U.S. SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549





FORM 10-KSB

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

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from  to  

Commission file number 000-24455





TORVEC, INC.



NEW YORK             
                                          
 &n
sp;                    16-1509512

11 Pond View Drive                       
                                          
 &nb
p;                     14534
            Pittsford, New York                          
                                          
 
nbsp;



Issuer's Telephone Number, including Area Code: (716)
248-8549



Securities registered pursuant to Section 12(b) of the
Exchange Act:





Title of each class                 
                                          &nbs;      Name of each exchange on
                                          
                                          
 &n
sp;                                      which registered

&nbs
;

nbsp;

Securities registered pursuant to Section 12(g) of the
Exchange Act

$.01 par value common voting stock
                                          
                                       (Title of class)







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

Check  if  there is no disclosure  of  delinquent filers  in  response to Item 405 of Regulation S-B contained in  this form, and no disclosure will be contained,  to  the best  of
registrant's  knowledge, in  definitive  proxy  or information statements incorporated by reference in Part III of  this  Form 10-KSB or any amendment to this Form  10-KSB.    [X]

State issuer's revenues for its most recent fiscal year.	$0.00

State  the  aggregate market value of  the  voting stock  held  by nonaffiliates computed by reference  to  the price  at which the stock was sold, or the average  bid  and asked  prices of
such stock, as of a specified  date  within the  past 60  days.  (See definition of affiliate  in  Rule 12(b)-2 of the Exchange Act).     $20,490,151

Note:   If  determining whether  a  person  is  an affiliate will involve an unreasonable effort and  expense, the  issuer may calculate the aggregate market value of  the common  equity  held
 by  non-affiliates  on  the  basis  of reasonable assumptions, if the assumptions are stated.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS

DURING THE PAST FIVE YEARS)

Check  whether the issuer has filed all documents and  reports required to be filed by Section 12, 13 or 15(d) of  the  Exchange Act after the distribution  of  securities under a plan
confirmed by a  court.     Yes  _____            No  _____

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.  21,085,639

DOCUMENTS INCORPORATED BY REFERENCE



If  the  following documents are incorporated by  reference, briefly describe them and identify the part of the Form  10KSB (e.g., Part I, Part II, etc.) into which the document is incorporated:   (1)  any annual report to security  holders; (2)   any
proxy  or  information  statement;  and  (3)  any prospectus  filed  pursuant to Rule 424(b)  or  (c)  of  the Securities  Act  of  1933 ('Securities  Act').   The  listed documents should  be clearly described  for  identification purposes (e.g., annual
report to security holders for fiscal year ended December 24, 1990).

Transitional Small Business Disclosure Form (Check one):

Yes   _______             No   X



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PART I

Item 1.	DESCRIPTION OF BUSINESS.

(a)     History and Development of Issuer's Inventions

Torvec, Inc. ('the Company') was incorporated as a New  York business corporation on September 25, 1996.   Upon its incorporation, the Company  acquired numerous  patents, inventions
and know-how developed for more than ten years by Vernon  E. Gleasman and members of his family.  The Company presently is a development stage company specializing in automotive technology.  The Company owns many U.S.  and international  patent properties
developed by the Gleasmans protecting important inventions relating to five  different areas of automotive technology, i.e., (i) steering drive for tracked  vehicles,  (ii)  infinitely-variable  transmission, (iii) hydraulic pump and motor, (iv) constant
velocity joint and (v) spherical gearing.

Preceding  the  formation  of  the  Company,  its principal  shareholders,  Vernon  E.  Gleasman,   James   A. Gleasman  and  Keith E. Gleasman started a research  program that  required
considerable time and expense.  As a  family, the  Gleasmans  have operated and sold their own  innovative products and companies over the last 30 years.  It  is  this knowledge base (of the automotive industry and its  trends), that was the basis of the
various research projects that are now  the  properties  of the Company.  A  review  of  Vernon Gleasman's first 100 plus inventions indicates that  almost all of them are improvements of other companies' technology, and most of Vernon Gleasman's
inventions were created either while he was employed by various companies, or while he  was acting as a consultant to these other companies.

Historically,  the  major  impediments  to the incorporation  of  Gleasman products into  other  companies' vehicles has been the 'not invented here' syndrome  and  the problems relating to
enforcement of licensing agreements  by an  independent inventor.  It is necessary to fully engineer and   develop   a  highly  refined  prototype.    Generally, thousands  of  hours  and millions of  dollars  have  to  be invested  before  a  new
product can  be  sold  to  an  OEM (original equipment  manufacturer).   A   highly   refined prototype of the FasTrack(tm) vehicle (described immediately below)  was completed in February, 1999 and the Company  has been actively seeking one or more joint
venture partners  to manufacture  and commercialize this vehicle.   In  addition, the  Company  is  engineering and developing highly  refined prototypes 	of  the  infinitely variable  transmission,  the Hydraulic pump/motor,  spherical  gearing   and
constant velocity  joint (also described below) to serve as  critical components of  the FasTrack vehicle as well as  for  direct commercialization.

Torvec's FasTrack

The infrastructure of most of Asia, Africa, South and Central America is very similar to the U.S. in the early 1900's.  At  that  time U.S. demographics were  as  follows: eighty  percent  of
the population lived  in  rural  areas, income  was  low and transportation was limited to  walking, bicycles, push carts and animal pulled vehicles. Roads, when they  existed,  were  dirt and at times  impassable  due  to terrain  or  inclement  weather.
Even  with  the  advent  of automobiles, commerce remained inhibited because paved roads were  only  found  in  the  cities. Similarly,  the  wheeled vehicles  of the developing country today can only  traverse the  rural  dirt roads during certain
seasons of  the  year. When  roads are in rough condition (e.g., muddy, blocked  by snow  or  ice, etc.), there is little difference  in  travel time between an animal drawn cart, a man on foot or bicycle, or  a  wheeled car.  If they are able to travel
at all, even four-wheeled drive vehicles are usually limited to  4 -5  mph under  these conditions.  The idealized vehicle would  be  a vehicle  that could travel at higher speeds (25 -  50  mph.), regardless  of  the  terrain, significantly  shortening
the travel time between rural areas and the primary marketplaces in the city.  A tracked vehicle, in effect,  'brings its own road with it'.

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The Company's FasTrack prototype vehicle is a new type  of vehicle, that management believes steers as  easily as  a  car  (using a steering wheel), has rubber tracks  and bridges an
important  gap  between  wheeled  and  tracked vehicles  that manufacturers have been trying  to  span  for decades.  This   new   vehicle  combines   the   high-speed capabilities  of  trucks  and cars  with  the  high-traction capabilities   of  tracked
 vehicles.   Unlike   most   'new generation'  vehicles (e.g., the Model T,  for  which  Henry Ford  had to  design  and  build almost  every  part),  the FasTrack  can  be made from existing automotive  components, and lends itself to formation of joint
ventures for assembly in  the  developing country. FasTrack vehicles  are  rubber-tracked  vehicles  which,  by  design,  are  environmentally sensitive since their low ground pressure (less than 2  lbs. per  sq.  in.) does not damage paved road surfaces
or  leave ruts  or  cause potholes on unpaved surfaces.  The  Company believes  that this tracked vehicle can traverse almost  any terrain  at  higher  speeds.  The  tracks  may  be  made  by Goodyear, a  corporation dedicated to  supporting  original
equipment manufacturers (OEMs), and Goodyear  has  provided

the  tracks  for the Company's prototype vehicle.   Goodyear states,  'Based  on  product testing and feedback  from  our customers, in most situations, Goodyear's rubber  track  has been seen to last 3 to 5 times longer than a set of standard utility
tires  used  in  the same  application.'   FasTrack vehicles will be able to perform as they do because of their unique  steering  mechanism, which is protected  by  several patents  in  Europe and Japan as well as the following  U.S. patents: Multi-Axle
Vehicle Steer Drive system (4732053), No-slip imposed Differential Reduction Drive (4776235), No-slip imposed differential (4776236), Steer-Driven Reduction Drive System  (4895052). The FasTrack will also use the  Company's infinitely  variable
transmission  (U.S.  patent  5186692). Different from  the multi-shifting automatic  transmission used  on passenger  vehicles,  the  Company's  infinitely variable  transmission should contribute to  increased  fuel mileage and significantly lower
emissions.

In  response  to requests from the  David  Taylor Marine  Research  Department of the  U.S.  Navy  for  a  new generation of   assault   vehicles   using off-the-shelf componentry,  the
Gleasman steering mechanism  for  tracked vehicles (GSD-10) was conceived and developed.  The military has  been  seeking  an  adequate, economical  mechanism  for steering  tracked vehicles.  Because they are  difficult  to steer  precisely,  tracked
vehicles  generally  have   been cumbersome and limited to low speed.  While wheeled  trucks and  cars  have  been  able to travel  at  higher  speed  on prepared  roads,  they have lacked the ability  to  traverse truly  difficult terrain.  Having
developed the GSD-10 steer drive, and seeking  the best way to  market  it,  led  the Company  to a new direction for commercializing the Gleasman inventions.  In contrast to the Gleasmans' past  procedures of  selling their products for another company's
 use,  the decision was made to incorporate the new steer drive into  a new  type  of  vehicle designed as a specific  product  that could be sold directly to the consumer, thereby providing  a foundation upon which the Company can propose joint ventures
with   countries,  automobile  producers,  and/or  component manufacturers  for  producing this vehicle.   The  prototype FasTrack vehicle has been completed as a result of  a  major investment of time, know-how and capital.

The  GSD-10 steer drive can best be described  in engineering terms as a hydro-mechanical steering  mechanism. The  'mechanical' portion is manufactured from conventional, high-volume gearing,
 while  the  'hydro'  portion  is  the Company's  patented hydraulic pump and motor.   Conventional hydraulic pumps and motors are large, noisy, and inefficient at  low  RPM.  Therefore, because tests have indicated  that the recently patented  Torvec(tm)
hydraulic pump/motors have substantially solved these heretofore inherent problems, the Company  believes the GSD-10 steer drive is  most  effective when used with these novel Torvec(tm) pump/motors.

The Company showcased its latest  prototype FasTrack  vehicle  in  early spring,  1999  and  during  the balance of fiscal 1999, has been actively engaged in ongoing discussions with  a
number  of  potential  joint   venture partners to manufacture and commercialize the vehicle.

In August, 1999, the Company established a working relationship with an international export company to solicit expressions of interest for its FasTrack(tm) vehicle  from potential worldwide
governmental and institutional customers.

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The Company is also investigating the possibility of  manufacturing  the  FasTrack(tm)  vehicle  itself.  The Company  is actively engaged in discussions with  officials representing  the  City  of  Rochester,  New  York  on the feasibility of
locating a manufacturing facility  for  the Fastrack  vehicle in Rochester, New York.  To this end,  the Company  has  and  is investigating potential  manufacturing sites   in Rochester  and  has  engaged   in   preliminary discussions with  the  City
and  a  number  of financial institutions   to  formulate  a  financial  package   which, together  with government-based incentives, will enable  the Company to pursue this approach to the actual production  of the vehicle.

Torvec's Infinitely Variable Transmission

The  Company's  intends to  develop  a  prototype infinitely variable  transmission,  a  transmission  that provides  an uninterrupted drive through an infinite  number of geared speed ratios,
allowing ideal torque flow to propel the  vehicle while permitting the engine to run  at  optimum efficiency.  In sharp contrast to other work being  done  in relation to diesel/gasoline engine management, the Company's new  transmission  will not require
any  change,  costly  or otherwise,  to  the  manufacture or  operation  of  existing diesel/gasoline   engines.  Instead,  it   permits   present automotive diesel/gasoline engines to operate in  a  steady-state  mode,  with dramatically reduced
pollution,  at  most times  during  normal operation, i.e., under  the  starting, stopping,  acceleration  and deceleration  of  normal  urban traffic.   For instance, such a steady-state optimum condition may match the usual engine  setting  when  the
vehicle is being driven at its top urban speed (e.g.,  35-45 miles  per hour).  It should be noted that this optimum urban cruising  speed may be only approximately twice  the  normal idling  speed  of  the  engine, and that  this  steady-state setting
is  relatively low in comparison  to  the  normally required  engine speed of three, four or five  times  idling speed  that  must  be  attained by the same  diesel/gasoline engine each time the vehicle accelerates between each of the conventional forward
gears (e.g., when shifting  from  first gear  to  second  gear, then from second  to  third,  etc.). [NOTE: Because it is an infinitely variable transmission and changes its   ratios  extremely  quickly,  the Company's transmission  can  accelerate a
diesel-powered  vehicle  as quickly as  a  gasoline-powered  vehicle.   The  Company's transmission also may be able to significantly  improve  the performance of electric drive vehicles.  There are a  number of  kinds of electric motors that can be
chosen to  drive  a vehicle.  Their  performance and  physical  characteristics vary  considerably.  Weight (for a given power level), zero-speed torque,  useful speed range, efficiency-vs.-motor-speed, and control characteristics  are among  these,  and
there are conflicts in  making  the  best choice  for a given vehicle application.  A transmission  of some  sort  commonly  is  needed  to  resolve  these.    The performance  characteristics of the  Company's  transmission make it a promising candidate
for such applications.]

