UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q





þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended: September 30, 2009

or



 ̈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: 0-10707





THERMODYNETICS, INC.

(Exact name of registrant as specified in its charter)





|                                  |                    
|--------------------------------- | -------------------
|Nevada                            | 06-1042505         
|(State or other jurisdiction      | (I.R.S. Employer   
|of incorporation or organization) | Identification No.)



651 Day Hill Road, Windsor, CT06095

(Address of Principal Executive Office) (Zip Code)

860-683-2005

(Registrants telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No  ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

|                                              |  |  |  |                             
|--------------------------------------------- |  |  |  | ----------------------------
|Large accelerated filer   ̈                    |  |  |  | Accelerated filer   ̈        
|Non-accelerated filer   ̈                      |  |  |  | Smaller reporting company  þ
|(Do not check if a smaller reporting company) |  |  |  |                             



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

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.

|                            |  |                                  
|--------------------------- |  | ---------------------------------
|Class                       |  | Outstanding at September 30, 2009
|Common stock $.01 Par Value |  | 4,600,306 Shares                 









---

INDEX

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Page
PART I FINANCIAL INFORMATION
Item 1.       Financial Statements
Consolidated Balance Sheets 
September  30, 2009 and March 31, 2009
1
Consolidated Statements Of Income 
Three Months Ended September 30, 2009 and 2008
2
Consolidated Statements Of Income 
Six Months Ended September 30, 2009 and 2008
3

Consolidated Statements Of Cash Flows 
Six Months Ended September 30, 2008 and 2009
4
Notes To Consolidated Financial Statements
5
Item 2.        Management's Discussion and Analysis of Financial Condition and Results of Operations.
8
Item 3.        Quantitative and Qualitative Disclosures About Market Risks.
9
Item 4T. Controls and Procedures.
9
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
10
Item 1A.     Risk Factors.
10
Item 2.        Unregistered Sales of Equity Securities and Use of Proceeds.
10
Item 3. Defaults Upon Senior Securities.
11
Item 4. Submission of Matters to a Vote of Security Holders.
11
Item 5. Other Information.
11
Item 6.        Exhibits.
11
Signatures
12
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       





---

PART I:   FINANCIAL INFORMATION

Item 1.

Financial Statements

THERMODYNETICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (in 000s)

