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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 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. Employerincorporation or organization)
    
    Identification No.)
 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
 o  o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
 APPLICABLE ONLY TO CORPORATE ISSUERS:
 practicable date:
 Class
    
    Number of Shares Outstanding atCommon Stock, $.01 par value
    
    May 11, 200933,514,486




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##### 



INDEX
 PAGEPART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Condensed Consolidated Balance Sheets  March 31, 2009 (Unaudited) and December 31, 2008
    
    
    3Condensed Consolidated Statements of OperationsThree months Ended
March 31, 2009 and 2008 and September 25, 1996 (Inception) through
March 31, 2009 (Unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows  Three months
Ended March 31, 2009 and 2008 and September 25, 1996 (Inception)
through March 31, 2009 (Unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements(Unaudited)
    
    
    6-21Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    22-27Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    28PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    29Item 1A. Risk Factors
    
    
    29Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3. Defaults Upon Senior Securities
    
    
    30Item 4. Submission of Matters to a Vote of Security Holders
    
    
    30Item 5. Other Information
    
    
    30Item 6. Exhibits
    
    
    30-35SIGNATURE PAGE
    
    
    36-37EXHIBIT INDEX
    
    
    38Exhibit 31.1Exhibit 32
   2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
 
 
  March 31, 2009
    
    
    December 31, 2008(Unaudited)ASSETSCurrent assets:Cash
    
    $
    124,000
    
    
    $
    304,000Accounts Receivable
    
    
    175,000
    
    
    
    Prepaid expenses and other receivables
    
    
    102,000
    
    
    
    102,000Total current assets
    
    
    401,000
    
    
    
    406,000Property and Equipment:Office equipment
    
    
    68,000
    
    
    
    68,000Shop equipment
    
    
    139,000
    
    
    
    139,000Leasehold improvements
    
    
    213,000
    
    
    
    213,000Transportation equipment
    
    
    106,000
    
    
    
    106,000526,000
    
    
    
    526,000Less accumulated depreciation and amortization
    
    
    (253,000
    )
    
    
    (237,000
    )Net property and equipment
    
    
    273,000
    
    
    
    289,000Total Assets
    
    $
    674,000
    
    
    $
    695,000LIABILITIESCurrent liabilities:Notes payable, current portion
    
    $
    15,000
    
    
    $
    15,000Accounts payable and Accrued Liabilities
    
    
    241,000
    
    
    
    177,000Deferred Compensation and Other
    
    
    948,000
    
    
    
    755,000Total current liabilities
    
    
    1,204,000
    
    
    
    947,000Deferred revenue
    
    
    800,000
    
    
    
    800,000Deferred rent expense
    
    
    36,000
    
    
    
    39,000Notes payable, net of current portion
    
    
    25,000
    
    
    
    29,000Total liabilities
    
    
    2,065,000
    
    
    
    1,815,000Commitments and contingenciesSTOCKHOLDERS CAPITAL DEFICITPreferred stock, $.01 par value, 100,000,000 shares authorized3,300,000 designated as Class A, convertible Non-voting,
cumulative dividend $.40 per share, per annum, March 31,
2009 and December 31, 2008: 707,101 shares issued and
outstanding (liquidation preference $3,930,912 and
$3,858,015, respectively)300,000 designated as Class B, convertible Non-voting,
cumulative dividend $.50 per share, per annum, March 31, 2009
and December 31, 2008: 97,500 shares issued and outstanding
(liquidation preference $372,477 and $360,339, respectively)
    
    
    8,000
    
    
    
    8,000Common stock, $.01 par value, 400,000,000 shares authorized,
33,248,816 and 32,811,422 issued and outstanding, at March
31, 2009 and December 31, 2008, respectively
    
    
    332,000
    
    
    
    328,000Additional paid-in capital
    
    
    48,909,000
    
    
    
    48,485,000Deficit accumulated during the development stage
    
    
    (50,640,000
    )
    
    
    (49,941,000
    )Total Torvec, Inc. Stockholders Capital Deficit
    
    
    (1,391,000
    )
    
    
    (1,120,000
    )Noncontrolling Interest of Subsidiary
    
    
    
    
    
    
    Total Stockholders Capital Deficit
    
    
    (1,391,000
    )
    
    
    (1,120,000
    )Total Liabilities and Stockholders Capital Deficit
    
    $
    674,000
    
    
    $
    695,000
 See notes to condensed consolidated financial statements.
  3




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Three Months
    
    
    Three Monthsended
    
    
    ended
    
    
    September 25, 1996March 31,
    
    
    March 31,
    
    
    (Inception) through2009
    
    
    2008
    
    

March 31, 2009Revenue
    
    $
    175,000
    
    
    $
    15,000
    
    
    $
    422,000Cost of Goods Sold
    
    
    90,000
    
    
    
    5,000
    
    
    
    315,000Gross Profit
    
    
    85,000
    
    
    
    10,000
    
    
    
    107,000Costs and expensesResearch and development
    
    
    133,000
    
    
    
    148,000
    
    
    
    15,468,000General and administrative
    
    
    651,000
    
    
    
    1,047,000
    
    
    
    37,627,000Asset Impairment
    
    
    
    
    
    
    
    
    
    
    1,071,000Loss from operations
    
    
    (699,000
    )
    
    
    (1,185,000
    )
    
    
    (54,059,000
    )Other Income
    
    
    
    
    
    
    1,000
    
    
    
    260,000Loss before Reversal of Liability and tax benefit
    
    
    (699,000
    )
    
    
    (1,184,000
    )
    
    
    (53,799,000
    )Reversal of liability on cancellation of debt
    
    
    
    
    
    
    
    
    
    
    1,541,000Net Loss Before Income Tax Provision
    
    
    (699,000
    )
    
    
    (1,184,000
    )
    
    
    (52,258,000
    )Income Tax Benefit
    
    
    
    
    
    
    
    
    
    
    346,000Net Loss
    
    
    (699,000
    )
    
    
    (1,184,000
    )
    
    
    (51,912,000
    )Less: Net loss attributable to the
Noncontrolling interest in subsidiary
    
    
    
    
    
    
    
    
    
    
    1,272,000Net Loss attributable to Torvec, Inc.
    