In  addition to having the potential of  reducing particulates,  the  Company's  transmission  will  be   less complicated  and  has  approximately 1/3  fewer  parts  when compared  to  a
conventional four or five  speed  automatic transmission, making it smaller in size, lighter  in  weight and,   therefore,  further  improving  fuel   economy.   The Company's transmission, which the Company believes  will  be simpler  and  less
expensive to manufacture  than  existing transmissions, should provide the automotive industry with a higher performing product at a lower cost.

In  view  of  the above, and because all  vehicles currently have transmissions, the Company believes that  the Company's transmission will permit substantial reductions in diesel/gasoline
engine pollutants and that such  significant environmental benefits will be achieved without an  economic penalty.  Further, it is  believed  that  the  Company's transmission   will  not  be  in  direct  competition   with companies who provide other
diesel/gasoline engine pollution remedies  and  that  the latter may even  be  interested  in working  with  the  Company to explore possible  synergistic effects with the Company's transmission.

In  December, 1999, the Company finished a  wide-ranging  and  complete  CAD/CAM  design  evaluation  on  the infinitely variable transmission which demonstrates that the Company's
transmissions  will  meet  the   new   emissions Standards for light trucks announced in December,  1999  by the  federal  government.   The evaluation  included  finite element  analysis,  fluid  dynamics  analysis  and  material compatibility  analysis
for 'real world  conditions'  under temperatures ranging from minus 20 degrees fahrenheit to 150 degrees.

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Hydraulic Pump/Motor, Constant Velocity Joint, and Spherical Gearing

The Company's  patented  infinitely variable transmission will incorporate a hydraulic pump/motor machine and, although it can be operated with commercially-available pump/motors, it is
most effectively used in combination with the Company's patented hydraulic pump/motors which, like the infinitely variable transmission, are significantly simpler, smaller and  lighter  than  other  commercially  available pump/motors  having  comparable
performance  specifications. The key feature of the Company's pump/motors is their swash-plate  mounting  arrangements that utilize  a  new  form  of spherical gearing which is also proprietary to the  Company. Further, this spherical gearing has been
incorporated in yet another Company-owned invention, which has been developed to replace  constant velocity joints used, among other  places, in  all  front-wheel drive vehicles.  The Company's constant velocity  joint is a departure from known designs,
and  its efficiency  and  weight  savings may provide  a  significant competitive advantage in the annual  constant velocity joint market of 180,000,000 units per year (1994 Annual Report  of GKN  (the world's  largest producer  of  constant  velocity
joints)).

The compact size and full power start-up torque of the Torvec hydraulic pump/motors are made possible  through the  invention of a revolutionary new form of gearing  based on  the  geometry
of spheres rather than conventional  gear geometry of cylinders and cones.  This new 'spherical'  gear is   perhaps  the  most  important  and  creative Gleasman invention to date, surpassing the 'impossible geometry'  of the Torsen differential gearing.

The  Gleasman spherical gears have been  used  to form  a  geared  ball-and-socket coupling in  which  driving tooth contact is maintained continuously while, at the  same time, permitting the
coupling to be flexed at 40 degrees  to either  side  of  center. The potential versatility  of  the Company's spherical gears may open the  door  to  many  yet unknown  solutions and products yet to be discovered.   This new  gearing paradigm is found in
the swash-plate  mechanism of  the Company's hydraulic pump and motor, and it will also be  used  to create a constant velocity joint as  a  working prototype ready for installation in a car.   The  Company's constant velocity joint is designed to be
interchangeable in over  40  existing car models.  It is notably lighter,  less costly to manufacture, and potentially more durable than the constant velocity joints presently being used in all  frontwheel  drive  vehicles.  In spite of mechanical  and
design limitations, the constant velocity joints currently  in  use are  manufactured  at the rate of over  '180  million  units annually' according to the 1994 Annual Report of GKN.

The  Company is currently negotiating a  proposed arrangement  for  the  commercial license  of  the  constant velocity joint to a newly formed entity owned by the Company and two of its
principal shareholders.

(b)     The Company's Assets

The Company owns the right, title and interest in and to the following patent properties:

1.	U.S. Patent No.: 4,732,053
	Title:  Multi-Axle Vehicle Steer Drive System

2.	U.S. Patent No.:  4,776,235
	Title:  No-Slip, Imposed Differential Reduction Drive

3.	U.S. Patent No.:  4,776,236
	Title:  No-Slip, Imposed Differential

4.	U.S. Patent No.:  4,895,052
	Title:  Steer-Driven Reduction Drive System





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5.	U.S. Patent No.:  5,186,692
	Title:  Hydro-Mechanical Orbital  Transmission

6.	U.S. Patent No.:  5,440,878
	Title:  Variable Hydraulic Machine

7.	U.S. Patent No.:  5,513,553
	Title:  Hydraulic Machine with Gear-Mounted SwashPlate

8.	U.S. Patent No.:  5,647,802
	Title:  Variable-Angle Gears

9.	U.S. Patent No.:  5,613,914
	Title:  Universal Coupling

10.	U.S. Patent No. 5,878,492
Title:  Method for Shaping the Teeth of 
Spherical Gears

11.	U.S. Patent Application
Serial No. 09/213,650
Title: Modular System for Track-Laying Vehicle

12.	U.S. Patent Application
	Serial No. 09/238,444
	Title:  Spool Valve for Fluid Control

13.	European Pat. 0 160 671:
Title:  No-Slip, Imposed Differential Validated in:  France, Germany, Sweden, 
United Kingdom

14.	Japanese Pat. No.  2002555
	Title:  No-Slip, Imposed Differential

15.	Australian Patent No. 681528

Title:  Variable-Angle Gear System and Constant Velocity Joint

16.	Australian Patent No. 681534
	Title:  Hydraulic Machine with Gear-Mounted Swash-Plate



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17.	International Application No. PCT/US95/06538
	Title:  Variable-Angle Gear System and Constant-Velocity Joint

Corresponding Regional/National applications:

Europe	95 921372.9

Brazil	PI 9507908-4

Canada	2,191,701

China	95 1 94440.1

Japan	501004/96

Korea	96-706840

Mexico	96 05859

18.	International Application No.:  PCT/U595/08732
	Title:  Hydraulic Machine with Gear Mounted Swash-Plate
		Corresponding Regional/National applications:

Europe	95 926258.5

Brazil	PI 9508276-0

Canada	2,194,963

China	951 95044.4

Japan	505116/96

Korea	97-700152

Mexico	9700288

In addition, the Company owns the exclusive right, title and interest  in  and  to  the following prototypes,  automotive parts, engineering documentation, computer-readable data and other  technological assets relating to the development  and testing
of the steer drive mechanism for tracked  vehicles, infinitely  variable  transmission,  hydraulic  pump/motors, spherical  gearing, and constant-velocity  joints  disclosed and found in the above-referenced patent properties:

1.	1997 Ford Taurus 4-door sedan.

2.	FasTrack tracked vehicle (Dimensions: length
- 142', width - 68', height - 72'; weight: 4100 lbs;
Engine: Ford, gasoline 2.3 liter; Transmission: Ford A4lLd; 
Steering system; Torvec Steer Drive.

3.	Prototype of Torvec Steer Drive (GSD-10).

4.	Ford automotive parts: 4 engines; transmissions; 
differentials; worm gears; body parts; windshields;
dashboards; and seats.



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5.	Complete CAD/CAM design for Infinitely
Variable Transmission re-engineered to adapt as retrofit
for existing vehicle of a major U.S. automaker.

6.	Engineering data for adapting Torvec Orbital
Infinitely Variable Transmission for retrofit on U.S. Army's 
existing HMMWV ('Hummer' vehicle).

7.	Off-the-shelf automotive hydraulic
pump/motors made by other manufacturers (used for
comparison testing).

8.	Parts (gears, housing, shafts) and
supporting technical data, relating to designs of Torvec 
constant velocity joint appropriate for
retrofit in existing vehicle of a major U.S. automaker.

9.	Engineering CAD/CAM files for constant
velocity joint designs.

10.	Isuzu Commercial Vehicle NPR-Diesel

(c)       Business  Plan;  Distribution  Methods   -   Joint Ventures, Collaborative Agreements and Licenses

The  Company's present, overall business strategy relating  to  its products  is (1)  to  provide  developing country  FasTrack vehicle models for marketing to  potential Asian,
African, South and Central American  joint  venture partners;  (2)  to complete the installation  of  infinitely variable transmissions  into  diesel-powered  trucks   for appropriate  testing  by  national and  state  environmental agencies  in the U.S.
and other countries to quantify  exact fuel  savings  and  emissions levels and  to  determine  its potential  effect on the worldwide problem of diesel  engine pollutants;  (3) to  complete  the  installation   of   the infinitely  variable transmission
into a vehicle to  provide test  results  on gasoline engine fuel mileage and  emission levels;  (4)  to  promote worldwide  use  of  the  Company's transmissions for reducing diesel/gasoline engine pollution; (5)   to  enter  into  appropriate
licensing/joint  working arrangements for all of the Company's products (the FasTrack vehicle,   infinitely   variable   transmission, hydraulic pump/motor, constant velocity joint, and spherical gearing); (6)  to  obtain  patent  protection on  at  least
 four  new developments  and  improvements  related  to  the  Company's products  described  above;  7) to  maintain  the  Company's Website  for  marketing,  sales, education  and  information relating to the Company's potential products.

The  Company continues to pursue its strategy  of seeking  collaborative  joint working  arrangements,  formal joint  venture  agreements and/or licensing agreements  with domestic  and/or
foreign governments,  automotive  industry manufacturers and suppliers in order to promote the  use  of the  Company's  potential products.   No  such  arrangements and/or licenses have been consummated to date, although  the Company  is presently
negotiating with a number of potential joint  venture  candidates.  However, the  Company  is  also investigating the   possibility   of   manufacturing the FasTrack(tm)  vehicle  itself.   The  Company  is   actively engaged in discussions with officials
representing the  City of  Rochester,  New York on the feasibility  of  locating  a manufacturing facility  for  the   Fastrack   vehicle   in Rochester,  New York.  To this end, the Company has  and  is investigating potential manufacturing sites in
Rochester and has  engaged in preliminary discussions with the City and  a number  of  financial institutions to formulate a  financial package  which,  together with government-based  incentives, will  enable  the  Company to pursue this  approach  to
the actual production of the vehicle.

In  addition  to seeking commercially  attractive collaborative  working arrangements or joint  ventures,  the Company  may  license  one or more of its  Torvec  potential products   to
unaffiliated  third   parties   for   direct commercialization.



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(d)     Competition and Market Acceptance

The Company believes that its patented technology is   superior  to  similar  products  manufactured  in the automotive industry and in some instances represent  a  true paradigm  shift
with respect to presently known  technology. However, once the Company commences operations, it  will  be marketing  products that are provided by  companies  in  the automotive   industry   that  have   significantly   greater financial,  marketing  and
operating  resources  than the Company.

The  Company's  immediate future  development  is dependent  upon  consumer  acceptance  of  the  FasTrack(tm) vehicle  especially in the Asian, African, South and Central American   markets.
 While  the  potential   domestic and international market   is   great,   the   Company   faces considerable obstacles in introducing the FasTrack in  these markets  and there can be no assurance that it will be  able to do so successfully.

The  Company's  ability to generate  revenue  and become  profitable  is also dependent  upon  the  automotive industry's acceptance of certain of its other products, such as  the
infinitely-variable transmission, the hydraulic pump and   motor,  the  constant  velocity  joint  and  spherical gearing.  The Company's ultimate growth and future financial performance  will depend on demonstrating the advantages  of such  products
over existing technologies to an  automotive industry  which  has  committed  substantial  resources to product  systems  utilizing old  technology.  In  addition, despite  management's belief that its products are superior, the  Company  will have to
overcome the 'not invented  here' attitude that permeates the industry.

Item 2.		 DESCRIPTION OF PROPERTY.

