U.S.
      SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
      DC 20549





FORM
      10-QSB


(Mark
      One)





x
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
                1934For
                the quarterly period ended June 30,
                2007




o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACTFor
                the transition period from _____ to
                _____




Commission
      file number 0-25417




TORBAY
      HOLDINGS, INC.


(Exact
      Name of Small Business Issuer as Specified in its Charter)




DELAWARE
            
            52-2143186(State
                or other jurisdiction of incorporation or organization)
            
            (I.R.S.
                Employer Identification No.)




2967
      MICHELSON DR, STE G 444, IRVINE, CA 92612


(Address
      of principal executive offices)


949/200-7569
 (Issuer's
          Telephone Number)





N/A







(Former
      Name, Former Address and Former Fiscal Year,


if
      Changed Since Last Report)





Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x No o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes x No o




Our
      Company had 190,277,900 shares of common stock outstanding as of August 20,
      2007.





TRANSITIONAL
      SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):


Yes o No x












INDEX




PART
                1 - FINANCIAL INFORMATIONCondensed
                consolidated balance sheet as of June 30, 2007 (unaudited)
            
            3Condensed
                consolidated statements of operations and other comprehensive income
                (loss) for the three and six months ended June 30, 2007 and 2006
                (unaudited)
            
            4Condensed
                consolidated statements of cash flows for the six months ended June
                30,
                2007 and 2006 (unaudited)
            
            5Notes
                to condensed consolidated financial statements as of June 30, 2007
                and
                2006 (unaudited)
            
            6Item
                2. Management's Discussion and Analysis or Plan of
                Operation
            
            9Item
                3. Controls and Procedures
            
            12PART
                2 - OTHER INFORMATIONItem
                1. Legal Proceedings
            
            13Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            
            13Item
                3. Defaults Upon Senior Securities
            
            13Item
                4. Submission of Matters to a Vote of Security Holders
            
            13Item
                5. Other Information
            
            13Item
                6. Exhibits
            
            13Signatures
            
            14







2





PART I
      - FINANCIAL INFORMATION





ITEM
      1.
      FINANCIAL STATEMENTS





**TORBAY
      HOLDINGS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEET**


**JUNE
      30, 2007**


**(UNAUDITED)**


ASSETSCurrent
                  assets:Cash
              
              $
              7,606Receivable
                  on sale of common stock to be issued
              
              
              1,089,600Total
                  current assets
              
              
              1,097,206Total
                  assets
              
              $
              1,097,206LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  liabilities:Accounts
                  payable and accrued expenses
              
              $
              126,391Advance
                  payable - related party
              
              
              2,000Advance
                  payable - other
              
              
              15,000Notes
                  payable
              
              
              110,000Total
                  current liabilities
              
              
              253,391Derivative
                  liability
              
              
              466,203Total
                  liabilities
              
              
              719,594Stockholders'
                  equity:Preferred
                  stock, $.0001 par value; 20,000,000 shares authorized,no
                  shares issued and outstanding
              
              
              -Common
                  stock, $.0001 par value; 250,000,000 sharesauthorized,
                  156,277,900 shares issued
              
              
              15,628Common
                  stock to be issued, 35,000,000 shares
              
              
              3,500Treasury
                  stock, at cost, 1,000,000 shares
              
              
              (17,000
              )Additional
                  paid-in capital
              
              
              7,280,724Accumulated
                  deficit
              
              
              (6,905,240
              )Total
                  stockholders' equity
              
              
              377,612Total
                  liabilities and stockholders' equity
              
              $
              1,097,206


3




**TORBAY
      HOLDINGS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**AND
      OTHER COMPREHENSIVE INCOME (LOSS)**


**FOR
      THE THREE AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006**


**(UNAUDITED)**


Three
                  months ended June 30,
              
              
              Six
                  months ended June 30,2007
              
              
              2006
              
              
              2007
              
              
              2006Revenue
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -General
                  and administrative expenses
              
              
              59,982
              
              
              63,607
              
              
              93,971
              
              
              235,462Loss
                  from continuing operations beforeother
                  expense
              
              
              (59,982
              )
              
              (63,607
              )
              
              (93,971
              )
              
              (235,462
              )Interest
                  expense and financing cost
              
              
              (185,939
              )
              
              (35,424
              )
              
              (186,446
              )
              
              (35,424
              )Change
                  in fair value of derivative liability
              
              
              (345,948
              )
              
