CRGS CurAegis Technologies Inc (CE)

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2009

OR

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

For the transition period from                      to                     

Commission File No. 000-24455

TORVEC, INC.

(Exact name of registrant as specified in its charter)

New York		16-1509512
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

1999 Mt. Read Blvd. Building 3, Rochester, New York 14615
(Address of principal executive offices and Zip Code)

(585) 254-1100
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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 o

Indicate by check mark whether the registrant (1) has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months(or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer o		Non-accelerated filer o		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 o No þ

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

		Number of Shares Outstanding at
Class		November 16, 2009
Common Stock, $.01 par value		35,188,485

 

 

TORVEC, INC. AND SUBSIDIARIES
(a development stage company)

INDEX

		PAGE
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements			3
Condensed Consolidated Balance Sheets — September 30, 2009 (Unaudited) and December 31, 2008			3
Condensed Consolidated Statements of Operations—Three and Nine months Ended September 30, 2009 and 2008 and September 25, 1996 (Inception) through September 30, 2009 (Unaudited)			4
Condensed Consolidated Statements of Cash Flows — Nine months Ended September 30, 2009 and 2008 and September 25, 1996 (Inception) through September 30, 2009 (Unaudited)			5
Notes to Condensed Consolidated Financial Statements(Unaudited)			6-20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			21-27
Item 3. Quantitative and Qualitative Disclosures About Market Risk			28
Item 4. Controls and Procedures			28
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			29
Item 1A. Risk Factors			29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			30
Item 3. Defaults Upon Senior Securities			30
Item 4. Submission of Matters to a Vote of Security Holders			30
Item 5. Other Information			30
Item 6. Exhibits			30-35
SIGNATURE PAGE			36
EXHIBIT INDEX			37
Exhibit 31.1
Exhibit 32

PART I — FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

TORVEC, INC. AND SUBSIDIARIES
(a development stage company)

Condensed Consolidated Balance Sheets

		September 30, 2009				December 31, 2008
		(Unaudited)
ASSETS
Current assets:
Cash		$	82,000			$	304,000
Prepaid expenses and other receivables			224,000				102,000
Total current assets			306,000				406,000
Property and Equipment:
Office equipment			68,000				68,000
Shop equipment			139,000				139,000
Leasehold improvements			213,000				213,000
Transportation equipment			106,000				106,000
			526,000				526,000
Less accumulated depreciation and amortization			(285,000	)			(237,000	)
Net property and equipment			241,000				289,000
Total Assets		$	547,000			$	695,000
LIABILITIES
Current liabilities:
Notes payable, current portion		$	15,000			$	15,000
Accounts Payable and Accrued Liabilities			210,000				177,000
Deferred Compensation and Other			361,000				755,000
Total current liabilities			586,000				947,000
Deferred revenue			800,000				800,000
Deferred rent expense			32,000				39,000
Notes payable, net of current portion			17,000				29,000
Total liabilities		$	1,435,000			$	1,815,000
Commitments and contingencies
STOCKHOLDERS’ CAPITAL DEFICIT
Preferred stock, $.01 par value, 100,000,000 shares authorized 3,300,000 designated as Class A, convertible Non-voting, cumulative dividend $.40 per share, per annum, September 30, 2009 and December 31, 2008: 649,601 and 707,101 shares issued and outstanding, respectively (liquidation preference $3,804,650 and $3,858,015, respectively)
300,000 designated as Class B, convertible Non-voting, cumulative dividend $.50 per share, per annum, September 30, 2009 and December 31, 2008: 77,500 and 97,500 shares issued and outstanding, respectively (liquidation preference $369,246 and $360,339, respectively)			7,000				8,000
Common stock, $.01 par value, 400,000,000 shares authorized, 34,884,150 and 32,811,422 issued and outstanding, at September 30, 2009 and December 31, 2008, respectively			349,000				328,000
Additional paid-in capital			50,982,000				48,485,000
Deficit accumulated during the development stage			(52,226,000	)			(49,941,000	)
Total Torvec, Inc. Stockholders’ Capital Deficit			(888,000	)			(1,120,000	)
Noncontrolling Interest of Subsidiary			—				—
Total Stockholders’ Capital Deficit			(888,000	)			(1,120,000	)
Total Liabilities and Stockholders’ Capital Deficit		$	547,000			$	695,000

See notes to condensed consolidated financial statements.

TORVEC, INC. AND SUBSIDIARIES
(a development stage company)

Condensed Consolidated Statements of Operations

																		September
		Three				Three				Nine				Nine				25, 1996
		Months				Months				Months				Months				(Inception)
		ended				ended				ended				ended				through
		September				September				September				September				September
		30, 2009				30, 2008				30, 2009				30, 2008				30, 2009
Revenue		$	—			$	—			$	175,000			$	30,000			$	422,000
Cost of Goods Sold			—				—				90,000				11,000				315,000
Gross Profit			—				—				85,000				19,000				107,000
Costs and expenses
Research and development			189,000				143,000				418,000				405,000				15,753,000
General and administrative			619,000				694,000				2,103,000				2,475,000				39,079,000
Asset Impairments			—				—				—				—				1,071,000
Loss for operations		$	(808,000	)		$	(837,000	)		$	(2,436,000	)		$	(2,861,000	)		$	(55,796,000	)
Other Income			—				—				—				1,000				260,000
Loss before gain on cancellation of debt, and tax benefit		$	(808,000	)		$	(837,000	)		$	(2,436,000	)		$	(2,860,000	)		$	(55,536,000	)
Gain on Cancellation of debt			—				—				—				1,541,000				1,541,000
Net Loss Before Income Tax Provision		$	(808,000	)		$	(837,000	)		$	(2,436,000	)		$	(1,319,000	)		$	(53,995,000	)
Income Tax Benefits			151,000				380,000				151,000				380,000				497,000
Net Loss		$	(657,000	)		$	(457,000	)		$	(2,285,000	)		$	(939,000	)		$	(53,498,000	)
Net Loss attributable to non-controlling interest in consolidating subsidiary			—				—				—				—				1,272,000
Net Loss attributable to Torvec, Inc		$	(657,000	)		$	(457,000	)		$	(2,285,000	)		$	(939,000	)		$	(52,226,000	)
Preferred stock beneficial conversion feature			—				—				—				—				763,000
Preferred stock dividends			73,000				79,000				234,000				246,000				1,434,000
Net Loss attributable to common stockholder		$	(730,000	)		$	(536,000	)		$	(2,519,000	)		$	(1,185,000	)		$	(54,423,000	)
Basic and Diluted net loss attributable to common stock per share			(0.02	)			(0.02	)			(0.07	)			(0.04	)
Weighted average number of shares of
Common stock, Basic And Diluted			34,524,000				32,266,000				33,719,000				32,021,000

See notes to condensed consolidated financial statements.

