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U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 Commission file number 000-24455
 TORVEC, INC.
 (Name of Small Business Issuer in its charter)
 NEW YORK
    
    16-1509512(State or other jurisdiction of
    
    I R S Employer Identification No.incorporation or organization)1999 Mount Read Blvd.Building 3Rochester, New York
    
    14615(Address of principal executive offices)
    
    (Zip Code)
 Issuers Telephone Number, including Area Code: (585) 254-1100
Securities registered pursuant to Section 12(b) of the Exchange Act:
 Name of each exchange onTitle of each class
    
    which registered
 Securities registered pursuant to Section 12(g) of the Exchange Act:
 $.01 par value common voting stock
 (Title of class)
 Yes o No þ
 Yes o No þ
 Note
 Yes þ No o
 Yes o No o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 Yes o No þ
 $ 9,835,710




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TORVEC, INC. AND SUBSIDIARIES  (A Development Stage Company)
 TABLE OF CONTENTS
 PAGEPART IItem 1. Description of Business
    
    
    3Item 1A. Risk Factors
    
    
    7Item 1B. Unresolved Staff Comments
    
    
    8Item 2. Properties
    
    
    9Item 3. Legal Proceedings
    
    
    9Item 4. Submission of Matters to a Vote of Security Holders
    
    
    10Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    10Item 6. Selected Financial Data
    
    
    19Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23PART II  DECEMBER 31, 2009 and 2008 FINANCIAL INFORMATIONItem 8. Consolidated Financial Statements
    
    
    F-1Report of Independent Registered Public Accounting Firm
    
    
    F-2Torvec, Inc. and Subsidiaries Consolidated Balance Sheet as of December 31, 2009 and 2008
    
    
    F-3Torvec, Inc. and Subsidiaries Consolidated Statements of Operations for each of the years in the
Two-Year Period Ended December 31, 2009 and for the Period from September 25, 1996 (Inception) through
December 31, 2009
    
    
    F-4Torvec, Inc. and Subsidiaries Consolidated Statements of Changes in Stockholders Equity (Capital
Deficit) for the Period from September 25, 1996 (Inception) through December 31, 2009
    
    
    F-5 - F-12Torvec, Inc. and Subsidiaries Consolidated Statements of Cash Flows for each of the years in The Two
Year Period Ended December 31, 2009 and for the Period from September 25, 1996 (Inception) through
December 31, 2009
    
    
    F-13Notes to Consolidated Financial Statements
    
    
    F-14 - F-34Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    24Item 9A. Controls and Procedures
    
    
    24Item 9B. Other Information
    
    
    25PART IIIItem 10. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a)
of the Exchange Act
    
    
    25Item 11. Executive Compensation
    
    
    40Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
    
    
    48Item 13. Certain Relationships and Related Transactions and Director Independence
    
    
    50Item 14. Principal Accountant Fees and Services
    
    
    52Item 15 Exhibits
    
    
    53SIGNATURES PAGE
    
    
    58EXHIBIT INDEX
    
    
    59Exhibit 23.1Exhibit 31.1Exhibit 32
   2




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PART I
 
 Item 1.
    
    DESCRIPTION OF BUSINESS
 (a) History and Development of Our Inventions
 ®
 (i)
    
    Iso-torque® differential;(ii)
    
    infinitely variable transmissions (IVT) for diesel and gasoline engines;(iii)
    
    steering drive and suspension system for tracked vehicles;(iv)
    
    high speed, steel-reinforced rubber tracks;(v)
    
    hydraulic pump and motor;(vi)
    
    constant velocity joint mechanism.
    (b) Our Automotive Properties
  (1) Full Terrain Vehicle ®
   3




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(2) IsoTorque ® Differential
 ®
 reliable efficient
  (3) Infinitely Variable Transmission  Hydraulic Pump/Motor
     4




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(4) Constant Velocity Joint Mechanism
      (c) Current Status of Product Development
   5




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(d) Partnership with Rochester Institute of Technology
  1.
    
    to provide RITs faculty, staff, and students with the opportunity to
participate in the ongoing refinement and enhancement of advanced automotive and
related energy technologies designed for specific applications to the world-wide
automotive and related energy industries;2.
    
    to provide RITs students with cooperative educational opportunities
with a view to future employment; through joint research, to further refine the
companys advanced automotive and related energy technologies, including product
evaluation and testing to improve the production and manufacturing of such
technologies;3.
    
    to jointly obtain grants and other forms of governmental and
nongovernmental research funding in order to implement the purposes of SEAL and
advance research in the industry of automotive and related industries;4.
    
    to establish SEAL as a leader in the technological and manufacturing
applications of advanced automotive and related energy technologies including the
development of new and increased employment opportunities in the automotive and
related energy industries.
  1.
    
    affirmatively work to provide each others faculty, staff, students,
and personnel with access to the companys advanced automotive and related energy
technologies, technical know-how, including Torvec personnel, offices and testing
facilities, and RITs facilities and laboratories pursuant to other mutually
agreeable contracts and/or sponsored research agreements between the company and
RIT as applicable;2.
    
    affirmatively work to engage each others faculty, staff, students, and
personnel in opportunities through SEAL for refinement, evaluation and testing
advanced automotive and related energy technologies, including designing, testing
and evaluating such technologies (including the companys) for possible production
pursuant to other mutually agreeable contracts and/or sponsored research agreements
between the company and RIT as applicable;3.
    
    affirmatively participate in establishing educational and training
programs for RIT personnel, including when and where appropriate, designing and
creating cooperative educational and employment opportunities for RITs students in
the fields of advanced automotive and related energy technologies;4.
    
    affirmatively participate in jointly approved efforts to obtain
governmental and nongovernmental funding to provide financial support for the
purposes and programs of SEAL, including the prompt completion of any written
proposals, required business plans, budgets and similar submissions and
statements-of-work in pursuit of research, academic development, and business
goals;5.
    
    affirmatively seek to engage additional automotive and relate energy
companies and organizations in the purposes and programs of SEAL.
  (e) Competition, Industry and Market Acceptance
   6




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®® ®
  ®
 ®
 ®
   
 Item 1A.
    
    RISK FACTORS
    7




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Item 1B.
    
    UNRESOLVED STAFF COMMENTS
   8




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Item 2.
    
    PROPERTIES
  th
  
 Item 3.
    
    LEGAL PROCEEDINGS
 (1)
    
    On March 6, 2009, the company settled, at no cost, a litigation
commenced by the company in September, 2005 against a management
consulting firm. The company had challenged the validity of consulting
agreements alleged to have been executed between the parties in June,
2004 and April, 2005 as being null and void. In accordance with the
terms of the settlement agreement, the parties released one another
from all claims and counterclaims against each other and terminated
any and all obligations emanating out of their relationship with each
other, including any and all obligations under the purported
agreements.(2)
    
    On October 8, 2007, the controlling persons of the companys
majority-owned subsidiary, Ice Surface Development, Inc. filed for
arbitration of certain agreements they had with Ice Surface, claiming
Ice Surface owed compensation to them for past services. On October
19, 2007, these same parties commenced a derivative action in Federal
District Court for the Western District of New York challenging the
companys assignment of its ice technology license in June, 2007 on
the grounds the assignment was made for inadequate consideration.On June 27, 2008, the Federal District Court dismissed, with
prejudice, the derivative action as being without merit and, in the
same action, affirmed that such persons had been fully paid for any
services rendered by them to Ice Surface Development. As a consequence
of the District Courts decision, these individuals withdrew their
arbitration claims on August 18, 2008.(3)
    
    On October 31, 2008, the company commenced an action in New York
Supreme Court, County of New York, Commercial Division against Ice
Engineering, LLC seeking the total balance owed by Ice Engineering to
the company pursuant to an assignment agreement entered into by the
parties, effective June 15, 2007, whereby the company assigned all of
its rights and interest in an ice technology license granted by
Dartmouth College to Ice Engineering in exchange for a 2.8% royalty
interest and a cash reimbursement of $3,500,000. The suit was
commenced after the company had been paid approximately $800,000.On January 27, 2010, the company and Ice Engineering settled this
litigation. Under the settlement agreement, the companys assignment
of the ice technology license is made permanent; the company elected
to forego its right to royalties and agreed to receive $1,100,000,
with $300,000 paid to the company by Ice Engineering on January 27,
2010 and $800,000 paid to the company by Ice Engineering by February
26, 2010.
  9




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Item 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Subsequent Event
  1.
    
    Election of Directors
 Election of Directors
    
    For
    
    
    WithheldDaniel R. Bickel
    
    
    18,341,133
    
    
    
    1,203,016William W. Destler
    
    
    18,483,783
    
    
    
    981,506Herbert H. Dobbs
    
    
    18,341,133
    
    
    
    1,124,156Asher J. Flaum
    
    
    18,372,768
    
    
    
    1,092,521James Y. Gleasman**
    
    
    17,941,754
    
    
    
    1,523,535Keith E. Gleasman
    
    
    18,258,946
    
    
    
    1,206,343Joseph B. Rizzo
    
    
    18,372,373
    
    
    
    1,092,916Gary A. Siconolfi
    
    
    18,400,816
    
    
    
    1,064,473
 2.
    
    Ratification of the appointment of Eisner LLP by the Audit Committee of
the board of directors as the Independent Registered Public Accounting
Firm of the company for its year ending December 31, 2009.
 For
    
    Against
    
    
    Abstained29,139,372
    
    
    1,481,916
    
    
    
    290,979
  **
    
    James Y. Gleasman retired from the board of directors, effective March 14, 2010. 
 Item 5.
    
    MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
 (a) Market Information
    10




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2009
    
    High
    
    
    Low1st Quarter
    
    $
    1.65
    
    
    $
    0.702nd Quarter
    
    $
    0.90
    
    
    $
    0.523rd Quarter
    
    $
    1.05
    
    
    $
    0.514th Quarter
    
    $
    0.79
    
    
    $
    0.40
 2008
    
    High
    
    
    Low1st Quarter
    
    $
    3.14
    
    
    $
    2.322nd Quarter
    
    $
    2.85
    
    
    $
    2.023rd Quarter
    
    $
    2.40
    
    
    $
    1.354th Quarter
    
    $
    1.80
    
    
    $
    .60
 (b) Holders of Common Stock
  (c) Dividend Policy on Common Stock
    11




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(d) Securities Authorized for Issuance under Equity Compensation Plans
 Number of securitiesto be issued upon
    
    
    Weighted averageexercise of
    
    
    exercise price of
    
    
    Number of securitiesoutstanding options,
    
    
    outstanding options,
    
    
    remaining availablewarrants and rights
    
    
    warrants and rights
    
    
    for future issuancePlan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation plans
approved by security
holders
    
    
    641,848
    (1)
    
    $
    4.79
    
    
    None (1)Equity compensation plans
not approved by security
holders
    
    
    1,229,500
    (4)
    
    $
    3.83
    
    
    None (2)-(4)Total
    
    
    1,871,348
    (4)
    
    $
    4.18
    
    
    None (1)-(4)
 (1)
    
    Represents number of common stock options outstanding. The companys stock option plan was terminated
effective May 28, 2008 as to future grants under the plan.(2)
    
    The company granted 125,000 common stock warrants to a consultant in connection with a non-exclusive
financial consulting agreement dated February 11, 1997. The warrants are only exercisable if and when the
company has an initial public offering of its common stock.(3)
    
    The company has granted 123,500 common stock warrants to its nonmanagement directors under its nonmanagement
directors plan. 69,000 warrants have been exercised through December 31, 2009. The plan was modified on
October 13, 2006 so that compensation for services rendered by directors was paid in shares of common stock.(4)
    
    The company has granted an aggregate 1,589,583 common stock warrants which the company has issued to a
number of business, engineering, financial, governmental affairs and technical consultants in connection
with its operations. 539,583 warrants have been exercised or have been cancelled or expired by their terms
through December 31, 2009. See footnote H [10] to the companys financial statements. (e) Class A Preferred Stock
   A.
    
    Number of SharesThe number of Class A Preferred initially authorized is 3,300,000 Class A Preferred. The initial number authorized shall be increased as required to provide Class A Preferred for payment of dividends as described in
Section B, distribution to holders in accordance with Section C and as described in Section F.B.
    
    Dividends
 (i)
    
    So long as any Class A Preferred is outstanding, the holders of the Class A Preferred will be entitled to receive cumulative preferential dividends in the amount of $.40 per share of
Class A Preferred for each annual dividend period. The annual dividend period shall commence on the first day of each March and shall end on the last day of the immediately succeeding
February, which February date is referred to as the Dividend Accrual Date.(ii)
    
    When and as declared by the board, dividends payable on the Class A Preferred will be paid in cash out of any funds legally available for the payment of dividends or, in the discretion of
the board, will be paid in Class A Preferred at a rate of 1 share of Class A Preferred for each $4.00 of dividends. No fractions of Class A Preferred shall issue. The Company shall pay
cash in lieu of paying fractions of Class A Preferred on a pro rata basis.(iii)
    
    Dividends shall be cumulative from the date of issuance of each share of Class A Preferred, whether or not declared and whether or not, in any annual dividend period(s), there are net
profits or net assets of the Company legally available for the payment of dividends.(iv)
    
    Accumulated and unpaid dividends on the Class A Preferred will not bear interest.
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(v)
    
    So long as any Class A Preferred is outstanding, the Company may not declare or pay any dividend, make any distribution, or fund, set aside or make monies available for a sinking fund for
the purchase or redemption of, any shares or stock of the Company ranking junior to the Class A Preferred with respect to the payment of dividends, including the $.01 par value common
stock of the Company (Junior Stock), unless all dividends in respect of the Class A Preferred for all past annual dividend periods have been paid and such dividends for the current
annual dividend period have been paid or declared and duly provided for. Subject to the foregoing, and not otherwise, the dividends (payable in cash, stock or otherwise) as may be
determined by the board, may be declared and paid on any Junior Stock from time to time out of any funds legally available therefore, and the Class A Preferred will be entitled to
participate in any such dividends, whether payable in cash, stock or otherwise on a pro rata basis.
 C.
    
    Liquidation Rights
 (i)
    
    In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of Class A Preferred then outstanding are entitled to be paid out
of the assets of the Company available for distribution to its shareholders, whether such assets are capital, surplus or earnings, before any payment or declaration and setting apart for
payment of any amount in respect of any shares of any Junior Stock with respect to the payment of dividends or distribution of assets on liquidation, dissolution or winding up of the
Company, all accumulated and unpaid dividends (including a prorated dividend from the last Dividend Accrual Date) in respect of any liquidation, dissolution or winding up consummated
except that, notwithstanding the provisions of Section B(ii), all of such accumulated and unpaid dividends will be paid in Class A Preferred at a rate of 1 share of Class A Preferred for
each $4.00 of dividends. No fractions of Class A Preferred shall issue. The Company shall pay cash in lieu of paying fractions of Class A Preferred on a pro rata basis.(ii)
    
    The Class A Preferred will be entitled to participate on a pro rata basis in any distribution of assets as may be made or paid on Junior Stock upon the liquidation, dissolution or winding
up of the Company.(iii)
    
    A consolidation or merger of the Company with or into any other corporation or corporations or any other legal entity will not be deemed to constitute a liquidation, dissolution or winding
up of the Company as those terms are used in this Section C.
 D.
    
    Redemption
 (i)
    
    The Company may, in the absolute discretion of its board, redeem at any time and from time to time from any source of funds legally available any and all of the Class A Preferred at the
Redemption Price.(ii)
    
    For each redemption, the Redemption Price for each share of Class A Preferred shall be equal to amount paid per share of Class A Preferred payable in cash, plus an amount payable (not
withstanding the provisions of Section B (ii)) in cash equal to the sum of all accumulated unpaid dividends per share of Class A Preferred (including a prorated annual dividend from the
last Dividend Accrual Date) to the respective date for each redemption on which the Company shall redeem any shares of Class A Preferred (the Redemption Date).(iii)
    
    In the event of redemption of only a portion of the then outstanding Class A Preferred, the Company will affect the redemption pro rata according to the number shares held by each holder
of Class A Preferred.(iv)
    
    At least 20 days and not more than 60 days prior to the date fixed by the board for any redemption of Class A Preferred, written notice (the Redemption Notice) will be mailed, postage
prepaid, to each holder of record of the Class A Preferred at his or her post office address last shown on the records of the Company. The Redemption Notice will state:
 
    
    Whether all or less than all of the outstanding Class A Preferred is to be redeemed and the
total number of shares of Class A Preferred being redeemed;
    
    the number of shares of Class A Preferred held by the holder that the Company intends to redeem;
    
    the Redemption Date and Redemption Price; and
    
    that the holder is to surrender to the Company, in the manner and at the place designated in
Section D(v), his or her certificate or certificates representing the number of shares of
Class A Preferred to be redeemed.
 (v)
    
    On or before the date fixed for redemption, each holder of Class A Preferred must surrender the certificate or certificates representing the number of
 shares of Class A Preferred to the Company, accompanied by instruments of transfer satisfactory to the Company and sufficient to transfer the Class A
Preferred being redeemed to the Company free and clear of any adverse interest, at the place designated in the Redemption Notice. The Redemption Price for
the number of shares of Class A Preferred redeemed will be payable in cash on the Redemption Date to the person whose name appears on the certificate(s) as
the owner of such certificate(s) as of the date of the Redemption Notice. In the event that less than all of the shares of Class A Preferred represented by
any certificate(s) are redeemed, a new certificate will issued by the Company representing the unredeemed Class A Preferred to the same record owner.
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(vi)
    
    As promptly as practicable after surrender of the certificate(s) representing the redeemed Class A Preferred, the Company will pay the Redemption Price to
the record holder of the redeemed Class A Preferred.(vii)
    
    Unless the Company defaults in the payment in full of the Redemption Price, the obligation of the Company to pay dividends on the Class A Preferred
redeemed shall cease on the Redemption Date, and the holders of the Class A Preferred redeemed will cease to have any further rights with respect to such
redeemed Class A Preferred on the Redemption Date, other than to receive the Redemption Price.(viii)
    
    The holders of the Class A Preferred have no right to seek or to compel redemption of the Class A Preferred.
 E.
    
    Voting Rights The holders of Class A Preferred are not be entitled to vote in any and all elections of directors and with respect to any and all other matters as to which the vote or consent of shareholders of the Company shall
be required or taken.F.
    