              -
              
              
              (345,948
              )
              
              -Loss
                  from continuing operationsbefore
                  provision for income taxes
              
              
              (591,869
              )
              
              (99,031
              )
              
              (626,365
              )
              
              (270,886
              )Provision
                  for income taxes
              
              
              -
              
              
              -
              
              
              -
              
              
              -Net
                  loss from continuing operations
              
              
              (591,869
              )
              
              (99,031
              )
              
              (626,365
              )
              
              (270,886
              )Loss
                  from discontinued operations (including
              
              
              
              
              
              -
              
              
              
              
              
              -gain
                  on disposal of $110,369 in 2007), net of tax
              
              
              (5,951
              )
              
              (75,783
              )
              
              (17,698
              )
              
              (157,198
              )Net
                  loss
              
              $
              (597,820
              )
              $
              (174,814
              )
              $
              (644,063
              )
              $
              (428,084
              )Net
                  loss per common share, basic and dilutedContinuing
                  operations
              
              $
              (0.00
              )
              $
              (0.00
              )
              $
              (0.00
              )
              $
              (0.00
              )Discontinued
                  operations
              
              
              (0.00
              )
              
              (0.00
              )
              
              (0.00
              )
              
              (0.00
              )$
              (0.00
              )
              $
              (0.00
              )
              $
              (0.00
              )
              $
              0.01Weighted
                  average shares outstanding, basic and diluted
              
              
              153,423,834
              
              
              136,844,769
              
              
              153,341,325
              
              
              133,824,577Comprehensive
                  loss:Net
                  loss
              
              $
              (597,820
              )
              $
              (174,814
              )
              $
              (644,063
              )
              $
              (428,084
              )Foreign
                  currency translation loss
              
              
              (2,869
              )
              
              (5,300
              )
              
              (3,104
              )
              
              (6,616
              )Comprehensive
                  loss
              
              $
              (600,689
              )
              $
              (180,114
              )
              $
              (647,167
              )
              $
              (434,700
              )




4




**TORBAY
      HOLDINGS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**FOR
      THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006**


**(UNAUDITED)**


Six
                  Months ended June 30,2007
              
              
              2006Cash
                  flows from operating activities:Net
                  loss
              
              $
              (644,063
              )
              $
              (428,084
              )Adjustments
                  to reconcile net loss to netCash
                  used in operating activities:Gain
                  on disposition of assets
              
              
              (110,369
              )
              
              -Depreciation
                  and amortization
              
              
              11,426
              
              
              21,965Deposit
                  applied to rent
              
              
              5,310Financing
                  cost - warrants repriced
              
              
              18
              
              
              34,174Common
                  stock and warrants issued for services
              
              
              400
              
              
              92,250Common
                  stock and warrants issued for financing costs
              
              
              60,000
              
              
              -Derivative
                  liability
              
              
              466,203
              
              
              -Deferred
                  equity based costs recognized
              
              
              -
              
              
              158,420Changes
                  in operating assets and liabilities:Decrease
                  (increase) in accounts receivable
              
              
              45,251
              
              
              (5,680
              )Decrease
                  in inventory
              
              
              150
              
              
              23,557Increase
                  in prepaid expenses
              
              
              (3,500
              )
              
              -Increase
                  in deposits
              
              
              (2,015
              )
              
              -Decrease
                  in accounts payable and accrued expenses
              
              
              (30,667
              )
              
              (53,102
              )Increase
                  in customer advance
              
              
              1,599
              
              
              -Net
                  cash used in operating activities
              
              
              (200,257
              )
              
              (156,500
              )Cash
                  flows from investing activities:Purchase
                  of property and equipment
              
              
              -
              
              
              (1,761
              )Cash
                  retained by former subsidiary
              
              
              (6,713
              )
              
              -Net
                  cash used in investing activities
              
              
              (6,713
              )
              
              (1,761
              )Cash
                  flows from financing activities:Proceeds
                  from issuance of notes
              
              
              208,000
              
              
              -Proceeds
                  from issuance of common stock
              
              
              -
              
              
              172,500Advances
                  received from stockholder
              
              
              22,000
              
              
              35,000Repayments
                  of advances received from stockholder
              
              
              (27,000
              )
              
              (14,583
              )Cash
                  provided by financing activities
              
              
              203,000
              
              
              192,917Effect
                  of exchange rate changes on cash
              
              
              (3,104
              )
              
