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 March 31, 2010

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

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

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

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

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		May 17, 2010
Common Stock, $.01 par value		36,817,617

 

 

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

INDEX

		PAGE
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements			3
Condensed Consolidated Balance Sheets — March 31, 2010 (Unaudited) and December 31, 2009			3
Condensed Consolidated Statements of Operations—Three months Ended March 31, 2010 and 2009 and September 25, 1996 (Inception) through March 31, 2010 (Unaudited)			4
Condensed Consolidated Statements of Cash Flows — Three months Ended March 31, 2010 and 2009 and September 25, 1996 (Inception) through March 31, 2010 (Unaudited)			5
Notes to Condensed Consolidated Financial Statements (Unaudited)			6-17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18-21
Item 3. Quantitative and Qualitative Disclosures About Market Risk			21
Item 4. Controls and Procedures			21
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			23
Item 1A. Risk Factors			23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			23
Item 3. Defaults Upon Senior Securities			24
Item 4. Submission of Matters to a Vote of Security Holders			24
Item 5. Other Information			24
Item 6. Exhibits			25-29
SIGNATURE PAGE			30
EXHIBIT INDEX			30
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

		March 31, 2010				December 31, 2009
		(Unaudited)
ASSETS
Current assets:
Cash		$	757,000			$	41,000
Prepaid expenses and other receivables			8,000				111,000
Total current assets			765,000				152,000
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			(314,000	)			(299,000	)
Net property and equipment			212,000				227,000
Total Assets		$	977,000			$	379,000
LIABILITIES
Current liabilities:
Notes payable, current portion		$	15,000			$	20,000
Accounts payable			214,000				255,000
Accrued liabilities			368,000				451,000
Due to related party			11,000				22,000
Deferred income			28,000				828,000
Total current liabilities			636,000				1,576,000
Deferred rent expense			25,000				29,000
Notes payable, net of current portion			8,000				9,000
Total liabilities		$	669,000			$	1,614,000
Commitments and contingencies (Note F)
STOCKHOLDERS’ CAPITAL EQUITY (DEFICIT)
Preferred stock, $.01 par value, 100,000,000 shares authorized
3,300,000 designated as Class A, Non-voting, convertible, cumulative dividend $.40 per share, per annum, March 31, 2010 and December 31, 2009: 655,851 and 655,851 shares issued and outstanding, respectively (liquidation preference $3,907,076 and $3,841,491, respectively)
300,000 designated as Class B, Non-voting , convertible, cumulative dividend $.50 per share, per annum, March 31, 2010 and December 31, 2009: 77,500 and 77,500 shares issued and outstanding, respectively (liquidation preference $562,483 and $552,795,respectively)			7,000				7,000
Common stock, $.01 par value, 405,000,000 shares authorized, 36,480,367 and 35,811,192 issued and outstanding, at March 31, 2010 and December 31, 2009, respectively			365,000				358,000
Additional paid-in capital			52,098,000				51,613,000
Deficit accumulated during the development stage			(52,162,000	)			(53,213,000	)
Total Torvec, Inc. Stockholders’ Capital Equity (Deficit)			308,000				(1,235,000	)
Noncontrolling Interest of Subsidiary			—				—
Total Stockholders’ Capital Equity (Deficit)			308,000				(1,235,000	)
Total Liabilities and Stockholders’ Capital Equity (Deficit)		$	977,000			$	379,000

See notes to condensed consolidated financial statements.

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

Condensed Consolidated Statements of Operations
(Unaudited)

										September 25, 1996
		Three Months ended				Three Months ended				(Inception) through
		March 31, 2010				March 31, 2009				March 31, 2010
Revenue		$	—			$	175,000			$	422,000
Cost of Goods Sold			—				90,000				315,000
Gross Profit			—				85,000				107,000
Costs and expenses
Research and development			101,000				101,000				15,956,000
General and administrative			748,000				683,000				40,601,000
Asset impairments			—				—				1,071,000
Loss from operations		$	(849,000	)		$	(699,000	)		$	(57,521,000	)
Reversal of liability on cancellation of debt			—				—				1,541,000
Other Income			1,900,000				—				2,160,000
Income (Loss) Before Income Tax Benefits		$	1,051,000			$	(699,000	)		$	(53,820,000	)
Income tax benefits			—				—				386,000
Net Income (Loss)		$	1,051,000			$	(699,000	)		$	(53,434,000	)
Net loss attributable to non-controlling interest in consolidated subsidiary			—				—				1,272,000
Net Income (Loss) attributable to Torvec, Inc		$	1,051,000			$	(699,000	)		$	(52,162,000	)
Preferred stock beneficial conversion feature			—				—				763,000
Preferred stock dividends			75,000				83,000				1,480,000
Net Income (Loss) attributable to common stockholders		$	976,000			$	(782,000	)		$	(54,405,000	)
Basic and Diluted net income (loss) attributable to common stock per share			0.03				(0.02	)
Weighted average number of shares of
Common stock, Basic			36,171,000				39,982,000
Common stock, Diluted			36,243,000				39,982,000

See notes to condensed consolidated financial statements.