|                                                                                                                                |  |                    |        |   |                |   |        |  
|------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------ | - | -------------- | - | ------ | -
|                                                                                                                                |  | September 30,
2009 |        |   | March 31,
2009 |  
|ASSETS                                                                                                                          |  | (Unaudited)        |        |   | (Audited)      |  
|CURRENT ASSETS                                                                                                                  |  |                    |        |   |                |  
|Cash                                                                                                                            |  | $                  | 2,408  |   |                | $ | 1,984  |  
|Accounts Receivable, Net                                                                                                        |  |                    | 1,408  |   |                |   | 1,860  |  
|Inventories                                                                                                                     |  |                    | 3,725  |   |                |   | 3,572  |  
|Prepaid Expenses and Other Current Assets                                                                                       |  |                    | 531    |   |                |   | 363    |  
|Marketable Securities                                                                                                           |  |                    | 36     |   |                |   | 51     |  
|Total Current Assets                                                                                                            |  |                    | 8,108  |   |                |   | 7,830  |  
|                                                                                                                                |  |                    |        |   |                |   |        |  
|PROPERTY, PLANT AND EQUIPMENT                                                                                                   |  |                    |        |   |                |   |        |  
|Property, Plant and Equipment - At Cost                                                                                         |  |                    | 16,907 |   |                |   | 16,591 |  
|Less: Accumulated Depreciation                                                                                                  |  |                    | 8,612  |   |                |   | 8,364  |  
|Property, Plant, and Equipment  Net                                                                                            |  |                    | 8,295  |   |                |   | 8,227  |  
|                                                                                                                                |  |                    |        |   |                |   |        |  
|OTHER ASSETS                                                                                                                    |  |                    |        |   |                |   |        |  
|Intangible Assets - Net of Amortization                                                                                         |  |                    | 94     |   |                |   | 94     |  
|Investment in Unaffiliated Companies                                                                                            |  |                    | 36     |   |                |   | 36     |  
|Deferred Income Taxes                                                                                                           |  |                    | 980    |   |                |   | 980    |  
|Deposits and Other                                                                                                              |  |                    | 48     |   |                |   | 53     |  
|Total Other Assets                                                                                                              |  |                    | 1,158  |   |                |   | 1,163  |  
|TOTAL ASSETS                                                                                                                    |  | $                  | 17,561 |   |                | $ | 17,220 |  
|                                                                                                                                |  |                    |        |   |                |   |        |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                            |  |                    |        |   |                |   |        |  
|CURRENT LIABILITIES                                                                                                             |  |                    |        |   |                |   |        |  
|Line of Credit                                                                                                                  |  | $                  | 1,087  |   |                | $ | 1,062  |  
|Accounts Payable                                                                                                                |  |                    | 1,364  |   |                |   | 906    |  
|Accrued Taxes and Expenses                                                                                                      |  |                    | 1,077  |   |                |   | 1,204  |  
|Current Portion of Long-Term Debt                                                                                               |  |                    | 270    |   |                |   | 306    |  
|Total Current Liabilities                                                                                                       |  |                    | 3,798  |   |                |   | 3,478  |  
|                                                                                                                                |  |                    |        |   |                |   |        |  
|DEFERRED INCOME TAXES                                                                                                           |  |                    | 333    |   |                |   | 383    |  
|LONG-TERM DEBT                                                                                                                  |  |                    | 1,602  |   |                |   | 1,712  |  
|LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS                                                                                |  |                    | 2,782  |   |                |   | 2,782  |  
|                                                                                                                                |  |                    |        |   |                |   |        |  
|STOCKHOLDERS EQUITY                                                                                                            |  |                    |        |   |                |   |        |  
|Thermodynetics, Inc. Stockholders Equity:                                                                                       |  |                    |        |   |                |   |        |  
|Common Stock, Par Value $.01/Share, Authorized 25,000,000 shares,
issued 4,600,306 and 4,090,306 shares at  9/30/09 and 3/31/09 |  |                    | 46     |   |                |   | 41     |  
|Additional Paid-in Capital                                                                                                      |  |                    | 7,262  |   |                |   | 7,138  |  
|Retained Earnings (Deficit)                                                                                                     |  |                    | (2,450 | ) |                |   | (2,254 | )
|Accumulated Other Comprehensive Income                                                                                          |  |                    | 7      |   |                |   | 25     |  
|Total Thermodynetics, Inc. Stockholders Equity                                                                                 |  |                    | 4,865  |   |                |   | 4,950  |  
|Noncontrolling Interest                                                                                                         |  |                    | 4,181  |   |                |   | 3,915  |  
|Total Equity                                                                                                                    |  |                    | 9,046  |   |                |   | 8,865  |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                      |  | $                  | 17,561 |   |                | $ | 17,220 |  



The accompanying notes are an integral part of these consolidated financial statements.



1



---

THERMODYNETICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30,

(UNAUDITED)

IN (000s) EXCEPT PER SHARE DATA



|                                                             |  |      |           |   |      |   |           |   |  | 
|------------------------------------------------------------ |  | ---- | --------- | - | ---- | - | --------- | - |  | 
|                                                             |  | 2009 |           |   | 2008 |  
|Net Sales                                                    |  | $    | 4,807     |   |      | $ | 7,529     |  
|                                                             |  |      |           |   |      |   |           |  
|Cost of Goods Sold                                           |  |      | 3,318     |   |      |   | 5,180     |  
|                                                             |  |      |           |   |      |   |           |  
|Gross Profit                                                 |  |      | 1,489     |   |      |   | 2,349     |  
|                                                             |  |      |           |   |      |   |           |  
|Selling, General & Administrative Expenses                   |  |      | 1,409     |   |      |   | 1,854     |  
|                                                             |  |      |           |   |      |   |           |  
|Income From Operations                                       |  |      | 80        |   |      |   | 495       |  
|                                                             |  |      |           |   |      |   |           |  
|Other Income (Expense)                                       |  |      |           |   |      |   |           |  
|Interest Expense, Net                                        |  |      | (41       | ) |      |   | (46       | )
|Other  Net                                                  |  |      | 82        |   |      |   | (4        | )
|                                                             |  |      |           |   |      |   |           |  
|Total Other Income (Expense)                                 |  |      | 41        |   |      |   | (50       | )
|                                                             |  |      |           |   |      |   |           |  
|Income Before Income Taxes and Minority Interest             |  |      | 121       |   |      |   | 445       |  
|                                                             |  |      |           |   |      |   |           |  
|Provision for Income Taxes                                   |  |      | 144       |   |      |   | 237       |  
|Net Income (Loss)                                            |  |      | (23       | ) |      |   | 208       |  
|Less: Net Income attributable to the Noncontrolling
Interest |  |      | (102      | ) |      |   | (150      | )
|                                                             |  |      |           |   |      |   |           |  
|Net Income (Loss) Attributable to Thermodynetics, Inc.       |  |      | (125      | ) |      |   | 58        |  
|                                                             |  |      |           |   |      |   |           |  
|Other Comprehensive Income, net of tax:                      |  |      |           |   |      |   |           |  
|Unrealized holding gains (losses) arising during the period  |  |      | (18       | ) |      |   | (20       | )
|Comprehensive Income Attributable to Thermodynetics, Inc.    |  |      | (143      | ) |      |   | 38        |  
|                                                             |  |      |           |   |      |   |           |  
|Earnings per Share                                           |  |      | (.03      | ) |      |   | .01       |  
|                                                             |  |      |           |   |      |   |           |  
|Weighted Average Shares Outstanding- Basic                   |  |      | 4,373,023 |   |      |   | 4,080,306 |  
|Weighted Average Shares Outstanding- Diluted                 |  |      | 4,373,023 |   |      |   | 4,080,306 |  