              (6,616
              )Net
                  (decrease) increase in cash
              
              
              (7,074
              )
              
              28,040Cash,
                  beginning of period
              
              
              14,680
              
              
              3,007Cash,
                  end of period
              
              $
              7,606
              
              $
              31,047Non-Cash
                  Financial Information:Treasury
                  stock acquired in exchange forassets
                  and liabilities of discontinued operations
              
              $
              17,000
              
              $
              -Net
                  liabilities of discontinued operations
              
              
              93,369
              
              
              -During
                2007, 420,000
                shares ofpreferred
                stock were
                convertedinto
                420,000 shares
                of commomstock
              
              
              -
              
              
              -




5




**TORBAY
      HOLDINGS, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE THREE AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006**


**(UNAUDITED)**




**NOTE
      1**  **BASIS
      OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES**





***(A)
      Basis of Presentation***





The
      accompanying unaudited condensed consolidated financial statements include
      the
      accounts of Torbay Holdings, Inc. (“Torbay”) and its former wholly owned
      subsidiaries, Designer Appliances Limited and Designer Appliances, Inc.
      (collectively, the “Company”). These condensed consolidated financial statements
      have been prepared in accordance with accounting principles generally accepted
      in the United States of America for interim financial information and the
      instructions to Form 10-QSB and do not include all the information and footnotes
      required by accounting principles generally accepted in the United States of
      America for complete financial statements. In the opinion of management, all
      adjustments (consisting of normal recurring accruals) considered necessary
      for a
      fair presentation of the results for the interim periods have been included.
      Operating results for the six months ended June 30, 2007 are not necessarily
      indicative of the results that may be expected for the year ending December
      31,
      2007. The accompanying condensed consolidated financial statements and the
      information included under the heading “Management’s Discussion and Analysis or
      Plan of Operation” should be read in conjunction with our Company’s audited
      consolidated financial statements and related notes included in our Company’s
      Form 10-KSB for the year ended December 31, 2006.





On
      June
      29, 2007 in connection with the resignation of certain of our executive officers
      and directors, our Company agreed to pay to those officers and directors an
      aggregate of $105,000 in full settlement of all contractual obligations that
      those officers and directors had and might have against our Company as a result
      of their services as directors and officers of our Company through that date.
      We
      also transferred to Mr. Thomas Large (a former officer who remains a director
      of
      our Company), 100% of the capital stock of Designer Appliances, Inc. and all
      other assets and liabilities of our Company relating to our Company’s former
      computer mouse and software business, including intellectual property and
      physical materials, including hardware and software and all rights pertaining
      thereto, in consideration of the payment to our Company in perpetuity of a
      1%
      royalty on sales by Designer Appliances, Inc., the return by Mr. Large to our
      Company of 1,000,000 shares of our common stock and the grant to our Company
      of
      a 5% interest in the disposal value of Designer Appliances, Inc. Thus, the
      results of operations of the computer mouse and software business have been
      presented as discontinued operations in these financial statements.





On
      June
      29, 2007, we sold 7,500,000 shares of a newly designated Series B preferred
      stock and 35,000,000 shares of our common stock to The Black Diamond Fund,
      LLLP,
      a Minnesota Limited Liability Limited Partnership (“Black Diamond”), for
      $1,778,000.





The
      purpose of the sale of stock was to raise capital with which we could pursue
      an acquisition strategy whereby we can seek to acquire businesses with a history
      of operating revenues in markets that provide room for growth. We are engaged
      in
      identifying, investigating and, if warranted, acquiring, companies that will
      enhance revenues and increase shareholder value. We
      are in
      active negotiations at the present time with one such opportunity. In
      the event that our limited financial resources prove to be insufficient to
      implement our acquisition strategy, we will be required to seek additional
      financing, through either equity or debt financing.





***(B)
      Use of Estimates***




The
      preparation of condensed consolidated financial statements in conformity with
      accounting principles generally accepted in the United States of America
      requires management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosures of contingent assets and
      liabilities at the date of the condensed consolidated financial statements
      and
      the reported amounts of revenues and expenses during the reporting period.
      Actual results could differ from those estimates.




***(C)
      Loss Per Share***




Basic
      and
      diluted loss per common share for all periods presented is computed based on
      the
      weighted average number of common shares outstanding during the periods
      presented as defined by SFAS No. 128, "Earnings Per Share". The assumed exercise
      of common stock equivalents was not utilized for the three and six months ended
      June 30, 2007 and 2006 since the effect would be anti-dilutive. There were
      38,441,500 and 11,700,000 common stock equivalents at June 30, 2007 and 2006,
      respectively.