    Conversion Privilege
 (i)
    
    The holders of the Class A Preferred have the right, at each holders option but subject to board approval in each case, to convert each share of Class A
Preferred into 1 fully paid and nonassessable share of the $.01 par value common stock of the Company (Common Share) without payment of any conversion
price or other consideration. Such 1 for 1 rate of conversion is subject to adjustment as set forth in F(x).(ii)
    
    The Conversion Privilege set forth in this Section F may not be exercised by the holder of Class A Preferred until 1 year shall have elapsed from the issue
date of the Class A Preferred held by such holder and may not be exercised if the board shall not have approved the actual exercise of such Conversion
Privilege by such holder of Class A Preferred. Such approval shall not be unreasonably withheld. Upon receipt of the Notice of Conversion described in
Section F(iii) below and the boards approval of such conversion, the Company shall give a Notice of Approval to the holder within 48 hours of the receipt
of the Notice of Conversion that the exercise of the Conversion Privilege by such holder is approved.(iii)
    
    In order to exercise the Conversion Privilege, the holder
of Class A Preferred must give written notice to the
Company that the holder elects to covert the number of
 shares of Class A Preferred as specified in the Notice of
Conversion. The Notice of Conversion will also state the
name(s) and address (es) in which the certificate(s) for
Common Shares issuable upon the conversion are to be
issued. Upon receipt of the Companys Notice of Approval,
the holder of the Class A Preferred must surrender the
certificate(s) representing the number of shares of Class A
Preferred being converted to the Company, accompanied by
instruments of transfer satisfactory to the Company and
sufficient to transfer the Class A Preferred being
converted to the Company free and clear of any adverse
interest at the office maintained for such purpose by the
Company. As promptly as practicable after the surrender of
the certificate(s) representing the number of shares of
Class A Preferred converted, the Company will issue and
deliver to the holder, or to such other person designated
by the holders written order, a certificate(s) for the
number of full Common Shares issuable upon the conversion
of the Class A Preferred in accordance with the provisions
of this Section F(iii).(iv)
    
    The Conversion Privilege may be exercised
in whole or in part and, if exercised in
part, a certificate(s) will be issued for
the remaining number of Class A Preferred
in any case in which fewer than all of the
Class A Preferred represented by a
certificate(s) are converted to the same
record holder of Class A Preferred
converted.(v)
    
    Each conversion will be deemed to have been
effective immediately prior to the close of
business on the date on which the Class A
Preferred will have been so surrendered as
provided in Section F(iii) (the Conversion
Date) and the person(s) in whose name(s)
any certificate(s) for Common Shares will
be issuable upon the conversion will be
deemed to have become the holder(s) of
record of the Common Shares on the
Conversion Date. Effective as of the
Conversion Date, the Company will have no
obligation to pay dividends on the Class A
Preferred converted provided that effective
as of the Conversion Date, the Company
shall pay all accumulated and unpaid
dividends (including the prorated dividend
from the last Dividend Accrual Date) on the
Class A Preferred converted, payable in the
discretion of the Board, in cash out of any
funds legally available for payment of such
dividends or in Class A Preferred.
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(vi)
    
    The Conversion Privilege shall terminate
with respect to Class A Preferred called
for redemption by the mailing of a
Redemption Notice described in
Section D(iv) on the close of business on
the date immediately preceding the
Redemption Date.(vii)
    
    Notwithstanding the requirement for board
approval and the 1 year limit set forth in
Section F(ii), in case of any consolidation
or merger to which the Company is a party
other than a merger or consolidation in
which the Company is the surviving
corporation or in case of any sale or
conveyance to another corporation of all or
substantially all of the assets of the
Company or in the case of any statutory
exchange of securities representing an
excess of 50% of the total outstanding
securities of the Company with another
corporation (including any exchange
effected in connection with a merger of a
third corporation into the Company), the
holders of Class A Preferred then
outstanding will have the right to convert
the Class A Preferred into the kind and
amount of securities, cash or other
property which the holder would have owned
or have been entitled to receive
immediately after the consolidation,
merger, statutory exchange, sale or
conveyance, had the Class A Preferred been
converted immediately prior to the
effective date of the consolidation,
merger, statutory exchange, sale or
conveyance as the case may be.(viii)
    
    Notwithstanding the 1 year holding period
set forth in Section F(ii), in the event
the highest bid price for the Companys
$.01 par value common stock quoted on any
exchange, automated quotation system or the
OTC Bulletin Board on which such stock is
actively traded is $20 or more on 5
consecutive trading days, the holders of
Class A Preferred shall have the right to
convert such Class A Preferred upon Board
approval.(ix)
    
    Common Shares delivered upon conversion of
Class A Preferred will be, upon delivery,
validly issued, fully paid and
nonassessable, free of all liens and
charges and not subject to any preemptive
rights.
 (x)
    
    In case the Company
 
    
    Declares a dividend, or makes a distribution, on
 shares of its $.01 par value common stock in shares of
its $.01 par value common stock; or
    
    Subdivides its outstanding shares of its $.01 par
value common stock into a greater number of shares of
its $.01 par value common stock; or
    
    Combines its outstanding shares of its $.01 par value
common stock into a smaller number of shares of $.01
par value common stock, the number of Common Shares
issuable upon the conversion of the Class A Preferred
shall be adjusted at the time of the record date for
the dividend or distribution or the effective date of
the subdivision or a combination so that after such
record or effective date, the holder of Class A
Preferred will be entitled to receive the same
percentage of ownership of the Companys $.01 par
value common stock as such holder would have been
entitled to receive immediately prior to such record
or effective date.
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(f) Class B Preferred Stock
 ®
   A.
    
    Three hundred thousand (300,000) authorized preferred shares of the par value of
$.01 each as fixed by the board of directors, , shall be issued in and as a series
to be designated Class B Non-Voting Cumulative Convertible Preferred Shares, $.01
par value. Said series is hereinafter called Class B Preferred Shares. The term
preferred shares as used herein shall include all 100,000,000 of the preferred
 shares, $.01 par value authorized by the Certificate of Incorporation of the
Corporation of which Class B Preferred Shares is the second series.
 B.
    
    (1)
    
    So long as any Class B Preferred are outstanding, the holders of the Class B
Preferred will be entitled to receive cumulative preferential dividends in the
amount of $.50 per share of Class B Preferred and no more for each annual dividend
period. The annual dividend period shall commence on the first day of each September
and shall end on the last day of the immediately succeeding August, which August
date is referred to as the Dividend Accrual Date.(2)
    
    When and as declared by the board, dividends payable on the Class B Preferred
will be paid in cash out of any funds legally available for the payment of dividends
or, in the discretion of the board, will be paid in Class B Preferred at a rate of 1
share of Class B Preferred for each $5.00 of dividends. No fractions of Class B
Preferred shall be issued. The Corporation shall pay cash in lieu of paying
fractions of Class B Preferred on a pro rata basis.(3)
    
    Dividends shall be cumulative from the date of issuance of each share of Class B
Preferred, whether or not declared and whether or not, in any annual dividend
period(s), there are net profits or net assets of the Corporation legally available
for the payment of dividends.(4)
    
    Accumulated and unpaid dividends on the Class B Preferred will not bear interest.(5)
    
    So long as any shares of Class B Preferred are outstanding, the Corporation may
not declare or pay any dividend, make any distribution, or fund, set aside or make
monies available for a sinking fund for the purchase or redemption of any shares or
stock of the Corporation ranking junior to the Class B Preferred with respect to the
payment of dividends, including the $.01 par value common stock of the company, for
all past annual dividend periods have been paid and such dividends for the current
annual dividend period have been paid or declared and duly provided for. Subject to
the foregoing, and not otherwise, the dividends (payable in cash, stock or
otherwise) as may be determined by the Board, may be declared and paid on any Junior
Stock from time to time out of any funds legally available therefore, and the
Class B Preferred will be entitled to participate in any such dividends, whether
payable in cash, stock or otherwise, on a pro rata basis.
 C.
    
    The Class B Preferred shall rank junior and be classified as Junior Stock with
respect to the Corporations Class A Preferred Shares in all respects.
 D.
    
    (1)
    
    In the event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the holders of Class B Preferred then outstanding
are entitled to be paid out of the assets of the Corporation available for
distribution to its shareholders, whether such assets are capital, surplus or
earnings, before any payment or declaration and setting apart for payment of any
amount in respect of any shares of any Junior stock with respect to the payment of
dividends or distribution of assets on liquidation, dissolution or winding up of the
Corporation, all accumulated and unpaid dividends (including a prorated dividend
from the last Dividend Accrual Date) in respect of any liquidation, dissolution or
winding up consummated except that, notwithstanding the provisions of Section B(2),
all of such accumulated and unpaid dividends will be paid in shares of Class B
Preferred at a rate of 1 share of Class B Preferred for each $5.00 of dividends. No
fractions of Class B Preferred shall be issued. The Corporation shall pay cash in
lieu of paying fractions of Class B Preferred on a pro rata basis. (2) The Class B
Preferred will be entitled to participate on a pro rata basis in any distribution of
assets as may be made or paid on Junior Stock upon the liquidation, dissolution or
winding up of the Corporation.
  16




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##### Table of Contents



E.
    
    (1)
    
    The Corporation may in the absolute discretion of its board, redeem at any time
and from time to time from any source of funds legally available any and all of the
Class B Preferred at the Redemption Price.(2)
    
    For each redemption, the Redemption Price for each share of Class B Preferred
shall be equal to the sum of $5.00 per share of Class B Preferred, payable in cash,
plus an amount payable (not withstanding the provisions of Section B(2) in cash
equal to the sum of all accumulated unpaid dividends per share of Class B Preferred
(including a prorated annual dividend from the last Dividend Accrual Date) to the
respective date for each redemption on which the Corporation shall redeem any shares
of Class B Preferred (the Redemption Date).(3)
    
    In the event of a redemption of only a portion of the then
outstanding Class B Preferred, the Corporation will affect the
redemption pro rata according to the number shares held by each holder
of Class B Preferred.(4)
    
    Unless the Corporation defaults in the payment in full of the
Redemption Price, the obligation of the Corporation to pay dividends
on the Class B Preferred redeemed shall cease on the Redemption Date,
and the holders of the Class B Preferred redeemed will cease to have
any further rights with respect to such redeemed Class B Preferred on
the Redemption Date, other than to receive the Redemption Price.(5)
    
    The holders of the Class B Preferred have no right to seek or to
compel redemption of the Class B Preferred.
 F.
    
    The holders of Class B Preferred are not entitled to vote in any and
all elections of directors and with respect to any and all other
matters as to which the vote or consent of shareholders of the
Corporation shall be required or taken.
 G.
    
    (1)
    
    The holders of the Class B Preferred have the right, at each
holders option but subject to board approval in each case, to
(i) convert each share of Class B Preferred into 1 fully paid and
nonassessable share of the $.01 par value common stock of the
Corporation (Torvec Common) without payment of any conversion price
or other consideration; and to (ii) convert each share of Class B
Preferred into 1 fully paid and nonassessable share of the $.01 par
value common stock of Iso-Torque Corporation (Iso-Torque Common)
without payment of any conversion price or other consideration upon
the happening of any of the following events:
 (a)
    
    the effectiveness of a registration statement as filed with the
Securities and Exchange Commission pursuant to and under the Securities Act of
1933 with respect to an initial public offering of Iso-Torque Common; or(b)
    
    the effectiveness of a registration statement as filed with the
Securities and Exchange Commission pursuant to and under the Securities Exchange
Act of 1934 with respect to an initial trading of Iso-Torque Common on a
national exchange, the NASDAQ or the OTCBB; or(c)
    
    notwithstanding the 1 year holding period set forth in
Section G(2) the execution of a definitive agreement for the sale, transfer
and/or exchange of all of the issued and outstanding Iso-Torque Common to a
third party purchaser of such stock or by any of a business combination of
Iso-Torque Corporation with an unrelated entity, other than a merger or
consolidation in which Iso-Torque Corporation is the surviving corporation.
 (2)
    
    The Conversion Privilege set forth in this Section G may not be exercised by the holder
of Class B Preferred until 1 year shall have elapsed from the issue date of the Class B
Preferred held by such holder and may not be exercised if the board shall not have
approved the actual exercise of such Conversion Privilege by such holder of Class B
Preferred. Such approval shall not be unreasonably withheld. Upon receipt of the Notice
of Conversion and the boards approval of such conversion, the Corporation shall give a
Notice of Approval to the holder within 48 hours of the receipt of the Notice of
Conversion that the exercise of the Conversion Privilege by such holder is approved.(3)
    
    The Conversion Privilege may be exercised in whole or in part and, if exercised in part,
a certificate(s) will be issued for the remaining Class B Preferred in any case in
which fewer than all of the Class B Preferred represented by a certificate(s) are
converted to the same record holder of Class B Preferred converted.(4)
    
    Each conversion will be deemed to have been effective immediately prior to the close of
business on the date on which the Class B Preferred will have been so surrendered (the
Conversion Date) and the person(s) in whose name(s) any certificate(s) for Torvec
Common or Iso-Torque Common will be issuable upon the conversion will be deemed to have
become the holder(s) of record of the Torvec Common or Iso-Torque Common on the
Conversion Date. Effective as of the Conversion Date, the Corporation will have no
obligation to pay dividends on the Class B Preferred converted provided that effective
as of the Conversion Date, the Corporation shall pay all accumulated and unpaid
dividends (including the prorated dividend from the last Dividend Accrual Date) on the
Class B Preferred converted, payable in the discretion of the board, in cash out of any
funds legally available for payment of such dividends or in shares of Class B
Preferred.
  17




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##### Table of Contents



(5)
    
    The Conversion Privilege shall terminate with respect to Class B Preferred called for
redemption by the mailing of a Redemption Notice on the close of business on the date
immediately preceding the Redemption Date.(6)
    
    Notwithstanding the requirement for board approval and the 1 year limit set forth in
Section G(2), in case of any consolidation or merger to which the Corporation is a
party other than a merger or consolidation in which the Corporation is the surviving
corporation or in case of any sale or conveyance to another corporation of all or
substantially all of the assets of the Corporation or in the case of any statutory
exchange of securities representing an excess of 50% of the total outstanding
securities of the Corporation with another corporation (including any exchange effected
in connection with a merger of a third corporation into the Corporation), the holders
of Class B Preferred then outstanding will have the right to convert the Class B
Preferred into the kind and amount of securities, cash or other property which the
holder would have owned or have been entitled to receive immediately after the
consolidation, merger, statutory exchange, sale or conveyance, had the Class B
Preferred been converted immediately prior to the effective date of the consolidation,
merger, statutory exchange, sale or conveyance as the case may be.(7)
    
    Notwithstanding the 1 year holding period set forth in Section G(2), in the event the
highest bid price for the Corporations $.01 par value common stock quoted on any
exchange, automated quotation system or the OTC Bulletin Board on which such stock is
actively traded is $20 or more on 5 consecutive trading days, the holders of Class B
Preferred shall have the right to convert such Class B Preferred upon board approval
for such conversion period.(8)
    
    Torvec Common or Iso-Torque Common delivered upon conversion of Class B Preferred will
be, upon delivery, validly issued, fully paid and nonassessable, free of all liens and
charges and not subject to any preemptive rights.(9)
    
    In case the Corporation
 (a)
    
    declares a dividend, or makes a distribution, on shares of its $.01 par value
common stock in shares of its $.01 par value common stock; or(b)
    
    subdivides its outstanding shares of its $.01 par value common stock into a
greater number of shares of its $.01 par value common stock; or(c)
    
    combines its outstanding shares of its $.01 par value common stock into a smaller
number of shares of $.01 par value common stock, the number of Torvec Common
issuable upon the conversion of the Class B Preferred shall be adjusted at the
time of the record date for the dividend or distribution or the effective date
of the subdivision or a combination so that after such record or effective date,
each holder of Class B Preferred will be entitled to receive the same percentage
of ownership of the Corporations $.01 par value common stock as such holder
would have been entitled to receive immediately prior to such record or
effective date.
       18




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##### Table of Contents



(g) Reports to Shareholders
  (h) Transfer Agent and Registrar
  
 Item 6.
    
    SELECTED FINANCIAL DATA
  
 Item 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 (a) Overall Business Strategy
 ® ®
 ®
  (b) Current Status of Business Plan and Ongoing Projects
  ®
   19




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##### Table of Contents



®
        (c) Company Expenses
     20




---



##### Table of Contents



(d) Liquidity and Capital Resources
  
    
    cash on hand at December 31, 2008, amounted to approximately $300,00
and mostly due to the receipt in the fourth quarter of 2008 of
approximately $280,000 representing New York State corporate income
tax refunds for credits allocable to certain research and development
expenses incurred by the company in the years 2005-2007;
    
    the sale during the year 2009 of approximately 551,483 shares of the
companys common stock for approximately $335,000 in gross proceeds;
    
    the receipt of approximately $175,000 from the National Aeronautics
and Space Administration in payment for delivery of seven infinitely
variable transmissions to
NASA.
         21




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##### Table of Contents



(e) Critical Accounting Policies
    ®
      22




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##### Table of Contents



(f) Impact of Inflation
  (g) Quarterly Fluctuations
  
 Item 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   23




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##### Table of Contents



Item 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 TORVEC, INC. AND SUBSIDIARIES   Contents
Financial Statements
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated balance sheets as of December 31, 2009 and 2008
    
    
    F-3Consolidated statements of operations for each of the years
in the two-year period ended December 31, 2009 and for the
period from September 25, 1996 (inception) through
December 31, 2009
    
    
    F-4Consolidated statements of changes in stockholders equity
(capital deficit) for the period from September 25, 1996
(inception) through December 31, 2009
    
    
    F-5 - F-12Consolidated statements of cash flows for each of the years
in the two-year period ended December 31, 2009 and for the
period from September 25, 1996 (inception) through
December 31, 2009
    
    
    F-13Notes to consolidated financial statements
    
    
    F-14 - F-34
  F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
  F-2




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##### Table of Contents



TORVEC, INC. AND SUBSIDIARIES
(a development stage company)
 
 
 2009
    
    
    2008ASSETSCurrent assets:Cash
    
    $
    41,000
    
    
    $
    304,000Prepaid expenses and other receivable
    
    
    111,000
    
    
    
    102,000Total current assets
    
    
    152,000
    
    
    
    406,000Property and Equipment:Office equipment
    
    
    68,000
    
    
    
    68,000Shop equipment
    
    
    139,000
    
    
    
    139,000Leasehold improvements
    
    
    213,000
    
    
    
    213,000Transportation equipment
    
    
    106,000
    
    
    
    106,000526,000
    
    
    
    526,000Less accumulated depreciation and amortization
    
    
    299,000
    
    
    
    237,000Net property and equipment
    
    
    227,000
    
    
    
    289,000Total Assets
    
    $
    379,000
    
    
    $
    695,000LIABILITIESCurrent liabilities:Notes payable  current
    
    $
    20,000
    
    
    $
    15,000Accounts payable
    
    
    255,000
    
    
    
    177,000Accrued liabilities
    
    
    451,000
    
    
    
    755,000Due to related party
    
    
    22,000
    
    
    
    Deferred income
    
    
    828,000
    
    
    
    Total current liabilities
    
    
    1,576,000
    
    
    
    947,000Deferred rent expense
    
    
    29,000
    
    
    
    39,000Deferred income
    
    
    
    
    
