold (Note 14)                    23,333,000   15,583,000    11,370,000
                                             -----------------------------------------

           GROSS PROFIT                          5,653,000    3,809,000     2,501,000

Operating Expenses                               3,644,000    2,608,000     1,533,000
                                             -----------------------------------------

           OPERATING INCOME                      2,009,000    1,201,000       968,000

Nonoperating Income (Expense)
   Interest (expense) (Note 4)                    (519,000)    (355,000)     (293,000)
   Other                                            16,000       17,000
                                             -----------------------------------------

           INCOME BEFORE INCOME
             TAXES (NOTE 2)                      1,506,000      863,000       675,000

Income Tax Expense (Notes 6 and 14)                691,000      383,000       430,000
                                             -----------------------------------------

           NET INCOME                        $     815,000 $    480,000 $     245,000
                                             =========================================

</TABLE>


See Notes to Consolidated Financial Statements.

                                           3


<PAGE>
PACIFIC BAJA LIGHT METALS HOLDING, INC.
  AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995,
1994  AND 1993


<TABLE>
<CAPTION>
                                                               Retained
                                                               Earnings
                                                  Additional    Since
                                       Common      Paid-In    January 1,
                                       Stock       Capital       1992       Total
-------------------------------------------------------------------------------------
<S>                                 <C>           <C>          <C>       <C>
Balance, January 1, 1993            $ 2,311,000 $     16,000 $   393,000 $ 2,720,000

   Issuance of 7,500 shares of
     common stock with a stated
     value of $10 a share                75,000                               75,000


   Net income, December 31, 1993                                 245,000     245,000

   Additional paid-in capital
     arising from "free" rent                        180,000                 180,000
     (Note 14)
                                    -------------------------------------------------

Balance, December 31, 1993            2,386,000      196,000     638,000   3,220,000

   Net income, December 31, 1994                                 480,000     480,000

   Utilization of net operating
   loss
     carryovers (Note 6)                             116,000                 116,000

   Additional paid-in capital
     arising from "free" rent                        180,000                 180,000
     (Note 14)
                                    -------------------------------------------------

Balance, December 31, 1994            2,386,000      492,000   1,118,000   3,996,000

   Net income                                                    815,000     815,000
                                    -------------------------------------------------

Balance, December 31, 1995          $ 2,386,000 $    492,000 $ 1,933,000 $ 4,811,000
                                   =================================================

</TABLE>


See Notes to Consolidated Financial Statements.

                                           4


<PAGE>
PACIFIC BAJA LIGHT METALS HOLDING, INC.
   AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993


<TABLE>
<CAPTION>
                                                    1995          1994          1993
--------------------------------------------------------------------------------------
<S>                                          <C>           <C>          <C>

Cash Flows from Operating Activities
   Net income
   Adjustments to reconcile net income to    $     815,000 $    480,000 $     245,000
   net
     cash provided by operating activities:
     Depreciation                                  927,000      662,000       526,000
     Deferred income taxes                         262,000      367,000       348,000
     Rent expense recorded for "free" rent                      180,000       180,000
     Change in assets and liabilities:
       (Increase) decrease in:
         Accounts receivables                  (1,025,000)    (598,000)     (213,000)
         Inventories                             (554,000)    (471,000)     (441,000)
         Prepaid expenses                          265,000    (282,000)       (5,000)
       Increase in:
         Accounts payable                          677,000      313,000       277,000
         Accrued expenses                          515,000      290,000        26,000
     Other                                          34,000                     17,000
                                             -----------------------------------------


           NET CASH PROVIDED BY OPERATING
              ACTIVITIES                         1,916,000      941,000       960,000
                                             -----------------------------------------

Cash Flows from Investing Activities
   Purchase of property, plant and equipment   (3,493,000)  (1,632,000)   (1,342,000)
   Other                                            16,000     (49,000)        42,000
                                             -----------------------------------------

           NET CASH (USED IN) INVESTING
              ACTIVITIES                       (3,477,000)  (1,681,000)   (1,300,000)
                                             -----------------------------------------

Cash Flows from Financial Activities
   Net borrowings under line of credit           1,262,000      318,000       650,000
   agreements
   Proceeds from long-term borrowings            1,475,000      473,000       236,000
   Proceeds from issuance of common stock                                      75,000
   Principal payments on long-term               (936,000)     (51,000)     (718,000)
   borrowings
                                             -----------------------------------------

           NET CASH PROVIDED BY FINANCING
              ACTIVITIES                         1,801,000      740,000       243,000
                                             -----------------------------------------

           NET INCREASE (DECREASE) IN CASH         240,000                   (97,000)

Cash
   Beginning                                        39,000       39,000       136,000
                                             -----------------------------------------

   Ending                                    $     279,000 $     39,000 $      39,000
                                             =========================================
</TABLE>




See Notes to Consolidated Financial Statements.

                                           5


<PAGE>

PACIFIC BAJA LIGHT METALS HOLDING, INC.
  AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1.  NATURE OF BUSINESS AND SIGNIFICANT POLICIES

NATURE OF BUSINESS:

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 in the United States
and abroad and castings prepared to customer specifications on a contract basis.

A SUMMARY OF THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES IS AS FOLLOWS:

Estimates:

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

Principles of consolidation:

The consolidated financial statements include the accounts of the Company and
two 100% owned subsidiaries (Optima Wheel, Inc. and Baja Pacific Light Metals,
Inc.) and one 96% owned subsidiary (Baja Oriente S.A. de C.V.). All significant
intercompany accounts and transactions have been eliminated in consolidation.

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.

Inventories:

Inventories are stated at the lower of cost of market. For the materials portion
of inventories, the cost is determined using the LIFO (last-in, first-out)
method during 1995 and 1994. During 1993, the cost of the materials portion of
the inventory was determined using the FIFO (first-in, first-out) method (see
Note 2). For the other components of inventories (labor and overhead) the cost
is determined using the FIFO (first-in, first-out) method.







                                           6
<PAGE>

PACIFIC BAJA LIGHT METALS HOLDING, INC.
  AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1.   NATURE OF BUSINESS AND SIGNIFICANT POLICIES (CONTINUED)

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 - 20 years


Income taxes:

Deferred taxes are provided on the liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss
carryforwards and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.

Foreign operations:

Baja Oriente S.A. de C.V. operates in Ensenada, Mexico and its functional
currency is the U.S. dollar. The foreign currency gain for 1995, 1994 and 1993
is approximately $7,000, $79,000, and $10,000, respectively, and is included in
operating expenses. Subsequent to December 31, 1995, the exchange rate has
changed from approximately 7.684 Mexican Pesos to $1.00 U.S. at December 31,
1995 to approximately 7.419 Mexican Pesos to $1.00 U.S. at May 15, 1996.

The net monetary liabilities denominated in Mexican Pesos as of December 31,
1995 is $322,000 (in U.S. dollars).







                                           7

<PAGE>


PACIFIC BAJA LIGHT METALS HOLDING, INC.
  AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1.   NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair value of financial instruments:

Financial Accounting Standards Board (FASB) Statement No. 107, Disclosures about
Fair Value of Financial Instruments, requires disclosure of fair value
information about financial intruments, whether or not recognized in the balance
sheet, for which it is practicable to estimate that value or other valuation
market prices are not available, fair values are based on estimates using
present value or other valuation techniques. Those techniques are significantly
affected by the assumptions used, including the discount rate and estimates of
future cash flows. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases, could not
be realized in immediate settlement of the instrument. Statement No. 107
excludes certain financial instruments and all nonfinancial instruments from its
disclosure requirements. Accordingly, the aggregate fair value amounts presented
do not represent the underlying value of the Company.

