----

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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     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| **United States     Securities and Exchange CommissionWashington, DC 20549 **Form 10-KSB **ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF    THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2007 
Commission file number 0-21832 **TurboSonic Technologies, Inc.
(Exact Name of Small Business Issuer as Specified in its    Charter)  **Delaware **13-1949528  
(State or other jurisdiction of 
(I.R.S. Employer  
incorporation or organization) 
Identification No.)  **550 Parkside Drive, Suite A-14,**Waterloo, Ontario, Canada**N2L 5V4
(Address of principal executive offices) 
**(519) 885-5513**
(Issuer’s telephone number)
Check whether the Issuer is not required to file reports pursuant to Section13 or 15 (d) of the Exchange Act. £

Check whether the Issuer (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12months (or for such shorter period that the Issuer was required to file suchreports), and (2) has been subject to such filing requirements for the past 90days. 

Yes Q          No£

Check if there is no disclosure of delinquent filers in response to Item 405of Regulation S-B contained in this form, and no disclosure will be contained,to the best of the Issuer's knowledge, in definitive proxy or informationstatements incorporated by reference in Part III of this Form 10-KSB or anyamendment to this Form 10-KSB. £

Indicate by check mark whether the Issuer is a shell company (as defined inRule 12b-2 of the Exchange Act). 

Yes £         No  Q

Issuer’s revenues for its most recent fiscal year: $22,893,353 

Aggregate market value of the Issuer’s common stock held by non-affiliates ofthe Issuer as of September 19, 2007: $13,538,313 

The number of shares outstanding of the Issuer's common stock as of September19, 2007: 15,130,054 

Transitional Small Business Disclosure Format (check one): 

Yes £         No  Q

**PART I 

ITEM 1: DESCRIPTION OF BUSINESS 

a) 

BusinessDevelopment**
TurboSonic Technologies, Inc.,directly and through subsidiaries, designs and markets integrated air pollutioncontrol and liquid atomization technology, including industrial gascooling/conditioning systems, to ameliorate or abate industrial environmentalproblems. 

We were incorporated in the State ofDelaware in April 1961. Our executive offices are located at 550 Parkside Drive,Suite A-14, Waterloo, Ontario, Canada N2L 5V4; our telephone number is (519)885-5513. Our website is located at www.turbosonic.com. The information on ourwebsite is not part of this annual report. 
**b) 

Our Business 

Introduction**
Our proprietary technology isdesigned to control a wide variety of air pollution control problems forindustries including pulp and paper, wood products, metallurgical (non-ferrousand iron and steel), chemical and mineral processing (including cement), ethanolproduction, industrial/medical and municipal solid waste (MSW) incineration,petrochemical, textiles and power generation. We believe our products, which aredesigned to meet the strictest emission regulations for gaseous and particulateemissions, afford economic and technical advantages over competitive airpollution equipment. 

Certain of our products and systemsemploy proprietary nozzles to atomize liquids passing through the nozzles,resulting in the liquid stream being converted into fine droplets. Controllingthe liquid and gas pressures applied to the nozzle can modulate droplet sizesand liquid flow rates. We have sold atomizing nozzles for many years. 

The following table reflects theapproximate percentages of our revenue derived from our principal customercategories during the fiscal years indicated: 
*  **Year Ended    June 30*  **2007 **2006* Waste Incineration,    including MSW
4%
 
6%* Chemical and Mineral    Processing
7%
 
13%* Metallurgical    Processing
5%
 
9%* Pulp and Paper
7%
 
5%* Wood Products
40%
 
55%* Ethanol Production
25%
 
3%* Textiles
5%
 
6%* Petrochemical
5%
 
0%* Other
2%
 
3%*  **100%
 **100%
 

We are contractually responsible toour customers for all phases of the design, fabrication and, if included in thescope of our contract, field installation of our products and systems. Oursuccessful completion of our contractual obligation is generally determined by aperformance test that is conducted either by our customer or by a customerselected independent testing agency. 

We perform all process engineering,including but not limited to, the determination of the size, geometry andstructural characteristics of the particular system needed for gaseous, mist orparticulate removal, and perform the detailed design of, and developsspecifications for, all applicable structural, electrical, mechanical andchemical components of such system. We, historically, have not manufactured orfabricated our own products or systems. Rather, we purchase componentsconsisting of both off the shelf items and items, such as our atomizing nozzles,scrubber vessels, wet electrostatic precipitator tubes and internals, coolingtowers and structural steel, which are made to our design and specifications bythird party manufacturers and fabricators, enter into subcontracts for fieldconstruction, which we supervise, and manage all technical, physical andcommercial aspects of the performance of our contracts. 
**Products and Systems**
We offer a range of products andsystems, incorporating diverse technologies, to address the industrialprocessing, air pollution control and other environmental management needs ofour customers. Many of such customers have historically purchased individualproducts or systems from us that, in many instances, operate in conjunction withproducts and systems supplied by others. We emphasize the marketing of customengineered air pollution control systems that may provide combinations of ourown products and systems, alone or in combination with complementary equipmentspecified or supplied by alliance partners, as an integrated environmentalmanagement solution. 

2

**Form 10-KSB****TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES** ***Incorporated Under the Laws of    Delaware, United States***
The following table reflects theapproximate percentages of our revenue derived from our principal products andsystems during the fiscal years indicated below: 
*  **Year Ended    June 30*  **2007
 **2006* Evaporative Gas    Cooling and Conditioning Systems
12%
 
14%* Wet Electrostatic    Precipitator Systems (WESPs)
67%
 
56%* Wet Scrubber Systems
15%
 
19%* Semi-dry Scrubber    Systems
3%
 
5%* Other Nozzle Products
3%
 
6%*  **100%
 **100%
Our products are utilized in manyindustries including pulp and paper, wood products, chemical and mineralprocessing (including cement), metallurgical (non-ferrous and iron and steel),ethanol production, industrial, medical and municipal solid waste (MSW)incineration, and power generation. 

Our principal products and systemsare described below: 
***SoniCoolTM Evaporative Gas Cooling andConditioning Systems***
Through the use of our atomizingnozzles, SoniCoolTM Evaporative Gas Cooling and Conditioning Systems accuratelycontrol temperature and humidity of high-temperature gas streams, such as thoseemanating from cement kilns, non-ferrous smelters and steel mill Electric ArcFurnaces (EAF) or Basic Oxygen Furnaces (BOF). The result is gas temperaturesthat do not damage equipment and ductwork, smaller gas volumes, and improvedefficiency of downstream air pollution control equipment. 

We are an internationally knownleader in gas cooling and conditioning with many installations throughout theworld. 
***SonicKleenTM Wet ElectrostaticPrecipitation Systems (WESP)***
The SonicKleenTM WESP removessub-micron particulate, heavy metals, dioxins and furans, mists, and fumes fromprocess gas streams. Removal efficiencies can be achieved at much loweroperating costs than with scrubbers. While there are many variations ofelectrostatic precipitators on the market, the SonicKleenTM design is recognizedas a proven approach that exceeds requirements for meeting government removaltargets while keeping operating and maintenance costs to a minimum. 

Currently, the U.S. EnvironmentalProtection Agency is tightening certain emission standards, thereby forcing anumber of industries to adopt technologies, such as WESPs, in order to meetemissions targets that more traditional technologies, such as scrubbers, willnot be able to meet effectively. Our WESP is capable of achieving these higherstandards and efficiently capturing sub-micron particulates. 

SonicKleenTM WESP systems have beensold for use in waste incinerators, ceramic refractory production, ethanolproduction, OSB (oriented-strand board) facilities and industrial power boilers.Our WESP technology is used in industries such as wood products, wasteincineration, metallurgical and chemical processing, and power generationindustries. 
***SonicBURN Waste Fuel Combustion***
SonicBURN systems are used tointroduce any fuel into combustion chambers for better combustion, resulting inhigher production efficiencies. Utilizing our Turbotak atomizing nozzles madefrom stainless steels, ceramic, or other durable materials and employing aprocess developed by us, SonicBURN atomizes viscous, dirty, or waste fuels intofine droplets for efficient combustion. The durability of the nozzles allowslonger production runs, less maintenance, and reduced costs compared to otherdesigns. 