    $
    (699,000
    )
    
    $
    (1,184,000
    )
    
    $
    (50,640,000
    )Preferred stock beneficial conversion feature
    
    
    
    
    
    
    
    
    
    
    763,000Preferred stock dividend
    
    
    83,000
    
    
    
    83,000
    
    
    
    1,259,000Net Loss attributable to Torvec, Inc. common stockholders
    
    $
    (782,000
    )
    
    $
    (1,267,000
    )
    
    $
    (52,662,000
    )Basic and Diluted net loss per share attributable Torvec, Inc. common stockholders
    
    
    (0.02
    )
    
    
    (0.04
    )Weighted average number of shares of
Common stock, Basic and Diluted
    
    
    32,982,000
    
    
    
    31,783,000
 See notes to condensed consolidated financial statements.
  4




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September 25,Three months Ended
    
    
    1996 (Inception)March 31,
    
    
    Through2009
    
    
    2008
    
    
    March 31, 2009Cash flows from operating activities:Net loss
    
    $
    (699,000
    )
    
    $
    (1,184,000
    )
    
    $
    (50,640,000
    )Adjustments to reconcile net loss to net cash used in operating activities:Loss attributable to noncontrolling interest in consolidated subsidiary
    
    
    
    
    
    
    
    
    
    
    (1,272,000
    )Accrued Payroll Taxes
    
    
    
    
    
    
    
    
    
    
    109,000Depreciation and amortization
    
    
    16,000
    
    
    
    18,000
    
    
    
    2,466,000Loss on impairment of license
    
    
    
    
    
    
    
    
    
    
    1,071,000Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    19,000Gain on sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    (10,000
    )Compensation expense attributable to common stock in Subsidiary
    
    
    
    
    
    
    
    
    
    
    619,000Common stock issued for services
    
    
    366,000
    
    
    
    538,000
    
    
    
    13,502,000Shares issued for future consulting services
    
    
    
    
    
    
    
    
    
    
    103,000Stockholder contribution of services
    
    
    
    
    
    
    
    
    
    
    2,409,000Gain on cancellation of debt
    
    
    
    
    
    
    
    
    
    
    (1,541,000
    )Contribution to Capital, Ford Truck
    
    
    
    
    
    
    
    
    
    
    16,000Common Stock Issued in connection with Commercializing Event
    
    
    
    
    
    
    
    
    
    
    36,000Compensatory common stock, options and warrants
    
    
    
    
    
    
    249,000
    
    
    
    17,835,000Changes in:Accounts receivable
    
    
    (175,000
    )
    
    
    (300,000
    )
    
    
    (175,000
    )Prepaid expenses and other receivables
    
    
    
    
    
    
    (46,000
    )
    
    
    59,000Deferred Revenue
    
    
    
    
    
    
    (26,000
    )
    
    
    709,000Deferred rent
    
    
    (3,000
    )
    
    
    33,000
    
    
    
    36,000Accounts payable and accrued expenses
    
    
    319,000
    
    
    
    201,000
    
    
    
    4,315,000Deferred Compensation and Other
    
    
    
    
    
    
    398,000
    
    
    
    600,000Net cash used in operating activities
    
    
    (176,000
    )
    
    
    (119,000
    )
    
    
    (9,734,000
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    
    
    
    
    (8,000
    )
    
    
    (360,000
    )Cost of acquisition
    
    
    
    
    
    
    
    
    
    
    (16,000
    )Proceeds from sale of fixed asset
    
    
    
    
    
    
    
    
    
    
    10,000Net cash used in investing activities
    
    
    
    
    
    
    (8,000
    )
    
    
    (366,000
    )Cash flows from financing activities:Net proceeds from sales of common stock and upon exercise of options and warrants
    
    
    
    
    
    
    
    
    
    
    6,699,000Net 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
    
    
    (4,000
    )
    
    
    (2,000
    )
    
    
    (69,000
    )Proceeds from stockholders loan and advances
    
    
    
    
    
    
    
    
    
    
    250,000Repayment of stockholders loan and advances
    
    
    
    
    
    
    
    
    
    
    (147,000
    )Distributions
    
    
    
    
    
    
    
    
    
    
    (365,000
    )Net cash provided by (used in) financing activities
    
    
    (4,000
    )
    
    
    (2,000
    )
    
    
    10,224,000Net decrease in cash
    
    
    (180,000
    )
    
    
    (129,000
    )
    
    
    124,000Cash at beginning of period
    
    
    304,000
    
    
    
    192,000Cash at end of period
    
    $
    124,000
    
    
    $
    63,000
    
    
    $
    124,000Supplemental Disclosures:Interest paid
    
    $
    1,000
    
    
    $
    2,000
    
    
    $
    25,000Income Tax Paid
    
    $
    
    
    
    $
    
    
    
    $
    1,000Non cash investing and financing activities:Shares issued for acquisition leasehold improvements
    
