##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File No. 000-24455
 TORVEC, INC.
  New York
    
    16-1509512(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 1999 Mt. Read Blvd. Building 3, Rochester, New York 14615
(Address of principal executive offices and Zip Code)
(585) 254-1100
(Registrants telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
  þ o
  Large accelerated filer oAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company þ  o þ
 APPLICABLE ONLY TO CORPORATE ISSUERS:
  Number of Shares Outstanding atClass
    
    May 15, 2008Common Stock, $.01 par value
    
    32,025,189
 Options Outstanding641,848




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##### 



INDEX
 PAGEPART I  FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsTorvec, Inc. and Subsidiaries Condensed Consolidated Balance Sheets  March 31,
2008 (Unaudited) and December 31, 2007 (Derived from Audited Financial Statements)
    
    
    3Torvec, Inc. and Subsidiaries Condensed Consolidated Statements of Operations
Three Months Ended March 31, 2008 and 2007 (Unaudited) and September 25, 1996
(Inception) through March 31, 2008
    
    
    4Torvec, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows 
Three Months Ended March 31, 2008 and 2007 (Unaudited) and September 25, 1996
(Inception) through March 31, 2008
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6-20Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 4.
    
    Controls and Procedures
    
    
    25PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    26Item 1A.
    
    Risk Factors
    
    
    26Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 3.
    
    Defaults Upon Senior Securities
    
    
    26Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    26Item 5.
    
    Other Information
    
    
    27Item 6.
    
    Exhibits
    
    
    27-30SIGNATURES PAGE
    
    
    31EXHIBIT INDEX
    
    
    32EX-31.1
    
    
    
    
    36EX-32
    
    
    
    
    37EX-31.1EX-32
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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
 
 
 March 31, 2008
    
    
    December 31, 2007(Derived fromAudited Financial(Unaudited)
    
    
    Statements)ASSETSCurrent assets:Cash
    
    $
    63,000
    
    
    $
    192,000Account Receivable
    
    
    300,000
    
    
    
    Inventory
    
    
    46,000
    
    
    
    Prepaid expenses and other receivables
    
    
    69,000
    
    
    
    43,000Total current assets
    
    
    478,000
    
    
    
    235,000Property and Equipment:Office equipment
    
    
    68,000
    
    
    
    67,000Shop equipment
    
    
    136,000
    
    
    
    129,000Leasehold improvements
    
    
    210,000
    
    
    
    149,000Transportation equipment
    
    
    106,000
    
    
    
    106,000520,000
    
    
    
    451,000Less accumulated depreciation and amortization
    
    
    188,000
    
    
    
    170,000Net property and equipment
    
    
    332,000
    
    
    
    281,000Total Assets
    
    $
    810,000
    
    
    $
    516,000LIABILITIESCurrent liabilities:Notes payable, current portion
    
    $
    15,000
    
    
    $
    15,000Accounts payable
    
    
    321,000
    
    
    
    261,000Accrued liabilities
    
    
    1,787,000
    
    
    
    1,704,000Total current liabilities
    
    
    2,123,000
    
    
    
    1,980,000Deferred revenue
    
    
    898,000
    
    
    
    500,000Deferred rent
    
    
    33,000Notes payable, net of current portion
    
    
    41,000
    
    
    
    43,000Total liabilities
    
    
    3,095,000
    
    
    
    2,523,000Commitments and other mattersSTOCKHOLDERS DEFICIENCYPreferred stock, $.01 par value, 100,000,000 shares authorized3,300,000 designated as Class A, Non-voting, cumulative
dividend $.40 per share, per annum, convertible, 713,351
shares issued and outstanding (liquidation preference
$3,672,302)
    
    
    9,000
    
    
    
    9,000300,000 designated as Class B, Non-voting, cumulative
dividend $.50 per share, per annum, convertible, 97,500
shares issued and outstanding (liquidation preference
$323,925)
    
    
    
    
    
    
    Common stock, $.01 par value, 400,000,000 shares authorized,
31,895,734 and 31,640,045 issued and outstanding, at March
31, 2008 and December 31, 2007, respectively
    
    
    319,000
    
    
    
    316,000Additional paid-in capital
    
    
    46,829,000
    
    
    
    45,926,000Deficit accumulated during the development stage
    
    
    (49,442,000
    )
    
    
    (48,258,000
    )Total Stockholders Deficit
    
    
    (2,285,000
    )
    
    
    (2,007,000
    )Total Liabilities and Stockholders Deficit
    
    $
    810,000
    
    
    $
    516,000
 See notes to condensed consolidated financial statements
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##### Table of Contents



September 25,1996(Inception)Three Months Ended
    
    
    ThroughMarch 31,
    
    
    March 31,2008
    
    
    2007
    
    
    2008Revenue
    
    $
    15,000
    
    
    $
    
    
    
    $
    141,000Cost of goods sold
    
    
    5,000
    
    
    
    
    
    
    
    125,000Gross profit
    
    
    10,000
    
    
    
    
    
    
    
    16,000Cost and expenses:Research and development
    
    
    148,000
    
    
    
    235,000
    
    
    
    14,948,000Selling, general and administrative
    
    
    1,047,000
    
    
    
    596,000
    
    
    
    34,858,000Asset impairment
    
    
    
    
    
    
    
    
    
    
    1,071,000Loss from operations
    
    
    (1,185,000
    )
    
    
    (831,000
    )
    
    
    (50,861,000
    )Other incomeOther income
    
    
    1,000
    
    
    
    
    
    
    
    147,000Loss before minority interest
    
    
    (1,184,000
    )
    
    
    (831,000
    )
    
    
    (50,714,000
    )Minority interest in loss of consolidated subsidiary
    
    
    
    
    
    
    
    
    
    
    1,272,000Net loss
    
    
    (1,184,000
    )
    
    
    (831,000
    )
    
    
    (49,442,000
    )Preferred stock beneficial conversion feature
    
    
    
    
    
    
    
    
    
    
    763,000Preferred stock dividend
    
    
    83,000
    
    
    
    85,000
    
    
    
    952,000Net loss attributable to common stockholders
    
    $
    (1,267,000
    )
    
    $
    (916,000
    )
    
    $
    (51,157,000
    )Basic and diluted net loss attributable to common
stockholders per share
    
    $
    (0.04
    )
    
    $
    (0.03
    )Basic and diluted weighted average number of shares of
common stock
    
    
    31,783,000
    
    
    
    31,334,000
 See notes to condensed consolidated financial statements
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September 25,1996(Inception)Three Months Ended
    
    
    ThroughMarch 31,
    
    
    March 31,2008
    
    
    2007
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (1,184,000
    )
    
    $
    (831,000
    )
    
    $
    (49,442,000
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    18,000
    
    
    
    11,000
    
    
    
    2,401,000Loss on impairment of license
    
    
    
    
    
    
    
    
    
    
    1,071,000Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    19,000Gain on sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    (10,000
    )Minority interest in gain (loss) of consolidated subsidiary
    
    
    
    
    
    
    
    
    
    
    (1,272,000
    )Compensation expense attributable to common stock in Subsidiary
    
    
    
    
    
    
    
    
    
    
    619,000Common stock issued for services
    
    
    596,000
    
    
    
    183,000
    
    
    
    12,292,000Shares issued for future consulting services
    
    
    
    
    
    
    
    
    
    
    103,000Stockholder contribution of services
    
    
    
    
    
    
    75,000
    
    
    
    2,409,000Compensatory common stock, options and warrants
    
    
    249,000
    
    
    
    249,000
    
    
    
    17,501,000Changes in:Accounts receivable
    
    
    (300,000
    )
    
    
    
    
    
    
    (300,000
    )Inventory
    
    
    (46,000
    )
    
    
    
    
    
    
    (46,000
    )Prepaid expenses
    
    
    (26,000
    )
    
    
    21,000
    
    
    
    92,000Deferred rent
    
    
    33,000
    
    
    
    
    
    
    
    33,000Accounts payable and accrued expenses
    
    
    143,000
    
    
    
    26,000
    
    
    
    4,016,000Deferred revenue
    
    
    398,000
    
    
    
    
    
    
    
    898,000Net cash used in operating activities
    
    
    (119,000
    )
    
    
    (266,000
    )
    
    
    (9,616,000
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (8,000
    )
    
    
    
    
    
    
    (357,000
    )Cost of acquisition
    
    
    
    
    
    
    
    
    
    
    (16,000
    )Proceeds from sale of fixed asset
    
    
    
    
    
    
    
    
    
    
    10,000Net cash used in investing activities
    
    
    (8,000
    )
    
    
    
    
    
    
    (363,000
    )Cash flows from financing activities:Net proceeds from sales of common stock and upon exercise of options and
warrants
    
    
    
    
    
    
    
    
    
    
    6,501,000Net proceeds from sales of preferred stock
    
    
    
    
    
    
    
    
    
    
    3,537,000Net proceeds from sale of subsidiary stock
    
    
    
    
    
    
    
    
    
    
    234,000Proceeds from long  term borrowings
    
    
    
    
    
    
    
    
    
    
    85,000Repayments of long  term debt
    
    
    (2,000
    )
    
    
    (3,000
    )
    
    
    (53,000
    )Proceeds from stockholders loan and advances
    
    
    
    
    
    
    
    
    
    
    250,000Repayment of stockholders loan and advances
    
    
    
    
    
    
    
    
    
    
    (147,000
    )Distributions
    
    
    
    
    
    
    
    
    
    
    (365,000
    )Net cash (used in) provided by financing activities
    
    
    (2,000
    )
    
    
    (3,000
    )
    
    
    10,042,000Net decrease in cash
    
    
    (129,000
    )
    
    
    (269,000
    )
    
    
    63,000Cash at beginning of period
    
    
    192,000
    
    
    
    720,000Cash at end of period
    
    $
    63,000
    
    
    $
    451,000
    
    
    $
    63,000Supplemental Disclosures:Interest paid
    
    $
    2,000
    
    
    $
    6,000Net cash investing and financing activities:Shares issued for acquisition leasehold improvements
    
    
    61,000
    
    
    
    Preferred stock issued in payment of dividend
    
    
    6,000
    
    
    
    
 See notes to condensed consolidated financial statements
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NOTE A  The Company and Basis of Presentation
 The interim information contained herein with respect to the three month periods ended March
31, 2008 and 2007 and the period from September 25, 1996 (inception) through March 31, 2008
has not been audited but was prepared in conformity with generally accepted accounting
principles for interim financial information and instructions for 10-Q and Item 310(b) of
Regulation S-K. Accordingly, the condensed consolidated financial statements do not include
all information and footnotes required by generally accepted accounting principles for
financial statements. Included are ordinary adjustments which in the opinion of management are
necessary for a fair presentation of the financial information for the three month periods
ended March 31, 2008 and 2007 and since inception. The results are not necessarily indicative
of results to be expected for the entire year.Torvec, Inc. (the company) was incorporated as a New York State business corporation in
September 1996. The company, which is in the development stage, has developed technology for
use in automotive applications. In September, 1996, the company acquired numerous patents,
inventions and know-how (the technology) contributed by Vernon E. Gleasman, James Y.
Gleasman and Keith E. Gleasman (theGleasmans). The company has developed, designed and
intends to commercialize its infinitely variable transmissions, its pumps/motors, its
IsoTorque differential, its constant velocity joint and the substructure and components of its
full terrain vehicle.The companys financial statements have been prepared assuming that it will continue as a
going concern. For the period from September 1996 (inception) through March 31, 2008, the
company has accumulated a deficit of $49,442,000, and at March 31, 2008 has a negative working
capital position of $1,645,000 and capital deficit of $2,285,000. The company has been
dependent upon equity financing and advances from stockholders to meet its obligations and
sustain operations. The companys efforts have been principally devoted to the development of
its technologies and commercializing its products. Management believes that based upon its
current cash position, its budget for its business operations through March 31, 2009, receipt
of reimbursement monies approximating $300,000 per quarter, collectibility of its receivables
in the ordinary course of business, and an outstanding funding commitment from a
director/officer to fund deficiencies that may arise up to $400,000, the company will be able
to continue operations through March 31, 2009. The companys ability to continue as a going
concern is ultimately dependent upon achieving profitable operations and generating sufficient
cash flows from operations to meet future obligations.
 NOTE B  Summary of Significant Accounting Policies
 [1]
    