On  January 7, 1998, the Company entered  into  a Service  and  Space   Agreement with  Joseph  L.  Neri,  Sr. (a shareholder) and Joseph Neri Chevrolet-Oldsmobile-Pontiac pursuant  to  which
the Company was entitled  to  lease  the premises  described below.  The Agreement was terminated  on August 31, 1999 and, in accordance with an informal and oral understanding  with Mr. Neri, the Company was  permitted  to utilize  the premises at no
charge from time to time  during the  last  4 months of fiscal 1999 and anticipates utilizing the  facility  in fiscal year 2000 in similar fashion.  The facility is located at 3740 Route 104, Williamson, New  York (approximately  20  minutes from
downtown  Rochester).	The facility  is  approximately  17,000  sq.  ft.,  situated  on 8  acres  of  land.  The Company has been able  to  use  the facility, all utilities (including telephone system with  an after-hour  answering  service),  computer
system,  service department, specialized equipment   and tools    with above-ground  lifts (D.E.C. approved) one  of  which  has  a 28,000  lb.  Capacity for trucks and buses, an  8  bay  body shop,   complete   with  a  paint  room  and Kansas   Jack
straightening  machine, a two floor parts department  and  a 30  member  staff (sales, managers, office staff,  mechanics and  a computer programmer).  The Company believes that this facility  is sufficient to construct all prototype  FasTrack vehicles as
well as assemble and install all prototypes  for the  Company's  other products for testing and demonstration purposes.

Item 3.   LEGAL PROCEEDINGS.

The  Company  is  not  a party  to  any  pending, material  litigation.  To the knowledge  of  management,  no federal,  state  or local governmental agency  is  presently contemplating any
proceeding against the Company.   See  the discussion under the caption 'Certain Proceedings  Involving Certain Shareholders.'

-11-

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

There  were no matters submitted to the Company's Shareholders  during  the fourth quarter  of  the  Company's fiscal year ended December 31, 1999.

PART II

Item 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

(a)     May 11, 1998 Private Placement

On  May 11, 1998, the Company initiated a private placement  of up to 1,500,000 shares of its $.01  par  value common  stock  to  institutional  investors  or  persons  of
substantial  means or substantial income  who  qualified  as accredited investors as defined by Rule 501 of Regulation  D promulgated  under  the 1933 Securities  Act.   The  initial offering price was $5.00 per share.  On September 21,  1998, the
offering  price  was increased  to  $10.00  per  share. Although originally scheduled to terminate on November  30, 1998,  the offering was extended periodically during  fiscal 1999   by  the  Company's  Board  of  Directors  until its termination on
November 30, 1999.

The  offering was made by the Company's Board  of Directors  without  payment  of  commissions.   Based   upon completed investor questionnaires received by the Company in the  offering,
management believes all of the  investors  in this  offering  were either 'accredited investors'  as  that term   is   defined  under  applicable  federal  and   state securities laws, rules and regulations, or were persons who, by  virtue  of background,
education and experience,  either alone  or  through  the  aid and assistance  of  a  personal representative,  could  accurately evaluate  the  risks  and merits  of  an investment of the securities of the  Company. Further, all such persons were
provided with access  to  all material  information regarding the Company,  prior  to  the offer  or  sale  of  these  securities,  and  each  had   an opportunity  to  ask of and receive answers from  directors, executive  officers,  attorneys  and
accountants  for the Company.  The offers and sales of the foregoing  securities are believed to be exempt from the registration requirements of  Section  5  of  the 1933 Act pursuant  to  Section  4(2) thereof,  and pursuant to and in accordance with
Regulation D, Rule 506 promulgated thereunder, and from similar states' securities   laws,  rules  and  regulations  requiring the registration of the offer and sale of such securities.

The Company sold 165,170 shares of its common stock and received net proceeds of $1,229,200 from such sales during its fiscal year ending December 31, 1999.

(b)     Market Information

Effective September 23, 1998, the Company's  $.01 par  value common stock, as a class, was registered with the Securities  and  Exchange Commission  under  the  Securities Exchange
Act of 1934.  As a result, shares of the Company's common  stock  which had been owned for  one  year  or  more became eligible for trading of the Over-the-Counter Bulletin Board  (OTCBB)   maintained by the National  Association  of Securities Dealers,
Inc. (NASD) on December 22,  1998.  The Company's stock began trading on January 21, 1999 at  $12.00 per  share.  The Company has approximately 10 market  makers for its common stock.





-12-



The following table presents the range of high and low bid prices for the Company's $.01 par value common stock for  each quarter during fiscal 1999, the first year  during which the
Company's common stock was traded.  The source  of the  high  and  low  bid information is the Over-the-Counter Bulletin  Board  and  such quotations  reflect  inter-dealer prices, without retail mark-up, mark-down or commission  and may not represent
actual transactions.

1999	      High	Low

1st Quarter	     $12.25	     $4.75

2nd Quarter	     $10.50	     $3.50

3rd Quarter	     $  9.94	     $5.12

4th Quarter	     $  8.50	     $4.13

(c)     Holders

As  of  December  31, 1999, the Company  had  230 shareholders of record.

(d)     Dividend Policy on Common Stock

The  Company  has not paid any dividends  to  its shareholders  since  its  inception.   The  declaration   or payment of dividends, if any, to its shareholders is  within the
discretion of the Board of Directors of the Company and will   depend   upon   the   Company's   earnings,   capital requirements,   financial  condition  and   other   relevant factors.  The Board of Directors does not currently  intend to  declare or
pay any dividends on its common stock in  the foreseeable  future and intends to retain  any  earnings  to finance the growth of the Company.

(e)     Reports to Shareholders

The  Company  intends to furnish its shareholders with  annual reports containing audited financial statements and such other periodic reports as the Company may determine to be
appropriate or as may be required by law.  The Company is   required  to  comply  with  periodic  reporting,  proxy solicitation   and   certain  other  requirements   of the Securities Exchange Act of 1934.

(f)     Transfer Agent and Registrar

Continental  Stock Transfer & Trust  Company  has been appointed as the Company's Transfer Agent and Registrar for its Common Stock.

Item 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF

OPERATION.

The  Company's present business strategy relating to  its  products  is  (1)  to  provide  developing
country FasTrack  vehicle  models for marketing to potential  Asian, African,  South and Central American joint
venture partners; (2) to complete the installation of the Company's infinitely variable transmissions  into  diesel-
powered  trucks for appropriate  testing  by  national and  state  environmental agencies in the U.S. and other 
countries to quantify exact fuel savings and emissions   levels  and to determine  its  potential effect on the 
worldwide problem of diesel engine pollutants; (3) to complete the  installation of  the infinitely variable

-13-

transmission into  the  best selling automobile of a major U.S  automaker that  has  an  agreement with the Company for  an  exclusive 'first   look'  at  the  transmission  for  gasoline  engine passenger  cars,  providing data  on  gasoline  engine
fuel mileage and emission levels; (4) to promote worldwide use of the   infinitely   variable   transmissions   for   reducing diesel/gasoline  engine  pollution;  (5)   to   enter   into appropriate licensing/joint working arrangements for all  of the
Company's  products (the FasTrack  vehicle,  infinitely variable transmission,  hydraulic   pump/motor,   constant velocity joint, and spherical gearing); (6) to obtain patent protection on   at   least  four  new   developments   and improvements
related  to the Company's  products  described above;  7) to  develop  a  Website  for  marketing,  sales, education and   information  relating  to  the Company's products.

The  Company  is  continuing  to  implement  its business plan.  The Company is engaged in discussions with a number  of vehicle manufacturers to license one or  more  of its  products  and/or
to create one or  more  joint  venture relationships.  If   successful,   these    licenses or Relationships will   lead  to  the  further   development, manufacture  and  distribution of  the  Company's  products, especially  the   FasTrack,   the
infinitely variable transmission and the Company's constant velocity joint.

The Company has completed its first pre-production prototype of the FasTrack on an Isuzu truck frame and is now testing   and  demonstrating  the  FasTrack.   The   Company believes that
its ability to showcase the Isuzu truck  frame prototype  will  enhance its pursuit  of  joint  venture  or licensing agreements with one or more manufacturers of cars, trucks  and related equipment, especially since the FasTrack can be assembled, without
significant modification, on  nine manufacturer's vehicle frames.

The Company plans to selectively incorporate  its other patented  technologies,  including  its   infinitely variable  transmission, its lightweight hydraulic  pump  and motor,  its constant
velocity joint (with its true  infinite gearing based on the Company's proprietary spherical gearing assembly), into  the  FasTrack  prototype  as  well  as  to separately commercialize each of the  technologies  through licensing and one or more joint
venture partners.

The  Company  intends to begin emission  and  fuel economy  testing of the infinitely variable transmission  as installed  into  diesel-powered trucks,  perhaps  at  Alfred State  College,
Alfred, New York.  The Company also  intends to  install  the  infinitely variable  transmission  into  a vehicle  owned  by the Company to document  actual  emission levels  and  fuel  economy.  The vehicle  and  test  results should  enhance joint
venture/ licensing opportunities  with major auto manufacturers throughout the world.

The  Company also intends to install its constant velocity  joint,  including its spherical gearing  assembly, into  a  vehicle for evaluation.  Upon satisfactory results, the  Company will
present the constant velocity joint to the auto  industry  for possible licensing and/or joint  venture arrangements.

The   Company  showcased  its  latest  prototype FasTrack  vehicle  in  early spring,  1999  and  during  the balance of fiscal 1999, has been actively engaged in ongoing discussions with  a
number  of  potential  joint   venture partners to manufacture and commercialize the vehicle.

In August, 1999, the Company established a working relationship with an international export company to solicit expressions of  interest for its FasTrack(tm)   vehicle  to form  potential
worldwide  governmental  and  institutional customers.

-14-



The Company is also investigating the possibility of  manufacturing  the  FasTrack(tm)  vehicle  itself.  The Company  is actively engaged in discussions with  officials representing  the
City  of  Rochester,  New  York  on the Feasibility of  locating a manufacturing facility  for  the Fastrack  vehicle in Rochester, New York.  To this end,  the Company  has  and  is investigating potential  manufacturing sites   in Rochester  and  has
engaged   in   preliminary Discussions with  the  City  and  a  number  of financial institutions   to  formulate  a  financial  package   which, together  with government-based incentives, will enable  the Company to pursue this approach to the actual
production  of the  vehicle.   The Company believes that it  will  need  at least  12  to  15  million dollars in order to  pursue  this possibility and management is presently investigating  ways in  which to acquire such monies including additional
equity and/or debt financing.

Liquidity and Capital Resources

The  Company's operations during its fiscal  year ended  December 31, 1999 have been funded primarily  through the  sale  of  165,170 shares of common stock to  a  limited number  of
investors  for an aggregate  purchase  price  of approximately  $1,229,200.  A significant  portion  of  such investments were  made by Keith and  James  Gleasman.  The Company  does not presently anticipate that it will be  able to  generate significant
operating revenues during the  next twelve  months.   The  Company  anticipates,  based  on  its currently  proposed plans and assumptions  relating  to  its operations(including assumptions regarding the nature  and extent  of its prototype development
program,  its  testing program,  the  ability  of the Company  to  secure  adequate manufacturing  and  distribution  relationships  and  market acceptance  of the Company's products) that, over  the  next twelve  months,  the  Company  will  be  required
 to seek additional financing  in the form of a  significant  equity investment by one or more investors in privately-negotiated transactions or through debt-financing or both.

The  Company's cash position at any  time  during fiscal  1999  was  directly dependent upon  its  success  in selling  stock since the Company generated no revenues  from any  other
source.  The Company anticipates that this  trend will continue in fiscal year 2000.

The Company adopted a Business Consultant's Stock Plan  in  June, 1999 reserving 200,000 shares  for  issuance thereunder.   During  1999,  it  issued  45,351  shares   to business
consultants, has issued an additional 42,501 shares through  March 14, 2000 and anticipates that it  will  issue more  shares  during the balance of fiscal  2000  under  the Plan.

Y2K Compliance

The  Company  currently  uses  a  software  which management  believes  is  in 'Year 2000'  (Y2K)  compliance.  Management  will  continue to evaluate the current  software and implement
any necessary changes to remain in 'Year 2000' (Y2K) compliance.

Impact of Inflation

Inflation 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  its   fiscal   year   ending December 31, 1999.



-15-

Quarterly Fluctuations

As of December 31, 1999, the Company had not engaged in significant 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 product returns, 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, 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.







-16-



TORVEC, INC.
(a development stage company)

Item 7.  Financial Statements

|Contents                                                                                                                                                                                                  | Page
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|Independent Auditors' Report                                                                                                                                                                              | F-2 
|Balance sheet as of December 31, 1999                                                                                                                                                                     | F-3 
|Statements of operations for each of the years in the two-year period ended December 31, 1999
     and for the period from September 25, 1996 (inception) through December 31, 1999                       | F-4 
|Statements of changes in stockholders' equity for the period from September 25, 1996
     (inception) through December 31, 1997 and each of the years in the two-year period
     ended December 31, 1999 | F-5 
|Statements of cash flows for each of the years in the two-year period ended December 31, 1999 and
     for the period from September 25, 1996 (inception) through December 31, 1999                       | F-6 
|Notes to financial statements                                                                                                                                                                             | F-7 





|F-1
|---











-17-

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Torvec, Inc.