    
    800,000Notes payable  long term
    
    
    9,000
    
    
    
    29,000Total liabilities
    
    
    1,614,000
    
    
    
    1,815,000Commitments, contingencies and other matters [Note I]STOCKHOLDERS CAPITAL DEFICITPreferred stock, $.01 par value, 100,000,000 shares
authorized 3,300,000 designated as Class A,
non-voting, convertible, cumulative dividend $.40
per share, per annum, 2009 and 2008: 655,851 and
707,101 shares issued and outstanding, respectively,
(liquidation preference 2009: $3,841,491 and 2008: $3,858,015) 300,000 designated as Class B,
non-voting, convertible, cumulative dividend $.50
per share, per annum, 2009 and 2008: 77,500 and
97,500 shares issued and outstanding, respectively,
(liquidation preference 2009: $552,795 and 2008: $634,497)
    
    
    7,000
    
    
    
    8,000Common stock, $.01 par value, 400,000,000 shares
authorized, 35,811,192 and 32,811,422 issued and
outstanding at December 31, 2009 and 2008,
respectively
    
    
    358,000
    
    
    
    328,000Additional paid-in capital
    
    
    51,613,000
    
    
    
    48,485,000Deficit accumulated during the development stage
    
    
    (53,213,000
    )
    
    
    (49,941,000
    )Total Torvec, Inc. Capital Deficit
    
    
    (1,235,000
    )
    
    
    (1,120,000
    )Non-controlling interest
    
    
    
    
    
    
    Total Capital Deficit
    
    
    (1,235,000
    )
    
    
    (1,120,000
    )Total Liability and Stockholders Capital Deficit
    
    $
    379,000
    
    
    $
    695,000
 See notes to consolidated financial statements
  F-3




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##### Table of Contents



TORVEC, INC. AND SUBSIDIARIES
(a development stage company)
 
  September 25,1996(Inception)Year Ended
    
    
    ThroughDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009Revenue
    
    $
    175,000
    
    
    $
    121,000
    
    
    $
    422,000Cost of goods sold
    
    
    90,000
    
    
    
    105,000
    
    
    
    315,000Gross Profit
    
    
    85,000
    
    
    
    16,000
    
    
    
    107,000Costs and expenses:Research and development
    
    
    520,000
    
    
    
    535,000
    
    
    
    15,855,000General and administrative
    
    
    2,877,000
    
    
    
    3,165,000
    
    
    
    39,853,000Asset impairment
    
    
    
    
    
    
    
    
    
    
    1,071,000Loss from operations
    
    
    (3,312,000
    )
    
    
    (3,684,000
    )
    
    
    (56,672,000
    )Other income
    
    
    
    
    
    
    114,000
    
    
    
    260,000Loss
before reversal of liability and tax benefit
    
    
    (3,312,000
    )
    
    
    (3,570,000
    )
    
    
    (56,412,000
    )Reversal of liability on cancellation of debt
    
    
    
    
    
    
    1,541,000
    
    
    
    1,541,000Net loss before income tax benefit
    
    
    (3,312,000
    )
    
    
    (2,029,000
    )
    
    
    (54,871,000
    )Income tax benefit
    
    
    40,000
    
    
    
    346,000
    
    
    
    386,000Net loss
    
    
    (3,272,000
    )
    
    
    (1,683,000
    )
    
    
    (54,485,000
    )Net loss attributable to non-controlling interests in
consolidated subsidiary
    
    
    
    
    
    
    
    
    
    
    1,272,000Net loss attributable to Torvec, Inc.
    
    
    (3,272,000
    )
    
    
    (1,683,000
    )
    
    
    (53,213,000
    )Preferred stock beneficial conversion feature
    
    
    
    
    
    
    
    
    
    
    763,000Preferred stock dividend
    
    
    229,000
    
    
    
    307,000
    
    
    
    1,405,000Net loss attributable to Torvec, Inc. common stockholders
    
    $
    (3,501,000
    )
    
    $
    (1,990,000
    )
    
    $
    (55,381,000
    )Basic and diluted net loss attributable to Torvec, Inc. common
stockholders per share
    
    $
    (0.10
    )
    
    $
    (0.06
    )Weighted average number of shares of Torvec, Inc.
common stock  basic and diluted
    
    
    34,035,000
    
    
    
    32,196,000
 See notes to consolidated financial statements
  F-4




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##### Table of Contents



TORVEC, INC. AND SUBSIDIARIES  (a development stage company)
 
 
 DeficitUnearned
    
    
    AccumulatedClass A
    
    
    Class B
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Due
    
    
    Compensatory
    
    
    During the
    
    
    TotalPreferred Stock
    
    
    Preferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    From
    
    
    Stock and
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stockholders
    
    
    Options
    
    
    Stage
    
    
    EquityIssuance of shares
to founders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,464,400
    
    
    $
    165,000
    
    
    $
    (165,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0Issuance of stock
for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,535,600
    
    
    
    25,000
    
    
    
    381,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    406,000Sale of common
stock  November
($1.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,600
    
    
    
    1,000
    
    
    
    96,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    97,000Sale of common
stock  December
($1.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    156,201
    
    
    
    1,000
    
    
    
    233,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    234,000Distribution to
founders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,000
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (489,000
    )
    
    
    (489,000
    )Balance 
December 31, 1996
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,220,801
    
    
    
    192,000
    
    
    
    518,000
    
    
    
    
    
    
    
    
    
    
    
    (489,000
    )
    
    
    221,000Issuance of
compensatory stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000
    
    
    
    10,000
    
    
    
    1,490,000
    
    
    
    
    
    
    $
    (1,500,000
    )
    
    
    
    
    
    
    0Issuance of stock
for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,000
    
    
    
    
    
    
    
    18,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,000Sale of common
stock  January
($1.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,266
    
    
    
    1,000
    
    
    
    86,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87,000Sale of common
stock  February
($1.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,361
    
    
    
    1,000
    
    
    
    112,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113,000Sale of common
stock  May ($1.50
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,000
    
    
    
    
    
    
    
    45,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,000Issuance of stock
for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000
    
    
    
    
    
    
    
    6,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,000Sale of common
stock  June ($3.00
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73,166
    
    
    
    1,000
    
    
    
    219,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    220,000Sale of common
stock  July ($3.00
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,335
    
    
    
    
    
    
    
    40,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,000Sale of common
stock  August
($3.00 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,567
    
    
    
    1,000
    
    
    
    181,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    182,000Sale of common
stock  September
($3.00 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    30,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,000Sale of common
stock  October
($3.00 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,000
    
    
    
    
    
    
    
    21,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,000Sale of common
stock  November
($3.00 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    30,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,000Sale of common
stock  December
($3.00 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    1,000
    
    
    
    299,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,000Issuance of
compensatory
options to
consultants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    234,000
    
    
    
    
    
    
    
    (234,000
    )
    
    
    
    
    
    
    0Compensatory stock
and options earned
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    451,000
    
    
    
    
    
    
    
    451,000Distributions to
founders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (338,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (338,000
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (922,000
    )
    
    
    (922,000
    )Balance 
December 31, 1997
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,672,496
    
    
    
    207,000
    
    
    
    2,991,000
    
    
    
    
    
    
    
    (1,283,000
    )
    
    
    (1,411,000
    )
    
    
    504,000Issuance of stock
for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    
    
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,000Sale of common
stock  May 11 to
September 20 ($5.00
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112,620
    
    
    
    1,000
    
    
    
    562,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    563,000Sale of common
stock 
September 21 to
December 31 ($10.00
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,500
    
    
    
    
    
    
    
    255,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    255,000Costs of offering
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (60,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (60,000
    )Compensatory stock
and options earned
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    578,000
    
    
    
    
    
    
    
    578,000Contribution of
services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,122,000
    )
    
    
    (2,122,000
    )Balance 
December 31, 1998
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,811,616
    
    
    
    208,000
    
    
    
    3,766,000
    
    
    
    
    
    
    
    (705,000
    )
    
    
    (3,533,000
    )
    
    
    (264,000
    )Issuance of stock
for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,351
    
    
    
    
    
    
    
    327,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    327,000Sale of common
stock  January 1
to August 9 ($10.00
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,670
    
    
    
    1,000
    
    
    
    806,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    807,000Sale of common
stock  August 10
to November 30
($5.00 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84,500
    
    
    
    1,000
    
    
    
    422,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    423,000Issuance of
compensatory
options to
consultants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,780,000
    
    
    
    
    
    
    
    (2,780,000
    )
    
    
    
    
    
    
    0Common stock
issued- exercise of
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,000
    
    
    
    
    
    
    
    105,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    105,000Compensatory stock
and options earned
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,050,000
    
    
    
    
    
    
    
    3,050,000Contribution of
services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,788,000
    )
    
    
    (4,788,000
    )Balance 
December 31, 1999
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,043,137
    
    
    $
    210,000
    
    
    
    8,221,000
    
    
    
    
    
    
    $
    (435,000
    )
    
    
    (8,321,000
    )
    
    
    (325,000
    )
 See notes to consolidated financial statements
  F-5




---



##### Table of Contents



TORVEC, INC. AND SUBSIDIARIES
(a development stage company)
 DeficitUnearned
    
    
    AccumulatedClass A
    
    
    Class B
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Due
    
    
    Compensatory
    
    
    During the
    
    
    TotalPreferred Stock
    
    
    Preferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    From
    
    
    Stock and
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stockholders
    
    
    Options
    
    
    Stage
    
    
    EquityIssuance of stock for
services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    196,259
    
    
    $
    2,000
    
    
    $
    838,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    840,000Sale of common stock 
March 29 ($4.51 per
share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,321
    
    
    
    
    
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000Sale of common stock 
June 23 ($3.50 per
share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    1,000
    
    
    
    349,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    350,000Acquisition of Ice
Surface Development
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,068,354
    
    
    
    11,000
    
    
    
    3,394,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,405,000Proceeds from exercise
of put option
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,735
    
    
    
    1,000
    
    
    
    108,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109,000Compensatory stock and
options earned
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    435,000
    
    
    
    
    
    
    
    435,000Contribution of
services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,374,000
    )
    
    
    (2,374,000
    )Balance  December 31,
2000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,488,806
    
    
    
    225,000
    
    
    
    13,125,000
    
    
    
    
    
    
    
    0
    
    
    
    (10,695,000
    )
    
    
    2,655,000Issuance of stock for
liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    126,667
    
    
    
    1,000
    
    
    
    664,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    665,000Issuance of stock for
services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    361,100
    
    
    
    4,000
    
    
    
    1,007,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,011,000Issuance of option to
consultant for
services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    398,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    398,000Proceeds from exercise
of put option
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101,910
    
    
    
    1,000
    
    
    
    323,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    324,000Contribution of
services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,871,000
    )
    
    
    (3,871,000
    )Balance  December 31,
2001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,078,483
    
    
    
    231,000
    
    
    
    15,532,000
    
    
    
    
    
    
    
    0
    
    
    
    (14,566,000
    )
    
    
    1,197,000Exercise of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    124,448
    
    
    
    1,000
    
    
    
    126,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    127,000Exercise of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    3,000
    
    
    
    72,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,000Loss on sale of
minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (232,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (232,000
    )Sale of preferred
stock and warrant
    
    
    38,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    142,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    142,000Issuance of stock for
services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,001,454
    
    
    
    10,000
    
    
    
    1,224,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,234,000Issuance of options in
settlement of
liabilities and
consulting fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    653,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    653,000Issuance of warrants
to chairman
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    690,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    690,000Proceeds from exercise
of put option ($.90
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    440,000
    
    
    
    5,000
    
    
    
    391,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    396,000Common stock issued in
exchange for loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,461
    
    
    
    
    
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000Sale of common stock 
July ($1.45 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,897
    
    
    
    
    
    
    
    68,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,000Sale of common stock 
August ($1.42 per
share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    211,265
    
    
    
    2,000
    
    
    
    298,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,000Sale of common stock 
September ($1.42 per
share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    140,845
    
    
    
    1,000
    
    
    
    199,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000Sale of common stock 
December ($.91 per
share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109,890
    
    
    
    1,000
    
    
    
    99,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000Contribution of
services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000Issuance of warrant
for financial services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,000Warrant issued in lieu
of compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    633,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    633,000Issuance of shares in
settlement of
liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    190,965
    
    
    
    2,000
    
    
    
    267,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    269,000Compensatory stock
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,000Employees/Stockholders
Contribution of
services in subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    519,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    519,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,577,000
    )
    
    
    (4,577,000
    )Balance  December 31,
2002
    
    
    38,500
    
    
    
    0
    
    
    
    
    
    
    
    
    
    
    
    25,629,708
    
    
    $
    256,000
    
    
    $
    20,786,000
    
    
    
    
    
    
    $
    0
    
    
    $
    (19,143,000
    )
    
    $
    1,899,000
 See notes to consolidated financial statements
  F-6




---



##### Table of Contents



TORVEC, INC. AND SUBSIDIARIES  (a development stage company)
 
 DeficitUnearned
    
    
    AccumulatedClass A
    
    
    Class B
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Due
    
    
    Compensatory
    
    
    During the
    
    
    TotalPreferred Stock
    
    
    Preferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    From
    
    
    Stock and
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stockholders
    
    
    Options
    
    
    Stage
    
    
    EquitySale of Common Stock  March
($0.90 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111,112
    
    
    
    1,000
    
    
    $
    99,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    100,000Sale of Common Stock  June
(0.80 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    3,000
    
    
    
    197,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000Sale of Common Stock 
September ($2.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,000
    
    
    
    
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,000Advance settled with Common
Stock  October ($2.50 per
share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000Exercise of warrant for common
stock  (December $0.50 per
share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    2,000
    
    
    
    123,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125,000Issuance of stock for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    753,824
    
    
    
    8,000
    
    
    
    842,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    850,000Exercise of Warrants for $.01
per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130,000
    
    
    
    1,000
    
    
    
    (1,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of Warrants for $.01
per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    1,000
    
    
    
    (1,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of Warrants for $.01
per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,680
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of Warrants for $.01
per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,500Cashless exercise of put option
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    654,432
    
    
    
    7,000
    
    
    
    (7,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sale of Class A Preferred
Stock  September ($4.00 per
share)
    
    
    5,575
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,000Sale of Class A Preferred
Stock  December ($4.00 per
share)
    
    
    10,112
    
    
    $
    1,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,000Issuance of option for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,000Issuance of options in
settlement of liabilities and
consulting fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    265,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    265,000Contribution of services in
subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    173,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    173,000Adjustment for equity
issuances of subsidiary common
stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,000Class A Preferred stock issued
    
    
    2,305
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,000NET LOSS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,927,000
    )
    
    
    (2,927,000
    )Balance at December 31, 2003
    
    
    56,492
    
    
    $
    1,000
    
    
    
    
    
    
    
    
    
    
    
    27,858,256
    
    
    $
    279,000
    
    
    $
    22,717,000
    
    
    
    
    
    
    
    
    
    
    $
    (22,070,000
    )
    
    $
    927,000
 See notes to consolidated financial statements
  F-7




---



##### Table of Contents



TORVEC, INC. AND SUBSIDIARIES
(a development stage company)
 DeficitUnearned
    
    
    AccumulatedClass A
    
    
    Class B
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Due
    
    
    Compensatory
    
    
    During the
    
    
    TotalPreferred Stock
    
    
    Preferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    From
    
    
    Stock and
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stockholders
    
    
    Options
    
    
    Stage
    
    
    EquitySale of Common
Stock  June, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,000
    
    
    $
    1,000
    
    
    $
    300,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    301,000Issuance of common
stock for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    469,883
    
    
    
    4,000
    
    
    
    2,348,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,352,000Sale of Class A
Preferred Stock
($4.00 per share) 
March
    
    
    203,117
    
    
    $
    2,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    820,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    822,000Sale of Class A
Preferred Stock
($4.00 per share) 
April
    
    
    32,653
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    121,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    121,000Conversion of
Preferred Stock
Class A
    
    
    (41,050
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,050
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Preferred Dividend
Class A
attributable to
converted shares
    
    
    8,031
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sale of Class B
Preferred Stock
($5.00 per share) 
September
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000Sale of Class B
Preferred Stock
($5.00 per share) 
October
    
    
    
    
    
    
    
    
    
    
    22,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113,000Contribution of
services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    450,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    450,000Exercise of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    268,865
    
    
    
    3,000
    
    
    
    (2,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000Exercise of
consultants
warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    345,600
    
    
    
    3,000
    
    
    
    
    
    
    
    (3,000
    )
    
    
    
    
    
    
    
    
    
    
    Issuance of
warrants for
consulting services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,794,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,794,000Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,805,000
    )
    
    
    (9,805,000
    )Balance at
December 31, 2004
    
    
    259,243
    
    
    $
    3,000
    
    
    
    42,500
    
    
    
    
    
    
    
    29,043,654
    
    
    $
    290,000
    
    
    $
    32,761,000
    
    
    $
    (3,000
    )
    
    
    
    
    
    $
    (31,875,000
    )
    
    $
    1,176,000
 See notes to consolidated financial statements
  F-8




---



##### Table of Contents



TORVEC, INC. AND SUBSIDIARIES
(a development stage company)
 DeficitUnearned
    
    
    AccumulatedClass A
    
    
    Class B
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Due
    
    
    Compensatory
    
    
    During the
    
    
    TotalPreferred Stock
    
    
    Preferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    From
    
    
    Stock and
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stockholders
    
    
    Options
    
    
    Stage
    
    
    EquityIssuance of common
stock for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    786,309
    
    
    $
    8,000
    
    
    $
    1,771,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,779,000Sale of Class A
Preferred Stock ($4.00
per share)  March
    
    
    47,500
    
    
    $
    1,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    190,000Sale of Class A
Preferred Stock ($4.00
per share)  April/May
    
    
    30,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,000Sale of Class A
Preferred Stock ($4.00
per share)
    
    
    92,500
    
    
    $
    1,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    369,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    370,000Sale of Class A
Preferred Stock ($4.00
per share) 
October/November
    
    
    30,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,000Contribution of services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,000Issuance of options for
consulting services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    247,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    247,000Exercise of consultants
warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161,000
    
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000Issuance of warrants
for consulting services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,261,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,261,000Issuance of shares for
debt repayment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,667
    
    
    
    
    
    
    
    28,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,000Shares issued for
future consulting
services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    
    
    
    
    103,000
    
    
    
    
    
    
    
    (103,000
    )Receipt for common
stock par stock value
for amounts paid in
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,000
    )
    
    
    2,000Reclass of due from
Stockholder to other
receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    1,000Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,445,000
    )
    
    
    (5,445,000
    )Balance at December 31,
2005
    
    
    459,243
    
    
    $
    5,000
    
    
    
    42,500
    
    
    
    
    
    
    
    30,052,630
    
    
    $
    300,000
    
    
    $
    37,267,000
    
    
    $
    
    
    
    $
    (103,000
    )
    