    Consolidation:The financial statements include the accounts of the company, its
majority-owned subsidiary, Ice (69.26% owned at March 31, 2008 and
2007), and its wholly-owned subsidiaries Iso-Torque Corporation, IVT
Diesel Corp. and Variable Gear LLC. All material intercompany
transactions and account balances have been eliminated in
consolidation.
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[2]
    
    Cash and Cash EquivalentsCash and cash equivalents include time deposits, certificates of
deposit, and all highly liquid debt instruments with original
maturities of three months or less. The company maintains cash and
cash equivalents at financial institutions which periodically may
exceed federally insured amounts.[3]
    
    Use of Estimates:The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Such estimates are used in
valuing the useful lives of its fixed assets and
the future realizable value of such assets. These estimates are subject to a high degree of judgment and potential
change. Actual results could differ from those estimates.[4]
    
    Loss per Common Share:Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share, requires the presentation of basic
earnings per share, which is based on common stock outstanding, and dilutive earnings per share, which gives effect to
options, warrants and convertible securities in periods when they are dilutive. At March 31, 2008 and 2007, the company
excluded 3,107,649 and 4,471,536 potential common shares, respectively, relating to convertible preferred stock
outstanding, options and warrants from its diluted net loss per common share calculation because they are
anti-dilutive.[5]
    
    Income TaxesThe Company accounts for income taxes using the asset and liability method described in SFAS No. 109,  Accounting for
Income Taxes, the objective of which is to establish deferred tax assets and liabilities for the temporary
differences between the financial reporting and the tax bases of the Companys assets and liabilities at enacted tax
rates expected to be in effect when such amounts are realized or settled. A valuation allowance related to deferred
tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be
realized.
We adopted the provisions of Financial Accounting Standards Board interpretation No. 48 Accounting for Uncertainty in
Income Taxes (FIN 48) an interpretation of FASB Statement No. 109 (SFAS 109) on January 1, 2007. As a result of
the implementation of FIN 48, we recognized no adjustment for uncertain tax provisions. At the adoption date of
January 1, 2007, we had a deferred tax asset which was fully reserved by a valuation allowance to reduce the deferred
tax asset to the amount that more likely than not to be realized.
We recognize interest and penalties related to uncertain tax positions in general and administrative expense. As of
December 31, 2007, we have not recorded any provisions for accrued interest and penalties related to uncertain tax
positions.
The tax year 2006 remains open to examination by the major tax jurisdictions to which we are subject.[6]
    
    InventoryThe Companys inventories consisted of the following at March 31, 2008 and 2007:
 2008
    
    
    2007Work-in Process
    
    $
    9,000
    
    
    
    Finished Goods
    
    
    37,000
    
    
    
    Total Inventory
    
    $
    46,000
    
    
    
    
 All inventories are stated at the lower of cost or market with cost determined using the specific identification method.
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[7]
    
    Fair Value of Financial Instruments:The carrying amount of cash, prepaid expenses, accounts payable and
accrued expenses approximates their fair value due to the short
maturity of those instruments.[8]
    
    Stock-based Compensation:In December 1997, the Board of Directors of the company
approved a Stock Option Plan (the Plan) which provides for
the granting of up to 2,000,000 shares of common stock,
pursuant to which officers, directors, key employees and key
consultants/advisors are eligible to receive incentive,
nonstatutory or reload stock options. Options granted under the
Plan are exercisable for a period of up to 10 years from date
of grant at an exercise price which is not less than the fair
value on date of grant, except that the exercise period of
options granted to a stockholder owning more than 10% of the
outstanding capital stock may not exceed five years and their
exercise price may not be less than 110% of the fair value of
the common stock at date of grant. Options may vest over five
years.Effective January 1, 2006, we adopted Statement of Financial
Accounting Standards (SFAS) No. 123(R), Share Based
Payment. We elected to use the modified prospective transition
method; therefore, prior period results were not restated.
Prior to the adoption of SFAS 123(R), stock-based compensation
expense related to stock options was not recognized in the
results of operations if the exercise price was at least equal
to the market value of the common stock on the grant date, in
accordance with Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees.No tax benefits were attributed to the stock-based compensation
expense because a valuation allowance was maintained for
substantially all net deferred tax assets. We elected to adopt
the alternative method of calculating the historical pool of
windfall tax benefits as permitted by FASB Staff Position (FSP)
No. SFAS 123(R)-c, Transition Election Related to Accounting
for the Tax Effects of Share-Based Payment Awards. This is a
simplified method to determine the pool of windfall tax
benefits that is used in determining the tax effects of stock
compensation in the results of operations and cash flow
reporting for awards that were outstanding as of the adoption
of SFAS 123(R).[9]
    
    Revenue Recognition:The companys terms provide that customers are obligated to pay
for products sold to them within a specified number of days
from the date that title to the products is transferred to the
customers. The companys standard terms are typically net 30
days. The company recognizes revenue when transfer of title
occurs and risk of ownership passes to a customer at the time
of shipment or delivery depending on the terms of the agreement
with a particular customer. The sale price of the companys
products is substantially fixed and determinable at the date of
the sale based upon purchase orders generated by a customer and
accepted by the company. The company will use the allowance
method to record receivables that are uncollectible. In the
current period, there is no history of uncollectible revenue
and no basis to calculate a return and allowance. All
receivables and revenue are deemed collectible and fully
recoverable.[10]
    
    Recent Accounting Pronouncements:Effective January 1, 2008, the Company adopted SFAS No. 157, Fair Value
Measurements (SFAS 157), which defines fair value, establishes a framework
for measuring fair value and requires additional disclosures about fair value
measurements. In February 2008, the FASB delayed the effective date of SFAS 157
for one year for all nonfinancial assets and nonfinancial liabilities, except
for those items that are recognized or disclosed at fair value in the financial
statements on a recurring basis. Management has determined that the adoption of
SFAS 157 did not have a material effect on the Companys consolidated financial
statements.Effective January 1, 2008, the Company adopted SFAS No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities- including an amendment
of FASB Statement 115 (SFAS 159). This statement provides companies with an
option to report selected financial assets and liabilities at fair value. As of
March 31, 2008, the Company has not elected to use the fair value option
allowed by SFAS 159. Management has determined that the adoption of SFAS 159
did not have a material effect on the Companys consolidated financial
position, results of operations, cash flows or financial statement disclosures.In December 2007, the FASB issued Statement No. 141 (revised), Business
Combinations (SFAS 141 (R)). The standard changes the accounting for
business combinations including the measurement of acquirer shares issued in
consideration for a
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business combination, the recognition of contingent consideration, the accounting for
pre-acquisition gain and loss contingencies, the recognition of capitalized in-process research and
development, the accounting for acquisition-related restructuring cost accruals, the treatment of
acquisition related transaction costs and the recognition of changes in the acquirers income tax
valuation allowance. SFAS 141(R) is effective for fiscal years beginning after December 15, 2008,
with early adoption prohibited. The Company does not expect SFAS 141(R) to have a significant
impact on the Companys financial position.In December 2007, the FASB issued Statement No. 160, Noncontrolling Interests in Consolidated
Financial Statements, an amendment of ARB No. 51 (SFAS 160). The standard changes the accounting
for noncontrolling (minority) interests in consolidated financial statements including the
requirements to classify noncontrolling interests as a component of consolidated stockholders
equity, and the elimination of minority interest accounting in results of operations with
earnings attributable to noncontrolling interests reported as part of consolidated earnings.
Additionally, SFAS 160 revises the accounting for both increases and decreases in a parents
controlling ownership interest. SFAS 160 is effective for fiscal years beginning after December 15,
2008. with early adoption prohibited. The Company is currently evaluating the effect, if any, the
adoption will have on the Companys financial position and results of operations, but does not
expect the adoption of SFAS 160 to have a significant impact on the
Companys financial position.
 NOTE C  RELATED PARTY TRANSACTIONS
 [1]
    
    Commencing January 1, 2004, James Y. Gleasman and Keith E. Gleasman (the Gleasmans) agreed to
provide consulting services and assign new patents, existing patent improvements and all know-how
in connection with all of their inventions to the company on a noncompensated basis. In addition,
Keith Gleasman agreed to continue as President and James Gleasman agreed to serve as the companys
chief executive officer and interim chief financial officer. During the three month period ended
March 31, 2007 the company did not pay the Gleasmans any consulting fees for their services in
accordance with this policy. The company recorded approximately $75,000 for the estimated value of
these services for the three month period ended March 31, 2007 as a contribution to capital based
upon approved time and hours spent. For such period, the company recorded $50,000 to research and
development and $25,000 to general and administrative.On March 28, 2008 the board of directors approved the governance and compensation committees
recommendation that, effective January 1, 2008, each of the Gleasmans be compensated at the rate of
$300,000 per year. Such amount is payable in cash. No payment of all or any portion of the
Gleasmans consulting fees shall be paid unless and until the company shall have the requisite cash
available. The determination of the availability of the requisite amount of cash shall be made by
the board of directors in the light of approved-budgets, existing and anticipated capital
requirements and existing and estimated cash flows. Unpaid amounts are accumulated and carry over
from one year to the next.Since the company did not have the requisite cash available to pay the Gleasmans compensation under
their new arrangement with the company with respect to the three month period ended March 31, 2008,
the company accrued an aggregate $150,000 of compensation expense for such period and recorded the
compensation expense of $50,000 to research and development and $100,000 to general and
administrative expense.[2]
    
    During the three month periods ended March 31, 2008 and 2007, the company paid $25,350 and $18,500
respectively, to a member of the Gleasman family for administrative, technological and engineering
consulting services. Management believes this compensation is reasonable.[3]
    
    During the three month period ended March 31, 2008, the company paid $23,270 to a family member of
its general counsel for engineering services rendered to the company. Management believes this
compensation is reasonable.
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[4]
    
    On September 14, 2007, the company moved its executive offices from Pittsford, New York to
Rochester, New York, which includes both a manufacturing and executive office facility. The
Rochester facility is owned by a partnership, in which David M. Flaum, a company director, is a
partner. Discussions with respect to a formal lease covering the facility were ongoing through
March 31, 2008. On April 28, 2008, the companys board of directors approved the terms of a lease
and such lease was executed on April 29, 2008. (See Note I.)[5]
    
    On June 29, 2000, the company granted an exclusive world-wide license of all its automotive
technologies to Variable Gear, LLC for the aeronautical and marine markets for $150,000 cash. The
company recorded the receipt of the $150,000 as deferred revenue to be recognized when all
conditions for earning such fees are complete. At the time of its formation and through June 6,
2007 when his interest was purchased, Robert C. Horton, a company shareholder, owned 51% of
Variable Gear, LLC. On June 6, 2007, the company purchased Mr. Hortons entire interest in Variable
Gear for 5,000 shares of common stock for $19,250. The company recognized the deferred revenue of
$150,000 as other income and recorded an impairment of the goodwill of $19,250, since there were no
operations of the entity since inception.
 NOTE D  Stockholders Equity (Capital Deficit)
 [1]
    
    Class A Preferred stock:In January 2002, the company authorized the sale of up to 2,000,000 shares of its Class A
Non-Voting Cumulative Convertible Preferred Stock (Class A Preferred) at $4.00 per share.
Each share of Class A Preferred is convertible into one share of voting common stock and
entitles the holder to dividends, at $.40 per share per annum. The holder has the right to
convert after one year subject to Board approval.The company has sold an aggregate 765,512 Class A Preferred for aggregate proceeds of
$3,062,048. The company has issued an aggregate 198,349 common stock warrants in connection
with the sale of Class A Preferred to the holders of the Class A Preferred, all exercisable
over a 10 year period at $.01 per common share. 179,599 of these warrants have been exercised.The company did not sell any Class A Preferred or issue any warrants during the three month
periods ended March 31, 2008 and 2007.From April 19, 2004 through March 31, 2008, five Class A Preferred holders have converted an
aggregate 66,050 Class A Preferred into an equal number of common shares, of which 25,000 Class
A Preferred were converted during the three month period ended March 31, 2008.From September 2004 through March 31, 2008, an aggregate 13,889 Class A Preferred shares have
been issued as dividends, with 5,858 Class A Preferred issued as dividends during the three
month period ended March 31, 2008.At March 31, 2008 and 2007, Class A Preferred dividends in arrears amounted to approximately
$819,000 and
 10