**NOTE
      2**  ****  **INTANGIBLE
      ASSETS**




Amortization
      expense for the six months ended June 30, 2007 and 2006 was $8,283 and $17,236,
      respectively. Amortization expense for the three months ended June 30, 2007
      and
      2006 was $3,798 and $7,970, respectively. The amortization expense has been
      included in discontinued operations.




6




**NOTE 3**  ****  **LOAN
      PAYABLE - RELATED PARTIES**




On
      June
      29, 2007, loans payable to the spouse of an officer aggregating $22,000 were
      assumed by Mr. Large as a part of the distribution of our computer mouse and
      software business. At June 30, 2007, we have a remaining balance due to this
      individual of $2,000, plus accrued interest of $5,408.





**NOTE 4**  ****  **STOCKHOLDERS’
      EQUITY**





During
      June, 2007 we issued 440,000 shares of common stock upon the conversion of
      our
      preferred stock.





During
      June, 2007 we issued 3,000,000 shares of common stock, valued at $60,000, to
      Mr.
      Large for financing activities.





During
      June, 2007 Mr. Large agreed to return 1,000,000 shares of his common stock,
      in connection with the distribution of our computer mouse business described
      in
      Note 1. These shares have been valued at $17,000, based on the market prices
      of
      our stock on the date of the agreement, and are presented as treasury stock
      in
      the financial statements.





On
      June
      29, 2007, we entered in an agreement to sell 7,500,000 shares of a newly
      designated Series B preferred stock and 35,000,000 shares of our common stock
      to
      The Black Diamond Fund, LLLP, a Minnesota Limited Liability Limited Partnership
      (“Black Diamond”), for $1,778,000 (the “Purchase
      Agreement”).
      The allocated price for the preferred stock sold under the agreement is $540,400
      and the allocated price for the common stock is $1,237,600. Since we collected
      the price for the common stock prior to the issuance of the financial
      statements, we have included that amount as a receivable as of June 30,
      2007. In accordance with the terms of the Purchase Agreement,
      the receivable has been shown net of the loan payable to Black Diamond
      described in Note 5, since the note principal balance has been applied to the
      purchase price.





The
      Purchase Agreement requires us to buy back shares of the Series B preferred
      stock at the option of the holder through a series of monthly cash payments
      starting at $50,000 per month in August, 2008 and rising to $200,000 per month
      in December, 2011 at a formula purchase price which is a multiple of the then
      per share price of our common stock. The total amount which Black Diamond could
      potentially require us to pay should Black Diamond exercise this option
      completely is $6,415,000 over that period. The terms of the Purchase Agreement
      were not fully executed as of June 30, 2007 because the designated 10,000,000
      shares of preferred stock were not authorized, no payments were received on
      the
      sale of the preferred stock and no shares were issued as of June 30, 2007.
      Accordingly, the accompanying financial statements do not reflect any liability
      or charge to operations as of June 30, 2007.




We
      have
      filed a Certificate of Designations with the State of Delaware Secretary of
      State to designate 10,000,000 of our authorized preferred stock as Series B
      preferred stock. The Series B preferred stock has the same rights as the common
      stock, except that the Series B preferred stock has 60 votes per share where
      a
      share of common stock has one vote per share on all matters requiring a
      shareholder vote. The shares of Series B preferred stock are not convertible
      into shares of common stock and do not have a liquidation
      preference.




This
      transaction will be accounted for in accordance
      with SFAS No. 150, “Accounting
      For
      Certain Financial Instruments with Characteristics of both Liabilities and
      Equity”.
      Accordingly, a liability in the amount of $540,400 will be recorded to reflect
      the principal amount of the total $6,415,000 of redeemable preferred stock
      and
      the balance of $5,874,600 will be accrued commencing July 25, 2007 through
      December 31, 2011 (see Note 7).