Many of our nozzles and systems arein use for waste fuel combustion in hazardous waste incinerators and cementkilns. 
***Turbotak, TurboVenturi and TurboSorbScrubbers***
The Turbotak Scrubber treatsindustrial process gas streams, removing sub-micron and larger particulate, acidgases, odors, fumes and vapors. By employing our proprietary atomizing nozzles,the scrubber is able to more effectively remove multiple contaminants thancompeting technologies, resulting in lower maintenance and operating costs. 

The TurboVenturi Scrubber treatsindustrial process exhaust gas streams primarily for removal of particulate. Thesystem operates by forcing the gas stream across a pressure drop in order togenerate a fine stream of liquid droplets for very high efficiency particulateremoval. The TurboVenturi Scrubber has a relatively low capital cost due to itsinherent simplicity. 

The TurboSorb Semi-Dry Scrubbertreats industrial process gas streams, removing acid gases such as SO2 (sulfurdioxide) and HCI (hydrochloric acid). By spraying an alkali reagent, theTurboSorb system can achieve higher removal efficiencies of SO2 and HCl thantraditional "dry" scrubbers. Unlike "wet" systems, with the TurboSorb semi-dryscrubber all water is evaporated so there is no liquid waste stream generated.

- 3 - 

**Form 10-KSB****TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES** ***Incorporated Under the Laws of    Delaware, United States*********
We have installed many of ourscrubbers to solve a wide variety of air pollution control problems. Ourequipment, designed to meet the most stringent regulations limiting gaseous andparticulate emissions, has also been retrofitted into competing technologies toimprove their performance. 
***Air Pollution Control System Upgrades***
Using our atomizing nozzles, venturiscrubber and wet electrostatic precipitator technologies and years of experiencein the air pollution control industry, we are able to retrofit existing airpollution control equipment to consistently improve performance. An equipmentupgrade is significantly less expensive than purchasing new equipment, withlower maintenance requirements. We have upgraded many air pollution controlsystems. 
***Atomizing Nozzles and Spare Parts***
Used in a wide variety of industrialapplications, our Turbotak atomizing nozzles atomize liquids to extremely smalldroplets. The nozzles feature a two-phase design for superior control overdroplet size and distribution. The combination of the small droplets, and thedistribution pattern provide unique results in designs which range from small,single-orifice nozzles to large, multi-orifice nozzles. This makes them idealfor evaporative gas cooling, spray drying, wet and semi-dry scrubbing,performance enhancement of air pollution control systems, as well as combustionand incineration. Our SoniCoreTM nozzle design has unique aspects to the dropletsize, spray pattern and very low flow rates that make it ideal for applicationssuch as dust suppression and humidification. 

With thousands of nozzles sold, theSoniCoreTM nozzles and the patented Turbotak Atomizing nozzles are at the heartof many of our air pollution control systems and are recognized by industry assuperior. 

We also provide replacement and spareparts for both our industrial gas processing and air pollution control systems.We believe that in view of the extreme conditions under which industrial processand air pollution control systems operate that there is an ongoing requirementfor spare parts that creates additional demand for our products. 
**Contractual Liabilities**
Our standard contractual terms withrespect to the sale of our products and systems disclaim any liability forconsequential or indirect losses or damages stemming from any failure of ourproducts or systems or any component thereof. We customarily seek contractualindemnification from our subcontractors for any loss, damage or claim arisingfrom the subcontractor’s failure of performance, negligence or malfeasance. Itis possible, however, that a customer’s inability to comply with applicablepollution control laws or regulations stemming from the failure ornon-performance of our products or systems may subject us to liability for anyfines imposed upon such customer by governmental regulatory authorities or fordamages asserted to have been incurred by any third party adversely affectedthereby. 
**Marketing and Sales**
Our marketing efforts are technicalin nature and currently involve our senior management and technicalprofessionals, supported by independent sales representatives. A significantportion of our sales are made through the recommendation of engineering firms,which play a significant role in the specification and implementation of airpollution control solutions and in customers’ selection of the vendors of airpollution control systems. 

Our independent sales representativesassist us in consummating sales of our products and services, serve an ongoingliaison function between us and our customers during the sales process andaddress customers’ questions or concerns arising thereafter. The salesrepresentatives are selected by us based upon industry reputation, prior salesperformance and the breadth of territorial coverage, among other criteria. Ourcontractual arrangements with our 18 current independent sales representativesaccord each a defined territory within which to sell some or all of our productsand systems, provide for the payment of agreed-upon sales commissions and areterminable at will by either ourselves or the representative upon relativelyshort prior notice. None of such representatives have authority to executecontracts on our behalf. 

Technical inquiries received frompotential customers are referred to our sales and engineering personnel whojointly prepare either a budget for the customers’ future planning or a firmbid. The period between initial customer contact and issuance of an order varieswidely, but is generally between 6 and 24 months. 

We seek to obtain repeat businessfrom our customers, although we do not depend upon any single customer tomaintain our level of activity from year to year; however, one or more differentcustomers may be expected to account for greater than 10% of our net revenues inany consecutive twelve month period. Sales to three customers accounted for 59%of our net revenues in the fiscal year ended June 30, 2007. One repeat customeraccounted for 30% in 2007, as compared to 34% in 2006. Two different customersaccounted for an additional 15% of our net revenues in the prior fiscal year.Our inability to retain or replace these customers could materially andadversely affect future revenue and profitability.. 
**Backlog**
At June 30, 2007, the amount of ourcontract backlog was approximately $3,300,000 compared to $10,000,000 at June30, 2006. Backlog represents work for which we have entered into a signedagreement or have received an order to proceed. Completion of 100% of ourcurrent backlog is anticipated to occur prior to June 30, 2008. A number oforders in backlog are for pre-engineering work only. Release of the equipmentportions of these orders by our customers will increase our backlog and expectedrevenue in fiscal 2008. 

- 4 - 

**Form 10-KSB****TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES** ***Incorporated Under the Laws of    Delaware, United States*****Product Development**
We have an ongoing program for thedevelopment and commercialization of new industrial processing and air pollutioncontrol products, systems and technologies, and the enhancement of existingproducts and systems. Expenditures for research and development activities, netof customer and government support, if applicable, were $432,298 and $54,681 for the fiscalyears ended June 30, 2007 and 2006, respectively. This investment in researchand development, in the order of ten times our average historical investment,was made to accelerate development of new products and improvement of existingproducts for TurboSonic, as well as to expand our reach into global markets. Webelieve that these investments will contribute significantly to ourfuture growth. 
**Proprietary Protection**
We rely on a combination of patents,trade and service marks, trade secrets and know-how to protect our proprietarytechnology and rights. We own or have licensed rights to over 24 internationalpatents and patents pending relating to a variety of air pollution controlapplications. 

We have registered servicemarks ortrademarks in the United States and certain foreign countries for severalidentifying names which we use with our products and systems including SoniCore®,Dry Fog® and TurboSOx®. 
**Suppliers and Subcontractors**
Like other companies in the airpollution control industry, we have historically relied on third parties tomanufacture and fabricate our products and to supply parts and components forour systems in accordance with our specifications. In those instances in whichour scope of work includes installation of equipment, we select and supervisesubcontractors for this work. To date, we have not experienced difficultieseither in obtaining fabricated components and other materials and parts used inany of our products and systems or in obtaining qualified subcontractors. Ourvendor sources for various components, materials and parts used in our systems,including our atomizing nozzle and other components, include more than 100firms. We do not depend on any one of the vendors to a material extent, and inany event we believe that alternative vendors would be available if needed. Withrespect to fabricators, we have satisfactory relationships with more than tenfabricators. Similarly, with respect to subcontractors for installation work, wehave satisfactory relations with more than three firms. On the basis of thenumber of vendors, fabricators and subcontractors which we utilize and theavailability of alternative sources, we do not believe that the loss of ourrelationship with any one firm would have a material adverse effect on ourbusiness. 
**Bonding and Insurance**
While we generally have not beenrequired to procure bid and performance bonds, such requirements are prevalentfor projects partially or fully funded by federal, state or local governments. Abid bond guarantees that a bidder will execute a contract if it is awarded thejob and a performance bond guarantees completion of the contract. Past coveragefor these requirements has been provided using cash reserves and guarantees froma Canadian crown corporation. 

We currently maintain different typesof insurance, including directors and officers liability, general liability,property coverage, professional and product liability insurance, with respect tothe engineering and products we sell to our customers. 
**Government Regulation**
Stringent environmental laws havebeen enacted in the United States and other nations in response to publicconcern about the environment. The need to comply with these laws creates demandfor our products. The Federal Clean Air Act, federal, state and localregulations which implement it and the enforcement of these laws and regulationslargely determine the level of expenditures that customers will make to limitemissions from their facilities. 