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

Condensed Consolidated Statements of Cash Flows
(Unaudited)

										September 25,
										1996
										(Inception)
		Three months Ended								Through
		March 31,								March 31,
		2010				2009				2010
Cash flows from operating activities:
Net income (loss)		$	1,051,000			$	(699,000	)		$	(53,434,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			15,000				16,000				2,527,000
Change in accrued taxes			51,000				—				228,000
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			217,000				263,000				14,729,000
Warrants issued for services			45,000				—				294,000
Shares issued for future consulting services			—				—				103,000
Stockholder contribution of services			136,000				—				3,745,000
Gain on cancellation of debt			—				—				(1,541,000	)
Contribution to Capital, Ford Truck			—				—				16,000
Common Stock Issued in connection with Commercializing Event			13,000				—				63,000
Compensatory common stock, options and warrants			41,000				41,000				17,917,000
Gain from sale of Ice Engineering License			(1,900,000	)			—				(1,900,000	)
Changes in:
Accounts Receivable			—				(175,000	)			—
Prepaid expenses and other receivables			103,000				—				153,000
Deferred Revenue			—				—				(63,000	)
Deferred rent			(4,000	)			(3,000	)			25,000
Accounts payable and accrued expenses			(140,000	)			381,000				4,104,000
Due to a related party			(11,000	)			—				11,000
Net cash used in operating activities			(383,000	)			(176,000	)			(11,324,000	)
Cash flows from investing activities:
Purchase of property and equipment			—				—				(360,000	)
Cost of acquisition			—				—				(16,000	)
Proceeds from sale of license			1,100,000				—				1,900,000
Proceeds from sale of fixed asset			—				—				10,000
Net cash provided by investing activities			1,100,000				—				1,534,000
Cash flows from financing activities:
Net proceeds from sales of common stock and upon exercise of options and warrants			5,000				—				7,039,000
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			(6,000	)			(4,000	)			(86,000	)
Proceeds from stockholders’ loan and advances			—				—				250,000
Repayment of stockholders’ loan and advances			—				—				(147,000	)
Distributions			—				—				(365,000	)
Net cash (used in) provided by financing activities			(1,000	)			(4,000	)			10,547,000
Net increase (decrease) in cash			716,000				(180,000	)			757,000
Cash at beginning of period			41,000				304,000				—
Cash at end of period		$	757,000			$	124,000			$	757,000
Supplemental Disclosures:
Interest paid		$	1,000			$	1,000			$	28,000
Income Tax Paid			—				—				1,000
Non cash investing and financing activities:
Shares issued for acquisition of leasehold improvements			—				—				166,000
Issuance of common stock in settlement of payables			35,000				62,000				156,000
Preferred stock issued in payment of dividend			—				—				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 non-controlling interest			—				—				232,000
Shares issued for future consulting services			—				—				103,000
Issuance of common stock for a finder’s 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
Issuance of common stock as payment for Preferred A and B dividends			—				—				76,683

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 month periods ended March 31, 2010 and 2009 and the period from September 25, 1996 (inception) through March 31, 2010 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 month periods ended March 31, 2010 and 2009 and since inception. The results are not necessarily indicative of results to be expected for the entire year. Certain amounts in the prior year consolidated financial statements have been reclassified to conform to current year presentation.

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.

For the period from September 1996 (inception) through March 31, 2010, the company has accumulated a deficit of $52,162,000, and at March 31, 2010 has working capital of $129,000 and stockholders’ equity of $308,000. 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 planned cash outlays for its business operations, the company will be able to meet its anticipated cash requirements through March 31, 2011. However, if its cash projections are less than expected, the company may need to downsize operations, incur debt or raise additional capital. There can be no assurance that the company will be successful in raising additional capital or incur debt when needed on terms acceptable to the company.

The company’s ability to continue as a going concern is ultimately dependent upon achieving profitable operations and generating sufficient cash flows from operations to continue to meet its future obligations.

NOTE B — Summary of Significant Accounting Policies

[1]

Consolidation:

The financial statements include the accounts of the company, its majority-owned subsidiary, Ice Surface Development, Inc. (56% owned at March 31, 2010 and 2009), and its wholly-owned subsidiaries Iso-Torque Corporation, IVT Diesel Corp. and Variable Gear LLC. All material intercompany transactions and account balances have been eliminated in consolidation.

[2]

Cash and Cash Equivalents:

Cash and cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less. The company maintains cash and cash equivalents at financial institutions which periodically may exceed federally insured amounts.

[3]

Use of Estimates:

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Such estimates are used in valuing the useful lives of its fixed assets and the future realizable value of such assets. These estimates are subject to a high degree of judgment and potential change. Actual results could differ from those estimates.

[4]

Earnings per Common Share:

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 260-10 (Previously known as: FASB Statement 128, “Earnings Per Share”) requires the presentation of basic earnings per share, which is based on common stock outstanding, and dilutive earnings per share, which gives effect to options, warrants and convertible securities in periods when they are dilutive. For the three month periods ended March 31, 2010 and 2009 the company excluded 2,530,699 and 2,587,699 potential common shares, respectively, relating to convertible preferred stock outstanding, options and warrants from its diluted net loss per common share calculation because they are anti-dilutive. The Company also excluded 625,000 warrants at March 31, 2010 and 2009 as the conditions for their vesting were not yet satisfied.

[5]

Income Taxes:

The company accounts for income taxes using the asset and liability method described in FASB ASC 740-10 (Previously known as: FASB Statement 109, “Accounting for Income Taxes,”) the objective of which is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting and the tax bases of the company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. A valuation allowance related to deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. We adopted FASB ASC 740-10 (Previously known as: FASB interpretation No. 48 “Accounting for Uncertainty in Income Taxes”, an interpretation of FASB Statement 109) on January 1, 2008. As a result of the implementation of FASB ASC 740-10, we recognized no adjustment for uncertain tax positions. As of March 31, 2010, we have not recognized an increase or decrease to reserves for uncertain tax positions nor have we accrued interest and penalties related to uncertain tax positions. The tax years 2007 through 2009 remain open to examination by the federal and states tax jurisdictions to which we are subject.

[6]

Fair Value of Financial Instruments:

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

[7]

Stock-Based Compensation:

The company’s Stock Option Plan was terminated as of May 27, 2008 as to the grant of additional options. 641,848 previously issued and outstanding options remain exercisable in accordance with the terms of the options.

ASC 718-10 requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense over the service period (generally the vesting period) in the consolidated financial statements based on their fair values on the grant date. 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 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 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 ASC 718-10.