    $
    
    
    
    $
    61,000
    
    
    $
    166,000Issuance of common stock in settlement of payables
    
    
    62,000
    
    
    
    64,000
    
    
    
    148,000Preferred stock issued in payment of dividend
    
    
    
    
    
    
    
    
    
    
    39,000Shares issued for acquisition of Variable Gear
    
    
    
    
    
    
    
    
    
    
    19,000Issuance of common stock for license
    
    
    
    
    
    
    
    
    
    
    3,405,000Issuance of common stock, warrant and options in settlement of liabilities, except notes payable
    
    
    
    
    
    
    
    
    
    
    2,907,000Notes Payable exchanged for common stock
    
    
    
    
    
    
    
    
    
    
    50,000Advance settled with common stock
    
    
    
    
    
    
    
    
    
    
    25,000Loss on exchange of minority interest
    
    
    
    
    
    
    
    
    
    
    232,000Shares issued for future consulting services
    
    
    
    
    
    
    
    
    
    
    103,000Issuance of common stock for a finder fee
    
    
    
    
    
    
    
    
    
    
    225,000Advance from stockholder
    
    
    
    
    
    
    
    
    
    
    250,000Contribution of FTV Ford Truck
    
    
    
    
    
    
    
    
    
    
    16,000ICE payable netted against receivable
    
    
    
    
    
    
    
    
    
    
    91,000Common stock issued in settlement of payable
    
    
    
    
    
    
    
    
    
    
    58,000Common stock issued in settlement of Patent expense
    
    
    
    
    
    
    
    
    
    
    117,000
 See notes to condensed consolidated financial statements.
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NOTE A  The Company and Basis of Presentation
     6




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##### Table of Contents



NOTE B  Summary of Significant Accounting Policies
 [1]
    
    Consolidation:The financial statements include the accounts of the company, its
majority-owned subsidiary, Ice Surface Development, Inc. (56% owned at
March 31, 2009 and 2008), 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.[2]
    
    Cash and Cash Equivalents:Cash 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. For the
three month periods ended March 31, 2009 and 2008, the company
excluded 2,587,699 and 3,107,649 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.
  7




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[5]
    
    Income Taxes:The 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, 2008As a result of the
implementation of FIN 48, we recognized no adjustment for uncertain
tax provisions. At the adoption date of January 1, 2008, 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 March 31, 2009, we have not
recognized an increase or decrease to reserves for uncertain tax
positions nor have we accrued interest and penalties related to
uncertain tax positions. The tax years 2006  2008 remain open to
examination by the major tax jurisdictions to which we are subject.[6]
    
    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.[7]
    
    Stock-based Compensation:In December 1997, the Board of Directors of the
company approved a Stock Option Plan (the Plan)
which provided for the grant of up to 2,000,000 shares
of common stock, pursuant to which officers,
directors, key employees and key consultants/advisors
were eligible to receive incentive, nonstatutory or
reload stock options. The Plan was terminated as of
May 27, 2008 as to the grant of additional options.
641,848 previously granted and outstanding options
remain exercisable in accordance with the terms of the
options.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.SFAS 123R requires all share-based payments to
employees, including grants of employee stock options,
to be recognized as compensation expense over the
requisite service period (generally the vesting
period) in the financial statements based on their
fair values. Under the modified prospective transition
method, awards that were granted, modified, or settled
on or after January 1, 2006 are measured and accounted
for in accordance with SFAS 123(R). Unvested
equity-classified awards that were granted prior to
January 1, 2006 will continue to be accounted for in
accordance with SFAS 123, except that the grant date
fair value of all awards are recognized in the results
of operations over the remaining vesting periods. The
impact of forfeitures that may occur prior to vesting
is also estimated and considered in the amount
recognized. In addition, the realization of tax
benefits in excess of amounts recognized for financial
reporting purposes will be recognized as a financing
activity in accordance with SFAS 123(R).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).[8]
    
    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, 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 and
collection is reasonably assured. 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.
  8




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[9]
    