The accompanying notes are an integral part of these consolidated financial statements.



2



---

THERMODYNETICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE SIX MONTHS ENDED SEPTEMBER 30,

(UNAUDITED)

IN (000s) EXCEPT PER SHARE DATA

|                                                             |  |      |           |      |   |           |  
|------------------------------------------------------------ |  | ---- | --------- | ---- | - | --------- | -
|                                                             |  | 2009 |           | 2008 |  
|Net Sales                                                    |  | $    | 9,734     |      | $ | 14,929    |  
|                                                             |  |      |           |      |   |           |  
|Cost of Goods Sold                                           |  |      | 6,670     |      |   | 10,416    |  
|                                                             |  |      |           |      |   |           |  
|Gross Profit                                                 |  |      | 3,064     |      |   | 4,513     |  
|                                                             |  |      |           |      |   |           |  
|Selling, General & Administrative Expenses                   |  |      | 2,714     |      |   | 3,448     |  
|                                                             |  |      |           |      |   |           |  
|Income From Operations                                       |  |      | 350       |      |   | 1,065     |  
|                                                             |  |      |           |      |   |           |  
|Other Income (Expense)                                       |  |      |           |      |   |           |  
|Interest Expense, Net                                        |  |      | (82       | )    |   | (82       | )
|Other  Net                                                  |  |      | 80        |      |   | (11       | )
|                                                             |  |      |           |      |   |           |  
|Total Other Income (Expense)                                 |  |      | (2        | )    |   | (93       | )
|                                                             |  |      |           |      |   |           |  
|Income Before Income Taxes and Minority Interest             |  |      | 348       |      |   | 972       |  
|                                                             |  |      |           |      |   |           |  
|Provision for Income Taxes                                   |  |      | 321       |      |   | 466       |  
|Net Income                                                   |  |      | 27        |      |   | 506       |  
|Less: Net Income attributable to the Noncontrolling Interest |  |      | (223      | )    |   | (304      | )
|                                                             |  |      |           |      |   |           |  
|Net Income (Loss) Attributable to Thermodynetics, Inc.       |  |      | (196      | )    |   | 202       |  
|                                                             |  |      |           |      |   |           |  
|Other Comprehensive Income, net of tax:                      |  |      |           |      |   |           |  
|Unrealized holding gains (losses) arising during the period  |  |      | (18       | )    |   | (14       | )
|Comprehensive Income Attributable to Thermodynetics, Inc.    |  |      | (214      | )    |   | 188       |  
|                                                             |  |      |           |      |   |           |  
|Earnings per Share                                           |  |      | (.05      | )    |   | .05       |  
|                                                             |  |      |           |      |   |           |  
|Weighted Average Shares Outstanding- Basic                   |  |      | 4,373,023 |      |   | 4,080,306 |  
|Weighted Average Shares Outstanding- Diluted                 |  |      | 4,373,023 |      |   | 4,080,306 |  





The accompanying notes are an integral part of these consolidated financial statements.