TORVEC, INC. AND SUBSIDIARIES
(a development stage company)

Condensed Consolidated Statements of Cash Flows

										September 25,
										1996
										(Inception)
		Nine months Ended								Through
		September 30,								September 30,
		2009				2008				2009
Cash flows from operating activities:
Net loss		$	(2,285,000	)		$	(939,000	)		$	(52,226,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss attributable to noncontrolling interest in consolidated subsidiary			—				—				(1,272,000	)
Depreciation and amortization			48,000				52,000				2,498,000
Loss on impairment of license			—				—				1,071,000
Impairment of goodwill			—				—				19,000
Gain on sale of fixed assets			—				—				(10,000	)
Compensation expense attributable to common stock in Subsidiary			—				—				619,000
Common stock issued for services			1,114,000				1,511,000				14,308,000
Shares issued for future consulting services			—				—				103,000
Stockholder contribution of services			1,050,000				249,000				3,459,000
Gain on cancellation of debt			—				(1,541,000	)			(1,541,000	)
Contribution to Capital, Ford Truck			—				—				16,000
Common Stock Issued in connection with Commercializing Event			14,000				17,000				50,000
Compensatory common stock, options and warrants			—				—				17,835,000
Changes in:
Inventory			—				(140,000	)			—
Prepaid expenses and other receivables			(122,000	)			(374,000	)			(63,000	)
Deferred Revenue			—				398,000				709,000
Deferred rent			(7,000	)			46,000				34,000
Accounts payable and accrued expenses			298,000				(118,000	)			4,234,000
Deferred Compensation and Other			(535,000	)			581,000				174,000
Net cash used in operating activities			(425,000	)			(258,000	)			(9,983,000	)
Cash flows from investing activities:
Purchase of property and equipment			—				(11,000	)			(360,000	)
Cost of acquisition			—				—				(16,000	)
Proceeds from sale of fixed asset			—				—				10,000
Net 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			215,000				130,000				6,914,000
Net proceeds from sales of preferred stock			—				—				3,537,000
Net proceeds from sale of subsidiary stock			—				—				234,000
Proceeds from long — term borrowings			—				—				85,000
Repayments of long — term debt			(12,000	)			(10,000	)			(77,000	)
Proceeds from stockholders’ loan and advances			—				—				250,000
Repayment of stockholders’ loan and advances			—				—				(147,000	)
Distributions			—				—				(365,000	)
Net cash provided by financing activities			203,000				120,000				10,431,000
Net decrease in cash			(222,000	)			(149,000	)			82,000
Cash at beginning of period			304,000				192,000				—
Cash at end of period		$	82,000			$	43,000			$	82,000
Supplemental Disclosures:
Interest paid		$	3,000			$	4,000			$	27,000
Income Tax Paid			—				—				1,000
Non cash investing and financing activities:
Shares issued for acquisition leasehold improvements			—				64,000				166,000
Issuance of common stock in settlement of payables			124,000				—				210,000
Preferred stock issued in payment of dividend			—				7,000				39,000
Shares issued for acquisition of Variable Gear			—				—				19,000
Issuance of common stock for license			—				—				3,405,000
Issuance of common stock, warrant and options in settlement of liabilities, except notes payable			—				—				2,907,000
Notes Payable exchanged for common stock			—				—				50,000
Advance settled with common stock			—				—				25,000
Loss on exchange of minority interest			—				—				232,000
Shares issued for future consulting services			—				—				103,000
Issuance of common stock for a finder fee			—				—				225,000
Advance from stockholder			—				—				250,000
Contribution of FTV Ford Truck			—				—				16,000
ICE payable netted against receivable			—				—				91,000
Common stock issued in settlement of Patent expense			—				—				117,000

See notes to condensed consolidated financial statements.

TORVEC, INC. AND SUBSIDIARIES
(a development stage company)

Notes to Condensed Consolidated Financial Statements

NOTE A — The Company and Basis of Presentation

The interim information contained herein with respect to the three and nine month periods ended September 30, 2009 and 2008 and the period from September 25, 1996 (inception) through September 30, 2009 has not been audited but was prepared in conformity with generally accepted accounting principles for interim financial information and instructions for Form 10-Q. Accordingly, the condensed consolidated financial statements do not include all information and footnotes required by generally accepted accounting principles for financial statements. Included are ordinary adjustments which in the opinion of management are necessary for a fair presentation of the financial information for the three and nine month periods ended September 30, 2009 and 2008 and since inception. The results are not necessarily indicative of results to be expected for the entire year.

Torvec, Inc. (the “company”) was incorporated as a New York State business corporation in September 1996. The company, which is in the development stage, has developed technology for use in automotive applications. In September, 1996, the company acquired numerous patents, inventions and know-how contributed by Vernon E. Gleasman, James Y. Gleasman and Keith E. Gleasman (the “Gleasmans”). The company has developed, is refining and intends to commercialize its infinitely variable transmissions, its pumps/motors, its IsoTorque differential, its constant velocity joint and the substructure and components of its full terrain vehicle.

The company’s financial statements have been prepared assuming that it will continue as a going concern. For the period from September 1996 (inception) through September 30, 2009, the company has accumulated a deficit of $52,226,000, and at September 30, 2009 has a working capital deficiency of $280,000 and a stockholders’ deficit of $888,000. The company has been dependent upon equity financing and advances from stockholders to meet its obligations and sustain operations. The company’s efforts are principally devoted to the ongoing refining of its technologies and commercializing its products. Management believes that based upon its current cash position and its budget for its business operations through September 30, 2010, the company will not be able to meet its anticipated cash requirements through September 30, 2010. The company is actively seeking additional sources of capital. There can be no assurance that the company will be able to raise sufficient capital on acceptable terms. Without sufficient additional capital or long term debt and ultimately profitable operating results, the company will not be able to continue as a going concern. These factors raise substantial doubt about the company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

NOTE B — Summary of Significant Accounting Policies

NOTE C — License from the Trustees of Dartmouth College

On November 28, 2000, the company’s majority-owned subsidiary, Ice Surface Development LLC (“Ice Surface”) entered into a 20-year exclusive license with the Trustees of Dartmouth College for land-based applications to a novel ice adhesion modification system developed by Dr. Victor Petrenko at Dartmouth’s Thayer School of Engineering. Under the license agreement the company made a single payment of $140,000 in 2000 for sponsored research. The license agreement provided for a royalty of 3.5% based on the value of net sales of licensed product with minimum annual payments of $10,000 for the first two years, $15,000 for the third year and $25,000 per year through 2021. In addition, the agreement provided for the payment of 50% of sub-license fee income.