We have audited the accompanying balance sheet of Torvec, Inc., (a development stage company), as of December 31, 1999, and the related statements of operations and cash flows for each of the years in the two-year period ended
December 31, 1999 and for the period from September 25, 1996 (inception) through December 31, 1999 and changes in stockholders' equity for the period from September 25, 1996 (inception) through December 31, 1997 and each of the
years in the two-year period ended December 31, 1999.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with generally accepted auditing standards.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements enumerated above present fairly, in all material respects, the financial position of Torvec, Inc. as of December 31, 1999 and the results of its operations and its cash flows for each of the
years in the two-year period ended December 31, 1999 and for the period from September 25, 1996 (inception) through December 31, 1999 in conformity with generally accepted accounting principles.



The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note A to the financial statements, the Company has incurred net losses, has a working capital
deficiency and is not generating cash flows from operating activities to sustain its operations which raises substantial doubt about its ability to continue as a going concern.  Management's plans in regard to these matters are described in Note A.
The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



As described in Note H[3], the principal stockholders are involved in an arbitration proceeding relating to certain technology which they contributed to the Company at its formation.



Richard A. Eisner & Company, LLP



/S/ RICHARD A. EISNER & COMPANY, LLP



March 2, 2000
New York, New York

With respect to Note G[3]
March 14, 2000

|F-2
|---







-18-

TORVEC, INC.

Balance Sheet
December 31, 1999

|ASSETS
Current assets:
    Cash
        Total current assets
Equipment (Note B[1]):
    Office equipment 
    Transportation equipment (Note F)
Less accumulated depreciation                                                                | $     183,000183,000        9,00053,000       62,000(24,000)        
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------
|Net equipment                                                                                                                                                                                                                                | 38,000                                                              
|                                                                                                                                                                                                                                             | $    221,000                                                        
|LIABILITIES
Current liabilities:
   Current portion of loan payable (Note F)
   Accounts payable and accrued expenses (Note E)
   Consulting fees payable to related parties (Note C[1])                                                     | $        6,000
      104,000421,000                                 
|Total current liabilities                                                                                                                                                                                                                    | 531,000                                                             
|Loan payable (Note F)                                                                                                                                                                                                                        | 15,000                                                              
|                                                                                                                                                                                                                                             | 546,000                                                             
|Commitments and other matter (Note H)                                                                                                                                                                                                        |                                                                     
|STOCKHOLDERS' EQUITY  (Note G)
Common stock, $.01 par value, 40,000,000 shares authorized, 21,043,137
issued and outstanding
Additional paid-in capital
Unearned compensatory stock options
Deficit accumulated during the development stage | 210,000
   8,221,000
    (435,000)(8,321,000)
(325,000)
$    221,000



|See independent auditors' report and notes to financial statements | F-3
|------------------------------------------------------------------ | ---



-19-



Statements of Operations

|                                                                                                                                                                                                            | Year Ended
December 31,1999  1998                     | September 25
1996
(Inception)
Through
December 31,1999  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------- | --------------------------------------------------------
|Cost and expenses:
   Research and development
   General and administrativeNet lossBasic and diluted loss per common shareWeighted average number of shares of commonstock - basic and diluted (Note B[4]) | $  1,035,0003,753,000
$(4,788,000)$(0.23)$ 20,918,000 | $  1,055,0001,067,000
$ (2,122,000)
$(0.10)
$ 20,726,000



|See independent auditors' report and notes to financial statements | F-4
|------------------------------------------------------------------ | ---







-20-





|TORVEC, INC.
(a development stage company)Statements of Changes in Stockholders' Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Common StockShares      Amount                                                                                                                                                                         | Additional
Paid-inCapital                                                                                     | Unearned
Compensatory
Stock andOptions                                                                                                                                                                                                                                        | Deficit
Accumulated
During the
DevelopmentStage                                                   | Total
Stockholders'Equity                                                                  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------
|Issuance of shares to founders (Note A)
Issuance of stock for services (Note A)
Sale of common stock - November ($1.50 per share)
Sale of common stock - December ($1.50 per share)
Distribution to founders (Note A)
Net Loss
Balance - December 31, 1996
Issuance of compensatory stock (Note G[2])
Issuance of stock for services
Sale of common stock - January ($1.50 per share)
Sale of common stock - February ($1.50 per share)
Sale of common stock - May ($1.50 per share)
Issuance of stock for services
Sale of common stock - June ($3.00 per share)
Sale of common stock - July ($3.00 per share)
Sale of common stock - August ($3.00 per share)
Sale of common stock - September ($3.00 per share)
Sale of common stock - October ($3.00 per share)
Sale of common stock - November ($3.00 per share)
Sale of common stock - December ($3.00 per share)
Issuance of compensatory options to consultants (Note G[3])
Compensatory stock and options earned
Distributions to founders (Note A)
Net Loss
Balance - December 31, 1997
Issuance of stock for services
Sale of common stock - May 11 to September 20 ($5.00 per share)
Sale of common stock - September 21 to December 31 ($10.00 per share)
Costs of offering
Compensatory stock and options earned
Contribution of services (Note C[3])
Net loss
Balance - December 31, 1998
Issuance of stock for services (Note G[4])
Sale of common stock - January 1 to August 9 ($10.00 per share)
Sale of common stock - August 10 to November 30 ($5.00 per share)
Issuance of compensatory options to consultants (Note G[2])
Common stock issued - exercise of options (Note G[2])
Compensatory stock and options earned
Contribution of services (Note C[3])
Net loss
Balance - December 31, 1999 | 16,464,400
2,535,600
64,600
156,20119,220,8011,000,00012,00058,26675,36130,000
2,00073,16613,33560,56710,0007,00010,000100,00020,672,4961,000112,62025,50020,811,61645,35180,67084,50021,00021,043,137 | $ 165,000
25,000
1,000
1,000192,00010,0001,0001,0001,0001,0001,000
207,000
1,000
208,000
1,000
1,000$ 210,000 | $ (165,000)
381,000
96,000
233,000
(27,000)518,0001,490,00018,00086,000112,00045,0006,000219,00040,000181,00030,00021,00030,000299,000
234,000
(338,000)
2,991,000
3,000
562,000
255,000
(60,000)
15,000
3,766,000
327,000
806,000
422,000
2,780,000
105,000
15,000$8,221,000 | $  (1,500,000)
(234,000)
451,000
(1,283,000)
578,000
(705,000)
(2,780,000)
3,050,000$   (435,000) | $   (489,000)(489,000)(922,000)(1,411,000)(2,122,000)(3,533,000)(4,788,000)
$  *(8,321,000)
|See independent auditors' report and notes to financial statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | F-5                                                                                                                                                                                                   











-21-



Statements of Cash Flow

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Year Ended
December 31,1999  1998                                                                                                                      | September 25,
1996
(Inception)
Through
December 31,1999                                                                                                         
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|Cash flows from operating activities:
      Net loss
      Adjustments to reconcile net loss to net cash used in
         operating activities:
              Depreciation and amortization
              Common stock issued for services
              Contribution of services
              Compensation expense attributable to common
                 stock and options
              Changes in:
                  Other assets
                  Accounts payable and accrued expenses
                     Net cash used in operating activities
Cash flows from investing activities:
     Purchase of equipment
Cash flows from financing activities:
     Net proceeds from sales of common stock
     Proceeds from loan
     Repayments of loan
     Distributions
                 Net cash provided by financing activities
Net increase (decrease) in cash
Cash at beginning of period
Cash at end of period
Supplemental disclosure of noncash investing and
     financing activities:
       Issuance of compensatory options to consultants
       Cash paid for:
           Interest
           Taxes | $  (4,788,000)
12,000
327,000
15,000
3,050,000
164,000(38,000)(1,258,000)1,416,000
(5,000)1,411,000153,00030,000
$    183,000$  2,780,000
$      2,000 | $  (2,122,000)
9,000
3,000
15,000
578,000504,000(1,013,000)
      (33,000)903,000
29,000
(3,000)929,000(117,000)
147,000$      30,000$       2,000
$       1,000

|See independent auditors' report and notes to financial statements | F-6
|------------------------------------------------------------------ | ---





-22-

TORVEC, INC.(a development stage company)Notes to Financial StatementsDecember 31, 1999Note A  -  The Company

Torvec, Inc. (the 'Company') was incorporated in New York on September 25, 1996.  The Company which is in the development stage, specializes in automotive technology.  In September 1996, the company acquired numerous
patents, inventions and know-how (the 'technology') contributed by Vernon E. Gleasman and members of his family (the 'Gleasmans') (see Note H[3]).  The Company intends to develop and design specific applications for this technology relating to steering
drives for tracked vehicles, infinitely variable transmissions, hydraulic pumps and motors and constant velocity joints and spherical gearings.  As consideration for this contributed technology, the Company issued 16,464,400 shares of common stock and
$365,000 to the Gleasmans.  In September 1996, the Company issued 2,535,600 shares of common stock (valued at $406,000) to individuals as consideration for the cost of services and facilities provided in assisting with the development of this
technology.

For the period from inception through December 31, 1999, the Company has accumulated a deficit of $8,321,000, has a working capital deficiency of $348,000 and has been dependent upon equity financing to meet its obligations and
sustain operations.  These factors raise substantial doubt about the Company's ability to continue as a going concern.  In order to continue its operations, the Company is seeking additional financing and exploring opportunities such as collaborative
arrangements, joint ventures or licensing arrangements.  However, there is no assurance that the Company can obtain adequate additional financing, that products will be developed which will be commercially successful, or that profitable operations can be
attained.  The financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts or the amount and classification of liabilities that might be necessary as a result of the above uncertainty.

Note B - Summary of Significant Accounting Policies

[1]    Equipment:
Equipment including a vehicle intended to be used as a prototype, is stated at cost less accumulated depreciation.  Depreciation is provided using the straight-line method over the estimated useful lives of the assets which range from five to seven years.

[2]    Research and development and patents:
Research and development costs and patent expenses are charged to operations as incurred.

[3]    Use of estimates:
The preparation of financial statements in conformity with 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 revenues and expenses during the reporting period.  Actual results could differ from those estimates.

[4]    Loss per common share:

|F-7
|---





-23-

TORVEC, INC.
(a development stage company)Notes to Financial StatementsDecember 31, 1999Note B - Summary of Significant Accounting Policies  (continued)
[5]    Fair value of financial instruments:

The carrying value of cash and accrued expenses approximates their fair value due to the short maturity of those instruments.

[6]    Stock-based compensation:

Statement of Financial Accounting Standards No. 123, 'Accounting for Stock-Based Compensation' ('SFAS No. 123'), encourages, but does not require, companies to record compensation cost for stock-based employee
compensation plans at fair value.  The Company has elected to account for its employee stock-based compensation plans using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, 'Accounting for Stock Issued to
Employees' ('APB No. 25').  Under the provisions of APB No. 25, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company's common stock at the date of the grant over the amount an
employee must pay to acquire the stock.  Stock options granted to nonemployees for goods or services are measured using the fair value of these options and such costs are included in operating results as an expense.

Note C - Related Party Transactions

[1]     On December 1, 1997, the Company entered into three-year consulting agreements with three members of the Gleasman family whereby each will provide technical services to the Company in exchange
for compensation of $12,500 each per month.  In addition, the Company granted them options to purchase a total of 75,000 shares of common stock at an exercise price of $5.00 per share (Note G[3]).  For the years ended December 31, 1999, 1998 and
1997, the Company incurred expenses amounting to approximately $528,000, $528,000 and $45,000, respectively, in connection with these agreements.  Prior to these agreements, one member of the Gleasman family provided consulting services to the Company.
Amounts charged to operations for the year ended December 31, 1997 and for the period ended December 31, 1996 were approximately $55,000 and $18,000, respectively.

[2]      For the years ended December 31, 1999, 1998 and 1997 and for the period ended December 31, 1996, approximately $269,000, $116,000, $213,000 and $4,000, respectively, were charged to
operations for services provided by three law firms, each of which has a partner who is a stockholder of the Company.  At December 31, 1999, the Company owed $31,000 to two of these firms which is included in accounts payable.

[3]      During 1999 and 1998 a stockholder provided space and services to the Company at no charge.  The fair value of such space and services amounted to $15,000 in each year and was treated as a capital
contribution and expensed.

Note D - Income Taxes

The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

|F-8
|---



-24-

TORVEC, INC.
(a development stage company)Notes to Financial StatementsDecember 31, 1999Note D - Income Taxes (continued)
At December 31, 1999, the Company has available $3,273,000 of net operating loss carryforwards to offset future taxable income tax expiring through 2019.

At December 31, 1999, the Company has a deferred tax asset of approximately $1,286,000 representing the benefits of its net operating loss carryforward and a deferred tax asset of $1,781,000 from temporary differences, principally
stock options not currently deductible and certain operating expenses which have been capitalized as start-up costs for federal income tax purposes.  The total of these deferred tax assets has been fully reserved by a valuation allowance since realization
of their benefit is uncertain.