[8]

Revenue Recognition:

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

[9]

Recent Accounting Pronouncements

In May 2009, the FASB issued new accounting guidance that establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In February 2010, the FASB amended the guidance and removed the contradictions between the requirements of U.S. generally accepted accounting principles U.S. GAAP (“GAAP”) and the Securities Exchange Commission (“SEC”) filing rules. As a result, public companies will no longer have to disclose the date of evaluation of subsequent events in both issued and revised financial statements.

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 did not receive any other installments.

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 the assignment agreement.

On January 27, 2010, the company and Ice Engineering settled this litigation. Under the settlement agreement, the company’s assignment of the ice technology license is made permanent. The company elected to forego its right to royalties and agreed to receive $1,100,000, with $300,000 paid to the company by Ice Engineering on January 27, 2010 and $800,000 paid to the company by Ice Engineering on February 26, 2010.

The company recognized in this quarter the $1,100,000 received in 2010 in regard to the settlement of the litigation. The company also recognized in this quarter the $800,000 previously recorded as deferred income in connection with the original contract for the license (See Note G [2]).

NOTE D — Related Party Transactions

[1]		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.
		The company did not have the requisite cash available to pay the Gleasmans’ compensation under this arrangement from January 1, 2008 through August 17, 2009, the date on which each of the Gleasmans waived all rights and interest in and to the board-created compensation plan, including all rights and interest in and to the amount(s) under the plan accrued to such date. As a result of such waiver, of the $942,000 accrued under the plan at August 17, 2009, $900,000 was reclassified to equity as a contribution of services and $42,000 accrued under the plan for payroll taxes was recorded as a reduction to general and administrative expenses.
		For periods for which there is no compensation plan in effect for the Gleasmans, the company is required to record the estimated value of each of the Gleasmans services rendered to the company (estimated at $300,000 each per annum) as a contribution of services under generally accepted accounting principles applicable to the company and is required under the same accounting guidance to allocate the amount of such contribution between research and development expenses on the one hand and general and administrative expenses on the other hand. For the three month period ended March 31, 2010, the company recorded $50,000 to research and development expense and $86,000 to general and administrative expense, based upon management’s estimate. For the three month period ended March 31, 2009, the company recorded $50,000 to research and development expense and $100,000 to general and administrative expense, based upon management’s estimate.
		Effective March 14, 2010, James Gleasman retired as the company’s chief executive officer, interim chief financial officer and as a member of the board of directors.
		During the year ended December 31, 2009, James Gleasman advanced the company $22,000. The outstanding balance as of March 31, 2010 is $11,000.
[2]		During the three month periods ended March 31, 2010 and 2009, the company recorded compensation expense of $11,700 and $25,350, respectively, to a member of the Gleasman family for administrative, technological and engineering consulting services. The related payments consisted of cash of $7,800 and $0 for the three months ended March 31, 2010 and 2009, respectively, with the balance paid in business consulting common shares
[3]		During the three month period ended March 31, 2010 and 2009, the company recorded expense of $17,900 and $23,270, respectively, to a family member of its general counsel for engineering services rendered to the company. The related payments consisted of cash of $7,160 and $0 for the three months ended March 31, 2010 and 2009, respectively, with the balance paid in business consulting common shares.
[4]		On September 14, 2007, the company moved its executive offices and engineering operations from Pittsford and Webster, New York to a Rochester, New York facility, which includes both manufacturing and executive office space. The Rochester facility is owned by a partnership, in which Asher J. Flaum, a company director is a partner. On April 28, 2008, the company’s board of directors approved the terms of a lease for these premises and such lease was executed on April 29, 2008. (See Note F).
		During the three month period ended March 31, 2010, the company made a one-time payment in shares for payments of additional rent. The company charged approximately $20,000 to general and administrative expense.

NOTE E — Stockholders’ Equity (Capital Deficit)

[1]

Common Stock:

During the three month period ended March 31, 2010, the company sold 10,000 restricted common shares for proceeds of $5,000 in a private placement.

For the three month period ended March 31, 2010, the company issued 22,756 restricted common shares to an accounting firm in partial payment for services rendered in the amount of $9,785.

[2]		Class A Preferred stock:
		In January 2002, the company authorized the sale of up to 3,300,000 shares of its Class A Non Voting Cumulative Convertible Preferred Stock (“Class A Preferred”) at $4.00 per share. Each share of Class A Preferred is convertible into one share of voting common stock and entitles the holder to dividends, at $.40 per share per annum. The holder has the right to convert after one year subject to board approval.
		Since its designation, the company has sold an aggregate of 765,512 Class A Preferred for aggregate proceeds of $3,062,048. The company has issued an aggregate of 198,349 common stock warrants in connection with the sale of Class A Preferred, all exercisable over a 10 year period at $.01 per common share. 182,099 of these warrants have been exercised through March 31, 2010.
		Since its designation, Class A Preferred holders have converted an aggregate 121,000 Class A Preferred into the company’s common stock on a one for one basis through March 31, 2010. For the three month periods ended March 31, 2010 and 2009, no Class A Preferred was converted.
		Upon conversion, converting Class A Preferred are entitled to receive, in accordance with the terms of the Class A Preferred, dividends payable either in cash or in Class A Preferred shares calculated at the rate of 10 percent per annum. At times, the company’s board may elect to settle dividends through the issuance of common stock in lieu of cash. The number of common shares issued is based on the market price of such stock at the time of conversion.
		Through March 31, 2010, an aggregate of $112,576 dividends have been paid on the Class A Preferred by the issuance of 16,389 Class A Preferred shares and 65,965 common shares. No dividends were paid in the three month periods ended March 31, 2010 and 2009.
		At March 31 2010 and 2009, dividends payable upon conversion of 644,512 outstanding shares of Class A Preferred amounted to approximately $1,284,000 and $1,100,000, respectively.
[3]		Class B Preferred stock:
		On October 21, 2004, the company authorized the sale of up to 300,000 shares of its Class B Non-Voting Cumulative Convertible Preferred Stock (“Class B Preferred”) at $5.00 per share. Each share of Class B Preferred pays cumulative dividends at $.50 per share per annum and is convertible into either one share of voting common stock of the company or one share of common stock of Iso-Torque Corporation under certain circumstances. The holder has the right to convert after one year subject to Board approval.
		Since its designation, the company has sold an aggregate 97,500 Class B Preferred in a number of private placements for proceeds of approximately $487,500.
		Since its designation, 20,000 Class B Preferred have been converted on a one for one basis into 20,000 shares of common stock. For the three month periods ended March 31, 2010 and 2009, no Class B Preferred were converted.
		Upon conversion, converting Class B Preferred are entitled to receive, in accordance with the terms of the Class B Preferred, dividends payable either in cash, in Class B Preferred shares or in shares of the company’s 100% owned IsoTorque corporation, all calculated at the rate of 10 percent per annum. At times, the company’s board may elect to settle dividends through the issuance of common stock in lieu of cash. The number of common shares issued is based on the market price of such stock at the time of conversion.