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##### Table of Contents



$552,000, respectively.
 [2]
    
    Class B Preferred stock:On October 21, 2004, the company authorized the sale of up to 300,000 shares of its Class B
Non-Voting Cumulative Convertible Preferred Stock (Class B Preferred) at $5.00 per share.
Each share of Class B Preferred pays cumulative dividends at $.50 per share per annum and is
convertible into either one share of voting common stock of the company or one share of common
stock of Iso-Torque Corporation under certain circumstances. The holder has the right to
convert after one year subject to Board approval.The company has sold an aggregate 97,500 Class B Preferred for aggregate proceeds of $487,500.During the three month periods ended March 31, 2008 and 2007, the company did not sell any
Class B Preferred. No Class B Preferred have been converted into common stock through March 31,
2008.At March 31, 2008 and 2007, Class B Preferred dividends in arrears amounted to approximately
$111,000 and $62,000, respectively.[3]
    
    Stock-Option Plan:In December, 1997, the board of directors adopted and on May 28, 1998, the companys
shareholders ratified the creation of a Stock Option Plan (the Option Plan) which provides
for the grant of up to 2,000,000 common stock options to officers, directors and consultants
who are eligible to receive incentive, nonqualified or reload stock options. Options granted
under the Option Plan are exercisable for a period of up to ten years from the date of grant at
an exercise price which is not less than the per share trading price of the underlying common
stock on the date of grant, except that the exercise period for options granted to a greater
than 10% shareholder may not exceed five years and the exercise price may not be less than 110%
of such trading price per share on the date of grant.
 Three Month Periods Ended March 31,2008
    
    
    2007Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    Aggregate
    
    
    
    
    
    
    AverageExercise
    
    
    Intrinsic
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Value
    
    
    Shares
    
    
    PriceOutstanding at beginning of period
    
    
    1,021,848
    
    
    $
    4.77
    
    
    
    
    
    
    
    1,823,895
    
    
    $
    4.92Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    (380,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at end of period
    
    
    641,848
    
    
    
    4.70
    
    
    $
    9,500
    
    
    
    1,823,895
    
    
    
    4.92Options exercisable at end of period
    
    
    641,848
    
    
    
    4.70
    
    
    $
    9,500
    
    
    
    1,823,895
    
    
    
    4.92Options Vested and Expected to Vest
    
    
    641,848
    
    
    
    4.70
    
    
    $
    9,500
    
    
    
    1,823,895
    
    
    
    4.92
   Options Outstanding
    
    Options ExercisableWeighted
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    Average
    
    
    
    
    
    AverageExercise
    
    Remaining Life
    
    
    
    
    
    ExerciseShares
    
    
    
    Price
    
    in Years
    
    Shares
    
    Price641,848
    
    
    
    
    
    4.70
    
    
    
    5.56
    
    
    
    641,848
    
    
    
    4.70
  [4]
    
    Business Consultants Stock Plan:For the three month periods ended March 31, 2008 and 2007, the company issued 230,689 and 45,977
common shares to business consultants under the Business Consultants Stock Plan and charged
$656,089 and $182,914 to operations in
 11




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##### Table of Contents



connection with these share issuances. Share issuances are
valued generally on the date immediately prior to the date of issuance, except for shares issued to
pay invoices which are valued as of the invoice date and except for shares issued under the
Nonmanagement Directors Plan which are valued as of the end of each quarter effective October 13,
2006. As of March 31, 2008, 4,422,957 shares are available for future issuances under the Business
Consultants Stock Plan
 [5]
    
    Nonmanagement Directors Plan:On October 1, 2004, the board of directors approved a Nonmanagement Directors Plan pursuant to
which each nonmanagement director is entitled to receive, if certain conditions are met, on an
annual basis for services rendered as a director, warrants to purchase 12,000 shares of the
companys common stock at $.01 per share. In addition, the chairman of the audit committee is
entitled to receive, on an annual basis for services rendered as chairman, additional warrants for
5,000 shares of the companys common stock at $.01 per share.Due to changes made to the Nonmanagement Directors Plan described below, the company did not
issue any warrants under the plan for the three month periods ended March 31, 2008 and 2007. No
previously issued warrants were exercised during the three month period ended March 31, 2008 and
6,000 previously issued warrants were exercised during the three month period ended March 31, 2007.On October 10, 2007, the Nonmanagement Directors Plan was modified to increase the fees
payable to the companys nonmanagement directors. As adjusted, each nonmanagment director (a
total of 4 persons) would receive $26,460 for board and
committee service per annum. The chairman of the audit committee would receive an additional
$12,600 per annum and the chairman of the nominating committee would receive an additional
$5,355 per annum.The Nonmanagement Directors Plan was also modified to provide that the chairman of the board,
chairman of the executive committee and chairman of the governance and compensation committee,
one person, will be paid an aggregate $110,000 per annum for all services rendered by him as a
director and in such capacities. This proposal was made in the light of the risks associated
with the positions he has undertaken as well as the fact that he is and has been since the
summer of 2005, serving the company in these positions on a full-time basis. The proposal was
also made in recognition of the fact that the services required to be performed by the
chairman of the boards executive committee and of its governance and compensation committee
have expanded both in responsibilities covered and time expended.The effective date for the adjustments to the Nonmanagement Directors Plan was July 1, 2007.During the three month period ended March 31, 2008, the company issued 18,855 common shares
under the Plan to satisfy the December 31, 2007 payable in the amount of $58,449 and recorded
a charge of $58,449 for such period. During the three month period ended March 31, 2007, the
company issued 7,985 common shares under the Plan to satisfy the December 31, 2006 payable in
the amount of $41,925 and recorded a charge of $41,925 for such period.[6]
    
    Business, Financial and Engineering Consultants:The company has issued 1,376,583 common stock warrants to various business, financial and
engineering consultants, of which, 91,583 have been exercised for proceeds of $915 and 445,000 cancelled in exchange for
the participation of certain engineers in the companys 2007
Commercializing Event Plan. (Note D [10]).On March 28, 2008, the board approved the issuance of an aggregate 195,000 warrants,
immediately exercisable at $5.00 per common share until 2016, to two engineering consultants who elected not to participate in the
companys 2007 Commercializing Event Plan. The Company recorded a charge in the amount of $249,000 to
general and administrative expense.[7]
    
    Warrants:As of March 31, 2008, outstanding warrants to acquire shares of the companys common stock are
as follows:
 12




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##### Table of Contents



Number ofExercise
    
    
    
    
    
    SharesPrice
    
    Expiration
    
    Exercisable(a)
    
    
    (a
    )
    
    
    125,000
    
    
    
    (a
    )$.75
    
    None
    
    
    500,000
    
    
    
    (b
    )$.01
    
    None
    
    
    511,200
    
    
    
    (c
    )$.01
    
    None
    
    
    54,500
    
    
    
    (d
    )(e)
    
    
    (e
    )
    
    
    (e
    )
    
    
    (e
    )$.01
    
    None
    
    
    39,000
    
    
    
    (f
    )$5.00
    
    10 years
    
    
    255,000
    
    
    
    (g
    )$.01
    
    None
    
    
    6,000
    
    
    
    (h
    )$.01
    
    None
    
    
    18,750
    
    
    
    (i
    )$1.00
    
    None
    
    
    20,500
    
    
    
    (j
    )(k)
    
    
    (k
    )
    
    
    (k
    )
    
    
    (k
    )(l)
    
    
    (l
    )
    
    
    (l
    )
    
    
    (l
    )$3.27
    
    10 years
    
    
    400,000
    
    
    
    (m
    )$3.75
    
    10 years
    
    
    200,000
    
    
    
    (n
    )$5.00
    
    10 years
    
    
    50,000
    
    
    
    (o
    )$5.00
    
    10 years
    
    
    100,000
    
    
    
    (p
    )
 
 (a)
    
    Exercisable only if the company has an IPO at the IPO price and exercisable five years from
IPO. Through March 31, 2008, the company has not conducted an IPO.(b)
    
    On April 15, 2002, the company issued 1,000,000 warrants to purchase common stock at prices
ranging from $.30 to $.75 to its then chairman of the board of directors and chief executive
officer. Of the total warrants, 250,000 were exercisable at $.30, and 250,000 were exercisable at
$.50 on the date the then board elected the executive to the board and named him chief executive
officer. During the year ended December 31, 2002, 250,000 warrants were exercised for $.30 per
share, resulting in proceeds of $75,000. During the year ended December 31, 2003, 250,000 warrants
were exercised for $.50 per share, resulting in proceeds of $125,000. The remaining 500,000
warrants are exercisable upon the execution of the company of a binding agreement for the sale,
transfer, license or assignment for value of any and/or all of its companys automotive technology
at $.75 per share. The company will record a charge representing the fair value of the warrants
when the warrants become exercisable.(c)
    
    The company has issued 1,080,000 warrants, exercisable at $.01 per common share, to a
management consulting firm. 528,800 of these warrants have been exercised for aggregate proceeds of
$5,484. The company is in litigation with this management consulting firm. In accordance with the
court of original jurisdictions order rendered on May 8, 2006, the company was required to honor
immediately the exercise of 40,000 of the 551,200 warrant balance, to issue an additional 245,000
warrants, exercisable at $.01 per common share and to honor, if and when presented for exercise,
the remaining 511,200 previously issued warrants. The company appealed the lower courts order to
the Appellate Division of the New York Supreme Court. On March 16, 2007, the Appellate Division
unanimously reversed the lower courts order in its entirety. During the pendency of its appeal,
the company had been required to deposit with the clerk of the court 40,000 common shares, 245,000
common stock warrants and $250,000. As the result of the Appellate Courts decision, the lower
court ordered of the 40,000 common shares, 245,000 common stock warrants and $250,000 to the
company. Upon such return, the company cancelled both the 40,000 common shares and the 245,000
common stock warrants. Thus, the 511,200 warrants do not include either the 40,000 warrants which
were exercised or the 245,000 warrants, both of which were cancelled on the companys books. See
Notes F and G.(d)
    
    The company has issued an aggregate 123,500 warrants to its nonmanagement directors for
services rendered to the board under its Nonmanagement Directors Stock Plan prior to its amendment
on October 13, 2006. No further warrants are issuable under the Plan as modified by the board of
directors on October 13, 2006 (See Note D 5). An aggregate 69,000 warrants have been exercised for
approximately $630 of proceeds, with 6,000 warrants exercised during the three month period ended
March 31, 2007 for proceeds of $60. No warrants were exercised during the three month period ended
March 31, 2008.(e)
    
    During 2005, the company issued 120,000 warrants to a consultant, immediately exercisable at
$.01 per common share. 48,000 warrants were exercised in 2005. The remaining 72,000 warrants were
exercised in 2006. During the years ended December 31, 2006 and 2005, the company received proceeds
of $720 and $480 respectively.(f)
    
    In 2005, the company issued 12,000 warrants to a consultant, immediately exercisable at .01 per
common share. During 2005, 3,000 warrants were exercised for proceeds of $30. In 2006, the company
issued 30,000 warrants to consultants exercisable immediately for a ten year term at $5.00 per
common share.(g)
    
    During 2005, the company issued 210,000 warrants to certain engineering consultants,
exercisable immediately for a ten year term at $5.00 per common share. During 2006, the company
issued 295,000 warrants to certain engineering consultants 13




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##### Table of Contents



exercisable over a ten year term at
$5.00 per common share, but only exercisable if the company sells, licenses or otherwise transfers
one or more technologies for value. The engineering consultants holding 445,000 of these warrants
agreed to cancel them in the fourth quarter of 2007 in exchange for their participation in the
companys Commercializing Event Plan. On March 28, 2008, the company issued an aggregate 195,000
warrants exercisable until 2016 at $5.00 per common shares to two engineers who elected not to
participate in the companys 2007 Commercializing Event Plan. The Company recorded a charge of
$249,000 to general and administrative expense.(h)
    
    During 2005, the company issued 6,000 warrants to a consultant, exercisable at .01 per common
share. None of these warrants have been exercised through March 31, 2008.(i)
    