The market for our air pollutioncontrol products and systems is directly dependent upon the existence andenforcement of laws and regulations which limit the release of pollutants intothe atmosphere and impose substantial penalties for non-compliance. TheGovernment can change environmental regulations at any time, which could havepositive or negative effects upon our future revenues and prospects ofprofitability. Currently, the U.S. Environmental Protection Agency is tighteningcertain emission standards, thereby forcing a number of industries to adopttechnologies, such as WESPs, in order to meet emissions targets that moretraditional technologies, such as scrubbers, will not be able to meeteffectively. 
**Competition**
We face substantial competition ineach of our principal markets from numerous competitors. We compete primarily onthe basis of price as well as our engineering and technological expertise, andquality of our products, systems and service. Additionally, we believe that thesuccessful performance of our installed products and systems is a key factor indealing with our customers, which typically prefer to make significant purchasesfrom a known company with a solid performance history. 

Virtually all contracts for ourproducts and systems are obtained through competitive bidding. Although price isan important factor and may in some cases be the governing factor, it is notalways determinative, and contracts may be awarded on the basis of theefficiency or reliability of products and the engineering and technicalexpertise of the bidder. 
**Employees**
As of June 30, 2007, we employed 44full time persons, including 6 engineers, 12 salespersons, and 13 technicalsupport persons. None of our employees are represented by a labor union. Webelieve that our relationship with our employees is satisfactory. 

- 5 - 

**Form 10-KSB****TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES** ***Incorporated Under the Laws of    Delaware, United States*****Financial Information about Foreignand Domestic Operations and Export Sales**
U.S. and Canadian customerscollectively accounted for approximately 91% and 90% of our sales during thefiscal years ended June 30, 2007 and 2006, respectively. Revenue derived fromexport sales is transacted in U.S. Dollars and Euros. 

The following table reflects theapproximate percentages of our revenue derived from United States, Canadian andforeign sales during the fiscal years indicated below: 
*  **Year Ended    June 30*  **2007 **2006* United States
 85%
 
 71%* Canada
6%
 
19%* South and Central    America
1%
 
4%* Europe
7%
 
2%* Far East
1%
 
3%* Other
0%
 
1%*  **100% **100%**Risks and Uncertainties**
Forward-looking statements in thisreport, including without limitation, statements relating to our plans,strategies, objectives, expectations, intentions and adequacy of resources, aremade pursuant to the safe-harbor provisions of the Private Securities LitigationReform Act of 1995. Readers are cautioned that such forward-looking statementsinvolve risks and uncertainties that could cause actual results to differmaterially from those expressed therein. Such risks and uncertainties include,among others, the following: 

***Risks Related to our Business*
We are dependent on environmentalregulation. The market for our air pollution control products and systems isdirectly dependent upon the existence and enforcement of laws and regulationswhich limit the release of pollutants into the atmosphere and impose substantialpenalties for non-compliance. Stringent enforcement of these laws andregulations may increase the attractiveness of, and demand for our products andservices, whereas lax enforcement and/or repeal in whole or in part may have theopposite effect. 
**Our revenue is concentrated among afew customers who vary from year to year. Sales to three customers accountedfor 59% of our net revenues in the fiscal year ended June 30, 2007. One repeatcustomer accounted for 30% in 2007, as compared to 34% in 2006. Two differentcustomers accounted for an additional 15% of our net revenues in the priorfiscal year. Our inability to retain or replace these customers could materiallyand adversely affect future revenue and profitability. 
**Our proprietary technology and rightshave limited protection. We rely on a combination of patents, trade andservice marks, trade secrets and know-how to protect our proprietary technologyand rights. There can be no assurance that our patents will not be infringedupon, that we would have adequate remedies for any such infringement, or thatour trade secrets will not otherwise become known to or independently developedby competitors. There can also be no assurance that any patents now or hereafterissued to, licensed by or applied for by us will be upheld, if challenged, orthat the protections afforded thereby will not be circumvented by others.Litigation may be necessary to defend our proprietary rights, which would resultin significant cost to us and a diversion of effort of our personnel. 
**Our foreign sales are subject tocertain inherent risks. Approximately 9% and 10%, respectively, of ourrevenues during the fiscal years ended June 30, 2007 and 2006 were derived fromsales made outside of the United States and Canada. Foreign sales are subject tocertain inherent risks, including unexpected changes in regulatory and otherlegal requirements, tariffs and other trade barriers, greater difficulty incollection of accounts receivable, foreign exchange fluctuations and potentiallyadverse tax consequences. There can be no assurance that these factors will nothave an adverse impact on our future foreign sales and, consequently, on ouroperating results. 
**Permits, which are required by someprojects, may cause extended delay or cancellation of one or more of our largeprojects. Some of our projects require permits to be issued by one or moregovernmental agencies prior to the commencement of both construction andoperation. Issuance of such permits could be delayed by political and otherconsiderations. Permitting delays could cause extended delay or cancellation ofone or more of our large projects, which would adversely impact our futurerevenues. 
**Since we do not manufacture orfabricate our own products or systems, we are dependent on the services of thirdparty manufacturers and fabricators. We do not manufacture or fabricate ourown products or systems, relying instead upon the services of third partymanufacturers and fabricators. We also do not engage in the field constructionof our systems but rely on field construction subcontractors operating under thesupervision of our own employees. The unavailability of the services of, or asubstantial increase in pricing by a significant number of, these manufacturers,fabricators or subcontractors could adversely affect us. Given the number ofmanufacturers, fabricators and subcontractors which we utilize and theavailability of alternative sources, we do not believe that the loss of ourrelationship with any one firm would have a material adverse effect on ourbusiness. 

- 6 - 

**Form 10-KSB****TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES** ***Incorporated Under the Laws of    Delaware, United States*****The markets for environmental controlproducts is very competitive. The markets for environmental control productsare characterized by substantial competition based primarily on engineering andtechnological expertise and quality of service. Because virtually all contractsfor our products and systems are obtained through competitive bidding, price isalso a competitive factor and may be the most significant factor in certaininstances. Although we believe that we compete on the basis of our technicalexpertise and reputation for service, there can be no assurance that we willmaintain our competitive position in our principal markets. 
**Our fixed price contracts may resultin losses. Our receipt of a fixed price contract as a consequence of beingthe lowest competitive bidder carries the inherent risk that our actualperformance costs may exceed the estimates upon which our bid for such contractwas based. To the extent that contract performance costs exceed projected costs,our profitability could be materially adversely affected. 
**ITEM 2: DESCRIPTION OF PROPERTY**
We lease approximately 11,800 squarefeet of executive and administrative offices and shop space in Waterloo,Ontario, Canada at an annual rent of approximately $69,000. Insurance andutilities are paid separately. This lease expires on June 30, 2008. 

We lease 640 square feet for a salesoffice in Parsippany, New Jersey at an annual rental of approximately $14,000.The lease expired on August 31, 2007 and has been renewed for an additional twoyears. 

We lease 1,000 square feet for aproject management office in Raleigh, North Carolina at an annual rent ofapproximately $10,200. The lease expires November 30, 2009. 

We lease approximately 975 squarefeet for a sales office in Milan, Italy with an annual rent of EUR 12,000 and alease expiry of January 31, 2013. 
**ITEM 3: LEGAL PROCEEDINGS**
Please refer to Note 11(b) to ourConsolidated Financial Statements. 
**ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**
No matters were submitted for a voteto our security holders during the fourth quarter of our fiscal year ended June30, 2007. 
**PART II 

ITEM 5: MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERSAND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES**
Our Common Stock is quoted on the OTC Bulletin Board underthe symbol "TSTA". 

The following table sets forth the range of the bidquotations for our Common Stock for the periods shown, as furnished by TheNasdaq Stock Market. 
  **Common Stock (1)**  **High** **Low**Fiscal    Year Ended June 30, 2006:
 
 
 First    Quarter 
$0.950
 
$0.424Second    Quarter 
$1.500
 
$0.650Third    Quarter 
$1.440
 
$0.970Fourth    Quarter 
$1.840
 
$0.920  
 
 
 Fiscal    Year Ended June 30, 2007:
 
 
 First    Quarter 
$1.750
 
$1.010Second    Quarter 
$1.420
 
$0.850Third    Quarter 
$1.540
 
$0.990Fourth    Quarter 
$1.290
 
$0.940*                       

(1) 

The abovequotations represent prices between dealers and do not include retail mark up,markdown or commissions. They do not necessarily represent actual transactions.The prices reflect a 5-for-4 stock split, effected on July 22, 2005.*
As of June 30, 2007, there were 360 holders of record andapproximately 900 beneficial holders of the Common Stock. This number ofbeneficial holders represents the number of actual holders of our Common Stock,including an estimate of the beneficial owners of shares held in "nominee" or"street" name. 