    $
    (37,320,000
    )
    
    $
    149,000
 See notes to consolidated financial statements
  F-9




---



##### Table of Contents



TORVEC, INC. AND SUBSIDIARIES
(a development stage company)
 DeficitUnearned
    
    
    AccumulatedClass A
    
    
    Class B
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Due
    
    
    Compensatory
    
    
    During the
    
    
    TotalPreferred Stock
    
    
    Preferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    From
    
    
    Stock and
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stockholders
    
    
    Options
    
    
    Stage
    
    
    EquityIssuance of common
stock for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    375,230
    
    
    $
    5,000
    
    
    $
    799,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    804,000Sale of Class A
Preferred Stock
($4.00 per share) 
January and
March 2006
    
    
    58,250
    
    
    $
    1,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    232,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    233,000Sale of Class A
Preferred Stock
($4.00 per share) 
May 2006
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000Sale of Class A
Preferred Stock
($4.00 per share) 
July and
August 2006
    
    
    78,750
    
    
    $
    1,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    314,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    315,000Sale of Class A
Preferred Stock
($4.00 per share) 
October and
November 2006
    
    
    111,250
    
    
    $
    1,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    444,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    445,000Sale of Class B
Preferred Stock
($5.00 per share)
    
    
    
    
    
    
    
    
    
    
    55,000
    
    
    $
    1,000
    
    
    
    
    
    
    
    
    
    
    
    274,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    275,000Contribution of
services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,000Exercise of
consultants
warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    680,932
    
    
    $
    7,000
    
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,000Issuance of
warrants for
consulting services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,614,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,614,000Shares issued for
consulting services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    160,000
    
    
    $
    1,000
    
    
    
    420,000
    
    
    
    
    
    
    
    103,000
    
    
    
    
    
    
    
    524,000Issuance of Common
Stock to Placement
agent for finders
fee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,000Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,727,000
    )
    
    
    (7,727,000
    )Balance at
December 31, 2006
    
    
    732,493
    
    
    $
    8,000
    
    
    
    97,500
    
    
    $
    1,000
    
    
    
    31,307,792
    
    
    $
    313,000
    
    
    $
    43,767,000
    
    
    $
    0
    
    
    $
    0
    
    
    $
    (45,047,000
    )
    
    $
    (958,000
    )
 See notes to consolidated financial statements
  F-10




---



##### Table of Contents



TORVEC, INC. AND SUBSIDIARIES
(a development stage company)
 DeficitUnearned
    
    
    Accumulated
    
    
    TotalClass A
    
    
    Class B
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Due
    
    
    Compensatory
    
    
    During the
    
    
    StockholdersPreferred Stock
    
    
    Preferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    From
    
    
    Stock and
    
    
    Development
    
    
    EquityShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stockholders
    
    
    Options
    
    
    Stage
    
    
    (Capital Deficit)Contribution of
services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,000Exercise of Warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,250
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000Shares Issued for
Services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    302,003
    
    
    
    2,000
    
    
    
    1,190,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,192,000Warrants Issued for
Services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    650,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    650,000Stock Issued for
Purchase of
Variable Gear, LLC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,000
    
    
    
    
    
    
    
    19,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,000Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,211,000
    )
    
    
    (3,211,000
    )Balance at
December 31, 2007
    
    
    732,493
    
    
    $
    8,000
    
    
    
    97,500
    
    
    $
    1,000
    
    
    
    31,640,045
    
    
    $
    316,000
    
    
    $
    45,926,000
    
    
    $
    0
    
    
    $
    0
    
    
    $
    (48,258,000
    )
    
    $
    (2,007,000
    )
 See notes to consolidated financial statements
 DeficitUnearned
    
    
    Accumulated
    
    
    TotalClass A
    
    
    Class B
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Due
    
    
    Compensatory
    
    
    During the
    
    
    StockholdersPreferred Stock
    
    
    Preferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    From
    
    
    Stock and
    
    
    Development
    
    
    EquityShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stockholders
    
    
    Options
    
    
    Stage
    
    
    (Capital Deficit)Conversion
    
    
    (32,305
    )
    
    
    (1,000
    )
    
    
    
    
    
    
    
    
    
    
    32,305
    
    
    
    1,000Shares Issued for
Services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    875,390
    
    
    
    7,000
    
    
    
    1,730,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,737,000Shares Issued as
Compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    147,757
    
    
    
    3,000
    
    
    
    331,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    334,000Dividend
    
    
    6,913Issuance of Common
Stock  June
($2.75 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,364
    
    
    
    1,000
    
    
    
    99,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000Issuance of Common
Stock  September
($1.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    
    
    
    
    30,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,000Issuance of Common
Stock  October
($1.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,000
    
    
    
    
    
    
    
    68,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,000Warrants Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,500Warrants Issued for
Services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    249,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    249,000Shares Issued for
Commercializing
Event
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,061
    
    
    
    
    
    
    
    36,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,000Contributed Capital
 Ford Truck
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,000Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,683,000
    )
    
    
    (1,683,000
    )Balance at
December 31, 2008
    
    
    707,101
    
    
    $
    7,000
    
    
    
    97,500
    
    
    $
    1,000
    
    
    
    32,811,422
    
    
    $
    328,000
    
    
    $
    48,485,000
    
    
    $
    0
    
    
    $
    0
    
    
    $
    (49,941,000
    )
    
    $
    (1,120,000
    )
 See notes to consolidated financial statements
  F-11




---



##### Table of Contents



TORVEC, INC. AND SUBSIDIARIES
(a development stage company)
 DeficitUnearned
    
    
    Accumulated
    
    
    
    
    
    
    TotalClass A
    
    
    Class B
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Due
    
    
    Compensatory
    
    
    During the
    
    
    Non-
    
    
    StockholdersPreferred Stock
    
    
    Preferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    From
    
    
    Stock and
    
    
    Development
    
    
    controlling
    
    
    EquityShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stockholders
    
    
    Options
    
    
    Stage
    
    
    Interest
    
    
    (Capital Deficit)Conversion
Preferred A
    
    
    (51,250
    )
    
    
    (1,000
    )
    
    
    
    
    
    
    
    
    
    
    51,250
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Payment of
Preferred A
Dividend in Common
Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65,965
    
    
    
    1,000
    
    
    
    (1,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Conversion
Preferred B
    
    
    
    
    
    
    
    
    
    
    (20,000
    )
    
    
    
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Payment of
Preferred B
Dividend in Common
Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,103
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -Shares Issued for
Services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,861,475
    
    
    
    18,000
    
    
    
    1,281,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,299,000Shares Issued as
Compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    377,152
    
    
    
    4,000
    
    
    
    286,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    290,000Issuance of common
stock April ($0.78
per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,103
    
    
    
    1,000
    
    
    
    49,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000Issuance of common
stock June ($0.67
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,000
    
    
    
    
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,000Issuance of common
stock July ($0.60
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86,665
    
    
    
    1,000
    
    
    
    51,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,000Issuance of common
stock July ($0.51
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,216
    
    
    
    1,000
    
    
    
    19,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,000Issuance of common
stock July ($0.76
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,200
    
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,000Issuance of common
stock August ($0.60
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000
    
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000Issuance of common
stock August ($0.72
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,961
    
    
    
    1,000
    
    
    
    29,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,000Issuance of common
stock September
($0.70 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,142
    
    
    
    
    
    
    
    12,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,000Issuance of common
stock September
($0.77 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,944
    
    
    
    
    
    
    
    6,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,000Issuance of common
stock October
($0.52 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    192,308
    
    
    
    2,000
    
    
    
    98,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000Issuance of common
stock October
($0.63 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    
    
    
    
    13,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,000Issuance of common
stock December
($0.40 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,944
    
    
    
    
    
    
    
    7,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,000Warrants Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of
restricted share
for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,173
    
    
    
    
    
    
    
    19,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,000Shares Issued for
Commercializing
Event
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,669
    
    
    
    
    
    
    
    14,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,000Contributed Services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,200,000Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,272,000
    )
    
    
    
    
    
    
    (3,272,000
    )Balance at
December 31, 2009
    
    
    655,851
    
    
    $
    6,000
    
    
    
    77,500
    
    
    $
    1,000
    
    
    
    35,811,192
    
    
    $
    358,000
    
    
    $
    51,613,000
    
    
    $
    0
    
    
    $
    0
    
    
    $
    (53,213,000
    )
    
    $
    0
    
    
    $
    (1,235,000
    )
 See notes to consolidated financial statements
  F-12




---



##### Table of Contents



TORVEC, INC. AND SUBSIDIARIES
(a development stage company)
 
  September 25,1996(Inception)Year Ended
    
    
    ThroughDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (3,272,000
    )
    
    $
    (1,683,000
    )
    
    $
    (53,213,000
    )Adjustments to reconcile net loss to net cash used in operating activities:Loss attributable to non-controlling interests in consolidated subsidiary
    
    
    
    
    
    
    
    
    
    
    (1,272,000
    )Depreciation and amortization
    
    
    62,000
    
    
    
    67,000
    
    
    
    2,512,000Change in Accrued Payroll Taxes
    
    
    68,000
    
    
    
    109,000
    
    
    
    177,000Loss on impairment
    
    
    
    
    
    
    
    
    
    
    1,071,000Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    19,000Gain on sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    (10,000
    )Compensation expense attributable to common stock in Subsidiary
    
    
    
    
    
    
    
    
    
    
    619,000Common stock issued for services
    
    
    1,318,000
    
    
    
    1,498,000
    
    
    
    14,512,000Warrants issued for services
    
    
    
    
    
    
    249,000
    
    
    
    249,000Shares Issued for future consulting services
    
    
    
    
    
    
    
    
    
    
    103,000Contribution to Capital, Ford Truck
    
    
    
    
    
    
    16,000
    
    
    
    16,000Stockholder contribution of services
    
    
    1,200,000
    
    
    
    
    
    
    
    3,609,000Common stock issued in connection with commercializing event planning
    
    
    14,000
    
    
    
    36,000
    
    
    
    50,000Reversal of Liability
    
    
    
    
    
    
    (1,541,000
    )
    
    
    (1,541,000
    )Compensatory common stock
    
    
    290,000
    
    
    
    334,000
    
    
    
    17,876,000Changes to:Prepaid expenses and other receivables
    
    
    (9,000
    )
    
    
    (59,000
    )
    
    
    50,000Deferred revenue
    
    
    28,000
    
    
    
    209,000
    
    
    
    737,000Deferred rent expense
    
    
    (10,000
    )
    
    
    39,000
    
    
    
    29,000Accounts payable and accrued expenses
    
    
    306,000
    
    
    
    65,000
    
    
    
    4,244,000Due to related party
    
    
    22,000
    
    
    
    
    
    
    
    22,000Deferred Compensation and Other
    
    
    (600,000
    )
    
    
    600,000
    
    
    
    Net cash used in operating activities
    
    
    (583,000
    )
    
    
    (61,000
    )
    
    
    (10,141,000
    )Cash flows from investing activities:Purchase of equipment
    
    
    
    
    
    
    (11,000
    )
    
    
    (360,000
    )Cost of acquisition
    
    
    
    
    
    
    
    
    
    
    (16,000
    )Proceeds from sale of fixed asset
    
    
    
    
    
    
    
    
    
    
    10,000Net cash used in investing activities
    
    
    
    
    
    
    (11,000
    )
    
    
    (366,000
    )Cash flows from financing activities:Net proceeds from sales of common stock and upon exercise of options and warrants
    
    
    335,000
    
    
    
    198,000
    
    
    
    7,034,000Net proceeds from sales of preferred stock
    
    
    
    
    
    
    
    
    
    
    3,537,000Net proceeds from sale of subsidiary stock
    
    
    
    
    
    
    
    
    
    
    234,000Proceeds from loan
    
    
    
    
    
    
    
    
    
    
    85,000Repayment of loan
    
    
    (15,000
    )
    
    
    (14,000
    )
    
    
    (80,000
    )Proceeds from loan
    
    
    
    
    
    
    
    
    
    
    250,000Repayment of officer loan
    
    
    
    
    
    
    
    
    
    
    (147,000
    )Distributions
    
    
    
    
    
    
    
    
    
    
    (365,000
    )Net cash provided by financing activities
    
    
    320,000
    
    
    
    184,000
    
    
    
    10,548,000Net (decrease) increase in cash and cash equivalents
    
    
    (263,000
    )
    
    
    112,000
    
    
    
    41,000Cash and cash equivalents at beginning of period
    
    
    304,000
    
    
    
    192,000Cash and cash equivalents at end of period
    
    $
    41,000
    
    
    $
    304,000
    
    
    $
    41,000Noncash investing and financing activities:Issuance of common stock for license
    
    $
    
    
    
    $
    
    
    
    $
    3,405,000Issuance of common stock, warrant and options in settlement of liabilities,
except notes payable
    
    
    
    
    
    
    
    
    
    
    2,907,000Notes payable exchanged for common stock
    
    
    
    
    
    
    
    
    
    
    50,000Loss on exchange of minority interest
    
    
    
    
    
    
    
    
    
    
    232,000Advance settled with common stock
    
    
    
    
    
    
    
    
    
    
    25,000Preferred dividends paid in preferred stock
    
    
    
    
    
    
    7,000
    
    
    
    39,000Shares issued for future consulting services
    
    
    
    
    
    
    
    
    
    
    103,000Issuance of common stock for a finders fee
    
    
    
    
    
    
    
    
    
    
    225,000Advance from stockholder
    
    
    
    
    
    
    
    
    
    
    250,000Issuance of common stock, leasehold improvement
    
    
    
    
    
    
    64,000
    
    
    
    166,000Shares issued for acquisition of Variable Gear
    
    
    
    
    
    
    
    
    
    
    19,000Contribution of FTV Ford Truck
    
    
    
    
    
    
    16,000
    
    
    
    16,000ICE payable netted against receivable
    
    
    
    
    
    
    91,000
    
    
    
    91,000Common stock issued in settlement of director fee payable
    
    
    63,000
    
    
    
    58,000
    
    
    
    121,000Common stock issued in settlement of Patent expense
    
    
    
    
    
    
    117,000
    
    
    
    117,000Issuance of common stock as payment for Preferred A and B dividends
    
    
    76,883
    
    
    
    
    
    
    
    76,683Supplemental disclosures:Interest
    
    
    3,000
    
    
    
    4,000
    
    
    
    27,000Taxes
    
    
    
    
    
    
    
    
    
    
    1,000
 See notes to consolidated financial statements
  F-13




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##### Table of Contents



TORVEC, INC. AND SUBSIDIARIES
(a development stage company)
 
 
 Note A  The Company and Basis of Presentation
 ®
     Note B  Summary of Significant Accounting Policies
 [1] Consolidation:
  [2] Cash and Cash Equivalents
   F-14




---



##### Table of Contents



[3] Property and Equipment:
  [4] Research and Development and Patents:
   [5] License:
    [6] Use of Estimates:
  [7] Loss per Common Share:
   F-15




---



##### Table of Contents



[8] Fair Value of Financial Instruments:
  [9] Stock-based Compensation:
     [10] Revenue Recognition:
  [11] Recent Accounting Pronouncements:
   F-16




---



##### Table of Contents



NOTE C  LICENSE FROM THE TRUSTEES OF DARTMOUTH COLLEGE
     F-17




---



##### Table of Contents



NOTE D  RELATED PARTY TRANSACTIONS
 [1]
     [2]
  F-18




---



##### Table of Contents



[3]
 [4]
 [5]
 [6]
 [7]
 [8]
 NOTE E  INCOME TAXES
    December 31,
    
    
    December 31,2009
    
    
    2008Income tax benefit at the federal statutory rate
    
    
    (1,087,000
    )
    
    
    (729,000
    )State income taxes, net of effect on federal taxes
    
    
    (103,000
    )
    
    
    (176,000
    )Reversal of ICE liability
    
    
    
    
    
    
    (524,000
    )New York State tax credit
    
    
    14,000
    
    
    
    117,000Refundable tax credits
    
    
    (40,000
    )
    
    
    (346,000
    )Contribution of capital  shareholders services
    
    
    408,000
    
    
    
    Other
    
    
    
    
    
    
    (7,000
    )Increase in valuation allowance
    
    
    768,000
    
    
    
    1,319,000Provision for income tax
    
    
    (40,000
    )
    
    
    (346,000
    )
  F-19




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2009
    
    
    2008Net operating loss carryforward
    
    $
    10,145,000
    
    
    $
    8,843,000Deferred start up costs
    
    
    7,829,000
    
    
    
    8,434,000Stock-based compensation
    
    
    342,000
    
    
    
    342,000Other
    
    
    126,000
    
    
    
    56,00018,442,000
    
    
    
    17,675,000Less: Valuation allowance
    
    
    (18,442,000
    )
    
    
    (17,675,000
    )Net deferred tax asset
    
    $
    
    
    
    $
    
     NOTE F  ACCRUED LIABILITIES
  2009
    
    
    2008Accrued Compensation
    
    $
    
    
    
    $
    600,000Accrued Payroll Tax Payable
    
    
    315,000
    
    
    
    155,000Accrued Legal
    
    
    124,000
    
    
    
    Other
    
    
    12,000
    
    
    
    $
    451,000
    
    
    $
    755,000
 NOTE G  NOTE PAYABLE
    Period EndingDecember 31,2010
    
    $
    22,0002011
    
    
    10,000Total Minimum payments
    
    
    32,000Less-amount representing interest
    
    
    3,00029,000Less-Current Maturities
    
    
    20,000Long Term Portion
    
    $
    9,000
  F-20




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##### Table of Contents



Note H  Stockholders Equity (Capital Deficit)
 [1] Private Placement Common Stock:
        [2] Class A Preferred Stock:
       F-21




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##### Table of Contents



[3] Class B Preferred Stock:
        F-22




---



##### Table of Contents



[4] Initial Public Offering Consultant:
   [5] Common Stock Subject to Resale Guarantee:
  [6] Stock-Option Plan:
     F-23




---



##### Table of Contents



Options Outstanding and ExercisableWeighted
    
    
    WeightedAverage
    
    
    Average
    
    
    AggregateExercise
    
    
    Remaining Life
    
    
    IntrinsicShares
    
    Price
    
    
    in Years
    
    
    Value641,848
    
    4.79
    
    
    3.75
    
    
    $0
  [7] Business Consultants Stock Plan:
  Common Shares Issued to BusinessFor the year ended
    
    Consultants and Other Third Parties
    
    
    Amount Charged toDecember 31,
    
    in Exchange for Services
    
    
    Operations
    
    
    Note2009
    
    
    2,243,296
    
    
    $
    1,603,0002008
    
    
    1,000,348
    
    
    $
    2,040,0002007
    
    
    359,432
    
    
    $
    1,245,0002006
    
    
    983,230
    
    
    $
    1,861,000
    
    
    