A reconciliation between the actual income tax benefit and income taxes computed by applying the federal income tax rate of 34% to the net loss is as follows:



|                                                                                                                                         | Year EndedDecember 31,
  1999     1998                  
|---------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------
|Computed federal Income tax benefit at 34% rate
State tax benefit, net of federal tax benefit
Nondeductible expenses
Valuation allowance | $  (1,627,000
(253,000)
202,0001,678,000
$             0

Note E - Accounts Payable and Accrued Expenses
At December 31, 1999, accounts payable and accrued expenses consist of the following:



|Professional fees (Note C[2])
Trade payables | $   31,00073,000
|-------------------------------------------- | ----------------
|                                             | $  104,000      

Note F - Loan Payable

During 1998, the Company purchased a vehicle that is intended to be used as a prototype.  The vehicle is collateral for the loan.  The loan is payable in monthly installments of principal and interest (at 10.13% per annum) of
approximately $610 through March 2003.

|F-9
|---



-25-



TORVEC, INC.(a development stage company)Notes to Financial Statements
December 31, 1999Note F - Loan Payable  (continued)

At December 31, 1999 the net book value of the prototype vehicle was approximately $20,000.

Note G - Stockholders' Equity[1]    Private placement:

On May 11, 1998 the Company initiated a private placement of its common stock at $5.00 per share.  On September 21, 1998 the Company increased the offering price to $10.00 per share.  The Company yielded net proceeds of
$1,230,000 (of which $507,000 was received from the Gleasman family), $758,000, $1,068,000 and $331,000 from private placements for the years ended December 31, 1999, 1998 and 1997 and for the period ended December 31, 1996, respectively.

[2]    Consultant:

In February 1997, the Company entered into a three-year agreement with a consultant (the 'Consultant') whereby the Consultant will provide financial consulting services and assistance in obtaining financing as well as other
services.  In consideration thereof, employees of the Consultant received an aggregate of 1,000,000 shares of common stock for $50.  The Company valued the shares of common stock at $1.50 per share.

In April 1997, the Company granted an aggregate of 500,000 warrants to five employees of the Consultant.  The warrants are exercisable into common stock at the initial public offering (the 'IPO') price and are exercisable for
five years from the date the Company's IPO is declared effective ('warrant term').  However, if fifty percent or more of either the Company's assets or its common stock is acquired by another entity or group during the warrant term, the exercise price
shall be $1.50.  The Company will record a charge to operations representing the fair value of the warrants when the IPO is declared effective.

On February 10, 1999, the Company entered into a one-year agreement with two consultants to provide financial and public relation services.  In connection therewith, 375,000 of previously granted warrants were cancelled and the
Company granted 375,000 options at an exercise price of $5.00 exercisable immediately through February 10, 2004.  The underlying shares will have registration rights.  The Company valued these options at $2,780,000 using the Black-Scholes Option
pricing model with the following weighted average assumptions for the year ended December 31, 1999; risk free rate of 5%, dividend yield 0%, volatility 40% and expected life for options granted of 10 years.  These options will be charged to operations
over the term of the consulting agreement.  In February 1999, 21,00 of such options were exercised.



|F-10
|----





-26-

[3]    Stock option plan:

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 generally vest over five years.

In connection with certain consulting agreements (see Note C[1]) the Company granted an aggregate of 75,000 nonqualified options to purchase common stock under the Plan at an exercise price of $5.00 per share.  The options vest 20%
per annum and are exercisable through November 30, 2007.  At December 31, 1999, 30,000 options are exercisable.  The Company valued these options at $234,000 using the Black-Scholes Option pricing model with the following weighted average
assumptions for the year ended December 31, 1997:  risk-free interest rate of 5.91%, dividend yield 0%, volatility 40% and expected life for options granted of 10 years.  The options are being amortized over the term of the consulting agreements.

In connection with employment agreements which commence upon the date the IPO is declared effective (see Note H[2]), the Company granted 380,000 options under the Plan at an exercise price of $5.00 per share.  The options are
exercisable for a period of ten years from January 1, 1998 and vest 20% per annum.  The Company will record a charge to operations representing the fair value of the options when the IPO is declared effective.

At December 31, 1999, the weighted average exercise price of the outstanding options was $5.00 and the weighted average remaining life was 8 years.

At December 31, 1999, 1,545,000 options were available under the Plan.

[4]    Business consultant stock plan:

On June 1999, the Company adopted the Business Consultant Stock Plan (the 'Stock Plan').  The plan provides for up to 200,000 shares of common stock to be issued from time to time to consultants in exchange for services.

For the year ended December 31, 1999, 45,351 shares were issued to consultants in exchange for services and amounts owed to these consultants.  The exchange was valued at the market value of the shares at the date of issuance.  The
Company issued 42,501 additional shares through March 14, 2000.

[5]    Noncash transaction:

During 1998, the Company granted 1,000 shares of common stock, valued at $3.00 per share, for services provided.  During 1997, the Company granted 12,000 and 2,000 shares of common stock for services provided.  The Company valued
the shares at their fair value of $1.50 and $3.00 per share, respectively.



|F-11
|----





-27-

TORVEC, INC.(a development stage company)Notes to Financial Statements
December 31, 1999Note H - Commitments and Other Matter[1]    Lease:

In January 1998 the Company entered into an agreement with a stockholder/landlord, as amended to be effective upon the completion of the Company's private placement, to lease land and a building for one year at $52,500 per
month.  The agreement also provided for the right to purchase of land adjacent to the leased premises for one year after the effective date of the lease for $350,000.

The Company paid approximately $164,000 representing the first month's rent and rent deposits.  On August 31, 1999, the Company and the stockholder terminated the lease agreement.  The terminated noted that the first and last
monthly payments previously paid by the Company constitute the total payment required to be made.  As a result, the $164,000 was charged to operations during 1999.

[2]    Employment agreements:

The Company has entered into three employment agreements with stockholders for a period of three years, commencing on the first day of the month in which the Company receives the proceeds from an IPO.  Two agreements each provide
for salaries of $150,000 per year.  The third agreement provides for a salary of  $240,000 in the first year, $252,000 in the second year and $264,000 in the third year and provides for a minimum bonus of $15,000 per quarter for the duration of the
agreement.

[3]    Arbitration:

During 1997 certain members of the Gleasman family were named in a lawsuit seeking monetary damages relating to the development of certain technology and related matters.  The court stayed all aspects of the litigation and directed
that the parties arbitrate such matters in dispute.  The arbitration proceedings were conducted during 1998 and a decision on this matter was rendered in April 1999.  The arbitrator issued a nonappealable decision which determined that the Gleasmans
exclusively owned all the patents and the patents are exclusive patents of the Company.  The arbitrator's decision also awarded the sum of $863,000 to be paid to McElroy Manufacturing, Inc. ('McElroy') by the Gleasmans out of royalties which they may
receive and awarded McElroy a 20% interest in all royalties and other sums received by the Gleasmans.  The Company was not a party to the arbitration.

In June 1999, McElroy filed an amended complaint in the United States District Court for the Northern District of Oklahoma seeking correction of the inventorship of the subject patents and that the Gleasmans immediately reimburse
McElroy for its expense in the amount of $863,000 plus interest.  In addition McElroy has demanded that Torvec pay out of proceeds generated by the sale of its stock the sums demanded of the Gleasmans.

Management of the Company believes that certain demands made by McElroy upon the Company constitute a complete misreading of the arbitrator's decision and are without merit since the contract was between the Gleasmans and McElroy, the
Company did not participate in the arbitration proceedings and that the arbitrator's decision did not direct payment of any sums from the Company to McElroy.

Should the Company's position not prevail, it would have a significant adverse effect on the Company's financial position and results of operations.  No provision for such contingency has been made in the financial statements.

|F-12
|----







-28-

Item 8.

None

PART III

Item 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;                 COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

(a)     Identification of Directors, Executive Officers And Consultants

The following table sets forth certain information about the current directors, executive officers of the Company and its consultants.

|Name                                                                                      | Age | Position                                           | Date of Electionor Designation | Date of Terminationor Resignation
|----------------------------------------------------------------------------------------- | --- | -------------------------------------------------- | ------------------------------ | ---------------------------------
|Herbert H. Dobbs
448 West Maryknoll Road
Rochester Hills, MI  48309                       | 68  | Chairman of the Board                              | 02/20/98                       | *                                
|Keith E. Gleasman
11 Pond View Drive
Pittsford, NY  14534                                 | 52  | Director; President and
Consultant to Torvec,
Inc. | 02/26/96                       | *                                
|Lee E. Sawyer
16 Williamsburg Lane
Rolling Hills, CA  90274                               | 58  | Director                                           | 09/27/96                       | *                                
|Morton A. Polster
c/o Eugene Stephens & Associates
56 Windsor Street
Rochester, NY  14605 | 72  | Director, Secretary of
Torvec, Inc.                | 09/27/96                       | *                                
|James A. Gleasman
11 Pond View Drive
Pittsford, NY  14534                                 | 59  | Director; Consultant to
Torvec, Inc.               | 02/20/98                       | *                                
|Vernon E. Gleasman
11 Pond View Drive
Pittsford, NY  14534                                | 88  | Consultant to Torvec, Inc.                         | 12/01/97                       | *                                
|Samuel M. Bronsky
6653 Main Street
Williamsville, NY  14221                               | 38  | Chief Financial Officer                            | 04/01/98                       | *                                

*Changes in Control

To the knowledge of the Company's management, there are no present arrangements or pledges of the Company's Common Stock which may result in a change of control of the Company.  The members of the Board of
Directors shall serve until the next annual meeting of shareholders and until their successors are elected or appointed and shall have qualified, or until their prior resignation or termination.

|
|



-29-

(b)     Business Experience

The following sets forth the business experience of the members of the Company's Board of Directors, its executive officers and other significant Company personnel:

|1. | Dr. Herbert H. Dobbs - Chairman of the Board of Directors
Dr. Dobbs, Ph.D., P.E., has worked at every level from design engineer to technical director of an Army Major Commodity Command at the two-star level.  He has worked as a hands-on engineer and scientist in industry and government, commanded field units,
managed Army R & D programs and laboratories and currently has his own practice as a consultant engineer.  He has the broad background needed to guide the Company's growth and development.
During his career he has:

Worked as a manufacturing engineer.
Worked as a design engineer in the aircraft and missile industry.Managed Army laboratories as a captain, lieutenant colonel and colonel.
Organized, implemented and operated the theater-wide 'Red Ball Express' quick response supply system in Vietnam to get disabled weapons and other critical equipment repaired and back into combat as rapidly as possible.
Done basic research on multi-phase turbulent fluid dynamics supporting development of the gas turbine primary power system now used in the M1 Abrams Main Battle Tank (MBT).
Managed advanced development of the laser guided 155mm-artillery shell now known as the 'Copperhead'.
Served in Taiwan as a member of the U.S. Military Assistance Advisory Group (MAAG) working with the Republic of China Army General Staff.
Served as liaison officer between the Army and Air Force for development of the laser seeker for the Hellfire missile.
Guided development of a new family of tactical vehicles for the Army, including the High Mobility Multipurpose Wheeled Vehicle (HMMWV) now known as the 'Hummer', which uses Vernon Gleasman's Torsen® differential.Served as Technical Director of U.S. Army Tank-Automotive Command (TACOM), which employs some 6,400 people and is responsible for all support of U.S. military ground vehicles (a fleet of 440,000) from development to ultimate disposal with a budget of
nearly $10 billion a year. He was also responsible for negotiation and management of military automotive R&D agreements with the French and German Ministries of Defense.At the end of 1985, Herbert H. Dobbs left government service and started his own consulting practice and began working with the Gleasmans to develop and market Vernon Gleasman's inventions.  Herbert H. Dobbs holds a Ph.D. in Mechanical Engineering from
the University of Michigan and is a registered professional engineer in Michigan.  He holds several patents of his own and, among many affiliations, is a member of SAE, ASME, NSPE, AAAS, Sigma XI, AUSA, ADPA and the U.S. Army Science Board.  The last named
organization is a small group of senior technical and managerial people chosen from industry and academia to provide direct advice to the Secretary of the Army, the Chief of Staff, and the Department of the Army concerning issues of policy, budgets,
doctrine, organization, training and technology.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



- 30 -

|2. | Keith E. Gleasman - Director; President and Consultant to Torvec, Inc.Co-Inventor with Vernon E. Gleasman on all Torvec patents, Mr. Gleasman's strengths include his extensive marketing and sales executive experience, in addition to his design and development knowledge.  His particular expertise has
been in the area of defining and demonstrating the products to persons within all levels of the automotive industry, race crew members, educators and students.