The following methods and assumptions were used by the Company in estimating the
fair value of each class of financial instruments for which it is practicable to
estimate that value:

   Notes payable: The fair value of the Company's notes payable is estimated
   based on the current rates offered to the Company for debt of the same
   remaining maturities with similar collateral requirements. For variable rate
   instruments, the fair market value approximates the carrying value. For fixed
   rates instruments, the market value approximates the carrying value based
   upon the maturity date of these instruments and their risk factors.

Seniority premiums and severance payments:

Seniority premiums, to which employees located in Mexico are entitled upon
retirement after fifteen years or more of service, in accordance with the
Mexican Federal Labor Law, are recognized as expenses in the years in which
services are rendered, based on Company estimates.

Any other payments to which employees may be entitled in the event of
separation, disability or death are charged to operations in the year in which
paid.

                                           8

<PAGE>
PACIFIC BAJA LIGHT METALS HOLDING, INC.
  AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

Note 2.  INVENTORIES


                                        1995         1994
--------------------------------------------------------------

   Finished goods                 $   1,187,000 $     751,000
   Work-in-process                      484,000       766,000
   Raw materials                      1,409,000     1,009,000
                                  ----------------------------

                                  $   3,080,000 $   2,526,000
                                  ----------------------------

During 1994, the method of determining the cost of the materials portion of
inventories was changed from the first-in, first-out (FIFO) method to the
last-in, first-out (LIFO) method. The change was made because management
believes the statement of income would more clearly report operations by
matching current costs with current revenue.

The use of the LIFO method of determining the cost of the materials portion of
inventories had the effect of decreasing reported inventories at December 31,
1995 and 1994 by $384,000 and $416,000 and increasing (decreasing) net income
before income taxes for 1995 by $32,000 and 1994 by (416,000) as compared to
what they would have been under the FIFO method.


NOTE 3.  Property, Plant and Equipment

                                        1995           1994
--------------------------------------------------------------

   Land                           $      60,000 $      60,000
   Buildings                             60,000        60,000
   Furniture and fixtures               238,000       136,000
   Machinery and equipment            8,161,000     6,144,000
   Transportation equipment             266,000       217,000
   Leasehold improvements             2,535,000     1,296,000
                                  ----------------------------
                                     11,320,000     7,913,000
   Less accumulated depreciation      3,342,000     2,447,000
                                  ----------------------------

                                  $   7,978,000 $   5,466,000
                                  ----------------------------


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
$4,678,000 and $3,676,000 at December 31, 1995 and 1994, respectively.




                                           9

<PAGE>
PACIFIC BAJA LIGHT METALS HOLDING, INC.
   AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 4.  Notes Payable and Long-Term Debt


                                                  1995          1994
-------------------------------------------------------------------------

Notes payable:

   Line of credit (A)                        $   2,040,000 $   1,721,000
   Line of credit (B)                            1,440,000       497,000
                                             ----------------------------

                                             $   3,480,000 $   2,218,000
                                             ============================


(A)    As of December 31, 1995, Optima Wheels, Inc. has a $3,000,000 line of
       credit agreement with a bank, secured by all receivables, inventory and
       equipment. The borrowings bear interest at the bank's prime rate (8.5% at
       December 31, 1995) plus 1% and are limited to 30% of eligible inventory
       and 80% of eligible accounts receivable. The agreement expires in
       September 1996; is guaranteed by certain stockholders; and contains
       certain liquidity and net worth covenants.

(B)    At December 31, 1995, Baja Pacific Light Metals Holding, Inc. has a
       $1,500,000 line of credit agreement with a bank, secured by all
       receivables, inventory and equipment. The borrowings bear interest at the
       bank's prime rate (8.5% at December 31, 1995) plus 1% and are limited to
       80% of eligible accounts receivable. The agreement expires in September
       1996; is guaranteed by certain stockholders; and contains certain
       liquidity and net worth covenants. At December 31, 1995, Pacific Baja
       Light Metals Holding, Inc. was in violation of certain covenants.

                                           10
<PAGE>
PACIFIC BAJA LIGHT METALS HOLDING, INC.
  AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------
Note 4.  Notes Payable and Long-Term Debt (Continued)

                                                                      1995        1994
------------------------------------------------------------------------------------------
<S>                                                           <C>               <C>
Long-term debt:

Notes payable, interest ranging from 8.6% to 14.4, with
  monthly installments of $22,403, including interest,
  secured by equipment, maturing at various dates through
  2000                                                         $    760,000     $ 531,000

Notes payable to a bank, interest at prime rate (8.5%
  at December 31, 1995) plus 1%, with monthly
  installments of $13,889, including interest,
  secured by equipment, maturing September 1997                     292,000       459,000

Notes payable, interest ranging from 7% to 15%, with
  monthly installments of $29,829, including interest,
  secured by equipment, maturing at various dates
  through 1999                                                      265,000             -

Note payable, interest at 8%, principle, due December 31,           250,000       368,000
  1997

Note payable to a bank, interest at prime rate (8.5% at
  December 31, 1995) plus 1%, with monthly installments of
  $5,694, including interest, secured by equipment, maturing
  September 1998                                                     188,000

Note payable to stockholder due on demand, interest at 10%,           93,000
  unsecured, interest payable annually
                                                                      75,000       26,000
Other                                                              ------------------------
                                                                   1,923,000    1,384,000
   Less current maturities                                           762,000      462,000
                                                                   -------------------------

                                                                 $ 1,161,000 $    922,000
                                                                   =========================
</TABLE>

Aggregate maturities of long-term debt as of December 31, 1995 are as follows:
1996 $762,000; 1997 $684,000; 1998 $243,000; 1999 $170,000; 2000 $64,000 (total
$1,923,000).

During 1995, 1994 and 1993, approximately $103,000, $18,000 and $34,000,
respectively, in interest was incurred on the notes payable to stockholders.



                                          11

<PAGE>
PACIFIC BAJA LIGHT METALS HOLDING, INC.
   AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 5.  LEASE COMMITMENTS AND RELATED PARTY TRANSACTION

The Company leases its California facility under a lease agreement which expires
in 2001. This agreement requires the Company to pay all property taxes, normal
maintenance and insurance on the property and contains a five year renewal
option. The Company leases its facilities in Ensenada, Mexico from certain
stockholders of the Company on a month-to-month operating lease requiring
monthly payments of $15,000 beginning in 1995. The Company recorded rent expense
of $15,000 per month for 1993 and 1994, offset by increases to paid-in capital
for the estimated fair value of the "free rent" (Note 14). The Company is in the
process of entering into a long-term lease on this facility. At December 31,
1995, the Company has leasehold improvements with a net book value of $1,622,000
on the Ensenada facility. These leasehold improvements are being amortized over
an 8 - 20 year period due to management's belief that the Company will be able
to enter into a satisfactory long-term lease arrangement and remain in this
facility long enough to recover the leasehold improvements.

Rent expense for 1995, 1994 and 1993 was approximately $517,000; $368,000 and
$303,000, respectively (including $180,000 per year on the Ensenada facility).

The total minimum lease commitments at December 31, 1995 is as follows: 1996
through 2000 $304,000 per year and thereafter $101,000 (total $1,621,000).