    A2005
    
    
    836,309
    
    
    $
    1,874,0002004
    
    
    469,883
    
    
    $
    2,352,0002003
    
    
    738,184
    
    
    $
    832,0002002
    
    
    1,057,455
    
    
    $
    1,036,000
    
    
    
    B2001
    
    
    361,100
    
    
    $
    1,011,0002000
    
    
    196,259
    
    
    $
    840,0001999
    
    
    45,351
    
    
    $
    327,000
 A-
    
    Includes 448,000 business consulting shares issued upon exercise of warrants at a value of
approximately $629,000.B-
    
    Includes 190,965 issued in settlement of amounts owed at a approximate value of $269,000
(see Note H[10])  F-24




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[8] Nonmanagement Directors Plan:
          F-25




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##### Table of Contents



[9] Restricted Shares Issued for Services and Rent:
   [10] Business, Financial and Engineering Consultants:
           F-26




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##### Table of Contents



Year Ended December 31,2008Dividend yield
    
    
    0.0
    %Expected volatility
    
    
    0.55
    %Risk free interest rate
    
    
    2.89
    %Expected Life
    
    
    8.83 years
  [11] Equity Funding Commitment:
       F-27




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##### Table of Contents



[12] Warrants:
  Number of
    
    
    Number ofExercise
    
    
    
    
    
    Warrants
    
    
    WarrantsPrice
    
    
    Expiration
    
    
    Outstanding
    
    
    Exercisable(a)
    
    
    (a)
    
    
    125,000
    (a)
    
    
    $
    .75
    
    None
    
    
    
    500,000
    (b)
    
    
    $
    .01
    
    None
    
    
    
    54,500
    (c)
    
    
    54,500$
    .01-5.00
    
    None
    
    
    
    39,000
    (d)
    
    
    39,000$
    5.00
    
    
    2015
    
    
    
    255,000
    (e)
    
    
    255,000$
    .01
    
    None
    
    
    
    6,000
    (f)
    
    
    6,000$
    .01
    
    None
    
    
    
    3,750
    (g)
    
    
    3,750$
    1.00
    
    None
    
    
    
    20,500
    (h)
    
    
    20,500$
    3.27
    
    
    2016
    
    
    
    400,000
    (i)
    
    
    400,000$
    3.75
    
    
    2016
    
    
    
    200,000
    (j)
    
    
    200,000$
    5.00
    
    
    2017
    
    
    
    50,000
    (k)
    
    
    50,000$
    5.00
    
    
    2017
    
    
    
    100,000
    (l)
    
    
    100,000
 (a)
    
    Exercisable only if the company has an IPO and exercisable at the
IPO price five years from IPO. Through the year ended December
31, 2009, the company has not conducted an IPO.(b)
    
    On April 15, 2002, the company issued 1,000,000 warrants to
purchase common stock at prices ranging from $.30 to $.75 to its
then chairman of the board of directors and chief executive
officer. Of the total warrants, 250,000 were exercisable at $.30,
and 250,000 were exercisable at $.50 on the date the then board
elected the executive to the board and named him chief executive
officer. During the year ended December 31, 2002, 250,000
warrants were exercised for $.30 per share, resulting in proceeds
of $75,000. During the year ended December 31, 2003, 250,000
warrants were exercised for $.50 per share, resulting in proceeds
of $125,000. The remaining 500,000 warrants are exercisable upon
the execution of the company of a binding agreement for the sale,
transfer, license or assignment for value of any and/or all of
its companys automotive technology at $.75 per share. The
company will record a charge representing the fair value of the
warrants when the warrants become exercisable.(c)
    
    The company has issued an aggregate 123,500 warrants at an
exercise price of $0.01 to its nonmanagement directors for
services rendered to the board under its Nonmanagement Directors
Stock Plan prior to its amendment on October 13, 2006. No further
warrants are issuable under the Plan as modified by the board of
directors on October 13, 2006 (See Note E [8]). An aggregate
69,000 warrants have been exercised for approximately $630 of
proceeds, with 6,000 warrants exercised during the year ended
December 31, 2008 for proceeds of $60. No warrants were exercised
during the year ended December 31, 2009.(d)
    
    In 2005, the company issued 12,000 warrants to a consultant,
immediately exercisable at $0.01 per common share. During 2005,
3,000 warrants were exercised for proceeds of $30. In 2006, the
company issued 30,000 warrants to consultants exercisable
immediately for a ten year term at $5.00 per common share. None
of these warrants were exercised during the years ended December
31, 2009 and 2008.(e)
    
    During 2005, the company issued 210,000 warrants to certain
engineering and administrative consultants, exercisable
immediately for a ten year term at $5.00 per common share. During
2006, the company issued 295,000 warrants to certain engineering
consultants exercisable over a ten year term at $5.00 per common
share, but only exercisable if the company sells, licenses or
otherwise transfers one or more technologies for value. The
engineering consultants holding 445,000 of these warrants agreed
to cancel them in the fourth quarter of 2008 in exchange for
their participation in the companys Commercializing Event Plan.
On March 28, 2008, the company issued an aggregate 195,000
warrants exercisable until 2016 at $5.00 per common shares to two
consultants who elected not to participate in the companys 2007
Commercializing Event Plan. The company recorded a charge of
$249,000 to general and administrative expense. None of these
warrants were exercised during the years ended December 31, 2009
and 2008.  F-28




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##### Table of Contents



(f)
    
    During 2005, the company issued 6,000 warrants to a consultant,
exercisable immediately for a five year term at $0.01 per common
share. None of these warrants have been exercised through
December 31, 2009.(g)
    
    During 2005, the company issued 62,500 warrants to investors in
connection with their purchase of 62,500 Class A Preferred,
immediately exercisable at $.01 per common share. During 2006,
the company issued 135,849 warrants to investors along with their
purchase 162,000 Class A Preferred and 20,000 Class B Preferred,
all immediately exercisable at $.01 per common share. At December
31, 2008 an aggregate 182,099 of these warrants have been
exercised for proceeds of approximately $1,258. On July 31, 2009,
an additional 12,500 warrants were exercised for 12,500 common
shares. No additional warrants were issued in the years ended
December 31, 2009 and 2008.(h)
    
    During 2006, one investor purchased 20,500 warrants immediately
exercisable immediately for a five year term at $1.00 per common
share for a purchase price of $2,000. None of these warrants have
been exercised through December 31, 2009.(i)
    
    During 2006, the company issued 400,000 warrants immediately
exercisable for ten years at an exercise price of $3.27 per
common share to a business consultant. None of these warrants
have been exercised through December 31, 2009.(j)
    
    During 2006, the company issued 200,000 warrants immediately
exercisable for ten years at an exercise price of $3.75 per
common share to a former governmental affairs consultant. None of
these warrants have been exercised through December 31, 2009.(k)
    
    During 2007, the company issued 50,000 warrants exercisable for
ten years at $5.00 per common share upon the happening of a
commercializing event. The warrants were issued to a consultant
who assisted the company to potentially place its products in
various state school bus programs. The company recorded a charge
of $249,000 to general and administrative expenses. None of these
warrants have been exercised through December 31, 2009.(l)
    
    During 2007, the company issued 100,000 warrants immediately
exercisable for ten years at an exercise price of $5.00 per
common share to two engineering consultants in connection with
the companys engagement to furnish constant velocity joints to a
military contractor. The company recorded a charge of $401,000 to
general and administrative expenses. None of these warrants have
been exercised through December 31, 2009.  2009WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term
    
    
    ValueOutstanding at January 1,
    
    
    1,766,250
    
    
    $
    2.82
    
    
    
    7.60 years
    
    
    $
    Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (12,500
    )
    
    
    0.01
    
    
    
    
    
    
    
    Canceled or expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at December 31,
    
    
    1,753,750
    
    
    $
    2.84
    
    
    
    6.65 years
    
    
    $
    38,090Exercisable at December 31,
    
    
    1,128,750
    
    
    $
    3.77
    
    
    
    6.65 years
    
    
    $
    38,090
  F-29




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##### Table of Contents



[13] Issuance of Stock and Warrants to Subsidiary:
    [14] Shares Issued for Consulting Services:
     [15] Commercializing Event Plan:
     F-30




---



##### Table of Contents



(a)
    
    for purposes of the good standing requirement, all participants are considered to be in good
standing unless a unanimous vote of the board of directors determines otherwise. In making this
determination, the board is required to consider whether a person has engaged in conduct which has
significantly harmed the company and to consider that any material violation of the companys Code
of Conduct shall constitute prima facie evidence that the company has been harmed;(b)
    
    participants shall be entitled to payment even though the participant is not actively engaged as a
consultant to or employee of the company if the reason for not being so engaged is due to death,
disability from accident, disease or similar circumstance beyond the participants control or is on
a leave of absence approved by an authorized officer;(c)
    
    the plan shall terminate no earlier than October 10, 2017 but that subject to such condition, the
plan may be terminated by the board of directors in its sole direction;(d)
    
    the benefits provided by the plan may not be reduced during its term as to amount, time, method,
manner of payment and/or any other material condition;(e)
    
    distributions under the plan shall be made on a commercializing event by commercializing event basis.
   ®
  F-31




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##### Table of Contents



December 31, 2008
Black-Scholes Inputs
 Term
    
    
    8.84 yearsExpected forfeiture rate
    
    
    0
    %Risk-free rate
    
    
    2.89
    %Volatility
    
    
    0.55Dividend yield
    
    
    0
    %
  F-32




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##### Table of Contents



Note I  Commitments and Other Matters
 [1] Variable Gear, LLC:
   [2] Leases:
   th
  Note J  Management Agreement
   Note K  Litigation
     F-33




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Note L  Royalty Agreement
  Note M  Subsequent Events
           F-34




---



##### Table of Contents



Item 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 Item 9A
    
    CONTROLS and PROCEDURES
  REPORT ON MANAGEMENTS ASSESSMENT OF INTERNAL CONTROL OVER  FINANCIAL REPORTING
     
   24




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##### Table of Contents



Item 9B.
    
    OTHER INFORMATION
  
 PART III
 
 Item 10.
    
    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
 (a) Identification of Directors, Executive Officers And Consultants
  Date of Election orDirector
    
    Principal Occupation
    
    
    Age
    
    
    Designation**Gary A. Siconolfi
    
    Chairman of the Board
    
    
    59
    
    
    
    10/31/02325 VanVoorhis AvenueRochester, NY 14617 (1)James Y. Gleasman+++
    
    Chief Executive Officer,
    
    
    69
    
    
    
    02/20/98987 Elmwood Avenue
    
    Interim Chief FinancialBrighton, New York 14618 (2)
    
    Officer, DirectorKeith E. Gleasman
    
    President, Director
    
    
    63
    
    
    
    09/26/9611 McCoordwoods DriveFairport, NY 14450 (3)Herbert H. Dobbs
    
    Secretary, Director
    
    
    79
    
    
    
    02/20/98448 West Maryknoll RoadRochester Hills, MI 48309 (4)Daniel R. Bickel
    
    Certified Public Accountant,
    
    
    62
    
    
    
    10/31/0239 Whippletree Road
    
    DirectorFairport, New York 14450 (5)Asher J. Flaum
    
    Real Estate Developer, Director
    
    
    30
    
    
    
    10/10/0849 Sunrise ParkPittsford, New York 14534 (6)Joseph B. Rizzo
    
    Attorney, Director
    
    
    45
    
    
    
    9/9/0539 State Street, Suite 700Rochester, New York 14614 (7)William W. Destler, Ph.D.
    
    College President, Director
    
    
    63
    
    
    
    9/15/09One Lomb Memorial DriveRochester, New York 14623
 **
    
    Changes in Control  To the best 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. Under the companys bylaws, the members of the board
of directors serve until the next annual meeting of shareholders
and until their successors have been elected or appointed and
shall have qualified, or until their prior resignation or
termination. All directors were reelected to the board at the
annual meeting of shareholders held on January 28, 2010.+++
    
    Effective March 14, 2010, James Y. Gleasman retired as a member of
the board of directors and as the companys chief executive
officer and interim chief financial officer.  25




---



##### Table of Contents



(b) Business Experience
 (1)
    
    Mr. Siconolfi was the owner and general manager of Panorama Dodge, Inc., Penfield, New York from 1984-1995 and of Panorama Collision, Inc., East Rochester, New
York from 1989-1995. He started and managed a highly successful auto/truck dealership and collision business, building the business to annual sales of $20 million,
with 5 departments and 65 employees.Prior to opening the dealership and collision business, Mr. Siconolfi acquired an excellent foundation in the automotive business, working in sales, sales
management and general management at Vanderstyne Ford, Schrieber Buick, Judge Motor Corporation and Meisenzahl Auto Parts, all in the Rochester area. He has
completed 100+ programs sponsored by Chrysler Corporation, Ford Motor Company and General Motors in fields such as management, sales management, sales, customer
relations, human resources and service training. He earned numerous awards given by these companies.A very active participant in his community, Mr. Siconolfi is currently involved in commercial real estate.(2)
    
    James Y. Gleasman has been a director and consultant of the company since its inception. His business background includes the following:
 
    
    Life-long entrepreneur.
    
    Skilled in management, finance, strategic planning, organizing and marketing.
    
    Principal inventor of the infinitely variable transmissions (IVT); co-inventor
of several other patented inventions.
    
    Established manufacturing of the Torsen® differential in Argentina, Brazil, etc.
    
    Former principal with two companies formerly owned by the Gleasman family.
    
    Set business strategies for small companies dealings with large companies.
    
    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.
  26




---



##### Table of Contents



(3)
    
    Keith E. Gleasman is 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 former Vice President of Sales for the unrelated 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 FTV vehicle (from concept to assembly).
    
    Assisted in developing engineering and manufacturing procedures for
the Torsen differential and for all of the Torvec products.
    
    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.(4)
    
    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. His broad
background has helped 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).
  27




---



##### Table of Contents




    
    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 the Torsen® differential.
    
    Served as Technical Director of U.S. Army Tank-automotive Command* (TACOM),
which then employed 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.*
    
    Now the U.S. Army Tank-Armaments Command.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 and
Torvec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, NDIA 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.(5)
    
    Daniel R. Bickel is a partner in the accounting firm of Bickel & Dewar, C.P.A.s, an
accounting firm providing a variety of accounting services to small to medium sized
business. The services provided include audits, reviews, compilations, business and personal
consulting, business acquisition and sale assistance and income tax preparation. Mr. Bickel
is a graduate of the Rochester Institute of Technology. He has been licensed in New York
State as a certified public accountant for almost 30 years and is a member of the American
Institute of Certified Public Accountants and the New York State Society of Certified Public
Accountants. He has served as an officer and director of numerous non-profit and civic
organizations.(6)
    
    Asher J. Flaum is President of Flaum Management Co., Inc., a full service real estate
company that owns and manages a portfolio of several million square feet of commercial real
estate including retail, office, industrial, development projects as well as provides
complete real estate brokerage services through its real estate brokerage division. Through
his active involvement with Flaum Management, Mr. Flaum focuses on real property management,
development, acquisitions and finance, leasing and brokerage services. He has participated
in multiple real estate transactions involving Fortune 500, national and regional companies.
A licensed real estate broker, Mr. Flaum is a member of the International Council of
Shopping Centers (ICSC) and a member of the New York State Commercial Association of
Realtors (NYSCAR). Mr. Flaum, who has a B.S. degree from Syracuse University, serves on the
board of directors and finance committee of the Jewish Community Federation and on the board
of directors of Constellation Brands Marvin Sands Performing Arts Center (CMAC).
  28




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##### Table of Contents



(7)
    
    Joseph B. Rizzo, Partner and Head of the Litigation Department of the law firm of Gallo &
Iacovangelo, LLP, was born January 17, 1965, in Buffalo, New York. Graduated from Pittsford
Mendon High School, 1982; State University of New York at Buffalo, B.A., English, 1986;
State University of New York at Buffalo, School of Law, Juris Doctor, 1989. Admitted to
practice law in the State of New York, 1990. Associate Attorney with the law firm of Speyer
& Perlberg, New York, New York, 1989 to 1995. Joined law firm of Gallo & Iacovangelo, LLP,
Rochester, New York in 1995 and became a Partner and Head of the firms Litigation
Department, 1997 to present. Mr. Rizzo is a published legal commentator and a lecturer for
the New York State Bar Association. He is a member of the New York State Bar Association and
the National Crime Victims Bar Association. Appears in the Strathmores Whos Who
2005-2006 Edition for outstanding leadership and achievement in the practice of law.(8)
    
    Dr. William W. Destler became president of Rochester Institute of Technology on July 1, 2007.He is the ninth president in the universitys 178-year history. He was formerly senior vice
president for academic affairs and provost of the University of Maryland at College Park. At
RIT, Dr. Destler is responsible for one of the nations leading career-oriented universities
with 16,450-students from all 50 states and more than 100 foreign countries, 2,800 faculty
and staff, an annual operating budget of more than $492 million, and an endowment of more
than $600 million. The university has one of the oldest and largest cooperative education
programs in the country.Dr. Destler serves on the American Council on Educations Commission on Effective Leadership
and is a board member for the National Institute of Aerospace Foundation. He is a member of
the board of directors for New Yorks Commission on Independent Colleges and Universities.
He also serves on community boards in Rochester: Rochester General Health System, Greater
Rochester Enterprise, Rochester Business Alliance, Golisano Family Foundation and High Tech
of Rochester, and Torvec Inc.Prior to RIT, Dr. Destler spent more than 30 years at the University of Maryland, rising
from the ranks of research associate and assistant professor of electrical engineering to
senior vice president and provost. At Maryland, he also served as electrical engineering
department chair, dean of the A. James Clark School of Engineering, interim vice president
for university advancement, vice president for research, and dean of the graduate school.As engineering school dean, Dr. Destler created the Gemstone Program, a multidisciplinary
four-year research program for undergraduate honors students of all majors in which teams of
students design, direct and conduct research exploring the interdependence of science and
technology with society. During his term as graduate school dean, student applications
increased by more than 20 percent and research funding rose by more than 30 percent. While
interim vice president for advancement, Dr. Destler was credited with securing a $25 million
gift from Comcast Corp. for naming rights supporting the construction of the Comcast Center
sports arena. As senior vice president for academic affairs, retention increased and the
graduation rate rose from 62 percent to 80 percent over five years. Other achievements at
Maryland include leading a faculty team in the creation of a cross-disciplinary masters
degree program in telecommunications; originating the Hinman CEOs Program, a living-learning
entrepreneurship initiative for undergraduate students; and involvement in the Presidents
Promise, an outside-the-classroom experiential program for freshmen.Dr. Destler is an international authority on high-power microwave sources and advanced
accelerator concepts. He is best known for his pioneering work in the collective
acceleration of heavy ions, achieving the highest energies to date by this method, and for
his development of large orbit microwave devices, including large orbit gyrotrons and
rotating beam free electron lasers. He has consulted for government agencies and private
firms, received more than $40 million in grants and contracts, published more than 200
journal articles and book chapters, and presented many papers. Dr. Destler has also directed
18 masters and doctoral student theses and earned awards for his teaching.
Dr. Destler earned a bachelors degree from Stevens Institute of Technology and a Ph.D. from
Cornell University. Both degrees were in the field of applied physics.
  29