		Through March 31, 2010, an aggregate $24,082 dividends have been paid on the Class B Preferred by the issuance of 30,103 common shares. No dividends were paid in the three month periods ended March 31, 2010 and 2009.
		At March 31, 2010 and 2009, dividends payable upon the conversion of 77,500 shares of Class B Preferred outstanding amounted to approximately $175,000 and $159,000, respectively.
[4]		Stock-Option Plan:
		In December, 1997, the board of directors adopted and on May 28, 1998, the company’s shareholders ratified the creation of a Stock Option Plan (the “Option Plan”) which provides for the grant of up to 2,000,000 common stock options to officers, directors and consultants who are eligible to receive incentive, nonqualified or reload stock options. Options granted under the Option Plan are exercisable for a period of up to ten years from the date of grant at an exercise price which is not less than the per share trading price of the underlying common stock on the date of grant, except that the exercise period for options granted to a greater than 10% shareholder may not exceed five years and the exercise price may not be less than 110% of such trading price per share on the date of grant.
		The following table represents information relating to stock options outstanding at March 31, 2010:

Options Outstanding and Exercisable

Weighted

Weighted

Average

Average

Aggregate

Exercise

Remaining Life

Intrinsic

Shares

Price

in Years

Value

641,848

4.79

3.47

$

0

		By its terms, the company’s Option Plan terminated as to the grant of future options on May 27, 2008. Consequently, no additional stock options will be granted under the Option Plan, although outstanding options remain available for exercise in accordance with their terms. No options were exercised for the three month periods ended March 31, 2010 and 2009.
		As of March 31, 2010, the company did not have any unrecognized stock compensation related to unvested awards.
[5]		Business Consultants Stock Plan:
		For the three month periods ended March 31, 2010 and 2009, the company issued 632,419 and 348,424 common shares to business consultants under the Business Consultants Stock Plan and charged approximately $294,000 and $350,000 to operations in connection with these share issuances. Share issuances are valued generally on the date immediately prior to the date of issuance, except for shares issued to pay invoices which are valued as of the invoice date and except for shares issued under the Nonmanagement Directors Plan which are valued as of the end of each month effective February 17, 2009.
		On March 23, 2010, the board of directors approved an increase in the number of common shares reserved for issuance under the company’s Business Consultants Stock Plan by 5,000,000 common shares. These shares were registered under the Securities Act of 1933 by the filing of a registration statement on Form S-8 with the Securities and Exchange Commission which became effective on April 1, 2010.
		As of March 31, 2010, 5,777,563 shares are available for future issuances under the Business Consultants Stock Plan.

[6]		Nonmanagement Directors Plan:
		On October 1, 2004, the board of directors approved a Nonmanagement Directors Plan pursuant to which each nonmanagement director is entitled to receive, if certain conditions are met, on an annual basis for services rendered as a director, warrants to purchase 12,000 shares of the company’s common stock at $.01 per share. In addition, the chairman of the audit committee is entitled to receive, on an annual basis for services rendered as chairman, additional warrants for 5,000 shares of the company’s common stock at $.01 per share.
		Due to changes made to the Nonmanagement Directors Plan described below, the company did not issue any warrants under the plan for the three month periods ended March 31, 2010 and 2009. No previously issued warrants were exercised during the three month periods ended March 31, 2010 and 2009.
		On October 10, 2007, the Nonmanagement Directors Plan was modified to increase the fees payable to the company’s nonmanagement directors. As adjusted, each nonmanagement director (a total of 4 persons) would receive $26,460 for board and committee service per annum. The chairman of the audit committee would receive an additional $12,600 per annum and the chairman of the nominating committee would receive an additional $5,355 per annum.
		The Nonmanagement Directors Plan was also modified to provide that the chairman of the board, chairman of the executive committee and chairman of the governance and compensation committee, one person, will be paid an aggregate $110,000 per annum for all services rendered by him as a director and in such capacities. The effective date for these adjustments to the plan was July 1, 2007.
		On April 28, 2008, the plan was again modified to increase the compensation of the person serving as chairman of the board, chairman of the executive committee, chairman of the governance and compensation committee (one person) to $125,000 per annum.
		On April 28, 2008, the board of directors approved a one-time payment to its chairman of the governance and compensation committee of $46,000 for special services rendered in connection with required compliance under the Sarbanes-Oxley Act. This amount was paid by the issuance of 19,167 common shares valued as of the closing price on April 28, 2008. The company charged $46,000 to operations in connection with such services.
		For the three month periods ended March 31, 2010 and 2009, the company issue 163,539 and 42,897 common shares under the plan to satisfy the payables for services rendered by the Company’s non-management directors with a value of $76,000 and $103,000 for such periods, respectively. $41,000 was charged to operations for the three month periods ended March 31, 2010 and 2009, and $35,000 and $62,000 were a settlement of fees payable as of December 31, 2009 and 2008, respectively.
[7]		Business, Financial and Engineering Consultants:
		Through March 31, 2010, the company has issued 1,689,583 common stock warrants to various businesses, financial and engineering consultants, of which 94,583 have been exercised for proceeds of $918 and 445,000 have been cancelled in exchange for the participation of certain engineers in the company’s 2008 Commercializing Event Plan (Note E [10]).
		On March 28, 2008, the board approved the issuance of an aggregate 195,000 warrants, immediately exercisable at $5.00 per common share until 2016, to two consultants who elected not to participate in the company’s 2008 Commercializing Event Plan. The company recorded a charge in the amount of $249,000 to general and administrative expense.
		On February 17, 2010, the company issued 100,000 common stock warrants vesting immediately and exercisable for ten years at an exercise price of $2.50 per common share to an adviser. The company recorded a charge of $45,000 to general and administrative expenses using the Black-Scholes inputs to calculate the value of the warrants. None of these warrants have been exercised through March 31, 2010 (Note E [8(m)]).