3



---

THERMODYNETICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED SEPTEMBER 30,

(UNAUDITED)

IN (000s) EXCEPT PER SHARE DATA

|                                                                                             |  |      |       |      |   |       |  
|-------------------------------------------------------------------------------------------- |  | ---- | ----- | ---- | - | ----- | -
|                                                                                             |  | 2009 |       | 2008 |  
|OPERATING ACTIVITIES:                                                                        |  |      |       |      |  
|Net income (loss)                                                                            |  | $    | (196  | )    | $ | 202   |  
|Adjustments to reconcile net income to net cash 
provided by (used in) operating activities: |  |      |       |      |   |       |  
|Depreciation and amortization                                                                |  |      | 248   |      |   | 241   |  
|Minority interest in earnings of subsidiary                                                  |  |      | 266   |      |   | 327   |  
|Issuance of stock                                                                            |  |      | 129   |      |   |      |  
|Deferred tax provision (benefit)                                                             |  |      | (50   | )    |   | (107  | )
|Changes in operating assets and liabilities:                                                 |  |      |       |      |   |       |  
|Increase in accounts payable                                                                 |  |      | 458   |      |   | 338   |  
|Increase in prepaid expenses and other assets                                                |  |      | (163  | )    |   | (118  | )
|Decrease in accounts receivable                                                              |  |      | 452   |      |   | 592   |  
|Decrease (increase) in inventories                                                           |  |      | (153  | )    |   | (899  | )
|Decrease in accrued taxes and expenses                                                       |  |      | (127  | )    |   | (163  | )
|                                                                                             |  |      |       |      |   |       |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                                    |  |      | 864   |      |   | 413   |  
|                                                                                             |  |      |       |      |   |       |  
|INVESTING ACTIVITIES;                                                                        |  |      |       |      |   |       |  
|Purchases of property, plant and equipment                                                   |  |      | (316  | )    |   | (423  | )
|(Purchase) sale of marketable securities                                                     |  |      | (3    | )    |   | 207   |  
|Investment in unaffiliated company                                                           |  |      |     |      |   | (31   | )
|                                                                                             |  |      |       |      |   |       |  
|NET CASH USED IN INVESTING ACTIVITIES                                                        |  |      | (319  | )    |   | (247  | )
|                                                                                             |  |      |       |      |   |       |  
|FINANCING ACTIVITIES                                                                         |  |      |       |      |   |       |  
|Net proceeds (payments) on revolving debt                                                    |  |      | 25    |      |   | 150   |  
|Principal payments on long-term debt                                                         |  |      | (146  | )    |   | (79   | )
|                                                                                             |  |      |       |      |   |       |  
|NET CASH USED IN FINANCING ACTIVITIES                                                        |  |      | (121  | )    |   | 71    |  
|                                                                                             |  |      |       |      |   |       |  
|INCREASE IN CASH                                                                             |  |      | 424   |      |   | 237   |  
|CASH AT BEGINNING OF PERIOD                                                                  |  |      | 1,984 |      |   | 1,062 |  
|CASH AT END OF PERIOD                                                                        |  | $    | 2,408 |      | $ | 1,299 |  







The accompanying notes are an integral part of these consolidated financial statements.



4



---

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

(UNAUDITED)

NOTE 1: BASIS OF PRESENTATION

The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for a fair statement of results for the interim period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The results of operations for the three and six months ended September 30, 2008 and 2009 are not necessarily indicative of the results to be expected for the full year.

NOTE 2: SUBSIDIARY TRANSACTIONS

On May 8, 2006, the Company completed the sale of a 43.68% minority interest of its subsidiary, Turbotec Products Plc, (the Plc), through an offering on the AIM Market of the London Stock Exchange.

The Company and the Plc entered into a Relationship Agreement (RA) which provides for an annual administration fee; restrictions on related party transactions; restrictions on appointments to the board of the Plc and mutual confidentiality and reporting undertakings. See Part II, Item 1. As part of the transaction, the Company and the Plc established independent officers and directors and the two boards of directors act independently.

Commercial Leases:

The Company and Turbotec Products, Inc., a wholly-owned subsidiary of the Plc (Turbotec Products), entered into formal real estate leases effective May 8, 2006, for approximately 54,500 square feet at 651 Day Hill Road, Windsor, CT, and approximately 17,000 square feet at 50 Baker Hollow Road, Windsor, CT. See Part II, Item 1. The leases commenced April 1, 2006 with a five-year term, and one extension option for three years, and a second extension option for two years. Rent charges with respect to the 651 Day Hill Road property are equal to seven dollars per square foot in years one and two, escalating annually thereafter through each of the extension terms; monthly fixed rent in year one equals $31,792, escalating to $42,010 monthly in year ten, assuming both lease extensions are exercised. Rent charges with respect to the 50 Baker Hollow Road property are equal to $5.50 per square foot in year one, escalating annually thereafter through each of the extension terms; monthly fixed rent in year one equals $7,792, escalating to $10,979 monthly in year ten, assuming both lease extensions are exercised.