    During 2005, the company issued 62,500 warrants to investors in connection with their purchase
of 62,500 Class A Preferred, exercisable at $.01 per common share. 50,000 of these warrants were
exercised in 2005 for proceeds of $625. During 2006, the company issued 135,849 warrants to
investors along with their purchase 162,000 Class A Preferred and 20,000 Class B Preferred, all
immediately exercisable at $.01 per common share. An aggregate 129,599 of these warrants have been
exercised for proceeds of approximately $$1,233, including 12,500 warrants exercised in the three
month period ended March 31, 2007 for proceeds of approximately $125. No additional warrants were
issued or exercised in the three month period ended March 31, 2008.(j)
    
    During 2006, one investor purchased 20,500 warrants immediately exercisable at $1.00 per common
share for a purchase price of $2,000. None of these warrants have been exercised through March 31,
2008.(k)
    
    During 2006, the company issued 360,000 warrants to a director for specific services rendered
by such director as chairman of the companys executive committee. These warrants were exercised on
September 1, 2006 and September 11, 2006 at $.01 per common share. The company received proceeds of
$3,600.(l)
    
    In connection with its business and financial operations for the year ended December 31, 2006,
the company issued 91,583 warrants, immediately exercisable over a ten year term at $.01 per common
share. During the year ended December 31, 2006, 91,083 of these warrants were exercised for
proceeds of $910. During the year ended December 31, 2007, the remaining 500 warrants were
exercised for proceeds of $5.00.(m)
    
    During 2006, the company issued 400,000 warrants immediately exercisable for ten years at an
exercise price of $3.27 per common share to a business consultant. None of these warrants have been
exercised through March 31, 2008.(n)
    
    During 2006, the company issued 200,000 warrants immediately exercisable for ten years at an
exercise price of $3.75 per common share to its governmental affairs consultant. None of these
warrants have been exercised through March 31, 2008.(o)
    
    During 2007, the company issued 50,000 warrants exercisable for ten years at $5.00 per common
share upon the happening of a commercializing event. The warrants were issued to a consultant who
assisted the company to potentially place its products in various state school bus programs. The
company recorded a charge of $249,000 to general and administrative expenses. None of these
warrants have been exercised through March 31, 2008.(p)
    
    During 2007, the company issued 100,000 warrants immediately exercisable for ten years at an
exercise price of $5.00 per common share to two engineering consultants in connection with the
companys engagement to furnish constant velocity joints to a military contractor. The company
recorded a charge of $401,000 to general and administrative expenses. None of these warrants have
been exercised through March 31, 2008. 14




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##### Table of Contents



WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term
    
    
    ValueOutstanding at January 1, 2008
    
    
    2,084,950
    
    
    $
    2.59
    
    
    4.90 years
    
    $
    3,072,861Granted
    
    
    195,000
    
    
    $
    5.00
    
    
    8.84 yearsExercisedCanceled or expiredOutstanding at March 31, 2008
    
    
    2,279,950
    
    
    $
    3.30
    
    
    4.86 years
    
    $
    2,343,268Exercisable at March 31, 2008
    
    
    1,654,950
    
    
    $
    3.92
    
    
    4.63 years
    
    $
    1,493,268
 [8]
    
    Issuance of Stock and Warrants by Subsidiary:In 2003, the company majority-owned subsidiary, Ice Surface Development, Inc. (Ice Surface)
issued 308,041 of its common stock at $.76 per share realizing aggregate proceeds of $234,000 in
a private placement. These issuances reduced the companys interest in Ice Surface from 72% to
approximately 69.26%. Based on the companys accounting policy, the change in the companys
proportionate share of Ice Surfaces equity resulting from the additional equity raised by the
subsidiary is accounted for as a capital transaction.In connection with the private placement, Ice Surface issued 53,948 warrants to the placement
agent immediately exercisable at $.76 per common share through June 9, 2008. In addition, 50,000
warrants were issued by Ice Surface to a consultant immediately exercisable at $.76 per common
share through June 9, 2008. In connection with the issuance of these warrants, a compensation
charge of $36,000 was recognized. These warrants were cancelled effective June 7, 2007 upon the
adoption by Ice Surfaces shareholders of a Plan for the complete liquidation and dissolution of
Ice.[9]
    
    Shares Issued for Consulting Services:On September 17, 2005, certain consultants created a trust to enable them to sell business
consultants shares issued to them by the company under their consultant agreements. The company
issued 50,000 business consultant common shares valued at $102,000 on September 27, 2005,
contingent on the performance by the consultants services under such consultant agreements. The
company fair values the shares issued to the trust using the closing market price on the date
immediately prior to the date of issuance. Amounts in excess of the consulting invoices are
classified as shares issued for consulting services in stockholders (capital deficit) equity.
No shares were sold in the trust in the year ended December 31, 2005.The company has issued an aggregate 342,500 business consultants share valued at an aggregate
$972,125 to the trust to satisfy the payment of invoices submitted by the consultants for
services rendered through December 31, 2007. The trustee has sold an aggregate 339,045 business
consultants shares for aggregate proceeds of $977,059 through December 31, 2007 and distributed
the proceeds from the trust to the consultants in accordance with the trusts terms.During the three month period ended March 31, 2008, the company issued 60,000 business
consultants shares valued at $165,000 to the trust to satisfy the payment of invoices submitted
by the consultants for services rendered during such period. During the three month period ended
March 31, 2008, the trustee sold 52,659 business consultant shares and distributed $158,034 in
proceeds to the consultants in accordance with the trusts terms.
 15




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##### Table of Contents



The companys payment obligations with respect to the consultant agreements are met once it has
issued shares to the trust in accordance with directives received from the consultants and the
consultants, not the company, bear the risk of loss in the event the proceeds of stock sales by
the trustee are less than the value of the stock contributed to the trust by the company on the
date of contribution.[10]
    
    Commercializing Event Plan:On October 13, 2006, the board of directors adopted a Commercializing Event Plan ( 2007 Event
Plan) designed to reward the companys directors, executives and certain administrative
personnel for the successful completion of one or more commercializing events. No payments were
made under the 2007 Event Plan during the years ended December 31, 2007 and 2006.On March 28, 2008 the board of directors approved amendments to the 2007 Event Plan
recommended by the governance and compensation committee to clarify that:(a)
    
    for purposes of the good standing requirement, all participants are considered to be in good
standing unless a unanimous vote of the board of directors determines otherwise. In making
this determination, the board is required to consider whether a person has engaged in conduct
which has significantly harmed the company and to consider that any material violation of the
companys Code of Conduct shall constitute prima facie evidence that the company has been
harmed;(b)
    
    participants shall be entitled to payment even though the participant is not actively engaged
as a consultant to or employee of the company if the reason for not being so engaged is due to
death, disability from accident, disease or similar circumstance beyond the participants
control or is on a leave of absence approved by an authorized officer;(c)
    
    the plan shall terminate no earlier than October 10, 2017 but that subject to such condition,
the plan may be terminated by the board of directors in its sole direction;(d)
    
    the benefits provided by the plan may not be reduced during its term as to amount, time,
method, manner of payment and/or any other material condition;(e)
    
    distributions under the plan shall be made on a commercializing event by commercializing event
basis;
 16




---



##### Table of Contents



(f)
    
    the number of common shares distributable to participants in the case of any commercializing
event not involving the sale of the company shall be calculated based upon a $3.00 per share
price[the closing price of the companys common stock on the date of the plans effective
date, October 10, 2007] but that the number of shares distributable in the case of a
commercializing event involving the sale of the company shall be calculated based upon the
trading price of the acquiring companys common stock as of the date the acquisition
transaction is announced.On February 25, 2008, the company issued an aggregate 3,648 business consultants shares to
thirteen participants in the 2007 Event Plan (304 shares to each of nine director, officer and
administrative participants and 228 shares to each of four engineer participants) upon the
completed sale of the companys constant velocity joints to a military contractor. The company
is accounting for the settlement of its commission arrangement with respect to this
commercializing event transaction under SFAS 123(R) Share Based Payment. For the three month
period ended March 31, 2008, the company recorded a charge to operations in the amount of
$10,957, representing the fair value of the equity instruments issued.In the fourth quarter of 2007, certain engineering consultants agreed to cancel 445,000 warrants
issued in 2005 and 2006 in exchange for their participation in the 2007 Event Plan. The exchange
of the warrants for the participation rights in a commercialization event did not result in an
accounting charge. The warrants at the date of the exchange were considered to have no value
because the underlying condition for vesting the warrants was not satisfied. The company
determined that the fair value of the rights to be de minimis at the date of the exchange based
on managements estimate.On March 28, 2008, the board of directors approved the grant of an aggregate 195,000 common
stock warrants exercisable until December 1, 2016 at $5.00 per
share to two engineering consultants in lieu of their participation in the 2007 Event Plan. The company valued the
warrants at $249,000 using the Black-Scholes option/pricing model and charged operations.
 NOTE E  Commitments and Other Matters
 17




---



##### Table of Contents



[1]
    
    Variable Gear, LLC:Under the operating agreement of Variable Gear, LLC, the company was required to purchase the
51% membership interest it did not own in such entity by January 1, 2008 at the then fair market
value as defined. Since inception, Variable Gear generated no revenues, incurred no expenses and
had no operations. On June 3, 2007, the company and the 51% owner agreed that his entire
membership interest would be purchased in exchange for 5,000 common shares of the company,
valued at the close of trading on such date ($19,250 based upon a $3.85 per common share close).
The transaction was finalized on June 6, 2007.The company recorded the purchase of the membership interest as additional goodwill. The company
also recorded the deferred revenue of $150,000 as other income at June 30, 2007 because all of
the companys obligations regarding this payment have been met. Since there are no operations of
the Variable Gear entity since inception, the company has concluded that there is no future
benefit to the purchased interest and has impaired the goodwill and recorded a charge of $19,000
at June 30, 2007.[2]
    
    Employment Agreements:On April 1, 2002, the companys majority-owned subsidiary, Ice Surface Development, Inc.,
entered into employment agreements with three persons as chief executive officer, chief operating officer and
vice-president of manufacturing, respectively. The agreements expired on July 31, 2004 and are the subject of litigation
between the company, Ice Surface Development, certain officers of Ice
Surface and the three individuals. See Note G.[3]
    
    Leases:During the last three years, the company leased executive office space at Powder Mills Office
Park, Pittsford, New York and leased research, development and manufacturing space in Webster,
New York. The company terminated its Powder Mills lease as of June 30, 2007 and its Webster
lease as of December 31, 2007 in order to access additional manufacturing and assembly space and
to consolidate its executive and manufacturing functions under one roof. The company was
released from all further obligations under these leases.
 18




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##### Table of Contents



On September 14, 2007, the company moved to a new facility located at 1999 Mount Read Blvd.,
Rochester, New York. The facility consists of approximately 13,650 sq. ft., with executive and
engineer offices, conference room, clean room, manufacturing and assembly space, automotive
bays, dynamometer and lift facilities and approximately thirty acres of land suitable for
vehicle testing and demonstration. The company expects to sign a five-year lease for the
premises (with a September 1, 2007 lease commencement date) providing for rent to be paid at a
rate of $5,687.00 per month ($68,244.00 per annum) and in addition, for the payment of the
companys proportionate share of yearly real estate taxes and yearly common area operating
costs. Under the lease, monthly rental payments do not commence until June 1, 2008. The lease
contains three 5-year renewal options and grants an option to the company to lease up to an
additional 7,000 sq. ft. of adjacent manufacturing and assembly space. During the three months
ended March 31, 2008, the Company recorded deferred rent in the amount of $33,000 in connection
with this lease (See Note I).
 NOTE F Management Agreement
 On February 20, 2004, in June, 2004 and April, 2005, the company entered into consulting
agreements with a management consulting firm. The company does not believe the June and/or the April agreements are valid.
However, to the extent a court of applicable jurisdiction finally determines that the
agreements, or any portion of them, are valid, the company has provided formal notice to the
management consulting firm that, in accordance with the agreements terms, such agreements have
been terminated effective June 30, 2006. (See Note G.)
 NOTE G Litigation
 (1)
    
    On September 30, 2005, the company filed a declaratory judgment action in the Supreme Court
of the State of New York for the Seventh Judicial District seeking that courts determination
that the June, 2004 and April, 2005 agreements with a management consulting firm are null and
void and unenforceable as against the company, its officers and directors. This litigation is
in the predeposition, document-production, discovery phase.(2)
    