Effective June 15, 2007, Ice Surface assigned the license to an unrelated company, Ice Engineering, LLC (“Ice Engineering”) in exchange for Ice Engineering’s agreement to pay the shareholders of Ice Surface an annual royalty equal to 5% of the annual gross revenues generated by the license and its agreement to assume the obligations to Dartmouth under the license.

Separately, Ice Engineering, agreed to reimburse approximately $3,500,000 of acquisition and maintenance costs expended by the company in connection with the ice technology. Pursuant to the reimbursement agreement, the company received $500,000 on June 15, 2007. Under the license assignment agreement, the $3,000,000 balance is to be paid at the rate of $300,000 per quarter commencing March 1, 2008, less approximately $91,000 in fees payable to Dartmouth College accrued through June 14, 2007 to be deducted from the first quarterly reimbursement amount. The company received the first installment of $209,000 due March 1, 2008 on April 3, 2008 and has not received any other installments due since that date.

On October 31, 2008, the company commenced an action in New York State Supreme Court, County of New York, Commercial Division against Ice Engineering, seeking the total balance owed by Ice Engineering to the company pursuant to an agreement entered into by the parties, effective June 15, 2007, namely, $2,700,000. Ice Engineering has counterclaimed for the $800,000 paid under the agreement thus far, alleging that the company failed to deliver certain “business information” to Ice Engineering as called for under the agreement. On April 14, 2009, the Court denied the company’s motion for summary judgment without prejudice to re-file and ordered the parties to proceed with discovery. The parties have commenced the discovery process and this process remains ongoing.

The company has accounted for the receipt of the reimbursement proceeds as a recovery of costs since such amounts represent an initial payment and is subject to additional installments and when payments received exceed the cost accumulated, revenue will be recorded under the cost recovery approach to the extent that the proceeds exceed the basis.

NOTE D — Related Party Transactions

NOTE E — Stockholders’ Equity (Capital Deficit)

						Nine Months Periods Ended September 30,
						2009												2008
						Weighted				Weighted												Weighted
						Average				Average				Aggregate								Average
						Exercise				Remaining				Intrinsic								Exercise
		Shares				Price				Life in Years				Value				Shares				Price
Outstanding at beginning of period			641,848			$	4.70				4.81								1,021,848			$	4.77
Granted			—				—				—								—				—
Expired			—				—				—								(380,000	)			—
Outstanding at end of period			641,848				4.70				4.03			$	—				641,848				4.70
Options exercisable at end of period			641,848				4.70				4.03			$	—				641,848				4.70
Options Vested and Expected to Vest			641,848				4.70				4.03			$	—				641,848				4.70

										Number of				Number of
Exercise										Shares				Shares
Price						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

The following summarizes the activity of the company’s outstanding warrants for the nine month periods ended September 30, 2009 and 2008.

										Weighted
						Weighted				Average
						Average				Remaining				Aggregate
						Exercise				Contractual				Intrinsic
		Warrants				Price				Term				Value
Outstanding at January 1, 2009			1,766,250			$	3.30			4.13 years				$	—
Granted			—				—				—				—
Exercised			(12,500	)		$	.01				—				—
Canceled or expired
Outstanding at September 30, 2009			1,753,750			$	3.32			3.59 years				$	48,473
Exercisable at September 30, 2009			1,128,750			$	4.58			3.08 years				$	48,473

										Weighted
						Weighted				Average
						Average				Remaining				Aggregate
						Exercise				Contractual				Intrinsic
		Warrants				Price				Term				Value
Outstanding at January 1, 2008			2,084,950			$	3.14			4.90 years				$	—
Granted			195,000			$	5.01			8.33 years
Exercised			(2,500	)		$	.01
Canceled or expired
Outstanding at September 30, 2008			2,277,450			$	3.30			4.38 years				$	1,404,106
Exercisable at September 30, 2008			1,652,450			$	3.93			4.17 years				$	739,106

September 30, 2008
Black-Scholes Inputs

Term			8.84 years
Expected forfeiture rate			-0-	%
Risk-free rate			2.89	%
Volatility			0.55
Dividend yield			0.0	%

NOTE F — Commitments and Other Matters

NOTE G — Management Agreement

On February 20, 2004 the company entered into an agreement with a management firm to develop and implement a business plan to commercialize its full terrain vehicle. In June, 2004, the company engaged three members of the management firm as the company’s chief executive officer, chief financial officer and chairman of its board of directors. In June, 2004 and in April, 2005, the company and the management firm purported to execute agreements reflecting the company-related capacities of the management firm’s three members and reflecting the management firm’s reorganization, respectively.

In September, 2005, the company commenced litigation challenging the validity of the June, 2004 and April, 2005 agreements. On March 6, 2009, the company and the management firm executed a Settlement Agreement and Release pursuant to which any and all claims and counterclaims the parties had or may have had arising out of or related to their relationship, arrangement or services provided one to the other were resolved and released and any and all obligations between and among them, specifically including the contested agreements, were terminated effective December 31, 2008.

No amount was paid to the management firm by the company during the three and nine month periods ended September 30, 2009 and 2008.

NOTE H — Litigation

On October 31, 2008, the company commenced an action in New York State Supreme Court, County of New York, Commercial Division against Ice Engineering, seeking the total balance owed by Ice Engineering to the company pursuant to an agreement entered into by the parties, effective June 15, 2007, namely, $2,700,000. Under the agreement, in connection with Torvec’s assignment of the ice technology license, Ice Engineering agreed to reimburse Torvec for approximately $3,500,000 the company previously had expended acquiring and maintaining the license. Ice Engineering has paid approximately $800,000 but is in arrears with respect to quarterly installments due June 1, 2008 through and including September 1, 2009 and apparently has repudiated its remaining payment obligations under the agreement. Ice Engineering has counterclaimed for the $800,000 paid under the agreement thus far, alleging that the company failed to deliver certain “business information” to Ice Engineering as called for under the agreement.

On April 14, 2009, the Court denied the company’s motion for summary judgment without prejudice to re-file and ordered the parties to proceed with discovery. The parties have commenced discovery and this process is continuing.