**NOTE 5**  ****  **NOTES
      PAYABLE**




On
      May
      11, 2007 we borrowed $60,000 from The Nutmeg/Mercury Fund LLLP. The loan is
      evidenced by a promissory note in the principal amount of $60,000 providing
      that
      interest at the rate of 18% per annum accrues (and compounds daily) on the
      outstanding principal amount and that all principal and accrued interest is
      payable one month after the date of issuance of the note (June 11, 2007). The
      note further provides that an “Event of Default” would occur under the note if
      our Company fails to make payment within 15 days after the due date of the
      note.
      As of June 30, we have not made any payments on the note and as of June 30,
      2007
      interest has been accruing on the note at the rate of the lesser of 30% per
      annum or the maximum interest rate permitted by law. The
      holder of the note may elect to receive payment in common stock of our Company
      at a conversion price of the lesser of $.002 per share or 50% of market value
      based on the trading price of our common stock. Since the note is convertible
      at
      a discount to market, the embedded conversion option is accounted for under
      EITF
      issue No. 00-19 "Accounting for Derivative Financial Instruments Indexed to,
      and
      Potentially Settled in, a Company's Own Stock". We have accounted for the
      embedded conversion option as a derivative liability. Accordingly, the embedded
      conversion option will be marked to market through earnings at the end of each
      reporting period. The conversion option is valued using the Black-Scholes
      valuation model. For the period ended June 30, 2007, our Company reflected
      an
      expense of $466,203, representing the initial fair value of $120,255 and the
      subsequent change in the value of the embedded conversion option of
      $345,948.




On
      June
      19, 2007, we borrowed $148,000 from The Black Diamond Fund LLLP. The loan is
      evidenced by a promissory note in the principal amount of $148,000 providing
      that interest at the rate of 15% per annum accrues (and compounds daily) on
      the
      outstanding principal amount and that all principal and accrued interest is
      payable six months after the date of issuance of the note (December 19, 2007).
      The principal amount of the note has subsequently been applied to the common
      stock purchase price described in Note 4 and we have shown the receivable
      on the common stock purchase agreement net of the principal
      balance.





**NOTE 6**  ****  **DISCONTINUED
      OPERATIONS**





On
      June
      29, 2007 we transferred to Mr. Thomas Large (a former officer who remains a
      director of our Company) 100% of the capital stock of Designer Appliances,
      Inc.
      and all other assets and liabilities of our Company relating to our Company’s
      computer mouse and software business, including intellectual property and
      physical materials, including hardware and software and all rights pertaining
      thereto, in consideration of the payment to our Company in perpetuity of a
      1%
      royalty on sales by Designer Appliances, Inc., the return by Mr. Large to our
      Company of 1,000,000 shares of our common stock, valued at $17,000, and the
      grant to our Company of a 5% interest in the disposal value of Designer
      Appliances, Inc.




7




As
      a
      result of the disposition, we have recorded a gain on the disposition of
      $110,369.





The
      results of operations of our computer mouse and software business have been
      presented as discontinued operations in these financial statements. Revenue
      included in discontinued operations for the six months ended June 30 2007 and
      2006 was $144,849 and $178,062, respectively. Revenue included in discontinued
      operations for the three months ended June 30, 2007 and 2006 was $78,102 and
      $100,344, respectively.





**NOTE 7**  ****  **SUBSEQUENT
      EVENTS**





On
      July
      25, 2007 we received the balance of the $1,778,000 investment from The Black
      Diamond Fund. Of this total amount, $148,000 had been advanced on June 11,
      2007
      as a loan pending the finalization of the documentation and two advances of
      $25,000 each were made subsequent to June 30, 2007 with the final payment of
      $1,580,000 received on July 25, 2007 (see Note 4).





On
      August
      8, 2007, we were notified by the Delaware Secretary of State that our
      Certificate of Designations regarding 10,000,000 shares of our Series B
      preferred stock had been filed. The shares are in the process of being issued
      to
      Black Diamond.





8





**ITEM
      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**





**OVERVIEW**





As
      of June 29, 2007, our board of directors determined that the implementation
      of
      our Company's business plan was no longer financially feasible and accepted
      the
      offer of The Black Diamond Fund, a
      Minnesota Limited Liability Limited Partnership (“Black Diamond”) to
      purchase 7,500,000
      shares of a new series of our preferred stock to be designated as Series B
      preferred stock and 35,000,000 shares of our common stock for $1,778,000.





This
      capital will be used to pursue an acquisition strategy, whereby we will seek
      to
      acquire undervalued businesses with a history of operating revenues in markets
      that provide room for growth. We are engaged in identifying, investigating
      and,
      if warranted, acquiring, companies that will enhance our revenues and increase
      shareholder value.