NOTE 6.  INCOME TAX MATTERS

The components of the provision for income tax are as follows:
                                   1995          1994          1993
---------------------------------------------------------------------

   Current                  $     348,000 $      16,000 $      3,000
   Deferred                       262,000       367,000      348,000
   Foreign                         81,000                     79,000
                            -----------------------------------------

                            $     691,000 $     383,000      430,000
                            -----------------------------------------


Total tax expense differs from the expected tax expense due to the following:



<TABLE>
<CAPTION>
                                                    1995             1994             1993
<S>                                          <C>           <C>              <C>
Computed "expected" tax expense              $    512000   $       293000   $       230000
State taxes, net of federal tax benefit            90000            63000            51000
Foreign taxes                                      81000
Non-deductability of "free" rent                                    61000            61000
Other                                               8000           (34000)           9000

                                             $    691000   $       383000   $       430000
</TABLE>





                                          12
<PAGE>


PACIFIC BAJA LIGHT METALS HOLDING, INC.
   AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6.   INCOME TAX MATTERS (CONTINUED)

Net deferred income taxes consist of the following at December 31,:


                                                    1995         1994
-------------------------------------------------------------------------

Deferred Tax Assets
   Inventories                               $      71,000 $      47,000
   Net operating loss carryovers                                 214,000
   Reserves for doubtful accounts                   39,000        12,000
   Accrued expenses                                 32,000        49,000
   Investment tax credit                            51,000        35,000
                                             ----------------------------

           TOTAL CURRENT DEFERRED TAX ASSET  $     193,000 $     357,000
                                             ============================

Long-Term Deferred Tax Liability, property,
   plant and equipment                       $   1,016,000 $     919,000
                                             ============================


On January 1, 1992, the Company affected a quasi reorganization. Benefits
realized from the net operating loss carryforwards arising prior to the date of
the quasi reorganization are recorded as additions to paid-in capital in the
year recognized in net deferred tax assets. During 1994, $116,000 of these
benefits were realized. The Company has no unused operating loss carryforwards
at December 31, 1995. The investment tax credit carryforward of $51,000 expires
in 2005.


NOTE 7.  STOCK OPTIONS

Officers, stockholders and employees of the Company have unexpired options to
purchase 92,000 shares of common stock of the Company. All options are currently
exercisable except for an option to purchase 75,000 shares at $1 which are
exercisable upon sale of the Company (see Note 10). The remaining options were
granted at prices ranging from $3 to $10 per share, which approximated the
market value at the dates of the grants.

In addition, the Company has granted an option to its president to purchase
shares of company stock at $3 per share. The agreement calls for options to be
issued totaling 5,000 shares for each $1 per share sales price of the Company.
These options are issuable only upon sale of the Company. If the sale discussed
in Note 10 is completed, the agreement will require options to be issued
totaling approximately 110,000 shares.




                                          13
<PAGE>
PACIFIC BAJA LIGHT METALS HOLDING, INC.
   AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7.  STOCK OPTIONS (CONTINUED)

Options for 5,000 shares at $7 per share were granted during 1994. No options
were granted in 1995 or 1993. No options were exercised or expired during 1995;
1994; or 1993.


NOTE 8.  SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash payments for interest for 1995; 1994 and 1993 totaled $624,000; $297,000
and $276,000, respectively. Cash payments for income taxes for 1995; 1994 and
1993 totaled $96,000; $3,000 and $37,000, respectively.


NOTE 9.  CONCENTRATIONS

Major customers:

   


Net sales for the years ended December 31, 1995, 1994 and 1993 include sales to
the following major customers, together with the accounts receivable due
from those customers at December 31, 1995 and 1994:

                              Amount of Net Sales          Accounts Receivable
                          Year Ended December 31,              December 31,

Customer                   1995     1994      1993         1995           1994

Customer A             $7,651,000  $5,034,000  $944,000    $270,000    $422,000
Customer B              7,178,000   4,699,000   2,644,000   962,000     555,000

    

Collective bargaining agreements:

The Company participates in collective bargaining agreements with unionized
employees in its Ensenada, Mexico facility. Eighty percent of the Company's
total labor force is covered by the agreements. None of the agreements are due
to expire within one year.


NOTE 10.  SUBSEQUENT EVENT AND ACQUISITION AGREEMENT

On March 15, 1996, the Company signed an acquisition agreement to merge with a
company that is publicly traded on the Vancouver stock exchange.


NOTE 11.  RECLASSIFICATIONS

Certain items on the financial statements for the years ended December 31, 1994
and 1993 have been reclassified to be consistent with the classifications of the
year ended December 31, 1995. These reclassifications had no effect on net
income or net shareholders' equity.


                                          14



<PAGE>
PACIFIC BAJA LIGHT METALS HOLDING, INC.
   AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 12.  QUASI-REORGANIZATION


The Company effected a quasi-reorganization as of January 1, 1992 at which time
the Company eliminated a deficit of $1,312,000.


NOTE 13.  RECENT ACCOUNTING PRONOUNCEMENT

In 1995 the FASB issued Statement No. 123, "Accounting for Stock-Based
Compensation." Statement No. 123, establishes financial accounting and reporting
standards for stock-based employee compensation plans such as stock option
plans. The Statement generally suggests, but does not require, employee
stock-based compensation transactions be accounted for based on the fair value
of the consideration received or the fair value of the equity instruments
issued, whichever is more reliably measurable. An enterprise may continue to
follow the requirements of Accounting Principles Board (APB) Opinion No. 25, for
employee based transactions, which does not require compensation to be recorded
if the consideration to be received is at least equal to the fair value at the
measurement date. If an enterprise elects to follow APB Opinion No. 25, it must
disclose the proforma effects on net income as if compensation were measured in
accordance with the suggestions of Statement No. 123. All stock based
transactions with non-employees entered into after December 15, 1995 must be
accounted for at the fair value of the instrument. The Company has not yet
determined if it will continue to follow APB Opinion No. 25, for employee based
transactions, or will adopt Statement No. 123. The Company does not believe
adoption of this pronouncement in 1996 will have a material impact on the
financial statements.


NOTE 14.  ACCOUNTING CHANGE

In 1995 the Company changes its method of accounting for the "free" rent
provided on its Ensenada facility. In 1994 and 1993, the Company was not charged
rent on its Ensenada facility which is owned by certain stockholders of the
Company and did not record rent expense for this "free" rent. In 1995, the
Company changed its method of accounting and recorded $180,000 in 1994 and 1993
in rent expense (the estimated fair value of the leased facilities) offset by an
increase in paid-in capital.

In addition, the Company changed its method of accounting for tax benefits
arising prior to the date quasi-reorganization. Previously the Company recorded
the benefit realized from the net operating loss carryforwards as a reduction of
income tax expense. The Company changed it method of accounting to record these
benefits realized as additions to paid-in capital.









                                          15


<PAGE>


                                  [LOGO]

                           MCGLADREY & PULLEN, LLP
                      --------------------------------
                CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS




                         INDEPENDENT AUDITOR'S REPORT ON
                             FINANCIAL STATEMENT SCHEDULE


To the Board of Directors
Pacific Baja Light Metals, Holding, Inc.
Santa Fe Springs, California


Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The consolidated
supplemental Schedule II is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not a part of the basic
consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in our audits of the basic consolidated financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic consolidated financial statements taken as a whole.