NOTE I — Royalty Agreement

On December 12, 2007, the company granted High Density Poweretrain, Inc. of Waterford, Michigan (“HDP”) an exclusive, worldwide license to incorporate the company’s constant velocity joint technology in HDP’s family of highly-powered, multifueled, fuel efficient, light weight, cost effective internal combustion engines. In consideration for the grant of the license, the company will receive annual royalties equal to 5% of annual gross revenues generated by the sale of HDP’s multifuel engines, including all sublicense of such technology. There are no minimum royalty payments and the grant does not affect the company’s ability to commercialize its constant velocity joint technology in any other field and/or application. At September 30, 2009, the company has not received any royalties under this agreement.

NOTE J — Subsequent Event

The Company has performed an evaluation of subsequent events through November 16, 2009, which is the date the financial statements were filed.

On October 20, 2009, the company sold 192,308 restricted common shares to a qualified accredited investor within the meaning of regulation D promulgated under the Securities Act of 1933 for proceeds of $100,000.

The company is relying on section 4(2) of such Act to provide it with an exemption from registration as a transaction by an issuer not involving a public offering.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

PLAN OF OPERATION

	(a)		Overall Business Strategy
			From its inception in 1996, the company’s overall business plan has been to design, develop, build and commercialize its FTV ® worldwide, especially in the Asian, African, South and Central American and Eastern European markets. In addressing issues and solving problems encountered in the design and development of the FTV, the company designed, developed and is refining a number of automotive drive-line technologies—i.e. the company’s hydraulic pump/motor system, infinitely variable transmissions, Iso-Torque ® differential and constant velocity joint technology.
			The FTV ® has been developed and is ready for commercialization. In addition, each of the company’s other automotive technologies has been designed, developed and is being refined— either independently on a stand-alone basis or as incorporated into the company’s FTV.
			In present circumstances, the company intends to produce, market and distribute FTV’s by entering into a joint venture relationship with an automotive manufacturer. The company intends to incorporate its drive-line technologies into the FTV to enhance its marketability and value. The company also intends to license and/or enter into supply contracts with automotive manufacturers, military contractors, tier-one suppliers and possibly end-users for its drive-line technologies independent of their utilization in the FTV.
	(b)		2009 Plan of Operation
			The company’s plan of operation during the year ending December 31, 2009 is as follows:

1) to continue working with the U.S. Air Force to create an Advanced Combat Firefighting Vehicle capable of unprecedented speed, maneuverability with diverse applications for use in the most extreme and rugged terrain. The company delivered an FTV ^® to the Air Force in December 2008 to maximize the FTVs combat firefighting capabilities, including its robotic and autonomous potential, at Tyndale Air Force Base in Florida. The Air Force has completed its evaluation of the FTV, has recommended that certain design-specific modifications be made to the vehicle and the company is in the process of making these changes prior to returning the vehicle to the Air Force for final approval;

2) to build a “second generation” FTV based upon the Air Force’s recommendations for delivery to the Air Force for integration in its Advanced Combat FirefightingVehicle Program;

3) to explore interest in the FTV among other branches of the U.S. military, the Department of Homeland Security, FEMA, the U.S. Forestry Service, as well as state and municipal governmental units, in acquiring design-specific FTVs for boarder patrol, off-highway emergencies, as an environmentally-friendly vehicle for federal and state conservation and drug-enforcement efforts and, as a fast, highly maneuverable vehicle for combat and non-combat uses;

4) to build an IsoTorque ^® differential for evaluation by a major American automotive manufacturer for integration in its front-wheel drive vehicles. Previously, in 2008, the manufacturer had evaluated the IsoTorque differential in its rear-wheel drive vehicles;

5) to build IsoTorque ^® differential units for a number of foreign and domestic automotive manufacturers;

6) to redesign the axle used by a major international truck manufacturer to enable the manufacturer to integrate the company’s IsoTorque technology in its fleet of heavy-duty trucks.

The company completed the axle redesign and has forwarded a proposal to the manufacturer for its review and acceptance.

During the first quarter of 2009, the company shipped seven design-specific infinitely variable transmissions to the National Aeronautics and Space Administration for use in that agency’s lunar rover in connection with NASA’s program titled “America’s return to the moon.” The company anticipates that it will continue to work in 2009 with NASA as an “official” drive-line consultant to the lunar rover project.

Information regarding the company and all of its automotive inventions, including regular updates on technological and business developments, can be found on the company’s website, www.torvec.com.

c)

Ice Technology License

Through June 14, 2007, the company held a license to ice technology granted by the Trustees of Dartmouth College. This license was held through the company’s majority-owned subsidiary, Ice Surface Development, Inc. The license required the company to pay Dartmouth College a royalty of 3.5% of the net sales of licensed product with minimum annual payments of $25,000 through 2021. In addition, the license provided for the payment of 50% of sub-license fee income.

Since its acquisition of the ice technology license, the company worked with the technology’s inventor, Dr. Victor Petrenko at Dartmouth’s Thayer School of Engineering, to refine the various methods of deicing and used its best efforts to sublicense such technology to one or more domestic and/or foreign glass manufacturers, automotive companies and other potential end-users. A considerable amount of additional development work was performed at the Dartmouth College’s Center for Ice Technology on the college’s campus, which work was supervised by Dr. Petrenko.

In December, 2006, the company was informed by Dr. Petrenko that while the physics underlying the ice technology is still valid and the technology remains promising, he could not estimate a time frame when the technology would be mature enough for automotive commercialization.

Given Dr. Petrenko’s assessment with respect to the ice technology, management concluded that the carrying amount of the ice technology license as of December 31, 2006 ($1,071,000) exceeded the estimated cash flows the company reasonably expected to receive and, therefore, determined the full amount of such excess should be recorded as an impairment in accordance with ASC 360-10 as of and for the year ended December 31, 2006.

During 2007, the company and Dr. Petrenko discussed the terms and conditions under which the company would accept Dr. Petrenko’s offer to purchase the license from the company. Effective June 15, 2007, the company assigned all of its rights, title and interest in and to the license to Dr. Petrenko’s company (Ice Engineering, LLC) in exchange for an agreement by Ice Engineering to pay the shareholders of Ice Surface Development a royalty equal to 5% of the gross revenues generated by the license and the assumption of the company’s obligations to Dartmouth College under the license.

Separately, Ice Engineering, LLC agreed to reimburse approximately $3,500,000 of acquisition and maintenance costs expended by the company in connection with the ice technology. Pursuant to the reimbursement agreement, the company received $500,000 on June 15, 2007. Under the license assignment agreement, the $3,000,000 balance is to be paid at the rate of $300,000 per quarter commencing March 1, 2008, less approximately $91,000 in fees payable to Dartmouth College accrued through June 14, 2007 to be deducted from the first quarterly reimbursement amount.