As Vice President of Sales for Gleason Corporation (Power Systems Division), designed and conducted seminars on vehicle driveline systems for engineers at the U.S. army tank automotive command.
Designed a complete nationwide after-market program for the Torsen Differential, which included trade show participation for the largest after-market shows in the U.S.,SCORE and SEMA.Extensive after-market experience including pricing, distribution, sales catalogs, promotions, trade show booths designs and vehicle sponsorships.
Responsible for over 300 articles in trade magazines highlighting the Torsen Differential (e.g., Popular Science, Auto Week, Motor Trend, Off-Road, and Four Wheeler).
Designed FasTrack(tm)  vehicle prototype, (from concept to asssembly).
Assisted in developing  engineering and manufacturing procedures for the Torsen Differential and for all of the Torvec prototypes.
Instructed race teams on use of the Torsen Differential (Indy cars, Formula 1, SCCA Trans-Am, IMSA, GTO, GTU, GT-1, NASCAR, truck pullers and off-road racers).
Has been trained for up-to-date manufacturing techniques such as NWH,  statistical process control and MRP II.Mr. Gleasman has extensive technical and practical experience, covering all aspect of the Company's products such as, promotion, engineering and manufacturing.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Morton A. Polster - Director; Secretary of Torvec Inc.
Partner in the intellectual property law firm of Eugene Stephens & Associates. Formerly, General Patent Counsel and, thereafter, Secretary and Corporate Counsel for Gleason Corporation (1969 - 1989) and prior to that, Patent Counsel for Eastman Kodak
Corporation (1960 1969).  While with Gleason Corporation, Mr. Polster represented Gleason when the latter purchased the Gleasman's Triple D, Inc., and exclusive rights to the Gleasman patents relating to the design and manufacture of the Torsen differentiael Kiki, Ltd. of Japan (now Zexel Corporation).  While in private practice, since 1989, Mr. Polster represented Zexel Torsen, Inc., (subsidiary of Zexel Corp.), which was created to manage the manufacture and sale of Torsen Differentials.  Mr. Polster has
been patent counsel to the Gleasmans since 1989 and has been in charge of the preparation and execution of their U.S. and international patent protection.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



- 31 -



|4. | Lee E. Sawyer - DirectorOver a 30-year career in the wholesale side of the automotive industry, Mr. Sawyer has worked for Ford in the technical training field and for Toyota in sales, marketing, motorsports and service.  During the last ten years, he was
part of the start-up teams that successfully launched Hyundai and Kia Motors America focusing on parts, service, quality assurance, fleet sales, public relations and consumer affairs policy, procedures and systems.   During his career he has worked with the
sFord Motor Company:

As Ford's first field service engineer.Managed expanded Training Center with Ford, Lincoln-Mercury car and heavy truck classrooms, and taught Ford Shelby high performance curriculum.Toyota Motor Sales USA:

Established 12 service Training Centers.Computerized the national warranty system and established an expense control audit program.Managed sales, parts and service field force during a period in which sales increased 300%In 1979, introduced the Torsen® differential to ToyotaStarted Motorsports - hired factory race teams, coordinated race engine development, and conducted Long Beach Grand Prix and Pro-Celebrity Match Race.  Results: 14 national championships.Hyundai Motor America:

Started national Service Department: warranty, quality assurance, consumer affairs, technical and management training.Managed public relation's activities, product introduction press previews, press releases and media interviews.Kia Motors America:

Consulted with Kia Korea re: establishing a car company in the USA.Started service department: warranty, quality assurance, consumer affairs, service training and publication.Mr. Sawyer is a start-up specialist with the operations, management, communications and problem solving skills required to launch the Company successfully.  He holds a B.A. in Industrial Technology and attended USC School of
Business-International Relations, Ford Marketing Institute, Toyota Management Training, American Management Association Training, Interpersonal skills training, and U.S. Coast Guard Leadership and Diesel Engine schools.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



- 32 -

5.   James A. Gleasman - Director; Consultant to Torvec, Inc.

- Life-long entrepreneur.
- Skilled in management, finance, strategic planning, organizing and marketing.
- Co-inventor of the Gleasman GSD-10 steer drive.
- Established manufacturing of the Torsen® Differential in Argentina, Brazil, etc.
- Principal at two of the family companies, raised capital, negotiated international, military and automotive contracts.
- Set business strategies for small company's dealings with large companies, including sale of family company to Gleason Corp., New York.
- Joint venture partner with Clayton Brokerage Co. of St. Louis, MO.
- Owned financial-consulting business.
- Negotiated with numerous Asian Corporations (including Mitsubishi and Mitsui).
- Educated in Asian philosophy, business practices and culture.

6.   Samuel M. Bronsky - Chief Financial Officer

Owner of a Certified Public Accounting firm specializing in small to medium-sized businesses.  Services include audits, reviews, compilations, and consulting services, including among other items, business valuations, computer
applications, assisting in debt acquisition and consolidation, purchasing and selling of businesses and related tax ramifications, and general business assistance for clients.  In addition, Mr. Bronsky has worked with various government agencies in a
variety of

7.   Vernon E. Gleasman - Consultant to Torvec, Inc.

Mr. Gleasman is co-inventor (with sons, James A. and Keith E. Gleasman) of the all-gear GSD-10 (a hydro-mechanical steering system for track vehicles); conceived and engineered the FasTrack(tm) vehicle (discussed below); and is
inventor of the Torsen® differential now used in many passenger automobiles around the world such as: Porsche, Audi Quattro's, 8 car lines of Toyota (i.e., Lexus, Supra and RAV4), Mazda Miata and RX7, Chevrolet Camero, Pontiac Firebird, Oldsmobile
Achieva,
).  Mr. Gleasman was the winner of the Society of Automotive Engineers' 1983 Schwitzer Award for Most Innovative New Product at the Indianapolis 500; is listed in Who's Who in American Inventors 1990 Edition; and he has been nominated to the National
Inventors Hall of Fame.  His work is featured in the Theory of Machines and Mechanisms, McGraw-Hill, 1995 (Mr. Gleasman's Torsen® Differential is pictured on the jacket cover).  He has been granted over 20 patents on gearing, differentials, and machi
 is the principal inventor on over 100 U.S. patents (as well as corresponding foreign patents), primarily automotive-related.  Examples (U.S. patent numbers in parenthesis): hydraulic clutch transmission (2177213); hydraulic clutch for transmission
(2226309); Bendix fuel direct engine injector valve and Bendix diesel engine starter (2450129); hydraulic variable-speed hydrostatic transmission (2471031); Vane-type fluid drive (2552167), hypoid differential (2628508); fluid transmission (2668417);
White Motor
White Motor; hydro-vector fuel-injector advance mechanism; catalytic converter for diesel trucks.  He is also the inventor of non-freeze water meter, machine tools and other products.  Early career: engineer at Bendix; and vice president manufacturing at
White Motor, where engineering and management experience included designing and planning White's plant for manufacture of White 9000 heavy truck and organizing manufacturing and production of aircraft components for White's Aircraft division. Later, Mr.
Gle
ing Triple-D, Inc., sold to Gleason Corporation, Rochester, New York.





- 33 -

(c)     Family Relationships

Vernon E. Gleasman is the father of James A. and Keith E. Gleasman.  There are no other family relationships between any directors or executive officers of the Company, either by blood or by marriage.

(d)     Certain Proceedings Involving Certain Shareholders

1.     On August 29, 1997, McElroy Manufacturing, Inc. of Tulsa, Oklahoma, and two MMI employees (collectively 'MMI'), initiated a lawsuit against Vernon and Keith Gleasman
in the United States District Court for the Northern District of Oklahoma.  The Company is not a party to this litigation.  The plaintiffs seek money damages against the Gleasmans in the amount of $750,000 representing amounts MMI allegedly contributed to
the development of hydraulic pump/motor prototypes and also allege that the two MMI employees should have been named as co-inventors on three patents.

In responding to the MMI complaints, the Gleasmans requested dismissal of the complaint on the grounds that the claims relate to an Agreement dated October 10, 1991, entered
into by MMI and the Gleasmans under which the parties agreed to arbitrate 'any controversy or claim arising out of or relating to this Agreement.'  The Gleasmans also requested dismissal of the complaint on the additional grounds that the two individuals
were not co-inventors and, even if they were, that pursuant to the  Agreement the individuals and MMI assigned any and all interest they may have had in such patents and prototypes to the Gleasmans.

On February 6, 1998, the Court stayed all aspects of the litigation pending arbitration in New York State.  In the opinion of the Gleasmans, MMI's claims are without merit.

As indicated above, the Company is not a party to this MMI litigation.  The litigation sets forth claims which do not effect the validity of the patents, but could impact the
Company's exclusive ownership of three patents listed among the future products of the Company, namely the hydraulic pump and motor, constant velocity joint, and  spherical gearing thus, enabling MMI to commercialize such patents.  The claims are based
upon the allegations that (1) the products were not included within the Agreement between the parties and therefore not assigned to the Gleasmans which fact is disputed by the Gleasmans and is one of the subjects of the arbitration, and (2) the
plaintiffs are co-inventors of the invention with the Gleasmans.

Hearings were conducted before the arbitrator in 1998.  On April 22, 1999, the arbitrator issued a nonappealable decision which determined that Vernon and Keith Gleasman
exclusively owned all three patents, thereby confirming that these patents, which were assigned by them to Torvec, are the exclusive patents of the Company.  The arbitrator's decision also awarded the sum of $862,699.61 to be paid to McElroy
Manufacturing, Inc. ('McElroy') by the Gleasmans out of royalties which they may receive and awarded McElroy a 20% interest in all royalties and other sums received by the Gleasmans, the payment of such amounts to be due only as, if and when, royalties
are paid to the Gleasmans.  The Company was not and is not a party to the arbitration.

On June 3, 1999, McElroy, by letter addressed to the Gleasmans' personal counsel, demanded that the Gleasmans reimburse McElroy immediately for its expenses in the amount of
$862,699.61, plus interest, to be paid from any monies received by the Gleasmans on account of the subject patents including, but not limited to, 20 % of all royalties or  monies received by the Gleasmans from the sale of shares of stock in the Company.
Further, McElroy demanded that the Gleasmans correct inventorship of the subject patents by requesting the Commission of Patents & Trademarks to issue a Certificate of Correction adding A.H. 'Chip' McElroy, II and Dave Porter as co-inventors on the
subject patents.  While correction of inventorship was not addressed in the decision, such correction, if appropriate, is desirable and possible, and can be accomplished by application to the Commissioner of Patents and Trademarks.  They do not contest
the arbitrator's determination that the patents were assigned to the Gleasmans and are now owned by Torvec.  In addition, McElroy has demanded that Torvec pay, out of proceeds generated by sale of its stock,  the same sums demanded of the Gleasmans and
notify any licensee, assignee or investor of McElroy's right to recover expenses and its 20% interest in monies received on account of the subject patents.

On June 15, 1999, McElroy filed its amended complaint in the United States District Court for the Northern District of Oklahoma.  There were two causes of action.  The first
cause of action seeks correction of the inventorship of the subject patents.   The second cause of action seeks an order confirming the arbitrator's award and, in addition, seeks an order directing that the Gleasmans reimburse McElroy immediately for its
expenses in the amount of $862,699.61 plus interest accruing from the date of the arbitrator's award.



- 34 -

Management of the Company believes that the demands made by McElroy upon the Company constitute a complete misreading of the arbitrator's decision and are without merit
procedurally as well as substantively, since among other reasons, the contract was between the Gleasmans and McElroy, the Company did not participate in the arbitration proceedings and that the arbitrator's decision did not direct payment of any sums from
Torvec to McElroy.

Should the Company's position not prevail it would have a significant adverse effect on the Company's financial position and results of operations.  No provision for such
contingency has been made in the accompanying financial statements.

2.     In 1993, James A. Gleasman, after a significant reduction in income, suffered financial reverses and filed for protection under Chapter 11 of the United States Bankruptcy
Code in United States Bankruptcy Court for the Western District of Texas.  The reorganization was completed within 14 months and all allowed claims were paid in full.

(e)     Section 16(a) Beneficial Ownership Reporting  Compliance

Based upon its review of copies of Forms 3 and 4 and 5 received by it, the Company believes that, to the extent such Forms were required to be filed, such Forms were timely filed pursuant to Section
16 of the Securities Exchange Act of 1934, and that no director, officer and/or 10% Shareholder required to file such Forms failed to either file them or file them in timely fashion.

Item 10.     EXECUTIVE COMPENSATION

Summary Compensation Table

The  following table sets forth the aggregate compensation paid or accrued to the Company's Named Executive Officers and Consultants by the Company for services rendered during the fiscal year ending December 31, 1999:



|                                           | AnnualCompensation | Long TermCompensation Awards
|------------------------------------------ | ------------------ | ----------------------------
|Name and Position                          | Salary             | Consultants Fee             
|Keith E. Gleasman
President and Consultant | $0                 | $66,000(1)(4)               
|James A. Gleasman
Consultant               | $0                 | $35,000(2)(4)               
|Vernon E. Gleasman
Consultant              | $0                 | $60,000(3)(4)               
|Morton A. Polster
Consultant               | $0                 | $ 0(5)                      

(1)     On December 1, 1997,  the Company entered into a 3 year consulting agreement with Keith E. Gleasman, under which he is obligated to devote substantially all of his business and professional
time to the Company and its Plan of Operation in the capacity of Consultant to the Company.  Under such agreement, Mr. Keith E. Gleasman shall receive an annual consulting fee of $150,000 and was granted an option to purchase 25,000 shares of the
Company's Common Stock pursuant to the Company's 1998 Stock Option Plan.  The Company accrued $84,000 in 1999 under this Agreement.