    On April 12, 2007, the company commenced a second lawsuit against the same management
consulting firm in the Supreme Court, Seventh Judicial District, alleging that such firm had
fraudulently induced the company to enter into certain purported agreements with the
management firm, did not perform the services for which the company had engaged the firm and
that, as a result, the company has been damaged in excess of $6,000,000 by such firm. This
litigation is in the predeposition, document-production, discovery phase.
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(3)
    
    On October 8, 2007, the controlling persons of the companys majority-owned subsidiary, Ice
Surface Development, Inc.(ISDI), namely its chief executive officer, its chief operating
officer and its vice-president of manufacturing, filed for arbitration of their claims that
ISDI is obligated to pay them certain amounts under their employment contracts. ISDI has
opposed plaintiffs claims on the grounds that they are without merit. The arbitration is in
the predeposition discovery phase.On October 19, 2007, the same three persons commenced a shareholders derivative action in the
Federal District Court for the Western District of New York claiming that the company and its
president breached their fiduciary duties to the minority shareholders of ISDI in assigning the
Dartmouth College ice technology license for inadequate consideration. On January 31, 2008, the
company and its president moved to dismiss the complaint for failure to state a cause of action
or, in the alternative, to stay such action pending the resolution of plaintiffs claims in
arbitration. The motion to dismiss was argued before the Court in April, 2008, with a decision
expected within a reasonable time.
 NOTE H  Royalty Agreement
 On December 12, 2007, the company granted High Density Poweretrain, Inc. of Waterford, Michigan
(HDP) an exclusive, worldwide license to incorporate the companys constant velocity joint
technology in HDPs family of highly-powered, multifueled, fuel efficient, light weight, cost
effective internal combustion engines. In consideration for the grant of the license, the
company will receive annual royalties equal to 5% of annual gross revenues generated by the sale
of HDPs multifuel engines, including all sublicense of such technology. There are no minimum
royalty payments and the grant does not affect the companys ability to commercialize its
constant velocity joint technology in any other field and/or application. At March 31, 2008, the
company did not record any royalties under this agreement.
 NOTE I Subsequent Events
 (1)
    
    On April 28, 2008, the companys board of directors approved, and on April 29, 2008, the
company executed, a five-year lease with respect to its new facility located at 1999 Mount
Read Blvd., Rochester, New York. The facility consists of approximately 13,650 sq. ft., with
executive and engineer offices, conference room, clean room, manufacturing and assembly
space, automotive bays, dynamometer and lift facilities and approximately thirty acres of land
suitable for vehicle testing and demonstration. The lease provides for rent to be paid at a
rate of $5,687.00 per month ($68,244.00 per annum) and in addition, for the payment of the
companys proportionate share of yearly real estate taxes and yearly common area operating
costs. While the lease has a December 1, 2007 commencement date, monthly rental payments do
not commence until June 1, 2008. Rental payments and certain other payments due to the
landlord is to be paid in common shares of the company, based upon the closing price per share
on the 15th day of the calendar month immediately prior to the date any installment
payment of monthly rent or other payment is due landlord. The lease contains three 5-year
renewal options and grants an option to the company to lease up to an additional 7,000 sq. ft.
of adjacent manufacturing and assembly space.(2)
    
    On April 28, 2008, the board of directors approved a one-time payment to the chairman of its
executive committee equal to approximately $46,000 for special services provided by such
person as chairman of such committee. At the same meeting, the board also approved increasing
the fee payable to such person for all services rendered by him in all board and board
committee capacities to $125,000 for the year beginning January 1, 2008.
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Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
 PLAN OF OPERATION
 (a)
    
    Overall Business StrategyFrom its inception in 1996, the companys overall business plan has been to design, develop,
build and commercialize its FTV® worldwide, especially in the Asian, African, South and Central
American and Eastern European markets. In addressing issues and solving problems encountered in
the design and development of the FTV, the company designed and developed a number of automotive
drive-line technologies i.e. the companys hydraulic pump/motor system, infinitely variable
transmissions, Iso-Torque differential and constant velocity joint technology.The FTV has been developed and is ready for commercialization. In addition, each of the
companys other automotive technologies has been developed and are ready for commercialization
  either independently on a stand-alone basis or as incorporated into the companys FTV.In present circumstances, the company intends to produce, market and distribute FTVs by
entering into a joint venture relationship with an automotive manufacturer. The company intends
to incorporate its drive-line technologies into the FTV to enhance its marketability and value.
The company also intends to license and/or enter into supply contracts with automotive
manufacturers, military contractors, tier-one suppliers and possibly end-users for its
drive-line technologies independent of their utilization in the FTV.(b)
    
    Current Status of Business Plan and Ongoing ProjectsThe companys plan of operation during the year ending December 31, 2008 is as follows:1)
    
    to complete and ship approximately seven design-specific infinitely variable transmissions to
the National Aeronautics and Space Administration for use in that agencys lunar rover in
connection with NASAs program entitled Americas return to the moon; to continue to work
with NASA as an official drive-line consultant to the lunar rover project;2)
    
    to complete the integration of the companys patented FTV technology, namely, its steer
drive, suspension system and high speed tracks, with a cabover truck furnished by a major U.S.
automotive company in order commercialize the FTV initially in the North American market and
eventually in the worldwide markets of Asia, Africa, Latin and South America and Europe;3)
    
    to deliver approximately six constant velocity joints to a major U.S. military contractor for
installation in the contractors production-ready Joint Light Tactical Vehicle the contractor
is planning to submit to the U.S. Army in 2008 as part of the bidding process for a contract
and to work with the contractor with respect to the commercialization of the companys other
technologies;4)
    
    to work with another major U.S. automotive manufacturer with respect to the possible
installation of the companys IsoTorque differential in a number of that manufacturers
vehicles;5)
    
    to deliver a design-specific, prototype constant velocity joint for installation in a
California metropolitan bus companys hybrid bus and, upon the successful integration of such
unit, to explore a potential supply contract with such company for all of its hybrid bus
production;6)
    
    to work with an American subsidiary of a Korean manufacturer for installation of the
companys patented hydraulic pump and motor technology in its construction and agriculture
vehicles.Information regarding the company and all of its automotive inventions, including regular
updates on technological and business developments, can be found on the companys website,
www.torvec.com.Through June 14, 2007, the company held a license to ice technology granted by the Trustees of
Dartmouth College. This license was held through the companys majority-owned subsidiary, Ice
Surface Development, Inc. The license required the company to pay Dartmouth College a royalty of
3.5% of the net sales of licensed product with minimum annual payments of $25,000 through 2021.
In addition, the license provided for the payment of 50% of sub-license fee income.Since its acquisition of the ice technology license, the company worked with the technologys
inventor, Dr. Victor Petrenko at Dartmouths Thayer School of Engineering, to refine the various
methods of deicing and used its best efforts to sublicense such technology to one or more
domestic and/or foreign glass manufacturers, automotive companies and other potential end-users.
A
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considerable amount of additional development work was performed at the Dartmouth Colleges
Center for Ice Technology on the colleges campus, which work was supervised by Dr. Petrenko.In December, 2006, the company was informed by Dr. Petrenko that while the physics underlying
the ice technology is still valid and the technology remains promising, he could not estimate a
time frame when the technology would be mature enough for automotive commercialization. Given
Dr. Petrenkos assessment with respect to the ice technology, management determined that the
unamortized cost of the ice license as of December 31, 2006 should be recorded as an impairment
in accordance with SFAS No. 144 as of and for the year ended December 31, 2006.During 2007, the company and Dr. Petrenko discussed the terms and conditions under which the
company would accept Dr. Petrenkos offer to purchase the license from the company. Effective
June 15, 2007, the company assigned all of its rights, title and interest in and to the license
to Dr. Petrenkos company (Ice Engineering, LLC) in exchange for an agreement by Ice Engineering
to pay the shareholders of Ice Surface Development a royalty equal to 5% of the gross revenues
generated by the license and the assumption of the companys obligations to Dartmouth College
under the license.Separately, Ice Engineering, LLC agreed to reimburse approximately $3,500,000 of acquisition and
maintenance costs expended by the company in connection with the ice technology. Pursuant to the
reimbursement agreement, the company received $500,000 on June 15, 2007. The $3,000,000 balance
is to be paid at the rate of $300,000 per quarter commencing March 1, 2008, less approximately
$91,000 in fees payable to Dartmouth College accrued through June 14, 2007 to be deducted from
the first quarterly reimbursement amount. In the circumstances, the collectibility of the
amounts due under the agreement are not reasonably determinable and the cost recovery method of
accounting has been applied. At March 31, 2008, the company has accrued $91,000 of these license
associated expenses. On April 3, 2008, the company received net proceeds of approximately
$209,000 representing the March 1, 2008 quarterly payment.The company did not receive the March 1, 2008 payment by the due date. Consequently, as of March
1, 2008, Ice Engineering was in violation of the June 15, 2007 reimbursement agreement. The
March 1, 2008, payment was received on April 3, 2008. In the event future payments are not
received and, upon notice, Ice Engineering fails to cure within sixty calendar days, the
Dartmouth license reverts back to Ice Surface Development and the company retains all
reimbursement monies previously paid to it.The company has accounted for the receipt of the reimbursement proceeds as a recovery of costs
since such amounts represent an initial payment and is subject to additional installments and
when payments received exceed the cost accumulated, revenue will be recorded under the cost
recovery approach to the extent that the proceeds exceed the basis.In anticipation of the assignment of the ice technology license, the shareholders of Ice Surface
Development adopted and approved a Plan of Liquidation and Dissolution on June 7, 2007. Pursuant
to the Plan, all liabilities owed by Ice Surface to its former officers, approximately $1.5
million, were extinguished in exchange for an increase in their percentage equity in Ice Surface
Development. The former officers of Ice Surface Development are contesting this treatment,
pursuant to a pending arbitration proceeding and a pending action in federal district court. The
company is reflecting the full amount of the liability on its consolidated balance sheet until
the matter is resolved. See Legal Proceedings.
 (c)
    
    Company ExpensesThe net loss for the three month period ended March 31, 2008 was $1,184,000 as compared to the
three month period ended March 31, 2007 net loss of $831,000. The increase in the net loss of
$353,000 is principally related to increase in general and administrative expense.Research and development expenses for the three month period ended March 31, 2008 amounted to
$148,000 as compared to $235,000 for the three month period ended March 31, 2007. This decrease
of $87,000 is principally attributable to decreased costs associated with commercializing our
technologies.General and administrative expenses for the three month period ended March 31, 2008 amounted to
$1,047,000 as compared to $596,000 for the three month period ended March 31, 2007. This
increase amounted to $468,000 and is due, in large part, to the increase in accrued
compensation to James and Keith Gleasman of $100,000 and the legal expenditures of $200,000 for
patents.(d)
    