Ice Engineering has paid approximately $800,000 under the assignment agreement but is in arrears with respect to quarterly installments due beginning June 1, 2008 and apparently has repudiated its payment obligations under the agreement.

On October 31, 2008, the company commenced an action in New York State Supreme Court, County of New York, Commercial Division against Ice Engineering, LLC seeking the total balance owed by Ice Engineering to the company pursuant to the agreement, namely, $2,700,000. Ice Engineering has counterclaimed for the $800,000 paid under the agreement thus far, alleging that the company failed to deliver certain “business information” to Ice Engineering as called for under the agreement.

The company filed a motion for summary judgment with respect to its claims and on April 14, 2009, the Court denied the motion without prejudice which means that the company can re-file the motion after discovery has been completed. The parties have commenced discovery and the process is continuing.

The company has accounted for the receipt of reimbursement proceeds as a recovery of its cost since such amounts represent an initial payment and is subject to additional installments and when payments received exceed the cost accumulated revenue will be recorded under the cost recovery approach to the extent that the proceeds exceed the basis.

(d)

Results of Operations

The net loss for the three month period ended September 30, 2009 was $657,000 as compared to the three month period ended September 30, 2008 of a net loss of $457,000. The net loss for the nine month period ended September 30, 2009 was $2,285,000 as compared to the nine month period ended September 30, 2008 net loss of $939,000. The increase of net loss of $200,000 for the comparative three month periods and the increase of net loss of $1,346,000 for the nine month comparative periods, respectively, is principally related to the tax credit refund and gain on cancellation of debt events in the two year period which provided the company with other income of $151,000 and $1,541,000, respectively.

Research and development expenses for the three month period ended September 30, 2009 amounted to $189,000 as compared to $143,000 for the three month period ended September 30, 2008. Research and development expenses for the nine month period ended September 30, 2009 amounted to $418,000 as compared to $405,000 for the nine month period ended September 30, 2008. The increase of $46,000 and $13,000 in the three and nine month comparative periods is due to increased cost associated with commercializing our technologies, specifically in modifying the FTV ^® in accordance with Air Force specifications and refining and building IsoTorque ^® differentials for foreign and domestic automotive companies.

General and administrative expense for the three month period ended September 30, 2009 amounted to $619,000 compared to $694,000 for the three month period ended September 30, 2008. General and administrative expenses for the nine month period ended September 30, 2009 amounted to $2,103,000 as compared to $2,475,000 for the nine month period ended September 30, 2008. The decrease of $75,000 and $372,000 in the three and nine month comparative periods is due, in large part, to decreased spending on consulting services.

(f)

Liquidity and Capital Resources

The company’s business activities during the three and nine month periods ended September 30, 2009 were funded principally through the receipt in the fourth quarter of 2008 of approximately $280,000 representing New York State corporation income tax refundable credits allocable to certain research and development expenses incurred in the years 2005-2007 and the receipt of approximately $145,000 from the sale of 228,128 restricted common shares to accredited investors during the three month period ended September 30, 2009 and the receipt of approximately $215,000 from the sale of 322,231 restricted common shares for the nine month period ended September 30, 2009.

For the nine month periods ended September 30, 2009 and 2008, the company issued 1,543,256 and 664,021 common shares to business consultants under the Business Consultants Stock Plan in exchange for ongoing business advisory services, engineering services, legal fees, including patent services, internal accounting services and other corporate services. As of September 30, 2009, 2,110,022 shares are available for future issuances under the Business Consultants Stock Plan.

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 at the rate of $300,000 per year. Actual payment under the plan was conditioned upon a board determination that the company had the requisite cash, after the complete funding of all ongoing projects, to make payment.

Since the company did not have the requisite cash available to pay the Gleasmans’ compensation under this arrangement from January 1, 2008 through June 30, 2009, the company accrued, for each quarterly period from January 1, 2008 through June 30, 2009, an aggregate $942,000 of compensation expense, including $42,000 of payroll taxes, and recorded the compensation expense of $200,000 to research and development and $400,000 to general and administrative expense based upon management’s estimate.

On August 17, 2009, 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) accrued to such date. As the result of such waiver, the aggregate amount accrued under the plan to June 30, 2009, namely $900,000, has been reclassified to equity as a contribution of services and the $42,000 accrued for payroll taxes have been recorded as a reduction to general and administrative expense.

During the three months ended September 30, 2009 and 2008, the company recorded $50,000 and $50,000 and $100,000 and $100,000 to general and administrative expense, respectively, based upon management’s estimate.

At September 30, 2009, the company’s cash position was $82,000 and the company had a working capital deficit of $280,000. The company’s cash position at anytime during the three and nine month periods ended September 30, 2009 was dependent upon its success in selling its common stock, reimbursement of research dollars by New York State and revenues generated by the sale of its products. Since our inception, we have incurred significant operating and net losses and have not generated positive cash flows from operations. The balance of cash and cash equivalents as of September 30, 2009 will not be sufficient to meet our anticipated cash requirements through September 30, 2010, based on our present plan of operation. As a result, we are seeking to raise additional capital. Additional capital may not be available on acceptable terms or at all. Equity financings may be dilutive to existing stockholders. If we are unable to obtain sufficient capital as and when needed, we may be forced to delay, scale back or eliminate some or all of our operations including our research and development programs and commercialization plans, and/or license to third parties certain products or technologies that we would otherwise seek to commercialize independently. Our ability to continue is dependent on obtaining additional long-term financing and ultimately achieving profitable operating results. Please see Note A of our condensed consolidated financial statements for the three and nine month periods ended September 30, 2009. Unless we are able to obtain financing and ultimately achieve profitability we will not be able to continue as a going concern. The report of our Independent Registered Public Accounting Firm contained in our 2008 annual report, on Form 10K, also contains an explanatory paragraph referring substantial doubt and to an uncertainty concerning our ability to continue as a going concern.

At September 30, 2009, the company had accounts payable, accrued expenses, and deferred compensation and other expenses totaling $571,000.

(g)

Critical Accounting Policies

Revenue Recognition:

The company’s terms provided that customers are obligated to pay for products sold to them within a specified number of days from the date that title to the products is transferred to the customers. The company’s standard terms are typically net 30 days. The company recognizes revenue when transfer of title occurs and risk of ownership passes to a customer at the time of shipment or delivery depending on the terms of the agreement with a particular customer and collection is reasonably assured. The sale price of the company’s products is substantially fixed and determinable at the date of the sale based upon purchase orders generated by a customer and accepted by the company.