/s/ McGladrey & Pullen, LLP
Anaheim, California
May 15, 1996


<PAGE>

PACIFIC BAJA LIGHT METALS HOLDING, INC.
   AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS - ALLOWANCE FOR DOUBTFUL
ACCOUNTS YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993


                      Balance at      Charged to                    Balance at
                      Beginning       Costs and                       End of
                      of Period       Expenses       Write Offs       Period
--------------------------------------------------------------------------------
Years ended December 31,

       1993    $               $    95,000      $      (26,000)     $   69,000
               ===============================================================

       1994    $    69,000      $    111,000     $    (150,000)     $   30,000
               ===============================================================

       1995    $    30,000      $    84,000      $    (17,000)      $   97,000
               ===============================================================






                                         17


<PAGE>

                            PACIFIC BAJA LIGHT METALS
                         HOLDING, INC. AND SUBSIDIARIES

                          CONSOLIDATED FINANCIAL REPORT
                                    Unaudited

                                  JUNE 30, 1996



<PAGE>


                                    CONTENTS

                                                          Page
--------------------------------------------------------------

 FINANCIAL STATEMENTS


 Consolidated balance sheet                                  1
 Consolidated statements of income                           2

 Consolidated statements of cash flows                       3

 Notes to consolidated financial statements                4-6

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



<PAGE>
 PACIFIC BAJA LIGHT METALS HOLDING INC.
  AND SUBSIDIARIES

 CONSOLIDATED BALANCE SHEET
 UNAUDITED
 JUNE 30, 1996



 ASSETS
----------------------------------------------------------------------

 Current Assets
          Cash                                              $ 441,000
          Accounts receivable, less allowance for
             doubtful accounts of $97,000                   6,722,000
          Inventories                                       2,585,000
          Prepaid expenses                                    657,000
          Deferred tax asset                                  193,000
                                                     ----------------

                TOTAL CURRENT ASSETS                       10,598,000

 Property, Plant and Equipment, net                         8,135,000
                                                     ----------------
                                                     $     18,733,000
                                                     ================


 LIABILITIES AND STOCKHOLDERS' EQUITY
---------------------------------------------------------------------

 Current Liabilities                                 $      4,485,000
          Notes payable

          Current maturities of
            long-term debt (Note 4)                           572,000
          Accounts payable                                  3,533,000
          Accrued compensation                                417,000
          Accrued other                                       261,000
          Income taxes payable                              1,105,000
                                                     ----------------

                  TOTAL CURRENT LIABILITIES                10,373,000
                                                     ----------------

 Long-Term Debt, less current maturities (including
      $76,000 due to stockholders)                            630,000
                                                     ----------------

 Deferred Tax Liability                                     1,025,000
                                                     ----------------

 Stockholders' Equity

             Common stock, no par value; authorized
               5,000,000 shares; issued and
               outstanding 1,131,247 shares                2,386,000
             Additional Paid-in capital                      492,000

             Retained earnings, since January 1, 1992      3,827,000
                                                     ----------------
                                                            6,705,000
                                                     ----------------

                                                     $     18,733,000
                                                     ================


See Notes to Consolidated Financial Statements.




                                        1

<PAGE>
 PACIFIC BAJA LIGHT METALS HOLDING INC.
  AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF INCOME
 UNAUDITED
 SIX MONTHS ENDED JUNE 30, 1996 AND 1995




                                                  1996           1995
--------------------------------------------------------------------------
 Net Sales                                    $ 20,024,000   $ 14,661,000

 Cost of Goods Sold                             14,892,000     11,671,000
                                              ----------------------------

    Gross profit                                 5,132,000      2,990,000

 Operating Expenses                              1,686,000      1,563,000
                                              ----------------------------

 Operating income                                3,446,000      1,427,000

 Nonoperating Income (Expense)
   Interest expense (including $4,000
   in 1996 and $17,000 in 1995 paid               (248,000)      (232,000)
      to stockholders)
               Other                               (41,000)       (89,000)
                                              ----------------------------

    Income before income taxes                   3,157,000       1,106,000


 Income Tax Expense                              1,263,000         442,000
                                              ----------------------------

    Net income                                   1,894,000         664,000
                                              ============================


See Notes to Consolidated Financial Statements.






                                        2

<PAGE>
 PACIFIC BAJA LIGHT METALS HOLDING INC.
    AND SUBSIDIARIES

 CONSOLIDATED STATEMENT OF CASH FLOWS
 UNAUDITED
 SIX MONTHS ENDED JUNE 30, 1996 AND 1995




                                                       1996        1995
------------------------------------------------------------------------------
 Cash Flows from Operating Activities

 Net income                                       $ 1,894,000      664,000

 Adjustments to reconcile net income
   to net cash provided by operating activities:
   Depreciation                                      553,000       418,000

   Deferred income taxes                               9,000       (15,000)
   Change in assets and liabilities:
     (Increase) decrease in:
        Accounts receivables                      (2,364,000)   (1,051,000)
        Inventories                                  495,000      (954,000)
        Prepaid expenses                            (456,000)     (316,000)
      Increase in:
        Accounts payable                             (86,000)      562,000
        Accrued expenses                            (591,000)      405,000
        Income taxes payable                       1,105,000       442,000
      Other                                           29,000        28,000
                                                 -------------------------
          Net cash provided by operating
             activities                              588,000       183,000
                                                 -------------------------
 Cash Flows from Investing Activities
       Net cash (used in) purchase of property,
       plant and  equipment                        (710,000)    (1,199,000)
                                                 -------------------------

 Cash Flows from Financial Activities
        Net borrowings under line of credit
          agreements                              1,005,000      1,157,000

        Proceeds from long-term borrowings          771,000
        Principal payments on
          long-term borrowings                   (1,492,000)       (63,000)
                                                 -------------------------

          Net cash provided by financing
            activities                              284,000      1,094,000
                                                 -------------------------

          Net increase in cash                      162,000         78,000

 Cash
       Beginning                                    279,000         39,000
                                                 -------------------------

       Ending                                       441,000        117,000
                                                 =========================




See Notes to Consolidated Financial Statements.

                                        3
<PAGE>

PACIFIC BAJA LIGHT METALS HOLDING, INC.
   AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited




NOTE 1.  Nature of Business and Significant Policies


Nature of Business:

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 in the United States
and abroad and castings prepared to customer specifications on a contract basis.

A summary of the Company's significant accounting policies is as follows:

Unaudited interim information:

In the opinion of management, the unaudited financial  statements reflect all
adjustments, consisting only of normal adjustments, necessary to present fairly
the financial position  of  Pacific Baja Light Metals Holding, Inc. and
subsidiaries at June 30, 1996 and the  results of operations and cash flows for
the six months ended June 30, 1996 and 1995 in conformity with generally
accepted accounting principles.

These interim financial statements are not intended to include all disclosures
required under generally accepted accounting principles and should be read in
conjunction with the Company's financial statements for the year ended December
31, 1995.

NOTE 2.  Inventories

                                              June 30,
                                               1996
------------------------------------------------------
 Finished goods                            $  778,000


 Work-in-process                              748,000

 Raw materials                              1,059,000
                                           ----------
                                           $2,585,000
                                           ==========

During 1994, the method of determining the cost of the materials portion of
inventories was changed from the first-in, first-out (FIFO) method to the
last-in, first-out (LIFO) method.  The change was made because management
believes the statement of income would more clearly report operations by
matching current costs with current revenue.