[8]		Warrants:
		As of March 31, 2010, outstanding warrants to acquire shares of the company’s common stock are as follows:

								Number of								Number of
Exercise								Shares								Shares
Price				Expiration				Outstanding								Exercisable
		(a)				(a)							125,000	(a)			—
$	.75			None									500,000	(b)			—
$	.01			2015/2016									54,500	(c)			54,500
$	.01-5.00			2010/2016									39,000	(d)			39,000
$	5.00				2015								255,000	(e)			255,000
$	.01				2010								6,000	(f)			6,000
$	.01				2011								3,750	(g)			3,750
$	1.00				2011								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
$	2.50				2017								100,000	(m)			100,000

March 31, 2010
Black-Scholes Assumptions

Term		10.00 years
Expected forfeiture rate			-0-	%
Risk-free rate			3.74	%
Volatility			122.25	%
Dividend yield			0.0	%

The following summarizes the activity of the company’s outstanding warrants for the three month period ended March 31, 2010:

										Weighted
						Weighted				Average
						Average				Remaining				Aggregate
						Exercise				Contractual				Intrinsic
		Warrants				Price				Term				Value
Outstanding at January 1, 2010			1,753,750			$	2.84			6.65 years				$	—
Granted			100,000				2.50			10.00 years					—
Exercised						$					—				—
Canceled or expired
Outstanding at March 31, 2010			1,853,750			$	2.82			6.70 years				$	27,103
Exercisable at March 31, 2010			1,228,750			$	3.67			6.70 years				$	27,103

[9]

Shares Issued for Consulting Services:

On September 17, 2005, certain consultants created a trust to enable them to sell business consultants shares issued to them by the company under their consultant agreements. The company issues business consultant common shares to the trust from time to time, contingent on the performance of services by the consultants under such consultant agreements. The company values the shares issued to the trust using the closing market price on the date immediately prior to the date of issuance.

During the three month period ended March 31, 2010, the company issued 104,167 business consultants shares valued at $50,000 to the trust to satisfy the payment of invoices submitted by the consultants for services rendered during such periods.

During the three month period ended March 31, 2009, the company issued 142,555 business consultants shares valued at $137,450 to the trust to satisfy the payment of invoices submitted by the consultants for services rendered during such periods.

The company’s payment obligations with respect to the consultant agreements are met once it has issued shares to the trust in accordance with directives received from the consultants and the consultants bear the risk of loss in the event the proceeds of stock sales by the trustee are less than the value of the stock contributed to the trust by the company on the date of contribution.

[10]

Commercializing Event Plan:

On October 13, 2006, the board of directors adopted a Commercializing Event Plan (“2006 Event Plan”) designed to reward the company’s directors, executives and certain administrative personnel for the successful completion of one or more commercializing events. No payments were made under the 2006 Event Plan and the 2006 Event Plan was terminated on October 31, 2007.

On October 31, 2007, the board of directors adopted a new 2007 Commercializing Event Plan (the “2007 Event Plan”). The 2007 Event Plan provides that upon the happening of any commercializing event, each of the directors and executive officers of the company as well as certain management personnel shall be entitled to share equally in 6% of the gross amount derived or to be derived from the commercializing event transaction(s). Similarly, certain of the company’s engineers are entitled to share equally in 2% of such gross amount.

In order to actually receive payment under the 2007 Event Plan, each participant must be both a) employed by, a consultant to or associated with the company and b) judged to be “in good standing” with the company at the time payment is made, all as determined by the board as of the date of the board’s authorization of payments to be made.

For the three month period ended March 31, 2010, the company issued 32,077 common shares under the 2007 Event Plan and recorded a charge of $13,000. During the three month period ended March 31, 2009, the company did not issue any common shares under the 2007 Event Plan.

The company accounts for the settlement of its compensation arrangements to non-employee consultants, directors, executives and certain administrative personnel with the issuance of its business consulting shares under ASC 505-50(Previously known as: FASB Statement 123(R) “Share Based Payment”, provided that there are sufficient shares under the business consultants plan. Under ASC 505-50, the company measures commission arrangements at the fair value of the equity instruments issued. In the event that there are insufficient shares available to settle the obligation, the company will follow the provisions of ASC 815-40(Previously known as: EITF 00-19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”). Under ASC 815-40, the company will record a liability instrument for the resulting changes in fair value from the date due to the end of each reporting period until such liability is satisfied.

In the fourth quarter of 2007, certain engineering consultants agreed to cancel 445,000 warrants issued in 2005 and 2006 in exchange for their participation in the 2007 Event Plan. The exchange of the warrants for the participation rights in a commercialization event did not result in an accounting charge. The warrants at the date of the exchange were considered to have no value because the underlying condition for vesting the warrants was not satisfied. The company determined that the fair value of the rights to be de minimis at the date of the exchange based on management’s estimate (Note: E [8]).