We
      will utilize several criteria to evaluate prospective acquisitions, including,
      but not limited to (1) established businesses with viable services or products,
      (2) experienced and qualified management team, (3) room for growth and/or
      expansion into other markets, (4) accretive to earnings, (5) offers the
      opportunity to achieve and/or enhance profitability, and (6) potential for
      significant increase in shareholder value.





On
      June
      29, 2007, we transferred to Mr. Thomas Large (a former officer who remains
      a
      director of our Company), 100% of the capital stock of Designer Appliances,
      Inc.
      and all other assets and liabilities of our Company relating to our Company’s
      computer mouse and software business, including intellectual property and
      physical materials, including hardware and software and all rights pertaining
      thereto, in consideration of the payment to our Company in perpetuity of a
      1%
      royalty on sales by Designer Appliances, Inc., the return by Mr. Large to our
      Company of 1,000,000 shares of our common stock and the grant to our Company
      of
      a 5% interest in the disposal value of Designer Appliances, Inc.




**RESULTS
      OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2007 AND
      2006**





Critical
      Accounting Policies and Estimates





Our
      Company is in a transition in its business model. As we make new acquisitions
      and investments, critical accounting policies and estimates will be set forth
      as
      necessary to reflect the then nature of our business.





Discussion
      and analysis of our financial condition and results of operations are based
      upon
      our consolidated financial statements, which have been prepared in accordance
      with generally accepted accounting principles in the United States. The
      preparation of these consolidated financial statements requires us to make
      estimates and judgments that affect the amounts reported in the consolidated
      financial statements and the accompanying notes.




On
      an
      on-going basis, we evaluate our estimates, including those related to intangible
      assets, equity based compensation and litigation. We base our estimates on
      experience and on various assumptions that are believed to be reasonable under
      the circumstances, the results of which form the basis for making judgments
      about the carrying values of assets and liabilities that are not readily
      apparent from other sources. Actual results may differ from these estimates
      under different assumptions or conditions.




9




**Stock
      Based Compensation**





On
      January 1, 2006, we adopted the fair value recognition provisions of Financial
      Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards
      (“SFAS”) No. 123(R), Accounting for Stock-Based Compensation, to account for
      compensation costs under our stock option plans. We previously utilized the
      intrinsic value method under Accounting Principles Board Opinion No. 25,
      Accounting for Stock Issued to Employees (as amended) (“APB 25”). Under the
      intrinsic value method prescribed by APB 25, no compensation costs were
      recognized for our employee stock options because the option exercise price
      equaled the market price on the date of grant. Prior to January 1, 2006, we
      only
      disclosed the pro forma effects on net income and earnings per share as if
      the
      fair value recognition provisions of SFAS 123(R) had been utilized.





In
      adopting SFAS No. 123(R), we elected to use the modified prospective method
      to
      account for the transition from the intrinsic value method to the fair value
      recognition method. Under the modified prospective method, compensation cost
      is
      recognized from the adoption date forward for all new stock options granted
      and
      for any outstanding unvested awards as if the fair value method had been applied
      to those awards as of the date of grant. There are no outstanding vested or
      unvested options awards.





**Revenue,
      Cost of Goods Sold, Gross Profit, and Operating Expenses**





With
      the
      transfer of the Designer Appliances business on June 29, 2007, we had no revenue
      from continuing operations to report. As the Designer Appliances business was
      the sole business of our Company in 2006, there was no revenue from continuing
      operations to report for that period. Thus, for the three months and six months
      ended June 30, 2007 and the three months and six months ended June 20, 2006,
      our
      Company had no revenue from continuing operations to report.





Likewise,
      for the three months and six months ended June 30, 2007 and the three months
      and
      six months ended June 20, 2006, our Company had no cost of goods sold, gross
      profit, or operating expenses from continuing operations to report.





The
      results of operations of our computer mouse and software business have been
      presented as discontinued operations in these financial statements. Revenue
      included in discontinued operations for the six months ended June 30, 2007
      and
      2006 was $144,849 and $178,062, respectively. Revenue included in discontinued
      operations for the three months ended June 30, 2007 and 2006 was $78,102 and
      $100,344, respectively. As a result of the disposition, we have recorded a
      gain
      on the disposition of $110,369.