    Liquidity and Capital ResourcesThe companys business activities during the three month period ended March 31, 2008 were funded
principally through:
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
    
    the receipt in 2007 of the first installment of $500,000 of an aggregate $3,500,000
reimbursement payable in connection with the assignment of the companys ice technology license
and the receipt in 2007 of $126,000 in revenue from the sale of the companys products to
various end-users; and
    
    the receipt of approximately $15,000 of revenue during the three month period ended March
31, 2008 attributable to the sale of a prototype to a military contractor.
 During the three month periods ended March 31, 2008 and 2007, the company issued 230,689 and
45,977 common shares to business consultants under its Business Consultants Stock Plan in
exchange for ongoing corporate legal services, internal accounting services, business advisory
services as well as legal fees and associated expenses for ongoing patent work and litigation.
As of March 31, 2008 and 2007, there are 4,422,937 and 4,920,652 shares available for future
grants under the plan.On March 28, 2008 the board of directors approved the governance and compensation committees
recommendation that, effective January 1, 2008, each of the Gleasmans be compensated at the rate
of $300,000 per year. Such amount is payable in cash. No payment of all or any portion of the
Gleasmans compensation shall be paid unless and until the company shall have the requisite cash
available. The determination of the availability of the requisite amount of cash shall be made
by the board of directors in the light of approved-budgets, existing and anticipated capital
requirements and existing and estimated cash flows. Unpaid amounts are accumulated and carry
over from one year to the next. No amount was paid to either of the Gleasmans under this
compensation arrangement during the three month period ended March 31, 2008. The amount of
unpaid compensation was accrued as of March 31, 2008 in the amount of $150,000.At March 31, 2008 and 2007, the companys cash position was $63,000 and $192,000 and the company
had a working capital deficiency of $1,645,000 and $1,473,000. The companys cash position at
anytime during the three month periods ended March 31, 2008 and 2007 was dependent upon its
success in selling its preferred stock, the receipt of reimbursement monies with respect to its
ice technology license and revenues generated by the sale of its products. The company believes
that it will be able to sustain operations during the twelve month period beginning April 1,
2008 based upon the receipt of revenues from the sale of its products, monies generated by
contractually scheduled payments of reimbursement monies in connection with the assignment of
its ice technology and an outstanding funding commitment from a director/officer to fund
deficiencies that may arise up to $400,000.At March 31, 2008 and 2007, the company had accounts payable and accrued expenses of $2,108,000
and 1,712,000, of which $1,451,000 is attributable to amounts claimed by the former officers and
directors of the companys ice technology subsidiary. (See Legal Proceedings.)The company was a joint venture partner of Variable Gear, LLC through June 6, 2007. Under the
operating agreement of Variable Gear, LLC, the company was required to purchase the 51%
membership interest it did not own in such entity by January 1, 2008 at the then fair market
value as defined. Since inception, Variable Gear generated no revenues, incurred no expenses and
had no operations. On June 3, 2007, the company and the 51% owner agreed that his entire
membership interest would be purchased in exchange for 5,000 common shares of the company,
valued at the close of trading on such date ($19,250 based upon a $3.85 per common share close).
The transaction was finalized on June 6, 2007.The company recorded the purchase of the membership interest as additional goodwill. The company
also recorded the deferred revenue of $150,000 as other income at June 30, 2007 because all of
the companys obligations regarding this payment have been met. Since there are no operations of
the Variable Gear entity since inception, the company has concluded that there is no future
benefit to the purchased interest and has impaired the goodwill and recorded a charge of $19,000
at June 30, 2007.(e)
    
    Critical Accounting PoliciesRevenue RecognitionThe companys terms provided that customers are obligated to pay for products sold to them
within a specified number of days from the date that title to the products is transferred to the
customers. The companys standard terms are typically net 30 days. The company recognizes
revenue when transfer of title occurs and risk of ownership passes to a customer at the time of
shipment or delivery depending on the terms of the agreement with a particular customer. The
sale price of the companys products is substantially fixed and determinable at the date of the
sale based upon purchase orders generated by a customer and accepted by the company. To the
extent that collectibility of the receivable is not assured, the company follows the cost
recovery approach. Accordingly, amounts collected will be accounted for as a reduction of costs.Impairment of Long-Lived Assets
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The Company has adopted SFAS No. 144, Accounting for the Impairment of Disposal of Long-Lived
Assets. Accordingly, whenever events or circumstances indicate that the carrying amount of an
asset may not be recoverable, management assesses the recoverability of the assets. Management
is also required to evaluate the useful lives each reporting period. When events or
circumstances indicate, our long-lived assets, including intangible assets with finite useful
lives, are tested for impairment by using the estimated future cash flows directly associated
with, and that are expected to arise as a direct result of, the use of the assets. If the
carrying amount exceeds the estimated undiscounted cash flows, impairment may be indicated. The
carrying amount is then compared to the estimated discounted cash flows, and if there is an
excess, such amount is recorded as impairment. See managements discussion of its determination
that the carrying value of the companys ice technology was impaired under SFAS No. 144 as of
December 31, 2006 on page 9 of this annual report.In June 2006, the Financial Accounting Standards Board (FASB) has issued interpretation No.
48, Accounting for Uncertainty in Income TaxesAn Interpretation of FASB Statement No. 109
(FIN 48), regarding accounting for, and disclosure of, uncertain tax positions. FIN 48
clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial
statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48
prescribes a recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN
48 also provides guidance on derecognition, classification, interest and penalties, accounting
in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning
after December 15, 2006. The Company is currently evaluating the impact FIN 48 will have on its
results of operations and financial position.Effective January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements (SFAS
157), which defines fair value, establishes a framework for measuring fair value and requires
additional disclosures about fair value measurements. In February 2008, the FASB delayed the
effective date of SFAS 157 for one year for all nonfinancial assets and nonfinancial
liabilities, except for those items that are recognized or disclosed at fair value in the
financial statements on a recurring basis. Management has determined that the adoption of SFAS
157 did not have a material effect on the Companys consolidated financial statements.Effective January 1, 2008, the Company adopted SFAS No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities- including an amendment of FASB Statement 115 (SFAS
159). This statement provides companies with an option to report selected financial assets and
liabilities at fair value. As of March 31, 2008, the Company has not elected to use the fair
value option allowed by SFAS 159. Management has determined that the adoption of SFAS 159 did
not have a material effect on the Companys consolidated financial position, results of
operations, cash flows or financial statement disclosures.(f)
    
    Impact of InflationInflation has not had a significant impact on the companys operations to date and management is
currently unable to determine the extent inflation may impact the companys operations during
the three month period ended March 31, 2008.(g)
    
    Quarterly FluctuationsAs of March 31, 2008 and 2007, the company had not engaged in substantial revenue producing
operations. Once the company actually commences significant revenue producing operations, the
companys operating results may fluctuate significantly from period to period as a result of a
variety of factors, including purchasing patterns of consumers, the length of the companys
sales cycle to key customers and distributors, the timing of the introduction of new products
and product enhancements by the company and its competitors, technological factors, variations
in sales by product and distribution channel, product returns, and competitive pricing.
Consequently, once the company actually commences significant revenue producing operations, the
companys product revenues may vary significantly by quarter and the companys operating results
may experience significant fluctuations.
 
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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Item 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and ProceduresThe company maintains disclosure controls and procedures that are designed to ensure that
information required to be disclosed by the company in reports it files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized, and reported on a timely
basis and that such information is accumulated and communicated to management, including the
chief executive officer and the chief financial officer, as appropriate, to allow for timely
decisions regarding required disclosure.The companys management, including the chief executive officer and interim chief financial
officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures
(as defined in Rule 13a-15(e) of the Exchange Act) as of March 31, 2008 pursuant to Rule
13a-15(b) under the Exchange Act and has concluded that our disclosure controls and procedures
were effective as of March 31, 2008.Changes in Internal Control Over Financial ReportingThe companys management, with the participation of the companys chief executive officer and
interim chief financial officer, has concluded that there were no changes in the companys
internal control over financial reporting that occurred during the quarter ended March 31, 2008
that has materially affected, or is reasonably likely to materially affect, the companys
internal control over financial reporting.
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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
 (1)
    
    On September 30, 2005, the company filed a declaratory judgment action in the Supreme Court
of the State of New York for the Seventh Judicial District seeking that courts determination
that certain, purported agreements with a management consulting firm are null and void and
unenforceable as against the company, its officers and directors. This litigation is in the
predeposition, document-production discovery phase.(2)
    
    On April 12, 2007, the company commenced a second lawsuit against the same management
consulting firm in the Supreme Court, Seventh Judicial District, alleging that such firm had
fraudulently induced the company to enter into certain purported agreements with the
management firm, did not perform the services for which the company had engaged the firm and
that, as a result, the company has been damaged in excess of $6,000,000 by such firm. This
litigation is in the predeposition, document-production discovery phase.(3)
    
    On October 8, 2007, the controlling persons of the companys majority-owned subsidiary, Ice
Surface Development, Inc.(ISDI), namely its chief executive officer, its chief operating
officer and its vice-president of manufacturing, filed for arbitration of their claims that
ISDI is obligated to pay them certain amounts under their employment contracts. ISDI has
opposed plaintiffs claims on the grounds that they are without merit. The arbitration is in
the predeposition discovery phase.On October 19, 2007, the same three persons commenced a shareholders derivative action in the
Federal District Court for the Western District of New York claiming that the company and its
president breached their fiduciary duties to the minority shareholders of ISDI in assigning the
Dartmouth College ice technology license for inadequate consideration. On January 31, 2008, the
company and its president moved to dismiss the complaint for failure to state a cause of action
or, in the alternative, to stay such action pending the resolution of plaintiffs claims in
arbitration. The motion to dismiss was argued before the Court in April, 2008, with a decision
expected within a reasonable time.
 
 Item 1A. Risk Factors .
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 None
 
 Item 3. Defaults Upon Senior Securities
 None
 
 Item 4. Submission of Matters to a Vote of Security Holders
  Election of Directors
 Election of Directors
    
    For
    
    WithheldDaniel R. Bickel
    
    
    31,076,182
    
    
    
    385,660Herbert H. Dobbs
    
    
    31,058,860
    
    
    
    402,982David M. Flaum
    
    
    31,083,756
    
    
    
    378,086James Y. Gleasman
    
    
    31,089,058
    
    
    
    373,784Keith E. Gleasman
    
    
    31,090,058
    
    
    
    372,784Joseph B. Rizzo
    
    
    31,069,941
    
    
    
    391,901Gary A. Siconolfi
    
    
    31,087,041
    
    
    
    374,801
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Item 5. Other Information
 None.
 
 Item 6. Exhibits
 Exhibits as required by Item 601 of Regulation S-K, as applicable, are attached to this
quarterly report (Form 10-Q). The Exhibit Index is found on the page immediately succeeding the
signature page, and the Exhibits follow on the pages immediately succeeding the Exhibit Index.
  2.1
    
    Agreement and Plan of Merger, dated November 29, 2000 by and among
Torvec Subsidiary Corporation, Torvec, Inc., UTEK Corporation and ICE
Surface Development, Inc. incorporated by reference to Form 8-K filed
November 30, 2000 and Form 8K/A filed February 12, 2001.
  3.1
    
    Certificate of Incorporation, incorporated by reference to Form
10-SB/A , Registration Statement, registering Companys $.01 par value
common stock under section 12(g) of the Securities Exchange Act of
1934;3.2
    
    Certificate of Amendment to the Certificate of Incorporation dated
August 30, 2000, incorporated by reference to Form SB-2 filed October
19, 2000;3.3
    
    Certificate of Correction dated March 22, 2002, incorporated by
reference to Form 10-KSB filed for fiscal year ended December 31,
2002;3.4
    
    By-laws, as amended by shareholders on January 24, 2002, incorporated
by reference to Form 10-KSB filed for fiscal year ended December 31,
2002;3.5
    
    Certification of Amendment to the Certificate of Incorporation dated
October 21, 2004 setting forth terms and conditions of Class B
Preferred, incorporated by reference to Form 10-QSB filed for fiscal
quarter ended September 30, 2004.3.6
    
    Certificate of Amendment to the Certificate of Incorporation dated
January 26, 2007 increasing the authorized common shares from
40,000,000 to 400,000,000 common shares, incorporated by reference to
annual report (Form 10-K) filed for the calendar year ended December
31, 2006.
      10.1
    
    Certain Employment Agreements, Consulting Agreements, certain assignments of patents, patent properties,
technology and know-how to the Company, Neri Service and Space Agreement and Ford Motor Company Agreement and
Extension of Term, all incorporated by reference to Form 10-SB/A, Registration Statement, registering Companys
$.01 par value common stock under section 12(g) of the Securities Exchange Act of 1934;10.2
    
    The Companys 1998 Stock Option Plan and related Stock Options Agreements, incorporated by reference to Form
S-8, Registration Statement, registering 2,000,000 shares of the Companys $.01 par value common stock reserved
for issuance thereunder, effective December 17, 1998;10.3
    
    The Companys Business Consultants Stock Plan, incorporated by reference to Form S-8, Registration Statement,
registering 200,000 shares of the Companys $.01 par value common stock reserved for issuance thereunder,
effective June 11, 1999, as amended by reference to Form S-8 Registration Statements registering an additional
200,000, 200,000, 100,000, 800,000, 250,000, 250,000, 350,000, 250,000, 2,500,000 and 5,000,000 shares of the
Companys $.01 par value common stock reserved for issuance thereunder, effective October 5, 2000, November 7,
2001, December 21, 2001, February 1, 2002,
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November 12, 2002, January 22, 2003, May 23, 2003, November 26, 2003,
April 20, 2004 and October 13, 2006, respectively;10.4
    
    Termination of Neri Service and Space Agreement dated August 31, 1999, incorporated by reference to Form 10-QSB
filed for the quarter ended September 30, 1999;10.5
    
    Operating Agreement of Variable Gear, LLC dated June 28, 2000, incorporated by reference to Form 10-QSB filed
for the quarter ended June 30, 2000;10.6
    