NOTE 3: EARNINGS PER SHARE

The Company has adopted Statement of Accounting Standards No. 128, Earnings per Share" (SFAS 128). Earnings per share for the three and six months ended September 30, 2009 and the year ended March 31, 2009 have been computed in accordance with this pronouncement, based on the weighted average of outstanding shares during the periods.

The weighted average numbers of shares outstanding used in the calculations are as follows:



|                                             |  |                                 |           |      |  |  |           | 
|-------------------------------------------- |  | ------------------------------- | --------- | ---- |  |  | --------- | 
|                                             |  | Three Months Ended September 30 |          
|                                             |  | 2009                            |           | 2008 | 
|Weighted Average Shares Outstanding- Basic   |  |                                 | 4,373,023 |      |  |  | 4,080,306 | 
|Weighted Average Shares Outstanding- Diluted |  |                                 | 4,373,023 |      |  |  | 4,080,306 | 



|                                             |  |                               |           |      |  |  |           | 
|-------------------------------------------- |  | ----------------------------- | --------- | ---- |  |  | --------- | 
|                                             |  | Six Months Ended September 30 |          
|                                             |  | 2009                          |           | 2008 | 
|Weighted Average Shares Outstanding- Basic   |  |                               | 4,373,023 |      |  |  | 4,080,306 | 
|Weighted Average Shares Outstanding- Diluted |  |                               | 4,373,023 |      |  |  | 4,080,306 | 





5



---

NOTE 4: INVENTORIES:

Inventories consist of the following at (in 000s):



|                |  |                    |       |  |                |   |       | 
|--------------- |  | ------------------ | ----- |  | -------------- | - | ----- | 
|                |  | September 30,
2009 |       |  | March 31,
2009 |  
|Raw materials   |  | $                  | 2,402 |  |                | $ | 2,043 | 
|Finished goods  |  |                    | 1,373 |  |                |   | 1,536 | 
|Work in process |  |                    | 96    |  |                |   | 120   | 
|                |  |                    | 3,871 |  |                |   | 3,699 | 
|Less: Reserves  |  |                    | 146   |  |                |   | 127   | 
|                |  | $                  | 3,725 |  |                | $ | 3,572 | 



Inventories are valued at the lower of cost or market, with cost determined on a standard cost basis which approximates a first-in, first-out basis.



NOTE 5: CASH FLOW INFORMATION AND NON CASH INVESTING ACTIVITIES

The following supplemental information is disclosed pursuant to the requirements of Financial Accounting Standards Board's "Statement of Accounting Standards No 95, Statement of Cash Flows.

|                           |  |                                           |    |  |      |   |    | 
|-------------------------- |  | ----------------------------------------- | -- |  | ---- | - | -- | 
|                           |  | Six Months Ended September 30,
(in 000s) |   
|                           |  | 2009                                      |    |  | 2008 |  
|Cash payments for interest |  | $                                         | 82 |  |      | $ | 82 | 



During the six months ended September 30, 2008, long  term debt of approximately $35,000 was incurred to acquire a vehicle.

NOTE 6: INVESTMENT/LOAN

As of September 30, 2009, $300,000 had been advanced to Tower Structures, Inc., (TS) a manufacturer of commercial buildings under loans which bear interest at 12%, payable monthly, and are repayable upon the financing of TS or on August 31, 2010, whichever comes first.  TS, as a consideration of the loan described above, issued shares to the Company in TS representing a small percentage of TS; the Thermodynetics CEO is also serving as TSs CEO, and had been granted in 2009 an incentive stock award representing a smaller interest in TS.

During the second quarter ended September 30, 2009, the Company recognized commitment fee income of $60,000 from TS.  This amount is a receivable and is included in other current assets in these financial statements.

NOTE 7: FINANCIAL ACCOUNTING STANDARDS

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statementsan amendment of Accounting Research Bulletin No. 51 (SFAS 160). SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parents ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS 160 is effective for fiscal years beginning after December 15, 2008 and has been adopted in these financial statements.