We do not anticipate paying any cash dividends in theforeseeable future, as it is the current policy of our Board of Directors toretain any earnings to finance our future operations and expand our business.

- 7 - 

**Form 10-KSB****TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES** ***Incorporated Under the Laws of    Delaware, United States*****ITEM 6: MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OFOPERATION 

General**
TurboSonic Technologies, Inc., directly and throughsubsidiaries, designs and markets integrated air pollution control and liquidatomization technology, including industrial gas cooling/conditioning systems,to ameliorate or abate industrial environmental problems. We currently have tworeportable business segments – OEM systems and Aftermarket. 

Our proprietary technology is designed to control a widevariety of air pollution control problems for industries including pulp andpaper, wood products, metallurgical (non-ferrous and iron and steel), chemicaland mineral processing (including cement), ethanol production, hazardous andmunicipal solid waste (MSW) incineration, petrochemical, textiles and powergeneration. We believe our products, which are designed to meet the strictestemission regulations for gaseous and particulate emissions, afford economic andtechnical advantages over competitive air pollution equipment. 

We seek to obtain repeat business from our customers,although we do not depend upon any single customer to maintain our level ofactivity from year to year; however, one or more different customers may beexpected to account for greater than 10% of our net revenues in any consecutivetwelve month period. Sales to three customers accounted for 59% of our netrevenues in the fiscal year ended June 30, 2007. One repeat customer accountedfor 30% in 2007, as compared to 34% in 2006. Two different customers accountedfor an additional 15% of our net revenues in the prior fiscal year. Ourinability to retain or replace these customers could materially and adverselyaffect future revenue and profitability. 

Stringent environmental laws have been enacted in the UnitedStates and other nations in response to public concern about the environment. Webelieve that the need to comply with these laws creates demand for our products.The Federal Clean Air Act, federal, state and local regulations which implementit and the enforcement of these laws and regulations largely determine the levelof expenditures that customers will make to limit emissions from theirfacilities. 

The market for our air pollution control products and systemsis directly dependent upon the existence and enforcement of laws and regulationsthat limit the release of pollutants into the atmosphere and impose substantialpenalties for non-compliance. The Government can change environmentalregulations at any time, which could have positive or negative effects upon ourfuture revenues and prospects of profitability. Currently, the U.S.Environmental Protection Agency is tightening certain emission standards,thereby forcing a number of industries to adopt technologies, such as WESPs, inorder to meet emissions targets that more traditional technologies, such asscrubbers, will not be able to meet effectively. 
**Forward-Looking Statements**
In this annual report, we state our beliefs of future eventsand of our future financial performance. In some cases, you can identify thoseso-called "forward-looking statements" by words such as "may," "will," "should,""expects," "plans," "anticipates," "believes," "estimates," "predicts,""potential," or "continue" or the negative of those words and other comparablewords. These forward-looking statements are subject to risks and uncertaintiesthat could cause actual results to differ materially from historical results orthose we anticipate. Factors that could cause actual results to differ fromthose contained in the forward-looking statements include those factors setforth under the section in this annual report captioned "Item 1: Description ofBusiness — Risks and Uncertainties" as well as other factors discussed in thisannual report. Statements included in this annual report are based uponinformation known to us as of the date that this annual report, and we assume noobligation to update or alter our forward-looking statements made in this annualreport, whether as a result of new information, future events or otherwise,except as otherwise required by applicable federal securities laws. 
**Critical Accounting Policies and Estimates**
Discussion of our financial condition and results ofoperation is an analysis of the Consolidated Financial Statements, which havebeen prepared in accordance with accounting principles generally accepted in theUnited States of America ("GAAP"), consistently applied. The preparation ofthese Consolidated Financial Statements requires our management to makeestimates and assumptions that affect the reported amounts of assets,liabilities, revenues, expenses, and related contingent assets and liabilities.On an on-going basis, we evaluate our estimates, including those related toconstruction-type contracts, intangible assets, bad debts, inventories, warrantyobligations, income taxes, and contingencies and litigation. We base ourestimates on historical experience and on various other factors that arebelieved to be reasonable under the circumstances, the results of which form thebasis for making judgements about the carrying values of assets and liabilitiesthat are not readily apparent from other sources. Actual results may differ fromthese estimates. We believe the following critical accounting policies affectthe more significant judgements and estimates used in the preparation of ourConsolidated Financial Statements: 
***Revenue Recognition***
We derive revenue from long-term contracts which requireperformance [i.e., design, construction and performance testing] over a timespan which may extend beyond one or more accounting periods. For long-termcontracts, we employ two methods of recognition – the percentage of completionmethod for virtually all of such projects being undertaken, and the completedcontract method for contracts with significant uncertainty, such as the use ofnew technology. For contracts of shorter duration, revenue is recorded whenproducts are shipped, services are performed or billings rendered, whichapproximate actual performance. 

- 8 - 

**Form 10-KSB****TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES** ***Incorporated Under the Laws of    Delaware, United States***
The percentage-of-completion is determined by best availableengineering estimates by our project managers. Engineering progress is measuredupon completion progress relative to the overall project design. Materialprogress is determined by the degree of completeness or progress of thecomponents individually and as a whole of the project. When included in thescope of the work, installation work completeness is based upon work completedrelative to the overall scope. Monthly revenue recognition reflects the degreeof completeness based upon review of project drawings, project schedule,progress of actual fabrication and installation, and further validated by visualobservation by the project manager, quality inspectors, and the constructionadvisor, if applicable. When the current estimated costs to complete indicate aloss, such losses are recognized immediately for accounting purposes. 

If the conditions of work to be performed change, or theestimated costs are not accurately projected, the gross profit fromconstruction-type contracts may vary significantly in future periods.. 
***Goodwill***
The goodwill impairment test was completed at April 1, 2007for the Aftermarket business segment, as required by SFAS No. 142. Theconclusion reached was that there has not been an impairment of goodwillassociated with the Aftermarket segment for the year ended June 30, 2007. 

We assess the impairment of goodwill by reporting unitwhenever events or changes in circumstances indicate that the carrying value maynot be recoverable, in whole or part. Some factors we consider to be importantand which could trigger an impairment review between annual tests include thefollowing: 

u

significant underperformance relative to expected historical or projected futureoperating results; 
u

significant changes in the manner of our use of the acquired assets or thestrategy for our overall business; 

u

significant negative industry or economic trends; 

u

significantdecline in our stock price for a sustained period, and our market capitalizationrelative to net book value. 
**Results of Operation**
Government regulations for air emissions controlsinternationally, but primarily in the USA, Canada and Europe, continue to createdemands for our products. 

We have invested in product development through research, thedevelopment of intellectual properties, the addition of technical staff, and thecontinuous development of competitive design solutions. We have opened newmarkets through added sales representation, the installation of pilot projects,and alliances with complementary equipment contractors. Consequently ourrevenues have increased 43% in 2007 and 45% in 2006 while retaining grossmargins of 21% in 2007 and 22% in 2006. 

During the past two fiscal years, we have hired support staffand improved accounting and management systems to support the growth in salesand marketing. Although our overhead costs have increased, such costs havedeclined relative to revenues (15% in 2007, 17% in 2006, 19% in 2005) adding toour growth in net income. 

With the opening of an office in Italy in May 2007to expand our reach into global markets, we now offer our services throughoutEurope. 
***Twelve Months Ended June 30, 2007Compared with Twelve Months Ended June 30, 2006***
OEM systems revenue increased by $6,716,946 (56%) to$18,663,338 for the twelve-month period ended June 30, 2007 from $11,946,392 forthe same period in fiscal 2006. The increase is primarily the result of anincrease in large system sales in the period, and in particular, those of WetElectrostatic Precipitators ("WESP") and wet scrubbers to the wood products (18%of the increase in revenue), chemical processing (15% of the increase inrevenue) and ethanol (67% of the increase in revenue) industries. 