On March 28, 2008, the board of directors approved the grant of an aggregate 195,000 common stock warrants exercisable until December 1, 2016 at $5.00 per share to two engineering consultants in lieu of their participation in the 2007 Event Plan. The company valued the warrants at $249,000 using the Black-Scholes option/pricing model and charged operations.

NOTE F — Commitments and Other Matters

[1]

Consulting Agreements:

On February 6, 2009, the company signed a consulting agreement with a strategic planning, government relations, marketing and public relations firm to render consulting services for a one year period. Under the agreement, the company is obligated to pay the consulting firm $20,000 per month, except that, until the consultant has assisted the company to secure an agreed-upon level of governmental and /or private funding, the company’s monthly obligation is limited to $4,000. On February 19, 2010, the agreement with the consulting firm was renewed for an additional six months under the same terms. As of March 31, 2010, no funding had been obtained under the extended agreement and as a result, the company’s monthly obligation under the extended agreement is $4,000. Payments to the consultant firm are charged to operations.

[2]

Leases:

The company leases a facility located at 1999 Mount Read Blvd., Rochester, New York. On April 29, 2008, the company executed a five-year lease for the premises (with a December 1, 2007 lease commencement date) which provides for rent to be paid at a rate of $5,687 per month ($68,244 per annum) and in addition, for the payment of the company’s proportionate share of yearly real estate taxes and yearly common area operating costs.

Under the lease, monthly rental payments commenced June 1, 2008. The lease contains three 5-year renewal options and grants an option to the company to lease additional adjacent manufacturing and assembly space. Rental payments and certain other payments due to the landlord is to be paid in common shares of the company, based upon the closing price per share on the 15th day of the calendar month immediately prior to the date any installment payment of monthly rent or other payment is due landlord.

Rent expense was $14,600 for each of the three month periods ended March 31, 2010 and 2009. For the three month period ended March 31, 2010, the company issued 49,187 business consultant common shares in payment for rent. For the three month period ended March 31, 2009, the company issued 26,506 business consultant common shares in payment for rent.

NOTE G — Litigation

		On October 31, 2008, the company commenced an action in New York Supreme Court, County of New York, Commercial Division against Ice Engineering, LLC seeking the total balance owed by Ice Engineering to the company pursuant to an assignment agreement entered into by the parties, effective June 15, 2007, whereby the company assigned all of its rights and interest in an ice technology license granted by Dartmouth College to Ice Engineering in exchange for a 2.8% royalty interest and a cash reimbursement of $3,500,000. The suit was commenced after the company had been paid approximately $800,000 in reimbursement monies.
		On January 27, 2010, the company and Ice Engineering settled this litigation. Under the settlement agreement, the company’s assignment of the ice technology license is made permanent; the company elected to forego its right to royalties and will receive $1,100,000 in reimbursement monies, with $300,000 being paid to the company by Ice Engineering on January 27, 2010 and $800,000 being paid to the company by Ice Engineering by February 26, 2010. The company received the entire $1,100,000 due under the settlement agreement by the due dates specified in the settlement agreement.

The recovery of $1,100,000 received during January and February 2010 has been recorded as other income during the quarter ended March 31, 2010. The $800,000 received in 2007 and 2008 has previously been recorded as deferred income and, upon settlement of this litigation, has been reflected as other income during the quarter ended March 31, 2010.

NOTE H — 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 March 31, 2010, the company has not received any royalties under this agreement.

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 and developed a number of automotive drive-line technologies—i.e. the company’s hydraulic pump/motor system, infinitely variable transmissions, Iso-Torque ® differential and constant velocity joint technology.

The FTV ® has been developed and is ready for commercialization. In addition, each of the company’s other automotive technologies has been developed and are ready for commercialization — either independently on a stand-alone basis or as incorporated into the company’s FTV.

In present circumstances, the company intends to produce, market and distribute FTV’s by entering into a joint venture relationship with an automotive manufacturer. The company intends to incorporate its drive-line technologies into the FTV to enhance its marketability and value. The company also intends to license and/or enter into supply contracts with automotive manufacturers, military contractors, tier-one suppliers and possibly end-users for its drive-line technologies independent of their utilization in the FTV.

(b)

Current Status of Business Plan and Ongoing Projects

The company’s plan of operation during the year ending December 31, 2010 is as follows:

1) to explore with the U.S. Air Force the military and commercial potential of the company’s FTV ^® as an Advanced Combat Firefighting Vehicle capable of unprecedented speed and maneuverability with diverse applications for use in the most extreme and rugged terrain. The company has redelivered the FTV to the Air Force after making modifications to the vehicle based upon the Air Force’s recommendations which maximized its combat firefighting capabilities, including its robotic and autonomous potential. The company anticipates that ongoing and future discussions with the Air Force will crystallize the direction of the Air Force’s Advanced Combat Firefighting Vehicle program and the company’s participation in such program;

2) based in part upon results of the company’s discussions with the Air Force, 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 for boarder patrol, off-highway emergencies, federal and state conservation and drug-enforcement efforts and, as a fast, highly maneuverable vehicle for combat and non-combat uses;

3) to ship Isotorque ^® differentials to General Motors and Ford Motor Company for performance evaluation by such companies for their front-wheel drive vehicle platforms, to interface with such companies in their evaluations, to furnish additional IsoTorque differentials to such companies for additional evaluation and to engage such companies in discussions with respect to the general utilization by such companies of Torvec’s Isotorque differential technology;

4) to interface with General Motors with respect to the performance evaluation by GM of the IsoTorque differential shipped to it in early January, 2010 as installed in GM’s Cadillac CTS ( and perhaps in a new vehicle platform under consideration by GM), to furnish additional rear-wheel drive Isotorque differentials to GM for additional evaluation in the Cadillac CTS and to engage GM in discussions concerning the utilization of Torvec’s Isotorque differential technology for its rear-wheel drive automotive and truck fleets;