    Recent Accounting Pronouncements:In December 2007, the FASB issued SFAS No. 141 (revised 2007),
Business Combinations, which replaces FASB Statement No. 141. SFAS
141(R) establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable
assets
acquired, the liabilities assumed, any non controlling interest in the
acquiree and the goodwill acquired. The Statement also establishes
disclosure requirements which will enable users to evaluate the nature
and financial effects of the business combination. SFAS 141(R) will
change how business combinations are accounted for and will impact
financial statements both on the acquisition date and in subsequent
periods. The adoption of SFAS No. 141(R) did not have an impact on the
Companys financial position and results of operations although it may
have a material impact on accounting for business combinations in the
future which can not currently be determined.In April 2009, the FASB issued FSP 141(R)-1 Accounting for Assets
Acquired and Liabilities Assumed in a Business Combination That Arises
from Contigencies (SFAS 141(R)-1). For business combinations, the
standard requires the acquirer to recognize at fair value an asset
acquired or liability assumed from a contingency if the acquisition
date fair value can be determined during the measurement period.
SFAS 141(R)-1 is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15, 2008,
with early adoption prohibited. As such, the company is required to
adopt these provisions at the beginning of the fiscal year January 1,
2009. SFAS 141(R)-1 will be applied prospectively for acquisitions in
2009 or thereafter.In December 2008, 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
replace references minority interest with noncontrolling interests.
Additionally, SFAS 160 revises the accounting for both increases and
decreases in a parents controlling ownership interest. The company
has adopted the standard as of January 1, 2009. The adoption of SFAS
160 did not have a significant impact on the companys financial
position.In June 2008, the FASB Task Force reached a consensus-for-exposure
that an entity should determine whether an equity-linked financial
instrument (or embedded feature) is indexed to its own stock first by
evaluating the instruments contingent exercise provisions, if any,
and then by evaluating the instruments settlement provisions. Issue
No. 07-5 (EITF 07-5), Determining Whether an Instrument (or Embedded
Feature) Is Indexed to an Entitys Own Stock. Paragraph 11(a) of FAS
133 specifies that a contract issued or held by the reporting entity
that is both (a) indexed to its own stock and (b) classified in
stockholders equity in its statement of financial position shall not
be considered a derivative financial instrument for purposes of
applying that Statement. If a freestanding financial instrument (for
example, a stock purchase warrant) meets the scope exception in
paragraph 11(a) of FAS 133, it is classified as an equity instrument
and is not accounted for as a derivative instrument. The adoption of
EITF 07-5 did not have a significant impact on the companys
financial position.In May 2008, FASB issued FAS No. 162, The Hierarchy of Generally
Accepted Accounting Principles (FAS 162). This statement documents
the hierarchy of the various sources of accounting principles and the
framework for selecting the principles used in preparing financial
statements. FAS 162 is effective 60 days following the Securities and
Exchange Commissions approval of the Public Company Accounting
Oversight Board amendments to AU Section 411, The Meaning of Present
Fairly in Conformity With Generally Accepted Accounting Principles.
FAS 162 did not have a material impact on the Companys financial
statements.In April 2009, the FASB issued FASB Staff Position No. FAS 107-1 and
APB 28-1, Interim Disclosures about Fair Value of Financial
Instruments, which requires disclosures about fair value of financial
instruments for interim reporting periods of publicly traded companies
as well as
in annual financial statements. This Staff Position is effective for
interim reporting periods ending after June 15, 2009, with early
adoption permitted for periods ending after March 15, 2009. The
Company does not expect the adoption of this accounting pronouncement
to have a material impact on the financial statements.
  9




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##### Table of Contents



NOTE C  License from the Trustees of Dartmouth College
      NOTE D  Related Party Transactions
 [1]
    
    On December 1, 1997, the company entered into three-year consulting
agreements with Vernon, Keith and James Gleasman (major stockholders,
directors and officers) whereby each was obligated to provide services
to the company in exchange for compensation of $12,500 each per month.
In 1997 the company granted each Vernon, Keith and James Gleasman
25,000 nonqualified common stock options, exercisable immediately at
$5.00 per common share for ten years (Note H [6]). These options
expired on November 30, 2007. For the years ended December 31,2003,
2002, 2001, 2000,1999, 1998 and 1997, the company incurred expenses
amounting to approximately $450,000, $450,000, $450,000, $522,000,
$528,000, $528,000 and $45,000, respectively, in connection with these
agreements (which were extended for an additional three years,
effective December 1, 2000, and amended to provide that compensation
was payable, in the board of directors discretion, in common stock,
cash or a combination).During 2001, the company issued 126,667 common shares under the
agreements for approximately $665,000 of accrued consulting fees.
  10




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##### Table of Contents



[2]
    
    During the three month periods ended March 31, 2009 and 2008, the
company paid $25,350 for both periods 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 periods ended March 31, 2009 and 2008, the
company paid $23,270 for both periods to a family member of its
general counsel for engineering services rendered to the company.
Management believes this compensation is reasonable.
 [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 Asher J. Flaum, a company director is
a partner. 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 4).
  11




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##### Table of Contents



[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. During the year ended December 31, 2007, 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.
 [6]
    
    On August 18, 2006, the company granted 400,000 nonqualified common
stock warrants valued at approximately $1,237,000 to a director of the
company. The warrants are immediately exercisable at $3.27 per common
share for a period of ten years.
 [7]
    
    On June 19, 2006, the company awarded an aggregate 360,000
nonqualified common stock warrants valued at approximately $629,000 to
a director for additional services rendered by such director as
chairman of the boards executive committee during 2006.
 [8]
    
    On April 28, 2008, the board of directors approved a one-time payment
to its chairman of the governance and compensation committee of
$46,000 for special services rendered in connection with required
compliance under the Sarbanes-Oxley Act. This amount was paid by the
issuance of 19,167 common shares valued as of the closing price on
April 28, 2008. The company charged $46,000 to operations in
connection with such services.
 NOTE E  Stockholders Equity (Capital Deficit)
 [1]
    
    Class A Preferred stock:
        12




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##### Table of Contents



[2]
    
    Class B Preferred stock:
     [3]
    
    Stock-Option Plan:
  Three Month Periods Ended March 31,2009
    
    
    2008Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    Aggregate
    
    
    
    
    
    
    AverageExercise
    
    
    Intrinsic
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Value
    
    
    Shares
    
    
    PriceOutstanding at beginning of period
    
    
    641,848
    
    
    $
    4.70
    
    
    
    
    
    
    
    1,021,848
    
    
    $
    4.77Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (380,000
    )
    
    
    Outstanding at end of period
    
    
    641,848
    
    
    
    4.70
    
    
    $
    
    
    
    
    641,848
    
    
    
    4.70Options exercisable at end of period
    
    
    641,848
    
    
    
    4.70
    
    
    $
    
    
    
    
    641,848
    
    
    
    4.70Options Vested and Expected to Vest
    
    
    641,848
    
    
    
    4.70
    
    
    $
    
    
    
    
    641,848
    
    
    