Aftermarket revenue increased by $129,267 (3%) to $4,230,015for the twelve months ended June 30, 2007 from $4,100,748 for the same period infiscal 2006. Increased revenue from increased WESP spare parts in the woodproducts industry, in support of the start-up of new OEM equipment, has been theprime cause of this positive increment. 

Cost of OEM systems increased by $5,707,931 (58%) to$15,611,359 for the twelve-month period ended June 30, 2007 from $9,903,428 forthe same period in fiscal 2006. The higher costs are the result of the increasedvolume of OEM systems work, as discussed above. As a percentage of OEM systemsrevenue, the cost of OEM systems was 84% for the twelve-month period ended June30, 2007 and 83% for the same period in fiscal 2006. The higher percentage torevenue for the OEM systems is the result of a lower level of engineeringoverabsorption during the 2007 fiscal year than in fiscal 2006. 

Aftermarket costs decreased by $95,090 (4%) to $2,448,145 forthe twelve-month period ended June 30, 2007 from $2,543,235 for the same periodone year earlier. The decreased costs are largely the result of improved costcontrol by project management in the current year. As a percentage ofaftermarket revenue, the aftermarket costs were 62% versus 65% for the sameperiod in fiscal 2006. 

Selling, general and administrative expenses increased$869,622 (33%) to $3,542,868 for the twelve-month period ended June 30, 2007from $2,673,246 for the same period in fiscal 2006. Increased selling, generaland administrative expenses resulted from increased salaries and benefits(+63%), increased sales travel (+3%), office-related expenses (+10%), insurance(+4%), professional fees (+8.5%) and stock-based compensation expenses (+10%)[see note 12 to the Consolidated Financial Statements]. As a percentage of totalrevenue, selling, general and administrative expenses were 15% for the fiscalyear ended June 30, 2007 and 17% for the same period a year earlier. Thisdecrease in percent to revenue is the direct result of the increased volume ofrevenue for the current period. 

- 9 - 

**Form 10-KSB****TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES** ***Incorporated Under the Laws of    Delaware, United States***
Also included in total expenses in the current year wereresearch and development expenses ($432,298 vs. $54,681 in fiscal 2006) togetherwith increased depreciation expense ($161,153 vs. $93,897 in fiscal 2006). Thisinvestment in research and development, in the order of ten times our averagehistorical investment, was made to accelerate development of new products andimprovement of existing products for our company, as well as to expand our reachinto global markets. We believe that these investments will contributesignificantly to our future growth. 

Income before tax in fiscal 2007 increased $17,955 (2%) toincome before taxes of $839,213, from $821,258 for the same period in fiscal2006. Income tax recovery for fiscal 2007 was $442,249 compared to a provisionfor income taxes of $5,408 in 2006. The tax recovery relates to recognition ofthe future benefit of US tax losses ($429,849) and Canadian timing differences($31,872), as discussed in note 13 to the Consolidated Financial Statements. 

"Other comprehensive income" of $87,316 was recorded for thetwelve-months ended June 30, 2007, as compared to "other comprehensive income"of $144,195 for the same period in fiscal 2006. The "other comprehensive income"in the current period was the result of the increase in the value of theCanadian dollar compared to the US dollar from June 30, 2006 to June 30, 2007,and the resulting changes in our balance sheet relative to Canadiandollar-denominated accounts. 
**Liquidity and Capital Resources**
On an overall basis, we had net cash applied of $3,053,933for fiscal 2007 as compared to net cash provided of $4,228,226 during the sameperiod in 2006. The fiscal 2007 net cash applied figure included cash applied tooperating activities of $3,109,795. This decrease in overall cash flow is theresult of increases in accounts receivable and in accrued charges and unearnedrevenue and contract advances, partially offset by operating income andincreased depreciation and amortization. 

At June 30, 2007, we had positive working capital (totalcurrent assets less total current liabilities) of $3,455,180 as compared topositive working capital of $2,276,455 at June 30, 2006, an increase of$1,178,725. Our current ratio (current assets divided by current liabilities)was 2.51 and 1.42 at June 30, 2007 and June 30, 2006, respectively. 

Our contracts typically provide for progress payments basedupon the achievement of performance milestones or the passage of time. Ourcontracts often provide for our customers to retain a portion of the contractprice until the achievement of performance guarantees has been demonstrated. Weattempt to have our progress billings exceed our costs and estimated earnings onuncompleted contracts; however, it is possible, at any point in time, that costsand estimated earnings can exceed progress billings on uncompleted contracts,which would negatively impact cash flow and working capital. At June 30, 2007,"Deferred contract costs and unbilled revenue" exceeded "Unearned revenue andcontract advances", with the result that cash flow was negatively affected by$679,242. At June 30, 2006, "Unearned revenue and contract advances" exceeded"Deferred contract costs and unbilled revenue" with the result that cash flowwas positively affected by $3,216,981.

Our backlog as at June 30, 2007 was approximately $3,300,000,all of which is expected to be shipped during the 2008 fiscal year, compared tothe June 30, 2006 backlog of $10,000,000. A number of orders in backlog are forpre-engineering work only. Release of the equipment portions of these orders byour customers will increase our backlog and expected revenue in fiscal 2008. 

At June 30, 2007, the cash and equivalents balance was$2,452,710, which is a decrease of $3,053,933 compared to June 30, 2005. Duringfiscal 2006, we did a private placement of 1,000,000 shares which netted cash of$1,037,385 [see note 12 to the Consolidated Financial Statements]. We have nooutstanding debt. Based upon the current cash position, expected revenue forfiscal 2008, anticipated new OEM orders and a steady stream of Aftermarketorders, we believe that projected cash generated from operations will besufficient to meet our cash needs through the end of the fiscal year ended June30, 2008. 
**Quantitative and Qualitative Information About Market Risk**
We do not engage in trading market risk sensitive instrumentsand do not purchase hedging instruments or "other than trading" instruments thatare likely to expose us to market risk, whether interest rate, foreign currencyexchange, commodity price or equity price risk. We have not entered into forwardor future contracts, purchased options or entered into swaps. We have no bankborrowing facility that could subject us to the risk of interest ratefluctuations. 
**ITEM 7:FINANCIAL STATEMENTS**
Reference is made to pages F-1 through F-17 comprising aportion of this Annual Report on Form 10-KSB. 
**ITEM 8:CHANGES INAND DISAGREEMENTSWITH ACCOUNTANTSON ACCOUNTINGAND FINANCIALDISCLOSURE**
None. 
**ITEM 8A:CONTROLS ANDPROCEDURES**
Our management has carried out an evaluation, with theparticipation of our Chief Executive Officer and Chief Financial Officer, of theeffectiveness of our disclosure controls and procedures as of June 30, 2007.Based upon that evaluation, our Chief Executive Officer and Chief FinancialOfficer concluded that our disclosure controls and procedures were effective asof June 30, 2007. 

There has not been any change in our internal control overfinancial reporting that occurred during the quarter ended June 30, 2007 thathas materially affected, or is reasonably likely to materially affect, ourinternal control over financial reporting. 

- 10 - 

**Form 10-KSB****TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES** ***Incorporated Under the Laws of    Delaware, United States*****ITEM 8B:OTHER INFORMATION**
On September 20, 2007, we issued a press release announcingour financial results for the year ended June 30, 2007. A copy of the pressrelease is being furnished as Exhibit 99.1 to this report and incorporatedherein by reference. 
**PART III 
ITEM 9:DIRECTORS,EXECUTIVE OFFICERS,PROMOTERS ANDCONTROL PERSONS;COMPLIANCE WITHSECTION 16(A)OF THEEXCHANGE ACT