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##### Table of Contents



(c) Relationships; Agreements
  (d) Section16(a)Beneficial Ownership Reporting Compliance
   (e) Corporate Governance, Code of Ethics, Director Independence
 Role of the Board of Directors
      30




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##### Table of Contents



Operation of the Board and Its Committees
    Director Independence
   Code of Ethics/Committee Charters
     31




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##### Table of Contents



Policy/Procedure for Review/ Approval of Related Party Transactions
      32




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##### Table of Contents



Executive Sessions of Independent Directors
  Committees of the Board
 The Audit Committee
   
    
 
 
 
 
 
 
  33




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##### Table of Contents



The Nominating Committee
   
         34




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##### Table of Contents



The Governance and Compensation Committee
   
         35




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##### Table of Contents



The Executive Committee
   
     (i)
    
    submit matters requiring shareholder approval under the Business
Corporation Law ;
 (ii)
    
    fill vacancies in the board of directors or in any committee;(iii)
    
    fix compensation of the directors for serving on the board of directors or on any committee;(iv)
    
    amend or repeal the companys Bylaws; or
 (v)
    
    amend or repeal any resolution of the board which by its terms is not
amenable or repealable.
    36




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##### Table of Contents



Compensation Committee Interlocks and Insider Participation
   37




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##### Table of Contents



Shareholder Communications
  Officer
    
    Mailing Address
    
    E-mailJames Y. Gleasman+++
Chief Executive Officer,
Interim Chief Financial Officer
    
    Torvec, Inc.
Mt. Read Industrial Facility
1999 Mt. Read Blvd.
Rochester, New York 14615
    
    jgleasman@torvec.com+++ Retired from such
positions, effective
March 14, 2010Keith E. Gleasman
President
    
    Torvec, Inc.
Mt. Read Industrial Facility
1999 Mt. Read Blvd.
Rochester, New York 14615
    
    kgleasman@torvec.com
  Herbert H. Dobbs
    
    dr.hh.dobbs@earthlink.netJoseph Rizzo
    
    josephrizzo@gallolaw.comDaniel R. Bickel
    
    dbickel@frontiernet.netGary A. Siconolfi
    
    gary1015@rochester.rr.comAsher J. Flaum
    
    aflaum@flaummgt.comWilliam W. Destler
    
    wwdpro@rit.eduRegular mail may be addressed to:
    
    Torvec Independent Directors
c/o Torvec, Inc.Mt. Read Industrial Facility
1999 Mt. Read Blvd.
Rochester, New York 14615Attention: Gary A. Siconolfi
  38




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##### Table of Contents



Sarbanes-Oxley Compliance
     39




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##### Table of Contents



Item 11.
    
    EXECUTIVE COMPENSATION
 (a) Compensation Discussion and Analysis
  Current Compensation Philosophy
  
 
 
 
 
 
 *
    
    with respect to the compensation policies described above, effective March 14, 2010, James Y.
Gleasman retired as the companys chief executive officer and interim chief financial officer.  40




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##### Table of Contents



Long-Term Compensation Philosophy
     Participants
   Effective Date of 2007 Event Plan
  Salient Terms of the 2007 Event Plan
     41




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##### Table of Contents



42




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##### Table of Contents



®
    43




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##### Table of Contents



SUMMARY COMPENSATION TABLE FOR YEARS
ENDED DECEMBER 31, 2007, 2008 and 2009
 Change inPension ValueandNon-
    
    
    NonqualifiedEquity
    
    
    Deferred
    
    
    AllName and
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock
    
    
    Option
    
    
    Incentive
    
    
    Compensation
    
    
    OtherPrincipal
    
    
    
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    Awards
    
    
    Plan Compensation
    
    
    Earnings
    
    
    Compensation
    
    
    TotalPosition
    
    Year
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)
    
    
    (g)
    
    
    (h)
    
    
    (i)
    
    
    (j)Keith E. Gleasman,
    
    
    07
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0President(1)
    
    
    08
    
    
    $
    0
    
    
    $
    0
    
    
    $
    3,014
    (4)
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    (4)09
    
    
    $
    0
    
    
    $
    0
    
    
    $
    1,167
    (4)
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $

    
    
    
    
    1,167
    (4)James Y. Gleasman,
    
    
    07
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0Chief Executive
    
    
    08
    
    
    $
    0
    
    
    $
    0
    
    
    $
    3,014
    (4)
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    3,014
    (4)Officer, Interim
    
    
    09
    
    
    $
    0
    
    
    $
    0
    
    
    $
    1,167
    (4)
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    
    
    
    
    1,167
    (4)Chief Financial Officer(2)Richard B. Sullivan
    
    
    07
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    129,500
    
    
    $
    129,000General Counsel(3)
    
    
    08
    
    
    $
    0
    
    
    $
    0
    
    
    $
    3,014
    (4)
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    144,000
    
    
    $
    144,000
    (4)09
    
    
    $
    0
    
    
    $
    0
    
    
    $
    1,167
    (4)
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    160,417
    
    
    
    161,584
 (1)
    
    Mr. Keith E. Gleasman served as president for the years ended December 31, 2007, 2008 and 2009. For the year ended December 31, 2008, Mr. Gleasman was paid 1,005 business consultants shares and for the year ended December 31, 2009,
Mr. Gleasman was paid 389 business consultants share, all under the companys commercializing event plan. At issuance, such shares had a value of $3,014 and $1,167, respectively.Under compensation plan established for Mr. Gleasman by the board of directors, effective January 1, 2008, Mr. Gleasmans annual compensation is $300,000, payable only if the company has sufficient cash to pay all or any portion of
such amount. The company did not have cash to pay such compensation for the years ended December 31, 2009, 2008 and 2007. On August 17, 2009, Mr. Gleasman waived all of his rights and interest in and to the board-created
compensation plan, including all of his rights and interest in and to the amount(s) under the plan accrued to such date.(2)
    
    Mr. James Y. Gleasman served as chief executive officer and interim chief financial officer for the years ended December 31, 2007, 2008 and 2009. For the year ended December 31, 2008, Mr. Gleasman was paid 1,005 business
consultants shares and for the year ended December 31, 2009, Mr. Gleasman was paid 389 business consultants share, all under the companys commercializing event plan. At issuance, such shares had a value of $3,014 and $1,167,
respectively.Under a compensation plan established for Mr. Gleasman by the board of directors, effective January 1, 2008, Mr. Gleasmans annual compensation is $300,000, payable only if the company has sufficient cash to pay all or any portion
of such amount. The company did not have cash to pay such compensation for the years ended December 31, 2009, 2008 and 2007.On August 17, 2009, Mr. Gleasman waived all of his rights and interest in and to the board-created
compensation plan, including all of his rights and interest in and to the amount(s) under the plan accrued to such date.James Y. Gleasman retired as the companys chief executive officer and interim chief financial officer effective March 14, 2010.(3)
    
    Mr. Sullivan served as the companys general counsel for the years ended December 31, 2007, 2008 and 2009. He is paid a consulting fee monthly in business consultants stock based upon the closing price of the companys common stock as of the last
day of the previous month. The amount of Mr. Sullivans consulting fee is determined by the board of directors from time to time. As a participant in the companys commercializing event plan, for the year ended December 31, 2008, Mr. Sullivan was
paid 1,005 business consultants shares and for the year ended December 31, 2009, Mr. Sullivan was paid 389 business consultants shares, all under the companys commercializing event plan. At issuance, such shares had a value of $3,014 and $1,167,
respectively. On February 18, 2010, the board of directors approved increasing the consultant fee paid to its general counsel to $225,000 per annum, retroactive to January 1, 2010. Such consultant fee is payable in business consultants shares of
the companys common stock.(4)
    
    Represents payments made in accordance with companys commercializing event plan during years ended December 31, 2009 and 2008.  44




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##### Table of Contents



OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2009
 Option Award
    
    
    Stock AwardsEquityIncentivePlanAwards:NumberEquity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Market
    
    
    ofIncentive Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Value of
    
    
    UnearnedAwards:
    
    
    
    
    
    
    
    
    
    
    Number
    
    
    Shares
    
    
    Shares,
    
    
    Equity IncentiveNumber of
    
    
    Number of
    
    
    Number
    
    
    
    
    
    
    
    
    
    
    of Shares
    
    
    or Units
    
    
    Units or
    
    
    Plan Awards:Securities
    
    
    Securities
    
    
    of Securities
    
    
    
    
    
    
    
    
    
    
    or Units of
    
    
    of Stock
    
    
    Other
    
    
    Market or PayoutUnderlying
    
    
    Underlying
    
    
    Underlying
    
    
    
    
    
    
    
    
    
    
    Stock
    
    
    That
    
    
    Rights
    
    
    Value of UnearnedUnexercised
    
    
    Unexercised
    
    
    Unexercised
    
    
    Option
    
    
    
    
    
    
    That Have
    
    
    Have
    
    
    That Have
    
    
    Shares, Units orOptions
    
    
    Options
    
    
    Unearned
    
    
    Exercise
    
    
    Option
    
    
    Not
    
    
    Not
    
    
    Not
    
    
    Other Rights That(#)
    
    
    (#)
    
    
    Options
    
    
    Price
    
    
    Expiration
    
    
    Vested
    
    
    Vested
    
    
    Vested
    
    
    have Not VestedName
    
    Exercisable
    
    
    Unexercisable
    
    
    (#)
    
    
    ($)
    
    
    Date
    
    
    (#)
    
    
    ($)
    
    
    (#)
    
    
    ($)(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)
    
    
    (g)
    
    
    (h)
    
    
    (i)
    
    
    (j)James Y. Gleasman
    
    
    39,575
    
    
    
    0
    
    
    
    0
    
    
    $
    5.00
    
    
    
    2013
    (1)
    
    
    0
    
    
    $
    0
    
    
    
    0
    
    
    $
    0Keith E. Gleasman
    
    
    31,818
    
    
    
    0
    
    
    
    0
    
    
    $
    5.00
    
    
    
    2013
    (2)
    
    
    0
    
    
    $
    0
    
    
    
    0
    
    
    $
    0
 (1)
    
    39,575 common stock purchase options exercisable for ten years at $5.00 per common share expire on December 21, 2013.(2)
    
    31,818 common stock purchase options exercisable for ten years at $5.00 per common share expire on December 21, 2013.  45




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##### Table of Contents



DIRECTOR COMPENSATION FOR THE YEAR ENDED DECEMBER 31, 2009
 Change in PensionFees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Value andEarned or
    
    
    
    
    
    
    
    
    
    
    Non-Equity
    
    
    NonqualifiedPaid in
    
    
    Stock
    
    
    Option
    
    
    Incentive Plan
    
    
    Deferred
    
    
    All OtherCash
    
    
    Awards
    
    
    Awards
    
    
    Compensation
    
    
    Compensation
    
    
    Compensation
    
    
    TotalName
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    Earnings
    
    
    ($)
    
    
    ($)(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)
    
    
    (g)
    
    
    (h)Daniel R. Bickel (1)
    
    $
    0
    
    
    
    40,227
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    40,227Herbert H. Dobbs (2)
    
    $
    0
    
    
    
    27,627
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    27,627Joseph B. Rizzo (3)
    
    $
    0
    
    
    
    32,982
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    32,982Gary A. Siconolfi (4)
    
    $
    0
    
    
    
    126,167
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    126,167Asher J. Flaum(5)
    
    $
    0
    
    
    
    27,627
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    27,627William
Destler(6)
    
    $
    0
    
    
    
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
 (1)
    
    Daniel R. Bickel was paid $26,460 in business consultants shares for services rendered during 2009 as a director and $12,600 in business consultants shares for services rendered in
2009 as chairman of the companys audit committee. In 2009, he was paid 389 common shares with a value at issuance of $1,167 under the companys commercializing event plan.(2)
    
    Herbert H. Dobbs was paid $26,460 in business consultants shares for
services rendered during 2009 as a director. In 2009, he was paid 389
common shares with a value at issuance of $1,167 under the companys
commercializing event plan.(3)
    
    Joseph B. Rizzo was paid $26,460 in business consultants shares for
services rendered during 2009 as a director and $5,355 in business
consultants shares for services rendered in 2009 as chairman of the
companys nominating committee. In 2009, he was paid 389 common shares
with a value at issuance of $1,167 under the companys commercializing
event plan.(4)
    
    Gary A. Siconolfi was paid $125,000 in business consultants shares for
services rendered during 2009 as a director, chairman of the board,
chairman of the companys executive committee and chairman of the
company governance and compensation committee. In 2009, he was paid
389 common shares with a value at issuance of $1,167 under the
companys commercializing event plan. On February 18, 2010, the board
of directors approved increasing the consultant fee paid to its
chairman of the board to $175,000 per annum, retroactive to January 1,
2010. Such consultant fee is payable in business consultant shares of
the companys common stock.(5)
    
    Asher J. Flaum was paid $26,460 in business consultants shares for services rendered in 2009 as a director. In 2009, he was paid 389
common shares with a value at issuance of $1,167 under the companys
commercializing event plan.(6)
    
    William Destler has agreed to serve as a director without compensation.  46




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##### Table of Contents



(a)Discussion of Director Compensation
 1) Participation in the Nonmanagement Directors Plan
          47




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##### Table of Contents



2) Participation in 1998 Stock Option Plan
      
 Item 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED SHAREHOLDER MATTERS
 Security Ownership  Common Stock
  
    
    each person who is known by us to beneficially own more than 5% of our common stock;
    
    each of our directors;
    
    each of our named executive officers; and
    
    all of our directors and executive officers as a group.
  48




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##### Table of Contents



Number of
    
    
    Percent ofName and Address of
    
    Shares
    
    
    SharesBeneficial Owner
    
    Owned
    
    
    OwnedMargaret F. Gleasman
    
    
    2,310,314
    (1)
    
    
    6.5
    %11 Pond View Drive
Pittsford, NY 14534
 (1)
    
    Includes 95,455 common shares which may be purchased through the exercise of a ten year option granted on January 5, 2004 all exercisable at $5.00 per common share. Number of
    
    
    Percent ofName and Address of
    
    
    
    
    
    Shares
    
    
    SharesBeneficial Owner
    
    Position
    
    
    Owned
    
    
    OwnedGary A. Siconolfi
    
    Chairman of the Board
    
    
    405,498
    (1)
    
    
    1.14
    %325 VanVoorhis Avenue
Rochester, New York
14617James Y. Gleasman+++
    
    Chief Executive Officer, Interim
    
    
    5,884,013
    (2)
    
    
    15.37
    %11 Pond View Drive
    
    Chief Financial Officer, DirectorPittsford, New York
14534Keith E. Gleasman
    
    President
    
    
    9,328,273
    (3)
    
    
    23.34
    %11 Pond View Drive
    
    DirectorPittsford, New York
14534Herbert H. Dobbs
    
    Secretary
    
    
    397,469
    
    
    
    1.12
    %48 West Maryknoll Road
    
    DirectorRochester Hills, Mich.
48309Daniel R. Bickel
    
    Director
    
    
    135,723
    (4)
    
    less than 1%39 Whippletree Road
Fairport, New York
14450Joseph B. Rizzo
    
    Director
    
    
    12,004
    
    
    less than 1%39 State Street, Suite 700
Rochester, New York
14614Asher J. Flaum
    
    Director
    
    
    441,211
    (5)
    
    
    1.23
    %39 State Street
Rochester, New York
14614William W. Destler
    
    
    
    
    
    
    20,000
    
    
    Less than 1%One Lomb Memorial Drive
Rochester, New York 14623All Directors and Executive
Officers as a Group
    
    
    
    
    
    
    13,518,693
    (6)
 (1)
    
    Includes 100,000 common shares which may be purchased through the
exercise of a ten year option granted on October 15, 2003, exercisable
at $5.00 per share.(2)
    
    Includes 39,575 common shares which may be purchased through the
exercise of a ten year option granted on January 5, 2004, exercisable
at $5.00 per share. Includes 1,400,000 common shares held by the
Vernon E. Gleasman Grandchildrens Trust and 1,400,000 common shares
held by the Margaret F. Gleasman Grandchildrens Trust of which
Mr. Gleasman is co-trustee. Mr. Gleasman retired, effective March 14,
2010, as a director and as the companys chief executive officer and
interim chief financial officer. PLS. NOTE ADDITION  49




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##### Table of Contents



(3)
    
    Includes 31, 818 common shares which may be purchased through the
exercise of a ten year option granted on December 22, 2003 exercisable
at 5.00 per share. Includes 30, 000 common shares owned by
Mr. Gleasmans son. Includes 1,400,000 common shares held by the
Vernon E. Gleasman Grandchildrens Trust and 1,400,000 common shares
held by the Margaret F. Gleasman Grandchildrens Trust of which
Mr. Gleasman is co-trustee. Includes 1,666,666 shares held by the
James Y. Gleasman Childrens Trust of which Mr. Gleasman is
co-trustee.(4)
    
    Includes 25,000 common shares which may be purchased through the
exercise of a ten year option granted on October 15, 2003, exercisable
at $5.00 per share. Includes 29,750 common shares which may be
purchased at $.01 per common share through the exercise of warrants
issued under the Nonmanagement Directors Plan.(5)
    
    Includes 400,000 common shares which may be purchased through the
exercise of ten year warrants exercisable at $3.27 per common share.
Mr. Flaums shares and warrants are owned directly by a company of
which Mr. Flaum is a principal.(6)
    
    Includes an aggregate 196,393 common shares which may be purchased
through the exercise of options, all of which are exercisable at $5.00
per share; 1,400,000 common shares held by the Vernon E. Gleasman
Grandchildrens Trust; 1,400,000 common shares held by the Margaret F.
Gleasman Grandchildrens Trust; and 1,666,666 common shares held by
the James Y. Gleasman Childrens Trust. Includes 29,750 common stock
warrants issued under the Nonmanagement Directors Plan exercisable at
$.01 per common share. Includes 400,000 common stock warrants
exercisable at $3.27 per common share. Includes 30,000 common shares
owned by Keith E. Gleasmans son. The 2,800,000 common shares owned by
the Vernon and Margaret Gleasman Grandchildrens Trusts are counted
only once for this calculation. Security Ownership  Preferred Stock
   
 Item 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
 Certain Transactions
 (1)
    
    During the ten plus years prior to the incorporation of the company,
Vernon E., Keith E. and James Y. 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 of 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 had 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.(2)
    