**General
      and Administrative Expenses**





For
      the
      three months ended June 30, 2007 and 2006, general administrative expenses
      from
      continuing operations were $59,982 and $63,607, respectively. General and
      administrative expenses from continuing operations for the six months ended
      June
      30, 2007 and 2006 were $93,971 and $235,462, respectively. The components of
      general administrative expenses are compensation costs and professional fees.
      We
      expect our general and administrative expenses to increase over the next twelve
      months as we investigate, negotiate, and acquire business opportunities.





Our
      strategy is to pursue an acquisition strategy, whereby we will seek to acquire
      undervalued businesses with a history of operating revenues in markets that
      provide room for growth. We are engaged in identifying, investigating and,
      if
      warranted, acquiring, companies that will enhance our revenues and increase
      shareholder value.





We
      will utilize several criteria to evaluate prospective acquisitions, including,
      but not limited to (1) established businesses with viable services or products,
      (2) experienced and qualified management team, (3) room for growth and/or
      expansion into other markets, (4) accretive to earnings, (5) offers the
      opportunity to achieve and/or enhance profitability, and (6) potential for
      significant increase in shareholder value.




**Interest
      Expense and Financing Costs**





For
      the
      three and six months ended June 30, 2007, we recorded other expense of $531,887
      and $532,394, respectively, comprised primarily of non-cash charges related
      to
      stock-based financing costs of $60,000 and our derivative liability of $466,203.
      For the three and six months ended June 30, 2006, we recorded other expense
      of
      $35,424, comprised primarily of a non-cash charge of $34,174 resulting from
      the
      re-pricing of certain of our common stock purchase warrants.





**Net
      Loss**





Our
      Company incurred a net loss of $597,820 for the three months ended June 30,
      2007
      relative to a net loss of $174,814 for the three months ended June 30, 2006.
      The
      $423,006 increase is due to the interest expense and financing costs as well
      as
      the change in the fair value of the derivative liability noted above.




10




Our
      Company incurred a net loss of $644,063 for the six months ended June 30, 2007
      relative to a net loss of $428,084 for the six months ended June 30, 2006,
      reflecting the fact that virtually all the changes in the net loss came in
      the
      three month period ending June 30, 2007.




**Liquidity
      and Cash Position**





**Operating
      Activities**




For
      the
      six months ended June 30, 2007 and 2006, our Company used $200,257 and $156,500,
      respectively, to fund operating activities. For the six months ended June 30,
      2007, a loss of $644,063 was partially offset by non-cash charges of $526,621
      related to financing decreased by the non cash gain on the disposition of assets
      and the net increase in operating assets. For the six months ended June 30,
      2006, a loss of $428,084 was partially offset by non-cash charges of $21,965
      of
      depreciation and amortization expense and $284,844 of stock based compensation
      and financing expense and increased by the net decrease in operating
      liabilities. Cash used by operating activities includes results from our
      computer mouse and software business, which has been discontinued as of June
      29,
      2007.





**Investing
      Activities**




For
      the
      six months ended June 30, 2007 our Company used $6,713 in cash as part of the
      assets transferred to Mr. Large, a former officer of our Company. For the six
      months ended June 30, 2006, our Company used $1,761 to fund investing
      activities.





**Financing
      Activities**




For
      the
      six months ended June 30, 2007 our Company realized cash of $208,000 in
      connection with short term loans to us pending the finalization of sale of
      preferred and common stock to The Black Diamond Fund.





For
      the
      six months ended June 30, 2006, our Company realized cash of $192,917 in
      connection with financing activities including the receipt of $20,000 pursuant
      to the exercise of warrants which occurred in 2005, $97,500 from the current
      sale of common stock, $75,000 from the exercise of warrants and $20,417 in
      net
      advances from a related party.






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ITEM
      3.
      CONTROLS AND PROCEDURES




Evaluation
      of Disclosure Controls And Procedures


Disclosure
        controls and procedures are designed to ensure that information required
        to be
        disclosed in the reports filed or submitted under the Securities Exchange
        Act of
        1934 (the “Exchange Act”) is recorded, processed, summarized and reported,
        within the time period specified in the rules and forms of the Securities
        and
        Exchange Commission (the “SEC”).  Disclosure controls and procedures
        include, without limitation, controls and procedures designed to ensure that
        information required to be disclosed in the reports filed under the Exchange
        Act
        is accumulated and communicated to management, including our President and
        Chief
        Financial Officer, as appropriate, to allow timely decisions regarding required
        disclosure.  Our Chief Executive Officer, who is also the acting Chief
        Financial Officer, in consultation with our other members of management and
        advisors as appropriate, carried out an evaluation of the effectiveness of
        our
        disclosure controls and procedures as of the end of the period covered by
        this
        quarterly report pursuant to Rule 13a-15(b) promulgated under the Exchange
        Act.  Based upon that evaluation, our Chief Executive Officer concluded
        that our disclosure controls and procedures are effective in alerting him
        in a
        timely fashion to all material information required to be included in our
        periodic filings with the SEC.