Our executive officers and directors are as follows: 
**Name****Age****Positions and Offices**Edward F. Spink53    Chairman of the Board and Chief Executive OfficerEgbert Q. van Everdingen46    President, Secretary-Treasurer and DirectorCarl A. Young65    Chief Financial OfficerRichard H. Hurd70    DirectorDr. Donald R. Spink, Sr.84    DirectorJulien J. Hradecky49    DirectorGlen O. Wright58    DirectorAndrew T. Meikle44    DirectorKen Kivenko65    DirectorRobert A. Allan65    Vice President EngineeringDavid J. Hobson59    Vice President Finance and AdministrationRichard C. Gimpel59    Vice President Marketing & Sales**Edward F. Spinkserved as our President and a director from August 27, 1997, the date upon whichTurbotak Technologies and Sonic Environmental Systems were consolidated to formour current company, until June 15, 1999. On June 15, 1999, Mr. Spink waselected our Chairman of the Board of Directors and Chief Executive Officer. From1995 to 1997, he was President and a director of Turbotak. Mr. Spink was VicePresident – Operations of Turbotak from 1989 to 1995. He joined Turbotak in1982. **Egbert Q. van Everdingen has served as our President,Secretary-Treasurer and as a director, since June 2006. Prior thereto and fromAugust 1997, Mr. van Everdingen served as our Vice President Marketing & Sales,Air Pollution Control Systems. Prior thereto and from 1986, he served as projectmanager and in various product development, sales and marketing positions withTurbotak. From August 2003 until June 2006, he was Executive Vice President,with responsibility for all sales, marketing, design and project engineering.
**Carl A. Young, has served as our Chief Financial officeron a part-time basis since October 2006. A Chartered Accountant, he has been theowner and president of 602536 Ontario Ltd., a management services company, since1984. From 1989 to 1998, he was president and owner of Mentor Dynamics Inc.,which designed, manufactured and installed custom material handling equipmentand industrial overhead cranes, and Provincial International Cranes Inc., whichdesigned and contracted out fabrication of industrial and shipyard cranes tointernational markets. Since 1999 through his management services company, Mr.Young has provided interim CFO, Director of Finance, VP of Finance and otherbusiness consulting services to a number of clients.**Richard H. Hurdserved as President from August 1993 to August 1997 and Treasurer from April1994 to August 1997 of Sonic Environmental Systems, Inc., the predecessor to ourcompany. He has been a director since February 1993 and currently serves as ouraudit committee chairperson. Mr. Hurd has been President and sole owner of RHBCapital Company Inc., a financial consulting company since 1987. He also acts asa Special Assistant to the Treasurer of the State of New Jersey. **Dr. Donald R. Spink, Sr. served as our Chairman of theBoard of Directors from August 27, 1997 until June 15, 1999. He continues toserve as a director and has agreed to provide us with technical advice. Priorthereto and from 1976 he was President and Chairman of Turbotak. 
**Julien J. Hradecky, P.Eng., has been a director sinceDecember 9, 2004. A member of the Professional Engineers of Ontario, Mr.Hradecky, has served since 1991 as Chief Executive Officer of R&J EngineeringCorporation, a world leader in the manufacture of pharmaceutical hard gelatincapsule production machinery and related equipment. Since 1994, Mr. Hradecky hasserved as Secretary and as a director of Meikle Automation Inc., a majormanufacturer of industrial automation systems, and in 2007 was elected Chairmanof the Board of Directors. He is also the President of Epicenter Inc., a privateinvestment company with a broad range of holdings. Mr. Hradecky serves on twoother Boards of Directors: Tacit Research Corporation, a private US-basedinvestment research company, and the Rotary Club of Kitchener-Conestoga. 
**Glen O. Wright has been a director of our company sinceDecember 2005. Mr. Wright founded Wright, Mogg and Associates Ltd., a pensionand benefits consulting firm and served as its Chief Executive Officer from 1980to 1986, and its Chairperson and Chief Executive Officer until 1996. It was soldin 2000 to Cowan Insurance Group and he continued as Chairman of the CowanInsurance Group until October 2002. He served as the Chairman of the WorkplaceSafety and Insurance Board in Ontario from June 1996 to February 2004 and servedas Chairman of Hydro One, the agency responsible for electric transmission inOntario from June 2002 to May 2003. Since February2004, he hasbeen working on a number of consulting projects through GPark Consulting Ltd.,of which he is President. He is currently a director of PrinterOn Corporationand LeanCor Logistics LLC, and was formerly a director for the Institute forWork and Health, Gore Mutual Insurance and the Canadian BroadcastingCorporation, a member of the Wilfrid Laurier University Foundation and a memberof the Council for Canadian Unity. 

- 11 - 

**Form 10-KSB****TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES** ***Incorporated Under the Laws of    Delaware, United States*****Andrew T. Meikle, P.Eng., has been a director of ourcompany since December 2005. Mr. Meikle, a member of the Professional Engineersof Ontario, is the founder of Meikle Automation, established in 1994, and hassince then held the position of President and Chief Executive Officer. MeikleAutomation, employs over 350 people in seven divisions across Canada, the US andMexico with annual sales in excess of CAD 50 million. 
**Ken Kivenko, P.Eng., a member of the ProfessionalEngineers of Ontario, is the founder and President of Kenmar Consulting. Kenmaracts as a private consultant in the areas of strategic planning, Total Quality,financing and governance, and was established in January 2001. Prior thereto, hewas President and CEO of NBS Technologies, a supplier of credit and ID cards andcard personalization equipment, from June 1995 to December 2000. He currentlyserves on the board of RDM Corporation (HR/Compensation committee and Chair ofDisclosure Committee) and Hy-Drive Technologies Ltd. (HR/Compensation committee,Chair of Disclosure Committee) He is the Advisory Committee Chairman for theSmall Investor Protection Association in Canada and is a member of the OntarioSecurites Commission Continuous Disclosure Advisory Committee. 
**Robert A. Allan, **P.Eng.,** has served as our VicePresident Engineering since August 27, 1997, and joined Turbotak as Manager ofEngineering in 1990. Prior thereto and from 1979, he was a Manager ofEngineering with Joy Technologies Canada, an air pollution control company.Prior to 1979 and from 1972, he was a technical advisor with Flakt Canada,specifically on pollution control processes. He also held various senior projectmanagement engineering positions in Quebec and Sweden with AB SvenskaFlaktfabriken. He is a professional engineer and holds a Master's degree inMechanical Engineering from the University of Waterloo. 
**David J. Hobson has served as our Vice President Financeand Administration since August 27, 1997. Prior thereto and from 1996, he heldthe position of Controller with Turbotak. Mr. Hobson has over thirty years offinance and accounting, human resources management and project managementexperience in the capital equipment sector, most of it gained in the airpollution control field with a division of Joy Technologies Canada. 
**Richard C. Gimpel was appointed our Vice President,Marketing and Sales in May 2006. Prior thereto and from 1999, he held theposition of Sales Director for air pollution control systems in the US. Prior tojoining us, he had held a number of senior management positions includingDirector – Industrial Sales with Crowder Construction. He holds degrees inIndustrial Engineering and Criminal Justice. 

Edward Spink is the son of Dr. Donald Spink, Sr. 

All directors hold office until the next annual meeting ofstockholders and the election and qualification of their successors. Executiveofficers are elected annually by the Board of Directors to hold office until thefirst meeting of the Board following the next annual meeting of stockholders oruntil their successors are chosen and qualified. 

Section 16(a) of the Securities Exchange Act of 1934 requiresour directors and executive officers and persons who ownbeneficially more than 10% of our commonstock to file reports of ownership and changes in ownership of such common stockwith the SEC, and to file copies of such reports with us. Based solely upon areview of the copies of such reports filed with us, we believe that during theyear ended June 30, 2007 such reporting persons complied with the filingrequirements of said Section 16(a), except that 
●

Edward F. Spink, ourChief Executive Officer, did not file on a timely basis one Form 4 reflectingone transaction; 
●

Richard H. Hurd, adirector of our company, did not file on a timely basis six Form 4s reflectingan aggregate of seven transactions; 
●

Dr. Donald R. Spink, Sr.,a director of our company, did not file on a timely basis one Form 4 reflectingone transaction; 
●

Carl A. Young, our ChiefFinancial Officer, did not file on a timely basis one Form 3, as well as twoForm 4s each reflecting one transaction;

●

Ken Kivenko,a director of ourcompany, did not file on a timely basisone Form 3.
Each of the delinquentForm 3s and Form 4s were subsequently filed with the SEC

Our audit committee consists of three directors, Richard H.Hurd as chairperson, Glen O. Wright and Andrew T. Meikle. The Board of Directorshas determined that Messrs. Wright and Meikle meet the Nasdaq Marketplace Ruledefinition of "independent" for audit committee purposes and that Mr. Hurd meetsthe general definition of independence for members of the board of directors,but not the definition of "independent" for audit committee purposes as hereceived consulting fees during the fiscal year ended June 30, 2007. The Boardof Directors has also determined that Richard Hurd meets the SEC definition ofan "audit committee financial expert." 