5) to ship IsoTorque differentials to Hyundai for installation and performance evaluation in its Genesis Coupe and to Tesla for installation and performance evaluation in its Roadster, to interface with both companies in their evaluations, to furnish additional IsoTorque differentials to such companies for additional evaluation and to engage such companies in discussions with respect to the general utilization by such companies of Torvec’s IsoTorque differential technology. On April 30, 2010, the company shipped a prototype differential to Hyundai for evaluation in Hyundai’s Genesis Coupe;

6) to enter the differential aftermarket by manufacturing, marketing and distributing IsoTorque differentials for Corvette C-5 and C-6 cars as well as for the SMS 620 Camaro sports car based upon management’s research that approximately 380,000 Corvette C-5 and C-6 cars have been produced since 1997 and up to 80,000 current-generation Camaros were produced and sold in 2009;

7) to build, test and evaluate the company’s constant velocity joint technology as specifically-designed for use in the worldwide mining industry in cooperation with Eastern Mining & Industrial Supply, Inc. of Chapmanville, West Virginia. This program will be conducted in partnership with the Center for Integrated Manufacturing Studies located on the campus of Rochester Institute of Technology and is funded, in part, by a grant from the New York State Office of Science, Technology and Academic Research (NYSTAR). The program will be conducted under the overall umbrella of the company’s partnership with Rochester Institute of Technology known as the Safety and Efficiency in Automobiles Laboratory (SEAL) created by agreement between the company and RIT in July 2009;

8) to expand the manufacturing, marketing, distribution and commercializing programs undertaken by SEAL by attracting federal, state and local governmental funding for such programs and by increasing the number of private-sector partners participating in SEAL’s projects;

9) to continue to explore the interest of a major international truck manufacturer in the redesign of the axle used by it in order to integrate Torvec’s IsoTorque differential technology in its fleet of heavy-duty trucks.

In addition to the activities to be undertaken by the company to implement its plan of operation detailed immediately above, the company from time to time receives indications of interest in its technologies from additional sources which lead to projects and developments not specified in the plan. 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)

Results of Operations

The net income for the three month period ended March 31, 2010 was $1,051,000 as compared to the three month period ended March 31, 2009 of a net loss of $699,000. The increase of $1,750,000 in the three month comparative period is principally related to the settlement of the ICE Engineering litigation (Note G).

Research and development expenses for the three month period ended March 31, 2010 amounted to $101,000 as compared to $101,000 for the three month period ended March 31, 2009.

General and administrative expense for the three month period ended March 31, 2010 amounted to $748,000 compared to $683,000 for the three month period ended March 31, 2009. The increase of $65,000 in three month comparative period is due, in large part to the $45,000 expense for issuance of warrant to a consultant, to the $25,000 increase in management compensation and the $13,000 for the Commercialization Event Plan expense associated with the settlement of the litigation. The remainder is due to increased expense for consulting, equipment and occupancy expenses.

(d)

Liquidity and Capital Resources

The company’s business activities during the three month period ended March 31, 2010 were funded principally through the receipt of approximately $103,000 representing New York State corporation income tax refundable credits, recognized in prior years, allocable to certain research and development expenses incurred in the 2008 tax year, the receipt of $1,100,000 in settlement of litigation with Ice Engineering LLC and the receipt of approximately $5,000 from the sale of 10,000 restricted common shares to an accredited investor, all occurring during the three month period ended March 31, 2010.

For the three month periods ended March 31, 2010 and 2009, the company issued 632,419 and 437,394 common shares to business consultants under the Business Consultants Stock Plan in exchange for ongoing business advisory services, engineering services, legal fees, including patent services, internal accounting services and other corporate services. As of March 31, 2010, 5,777,563 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.

The company did not have the requisite cash available to pay the Gleasmans’ compensation under this arrangement from January 1, 2008 through August 17, 2009, the date on which each of the Gleasmans waived all rights and interest in and to the board-created compensation plan, including all rights and interest in and to the amount(s) under the plan accrued to such date. As a result of such waiver, of the $942,000 accrued under the plan at August 17, 2009, $900,000 was reclassified to equity as a contribution of services and $42,000 accrued under the plan for payroll taxes was recorded as a reduction to general and administrative expenses.

For periods for which there is no compensation plan in effect for the Gleasmans, the company is required to record the estimated value of each of the Gleasmans services rendered to the company (estimated at $300,000 each per annum) as a contribution of services under generally accepted accounting principles applicable to the company and is required under the same accounting principles to allocate the amount of such contribution between research and development expenses on the one hand and general and administrative expenses on the other hand.

Effective March 14, 2010, James Gleasman retired as the company’s chief executive officer, interim chief financial officer and as a member of the board of directors.

For the three month period ended March 31, 2010, the company recorded $50,000 to research and development expense and $86,000 to general and administrative expense, based upon management’s estimate.

For the period from September 1996 (inception) through March 31, 2010, the company has accumulated a deficit of $52,162,000, and at March 31, 2010 has working capital of $129,000 and stockholders’ equity of $308,000. 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 planned cash outlays for its business operations, the company will be able to meet its anticipated cash requirements through March 31, 2011. However, if its cash projections are less than expected, the company may need to downsize operations, incur debt or raise additional capital. There can be no assurance that the company will be successful in raising additional capital or incur debt when needed on terms acceptable to the company.

The company’s ability to continue as a going concern is ultimately dependent upon achieving profitable operations and generating sufficient cash flows from operations to continue to meet its future obligations.