    4.70
   13




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##### Table of Contents



Weighted
    
    
    WeightedAverage
    
    
    AverageOptions
    
    Exercise
    
    
    Remaining
    
    
    OptionOutstanding
    
    Price
    
    
    Life in Years
    
    
    Exercisable641,848
    
    $
    4.70
    
    
    
    4.56
    
    
    
    641,848
  [5]
    
    Business Consultants Stock Plan:
  [6]
    
    Nonmanagement Directors Plan:
    .
  14




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##### Table of Contents



[7]
    
    Business, Financial and Engineering Consultants:
   [8]
    
    Warrants:
  Number ofExercise
    
    
    
    
    SharesPrice
    
    
    Expiration
    
    Exercisable(a
    )
    
    
    (a)
    
    125,000
    (a)$
    .75
    
    
    None
    
    
    500,000
    (b)$
    .01
    
    
    None
    
    
    54,500
    (c)$
    .01
    
    
    None
    
    
    39,000
    (d)$
    5.00
    
    
    2015
    
    
    255,000
    (e)$
    .01
    
    
    None
    
    
    6,000
    (f)$
    .01
    
    
    None
    
    
    16,250
    (g)$
    1.00
    
    
    None
    
    
    20,500
    (h)$
    3.27
    
    
    2016
    
    
    400,000
    (i)$
    3.75
    
    
    2016
    
    
    200,000
    (j)$
    5.00
    
    
    2017
    
    
    50,000
    (k)$
    5.00
    
    
    2017
    
    
    100,000
    (l)
 (a)
    
    Exercisable only if the company has an IPO and exercisable at the IPO price five years from IPO. Through the quarter March 31, 2009, the company
has not conducted an IPO.  15




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##### Table of Contents



(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 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 E [6]). An
aggregate 69,000 warrants have been exercised
for approximately $630 of proceeds, with
6,000 warrants exercised during the second
quarter of 2008 for proceeds of $60. No
warrants were exercised during the three
month period ended March 31, 2009.(d)
    
    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.(e)
    
    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
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 2008 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 2008 Commercializing Event
Plan. The company recorded a charge of $249,000 to general
and administrative expense.(f)
    
    During 2005, the company issued 6,000 warrants to a
consultant, exercisable immediately for a five year term at .01 per common share. None of these warrants have been
exercised through March 31, 2009.(g)
    
    During 2005, the company issued 62,500 warrants to investors
in connection with their purchase of 62,500 Class A
Preferred, immediately exercisable at $.01 per common share.
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. At December 31, 2008 an aggregate 182,099
of these warrants have been exercised for proceeds of
approximately $1,258. No additional warrants were issued in
the three month period ended March 31, 2009.(h)
    
    During 2006, one investor purchased 20,500 warrants
immediately exercisable immediately for a five year term at
$1.00 per common share for a purchase price of $2,000. None
of these warrants have been exercised through March 31, 2009.(i)
    
    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, 2009.  16




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##### Table of Contents



(j)
    
    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, 2009.(k)
    
    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, 2009.(l)
    
    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, 2009.  WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicWarrants
    
    
    Price
    
    
    Term
    
    
    ValueOutstanding at January 1, 2009
    
    
    1,766,250
    
    
    $
    4.25
    
    
    4.13 years
    
    $
    1,063,043GrantedExercisedCanceled or expiredOutstanding at March 31, 2009
    
    
    1,766,250
    
    
    $
    4.25
    
    
    4.13 years
    
    $
    534,000Exercisable at March 31, 2009
    
    
    1,141,250
    
    
    $
    5.68
    
    
    3.70 years
    
    $
    
 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
    
    $
    
 [9]
    
    Issuance of Stock and Warrants by Subsidiary:In 2003, the company majority-owned subsidiary, 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.
  17




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##### Table of Contents



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.[10]
    
    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 issues
business consultant common shares to the trust from time to time,
contingent on the performance of services by the consultants 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.The company issued an aggregate 373,295 business consultants shares
valued at an aggregate $716,998 to the trust to satisfy the payment
of invoices submitted by the consultants for services rendered for
the year ended December 31, 2008. The trustee sold an aggregate
328,779 business consultants shares for aggregate proceeds of
$597,119 during the year ended December 31, 2008 and distributed the
proceeds from the trust to the consultants in payment of invoices
submitted by the consultants.During the three month periods ended March 31, 2009 and 2008, the
company issued 142,555 and 60,000 business consultants shares valued
at $137,450 and $165,000, respectively, to the trust to satisfy the
payment of invoices submitted by the consultants for services
rendered during such periods. During the three month periods ended
March 31, 2009 and 2008, the trustee sold 109,236 and 52,659 business
consultant shares and distributed $112,436 and $158,034 in proceeds
from the trust to the consultants in payment of invoices submitted by
the consultants.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.[11]
    
    Commercializing Event Plan:On October 13, 2006, the board of directors
adopted a Commercializing Event Plan (2006
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 2006
Event Plan and the 2006 Event Plan was
terminated on October 31, 2007.On October 31, 2007, the board terminated
the 2006 Event Plan and adopted a new 2007
Commercializing Event Plan (the 2007 Event
Plan). The 2007 Event Plan provides that
upon the happening of any commercializing
event, each of the directors and executive
officers of the company as well as certain
management personnel shall be entitled to
share equally in 6% of the gross amount
derived or to be derived from the
commercializing event transaction(s).
Similarly, certain of the companys
engineers are entitled to share equally in
2% of such gross amount.In order to actually receive payment under
the 2007 Event Plan, each participant must
be both a) employed by, a consultant to or
associated with the company and b) judged to
be in good standing with the company at
the time payment is made, all as determined
by the board as of the date of the boards
authorization of payments to be made.No payments were made under the 2007 Event Plan for the three months
ended March 31, 2009. For the three months ended March 31, 2008,
3,648 business consultant shares were issued under the 2007 Event
Plan.
  18