The use of the LIFO method of determining the cost of the materials portion of
inventories had the effect of decreasing reported inventories at June 30, 1996
by $460,000 and increasing (decreasing) net income before income taxes for the
six months ended June 30, 1996 and 1995 by ($56,000) and $-0-, respectively, as
compared to what they would have been under the FIFO method.





                                        4

<PAGE>




PACIFIC BAJA LIGHT METALS HOLDING, INC.
  AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited


--------------------------------------------------------------------------------
NOTE 3.     Notes Payable

                                                  June
                                                   30,
                                                  1996
--------------------------------------------------------------------------------

 Line of credit (A)                          $ 3,239,000

 Line of credit (B)                            1,246,000
                                             -----------
                                             $ 4,485,000
                                             ===========

(A)  As of June 30, 1996, Optima Wheel, Inc. has a $3,500,000 line of
     credit agreement with a bank, secured by all receivables, inventory
     and equipment. The borrowings bear interest at the bank's prime rate
     (8.25% at June 30, 1996) plus 1% and are limited to 30% of eligible
     inventory and 80% of eligible accounts receivable. The agreement
     expires in September 1996; is guaranteed by certain stockholders; and
     contains certain liquidity and net worth covenants.

(B)  At June 30, 1996, Baja Pacific Light Metals Holding, Inc. has a
     $1,500,000 line of credit agreement with a bank, secured by all
     receivables, inventory and equipment. The borrowings bear interest at
     the bank's prime rate (8.25% at June 30, 1996) plus 1% and are limited
     to 80% of eligible accounts receivable. The agreement expires in
     September 1996; is guaranteed by certain stockholders; and contains
     certain liquidity and net worth covenants.

   

     At June 30, 1996, the Company was in violation of the covenants relating
     to minimum working capital and minimum tangible net worth. The company
     is negotiating with the bank regarding these lines of credit, and has a
     tentative agreement to increase the overall avaialability to a combined
     amount of $8,000,000 with interest at the bank's prime plus .25%.

    
NOTE 4.   Lease Commitments and Related Party Transaction


The Company leases its California facility under a lease agreement which expires
in 2001. This agreement requires the Company to pay all property taxes, normal
maintenance and insurance on the property and contains a five year renewal
option.  The Company leases its facilities in Ensenada, Mexico from certain
stockholder's of the Company on a month-to-month operating lease requiring
monthly payments of $15,000. The Company is in the process of entering into a
long-term lease on this facility.

Rent expense for the six months ended June 30, 1996, and 1995 was approximately
$282,000 and $277,000, respectively (including  $90,000  and  $75,000,
respectively, on the Ensenada facility).





                                      5

<PAGE>
PACIFIC BAJA LIGHT METALS HOLDING, INC.
  AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited

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

NOTE 5.  Stock Options

Officers, stockholders and employees of the Company have unexpired options to
purchase 92,000 shares of common stock of the Company.  All options are
currently exercisable except for an option to purchase 75,000 shares at $1 which
are exercisable upon sale of the Company (see Note 10). The remaining options
were granted at prices ranging from $3 to $10 per share, which approximated the
market value at the dates of the grants.

In addition, the Company has granted an option to its president to purchase
shares of company stock at $3 per share. The agreement calls for options to be
issued totaling 5,000 shares for each $1 per share sales price of the Company.
These options are issuable only upon sale of the Company. If the sale discussed
in Note 10 is completed, the agreement will require options to be issued
totaling approximately 110,000 shares.

When the options are granted, the difference between the fair market value of
the option and the option price will be charged against income during that
period.

Options for 5,000 shares at $7 per share were granted during 1994. No options
were granted in 1995 or 1993. No options were exercised or expired during 1995;
1994; or 1993.


NOTE 6.  Acquisition Agreement

On March 15, 1996, the Company signed an acquisition agreement to merge with a
company that is publicly traded on the Vancouver stock exchange.



<PAGE>



                          TURBOYDYNE TECHNOLOGIES INC.
                          ----------------------------

           INTRODUCTION TO PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
           -----------------------------------------------------------

                             AS AT JUNE 30, 1996 AND
                             -----------------------

                      FOR THE YEAR ENDED DECEMBER 31, 1995
                      -------------------------------------

                     AND THE SIX MONTHS ENDED JUNE 30, 1996
                     --------------------------------------
                            (Stated in U.S. Dollars)




The following unaudited pro-forma consolidated balance sheet and pro-forma
consolidated statements of operations and explanatory notes give effect to the
proposed acquisition of Pacific Baja Light Metals Holding, Inc. by Turbodyne
Technologies Inc. and is based on the estimates and assumptions set forth in the
explanatory notes.  This pro-forma consolidated balance sheet and these pro-
forma consolidated statements of operations have been prepared utilizing the
historical financial statements of Turbodyne Technologies Inc. and Pacific Baja
Light Metals Holding, Inc. and should be read in conjunction with the historical
financial statements and notes thereto included elsewhere in this registration
statement.

These pro-forma consolidated statements of operations have been prepared as if
the acquisition of Pacific Baja Light Metals Holding, Inc. by Turbodyne
Technologies Inc. had been consummated on January 1, 1995 under the purchase
method of accounting and carried through to June 30, 1996.  The pro-forma
balance sheet has been prepared as if the acquisition was consummated on June
30, 1996.  In addition, the unaudited pro-forma consolidated balance sheet and
pro-forma consolidated statements of operations have been prepared as if the
brokered private placements had closed effective January 1, 1995.

This pro-forma financial data is provided for comparative purposes only and does
not purport to be indicative of the actual financial position or results of
operations had the transaction occurred at the beginning of the fiscal period
presented, nor are they necessarily indicative of the results of future
operations.


<PAGE>


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

                                   PRO FORMA CONSOLIDATED BALANCE SHEET
                                   ------------------------------------

                                              JUNE 30, 1996
                                              -------------
                                         (Stated in U.S. Dollars)

<TABLE>

                                        Pacific Baja
                        Turbodyne       Light Metals
                  Technologies Inc.     Holding, Inc.       Adjustments          Pro-Forma


                  -----------------     -------------       -----------          ---------
                                           ASSETS
CURRENT

<S>               <C>                 <C>              <C>                    <C>
 Cash               $  1,759,872      $    441,000     {$ 17,051,250   (b)    $  7,251,452
                                                       { (12,000,670)  (a)
 Accounts
   receivable             60,390         6,722,000                               6,782,390
 Advances
   receivable             37,497              -                                     37,497
 Inventories               -             2,585,000                               2,585,000
 Prepaid
   expenses              102,211           657,000                                 759,211
 Deferred tax
   asset                   -               193,000                                 193,000
                      ----------         ----------                             ----------
                       1,959,970        10,598,000                              17,608,550
CAPITAL ASSETS           908,558         8,135,000                               9,043,558
   

GOODWILL                   -                  -           8,818,056   (a)        8,818,056

DEFERRED
  ACQUISITION
  COSTS                  523,056              -             (523,056)  (a)
                      ----------        ----------                              ----------
                    $  3,391,584      $ 18,733,000                            $ 35,470,164
                      ==========        ==========                              ==========
    
<CAPTION>
                                               LIABILITIES
CURRENT

<S>               <C>                 <C>              <C>                    <C>
 Notes
  payable           $      -          $  4,485,000                            $  4,485,000
 Accounts
  payable and
  accrued
  liabilities            318,498         4,211,000                               4,529,498
Loans payable              4,131              -                                      4,131
Current portion
   of long term
   debt                   25,102           572,000                                 597,102
Income taxes
   payable                 -             1,105,000                               1,105,000
                      ----------        ----------                              ----------
                         347,731        10,373,000                              10,720,731
LONG TERM DEBT            83,337           630,000                                 713,337