Our Audit Committee has adopted a Code of Ethics applicableto all of our employees, including our Principal Executive Officer, PrincipalFinancial Officer and Principal Accounting Officer, as well as the members ofour board of directors. The Code of Ethics was filed as Exhibit 14 to the Form10-KSB for the year ended June 30, 2004. 

Our compensation committee consists of two directors, Glen O.Wright as chairperson, and Julien J. Hradecky. The Board of Directors hasdetermined that each member of the Compensation Committee meets the generaldefinition of independence for members of the board of directors. 

- 12 - 

**Form 10-KSB****TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES** ***Incorporated Under the Laws of    Delaware, United States***
**ITEM 10: EXECUTIVE COMPENSATION**

***Summary Compensation***

Set forth below is the aggregate compensationfor services rendered in all capacities to us during our fiscal year ended June30, 2007 by our chief executive officer and by executive officers receivingannual compensation exceeding $100,000 during our fiscal year ended June 30,2007 (collectively the "Named Officers"). 

SUMMARY COMPENSATION TABLE (1) 
**Name and    Principal Position****Year Ended June 30****Salary****Option    Awards (2)****Non-equity Incentive Plan Compensation (3)****All Other Compensation****Total**            Edward F. Spink 2007$178,846$22,900$28,158$3,089(4)$ 232,993CEO                       Egbert Q. van Everdingen,2007$156,449$22,900$23,465$3,089(4)$205,903President, Secretary-Treasurer                       Richard C. Gimpel,2007$120,000$ 8,750 --$ 89,398 (5)$ 218,148VP – Marketing & Sales                       Ronald A. Berube2007$ 54,757$-- --$ 86,076 (6)$140,833VP – Nozzle Marketing & Sales(7)           *                       *
1) 

No bonus awards were madeexcept for bonus awards under Non-Equity Incentive Plan Compensation. We have nopension or deferred compensation plans to which we contribute. 

2) 

This column represents thedollar amount recognized for financial statement reporting purposes with respectto the 2007 fiscal year for the fair value of option awards granted in fiscal2007, in accordance with SFAS 123R. Pursuant to SEC rules, the amounts shownexclude the impact of estimated forfeitures related to service-based vestingconditions. The fair value of the option award was calculated using the closingprice of our common stock on the date of grant. For additional information,refer to note 12 of our financial statements in the Form 10-KSB for the yearended June 30, 2007. See the Grants of Plan-Based Awards Table below forinformation on stock awards made in 2007. Amounts in this column reflect ouraccounting expense for these awards and do not correspond to the actual valuethat will be recognized by the named executive officers. 

3) 

Amounts in this columnrepresent annual performance-based bonuses earned in 2007 by the named executiveofficers under our 2007 cash bonus plan for achieving targets in our 2007Business Plan. 

4) 

This represents directors feesreceived during fiscal 2007. 

5) 

This represents commission paidon orders received prior to fiscal 2007. 

6) 

This represents commission onorders received prior to and including fiscal 2007. 

7) 

Mr. Berube served as VP –Nozzles Marketing and Sales until his retirement in January 2007. 

The recognized stock-based compensationexpense listed as Option Awards for Mr. Spink in the above Summary Compensationtable was derived from option awards made on January 5, 2007 at an exerciseprice of $1.10 per share, receiving 15,000 options as our Chief ExecutiveOfficer and 20,000 options as director and Chairman of the Board. 

The recognized stock-based compensationexpense listed as Option Awards for Mr. van Everdingen in the above SummaryCompensation  table was derived from option awards made on January 5,2007 at an exercise price of $1.10 per share, receiving 15,000 options as ourPresident and Secretary-Treasurer and 20,000 options as a director. 

The recognized stock-based compensationexpense listed as Option Awards for Mr. Gimpel in the above Summary CompensationExpense table was derived from an option award made on January 5, 2007 at anexercise price of $1.10 per share. 

The options refected in the above SummaryCompensation table as having been granted to Messrs. Spink and van Everdingen,in their respective capacities as members of our board, were immediately exerciseable upon their grant date. The options reflected therein as having beengranted to Messrs. Spink, van Everdingen and Gimpel, in their respectivecapacities as employees, will not become exerciseable prior to January 5, 2010.

None of our current executive officers areemployed pursuant to an employment agreement with us. 

- 13 - 

**Form 10-KSB****TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES** ***Incorporated Under the Laws of    Delaware, United States***
 
***Outstanding Equity Awards at June 30, 2007***         **Number of Shares Underlying    Unexercised Options Exerciseable****Number of Shares Underlying    Unexercised Options Unexerciseable (1)****Exercise Price****Expiration Date**  
  
  
   Edward F. Spink 
12,500 
--$
0.28 12/11/2008  
35,000 
--$
0.75 10/31/2010  
20,000 
15,000$
1.10 1/05/2012Egbert    Q. van Everdingen 
15,000 
-- 
0.75 10/31/2010  
20,000 
15,000$
1.10 1/05/2012Richard C. Gimpel 
5,000 
12,500$
0.75 10/31/2010         *(1) 

Options vest on January 5,    2010.             ***Compensation of Directors***         **Fees Earned or Paid in Cash****Option Awards (1)****All Other Compensation****Total**  
  
  
  
 Donald R. Spink$
7,502$
12,400$
--$
19,902Julien    J. Hradecky$
 7,944$
12,400$
--$
 20,344Richard R. Hurd$
9,500$
12,400$ 
19,002 (2)$
 40,902Ken    Kivenko$
 3,751$
 15,200$
--$
 18,951Andrew T. Meikle$ 
 8,385$ 
12,400$
--$ 
 20,785Glen    O. Wright$
 8,606$
 12,400$
--$
 21,006*(1) 

This column represents the dollar amountrecognized for financial statement reporting purposes with respect to the 2007fiscal year for the fair value of option awards granted in fiscal 2007, inaccordance with SFAS 123R. Pursuant to SEC rules, the amounts shown exclude theimpact of estimated forfeitures related to service-based vesting conditions. Thefair value of the option award was calculated using the closing price of ourcommon stock on the date of grant. For additional information, refer to note 12of our financial statements in the Form 10-KSB for the year ended June 30, 2007.See the Grants of Plan-Based Awards Table below for information on stock awardsmade in 2007. Amounts in this column reflect our accounting expense for theseawards and do not correspond to the actual value that will be recognized by thedirectors. 

(2) 

Thisrepresents consulting fees paid for advisory services provided to our executiveofficers in fiscal 2007.*
During the first six months of the fiscal year ended June 30,2007, our directors were each paid $500 (CAD for all board members, except Mr.Hurd who is in USD) for each board meeting attended. Commencing January 1, 2007,our non-executive directors were paid $2,500 per quarter, $500 for eachregularly scheduled board meeting attended and $250 for each committee meetingattended. Our directors are periodically granted stock options, typically on ayearly basis. Non-executive directors receive reimbursement of out-of-pocketexpenses incurred for each board meeting or committee meeting attended. Duringthe fiscal year ended June 30, 2007, there was a grant of 20,000 options to eachdirector, which vested immediately, had an exercise price of $1.10 and an expirydate of January 5, 2012, except for one new director whose award had an exerciseprice of $1.35 and an expiry date of February 8, 2012. 
**ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS ANDMANAGEMENT AND RELATED STOCKHOLDER MATTERS**
The following table sets forth, as of August 31, 2007 theshares of our Common Stock beneficially owned by each person who, to ourknowledge, is the holder of 5% or more of our Common Stock, by each of ourdirectors, by the Named Officers and by all of our executive officers anddirectors as a group. 
**Name and Address    of Beneficial Owner or Identity or** **Number of Shares** **Approximate    Percentage****Group** **Beneficially Owned (1)** **of Class**Dr. Donald R. Spink, Sr. (*) 
2,947,790 (2) (3) (4) 
18.2%Edward F. Spink 
581,048 (2) (5) 
3.6%Egbert Q. van Everdingen 
346,120 (2) (6) 
2.1%Richard H. Hurd 
86,673 (4) 
**Julien J. Hradecky 
224,423 (4) 
1.4%Glen O. Wright 
40,000 (4) 
**Andrew T. Meikle 
40,000 (4) 
**Ken Kivenko 
27,000 (7) 
**Richard C. Gimpel 
35,625 (8) 
**Ronald A. Berube 
148,000 (2) (9) 
**
- 14 - 

**Form 10-KSB****TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES** ***Incorporated Under the Laws of    Delaware, United States***
 
**Name and Address of Beneficial Owner or    Identity or** **Number of Shares** **Approximate Percentage****Group** **Beneficially Owned (1)** **of Class**Dynamis Advisors, LLC (11) 
1,621,583 
10.0%Heartland Advisors, Inc.(12) 
990,000 
6.1%Bard Associates, Inc. (13) 
1,137,275 
7.0%Sprott Asset Management, Inc.(14) 
1,033,800 
6.4%Boston Partners Asset Management LLC (15) 
809,990 
5.0%All Executive Officers and Directors as a group (12 persons) 
4,498,090 (10) 
27.7%
(*) 

Dr. Spink’s address is c/o TurboSonic Technologies, Inc. 550 Parkside Drive,Suite A-14, Waterloo, Ontario, N2L 5V4, Canada. 