    License Agreement between Torvec, Inc. and Variable Gear, LLC dated June 28, 2000, incorporated by reference to
Form SB-2 filed October 19, 2000;10.7
    
    Investment Agreement with Swartz Private Equity, LLC dated September 5, 2000, together with attachments thereto,
incorporated by reference to Form 8-K filed October 2, 2000;10.8
    
    Extension of and Amendment to Consulting Agreement with James A. Gleasman, incorporated by reference to
Form 10-KSB filed for the fiscal year ended December 31, 2000;10.9
    
    Extension of and Amendment to Consulting Agreement with Keith E. Gleasman, incorporated by reference to Form
10-KSB filed for the fiscal year ended December 31, 2000;10.10
    
    Extension of and Amendment to Consulting Agreement with Vernon E. Gleasman, incorporated by reference to
Form 10-KSB filed for the fiscal year ended December 31, 2000;10.11
    
    Option and Consulting Agreement with Marquis Capital, LLC dated February 10, 1999, incorporated by reference to
Form 10-QSB filed for quarter ended March 31, 2001;10.12
    
    Option and Consulting Agreement with PMC Direct Corp., dated February 10, 1999, incorporated by reference to
Form 10-QSB filed for quarter ended March 31, 2001;10.13
    
    Investment Banking Services Agreement with Swartz Institutional Finance (Dunwoody Brokerage Services, Inc.)
dated December 8, 2000, incorporated by reference to Form 10-QSB filed for quarter ended March 31, 2001;10.14
    
    Employment Agreement with Michael Martindale, Chief Executive Officer, dated August 1, 2001, incorporated by
reference to Form 10-QSB filed for fiscal quarter ended September 30, 2001;10.15
    
    Employment Agreement with Jacob H. Brooks, Chief Operating Officer, dated August 1, 2001, incorporated by
reference to Form 10-QSB filed for fiscal quarter ended September 30, 2001;10.16
    
    Employment Agreement with David K. Marshall, Vice-President of Manufacturing, dated September 1, 2001,
incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2001;10.17
    
    Investment Banking Services Agreement with Swartz Institutional Finance (Dunwoody Brokerage Services, Inc.), as
amended, dated October 23, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended
September 30, 2001;10.18
    
    Stock Option Agreement with Samuel Bronsky, Chief Financial and Accounting Officer, dated August 28, 2001,
incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2001;10.19
    
    Pittsford Capital Group, LLC Agreement dated January 30, 2002, incorporated by reference to Form 10-KSB filed
for fiscal year ended December 31, 2001;10.20
    
    Gleasman-Steenburgh Indemnification Agreement dated April 9, 2002, incorporated by reference to Form 10-KSB
filed for fiscal year ended December 31, 2001;10.21
    
    Series B Warrant dated April 10, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended
December 31, 2001;10.22
    
    Billow Butler & Company, LLC investment banking engagement letter dated October 1, 2003, incorporated by
reference to Form 10-QSB filed for fiscal quarter ended September 30, 2003;10.23
    
    Letter of Acknowledgement and Agreement with U.S. Environmental Protection Agency dated February 4, 2004,
incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2003;10.24
    
    Letter Agreement with CXO on the GO, L.L.C. dated February 20, 2004, incorporated by reference to Form 10-KSB
filed for fiscal year ended December 31, 2003;10.25
    
    Letter Amendment with CXO on the GO, L.L.C. dated February 23, 2004, incorporated by reference to Form 10-KSB
filed for fiscal year ended December 31, 2003;10.26
    
    Lease Agreement for premises at Powder Mills Office Park, 1169 Pittsford-Victor Road, Suite 125, Pittsford, New
York 14534, dated July 16, 2004; incorporated by reference to Form 10-QSB filed for fiscal quarter ended June
30, 2004;10.27
    
    Lease Agreement for testing facility and Mustang dynamometer, dated July 21, 2004; incorporated by reference to
 28




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##### Table of Contents



Form 10-QSB filed for fiscal quarter ended June 30, 2004;10.28
    
    Advisory Agreement with PNB Consulting, LLC, 970 Peachtree Industrial Blvd., Suite 303, Suwanee, Georgia 30024;
incorporated by reference to Form 10-QSB filed for fiscal quarter ended June 30, 2004;10.29
    
    Agreement between Torvec and ZT Technologies, Inc. dated July 21, 2004, incorporated by reference to Form 10-QSB
filed for fiscal quarter ended September 30, 2004;10.30
    
    Assignment and Assumption of Lease between William J. Green and Ronald J. Green and Torvec, Inc. effective as of
December 31, 2004, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2004;10.31
    
    Bill of Sale between Dynamx, Inc. and Torvec, Inc. for equipment and machinery, incorporated by reference to
Form 10-KSB filed for fiscal year ended December 31, 2004;10.32
    
    Lease and Services Agreement between Robert C. Horton as Landlord and Torvec, Inc. as Tenant dated March 18,
2005, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2004;10.33
    
    Settlement Agreement and Mutual Release between Torvec, Inc. and ZT Technologies, Inc. dated March 29, 2005,
incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;10.34
    
    Advisory Agreement between Robert C. Horton and Torvec, Inc. dated February 15, 2005, incorporated by reference
to Form 10-QSB filed for fiscal quarter ended March 31, 2005;10.35
    
    Lease and Services Agreement between Dennis J. Trask as Landlord and Torvec, Inc. as Tenant dated April 18,
2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;10.36
    
    Consulting Agreement with Matthew R. Wrona, dated June 30, 2005, incorporated by reference to Form 10-QSB filed
for fiscal quarter ended June 30, 2005;10.37
    
    Option Agreement between Matthew R. Wrona and Torvec, Inc. dated June 30, 2005, incorporated by reference to
Form 10-QSB filed for fiscal quarter ended June 30, 2005;10.38
    
    Trust Agreement between Matthew R. Wrona, Donald Gabel, Lawrence Clark, Steven Urbanik, Floyd G. Cady, Jr., and
Michael Pomponi as Grantors and Richard B. Sullivan as Trustee, dated September 22, 2005, incorporated by
reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;10.39
    
    Consultant Agreement with Floyd G. Cady, Jr., dated October 1, 2005, incorporated by reference to Form 10-QSB
filed for fiscal quarter ended September 30, 2005;10.40
    
    Consultant Agreement with Lawrence W. Clark, dated October 1, 2005, incorporated by reference to Form 10-QSB
filed for fiscal quarter ended September 30, 2005;10.41
    
    Consultant Agreement with Donald W. Gabel, dated October 1, 2005, incorporated by reference to Form 10-QSB filed
for fiscal quarter ended September 30, 2005;10.42
    
    Consultant Agreement with Michael A. Pomponi, dated October 1, 2005, incorporated by reference to Form 10-QSB
filed for fiscal quarter ended September 30, 2005;10.43
    
    Consultant Agreement with Steven Urbanik, dated October 1, 2005, incorporated by reference to Form 10-QSB filed
for fiscal quarter ended September 30, 2005;10.44
    
    Consultant Agreement with Kiwee Johnson, dated September 30, 2005, incorporated by reference to Form 10-QSB
filed for fiscal quarter ended September 30, 2005;10.45
    
    Confidentiality Agreement with Joseph B. Rizzo, dated October 24, 2005, incorporated by reference to Form 10-QSB
filed for fiscal quarter ended September 30, 2005.10.46
    
    Minutes of meeting Board of Directors Torvec, Inc., held October 19, 2004, creating the non-management directors
plan, incorporated by reference to Form 10-KSB filed for the fiscal year ended December 31, 2006.10.47
    
    Excerpts from minutes of the meeting of Board of Directors Torvec, Inc., adopting changes to the non-management
directors plan creating, a commercialized event plan, approving an increase in shares to be issued under
business consulting plan and adopting recommendation that shareholders increase number of authorized common
shares from 40,000,000 to 400,000,000 common shares, incorporated by reference to Form 8-K filed on October 16,
2006.10.48
    
    Order of Supreme Court of the State of New York with respect to litigation between the company and a management
consulting firm, incorporated by reference to Form 8-K filed on June 20, 2006;10.49
    
    Letter agreement with American Continental Group, LLC, executed on October 22, 2006, incorporated by reference
to Form 8-K filed on October 30, 2006;10.50
    
    New York State School Bus Proposal incorporated by reference to Form 10-Q filed for quarter ended March 31, 2006;10.51
    
    Order of Supreme Court of the State of New York directing the Monroe County Clerk to release back to the company
40,000 common shares and 245,000 common stock warrants issued to a management consulting firm with which the
company is in
 29




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##### Table of Contents



litigation and held in escrow by such Clerk by virtue of a previous court order and directing the
return to the company of a $250,000 (less administrative fee) undertaking deposited with the Monroe County
Treasurer in connection with the same litigation, incorporated by reference to Form 10-Q filed for the quarter
ended March 31, 2007;10.52
    
    License Assignment and Transfer Agreement by and between Ice Engineering, LLC and Torvec, Inc. made effective
June 15, 2007 assigning license granted by Dartmouth College with respect to ice technology from Torvec to Ice
Engineering, incorporated by reference to Form 8-K filed on July 18, 2007.10.53
    
    License Agreement by and between High Density Powertrain and Torvec, Inc. dated December
12, 2007, incorporated by reference to current report (Form 8-K) filed December 14, 2007;10.54
    
    Consulting Agreement by and between Clifford Carlson and Torvec, Inc. dated December 12,
2007, incorporated by reference to current report (Form 8-K) filed December 14, 2007;10.55
    
    Minutes of meeting of Governance and Compensation Committee dated February 19, 2008
establishing compensation for the companys president and chief executive officer and
amending the companys commercializing event plan, incorporated by reference to annual
report (Form 10-K) filed for year ended December 31, 2007.
                         30




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##### Table of Contents



SIGNATURES
  Date: May 20, 2008
    TORVEC, INC.By:
    /s/ James Y. GleasmanJames Y. Gleasman, Chief Executive Officer  Dated: May 20, 2008
    By:
    /s/ James Y. GleasmanJames Y. Gleasman, Chief Executive Officer andInterim Chief Financial Officer 31




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##### Table of Contents



EXHIBIT INDEX
 EXHIBIT
    
    
    
    
    
    PAGE(2)
    
    Plan of acquisition, reorganization, arrangement, liquidation, or succession2.1
    
    Agreement and Plan of Merger, dated November 29, 2000 by and among Torvec Subsidiary Corporation, Torvec, Inc., UTEK Corporation and
ICE Surface Development, Inc. incorporated by reference to Form 8-K filed November 30, 2000 and Form 8K/A filed February 12, 2001.
    
    N/A(3)
    
    Articles of Incorporation, By-laws3.1
    
    Certificate of Incorporation, incorporated by reference to Form 10-SB/A, Registration Statement, registering Companys $.01 par
value common stock under section 12(g) of the Securities Exchange Act of 1934;
    
    N/A3.2
    
    Certificate of Amendment to the Certificate of Incorporation dated August 30, 2000, incorporated by reference to Form SB-2 filed
October 19, 2000;
    
    N/A3.3
    
    Certificate of Correction dated March 22, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31,
2002;
    
    N/A3.4
    
    By-laws, as amended by shareholders on January 24, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended
December 31, 2002;
    
    N/A3.5
    
    Certification of Amendment to the Certificate of Incorporation dated October 21, 2004 setting forth terms and conditions of Class B
Preferred, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2004.
    
    N/A3.6
    
    Certificate of Amendment to the Certificate of Incorporation dated January 26,2007 increasing authorized common shares from
40,000,000 to 400,000,000 common shares, incorporated by reference to annual report Form 10-K filed for the calendar year ended
December 31, 2006.
    