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##### Table of Contents



March 31, 2008
Black-Scholes Inputs
 Term
    
    8.84 yearsRisk-free rate
    
    
    2.89
    %Volatility
    
    
    0.55Dividend yield
    
    
    0.0
    %
 NOTE F  Commitments and Other Matters
 [1]
    
    Consulting Agreements:
    19




---



##### Table of Contents



[2]
    
    Leases:
     20




---



##### Table of Contents



Note G Management Agreement
    NOTE H  Litigation
   NOTE I  Royalty Agreement
  NOTE J Accounts Receivable
   21




---



##### Table of Contents



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)
    
    2009 Plan of OperationThe companys plan of operation during the year ending December 31, 2009 is as follows:1) to continue working with the U.S. Air Force to create an Advanced Combat Firefighting
Vehicle capable of unprecedented speed, maneuverability with diverse applications for use
in the most extreme and rugged terrain. The company has delivered an FTV® to the Air Force
in December 2008 to maximize the FTVs combat firefighting capabilities, including its
robotic and autonomous potential, at Tyndale Air Force Base in Florida;2) to build a second generation FTV based upon the Air Forces recommendations for
delivery to the Air Force for integration in its Advanced Combat FirefightingVehicle
Program;3) to explore interest in the FTV among other branches of the U.S. military, the Department
of Homeland Security, FEMA, the U.S. Forestry Service, as well as state and municipal
governmental units, in acquiring design-specific FTVs for boarder patrol, off-highway
emergencies, as an environmentally-friendly vehicle for federal and state conservation and
drug-enforcement efforts and, as a fast, highly maneuverable vehicle for combat and
non-combat uses;
  22




---



##### Table of Contents



4) to explore the interest of a foreign truck manufacturer in licensing the rights to
produce and market the FTV worldwide;5) to build an IsoTorque® differential for evaluation by a major American automotive
manufacturer for integration in its front-wheel drive vehicles. Previously, in 2008, the
manufacturer had evaluated the IsoTorque differential in its rear-wheel drive vehicles;6) to redesign the axle used by a major international truck manufacturer to enable the
manufacturer to integrate the companys IsoTorque technology in its fleet of heavy-duty
trucks.During the first quarter of 2009, the company shipped 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 titled Americas return to the
moon. The company anticipates that it will continue to work in 2009 with NASA as an
official drive-line consultant to the lunar rover project.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.c)
    
    Ice Technology LicenseThrough 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 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 concluded
that the carrying amount of the ice technology license as of December 31, 2007 ($1,071,000)
exceeded the estimated cash flows the company reasonably expected to receive and,
therefore, determined the full amount of such excess 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.
  23




---



##### Table of Contents



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. Under the license assignment agreement, 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.Ice Engineering has paid approximately $800,000 under the assignment
agreement but is in arrears with respect to quarterly installments due
beginning June 1, 2008 and has repudiated its payment obligations
under the agreement.On October 31, 2008, the company commenced an action in New York State
Supreme Court, County of New York, Commercial Division against Ice
Engineering, LLC seeking the total balance owed by Ice Engineering to
the company pursuant to the agreement, namely, $2,700,000. Ice
Engineering has counterclaimed for the $800,000 paid under the
agreement thus far, alleging that the company failed to deliver
certain business information to Ice Engineering as called for under
the agreement.The company filed a motion for summary judgment with respect to its
claims and on April 14, 2009, the Court denied the motion without
prejudice which means that the company can re-file the motion after
discovery has been completed. The parties are proceeding with
discovery.The company has accounted for the receipt of reimbursement proceeds as
a recovery of its cost 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.(d)
    
    Results of OperationsThe net loss for the three month period ended March 31, 2009 was
$699,000 as compared to the three month period ended March 31, 2008 of
a net loss of $1,184,000. The decrease in the net loss of $485,000 is
principally related to the decrease by approximately $220,000 in
professional fees for both legal and accounting services in the
current year as compared to the prior year for the same period . In
addition the stock based compensation decreased by $421,000 in current
period as compared to the prior year period. The increase in gross
profit by $75,000 is related to the companys small quantity sales of
products to various end users.Research and development expenses for the three month period ended
March 31, 2009 amounted to $133,000 as compared to $148,000 for the
three month period ended March 31, 2008. The decrease of $15,000 in
the three month comparative is due to decreased cost associated with
commercializing our technologies.General and administrative expense for the three month period ended
March 31, 2009 amounted to $651,000 compared to $1,047,000 for the
three month period ended March 31, 2008. This decrease of $396,000 in
the three month comparative is due to the decrease in professional
fees, as mentioned above and the decrease in stock based compensation
of approximately $300,000 as compared to the prior year for the same
period.
  24




---



##### Table of Contents



(f)
    