Fair Value of Financial Instruments

The carrying amount of cash, prepaid expenses, accounts payable and accrued expenses approximates their fair value due to the short maturity of those instruments.

Stock-Based Compensation

Effective January 1, 2006, we adopted FASB ASC 718-10 and FASB ASC 505-50 (Previously known as: FASB Statement 123(R), “Share Based Payment.”) We elected to use the modified prospective transition method; therefore, prior period results were not restated. Prior to the adoption of SFAS 123(R), stock-based compensation expense related to stock options was not recognized in the results of operations if the exercise price was at least equal to the market value of the common stock on the grant date, in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”.

FASB ASC 718-10 requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense over the requisite service period (generally the vesting period) in the financial statements based on their fair values. The impact of forfeitures that may occur prior to vesting is also estimated and considered in the amount recognized. In addition, the realization of tax benefits in excess of amounts recognized for financial reporting purposes will be recognized as a financing activity in accordance with FASB ASC 718-10.

No tax benefits were attributed to the stock-based compensation expense because a valuation allowance was maintained for substantially all net deferred tax assets. We elected to adopt the alternative method of calculating the historical pool of windfall tax benefits as permitted by FASB ASC 718-10-65 (Previously known as: FASB Staff Position (FSP) No. SFAS 123(R)-c, “Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards.”) This is a simplified method to determine the pool of windfall tax benefits that is used in determining the tax effects of stock compensation in the results of operations and cash flow reporting for awards that were outstanding as of the adoption of FASB ASC 718-10.

(h)

Newly Adopted Accounting Pronouncements

In June 2009, the FASB issued under ASC Topic 105-10 which the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. ASC Topic 105-10 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. ASC Topic 105-10 explicitly recognizes rules and interpretative releases of the Securities and Exchange Commission (“SEC”) under federal securities laws as authoritative GAAP for SEC Registrants. Upon adoption of this guidance under ASC Topic 105-10, the Codification superseded all then- existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification became non-authoritative.

In April 2009, the FASB issued FASB ASC 805-10 (Previously known as: FSP 141(R) “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arises from Contigencies”). For business combinations, the standard requires the acquirer to recognize at fair value an asset acquired or liability assumed from a contingency if the acquisition date fair value can be determined during the measurement period. FASB ASC 805-10 is effective for business combinations during the fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, with early adoption prohibited. The company adopted these provisions at the beginning of the fiscal year January 1, 2009. FASB ASC 805-10 will be applied prospectively for acquisitions in 2009 or thereafter.

In December 2007, the FASB issued FASB ASC 810-10-65 (Previously known as: FASB Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51”). The standard changes the accounting for noncontrolling (minority) interests in consolidated financial statements including the requirements to classify noncontrolling interests as a component of consolidated stockholders’ equity, and replace references “minority interest” with noncontrolling interests. Additionally, FASB ASC 810-10-65 revises the accounting for both increases and decreases in a parent’s controlling ownership interest. The company adopted the standard as of January 1, 2009. The adoption of FASB ASC 810-10-65 did not have a significant impact on the company’s financial position.

In June 2008, the FASB Task Force reached a consensus-for-exposure that an entity should determine whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock first by evaluating the instrument’s contingent exercise provisions, if any, and then by evaluating the instrument’s settlement provisions. FASB ASC 815-40 (Previously known as: EITF 07-5, “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock”). FASB ASC 810-10-15 (Previously known as: Paragraph 11(a) of FAS 133) specifies that a contract issued or held by the reporting entity that is both (a) indexed to its own stock and (b) classified in stockholders’ equity in its statement of financial position shall not be considered a derivative financial instrument for purposes of applying that Statement. If a freestanding financial instrument (for example, a stock purchase warrant) meets the scope exception in FASB ASC 810-10-15, it is classified as an equity instrument and is not accounted for as a derivative instrument. The adoption of FASB ASC 815-40 did not have a material impact on the company’s financial position.

In April 2009, the FASB issued FASB ASC 825-10-50 (Previously known as: FASB Staff Position No. FAS 107-1, “Disclosures about Fair Value of Financial Instruments”) and FASB ASC 270-10-05 (Previously known as: APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments,” which requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This ASC 825-10-50 is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The adoption of this accounting pronouncement did not have a material impact on the financial statements.

In May 2009, the FASB issued ASC Topic 855 (SFAS No. 165), “ Subsequent Events” which establishes general standards for accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. More specifically, ASC Topic 855 sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition in the financial statements, identifies the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and the disclosures that should be made about events or transactions that occur after the balance sheet date. ASC Topic 855 provides largely the same guidance on subsequent events which previously existed in auditing literature. The disclosure is required in financial statements for interim and annual periods ending after June 15, 2009.

	(i)		Recent Accounting Pronouncements
			In June 2009, the FASB issued ASC Topic 160 ( SFAS No. 166) “Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140” improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. ASC Topic 160 is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. The company is evaluating the impact the adoption of ASC Topic 160 will have on its financial statements.
			In June 2009, the FASB amended accounting guidance related to the consolidation of variable interest entities. The amended guidance changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance. The amended guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after November 15, 2009. The company doses not expect adoption to have a material impact on the company’s consolidated financial position, results of operations or cash flows.
			In October 2009, the FASB issued new guidance for revenue recognition with multiple deliverables, which is effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, although early adoption is permitted. This guidance eliminates the residual method under the current guidance and replaces it with the “relative selling price” method when allocating revenue in a multiple deliverable arrangement. The selling price for each deliverable shall be determined using vendor specific objective evidence of selling price, if it exists, otherwise third-party evidence of selling price shall be used. If neither exists for a deliverable, the vendor shall use its best estimate of the selling price for that deliverable. After adoption, this guidance will also require expanded qualitative and quantitative disclosures. The Company is currently assessing the impact of adoption on its financial position and results of operations.
	(j)		Impact of Inflation
			The extent inflation may impact the company’s operations during the three and nine month periods ended September 30, 2009, has been determined by management not to have a significant impact on the company’s operations to date.
	(k)		Quarterly Fluctuations
			As of September 30, 2009 and 2008, the company had not engaged in substantial revenue producing operations. Once the company actually commences significant revenue producing operations, the company’s operating results may fluctuate significantly from period to period as a result of a variety of factors, including purchasing patterns of consumers, the length of the company’s sales cycle to key customers and distributors, the timing of the introduction of new products and product enhancements by the company and its competitors, technological factors, variations in sales by product and distribution channel, product returns, and competitive pricing. Consequently, once the company actually commences significant revenue producing operations, the company’s product revenues may vary significantly by quarter and the company’s operating results may experience significant fluctuations.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable

Item 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures

Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), as of the end of such period, are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

There have been no significant changes in our internal controls over financial reporting during the second quarter ended September 30, 2009 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

This Quarterly Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Quarterly Report.