6



---

NOTE 8: LEGAL PROCEEDINGS

(a)

The lawsuit instituted by the Company on January 8, 2008 in the High Court in England, file no. HC08C00046, against Turbotec Products Plc regarding the PLCs non-payment of dividends payable to Thermodynetics and the PLCs attempt to off-set that dividend against administrative fees payable to the Company under their Relationship Agreement of April 28, 2006. The PLC declared and paid dividends in cash to the other shareholders, but not to Thermodynetics, as follows: August 24, 2007 in the amount of 5.8 cents per share, December 12, 2007 in the amount of 2.3 cents per share and March 28, 2008 in the amount of 4.4 cents per share. Thermodynetics owns 7,212,407 ordinary shares of the PLC; the unpaid dividends equal $884,162. Thermodynetics solicitors in the United Kingdom share the view as expressed in the written opinion of the Queens Counsel representing Thermodynetics that the legal positions taken by Thermodynetics are the correct ones and that Thermodynetics is likely to prevail at trial, and therefore Thermodynetics does not view risk of loss to be probable or material. The trial is scheduled to be held in London in December 2009.

(b)

Turbotec Products, Inc. commenced a lawsuit against Thermodynetics on February 27, 2008 in the Connecticut Superior Court, Judicial District of Hartford, alleging that Thermodynetics breached two commercial leases because it received certain overpayments as a result of alleged encroachment of space leased to Turbotec Products and for common area and maintenance charges, and that Thermodynetics improperly withdrew funds from a sinking fund established under one of the leases. The lawsuit was transferred from the regular docket to the Housing Session and now is entitled Turbotec Products, Inc. v. Thermodynetics, Inc., Connecticut Superior Court, Judicial District of Hartford, Housing Session, Docket No. 7712.

On January 29, 2009, Turbotec Products was granted permission by the court to file an amended complaint adding counts for fraudulent inducement, fraudulent misrepresentation, and violation of the Connecticut Unfair Trade Practices Act (Conn. Gen. Stat. Sect. 42-110b, et seq.) claiming that it was induced to enter into the two commercial leases based on alleged false statements by an officer of Thermodynetics concerning the market rent for the leased properties. Thermodynetics is in the process of conducting discovery on the new claims as well as continuing discovery on the initial claims.

Thermodynetics denies the allegations, is vigorously defending the case which is still in its intermediate stages, and filed counterclaims against Turbotec Products for sums due under the two leases, and has claimed the case for a jury trial. The Company's motion to transfer the case back to the regular docket given the nature of the new claims was granted. Thermodynetics does not view the risk of loss in the case as probable or material.

(c)

There are a number of threatened and pending actions against Vulcan, and a number of material judgments obtained against Vulcan. Thermodynetics and its other subsidiaries are not and have not been a party to any such Vulcan actions.



7



---

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations.

RESULTS OF OPERATIONS

The economic conditions worldwide and in the United States in particular have had a domino effect on business conditions.  This has carried over to the Company in that for the last several quarters, revenues of our Turbotec subsidiary have remained at depressed levels below $5 million per quarter.



The efforts at Turbotec to control operating costs have resulted in their reporting of earnings which results are incorporated within the consolidated financial statements that are part of this report.  While revenues have stabilized at current levels, efforts to control costs have continued and the move to their new facility in North Carolina is now on stream.



Business efforts for water source heat pumps is helping the Company achieve its current level of revenues, while swimming pool heat pumps and marine applications are at much lower than normal levels.



The expectations are for these levels will continue for the foreseeable future.  The trial in the UK litigation expected to have been heard and argued before the next report.  The Company expects that it will prevail in the UK case.  The real estate lease case is proceeding and will be heard in due course.



Liquidity and Capital Resources.

The Relationship Agreement that was entered into as a result of the IPO for Turbotec in 2006 contained various restrictive provisions.  As a result, the two organizations are operated independently of one another and their assets and liabilities are not allowed to be co-mingled or used to satisfy the obligations of the other.  A dispute between the two organizations has not been able to be resolved; the two companies are scheduled to have the UK courts hear the issues in December 2009 at a trial and we expect that we will prevail.



The Companys bank has proposed terms for an extension of the due date (July 31, 2009) for its $1.1 million line of credit and this is a continuing discussion.  The other debt obligations of Thermodynetics consist of mortgages $1.5 million and other notes payable of $56,000.  Turbotecs obligations consist of long term obligations of $266,000.



The cash and other current assets of Thermodynetics aggregating $856,000 (exclusive of intercompany amounts) are anticipated to be available to pay the Companys obligations.  Of that amount, some $118,000 is cash that is reserved in a sinking fund that, if not spent to make repairs, may be returnable to Turbotec.



As of September 30, the Company had advanced $300,000 to Tower Structures, Inc. (TSI) which has received orders for commercial modular buildings and is currently manufacturing and shipping the modular building components as they are completed.  TSI, as a consideration of the loan described above, issued shares in TSI representing a small percentage of the company and also shares certain management personnel with Thermodynetics, and had been granted in 2009 an incentive stock award representing a smaller interest in TS.