Changes
      in Internal Control over Financial Reporting




The
      term
“internal control over financial reporting” is defined as a process designed by,
      or under the supervision of, our President and Principal Financial Officer,
      and
      effected by our Board of Directors, management and other personnel, to provide
      reasonable assurance regarding the reliability of financial reporting and the
      preparation of financial statements for external purposes in accordance with
      generally accepted accounting principles. There were no changes in our internal
      control over financial reporting identified in connection with our evaluation
      of
      these controls as of the end of the period covered by this quarterly report
      that
      could have significantly affected those controls subsequent to the date of
      the
      evaluation referred to in the previous paragraph, including any correction
      action with regard to significant deficiencies and material
      weakness.




12





PART
      II -
      OTHER INFORMATION


ITEM
      1.
      LEGAL PROCEEDINGS


As
        of the
        date of this Form 10-QSB, we are not a party to any litigation and management
        has no knowledge of any threatened or pending litigation against
        us.





ITEM
      2.
      UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





During
      the three month period ending June 30, 2007, our Company entered into a Share
      Purchase Agreement (the ‘Purchase Agreement”) to sell 7,500,000 of a new series
      of its preferred stock to be designated as Series B preferred stock for $540,000
      and 35,000,000 shares of its common stock for $1,237,600 to Black Diamond for
      $1,778,000.





The
      Purchase Agreement requires our Company to buy back shares of the Series B
      preferred stock at the option of Black Diamond through a series of monthly
      cash
      payments starting at $50,000 per month in August, 2008 and rising to $200,000
      per month in December, 2011 at a formula purchase price which is a multiple
      of
      the then common share price. The total amount which Black Diamond could require
      our Company to pay should Black Diamond exercise this option completely is
      $6,415,000 over that period.




Our
      Company has filled a Certification of Designation with the State of Delaware
      Secretary of State to designate 10,000,000 of its authorized preferred stock
      as
      Series B preferred stock. The Series B preferred stock has the same rights
      as
      the common stock, except that the Series B preferred stock has 60 votes per
      share where a share of common stock has one vote per share on all matters
      requiring a shareholder vote. The shares of Series B preferred stock are not
      convertible into shares of common stock and do not have a liquidation
      preference.





Our
      Company had previously designated 700,000 of its preferred shares as Series
      1
      preferred stock. None of that Series 1 preferred stock is currently outstanding.
      Our Company does not have any plans to issue the Series 1 preferred
      stock.





Black
      Diamond’s acquisition of our capital stock pursuant to the Purchase Agreement
      was for investment purposes only and our Company issued such securities in
      reliance upon the exemption from registration afforded by Section 4(2) of the
      Securities Act of 1933, as amended. No underwriters or brokers were involved
      in
      the transaction. The sale was for cash and involved no discount.





ITEM
      3.
      DEFAULTS UPON SENIOR SECURITIES





The
      $60,000 note to The Nutmeg/Mercury Fund LLLP described in Note 5 to the
      financial statements is currently in default.




ITEM
      4.
      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.




ITEM
      5.
      OTHER INFORMATION





None.





ITEM
      6.
      EXHIBITS





3.1
            Certificate
                of Designations for Series B Preferred Stock.*31.1
            Certification
                of the Chief Executive Officer and Acting Principal Financial Officer
                of
                Torbay Holdings, Inc. pursuant to Section 302 of the Sarbanes-Oxley
                Act of
                2002.*





32.1
            Certification
                of the Chief Executive Officer and Acting Principal Financial Officer
                of
                Torbay Holdings, Inc. pursuant to Section 906 of the Sarbanes-Oxley
                Act of
                2002.*




13




SIGNATURES





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




TORBAY
                HOLDINGS, INC.Date: August
              20, 2007
            By:
            /s/  Richard
              K LauerName:
                Richard K LauerTitle:
              President and Chief Executive Officer
              (Principal
                Executive Officer and Acting Principal Accounting
                Officer)




14