(2)     On December 1, 1997,  the Company entered into a 3 year consulting agreement with James A. Gleasman, under which he is obligated to devote substantially all of his business and professional time to the
Company and its Plan of Operation in the capacity of Consultant to the Company.  Under such agreement, Mr. James A. Gleasman shall receive an annual consulting fee of $150,000 and was granted an option to purchase 25,000 shares of the Company's
Common Stock pursuant to the Company's 1998 Stock Option Plan.  The Company accrued $115,000 in 1999 under this Agreement.



- 35 -

(3)      On December 1, 1997,  the Company entered into a 3 year consulting agreement with Vernon E. Gleasman, under which he is obligated to devote substantially all of his business and professional time to the
Company and its Plan of Operation in the capacity of Consultant to the Company.  Under such agreement, Mr. Vernon Gleasman shall receive an annual consulting fee of $150,000 and was granted an option to purchase 25,000 shares of the Company's Common
Stock pursuant to the Company's 1998 Stock Option Plan.  The Company accrued $90,000 in 1999 under this Agreement.

(4)     Each of the consulting agreements contain customary covenants prohibiting the consultant from disclosure of confidential information regarding the Company, its inventions and its products, and provisions
confirming that all inventions conceived, made or developed by the consultant and relating to the business of the Company constitutes the sole property of the Company. Each of the consulting agreements contains covenants restricting the consultant from
engaging in any activities competitive with the business of the Company during the terms of such agreements and for a period of two years after termination.  Each of the consulting agreements also contain a provision that the benefits provided thereunder
continue even if the consultant were to become unable to perform services for the Company during its term.

(5)     On February 6, 1998, the Company entered into a 3 year employment agreement with Morton A. Polster, commencing on the first day of the month in which the Company receives the proceeds from the completion
of an initial public offering of its securities, under which he is obligated to devote substantially all of his business and professional time to the Company and its Plan of Operation in the capacity as Secretary and Legal and Patent Counsel of the
Company.  Under such agreement, Mr. Polster is entitled to receive a salary of $150,000 during the first year of the agreement, $150,000 during the second year and $150,000 during the  last year.  He is also entitled to certain employee benefits
normally associated with employment such as vacation, health and disability insurance and was granted an option to purchase 100,000 shares of the Company's Common Stock pursuant to the Company's 1998 Stock Option Plan.  The agreement is automatically
renewable for an additional 3 years and may be terminated earlier by the employee upon 12 months notice or by the Company upon payment of a severance of 12 months base pay, except if the termination is for cause.  Since the Company has not initiated an
initial public offering, the employment agreement, by its terms, has not become effective.

(6)     During fiscal year 1999, Mr. Polster was paid 6,231 shares of the Company's common stock as remuneration for legal services rendered to the Company in connection with its patents.

Herbert H. Dobbs is Chairman of the Company's Board of Directors.  Lee E. Sawyer is a Director of the Company.  Durings its fiscal year ending December 31, 1999, the Company did not renumerate either of
them in such capacities.

On February 6, 1998, the Company entered into a 3 year employment agreement with Herbert H. Dobbs, commencing on the first day of the month in which the Company receives the proceeds from the completion of
an initial public offering of its securities, under which he is obligated to devote substantially all of his business and professional time to the Company and its Plan of Operation in the capacity as Chairman and Chief Executive Officer of the Company.
Under such agreement, Herbert H. Dobbs is entitled to receive a salary of $150,000 during the first year of the agreement, $150,000 during the second year and $150,000 during the last year.  He is also entitled to certain employee benefits normally
associated with employment such as vacation, health and disability insurance and was granted an option to purchase 100,000 shares of the Company's Common Stock pursuant to the Company's 1998 Stock Option Plan.  The agreement is automatically renewable for
an additional 3 years and may be terminated earlier by the employee upon 12 months notice or by the Company upon payment of a severance of 12 months base pay, except if the termination is for cause. Since the Company has not initiated an initial public
offering, the employment agreement, by its terms, has not become effective.

On February 6, 1998, the Company entered into a 3 year employment agreement with Lee E. Sawyer, commencing on the first day of the month in which the Company receives the proceeds from the completion of an
initial public offering of its securities, under which he is obligated to devote substantially all of his business and professional time to the Company and its Plan of Operation in the capacity as President and Chief Operating Officer of the Company.
Under such agreement, Mr. Sawyer is entitled to receive a salary of $240,000 during the first year of the agreement, $252,000 during the second year and $264,000 during the last year and a minimum bonus of $15,000 per quarter during the agreement's
term, with bonus increases determined by the Board of Directors depending upon such factors as performance, profitability and the financial condition of the Company.  He is also entitled to certain employee benefits normally associated with employment
such as vacation, health and disability insurance and was granted an option to purchase 180,000 shares of the Company's Common Stock pursuant to the Company's 1998 Stock Option Plan.  The agreement is automatically renewable for an additional 3 years and
may be terminated earlier by the employee upon 12 months notice or by the Company upon payment of a severance of 12 months base pay and minimum bonus, except if the termination is for cause. Since the Company has not initiated an initial public
offering, the employment agreement, by its terms, has not become effective.

Each of the employment agreements contain customary covenants prohibiting the employee from disclosure of confidential information regarding the Company, its inventions and its products, and provisions
confirming that all inventions conceived, made or developed by the employee and relating to the business of the Company constitutes the sole property of the Company. Each of the employment agreements contains covenants restricting the employee from
engaging in any activities competitive with the business of the Company during the terms of such agreements and for a period of two years after termination.  Each of the employment agreements also contain a provision that the benefits provided thereunder
continue even if the employee were to become unable to perform services for the Company during its term.









- 36 -

Option/SAR Grants in Last Fiscal Year



The following table sets forth certain information for the Named Executive Officers as well as the Company's Consultants with respect to the grant of options to purchase Common Stock during the fiscal year
ended December 31, 1999.



|                   |                                  |                                  |                |                
|------------------ | -------------------------------- | -------------------------------- | -------------- | ---------------
|Name               | Shares UnderlyingOptions Granted | % of OptionsGranted to Employees | Exercise Price | Expiration Date
|Keith E. Gleasman  | 0                                | 0%                               | 0              | 0              
|James A. Gleasman  | 0                                | 0%                               | 0              | 0              
|Vernon E. Gleasman | 0                                | 0%                               | 0              | 0              
|Morton A. Polster  | 0                                | 0%                               | 0              | 0              
|Herbert H. Dobbs   | 0                                | 0%                               | 0              | 0              
|Lee E. Sawyer      | 0                                | 0%                               | 0              | 0              







Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values



The following table sets forth certain information for the Named Executive Officers as well as the Company's Consultants with respect to the exercise of options to purchase Common Stock during the fiscal
year ended December 31, 1999 and the number and value of securities underlying unexercised options held by the Named Executive Officers as well as the Company's Consultants as of such date.





|                   | Shares
Acquiredon Exercise | ValueRealized | Number of Unexercised
Options atDecember 31, 1999 | Value of Unexercised
In-the-Money Optionsat December 31, 1999(l)
|------------------ | -------------------------- | ------------- | ------------------------------------------------- | ----------------------------------------------------------------
|Name               |                            |               | Exercisable                                       | Unexercisable                                                   
|                   |                            |               |                                                   |                                                                 
|Keith E. Gleasman  | 0                          | 0             | 15,000                                            | 10,000                                                          
|James A. Gleasman  | 0                          | 0             | 15,000                                            | 10,000                                                          
|Vernon E. Gleasman | 0                          | 0             | 15,000                                            | 10,000                                                          
|Morton A. Polster  | 0                          | 0             | 60,000                                            | 40,000                                                          
|Lee E. Sawyer      | 0                          | 0             | 108,000                                           | 72,000                                                          
|Herbert H. Dobbs   | 0                          | 0             | 60,000                                            | 40,000                                                          















- 37 -

1998 Stock Option Plan

On December 1, 1997, the Company's Board of Directors adopted the Company's 1998 Stock Option Plan pursuant to which officers, directors, key employees and/or consultants of the Company may be granted
incentive stock options and/or  non-qualified stock options to purchase up to an aggregate of 2,000,000 shares of the Company's Common Stock.  On May 27, 1998, the Company shareholders approved the 1998 Stock Option Plan.  On December 17, 1998, the
Company registered the shares reserved for issuance under the 1998 Stock Option Plan under the Securities Act of 1933.

With respect to incentive stock options, the Plan provides that the exercise price of each such option must be at least equal to 100% of the fair market value of the Common Stock on the date that such
option is granted (110% of fair market value in the case of shareholders who, at the time the option is granted, own more than 10% of the total outstanding Common Stock), and requires that all such options have an expiration date not later than the date
which is one day before the tenth anniversary of the date of the grant of such options (or the fifth anniversary of the date of grant in the case of 10% shareholders).  However, in the event that the option holder ceases to be an employee of the Company,
such option holder's incentive options immediately terminate.  Pursuant to the provisions of the Plan, the aggregate fair market value, determined as of the date(s) of grant, for which incentive stock options are first exercisable by an option holder
during any one calendar year cannot exceed $100,000.

With respect to non-qualified stock options, the Plan permits the exercise price to be less than the fair market value of the Common Stock on the date the option is granted and permits Board discretion with
respect to the establishment of the terms of such options.  Unless the Board otherwise determines, in the event that the option holder ceases to be an employee of the Company, such option holder's non-qualified options immediately terminate.

In connection with their employment agreements, the Company's Board of Directors granted stock options under the 1998 Stock Option Plan to the Company's Named Executive Officers entitling them to purchase
an aggregate of 380,000 shares of Common Stock, all of which provide for an exercise price of $5.00 per share, are exercisable on a cumulative basis at the rate of 20% per year beginning on January 1, 1998 and provide that the right to exercise the option
in accordance with its terms shall survive the executive's termination of employment.  Each option expires on December 31, 2007.  In connection with their consulting agreements, the Board of Directors granted stock options under the 1998 Stock Option Plan
to the Company's consultants entitling them to purchase an aggregate of 75,000 shares of Common Stock, all of which provide for an exercise price of $5.00 per share, are exercisable on a cumulative basis at the rate of 20% per year beginning on December
1, 1997 and provide that the right to exercise the option in accordance with its terms shall survive the consultant's termination of services.  Each option expires on November 30, 2007.

No options were granted under the Company's 1998 Stock Option Plan during the fiscal year ending December 31, 1999.  No options granted under the Plan were exercised during fiscal year ended December 31, 1999
 .

Business Consultants Stock Plan

On June 2, 1999, the Company created a Business Consultants Stock Plan and reserved 200,000 shares of the Company's $.01 par value common stock, which may be issued from time to time to business
consultants and advisors who provide bona fide services to the Company, provided that such services are not in connection with the offer or sale of securities of the Company in a capital raising transaction and do not directly or indirectly promote or
maintain a market for the Company's securities.

With respect to the actual issuance by the Company of shares for services rendered in accordance with the terms of the Plan, the per share value of such shares is equal to the closing price for the
Company's common stock on a date which is one business day immediately prior to the issuance of the shares as quoted in the over-the-counter market (OTCBB).

The Company registered the 200,000 shares reserved for issuance under the Business Consultants Stock Plan under the Securities Act of 1933, and the Registration Statement became effective on June 11, 1999.  By virtue of
such registration, business consultants, who are not affiliates of the Company, may immediately sell such shares in open market transactions without securities law restrictions.

For the fiscal year ending December 31, 1999, the Company issued 45,351 shares of common stock under the Business Consultants Stock Plan.  The Company has issued 42,501 additional shares through March 14, 2000 under the Plan
 .