    N/A(4)
    
    Instruments defining the rights of holders including indenturesNone
    
    N/A(9)
    
    Voting Trust AgreementNone
    
    N/A(10)
    
    Material Contracts10.1
    
    Certain Employment Agreements, Consulting Agreements, certain assignments of patents, patent properties, technology and know-how to
the Company, Neri Service and Space Agreement and Ford Motor Company Agreement and Extension of Term, all incorporated by reference
to Form 10-SB/A, Registration Statement, registering Companys $.01 par value common stock under section 12(g) of the Securities
Exchange Act of 1934;
    
    N/A10.2
    
    
    
    The Companys 1998 Stock Option Plan and related Stock Options Agreements, incorporated by reference to Form S-8, Registration Statement,
registering 2,000,000 shares of the Companys $.01 par value common stock reserved for issuance thereunder, effective December 17, 1998;
    
    N/A10.3
    
    
    
    The Companys Business Consultants Stock Plan, incorporated by reference to Form S-8, Registration Statement, registering 200,000 shares of the
Companys $.01 par value common stock reserved for issuance thereunder, effective June 11, 1999 as amended by reference to Form S-8 Registration
Statement registering an additional 200,000, 200,000, 100,000, 800,000, 250,000, 250,000, 350,000, 250,000,2,500,000 and 5,000,000 shares of the
Companys $.01 par value common stock reserved for issuance thereunder, effective October 5, 2000, November 7, 2001, December 21, 2001, February 1,
2002, November 12, 2002, January 22, 2003, May 23,
2003, November 26, 2003, April 20, 2004 and October 13, 2006 respectively;
    
    N/A10.4
    
    
    
    Termination of Neri Service and Space Agreement dated August 31, 1999, incorporated by reference to Form 10-QSB filed for the quarter
ended September 30, 1999;
    
    N/A10.5
    
    
    
    Operating Agreement of Variable Gear, LLC dated June 28, 2000, incorporated by reference to Form 10-QSB filed for the quarter ended June 30, 2000;
    
    N/A10.6
    
    
    
    License Agreement between Torvec, Inc. and Variable Gear, LLC dated June 28, 2000, incorporated by reference to Form SB-2 filed October 19, 2000;
    
    N/A10.7
    
    
    
    Investment Agreement with Swartz Private Equity, LLC dated September 5, 2000, together with attachments thereto, incorporated by reference to Form
8-K filed October 2, 2000;
    
    N/A10.8
    
    
    
    Extension of and Amendment to Consulting Agreement with James A. Gleasman, incorporated by reference to Form 10-KSB filed for the fiscal year ended
December 31, 2000;
    
    N/A
 32




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##### Table of Contents



EXHIBIT
    
    
    
    
    
    PAGE10.9
    
    
    
    Extension of and Amendment to Consulting Agreement with Keith E. Gleasman, incorporated by reference to Form 10-KSB filed for the fiscal year ended
December 31, 2000;
    
    N/A10.10
    
    
    
    Extension of and Amendment to Consulting Agreement with Vernon E. Gleasman, incorporated by reference to Form 10-KSB filed for the fiscal year ended
December 31, 2000;
    
    N/A10.11
    
    
    
    Option and Consulting Agreement with Marquis Capital, LLC dated February 10, 1999, incorporated by reference to Form 10-QSB filed for quarter ended
March 31, 2001;
    
    N/A10.12
    
    
    
    Option and Consulting Agreement with PMC Direct Corp., dated February 10, 1999, incorporated by reference to Form 10-QSB filed for quarter ended
March 31, 2001;
    
    N/A10.13
    
    
    
    Investment Banking Services Agreement with Swartz Institutional Finance (Dunwoody Brokerage Services, Inc.) dated December 8, 2000, incorporated by
reference to Form 10-QSB filed for quarter ended March 31, 2001;
    
    N/A10.14
    
    
    
    Employment Agreement with Michael Martindale, Chief Executive Officer, dated August 1, 2001, incorporated by reference to Form 10-QSB filed for
fiscal quarter ended September 30, 2001;
    
    N/A10.15
    
    
    
    Employment Agreement with Jacob H. Brooks, Chief Operating Officer, dated August 1, 2001, incorporated by reference to Form 10-QSB filed for fiscal
quarter ended September 30, 2001;
    
    N/A10.16
    
    
    
    Employment Agreement with David K. Marshall, Vice-President of Manufacturing, dated September 1, 2001, incorporated by reference to Form 10-QSB
filed for fiscal quarter ended September 30, 2001;
    
    N/A10.17
    
    
    
    Investment Banking Services Agreement with Swartz Institutional Finance (Dunwoody Brokerage Services, Inc.), as amended, dated October 23, 2001,
incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2001;
    
    N/A10.18
    
    
    
    Stock Option Agreement with Samuel Bronsky, Chief Financial and Accounting Officer, dated August 28, 2001, incorporated by reference to Form 10-QSB
filed for fiscal quarter ended September 30, 2001;
    
    N/A10.19
    
    
    
    Pittsford Capital Group, LLC Agreement dated January 30, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31,
2001;
    
    N/A10.20
    
    
    
    Gleasman-Steenburgh Indemnification Agreement dated April 9, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31,
2001;
    
    N/A10.21
    
    
    
    Series B Warrant dated April 10, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2001;
    
    N/A10.22
    
    
    
    Billow Butler & Company, LLC investment banking engagement letter dated October 1, 2003, incorporated by reference to Form 10-QSB filed for fiscal
quarter ended September 30, 2003;
    
    N/A10.23
    
    
    
    Letter of Acknowledgement and Agreement with U.S. Environmental Protection Agency dated February 4, 2004, incorporated by reference to Form 10-KSB
filed for fiscal year ended December 31, 2003;
    
    N/A10.24
    
    
    
    Letter Agreement with CXO on the GO, L.L.C. dated February 20, 2004, incorporated by reference to Form 10-KSB filed for fiscal year
ended December 31, 2003;
    
    N/A10.25
    
    
    
    Letter Amendment with CXO on the GO, L.L.C. dated February 23, 2004, incorporated by reference to Form 10-KSB filed for fiscal year ended
December 31, 2003;
    
    N/A10.26
    
    
    
    Lease Agreement for premises at Powder Mills Office Park, 1169 Pittsford-Victor Road, Suite 125, Pittsford, New York 14534, dated July 16, 2004,
incorporated by reference to Form 10-QSB filed for fiscal quarter ended June 30, 2004;
    
    N/A10.27
    
    
    
    Lease Agreement for testing facility and Mustang dynamometer, dated July 21, 2004; incorporated by reference to Form 10-QSB filed for fiscal quarter
ended June 30, 2004;
    
    N/A10.28
    
    
    
    Advisory Agreement with PNB Consulting, LLC, 970 Peachtree Industrial Blvd., Suite 303, Suwanee, Georgia 30024; incorporated by reference to Form
10-QSB filed for fiscal quarter ended June 30, 2004;
    
    N/A10.29
    
    
    
    Agreement between Torvec and ZT Technologies, Inc. dated July 21, 2004, incorporated by reference to Form 10-QSB filed for fiscal quarter
ended September 30, 2004;
    
    N/A10.30
    
    
    
    Assignment and Assumption of Lease between William J. Green and Ronald J. Green and Torvec, Inc. effective as of December 31, 2004, incorporated by
reference to Form 10-KSB filed for fiscal year ended December 31, 2004;
    
    N/A10.31
    
    
    
    Bill of Sale between Dynamx, Inc. and Torvec, Inc. for equipment and machinery, incorporated by reference to Form 10-KSB filed for fiscal year ended
December 31, 2004;
    
    N/A10.32
    
    
    
    Lease and Services Agreement between Robert C. Horton as Landlord and Torvec, Inc. as Tenant dated March 18, 2005, incorporated by reference to Form
10-KSB filed for fiscal year ended December 31, 2004;
    
    N/A10.33
    
    
    
    Settlement Agreement and Mutual Release between Torvec, Inc. and ZT Technologies, Inc. dated March 29, 2005,
    
    N/A
 33




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##### Table of Contents



EXHIBIT
    
    
    
    
    
    PAGEincorporated by reference to Form
10-QSB filed for fiscal quarter ended March 31, 2005;10.34
    
    
    
    Advisory Agreement between Robert C. Horton and Torvec, Inc. dated February 15, 2005, incorporated by reference to Form 10-QSB filed for fiscal
quarter ended March 31, 2005;
    
    N/A10.35
    
    
    
    Lease and Services Agreement between Dennis J. Trask as Landlord and Torvec, Inc. as Tenant dated April 18, 2005, incorporated by reference to Form
10-QSB filed for fiscal quarter ended March 31, 2005;
    
    N/A10.36
    
    
    
    Consulting Agreement with Matthew R. Wrona, dated June 30, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended June 30,
2005;
    
    N/A10.37
    
    
    
    Option Agreement between Matthew R. Wrona and Torvec, Inc. dated June 30, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter
ended June 30, 2005;
    
    N/A10.38
    
    
    
    Trust Agreement between Matthew R. Wrona, Donald Gabel, Lawrence Clark, Steve Urbanik, Floyd G. Cady, Jr. and Michael Pomponi as Grantors and
Richard B. Sullivan as Trustee, dated September 22, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;
    
    N/A10.39
    
    
    
    Consultant Agreement with Floyd G. Cady, Jr., dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended
September 30, 2005;
    
    N/A10.40
    
    
    
    Consultant Agreement with Lawrence W. Clark, dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended
September 30, 2005;
    
    N/A10.41
    
    
    
    Consultant Agreement with Donald W. Gabel, dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September
30, 2005;
    
    N/A10.42
    
    
    
    Consultant Agreement with Michael A. Pomponi, dated October 1, 2005, incorporated b y reference to Form 10-QSB filed for fiscal quarter
ended September 30, 2005;
    
    N/A10.43
    
    
    
    Consultant Agreement with Steven Urbanik, dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September
30, 2005;
    
    N/A10.44
    
    
    
    Consultant Agreement with Kiwee Johnson, dated September 30, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September
30, 2005;
    
    N/A10.45
    
    
    
    Confidentiality Agreement with Joseph B. Rizzo, dated October 24, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended
September 30, 2005
    
    N/A10.46
    
    
    
    Minutes of meeting Board of Directors Torvec, Inc., held October 19, 2004, creating the non-management directors plan, incorporated by reference to
Form 10-KSB for fiscal year ended December 31, 2005
    
    N/A10.47
    
    
    
    Excerpts from minutes of the meeting of Board of Directors Torvec, Inc., adopting changes to the non-management directors plan creating a
commercializes event plan, approving an increase in shares to be issued under business consulting plan and adopting recommendation that shareholders
increase number of authorized common Shares from 40,000,000 to 400,000,000, incorporated by reference to Form 8-K filed on October 16, 2006.
    
    N/A10.48
    
    
    
    Order of Supreme Court of the State of New York with respect to litigation between the company and a management consulting firm, incorporated by
reference to Form 8-K filed on June 20, 2006;
    
    N/A10.49
    
    
    
    Letter agreement with American Continental Group, LLC dated October 27, 2006 incorporated by reference to Form 8-K filed on October 30, 2006;
    
    N/A10.50
    
    
    
    New York State School Bus Proposal, incorporated by reference to Form 10-Q filed for the quarter ended March 31, 2006;
    
    N/A10.51
    
    
    
    Order of Supreme Court of the State of New York directing the Monroe County Clerk to release back to the company 40,000 common shares and 245,000
common stock warrants issued to a management consulting firm with which the company is in litigation and held in escrow by such Clerk by virtue of
a previous court order and directing the return to the company of a $250,000 (less administrative fee) undertaking deposited with the Monroe County
Treasurer in connection with the same litigation, incorporated by reference to Form 10-Q filed for the quarter ended March 31, 2007;
    
    N/A10.52
    
    
    
    License Assignment and Transfer Agreement by and between Ice Engineering, LLC and Torvec, Inc. made effective June 15, 2007 assigning license
granted by Dartmouth College with respect to ice technology to Ice Engineering, incorporated by reference to Form 8-K filed on July 18, 2007.
    
    N/A10.53
    
    
    
    License Agreement by and between High Density Powertrain and Torvec, Inc. dated December 12, 2007, incorporated by reference to current report
(Form 8-K) filed December 14, 2007;10.54
    
    
    
    Consulting Agreement by and between Clifford Carlson and Torvec, Inc. dated December 12, 2007, incorporated by
 34




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##### Table of Contents



EXHIBIT
    
    
    
    
    
    PAGEreference to current report (Form
8-K) filed December 14, 2007;10.55
    
    
    
    Minutes of meeting of Governance and Compensation Committee dated February 19, 2008 establishing compensation for the companys president and chief
executive officer and amending the companys commercializing event plan, incorporated by reference to annual report (Form 10-K) filed for year
ended December 31, 2007.
                         35