(**) 

Less than 1%. 

(1) 

Unless otherwise indicated, all persons named below have sole voting andinvestment power over listed shares. 

(2) 

Includes shares of TurboSonic Canada Inc., a wholly owned subsidiary of ourcompany, which by their terms are convertible at any time into a like number ofshares of Common Stock of our company ("TurboSonic Canada Shares"). (3) Includes2,480,609 TurboSonic Canada Shares owned by Canadian numbered corporation, overwhich shares Dr. Spink exercises voting control. 

(4) 

Includes 40,000 shares issuable upon exercise of vested options. 

(5) 

Includes 67,500 shares issuable upon exercise of vested options. 

(6)

Includes 35,000 shares issuable upon exercise of vested options 

(7) 

Includes 20,000 shares issuable upon exercise of vested options. 

(8) 

Includes 5,000 shares issuable upon exercise of vested options. 

(9) 

At the time of his retirement on January 25, 2007, included 12,500 shares issuableupon exercise of vested options, which have since been exercised. 

(10) 

Includes 439,375 shares issuable upon exercise of vested options. 

(11) 

Pursuant to a Schedule 13G filed on February 9, 2007 and information availableto us, Frederic S. Bocock, Alexander H. Bocock and John H. Bocock, have sharedpower to direct the disposition of, and the vote of, 1,621,583 shares. Theaddress of the beneficial owner is 310 Fourth St., Suite 101, Charlottesville,VA 22902. 

(12) 

Pursuant to a Schedule 13G filed on February 12, 2007, Heartland Advisors, Inc.and William J. Nasgovitz have shared power to direct the disposition of, and thevote of, 990,000 shares. The address of the beneficial owner is 789 North WaterSt., Milwaukee, WI 53202. 

(13)

Pursuant to a Schedule 13G filed on February 6, 2007, Bard Associates, Inc. hasthe sole power to direct the disposition of 1,137,375 shares and the sole powerto direct the vote of 103,750 shares. The address of the beneficial owner is 135South LaSalle St., Suite 2320, Chicago, IL 60603. 

(14) 

Pursuant to a Schedule 13G filed on April 26, 2007, Sprott Asset Management,Inc. has the sole power to direct the disposition of 1,033,800 shares and thesole power to direct the vote of 1,033,800 shares. The address of the beneficialowner is Suite 2700, South Tower, Royal Bank Plaza, PO Box 27, Toronto, ON M5J2J1, Canada. 

(15) 

Pursuant to aSchedule 13G filed on February 14, 2007, Boston Partners Asset Management LLChas the sole power to direct the disposition of 809,990 shares and the solepower to direct the vote of 809,990 shares. The address of the beneficial owneris 28 State St., 21st Floor, Boston, MA 02109. 
**Securities Authorized for Issuance Under Equity CompensationPlans (3):**
The following table provides information as of June 30, 2007about our equity compensation plans: 
**Plan Category** **Number of Securities to be Issued    upon Exercise of Outstanding Options, Warrants and Rights****Weighted Average – Exercise Price    of Outstanding Options, Warrants and Rights****Number of Securities Remaining    Available for Future Issuance**      Equity    compensation plans approved by security holders:-455,000$1.018743,500
- 2003 Stock Plan    Equity compensation plans not approved    by security holders:   
- 2000 Stock Plan 157,999$0.712826,688  **612,499****$0.9398****69,188***                       *
We instituted the 2000 Stock Plan [the "2000Plan"] with the express purpose of encouraging key employees, as well as otherindividuals who render services to us, by affording such persons withopportunities to participate in equity ownership of our company. The 2000 Planprovides for the grant of non-qualified options, stock awards and stock purchaserights. Collectively, these are referred to as stock rights. 

- 15 - 

**Form 10-KSB****TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES** ***Incorporated Under the Laws of    Delaware, United States***
The 2000 Plan, adopted by us on February 9, 2000, isadministered by the Board of Directors, which determines to whom such stockrights may be granted, at which times the stock rights shall be granted and thetime or times when each option shall become exercisable and the duration of theexercise period. The exercise price per each non-qualified option granted underthe 2000 Plan shall be not less than the fair market value per share of commonstock on the date of such grant. The stock, subject to stock rights, shall beauthorized but unissued shares of our common stock or shares of common stockreacquired by us in any manner. The aggregate number of shares that may beissued, pursuant to the 2000 Plan, is 937,500, of which 157,999 have beengranted and remain outstanding, and 752,813 have been granted and exercised. 
**ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**
Not applicable. 
**PART IV 

ITEM 13: EXHIBITS**
The following exhibits, which arenumbered in accordance with Item 601 of Regulation S-B, are filed herewith or,as noted, incorporated by reference herein: 
**Exhibit Number Exhibit Description*** **Exhibit Number**
**Exhibit Description**
  
 
 3.1
Certificate of    Incorporation of the Company (1)
 3.2
Certificate of    Amendment of Certificate of Incorporation of the Company (2)
 3.3
Certificate of    Correction of Certificate of Amendment of the Company (3)
 3.4
Certificate of    Designation, Number, Powers, Preferences and Relative, Participating,    Optional, and other Special Rights and the    Qualifications, Limitations, Restrictions, and other distinguishing    characteristics of Special Voting Preferred Stock (2).
 3.5
By-laws, as amended,    of the Company (2)
 4.1
Form of certificate    evidencing share of common stock (2)
 10.1 *
2000 Stock Plan (4)
 10.2 *
2003 Stock Plan (5)
 10.3
Securities Purchase    Agreement dated April 21, 2006 among ourselves and two institutional    investors, inclusive of Exhibit A and B    thereto, being, respectively, a Registration Rights Agreement among    ourselves and such investors and a form of Common    Stock Purchase Warrant (6)
 14
Code of Ethics (6)
 21.1
Subsidiaries of the    Company
 23.1
Consent of Mintz &    Partners LLP
 31.1
Rule 13a-14(a)/15d-14(a)    Certifications
 32.1
Section 1350    Certifications
 99.1
Full Year Operating    Results Press Release issued September 20, 2007
  
 
 ***
*Compensatory Plan*
(1) 

Filed on April 9,1993, as an exhibit to our Registration Statement on Form S-1 (File Number33-60856) and incorporated herein by reference. 

(2) 

Filed on November18, 1997 as an exhibit to our Annual Report on Form 10-KSB for the fiscal yearended April 30, 1996 and incorporated herein by reference. 

(3) 

Filed on September30, 2002 as an exhibit to our Annual Report on Form 10-KSB for the fiscal yearended June 30, 2002 and incorporated herein by reference. 

(4) 

Filed on March 19,2001 as an exhibit to our Registration Statement on Form S-8 (File Number333-57248) and incorporated herein by reference. 

(5) 

Filed on November12, 2002 as an exhibit to our proxy statement for the 2002 annual meeting, andincorporated herein by reference. 

(6) 

Filed on April 25,2005 as an exhibit to our Current Report on Form 8-K dated April 24, 2006 andincorporated herein by reference. 

(7) 

Filed on September 28, 2004 as an exhibit to our Annual Report on Form 10-KSBfor the fiscal year ended June 30, 2004, and incorporated herein by reference.

- 15 - 

**Form 10-KSB****TURBOSONIC TECHNOLOGIES, INC. AND SUBSIDIARIES** ***Incorporated Under the Laws of    Delaware, United States*****I**TEM 14:PRINCIPAL ACCOUNTANT FEES AND SERVICES**
Fees for professional services provided by our principalindependent auditors in each of the last two fiscal years, in each of thefollowing categories are as follows: 
**** **** ******************************************************************************************************************************* |