DEFERRED TAX
  LIABILITY                -             1,025,000                               1,025,000
                      ----------        ----------                              ----------
                         431,068        12,028,000                              12,459,068
                      ----------        ----------                              ----------

</TABLE>



<PAGE>




<TABLE>


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

                             PRO FORMA CONSOLIDATED BALANCE SHEET (CONTINUED)
                             ------------------------------------------------

                                              JUNE 30, 1996
                                              -------------
                                         (Stated in U.S. Dollars)

<CAPTION>



                                        Pacific Baja
                        Turbodyne       Light Metals
                  Technologies Inc.     Holding, Inc.       Adjustments          Pro-Forma
                  -----------------     -------------       -----------          ---------

                                    SHAREHOLDER'S EQUITY

<S>                 <C>                  <C>             <C>                     <C>
   

SHARE CAPITAL         10,062,523          2,386,000      {(1,705,125) (c)
  (27,970,489)                                           { 1,705,125  (c)

 Common                                                  {17,051,250  (b)
  shares)                                                { 2,999,330  (a)
                                                         {(2,386,000) (a)       30,113,103
ADDITIONAL PAID
  IN CAPITAL               -                492,000         (492,000) (a)


RETAINED EARNINGS
  (DEFICIT)           (7,102,007)         3,827,000       (3,827,000) (a)      ( 7,102,007)
                      ----------         ----------                             ----------
                       2,960,516          6,705,000                              23,011,096
                      ----------         ----------                             ----------

                    $  3,391,584       $ 18,733,000                           $  35,470,164
                      ==========         ==========                             ==========


    
</TABLE>





<PAGE>






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

                              PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                              ----------------------------------------------

                                  FOR THE SIX MONTHS ENDED JUNE 30, 1996
                                  --------------------------------------
                                         (Stated in U.S. Dollars)



                                        Pacific Baja
                        Turbodyne       Light Metals
<TABLE>
<CAPTION>
                  Technologies Inc.     Holding, Inc.       Adjustments          Pro-Forma
                  -----------------     -------------       -----------          ---------

<S>                 <C>                <C>                  <C>               <C>
NET SALES            $     -           $ 20,024,000                           $ 20,024,000

COST OF GOODS
  SOLD                     -             14,892,000                             14,892,000
                       ---------         ----------                             ----------
   

GROSS PROFIT               -              5,132,000                              5,132,000

OPERATING
  EXPENSES             2,124,315          1,686,000        220,451  (d)          4,030,766
                       ---------         ----------        -------              ----------

OPERATING
  INCOME (LOSS)       (2,124,315)         3,446,000                              1,101,234

NON OPERATING
  EXPENSES
  Interest
    expense                -               (248,000)                              (248,000)
  Other                    -                (41,000)                               (41,000)
                       ---------         ----------        -------              ----------

INCOME (LOSS)
  BEFORE
  INCOME TAXES        (2,124,315)         3,157,000                                812,234

INCOME TAX
  EXPENSE                  -             (1,263,000)                            (1,263,000)
                       ---------         ----------                             ----------

NET INCOME
  (LOSS)             $(2,124,315)      $  1,894,000                           $   (450,766)
                       =========         ==========                             ==========

NET INCOME
  (LOSS)
  PER SHARE                                                                         $(0.02)
                                                                                      ====
    
WEIGHTED AVERAGE
  NUMBER OF COMMON
  SHARES
  OUTSTANDING                                                                   23,441,021
                                                                                ==========


</TABLE>




<PAGE>






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

                              PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                              ----------------------------------------------

                                   FOR THE YEAR ENDED DECEMBER 31, 1995
                                   ------------------------------------
                                         (Stated in U.S. Dollars)

<TABLE>
<CAPTION>

                                        Pacific Baja
                        Turbodyne       Light Metals
                  Technologies Inc.     Holding, Inc.       Adjustments          Pro-Forma
                  -----------------     -------------       -----------          ---------

<S>                  <C>               <C>                   <C>              <C>
NET SALES            $     -           $ 28,986,000                           $ 28,986,000

COST OF GOODS
  SOLD                     -             23,333,000                             23,333,000
                       ---------         ----------                             ----------

GROSS PROFIT               -              5,653,000                              5,653,000
   

OPERATING
  EXPENSES             2,634,962          3,644,000          440,902  (d)        6,719,864
                       ---------         ----------                             ----------

OPERATING
  INCOME (LOSS)       (2,634,962)         2,009,000                             (1,066,864)

NON OPERATING
  EXPENSES
  Interest
    expense                -               (519,000)                              (519,000)
  Other                    -                 16,000                                 16,000
                       ---------         ----------          -------            ----------

INCOME (LOSS)
  BEFORE
  INCOME TAXES        (2,634,962)         1,506,000                             (1,569,864)

INCOME TAX
  EXPENSE                  -               (691,000)                              (691,000)
                       ---------         ----------                             ----------

NET INCOME
  (LOSS)             $(2,634,962)      $    815,000                           $ (2,260,864)
                       =========         ==========                             ==========

NET INCOME
  (LOSS)
  PER SHARE                                                                         $(0.13)
                                                                                      ====
    
WEIGHTED AVERAGE
  NUMBER OF COMMON
  SHARES
  OUTSTANDING                                                                   17,557,793
                                                                                ==========


</TABLE>



<PAGE>






                          TURBOYDYNE TECHNOLOGIES INC.
                          ----------------------------

               NOTES AND ASSUMPTIONS TO THE UNAUDITED CONSOLIDATED
               ---------------------------------------------------

         PRO-FORMA BALANCE SHEET AND PRO-FORMA STATEMENTS OF OPERATIONS
         --------------------------------------------------------------

                      FOR THE YEAR ENDED DECEMBER 31, 1995
                      ------------------------------------

                     AND THE SIX MONTHS ENDED JUNE 30, 1996
                     --------------------------------------
                            (Stated in U.S. Dollars)


1. ORGANIZATION AND BASIS OF PRESENTATION

   The unaudited pro-forma consolidated balance sheet and pro-forma
   consolidated statements of operations have been prepared based on historical
   financial information, using U.S. generally accepted accounting principles,
   of Turbodyne Technologies Inc. and Pacific Baja Light Metals Holding, Inc.
   for the year ended December 31, 1995 and the six months ended June 30, 1996,
   considering the effects of the following transactions:

   

   i)   for purposes of the pro-forma consolidated statements of operations the
        acquisition of Pacific Baja Light Metals Holding, Inc.
        ("Pacific Baja") was completed effective January 1, 1995 and for the
        purposes of the pro-forma consolidated balance sheet the
        acquisition of Pacific Baja was completed effective June 30, 1996, and
        that Pacific Baja had a fair market value of the U.S. $15,000,000
        and that goodwill arising on acquisition will be amortized on a
        straight line basis over 20 years;
    
   ii)  that brokered private placements of 3,750,000 special warrants at U.S.
        $3.667 per special warrant and 500,000 special warrants at U.S. $6.60
        per special warrant had closed effective January 1, 1995.

   iii) that the 10% commission paid on the brokered private placements
        referred to above were in the form of units for the 500,000 special
        warrants at U.S. $6.60 per unit and for the 3,750,000 special warrants
        at U.S. $3.667 per unit.