- 38 -

Item 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

(a)     Security Ownership

The following table sets forth as of December 31, 1999 certain information with respect to the beneficial ownership of the Common Stock of the Company by (i) each
person known by the Company to own more than 5% of the outstanding shares of the Common Stock of the Company, each director, each executive officer, each consultant and (ii) all directors, executive officers and named consultants of the Company as a
group.  Unless otherwise indicated, the owners have sole voting and investment power with respect to their respective shares.

|Name and Address of     Beneficial Owner                                                        | Position                                           | Number ofShares Owned(1) | Percent ofShares Owned
|----------------------------------------------------------------------------------------------- | -------------------------------------------------- | ------------------------ | ----------------------
|Herbert H. Dobbs
448 West Maryknoll Road
Rochester Hills, Michigan  48309                       | Chairman of the Board of 
Directors                | 440,000(2)               | 2.08%                 
|Keith E. Gleasman
11 Pond View Drive
Pittsford, New York  14534                                 | Director; President and
Consultant to Torvec, Inc. | 5,518,979(3)             | 26.21%                
|Lee E. Sawyer
16 Williamsburg Lane
Rolling Hills, California  90274                             | Director                                           | 393,000(4)               | 1.85%                 
|Morton A. Polster
c/o Eugene Stephens & Associates
56 Windsor Street
Rochester, New York  14605 | Director; Secretary of
Torvec, Inc.                | 321,831(5)               | 1.52%                 
|James A. Gleasman
11 Pond View Drive
Pittsford, NY  14534                                       | Director; Consultant
to Torvec, Inc.               | 5,504,608(6)             | 26.14%                
|Vernon E. Gleasman
11 Pond View Drive
Pittsford, NY  14534                                      | Consultant to Torvec, Inc.                         | 5,503,133(7)             | 26.13%                
|Samuel M. Bronsky
6653 Main Street
Williamsville, NY  14221                                     | Chief Financial Officer                            | 1,000                    | Less Than 1%          
|All Executive Officers
and Directors as a Group
(7 persons)                                     |                                                    | 17,683,643(8)            | 82.94                 



1.     Except as indicated in the footnotes to this table, the Company believes that all the persons named in the table have sole voting and investment power with respect to all shares shown
as beneficially owned by them, subject to community property laws where applicable.  In accordance with the rules of the Commission, a person or entity is deemed to be the beneficial owner of securities that can be acquired by such person or entity within
60 days from December 31, 1999 upon the exercise of options or warrants.  Each beneficial owner's percentage ownership is determined by assuming that options and warrants that are held by such person (but not those held by any other person) and which are
exercisable within 60 days of December 31, 1999 have been exercised.  The inclusion herein of such shares listed as beneficially owned does not constitute an admission of beneficial ownership.  Percentages herein assume a base of 21,043,137 shares of
Common Stock outstanding as of December 31, 1999.

2.     Includes 60,000 shares which may be purchased through the exercise of an option granted in connection with his employment agreement, exercisable at $5.00 per share.  In May, 1998, Mr. Dobbs entered into
option agreements pursuant to which related parties have the right to purchase 360,000 shares of the Company's Common Stock from him at an exercise price of $5.00 per share at any time during a ten year option term.



-39 -

3.     Includes 15,000 shares which may be purchased through the exercise of an option granted in connection with his consulting agreement, exercisable at $5.00 per share.  In December, 1997, Mr. Gleasman
entered into option agreements pursuant to which related parties have the right to purchase 300,000 shares of the Company's Common Stock from him at an exercise price of $5.00 per share at any time during a ten year option term.

4.     Includes 108,000 shares which may be purchased through the exercise of an option granted in connection with his employment agreement, exercisable at $5.00 per share.

5.     Includes 60,000 shares which may be purchased through the exercise of an option granted in connection with his employment agreement, exercisable at $5.00 per share.

6.     Includes 15,000 shares which may be purchased through the exercise of an option granted in connection with his consulting agreement, exercisable at $5.00 per share.  In November, December 1997, Mr.
Gleasman entered into option agreements pursuant to which related parties have the right to purchase 364,000 shares of the Company's Common Stock from him at an exercise price of $5.00 per share at any time during a 10 year option term.

7.     Includes 1,744,066 shares attributable to ownership by Mr. Gleasman's wife.  Includes 15,000 shares which may be purchased through the exercise of an option granted in connection with his consulting
agreement, exercisable at $5.00 per share.  In December, 1997, Mr. Gleasman entered into option agreements pursuant to which related parties have the right to purchase 2,000,000 shares of the Company's Common Stock from him at an exercise price of $5.00
per share at any time during a 10 year option term.

8.     Includes an aggregate 273,000 shares which may be purchased through the exercise of options granted in connection with employment and consulting agreements, exercisable at $5.00 per share.Item 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Certain Transactions

During the ten plus years prior to the incorporation of the Company, Vernon E., Keith E. and James A. Gleasman invented and patented numerous improvements relating to
drive mechanisms for tracked vehicles, transmissions, hydraulic pumps/motors, a unique form of gearing, universal joints, and constant velocity joints as disclosed in such patents.  Upon the Company's incorporation, the Gleasmans assigned all their right,
title and interest to and in such inventions and patents to the Company in exchange for the issuance of 16,464,400 shares of the Company's Common Stock and the agreement of the Company to pay the Gleasmans the sum of $365,000 for expenditures in the
development of these inventions and products, the Gleasmans having agreed to waive and release the Company from payment of any other expenses that they incurred in the development of these inventions and products.  The Board of Directors of the Company
concluded that the value of the inventions, patents and patent applications assigned to the Company, as well as the value of the services rendered, had a value in excess of the par value of the number of shares transferred to the assignors and service
providers, respectively.  Shares issued are fully paid and nonassessable.

On March 26, 1999, Keith and James Gleasman each purchased 26,000 shares of the Company's common stock at $10.00 per share under the Company's private placement.  On June 25,
1999, Keith and James Gleasman each purchased 9,500 shares of the Company'scommon stock at $10.00 per share under the Company's private placement.  On August 9, 1999, Keith Gleasman purchased 4,870 shares and James Gleasman purchased 3,500 shares at
$10.00 per share under the Company's private placement.

Mr. Morton A. Polster, a director of the Company and its Secretary, has been Patent Counsel to the Gleasman family since 1989 and has been in charge of the preparation and
execution of the Gleasmans' and now the Company's U.S. and international patent protection.  Mr. Polster received 291,600 shares of the Company's Common Stock at the inception of the Company.  See Page 32 of this Annual Report for a discussion of the
shares received during fiscal 1999 under the Company's Business Consultants Stock Plan.

Certain officers, directors and consultants may engage in transactions with the Company in the ordinary course of the business of the Company.  It is expected that the terms
and conditions of such transactions will be substantially the same as similar transactions with unrelated parties.

Other than as described herein, there have been no material transactions, series of similar transactions or currently proposed transactions to which the Company was or is a
party, in which the amount invested exceeds $60,000 and in which any director or executive officer, or any security holder who is known to the Company to own of record or beneficially  more than five percent of the Company's common stock, or any member of
the immediate family of any of the foregoing persons, had a material interest.



- 40 -

Item 13.     EXHIBITS AND REPORTS ON FORM 8-K.

(a)     Exhibits

The following Exhibits, as applicable, are attached to this Annual Report (Form 10-KSB).  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)                           | Plan of acquisition, reorganization, arrangement, liquidation, or succession
Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3)
     3.1
     3.2
(4)
(9) | Articles of incorporation, By-laws
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;
By-laws 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;
Instruments defining the rights of security holders, including indentures
Not Applicable
Voting trust agreement
Not Applicable
|(10)                          | Material contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                              | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                              | (ii)
(iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(11)
(13)
(16)
(18)
(21)      | Statement re: computation of per share earnings (loss)
Annual or quarterly Annual or quarterly reports, Form 10-Q Letter re: 
unaudited interim financial information
Not applicable
Letter on change in certifying accountant
Not Applicable
Letter re change in accounting principles
Not applicable
Subsidiaries of the registrant
None                                                                                                                                                                                                                              



- 41 -

|(22)
(23)
(24)
(27)
(99) | Published report regarding matters submitted to vote of security holders
Not applicable
Consents of experts and counsel
23.1    Richard A. Eisner & Company, LLP
Power of attorney
Not applicable
Financial data schedule
Additional exhibits
Not applicable
|------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b)     Reports Filed on 8-K

On June 9, 1999, the Company filed a Current Report under cover of Form 8-K to disclose the receipt of a letter demanding the Company pay out of the proceeds of its
stock sales, amounts demanded by MMI against Vernon and Keith Gleasman.

(c)     Forward Looking Information

This Annual Report contains forward-looking statements that are based on current expectations, estimates and projections about the Company and its plans for future
operation as well as management's beliefs and assumptions.  Words such as 'expects,' 'anticipates,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' variations of such words and similar expressions are intended to identify such forward-looking
statements.  These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ('Future Factors') which are difficult to predict.  Therefore, actual outcomes and results may differ materially from what is
expressed or forecasted in such forward-looking statements.  The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

The Future Factors that may affect the Company, its plans for its future operations and performance and results of the Company's future business include, but are not limited to, the following:





|a. | general economic and competitive conditions in the markets and countries in which the Company will operate, and the risks inherent in any future international operations;                                                                                                                
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|b. | the Company's ability to enter into collaborative joint working arrangements, formal joint venture arrangements and/or licensing arrangements with domestic and/or foreign governments, automotive industry manufacturers and suppliers to
manufacture and promote the Company's products;
|c. | industry and consumer acceptance of the Company's products;                                                                                                                                                                                                                               
|d. | the level of competition and resistance in the automotive industry;                                                                                                                                                                                                                       
|e. | the strength of the U.S. dollar against currencies of other countries where the Company may operate, as well as cross-currencies between the Company's future operations outside of the U.S. and other countries with whom it transacts business.                                         

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking statements.  The Company
does not intend to update forward-looking statements.





- 42 -





SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



TORVEC, INC.





Date:  March 29, 2000                                      
            By:     /S/KEITH E. GLEASMAN                                          
                                          
          Keith E. Gleasman, President



In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



Dated:  March 29, 2000                                      
         By:     /S/HERBERT H. DOBBS                                          
                                          
        Herbert H. Dobbs, Chairman of the Board of Directors





Dated:  March 29, 2000                                      
         By:     /S/KEITH E. GLEASMAN                                          
                                          
       Keith E. Gleasman, Director and President





Dated:  March 29, 2000                                      
         By:      /S/LEE E. SAWYER                                          
                                          
       Lee E. Sawyer, Director





Dated:  March 29, 2000                                      
        By:     /S/MORTON A. POLSTER                                          
                                          
      Morton A. Polster, Director; Secretary





Dated:  March 29, 2000                                      
        By:     /S/JAMES A. GLEASMAN                                          
                                          
     James A. Gleasman, Director; Consultant





Dated:  March 29, 2000                                      
        By:     /S/SAMUEL M. BRONSKY                                          
                                          
     Samuel M. Bronsky, Chief Financial Officer



- 43 -



EXHIBIT INDEX

Exhibit                                     
                                          
                Page Number

|(2)                                               | Plan of acquisition, reorganization, arrangement, liquidation, or succession
Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |      
|------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----
|(3)
     3.1
     3.2
(4)
(9)                     | Articles of incorporation, By-laws
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;
By-laws 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;
Instruments defining the rights of security holders, including indentures
Not Applicable
Voting trust agreement
Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |      
|(10)                                              | Material contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |      
|                                                  | (i)     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;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |      
|(11)
(13)
(16)
(18)
(21)
(22)
(23)
(24)
(27)
(99) | The Company's 1998 Stock Option Plan and relative 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;
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.
Statement re: computation of per share earnings (loss)
Annual or quarterly Annual or quarterly reports, Form 10-Q Letter re:
unaudited interim financial information
Not applicable
Letter on change in certifying accountant
Not Applicable
Letter re change in accounting principles
Not applicable
Subsidiaries of the registrant
None
Published report regarding matters submitted to vote of security holders
Not applicable
Consents of experts and counsel
23.1    Richard A. Eisner & Company, LLP
Power of attorney
Not applicable
Financial data schedule
Additional exhibits
Not applicable | 44
45







- 44 -





EXHIBIT 23.1





INDEPENDENT AUDITORS' CONSENT



We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-80443) and Form S-8 (No. 333-69123), of Torvec, Inc. of our report dated March 2, 2000, which is included in the annual report on Form 10-KSB for
the year ended December 31, 1999.



/S/ RICHARD A. EISNER & COMPANY, LLP



Richard A. Eisner & Company, LLP



New York, New York
March 29, 2000



- 45 -



FINANCIAL DATA SCHEDULE

12/31/99



|                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|PERIOD TYPE
FISCAL-YEAR-END
PERIOD-START
PERIOD-END
CASH
SECURITIES 
RECEIVABLES
ALLOWANCES
INVENTORY
CURRENT-ASSETS 
EQUIPMENT
DEPRECIATION
TOTAL-ASSETS
CURRENT-LIABILITIES
BONDS
PREFERRED-MANDATORY
PREFERRED
COMMON
OTHER-SE
TOTAL-LIABILITY-AND-EQUITY
SALES
TOTAL-REVENUES
CGS
TOTAL-COSTS
OTHER-EXPENSES
LOSS-PROVISION
INTEREST-EXPENSE
INCOME-PRETAX
INCOME-TAX
INCOME-CONTINUING
DISCONTINUED
EXTRAORDINARY
CHANGES
NET-INCOME
EPS-BASIC
EPS-DILUTED