    On December 1, 1997, the company entered into three-year consulting
agreements with Vernon, Keith and James Gleasman (major stockholders,
directors and officers) whereby each was obligated to provide services
to the company in exchange for compensation of $12,500 each per month.
In 1997 the company granted each Vernon, Keith and James Gleasman
25,000 nonqualified common stock options, exercisable immediately at
$5.00 per common share for ten years.During 2001, the company issued 126,667 common shares under these
agreements for approximately $665,000 of accrued consulting fees.On September 30, 2002, the company granted 727,047 nonqualified common
stock options, all exercisable immediately at $5.00 per common share,
in settlement of approximately $653,000 of accrued consulting fees
under these agreements. These options expired September 30, 2007 and
were not replaced.On December 23, 2003, the company granted 166,848 nonqualified common
stock options exercisable Immediately at $5.00 per common share, in
settlement under the agreements for accrued consulting fees of
approximately $265,000. These options are exercisable for ten years.The companys consulting agreements with Vernon, Keith and James
Gleasman expired on December 1, 2003 and were not renewed.
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##### Table of Contents



(3)
    
    Effective January 1, 2008, the board of directors instituted a
compensation plan for James and Keith Gleasman by which the company
would compensate each of them for services performed and inventions
and know-how transferred to the company at the rate of $300,000 per
year. Actual payment of this compensation, or any portion thereof,
was conditioned upon a board of director determination that the
company had the requisite cash, after the complete funding of all
ongoing company projects, to make payment.The company did not have the requisite cash available to pay the
Gleasmans compensation under this arrangement from January 1, 2008
through August 17, 2009, the date on which each of the Gleasmans
waived all of his rights and interest in and to the board-created
compensation plan, including all of his rights and interest in and to
the amount(s) under the plan accrued to such date. As a result of
such waiver, of the $942,000 amount accrued under the plan at June
30, 2009, $900,000 was reclassified to equity as a contribution of
services and $42,000 accrued under the plan for payroll taxes was
recorded as a reduction to general and administrative expenses in the
quarter ended June 30, 2009.For periods for which there is no compensation plan, the company is
required to record the estimated value of each of the Gleasmans
services rendered to the company (estimated at $300,000 each per
annum) as a contribution of services under generally accepted
accounting principles applicable to the company and is required under
the same accounting principles to allocate the amount of such
contribution between research and development expenses on the one
hand and general and administrative on the other hand. For the year
ended December 31, 2009, the company recorded $200,000 to research
and development expense and $400,000 to general and administrative
expense, based upon managements estimate.Mr. James Y. Gleasman retired as the companys chief executive
officer, interim chief financial officer and member of the board of
directors effective March 14, 2010.(4)
    
    During the years ended December 31, 2009 and 2008,
the company paid in business consultant common shares
or cash $94,700 and $93,600 respectively, to a member
of the Gleasman family for administrative,
technological and engineering consulting services.
Management believes this compensation is reasonable.(5)
    
    During the years ended December 31, 2009 and 2008,
the company paid in business consultant common shares
or cash $87,700 and $91,290 to a family member of its
general counsel for engineering services rendered to
the company. Management believes this compensation is
reasonable.(6)
    
    On September 14, 2007, the company moved its
executive offices from Pittsford, New York to
Rochester, New York, which includes both a
manufacturing and executive office facility. The
Rochester facility is owned by a partnership, in
which Asher J. Flaum, a company director is a
partner. On April 28, 2008, the companys board of
directors approved the terms of a lease and such
lease was executed on April 29, 2008.(7)
    
    On June 29, 2000, the company granted an exclusive
world-wide license of all its automotive technologies
to Variable Gear, LLC for the aeronautical and marine
markets for $150,000 cash. The company recorded the
receipt of the $150,000 as deferred revenue to be
recognized when all conditions for earning such fees
are complete. At the time of its formation and
through June 6, 2007 when his interest was purchased,
Robert C. Horton, a company shareholder, owned 51% of
Variable Gear, LLC. On June 6, 2007, the company
purchased Mr. Hortons entire interest in Variable
Gear for 5,000 shares of common stock for $19,250.
The company recognized the deferred revenue of
$150,000 as other income and recorded an impairment
of the goodwill of $19,250, since there were no
operations of the entity since inception.(8)
    
    During the year ended December 2005, the company
issued 90,000 common shares as rent for the companys
use of a facility owned by a stockholder valued at
approximately $259,000 based upon the fair market
value of the common stock on the date of issuance.
This arrangement terminated effective February 28,
2006 when the company moved to a new facility.
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##### Table of Contents



(9)
    
    During the year ended December 31, 2005, the company
incurred approximately $298,000 for non-legal
consulting services provided to the company by one of
its outside counsel. This arrangement terminated on
December 16, 2005.(10)
    
    On August 18, 2006, the company granted 400,000
nonqualified common stock warrants valued at
approximately $1,237,000 to a company one member of
which is a director. The warrants are immediately
exercisable at $3.27 per common share for a period of
ten years.(11)
    
    On June 19, 2006, the company awarded an aggregate
360,000 nonqualified common stock warrants valued at
approximately $629,000 to a director for additional
services rendered by such director as chairman of the
boards executive committee during 2006.(12)
    
    On August 17, 2005, the company repaid $28,000
indebtedness to a stockholder by issuing 11,667
restricted common shares, such number of shares based
upon the closing price of the companys common stock
on August 16, 2005.(13)
    
    On April 28, 2008, the board of directors approved a
one-time payment to its chairman of the governance
and compensation committee of $46,000 for special
services rendered in connection with required
compliance under the Sarbanes-Oxley Act. This amount
was paid by the issuance of 19,167 common shares
valued as of the closing price on April 28, 2008. The
company charged $46,000 to operations in connection
with such services.
  Director Independence
  
 Item 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
 Principal Accountant Fees and Services
 Audit Fees
  2009
    
    2008$147,000
    
    $120,000
 Audit-Related Fees
  Tax Fees
  All Other Fees
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##### Table of Contents



Total Fees
  Pre-Approval of Policies and Procedures
  Audit -Committee Approval
  
 Item 15.
    
    EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 (a) Exhibits
  (2)
    
    Plan of acquisition, reorganization, arrangement, liquidation, or succession2.1
    
    Agreement and Plan of Merger, dated November 29, 2000 by and among
Torvec Subsidiary Corporation, Torvec, Inc., UTEK Corporation and ICE
Surface Development, Inc. incorporated by reference to Form 8-K filed
November 30, 2000 and Form 8K/A filed February 12, 2001.(3)
    
    Articles of Incorporation, By-laws3.1
    
    Certificate of Incorporation, incorporated by reference to Form
10-SB/A , Registration Statement, registering Companys $.01 par value
common stock under section 12(g) of the Securities Exchange Act of
1934;3.2
    
    Certificate of Amendment to the Certificate of Incorporation dated
August 30, 2000, incorporated by reference to Form SB-2 filed
October 19, 2000;3.3
    
    Certificate of Correction dated March 22, 2002, incorporated by
reference to Form 10-KSB filed for fiscal year ended December 31,
2002;3.4
    
    By-laws, as amended by shareholders on January 24, 2002, incorporated
by reference to Form 10-KSB filed for fiscal year ended December 31,
2002;3.5
    
    Certificate of Amendment to the Certificate of Incorporation dated
October 21, 2004 setting forth terms and conditions of Class B
Preferred, incorporated by reference to Form 10-QSB filed for fiscal
quarter ended September 30, 2004.3.6
    
    Certificate of Amendment to the Certificate of Incorporation dated
January 26, 2007 increasing authorized common shares from 40,000,000
to 400,000,000.(4)
    
    Instruments defining the rights of holders including indenturesNone(9)
    
    Voting Trust AgreementNone
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##### Table of Contents



(10)
    
    Material Contracts10.2
    
    The Companys 1998 Stock Option Plan and
related Stock Options Agreements,
incorporated by reference to Form S-8,
Registration Statement, registering 2,000,000
shares of the Companys $.01 par value common
stock reserved for issuance thereunder,
effective December 17, 1998;10.3
    
    The Companys Business Consultants Stock
Plan, incorporated by reference to Form S-8,
Registration Statement, registering 200,000
shares of the Companys $.01 par value common
stock reserved for issuance thereunder,
effective June 11, 1999, as amended by
reference to Form S-8 Registration Statements
registering an additional 200,000, 200,000,
100,000, 800,000, 250,000, 250,000, 350,000,
250,000, and 2,500,000 shares of the
Companys $.01 par value common stock
reserved for issuance thereunder, effective
October 5, 2000, November 7, 2001,
December 21, 2001, February 1, 2002,
November 12, 2002, January 22, 2003, May 23,
2003, November 26, 2003, and April 20, 2004
respectively;10.4
    
    Termination of Neri Service and Space
Agreement dated August 31, 1999, incorporated
by reference to Form 10-QSB filed for the
quarter ended September 30, 1999;10.5
    
    Operating Agreement of Variable Gear, LLC
dated June 28, 2000, incorporated by
reference to Form 10-QSB filed for the
quarter ended June 30, 2000;10.6
    
    License Agreement between Torvec, Inc. and
Variable Gear, LLC dated June 28, 2000,
incorporated by reference to Form SB-2 filed
October 19, 2000;10.7
    
    Investment Agreement with Swartz Private
Equity, LLC dated September 5, 2000, together
with attachments thereto, incorporated by
reference to Form 8-K filed October 2, 2000;10.8
    
    Extension of and Amendment to Consulting
Agreement with James A. Gleasman,
incorporated by reference to Form 10-KSB
filed for the fiscal year ended December 31,
2000;10.9
    
    Extension of and Amendment to Consulting
Agreement with Keith E. Gleasman,
incorporated by reference to Form 10-KSB
filed for the fiscal year ended December 31,
2000;10.10
    
    Extension of and Amendment to Consulting
Agreement with Vernon E. Gleasman,
incorporated by reference to Form 10-KSB
filed for the fiscal year ended December 31,
2000;10.11
    
    Option and Consulting Agreement with Marquis
Capital, LLC dated February 10, 1999,
incorporated by reference to Form 10-QSB
filed for quarter ended March 31, 2001;10.12
    
    Option and Consulting Agreement with PMC
Direct Corp., dated February 10, 1999,
incorporated by reference to Form 10-QSB
filed for quarter ended March 31, 2001;10.13
    
    Investment Banking Services Agreement with
Swartz Institutional Finance (Dunwoody
Brokerage Services, Inc.) dated December 8,
2000, incorporated by reference to Form
10-QSB filed for quarter ended March 31,
2001;10.14
    
    Employment Agreement with Michael Martindale,
Chief Executive Officer, dated August 1,
2001, incorporated by reference to Form
10-QSB filed for fiscal quarter ended
September 30, 2001;10.15
    
    Employment Agreement with Jacob H. Brooks,
Chief Operating Officer, dated August 1,
2001, incorporated by reference to Form
10-QSB filed for fiscal quarter ended
September 30, 2001;10.16
    
    Employment Agreement with David K. Marshall,
Vice-President of Manufacturing, dated
September 1, 2001, incorporated by reference
to Form 10-QSB filed for fiscal quarter ended
September 30, 2001;10.17
    
    Investment Banking Services Agreement with Swartz
Institutional Finance (Dunwoody Brokerage Services, Inc.), as
amended, dated October 23, 2001, incorporated by reference to
Form 10-QSB filed for fiscal quarter ended September 30,
2001;
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##### Table of Contents



10.18
    
    Stock Option Agreement with Samuel Bronsky, Chief Financial and Accounting Officer, dated
August 28, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended
September 30, 2001;10.19
    
    Pittsford Capital Group, LLC Agreement dated January 30, 2002, incorporated by reference to
Form 10-KSB filed for fiscal year ended December 31, 2001;10.20
    
    Gleasman-Steenburgh Indemnification Agreement dated April 9, 2002, incorporated by reference
to Form 10-KSB filed for fiscal year ended December 31, 2001;10.21
    
    Series B Warrant dated April 10, 2002, incorporated by reference to Form 10-KSB filed for
fiscal year ended December 31, 2001;10.22
    
    Billow Butler & Company, LLC investment banking engagement letter dated October 1, 2003,
incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2003;10.23
    
    Letter of Acknowledgement and Agreement with U.S. Environmental Protection Agency dated
February 4, 2004, incorporated by reference to Form 10-KSB filed for fiscal year ended
December 31, 2003;10.24
    
    Letter Agreement with CXO on the GO, L.L.C. dated February 20, 2004, incorporated by reference
to Form 10-KSB filed for fiscal year ended December 31, 2003;10.25
    
    Letter Amendment with CXO on the GO, L.L.C. dated February 23, 2004, incorporated by reference
to Form 10-KSB filed for fiscal year ended December 31, 2003;10.26
    
    Lease Agreement for premises at Powder Mills Office Park, 1169 Pittsford-Victor Road,
Suite 125, Pittsford, New York 14534, dated July 16, 2004; incorporated by reference to Form
10-QSB filed for fiscal quarter ended June 30, 2004;10.27
    
    Lease Agreement for testing facility and Mustang dynamometer, dated July 21, 2004;
incorporated by reference to Form 10-QSB filed for fiscal quarter ended June 30, 2004;10.28
    
    Advisory Agreement with PNB Consulting, LLC, 970 Peachtree Industrial Blvd., Suite 303,
Suwanee, Georgia 30024; incorporated by reference to Form 10-QSB filed for fiscal quarter
ended June 30, 2004;10.29
    
    Agreement between Torvec and ZT Technologies, Inc. dated July 21, 2004, incorporated by
reference to Form 10-QSB filed for fiscal quarter ended September 30, 2004;10.30
    
    Assignment and Assumption of Lease between William J. Green and Ronald J. Green and Torvec,
Inc. effective as of December 31, 2004, incorporated by reference to Form 10-KSB filed for
fiscal year ended December 31,2004;10.31
    
    Bill of Sale between Dynamx, Inc. and Torvec, Inc. for equipment and machinery, incorporated
by reference to Form 10-KSB filed for fiscal year ended December 31, 2004;10.32
    
    Lease and Services Agreement between Robert C. Horton as Landlord and Torvec, Inc. as Tenant
dated March 18, 2005, incorporated by reference to Form 10-KSB filed for fiscal year ended
December 31, 2004;10.33
    
    Settlement Agreement and Mutual Release between Torvec, Inc. and ZT Technologies, Inc. dated
March 29, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended
March 31, 2005;10.34
    
    Advisory Agreement between Robert C. Horton and Torvec, Inc. dated February 15, 2005,
incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;10.35
    
    Lease and Services Agreement between Dennis J. Trask as Landlord and Torvec, Inc. as Tenant
dated April 18, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended
March 31, 2005;10.36
    
    Consulting Agreement with Matthew R. Wrona, dated June 30, 2005, incorporated by reference to
Form 10-QSB filed for fiscal quarter ended June 30, 2005;10.37
    
    Option Agreement between Matthew R. Wrona and Torvec, Inc. dated June 30, 2005, incorporated
by reference to Form 10-QSB filed for fiscal quarter ended June 30, 2005;
  55




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##### Table of Contents



10.38
    
    Trust Agreement between Matthew R. Wrona, Donald Gabel, Lawrence Clark, Steven Urbanik, Floyd
G. Cady,Jr., and Michael Pomponi as Grantors and Richard B. Sullivan as Trustee, dated
September 22, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended
September 30, 2005;10.39
    
    Consultant Agreement with Floyd G. Cady, Jr., dated October 1, 2005, incorporated by reference
to Form 10-QSB filed for fiscal quarter ended September 30, 2005;10.40
    
    Consultant Agreement with Lawrence W. Clark, dated October 1, 2005, incorporated by reference
to Form 10-QSB filed for fiscal quarter ended September 30, 2005;10.41
    
    Consultant Agreement with Donald W. Gabel, dated October 1, 2005, incorporated by reference to
Form 10-QSB filed for fiscal quarter ended September 30, 2005;10.42
    
    Consultant Agreement with Michael A. Pomponi, dated October 1, 2005, incorporated by reference
to Form 10-QSB filed for fiscal quarter ended September 30, 2005;10.43
    
    Consultant Agreement with Steven Urbanik, dated October 1, 2005, incorporated by reference to
Form 10-QSB filed for fiscal quarter ended September 30, 2005;10.44
    
    Consultant Agreement with Kiwee Johnson, dated September 30, 2005, incorporated by reference
to Form 10-QSB filed for fiscal quarter ended September 30, 2005;10.45
    
    Confidentiality Agreement with Joseph B. Rizzo, dated October 24, 2005, incorporated by
reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;10.46
    
    Minutes of meeting Board of Directors Torvec, Inc., held October 19, 2004 Incorporated by
reference to annual report (Form 10-KSB) filed for the year ended December 31, 2005;10.47
    
    Minutes of meeting of Board of Directors dated October 13, 2006 creating the Commercializing
Event Plan, modifying the Nonmanagement Directors Plan. increasing the number of authorized
shares to be issued under Business Consultants Plan and recommending shareholder approval of
increase in number of authorized common shares from 40,000,000 to 400,000,000;10.48
    
    Order of Supreme Court of the State of New York with respect to litigation between the company
and a management consulting firm incorporated by reference to Current Report (Form 8-K) filed
on June 20, 2006;10.49
    
    Agreement with American Continental Group, LLC dated October 27, 2006 incorporated by
reference to Current Report (Form 8-K) filed October 30, 2006;10.50
    
    New York State School Bus Proposal incorporated by reference to Form 10-Q filed for quarter
ended March 31, 2006;10.51
    
    Order of Supreme Court of the State of New York directing the Monroe County, New York Clerk to
release back to the company 40,000 common shares and 245,000 common stock warrants issued to a
management consulting firm with which the company is in litigation and held in escrow by such
Clerk by virtue of a previous court order and which order directed the return to the company
of a $250,000 (less administrative fee) undertaking deposited with the Monroe County, New York
Treasurer in connection with the same litigation, incorporated by reference to quarterly
report (Form 10-Q) filed for the quarter ended March 31, 2007;10.52
    
    License Assignment and Transfer Agreement by and between Ice Engineering, LLC and Torvec, LLC
made effective June 15, 2007 assigning license granted by Dartmouth College with respect to
ice technology from Torvec to Ice Engineering, incorporated by reference to current report
(Form 8-K) filed July 18, 2007;10.53
    
    License Agreement by and between High Density Powertrain and Torvec, Inc. dated December 12,
2007, incorporated by reference to current report (Form 8-K) filed December 14, 2007;10.54
    
    Consulting Agreement by and between Clifford Carlson and Torvec, Inc. dated December 12, 2007,
incorporated by reference to current report (Form 8-K) filed December 14, 2007;10.55
    
    Minutes of meeting of Governance and Compensation Committee dated February 19, 2007
establishing compensation for the companys president and chief executive officer and amending
the companys commercializing event plan;10.56
    
    Consulting Agreement by and between Capital Campaigns, Inc. and Torvec, dated February 6, 2009;10.57
    
    Settlement and Release Agreement by and between CXO on the GO of Delaware LLC, et. al. and
Torvec, Inc. et.al. dated March 6, 2009;
  56




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##### Table of Contents



(11)
    
    Statement re computation of per share earnings (loss)Not applicable(14)
    
    Code of Ethics(16)
    
    Letter on change in certifying accountantNone(18)
    
    Letter re change in accounting principlesNone(20)
    
    Other documents or statements to security holdersNone(21)
    
    Subsidiaries of the registrantIce Surface Development, Inc. (New York)
Iso-Torque Corporation (New York)
IVT Diesel Corp. (New York)
Variable Gear, LLC (New York)(22)
    
    Published report regarding matters submitted to vote of security holdersNone(23)
    
    Consents of experts and counsel(23.1)
    
    Eisner LLP Consent(24)
    
    Power of attorneyNone(31.1)
    
    Rule 13(a)-14(a)/15(d)-14(a) Certifications(32)
    
    Section 1350 Certifications(99)
    
    Additional exhibitsNone
  57




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##### Table of Contents



SIGNATURES
  TORVEC, INC.Date: March 31, 2010
    By:
    /s/ James Y. GleasmanJames Y. Gleasman,Chief Executive Officer  Dated: March 31, 2010
    
    By:
    
    /s/ James Y. Gleasman

James Y. Gleasman,
Chief Executive Officer,
Interim Chief Financial Officer and DirectorDated: March 31, 2010
    
    By:
    
    /s/ Keith E. Gleasman

Keith E. Gleasman,
President and DirectorDated: March 31, 2010
    
    By:
    
    /s/ Herbert H. Dobbs

Herbert H. Dobbs,
Secretary and DirectorDated: March 31, 2010
    
    By:
    
    /s/ Daniel R. Bickel

Daniel R. Bickel,
DirectorDated: March 31, 2010
    
    By:
    
    /s/ Joseph R.Rizzo

Joseph R. Rizzo,
DirectorDated: March 31, 2010
    
    By:
    
    /s/ Asher J. Flaum

Asher J. Flaum,
DirectorDated: March 31, 2010
    
    By:
    
    /s/ Gary A. Siconolfi

Gary A. Siconolfi,
DirectorDated: March 31, 2010
    
    By:
    
    /s/ William W. Destler

William W. Destler
Director
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##### Table of Contents



EXHIBIT INDEX
 EXHIBIT
    
    
    
    
    
    PAGE(2)
    
    Plan of acquisition, reorganization, arrangement, liquidation, or succession2.1
    
    Agreement and Plan of Merger,
dated November 29, 2000 by and
among Torvec Subsidiary
Corporation, Torvec, Inc., UTEK
Corporation and ICE Surface
Development, Inc. incorporated
by reference to Form 8-K filed
November 30, 2000 and Form 8K/A
filed February 12, 2001.
    