    Liquidity and Capital ResourcesThe companys business activities during the three month period ended
March 31, 2009 were funded principally through the receipt in the
fourth quarter of 2008 of approximately $280,000 representing New York
State corporation income tax refundable credits allocable to certain
research and development expenses incurred in the years 2005-2007.For the three month periods ended March 31, 2009 and 2008, the company issued 437,394 and
230,689 common shares to business consultants under the Business Consultants Stock Plan in
exchange for ongoing business advisory services, engineering services, legal fees, including
patent services, internal accounting services and other corporate services. As of March 31,
2009, 3,215,884 shares are available for future issuances under the Business Consultants Stock
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 periods ended March 31, 2009 and 2008. The
amount of cumulative unpaid compensation accrued as of March 31, 2009 is $786,000, including
accrued payroll taxes of $36,000.At March 31, 2009, the companys cash position was $124,000 and the company had a working
capital deficit of $803,000.. The companys cash position at anytime during the nine month
periods ended March 31, 2009 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. Since our inception, we have incurred significant
operating and net losses and have not generated positive cash flows from operations. The
balance of cash and cash equivalents as of March 31, 2009 will not sufficient to meet our
anticipated cash requirements through March 31, 2010, based on our present plan of operation.
As a result, we are seeking to raise additional capital. Additional capital may not be
available on acceptable terms or at all. Equity financings may be dilutive to existing
stockholders. If we are unable to obtain sufficient capital as and when needed, we may be
forced to delay, scale back or eliminate some or all of our operations including our research
and development programs and commercialization plans, and/or license to third parties certain
products or technologies that we would otherwise seek to commercialize independently. Our
ability to continue is dependent on obtaining additional long-term financing and ultimately
achieving profitable operating results. Please see Note A of our condensed consolidated
financial statements for the three months ended March 31, 2010. Unless we are able to obtain
financing and ultimately achieve profitability we will not be able to continue as a going
concern.
   25




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##### Table of Contents



(g)
    
    Critical Accounting PoliciesRevenue Recognition:The 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.In December 2008, 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. The company has adopted the standard as of
January 1, 2009. The adoption of SFAS 160 did not have a significant
impact on the companys financial position.In March 2008, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standard (SFAS) No. 161,
Disclosures about Derivative Instruments and Hedging Activities-an
amendment of FASB Statement No. 133.SFAS 161 requires enhanced
disclosures about an entitys derivative and hedging activities. SFAS
161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008 with early
application encouraged. As such, the Company is required to adopt
these provisions at the beginning of the fiscal year ended
December 31, 2009. in review of SFAS 161, the Company has determined
that it is not applicable and will have no effect to its consolidated
financial statements.
  26




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##### Table of Contents



In May 2008, the FASB issued Statement of Financial Accounting
Standards No. 162 (SFAS 162), The Hierarchy of Generally Accepted
Accounting Principles. SFAS 162 identifies the sources of accounting
principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities
that are presented in conformity with U.S. GAAP. SFAS 162 will become
effective 60 days following the SECs approval of the Public Company
Accounting Oversight Board amendments to AU Section 411, The Meaning
of Present Fairly in Conformity With Generally Accepted Accounting
Principles. This statement is not expected to result in a change in
our current practice.In June 2008, the FASB Task Force reached a consensus-for-exposure
that an entity should determine whether an equity-linked financial
instrument (or embedded feature) is indexed to its own stock first by
evaluating the instruments contingent exercise provisions, if any,
and then by evaluating the instruments settlement provisions. Issue
No. 07-5 (EITF 07-5), Determining Whether an Instrument (or Embedded
Feature) Is Indexed to an Entitys Own Stock. Paragraph 11(a) of FAS
133 specifies that a contract issued or held by the reporting entity
that is both (a) indexed to its own stock and (b) classified in
stockholders equity in its statement of financial position shall not
be considered a derivative financial instrument for purposes of
applying that Statement. If a freestanding financial instrument (for
example, a stock purchase warrant) meets the scope exception in
paragraph 11(a) of FAS 133, it is classified as an equity instrument
and is not accounted for as a derivative instrument. The adoption of
EITF 07-5 did not have a significant impact on the companys
financial position.In May 2008, FASB issued FAS No. 162, The Hierarchy of Generally
Accepted Accounting Principles (FAS 162). This statement documents
the hierarchy of the various sources of accounting principles and the
framework for selecting the principles used in preparing financial
statements. FAS 162 is effective 60 days following the Securities and
Exchange Commissions approval of the Public Company Accounting
Oversight Board amendments to AU Section 411, The Meaning of Present
Fairly in Conformity With Generally Accepted Accounting Principles.
FAS 162 did not have a material impact on the Companys financial
statements.In April 2009, the FASB issued FASB Staff Position No. FAS 107-1 and
APB 28-1, Interim Disclosures about Fair Value of Financial
Instruments, which requires disclosures about fair value of financial
instruments for interim reporting periods of publicly traded companies
as well as
in annual financial statements. This Staff Position is effective for
interim reporting periods ending after June 15, 2009, with early
adoption permitted for periods ending after March 15, 2009. The
Company does not expect the adoption of this accounting pronouncement
to have a material impact on the financial statements.(h)
    
    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, 2009.(i)
    
    Quarterly FluctuationsAs of March 31, 2009 and 2008, 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.
  27




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##### Table of Contents



Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 Item 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
   28




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
 (1)
    
    On February 20, 2004 the company entered into an agreement with a
management firm to develop and implement a business plan to
commercialize its full terrain vehicle. In June, 2004, the company
engaged three members of the management firm as the companys chief
executive officer, chief financial officer and chairman of its board
of directors. In June, 2004 and in April, 2005, the company and the
management firm purported to execute agreements reflecting the
company-related capacities of the management firms three members and
reflecting the management firms reorganization, respectively.In September, 2005, the company commenced litigation challenging the
validity of the June, 2004 and April, 2005 agreements. On March 6,
2009, the company and the management firm executed a Settlement
Agreement and Release pursuant to which any and all claims and
counterclaims the parties had or may have had arising out of or
related to their relationship, arrangement or services provided one
to the other were resolved and released and any and all obligations
between and among them, specifically including the contested
agreements, were terminated effective December 31, 2008.(2)
    