During the second quarter ended September 30, 2009, the Company recognized commitment fee income of $60,000 from TS.  This amount is a receivable and is included in other current assets in these financial statements.

At September 30, 2009 consolidated working capital was $4.3 million.



In the six months ended September 30. 2009, cash of $864,000 was provided by operations which was primarily the result of 1) an increase in accounts payable of $458,000 and 2) a decrease in accounts receivable of $452,000.



Cash of $316,000 was used by Turbotec in investing activities during the six month periods of 2009 to purchase property, plant and equipment.  Cash was provided by investing activities in the same period was due to sales by Thermodynetics of marketable securities.



Cash of $121,000 used in financing activities was the result of payments of long-term debt and the line of credit.







8



---

FORWARD LOOKING STATEMENTS

This report contains certain forward-looking statements regarding the Company, its business prospects and results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause the Companys actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that may affect such forward-looking statements include, without limitation: the Companys ability to successfully and timely develop and finance new projects, the impact of competition on the Companys revenues, and changes in unit prices, supply and demand for the Companys tubing product line especially in applications serving the commercial, industrial and residential construction industries.

When used, words such as "believes," "anticipates," "expects," "continue", "may", "plan", "predict", "should", "will", "intends" and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. The Company undertakes no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made by the Company in this report, news releases, and other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect the Companys business.

Significant risk factors and economic considerations associated with heat transfer products include, but are not limited to, seasonality of purchasing and building cycles, the cost of energy, the reported housing slowdown, incentives provided by manufacturers, marketers and municipalities to encourage the use of more efficient equipment, interest rate changes that may stimulate or depress demand, the cost and availability of materials used in manufacturing processes, and regulatory directives relating to energy consumption, conservation and the environment.

Item 3.

Quantitative and Qualitative Disclosures About Market Risks.

Not applicable.

Item 4T.

Controls and Procedures.

NOTE: The Company owns 56% of Turbotec Products Plc (the PLC) and entered into an agreement that limits its influence with the PLC as described in Item 1(a) hereof. The PLC's wholly-owned subsidiary is Turbotec Products, Inc. (which together with the PLC, is referred to as "Turbotec"). The Companys conclusion regarding the effectiveness of its internal control over financial reporting does not extend to the internal disclosure controls and procedures and internal control over financial reporting procedures of Turbotec.  The Company has not evaluated the internal controls of Turbotec.  The Company does not have the ability to examine, dictate, or modify the controls of Turbotec, nor does the Company have the ability, in practice, to evaluate the disclosure controls and procedures or the internal control over financial reporting procedures of Turbotec.  Accordingly, the Company does not have actual knowledge of the disclosure controls and procedures or the internal control over financial reporting procedures of Turbotec to the extent believed to be required under Section 404 of the Sarbanes-Oxley Act and Rule 13a-15 of the Securities Exchange Act of 1934.  Therefore, the Company is unable to certify as to the disclosure controls and procedures and the internal control over financial reporting procedures of Turbotec.  Therefore the Company states as follows:

(a)

Evaluation of Disclosure Controls and Procedures -

The Companys principal executive and principal financial officers have concluded, based on their evaluation, that as of March 31, 2009 the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the Exchange Act)), as of the end of the reported period, were not effective to provide the material information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the Exchange Act.



9



---

(b)

Changes in Internal Controls -

There were no changes made and no corrective actions taken during the quarter ended for this report with respect to the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect the Company's internal control over its financial reporting.

However, management of the Company has not been able to evaluate the effectiveness of the internal control over financial reporting procedures that do or may exist at Turbotec nor is the Company knowledgeable about such controls.  Therefore, the Companys internal control over financial reporting for Thermodynetics, Inc. and its subsidiaries was not effective as of the end of the reporting period for this report.



10



---

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings.

There are no material legal proceedings known or threatened against the Company, except:

(a)

The lawsuit instituted by the Company on January 8, 2008 in the High Court in England, file no. HC08C00046, against Turbotec Products Plc regarding the PLCs non-payment of dividends payable to Thermodynetics and the PLCs attempt to off-set that dividend against administrative fees payable to the Company under their Relationship Agreement of April 28, 2006. The PLC declared and paid dividends in cash to the other shareholders, but not to Thermodynetics, as follows: August 24, 2007 in the amount of 5.8 cents per share, December 12, 2007 in the amount of 2.3 cents per share and March 28, 2008 in the amount of 4.4 cents per share. Thermodynetics owns 7,212,407 ordinary shares of the PLC; the unpaid dividends equal $884,162. Thermodynetics solicitors in the United Kingdom share the view as expressed in the written opinion of the Queens Counsel representing Thermodynetics that the legal positions taken by Thermodynetics are the correct ones and that Thermodynetics is likely to prevail at trial, and therefore Thermodynetics does not view the risk of loss to be probable or material. The trial is scheduled to be held in London in December 2009.