Management Report on Internal Control over Financial Reporting

Our company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act. Those rules define internal control over financial reporting as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and the receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Company; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of September 30, 2009. In making this assessment, our management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

There have been no significant changes to the risk factors facing the company as disclosed in the company’s Form 10-K for the year ended December 31, 2008.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three and nine month periods ended September 30, 2009, the company sold 228,128 and 322,231 restricted common shares for proceeds of $145,000 and $215,000, respectively, in a number private placements.

The investors are qualified accredited investors within the meaning of regulation D promulgated under the Securities Act of 1933 and the company is therefore relying on section 4(2) of said Act as a transaction by an issuer not involving a public offering.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibits as required by Item 601 of Regulation S-K, as applicable, are attached to this quarterly report (Form 10-Q). The Exhibit Index is found on the page immediately succeeding the signature page, and the Exhibits follow on the pages immediately succeeding the Exhibit Index.

(2)

Plan of acquisition, reorganization, arrangement, liquidation, or succession

2.1

Agreement and Plan of Merger, dated November 29, 2000 by and among Torvec Subsidiary Corporation, Torvec, Inc., UTEK Corporation and ICE Surface Development, Inc. incorporated by reference to Form 8-K filed November 30, 2000 and Form 8K/A filed February 12, 2001.

(3)

Articles of Incorporation, By-laws

	3.1		Certificate of Incorporation, incorporated by reference to Form 10-SB/A, Registration Statement, registering Company’s $.01 par value common stock under section 12(g) of the Securities Exchange Act of 1934;
	3.2		Certificate of Amendment to the Certificate of Incorporation dated August 30, 2000, incorporated by reference to Form SB-2 filed October 19, 2000;
	3.3		Certificate of Correction dated March 22, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2002;
	3.4		By-laws, as amended by shareholders on January 24, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2002;
	3.5		Certification of Amendment to the Certificate of Incorporation dated October 21, 2004 setting forth terms and conditions of Class B Preferred, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2004.
	3.6		Certificate of Amendment to the Certificate of Incorporation dated January 26, 2008 increasing the authorized common shares from 40,000,000 to 400,000,000 common shares, incorporated by reference to annual report (Form 10-K) filed for the calendar year ended December 31, 2006.

(4)

Instruments defining the rights of holders including indentures

None

(9)

Voting Trust Agreement

None

(10)

Material Contracts

	10.1		Certain Employment Agreements, Consulting Agreements, certain assignments of patents, patent properties, technology and know-how to the Company, Neri Service and Space Agreement and Ford Motor Company Agreement and Extension of Term, all incorporated by reference to Form 10-SB/A, Registration Statement, registering Company’s $.01 par value common stock under section 12(g) of the Securities Exchange Act of 1934;
	10.2		The Company’s 1998 Stock Option Plan and related Stock Options Agreements, incorporated by reference to Form S-8, Registration Statement, registering 2,000,000 shares of the Company’s $.01 par value common stock reserved for issuance thereunder, effective December 17, 1998;
	10.3		The Company’s Business Consultants Stock Plan, incorporated by reference to Form S-8, Registration Statement, registering 200,000 shares of the Company’s $.01 par value common stock reserved for issuance thereunder, effective June 11, 1999, as amended by reference to Form S-8 Registration Statements registering an additional 200,000, 200,000, 100,000, 800,000, 250,000, 250,000, 350,000, 250,000, 2,500,000 and 5,000,000 shares of the Company’s $.01 par value common stock reserved for issuance thereunder, effective October 5, 2000, November 7, 2001, December 21, 2001, February 1, 2002, November 12, 2002, January 22, 2003, May 23, 2003, November 26, 2003, April 20, 2004 and October 13, 2006, respectively;
	10.4		Termination of Neri Service and Space Agreement dated August 31, 1999, incorporated by reference to Form 10-QSB filed for the quarter ended March 31, 1999;
	10.5		Operating Agreement of Variable Gear, LLC dated June 28, 2000, incorporated by reference to Form 10-QSB filed for the quarter ended March 31, 2000;
	10.6		License Agreement between Torvec, Inc. and Variable Gear, LLC dated June 28, 2000, incorporated by reference to Form SB-2 filed October 19, 2000;
	10.7		Investment Agreement with Swartz Private Equity, LLC dated September 5, 2000, together with attachments thereto, incorporated by reference to Form 8-K filed October 2, 2000;
	10.8		Extension of and Amendment to Consulting Agreement with James A. Gleasman, incorporated by reference to Form 10-KSB filed for the fiscal year ended December 31, 2000;
	10.9		Extension of and Amendment to Consulting Agreement with Keith E. Gleasman, incorporated by reference to Form 10-KSB filed for the fiscal year ended December 31, 2000;
	10.10		Extension of and Amendment to Consulting Agreement with Vernon E. Gleasman, incorporated by reference to Form 10-KSB filed for the fiscal year ended December 31, 2000;
	10.11		Option and Consulting Agreement with Marquis Capital, LLC dated February 10, 1999, incorporated by reference to Form 10-QSB filed for quarter ended March 31, 2001;
	10.12		Option and Consulting Agreement with PMC Direct Corp., dated February 10, 1999, incorporated by reference to Form 10-QSB filed for quarter ended March 31, 2001;
	10.13		Investment Banking Services Agreement with Swartz Institutional Finance (Dunwoody Brokerage Services, Inc.) dated December 8, 2000, incorporated by reference to Form 10-QSB filed for quarter ended March 31, 2001;