2. ASSUMPTION

   The number of shares used in the calculation of the pro-forma net income per
   share data is based on the weighted average number of shares outstanding
   during the period adjusted to give effect to shares assumed to be issued had
   the transactions referred to above been consummated January 1, 1995.


3. PRO-FORMA ADJUSTMENTS

   a)  Record acquisition of Pacific Baja Light Metals Holding, Inc. and
       resulting goodwill arising on acquisition.
   b)  Record special warrant private placements.

   c)  Record commissions paid in connection with the special warrant private
       placements.

   d)  Record amortization of goodwill.





<PAGE>

                                  SIGNATURE


Pursuant to the requirements of Section 12 of the Securities Exchange Act 0f 
1934, the Registrant certifies that it meets all of the requirements for 
filing on Form 20-F and has duly caused this registration statement to be 
signed on its behalf by the undersigned, thereunto duly authorized.


                                     TURBODYNE TECHNOLOGIES, INC.

                                     /s/ Edward M. Halimi
                                         President and Director


DATED:   November 14, 1996


<PAGE>
                           Morgan & Company
                           P.O. Box 10007, Pacific Centre
                           Suite 1730 - 700 West Georgia Street
                           Vancouver, BC V7Y 1A1
                           Telephone (604) 687-5841
                           Fax: (604) 687-0075



                   CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the inclusion of our report dated April 26, 1996 on the 
consolidated financial statements of Turbodyne Technologies Inc. for the year
ended December 31, 1995 in Amendment No. 1 to the Company's Form 20F
Registration Statement. We also consent to application of such report to the 
financial information in Amendment No. 1 to the Form 20F Registration Statement,
when such financial information is read in conjunction with the financial 
statements referred to in our report. 

                                             Morgan & Company
                                             Chartered Accountants

Vancouver, Canada
November 14, 1996

<PAGE>

                          McGladrey & Pullen, LLP
                             Suite 800
                          222 South Harbor Boulevard
                          P.O. Box 200
                          Anaheim, California 92815-0200
                          (714) 520-9561
                          Fax: (714) 520-0898


To the Board of Directors
Pacific Baja Light Metal Holdings, Inc. 
Santa Fe Springs, California


We hereby consent to the use in this Amendment No. 1 to Form 20-F Registration
Statement being submitted by Turbodyne Technologies, Inc. of our report,
dated May 15, 1996, relating to the consolidated financial statements of
Pacific Baja Light Metal Holdings, Inc. and subsidiaries. 

                                                McGladrey & Pullen, LLP
   Anaheim, California
   Dated: November 14, 1996 

<PAGE>

O'NEILL & COMPANY
12th Floor, 1190 Hornby Street
Vancouver, B.C.  V6Z 2L3
(604) 687-5792
(604) 687-6650 (Fax)






                                                       
November 14, 1996

UNITED STATES
   SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street N.W.
Washington, D.C.
USA   20549

Attention: Mr. William Tolbert, Jr., Assistant Director

Dear Sirs:

RE:      TURBODYNE TECHNOLOGIES INC. (the "Company")
         - Form 20-F filed September 18, 1996, File No. 0-21391
------------------------------------------------------------------------


Thank you for your letter  dated  October 21,  1996.  Our client has amended the
Form 20-F and the filed  financial  statements to address the comments raised in
your letter.  Accordingly,  we enclose the  Registrant's  amended Form 20-F/A-1.
(Clean and black-lined copies enclosed):

An  Edgarized  version  of the  amended  Form  20-F  will  be  submitted  to the
Securities  and  Exchange  Commission  ("SEC")  as early as  possible  following
delivery of this letter.

We respond as follows to the  comments in your  letter,  with  reference  to the
amended Form 20-F and with  reference to the paragraph  numbers in your original
letter:
1.       Description of Business.
The Form 20-F has been  amended  to state the  research  and  development  costs
incurred by the  Registrant  during the last three fiscal years,  as required by
Item 1(a)(6) of Form 20-F. (See pages 8 and 9)

<PAGE>

2.       Acquisition of Pacific Baja.

The Form 20-F has been amended to expand on the disclosure of the acquisition of
Pacific Baja Light Metals  Holding Inc.  ("Baja") by the  Registrant  to confirm
that the Registrant completed this acquisition using the proceeds from a private
placement financing of Series "A"Special Warrants. (See pages 1, 2 and 10)

The discussion in Item 1,  "Description of Business" has been amended to reflect
the completion of the acquisition of Baja by the Registrant in September, 1996.

3.       Competition.

The Form 20-F has been amended to expand on the nature of the competition in the
industry to the Registrant's Turbodyne Technology. (See pages 12 and 13)


4.       Pro Forma Balance Sheet.

The Form 20-F has been amended to  summarize  the  assumptions  on which the Pro
Forma Financial  Statements are based and to provide  specific  reference to the
detailed  description  of these  assumptions  as set  forth in Note 1 to the Pro
Forma Financial Statements. (See page 26)

The Registrant has amended the Pro Forma Financial Statements to more accurately
reflect the total purchase price and fair market value assigned to the shares of
the Registrant issued in the acquisition.

5.       Item 11 - Compensation of Directors and Officers.

The options  granted to Mr.  Halimi in 1995 were options  granted at an exercise
price equal to the 10-day average  trading price of the  Registrant's  shares on
the  Vancouver  Stock  Exchange.  Accordingly,  the options were granted at fair
market value.

We advise that the policies of the  Vancouver  Stock  Exchange  require that the
Registrant  not grant  stock  options at a price  less than the  10-day  average
trading price of the Registrant's common shares for the period immediately prior
to the granting of the options.

6.       Compensation of Directors and Officers

Item 11 of the Form 20-F has been revised to include the total compensation paid
to all  directors  and  officers of the  Registrant  as a group  during the last
fiscal year of the Registrant. (See page 31)

<PAGE>

7.       Options to Purchase Securities

Item 12 of the Form  20-F has been  amended  to  elaborate  on the  Registrant's
Series "A" Special Warrant financing and to confirm that this financing has been
completed  and funds  released to the  Registrant  to enable the  Registrant  to
complete the acquisition of Baja. (See pages 32 ,33 and 34)

8.       Options to Purchase Securities

Item 12 of the Form 20-F has been  amended to confirm  that the  Registrant  had
announced  a private  placement  of Series "B"  Special  Warrants  but that this
private placement has been terminated. (See page 34)

We advise that the  difference in the offering  price between the Series "A" and
Series "B" Special Warrant  financings is accounted for by the difference in the
trading  price of the  Registrant's  common  shares,  as listed on the Vancouver
Stock Exchange, as the time each private placement was announced. The negotiated
price of each private placement financing was in compliance with the policies of
the Vancouver  Stock  Exchange which require the price to be no less than 85% of
the  closing  price of the  Registrant's  shares on the day prior to the private
placement  announcement.  As the  Registrant's  common  shares  had  appreciated
substantially  between  the  announcement  of the  Series  "A"  Special  Warrant
financing and the Series "B" Special Warrant financing,  the price of the Series
"B" Special Warrants was substantially  higher than the price for the Series "A"

Special Warrants. (See page 34)

9.       Options to Purchase Securities.

Item 12 of the Form 20-F has been  amended  to  clarify  the  obligation  of the
Registrant  to file a  prospectus  within  the  Canadian  Provinces  of  British
Columbia, Manitoba, and Ontario. The effect of the filing of the prospectus will
be to  qualify  the  common  shares  and  ordinary  warrants  to be issued  upon
conversion of the Series "A" Special Warrants for resale within these provinces.
(See pages 33 and 34)

10.      Share Capital Structure.

Item 14 of the  Form  20-F has been  revised  to  expand  on the  nature  of the
performance shares issued by the Registrant. (See pages 36, 37 and 38)

11.      Turbodyne Financial Statements dated June 30, 1996.

The Registrant's  accountants,  Morgan & Company, have reviewed Rule 3-20(b) and
do not believe  that the  Registrant  is  required  to furnish  the  convenience
translation financial statements as suggested in this comment.