(b)

Turbotec Products, Inc. commenced a lawsuit against Thermodynetics on February 27, 2008 in the Connecticut Superior Court, Judicial District of Hartford, alleging that Thermodynetics breached two commercial leases because it received certain overpayments as a result of alleged encroachment of space leased to Turbotec Products and for common area and maintenance charges, and that Thermodynetics improperly withdrew funds from a sinking fund established under the leases. The lawsuit was transferred from the regular docket to the Housing Session and now is entitled Turbotec Products, Inc. v. Thermodynetics, Inc., Connecticut Superior Court, Judicial District of Hartford, Housing Session, Docket No. 7712.

On January 29, 2009, Turbotec Products was granted permission by the court to file an amended complaint adding counts for fraudulent inducement, fraudulent misrepresentation, and violation of the Connecticut Unfair Trade Practices Act (Conn. Gen. Stat. Sect. 42-110b, et seq.) claiming that it was induced to enter into the two commercial leases based on alleged false statements by an officer of Thermodynetics concerning the market rent for the leased properties. Thermodynetics is in the process of conducting discovery on the new claims as well as continuing discovery on the initial claims. Thermodynetics denies the allegations, is vigorously defending the case which is still in its intermediate stages, and filed counterclaims against Turbotec Products for sums due under the two leases, and has claimed the case for a jury trial. The Company's motion to transfer the case back to the regular docket given the nature of the new claims was granted. Thermodynetics does not view the risk of loss in the case as probable or material.

(c)

There are a number of threatened and pending actions against Vulcan, and a number of material judgments obtained against Vulcan. Thermodynetics and its other subsidiaries are not and have not been a party to any such Vulcan actions.

Item 1A.

Risk Factors.

Not Applicable.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered sales of equity securities of the Company during the three-month period covered by this Form 10-Q report, except that: (i) on August 11, 2009, the Company issued 300,000 shares of Common Stock to Robert A. Lerman and 150,000 shares of Common Stock to John F. Ferraro as stock bonus awards; no cash was paid to the Company for these awards;  (ii) on August 11, 2009, the Company issued 5,000 shares of Common Stock to John J. Hughes and 5,000 shares of Common Stock to Fred H. Samuelson as stock bonus awards; no cash was paid to the Company for these awards; and (iii) on August 11, 2009, the Company issued 50,000 shares of Common Stock to the Thermodynetics, Inc. 401(k) Profit-Sharing Plan as a matching contribution; no cash was paid to the Company for this award.  (iv) None of the referenced shares were registered under the Securities Act of 1933, as amended (the Securities Act), but were issued in reliance on the exemption from registration contained in Section 4(2) of the Securities Act.



11



---

Item 3.

Defaults Upon Senior Securities.

There were no material defaults of any terms of the securities or indebtedness of any senior securities of the Company or any of its significant subsidiaries during the three-month period covered by this Form 10-Q report.

Item 4.

Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of the securities holders of the Company during the three-month period covered by this Form 10-Q report.

Item 5.

Other Information.

None

Item 6.

Exhibits.

(a)

Exhibits:

Rule 13a-14(a)/15d-14(a) Certifications:

·

Exhibit 31(a)

Certification of Chief Executive Officer.

·

Exhibit 31(b)

Certification of Chief Financial Officer.

Section 1350 Certifications:

·

Exhibit 32(a)

Certification of Chief Executive Officer.

·

Exhibit 32(b)

Certification of Chief Financial Officer.





12



---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                         |     |                                       | 
|------------------------ | --- | ------------------------------------- | 
|                         |     | THERMODYNETICS, INC.                  | 
|                         |     |                                       | 
|Date: November  12, 2009 | By: | /s/ ROBERT A. LERMAN                  | 
|                         |     | Robert A. Lerman                      | 
|                         |     | President and Chief Executive Officer | 
|                         |     |                                       | 
|Date: November 12, 2009  | By: | /s/ JOHN F. FERRARO                   | 
|                         |     | John F. Ferraro                       | 
|                         |     | Treasurer and Chief Financial Officer | 





13