    N/A(3)
    
    Articles of Incorporation, By-laws3.1
    
    Certificate of Incorporation,
incorporated by reference to
Form 10-SB/A, Registration
Statement, registering
Companys $.01 par value common
stock under section 12(g) of
the Securities Exchange Act of
1934;
    
    N/A3.2
    
    Certificate of Amendment to the
Certificate of Incorporation
dated August 30, 2000,
incorporated by reference to
Form SB-2 filed October 19,
2000;
    
    N/A3.3
    
    Certificate of Correction dated
March 22, 2002, incorporated by
reference to Form 10-KSB filed
for fiscal year ended
December 31, 2002;
    
    N/A3.4
    
    By-laws, as amended by
shareholders on January 24,
2002, incorporated by reference
to Form 10-KSB filed for fiscal
year ended December 31, 2002;
    
    N/A3.5
    
    Certificate of Amendment to the
Certificate of Incorporation
dated October 21, 2004 setting
forth terms and conditions of
Class B Preferred, incorporated
by reference to Form 10-QSB
filed for fiscal quarter ended
September 30, 2004.
    
    N/A3.6
    
    Certificate of Amendment to the
Certificate of Incorporation
dated January 26, 2007
increasing authorized common
shares from 40,000,000 to
400,000,000.
    
    N/A(4)
    
    Instruments defining the rights of holders including indenturesNone
    
    N/A(9)
    
    Voting Trust AgreementNone
    
    N/A(10)
    
    Material Contracts10.1
    
    Certain Employment Agreements,
Consulting Agreements, certain
assignments of patents, patent
properties, technology and
know-how to the Company, Neri
Service and Space Agreement and
Ford Motor Company Agreement
and Extension of Term, all
incorporated by reference to
Form 10-SB/A, Registration
Statement, registering
Companys $.01 par value common
stock under section 12(g) of
the Securities Exchange Act of
1934;
    
    N/A10.2
    
    The Companys 1998 Stock Option
Plan and related Stock Options
Agreements, incorporated by
reference to Form S-8,
Registration Statement,
registering 2,000,000 shares of
the Companys $.01 par value
common stock reserved for
issuance thereunder, effective
December 17, 1998;
    
    N/A
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##### Table of Contents



EXHIBIT
    
    
    
    
    
    PAGE10.3
    
    The Companys Business
Consultants Stock Plan,
incorporated by reference to
Form S-8, Registration
Statement, registering 200,000
shares of the Companys $.01
par value
common stock reserved for
issuance thereunder, effective
June 11, 1999 as amended by
reference to Form S-8
Registration Statement
registering an additional
200,000, 200,000, 100,000,
800,000, 250,000, 250,000,
350,000, 250,000 and 2,500,000
shares of the Companys $.01
par value common stock reserved
for issuance thereunder,
effective October 5, 2000,
November 7, 2001, December 21,
2001, February 1, 2002,
November 12, 2002, January 22,
2003, May 23, 2003,
November 26, 2003 and April 20,
2004 respectively;
    
    N/A10.4
    
    Termination of Neri Service and
Space Agreement dated
August 31, 1999, incorporated
by reference to Form 10-QSB
filed for the quarter ended
September 30, 1999;
    
    N/A10.5
    
    Operating Agreement of Variable
Gear, LLC dated June 28, 2000,
incorporated by reference to
Form 10-QSB filed for the
quarter ended June 30, 2000;
    
    N/A10.6
    
    License Agreement between
Torvec, Inc. and Variable Gear,
LLC dated June 28, 2000,
incorporated by reference to
Form SB-2 filed October 19,
2000;
    
    N/A10.7
    
    Investment Agreement with
Swartz Private Equity, LLC
dated September 5, 2000,
together with attachments
thereto, incorporated by
reference to Form 8-K filed
October 2, 2000;
    
    N/A10.8
    
    Extension of and Amendment to
Consulting Agreement with James
A. Gleasman, incorporated by
reference to Form 10-KSB filed
for the fiscal year ended
December 31, 2000;
    
    N/A10.9
    
    Extension of and Amendment to
Consulting Agreement with Keith
E. Gleasman, incorporated by
reference to Form 10-KSB filed
for the fiscal year ended
December 31, 2000;
    
    N/A10.10
    
    Extension of and Amendment to
Consulting Agreement with
Vernon E. Gleasman,
incorporated by reference to
Form 10-KSB filed for the
fiscal year ended December 31,
2000;
    
    N/A10.11
    
    Option and Consulting Agreement
with Marquis Capital, LLC dated
February 10, 1999, incorporated
by reference to Form 10-QSB
filed for quarter ended
March 31, 2001;
    
    N/A10.12
    
    Option and Consulting Agreement
with PMC Direct Corp., dated
February 10, 1999, incorporated
by reference to Form 10-QSB
filed for quarter ended
March 31, 2001;
    
    N/A10.13
    
    Investment Banking Services
Agreement with Swartz
Institutional Finance (Dunwoody
Brokerage Services, Inc.) dated
December 8, 2000, incorporated
by reference to Form 10-QSB
filed for quarter ended
March 31, 2001;
    
    N/A10.14
    
    Employment Agreement with
Michael Martindale, Chief
Executive Officer, dated
August 1, 2001, incorporated by
reference to Form 10-QSB filed
for fiscal quarter ended
September 30, 2001;
    
    N/A10.15
    
    Employment Agreement with Jacob
H. Brooks, Chief Operating
Officer, dated August 1, 2001,
incorporated by reference to
Form 10-QSB filed for fiscal
quarter ended September 30,
2001;
    
    N/A
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EXHIBIT
    
    
    
    
    
    PAGE10.16
    
    Employment Agreement with David
K. Marshall, Vice-President of
Manufacturing, dated
September 1, 2001, incorporated
by reference to Form 10-QSB
filed for fiscal quarter ended
September 30, 2001;
    
    N/A10.17
    
    Investment Banking Services
Agreement with Swartz
Institutional Finance (Dunwoody
Brokerage Services, Inc.), as
amended, dated October 23,
2001, incorporated by reference
to Form 10-QSB filed for fiscal
quarter ended September 30,
2001;
    
    N/A10.18
    
    Stock Option Agreement with
Samuel Bronsky, Chief Financial
and Accounting Officer, dated
August 28, 2001, incorporated
by reference to Form 10-QSB
filed for fiscal quarter ended
September 30, 2001;
    
    N/A10.19
    
    Pittsford Capital Group, LLC
Agreement dated January 30,
2002, incorporated by reference
to Form 10-KSB filed for fiscal
year ended December 31, 2001;
    
    N/A10.20
    
    Gleasman-Steenburgh
Indemnification Agreement dated
April 9, 2002, incorporated by
reference to Form 10-KSB filed
for fiscal year ended
December 31, 2001;
    
    N/A10.21
    
    Series B Warrant dated
April 10, 2002, incorporated by
reference to Form 10-KSB filed
for fiscal year ended
December 31, 2001;
    
    N/A10.22
    
    Billow Butler & Company, LLC
investment banking engagement
letter dated October 1, 2003,
incorporated by reference to
Form 10-QSB filed for fiscal
quarter ended September 30,
2003;
    
    N/A10.23
    
    Letter of Acknowledgement and
Agreement with U.S.
Environmental Protection Agency
dated February 4, 2004,
incorporated by reference to
Form 10-KSB filed for fiscal
year ended December 31, 2003;
    
    N/A10.24
    
    Letter Agreement with CXO on
the GO, L.L.C. dated
February 20, 2004, incorporated
by reference to Form 10-KSB
filed for fiscal year ended
December 31, 2003;
    
    N/A
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EXHIBIT
    
    
    
    
    
    PAGE10.25
    
    Letter Amendment with CXO on the GO,
L.L.C. dated February 23, 2004,
incorporated by reference to
Form 10-KSB filed for fiscal year
ended December 31, 2003;
    
    N/A10.26
    
    Lease Agreement for premises at
Powder Mills Office Park, 1169
Pittsford-Victor Road, Suite 125,
Pittsford, New York 14534, dated
July 16, 2004, incorporated by
reference to Form 10-QSB filed for
fiscal quarter ended June 30, 2004;;
    
    N/A10.27
    
    Lease Agreement for testing facility
and Mustang dynamometer, dated
July 21, 2004; incorporated by
reference to Form 10-QSB filed for
fiscal quarter ended June 30, 2004;
    
    N/A10.28
    
    Advisory Agreement with PNB
Consulting, LLC, 970 Peachtree
Industrial Blvd., Suite 303,
Suwanee, Georgia 30024; incorporated
by reference to Form 10-QSB filed
for fiscal quarter ended June 30,
2004;
    
    N/A10.29
    
    Agreement between Torvec and ZT
Technologies, Inc. dated July 21,
2004, incorporated by reference to
Form 10-QSB filed for fiscal quarter
ended September 30, 2004;
    
    N/A10.30
    
    Assignment and Assumption of Lease
between William J. Green and Ronald
J. Green and Torvec, Inc. effective
as of December 31, 2004,
incorporated by reference to
Form 10-KSB filed for fiscal year
ended December 31, 2004;
    
    N/A10.31
    
    Bill of Sale between Dynamx, Inc.
and Torvec, Inc. for equipment and
machinery, incorporated by reference
to Form 10-KSB filed for fiscal year
ended December 31, 2004;
    
    N/A10.32
    
    Lease and Services Agreement between
Robert C. Horton as Landlord and
Torvec, Inc. as Tenant dated
March 18, 2005, incorporated by
reference to Form 10-KSB filed for
fiscal year ended December 31, 2004;
    
    N/A10.33
    
    Settlement Agreement and Mutual
Release between Torvec, Inc. and ZT
Technologies, Inc. dated March 29,
2005, incorporated by reference to
Form 10-QSB filed for fiscal quarter
ended March 31, 2005;
    
    N/A10.34
    
    Advisory Agreement between Robert C.
Horton and Torvec, Inc. dated
February 15, 2005, incorporated by
reference to Form 10-QSB filed for
fiscal quarter ended March 31, 2005;
    
    N/A10.35
    
    Lease and Services Agreement between
Dennis J. Trask as Landlord and
Torvec, Inc. as Tenant dated
April 18, 2005, incorporated by
reference to Form 10-QSB filed for
fiscal quarter ended March 31, 2005;
    
    N/A10.36
    
    Consulting Agreement with Matthew R.
Wrona, dated June 30, 2005,
incorporated by reference to
Form 10-QSB filed for fiscal quarter
ended June 30, 2005;
    
    N/A10.37
    
    Option Agreement between Matthew R.
Wrona and Torvec, Inc. dated
June 30, 2005, incorporated by
reference to Form 10-QSB filed for
fiscal quarter ended June 30, 2005;
    
    N/A10.38
    
    Trust Agreement between Matthew R.
Wrona, Donald Gabel, Lawrence Clark,
Steve Urbanik, Floyd G. Cady, Jr.
and Michael Pomponi as Grantors and
Richard B. Sullivan as Trustee,
dated September 22, 2005,
incorporated by reference to
Form 10-QSB filed for fiscal quarter
ended September 30, 2005;
    
    N/A10.39
    
    Consultant Agreement with Floyd G.
Cady, Jr., dated October 1, 2005,
incorporated by reference to
Form 10-QSB filed for fiscal quarter
ended September 30, 2005;
    
    N/A
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EXHIBIT
    
    
    
    
    
    PAGE10.40
    
    Consultant Agreement with Lawrence
W. Clark, dated October 1, 2005,
incorporated by reference to
Form 10-QSB filed for fiscal quarter
ended September 30, 2005;
    
    N/A10.41
    
    Consultant Agreement with Donald W.
Gabel, dated October 1, 2005,
incorporated by reference to
Form 10-QSB filed for fiscal quarter
ended September 30, 2005;
    
    N/A10.42
    
    Consultant Agreement with Michael A.
Pomponi, dated October 1, 2005,
incorporated by reference to
Form 10-QSB filed for fiscal quarter ended September 30, 2005;
    
    N/A10.44
    
    Consultant Agreement with Kiwee
Johnson, dated September 30, 2005,
incorporated by reference to
Form 10-QSB filed for fiscal quarter
ended September 30, 2005;
    
    N/A10.45
    
    Confidentiality Agreement with
Joseph B. Rizzo, dated October 24,
2005, incorporated by reference to
Form 10-QSB filed for fiscal quarter
ended September 30, 2005;
    
    N/A10.46
    
    Minutes of meeting Board of
Directors Torvec, Inc., held
October 19, 2004 incorporated by
reference to annual report
(Form 10-KSB) filed for the year
ended December 31, 2005;
    
    N/A10.47
    
    Minutes of meeting of Board of
Directors dated October 13, 2006
creating the Commercializing Event
Plan, modifying the Nonmanagement
Directors Plan. increasing the
number of authorized shares to be
issued under Business Consultants
Plan and recommending shareholder
approval of increase in number of
authorized common shares from
40,000,000 to 400,000,000;
    
    N/A10.48
    
    Order of Supreme Court of the State
of New York with respect to
litigation between the company and a
management consulting firm
incorporated by reference to Current
Report (Form 8-K) filed on June 20,
2006;
    
    N/A10.49
    
    Agreement with American Continental
Group, LLC dated October 27, 2006
incorporated by reference to Current
Report (Form 8-K) filed October 30,
2006;
    
    N/A10.50
    
    New York State School Bus Proposal
incorporated by reference to
Quarterly Report (Form 10-Q) filed
March 31, 2006;10.51
    
    Order of Supreme Court of the State
of New York directing the Monroe
County, New York Clerk to release
back to the company 40,000 common
shares and 245,000 common stock
warrants issued to a management
consulting firm with which the
company is in litigation and held in
escrow by such Clerk by virtue of a
previous court order and which order
directed the return to the company
of a $250,000 (less administrative
fee) undertaking deposited with the
Monroe County, New York Treasurer in
connection with the same litigation,
incorporated by reference to
quarterly report (Form 10-Q) filed
for the quarter ended March 31,
2007;
    
    N/A10.52
    
    License Assignment and Transfer
Agreement by and between Ice
Engineering, LLC and Torvec, LLC
made effective June 15, 2007
assigning license granted by
Dartmouth College with respect to
ice technology from Torvec to Ice
Engineering, incorporated by
reference to current report
(Form 8-K) filed July 18, 2007;
    
    N/A10.53
    
    License Agreement by and between
High Density Powertrain and Torvec,
Inc. dated December 12, 2007,
incorporated by reference to current
report (Form 8-K) filed December 14,
2007;
    
    N/A
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##### Table of Contents



EXHIBIT
    
    
    
    
    
    PAGE10.54
    
    Consulting Agreement by
and between Clifford
Carlson and Torvec, Inc.
dated December 12, 2007,
incorporated by reference
to current report
(Form 8-K) filed
December 14, 2007;
    
    
    N/A10.55
    
    Minutes of meeting of
Governance and
Compensation Committee
dated February 19, 2007
establishing compensation
for the companys
president and chief
executive officer and
amending the companys
commercializing event
plan;
    
    
    N/A10.56
    
    Consulting Agreement by
and between Capital
Campaigns,Inc. and
Torvec, Inc., dated
February 6, 2009;
    
    
    N/A10.57
    
    Settlement and Release
Agreement by and between
CXO on the GO of
Delaware,LLC,et. al. and
Torvec, Inc. et. al.,
dated March 6, 2009;
    
    
    N/ANot applicable(14)
    
    Code of Ethics
    
    
    N/A(16)
    
    Letter on change in certifying accountantNone(18)
    
    Letter re change in accounting principlesNone(20)
    
    Other documents or statements to security holdersNone(21)
    
    Subsidiaries of the registrantIce Surface Development, Inc. (New York)Iso-Torque Corporation (New York)IVT Diesel Corp. (New York)Variable Gear, LLC (New York)(22)
    
    Published report regarding matters submitted to vote of security holders None(23)
    
    Consents of experts and counsel(23.1)
    
    Eisner LLP Consent
    
    
    65(24)
    
    Power of attorneyNone(31.1)
    
    Rule 13(a)-14(a)/15(d)-14(a) Certifications
    
    
    66(32)
    
    Section 1350 Certifications
    
    
    67(99)
    
    Additional exhibitsNone
  64