12.      Non-Monetary Transactions.

The  Registrant  has  amended  the  applicable  accounting  policy  note  in the
Registrant's
<PAGE>


         financial statements to confirm that as of June 30, 1996 there have
          been no non-monetary
         transactions where management has determined that the quoted market
         price per share is not
         the more appropriate method of valuation.


<PAGE>

13.      Share Capital.

In connection with the acquisition of Turbodyne System's Inc., and in accordance
with the  policies  of the  Vancouver  Stock  exchange,  the  Registrant  issued
4,000,000  performance  shares for cash  consideration of $40,000.00.  The issue
price of $0.01 per share was less than the quoted  market price per share at the
time the shares were  issued,  which was $0.35.  While these  shares were issued
from treasury as fully paid,  non-assessable shares and entitle the shareholders
to voting and dividend rights,  the shareholders  agreed to the escrowing of the
shares with their subsequent release from escrow tied to substantial performance
and earnings  conditions.  Accordingly,  it is the Company's position that $0.01
per share was the fair market value of these shares, being a reasonable discount
form the quoted market price,  justified by the escrow restrictions  attached to
the shares.

Unlike a stock  option  which is issued for nominal  consideration  and does not
result in the issue of shares  until a cash  payment is made at some later date,
these escrowed shares as indicated  previously have been subscribed for and paid
for in cash.

14.      Share Capital.

The Registrant has expanded Note 6(c) of the Registrant's financial statement to
indicate that all stock options are granted at fair market value.

Item 12 of the Form 20-F has also been amended to include this disclosure.  (See
page 32)

15.      Consolidated Statement of Cash Flows.

The Registrant has revised the Registrant's  financial  statements to include an
accounting policy note which indicates that the Statement of Cash Flows has been
prepared in accordance with US Generally Accepted Accounting Principles.

16.      Pacific Baja Lease Commitments.

We advise that the lease for Baja's Ensenada Facility has been formalized by the
execution of a lease  agreement with a ten year term. This lease was executed on
the closing of the Registrant's acquisition of Baja in September, 1996.

The Registrant has been advised by the management of Baja that the lease for the
Ensenada  Facility has been a long-term  lease from the outset,  notwithstanding
that no written lease was executed.  The following factors support the treatment
of the lease as a long-term lease:

a. the owners of the  property on which the  Ensenada  Facility is located  were
principal shareholders of Baja until the acquisition of Baja by the Registrant;

b. the principal  shareholders  of Baja  acquired the Ensenada  property for the
purpose of enabling Baja to construct the Ensenada Facility;
<PAGE>



c.  the  relationship  between  landlord  and  tenant  was  not  a  third  party
relationship in which either party had contemplated  having a right to terminate
the lease on 30 days' notice;

d. Baja invested  substantial funds into improvements of the Ensenada  Facility,
which improvements included renovation of the existing building and installation
of manufacturing  equipment.  This capital  expenditure is not consistent with a
lease on a month to month basis;

e.  Management  of Baja had delivered  written  intention to execute a long term
lease.  Based on this reasoning,  the notes to the Baja statements have not been
revised to expense the leasehold improvements.

17.      Major Customers.

The Baja  financial  statements  have  been  revised  to  clarify  the  required
disclosure.

18.      Notes Payable.

As of June 30,  1996,  Baja was in  violation  of minimum  working  capital  and
minimum tangible net worth requirements under its line of credit agreements with
Wells Fargo Bank. The notes to the Baja financial  statements  have been revised
to disclose the nature of the violation of these covenants.  We advise that Baja
has since renewed its line of credit facility with Wells Fargo Bank.

19.      Accountants' Consents.


The Company repllies as follows, with reference to the appropriate paragraph in 
your letter dated November 8, 1996:

1.  Paragraph 2

The Distributorship Agreement was originally executed between the Company and 
Granatelli Performance Technologies, Inc. The Company understands that 
Granatelli Performance Technologies has changed its name to Grand Technologies,
Inc.   Accordingly, references to Granatelli Performance Technologies in the 
Form 20-F have been amended to refer to Grand Technologies, Inc. 

At the time the Company entered into the Distributorship Agreement, they were
advised that the principals of Granatelli Performance Technologies Inc. were
Joseph T. Granatelli (a nephew of Any Granatelli), Harry Hibbler, a well 
known automotive publisher, and George Fencl, a director of the Vector
Automobile Company. The Company understands that these persons ar now involved
in a dispute with Andy Granatelli in respect of the use of the name 
"Granatelli" as Andy Grantelli apparently does not want these persons to
 capitalize on the Granatelli name. The Company understands that the name of the
Company has been changed to Grand Technologies, Inc. in order to remove any
reference to "Granatelli". The Company also understands that Joseph Granatelli
may no longer be involved with Grand Technologies. 

2.   Paragraph 3

The Company has amended the Form 20-F to provide disclosure that Grand
Technologies is a recently incorporated company and that there is a risk that
the company will not be sufficiently capitalized in order to fulfil its
obligations under the Distributorship Agreement or any purchase orders
delivered under the Distributorship Agreement. 

3.  Paragraph 4

We hereby confirm to the staff that the Company has received a purchase order
from Grand Technologies in the amount of $9,000,000.  The Company has made
delivery of 85 Turbopac products under the purchase order. 

The Company is presently in the process of gearing up production to satisfy
the required delivery of Turbopac products under the purchase order. 
Notwithstanding that Grand Technologies is a newly incorporated company, the 
Company feels that the purchase order has been delivered in good faithh and 
is confident based on the background of Mr. Hibbler and Mr. Fencl. 

4.  Paragraph 5

The Registrant will amend the Form 20-F to insure that the signature on the 
execution page of Exhibit 3(IV) refers to "George Fencl".

We enclose current dated accountant consents for Morgan & Company and 
McGladrey & Pullen, LLP.

We  trust  that  the  above   comments  and  the  revisions  to  the  Form  20-F
satisfactorily  address the  comments  raised in your letter  dated  October 21,
1996 and November 8, 1996.  Accordingly, we look forward to finalization of
 this Form 20-F filing.

Yours truly,

MICHAEL H. TAYLOR


Enclosure


<PAGE>



(Exhibit 3(IV))



IN WITNESS WHEREOF, the parties hereto have caused the Agreement to be 
executed as of the Commencement Date set forth above. 

TURBODYNE SYSTEMS, INC.

Signature: /s/   Edward M. Halimi

Name:  Edward M. Halimi
Title: President
Date:  June 12, 1996

GRANATELLI PERFORMANCE TECHNOLOGIES, INC.

Signature:  /s/ George Fencl

Name:  George Fencl
Title: Vice President
Date:  June 12, 1996 
<PAGE>