	10.14		Employment Agreement with Michael Martindale, Chief Executive Officer, dated August 1, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2001;
	10.15		Employment Agreement with Jacob H. Brooks, Chief Operating Officer, dated August 1, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2001;
	10.16		Employment Agreement with David K. Marshall, Vice-President of Manufacturing, dated September 1, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2001;
	10.17		Investment Banking Services Agreement with Swartz Institutional Finance (Dunwoody Brokerage Services, Inc.), as amended, dated October 23, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2001;
	10.18		Stock Option Agreement with Samuel Bronsky, Chief Financial and Accounting Officer, dated August 28, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2001;
	10.19		Pittsford Capital Group, LLC Agreement dated January 30, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2001;
	10.20		Gleasman-Steenburgh Indemnification Agreement dated April 9, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2001;
	10.21		Series B Warrant dated April 10, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2001;
	10.22		Billow Butler & Company, LLC investment banking engagement letter dated October 1, 2003, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2003;
	10.23		Letter of Acknowledgement and Agreement with U.S. Environmental Protection Agency dated February 4, 2004, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2003;
	10.24		Letter Agreement with CXO on the GO, L.L.C. dated February 20, 2004, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2003;
	10.25		Letter Amendment with CXO on the GO, L.L.C. dated February 23, 2004, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2003;
	10.26		Lease Agreement for premises at Powder Mills Office Park, 1169 Pittsford-Victor Road, Suite 125, Pittsford, New York 14534, dated July 16, 2004; incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2004;
	10.27		Lease Agreement for testing facility and Mustang dynamometer, dated July 21, 2004; incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2004;
	10.28		Advisory Agreement with PNB Consulting, LLC, 970 Peachtree Industrial Blvd., Suite 303, Suwanee, Georgia 30024; incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2004;
	10.29		Agreement between Torvec and ZT Technologies, Inc. dated July 21, 2004, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2004;
	10.30		Assignment and Assumption of Lease between William J. Green and Ronald J. Green and Torvec, Inc. effective as of December 31, 2004, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2004;

	10.31		Bill of Sale between Dynamx, Inc. and Torvec, Inc. for equipment and machinery, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2004;
	10.32		Lease and Services Agreement between Robert C. Horton as Landlord and Torvec, Inc. as Tenant dated March 18, 2005, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2004;
	10.33		Settlement Agreement and Mutual Release between Torvec, Inc. and ZT Technologies, Inc. dated March 29, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;
	10.34		Advisory Agreement between Robert C. Horton and Torvec, Inc. dated February 15, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;
	10.35		Lease and Services Agreement between Dennis J. Trask as Landlord and Torvec, Inc. as Tenant dated April 18, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;
	10.36		Consulting Agreement with Matthew R. Wrona, dated March 31, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;
	10.37		Option Agreement between Matthew R. Wrona and Torvec, Inc. dated March 31, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;
	10.38		Trust Agreement between Matthew R. Wrona, Donald Gabel, Lawrence Clark, Steven Urbanik, Floyd G. Cady, Jr., and Michael Pomponi as Grantors and Richard B. Sullivan as Trustee, dated September 22, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;
	10.39		Consultant Agreement with Floyd G. Cady, Jr., dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;
	10.40		Consultant Agreement with Lawrence W. Clark, dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;
	10.41		Consultant Agreement with Donald W. Gabel, dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;
	10.42		Consultant Agreement with Michael A. Pomponi, dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;
	10.43		Consultant Agreement with Steven Urbanik, dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;
	10.44		Consultant Agreement with Kiwee Johnson, dated March 31, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;
	10.45		Confidentiality Agreement with Joseph B. Rizzo, dated October 24, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005.
	10.46		Minutes of meeting Board of Directors Torvec, Inc., held October 19, 2004, creating the non-management directors plan, incorporated by reference to Form 10-KSB filed for the fiscal year ended December 31, 2006.

	10.47		Excerpts from minutes of the meeting of Board of Directors Torvec, Inc., adopting changes to the non-management directors plan creating, a commercialized event plan, approving an increase in shares to be issued under business consulting plan and adopting recommendation that shareholders increase number of authorized common shares from 40,000,000 to 400,000,000 common shares, incorporated by reference to Form 8-K filed on October 16, 2006.
	10.48		Order of Supreme Court of the State of New York with respect to litigation between the company and a management consulting firm, incorporated by reference to Form 8-K filed on June 20, 2006;
	10.49		Letter agreement with American Continental Group, LLC, executed on October 22, 2006, incorporated by reference to Form 8-K filed on October 30, 2006;
	10.50		New York State School Bus Proposal incorporated by reference to Form 10-Q filed for quarter ended March 31, 2006;
	10.51		Order of Supreme Court of the State of New York directing the Monroe County Clerk to release back to the company 40,000 common shares and 245,000 common stock warrants issued to a management consulting firm with which the company is in litigation and held in escrow by such Clerk by virtue of a previous court order and directing the return to the company of a $250,000 (less administrative fee) undertaking deposited with the Monroe County Treasurer in connection with the same litigation, incorporated by reference to Form 10-Q filed for the quarter ended March 31, 2008;
	10.52		License Assignment and Transfer Agreement by and between Ice Engineering, LLC and Torvec, Inc. made effective June 15, 2008 assigning license granted by Dartmouth College with respect to ice technology from Torvec to Ice Engineering, incorporated by reference to Form 8-K filed on July 18, 2008.
	10.53		License Agreement by and between High Density Powertrain and Torvec, Inc. dated December 12, 2008, incorporated by reference to current report (Form 8-K) filed December 14, 2008;
	10.54		Consulting Agreement by and between Clifford Carlson and Torvec, Inc. dated December 12, 2008, incorporated by reference to current report (Form 8-K) filed December 14, 2008;
	10.55		Minutes of meeting of Governance and Compensation Committee dated February 19, 2008 establishing compensation for the company’s president and chief executive officer and amending the company’s commercializing event plan, incorporated by reference to annual report (Form 10-K) filed for year ended December 31, 2007;
	10.56		Consulting Agreement by and between Capital Campaigns, Inc. and Torvec, Inc., dated February 6, 2009, incorporated by reference to annual report (Form 10-K) filed for the year ended December 31, 2008;
	10.57		Settlement and Release Agreement by and between CXO on the GO of Delaware, LLC, et. al and Torvec, Inc. et. al., dated March 6, 2009, incorporated by reference to annual report (Form 10-K) filed for the year ended December 31,2008;

(11)

Statement regarding computation of per share earnings (loss)

Not applicable

(14)		Code of Ethics
(16)		Letter on change in certifying accountant

None

(18)

Letter regarding change in accounting principles

None

(20)

Other documents or statements to security holders

None

(21)		Subsidiaries of the registrant
		Ice 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
(24)		Power of attorney

None

(31.1)		Rule 13(a)-14(a)/15(d)-14(a) Certifications
(32)		Section 1350 Certifications
(99)		Additional exhibits

None

SIGNATURES

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

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

EXHIBIT INDEX

(31.1)		Rule 13(a)-14(a)/15(d)-14(a) Certifications
(32)		Section 1350 Certifications

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