    On October 31, 2008, the company commenced an action in New York
State Supreme Court, County of New York, Commercial Division against
Ice Engineering, LLC seeking the total balance owed by Ice
Engineering to the company pursuant to an agreement entered into by
the parties, effective June 15, 2007, namely, $2,700,000. Under the
agreement, in connection with Torvecs assignment of the ice
technology license, Ice Engineering agreed to reimburse Torvec for
approximately $3,500,000 the company previously had expended
acquiring and maintaining the license. Ice Engineering has paid
approximately $800,000 but is in arrears with respect to installments
due June 1, 2008, September 1, 2008 and December 1, 2008 and
apparently has repudiated its remaining payment obligations under the
agreement. Ice Engineering has counterclaimed for the $800,000 paid
under the agreement thus far, alleging that the company failed to
deliver certain business information to Ice Engineering as called
for under the agreement.The company filed a motion for summary judgment with respect to its
claims and on April 14, 2009, the Court denied the motion without
prejudice which means that the company can re-file the motion after
discovery has been completed. The parties are proceeding with
discovery.
 
 Item 1A. Risk Factors
   29




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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
  (2)
    
    Plan of acquisition, reorganization, arrangement, liquidation, or succession
 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)
    
    Articles of Incorporation, By-laws
 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
March 31, 2004.3.6
    
    Certificate of Amendment to the
Certificate of Incorporation dated
January 26, 2008 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.
 (4)
    
    Instruments defining the rights of holders including indentures
   30




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##### Table of Contents



(9)
    
    Voting Trust Agreement
  (10)
    
    Material Contracts
 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, 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 March 31,
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 March 31,
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;
  31




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##### Table of Contents



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 March 31, 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 March 31, 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 March 31, 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 March 31, 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 March 31, 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 March 31, 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 March 31, 2004;10.27
    
    Lease Agreement for testing facility and Mustang dynamometer, dated
July 21, 2004; incorporated by reference to Form 10-QSB filed for
fiscal quarter ended March 31, 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 March 31,
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 March 31, 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;
  32




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##### Table of Contents



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 March 31, 2005,
incorporated by reference to Form 10-QSB filed for fiscal quarter
ended March 31, 2005;10.37
    
    Option Agreement between Matthew R. Wrona and Torvec, Inc. dated
March 31, 2005, incorporated by reference to Form 10-QSB filed for
fiscal quarter ended March 31, 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 March 31, 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 March 31, 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 March 31, 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 March 31, 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 March 31, 2005;10.43
    
    Consultant Agreement with Steven Urbanik, dated October 1, 2005,
incorporated by reference to Form 10-QSB filed for fiscal quarter
ended March 31, 2005;10.44
    
    Consultant Agreement with Kiwee Johnson, dated March 31, 2005,
incorporated by reference to Form 10-QSB filed for fiscal quarter
ended March 31, 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 March 31, 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.
  33




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##### Table of Contents



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 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, 2008;10.52
    
    License Assignment and
Transfer Agreement by and
between Ice Engineering, LLC
and Torvec, Inc. made
effective June 15, 2008
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, 2008.10.53
    
    License Agreement by and
between High Density
Powertrain and Torvec, Inc.
dated December 12, 2008,
incorporated by reference to
current report (Form 8-K)
filed December 14, 2008;10.54
    
    Consulting Agreement by and
between Clifford Carlson and
Torvec, Inc. dated
December 12, 2008,
incorporated by reference to
current report (Form 8-K)
filed December 14, 2008;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;10.56
    
    Consulting Agreement by and
between Capital Campaigns,
Inc. and Torvec, Inc., dated
February 6, 2009,
incorporated by reference to
annual report (Form 10-K)
filed for the year ended
December 31, 2008;10.57
    
    Settlement and Release
Agreement by and between CXO
on the GO of Delaware, LLC,
et. al and Torvec, Inc. et.
al., dated March 6, 2009,
incorporated by reference to
annual report (Form 10-K)
filed for the year ended
December 31,2008;
 (11)
    
    Statement regarding computation of per share earnings (loss)
  (14)
    
    Code of Ethics(16)
    
    Letter on change in certifying accountant
   34




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##### Table of Contents



(18)
    
    Letter regarding change in accounting principles
  (20)
    
    Other documents or statements to security holders
  (21)
    
    Subsidiaries of the registrantIce Surface Development, Inc. (New York)Iso-Torque Corporation (New York)IVT Diesel Corp. (New York)Variable Gear, LLC (New York)
 (22)
    
    Published report regarding matters submitted to vote of security holders
  (23)
    
    Consents of experts and counsel(24)
    
    Power of attorney
  (31.1)
    
    Rule 13(a)-14(a)/15(d)-14(a) Certifications(32)
    
    Section 1350 Certifications(99)
    
    Additional exhibits
   35




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SIGNATURES
  TORVEC, INC.Date: May 15, 2009
    By:
    /s/ James Y. GleasmanJames Y. Gleasman, Chief Executive Officer  36




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##### Table of Contents



Dated: May 15, 2009
    By:
    /s/ James Y. GleasmanJames Y. Gleasman, Chief Executive Officer andInterim Chief Financial Officer  37




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Description(31.1
    )
    
    Rule 13(a)-14(a)/15(d)-14(a) Certifications(32
    )
    
    Section 1350 Certifications
  38