(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 customer. The company’s standard terms are typically net 30 days. The company recognizes revenue when transfer of title occurs and risk of ownership passes to a customer at the time of shipment or delivery, depending on the terms of the agreement with a particular customer. The sale price of the company’s products is substantially fixed or determinable at the date of the sale based upon purchase orders generated by a customer and accepted by the company. To the extent that collectability of the receivable is not assured, the company follows the cost recovery approach. Accordingly, amounts collected will be accounted for as a reduction of costs.
		Share-based Payments
		The company accounts for the settlement of its commission arrangements to non-employee consultants, directors, executives and certain administrative personnel with the issuance of its business consulting shares under ASC 505 (Previously known as FASB Statement 123 ® “Share Based Payment”), provided that there are sufficient shares available under the business consulting plan. Under ASC 505, the company measures commission arrangements at the fair value of the equity instruments issued. In the event that there are insufficient shares available to settle the obligation, the company will follow the provisions of ASC 815-40 (Previously known as: EITF 00-19 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”). Under ASC 815-40, the company will record a liability instrument for the resulting changes in fair value from the date due to the end of each reporting period until such liability is satisfied.
		Recently Issued Accounting Principles
		See Note B [9] of the Notes to the Condensed Consolidated Financial Statements in Part I, Item 1 herein for a discussion of the impact of the recent accounting standards
(h)		Impact of Inflation The extent inflation may impact the company’s operations during the three month period ended March 31, 2010, has been determined by management not to have a significant impact on the company’s operations to date.
(i)		Quarterly Fluctuations
		As of March 31, 2010 and 2009, 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 President and Interim 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 first quarter ended March 31, 2010 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Evaluation of Disclosure Controls and Procedures

Our management evaluated, with the participation of our President and Interim 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 and the identification of the material weaknesses in our internal control over financial reporting described below, our President and interim Chief Financial Officer have concluded, as of March 31, 2010, 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 not 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 first quarter ended March 31, 2010 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. Below, we have described the material weaknesses that were identified for the year ended December 31, 2009 and the current status of management’s remediation efforts.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projection of any evaluation of effectiveness to future periods is 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 has conducted, with the participation of our President and our interim Chief Financial Officer, an assessment of the effectiveness, of our internal control over financial reporting as of March 31, 2010. Management’s assessment of internal control over financial reporting was conducted using the criteria in Internal Control over Financial Reporting — Guidance for Smaller Public Companies issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based on the evaluation, our management concluded that there are material weaknesses in our internal control over financial reporting. The material weaknesses identified did not result in the restatement of any previously reported financial statements nor does management believe that it had any effect on the accuracy of the Company’s financial statements for the current reporting period. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. We identified the following material weaknesses in our internal control over financial reporting as of March 31, 2010:

The material weaknesses relate to the a) preparation of the income tax disclosures and the related components of our deferred tax assets, b) accounting for equity transactions, which resulted in the Company providing price protection to consultants and c) the preparation of financial statements and footnotes and financial data provided to the Company’s registered public accounting firm in connection with the annual audit. While we engage outside consultants to assist us in preparing our tax provision and tax returns, our financial statements and related disclosures, we did not have proper review controls to monitor outside consultants. We have not implemented an effective review process for accounting for income taxes, which could lead to errors in computation and disclosures. The Company does not have technical expertise in financial reporting to monitor work performed by outside consultants.

We intend to take appropriate and reasonable steps to make the necessary improvements to remediate the material weaknesses. We intend to consider the results of our remediation efforts and related testing as part of our fiscal 2010 assessment of the effectiveness of our internal control over financial reporting.

Remediation of Material Weaknesses in Internal Control over Financial Reporting

We are in the process of implementing remediation efforts with respect to the material weaknesses noted above as follows:

a)

Income Tax Disclosures — Management is in the process of working with the consultant to increase the amount of oversight in regard to the tax disclosure and the related components.

b)

Accounting for Equity Transactions — The internal control has been modified so that price protection is no longer being provided to the company’s consultants. The Compensation and Governance Committee is in the process of reviewing this policy.

c)

Preparation of the Financial Statements — Management is in the process of working with the consultant to increase the amount of oversight in regard to financial statement preparation.

We believe the foregoing efforts will enable us to improve our internal control over financial reporting. Management is committed to continuing efforts aimed at improving the design adequacy and operational effectiveness of its system of internal controls. The remediation efforts noted above will be subject to our internal control assessment, testing and evaluation process.

PART II — OTHER INFORMATION

Item 1.		Legal Proceedings

On October 31, 2008, the company commenced an action in New York Supreme Court, County of New York, Commercial Division against Ice Engineering, LLC seeking the total balance owed by Ice Engineering to the company pursuant to an assignment agreement entered into by the parties, effective June 15, 2007, whereby the company assigned all of its rights and interest in an ice technology license granted by Dartmouth College to Ice Engineering in exchange for a 2.8% royalty interest and a cash reimbursement of $3,500,000. The suit was commenced after the company had been paid approximately $800,000 in reimbursement monies.

On January 27, 2010, the company and Ice Engineering settled this litigation. Under the settlement agreement, the company’s assignment of the ice technology license is made permanent; the company elected to forego its right to royalties and will receive $1,100,000 in reimbursement monies, with $300,000 being paid to the company by Ice Engineering on January 27, 2010 and $800,000 being paid to the company by Ice Engineering by February 26, 2010. The company received the entire $1,100,000 due under the settlement agreement by the due dates specified in the settlement agreement.

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, 2009.

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

During the three month period ended March 31, 2010, the company sold 10,000 restricted common shares for proceeds of $5,000 in a private placement.

The investor is a qualified accredited investor 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

The annual meeting of the company’s common shareholders was held on January 28, 2010. At the meeting, at which a quorum of the requisite number of common shares under the company’s bylaws for the conduct of business was present either in person or by proxy (30,912,267 common shares out of 35,817,422 common shares outstanding on the record date), the following items were voted on by the shareholders with the following results:

1.

Election of Directors

Election of Directors		For				Withheld
Daniel R. Bickel			18,341,133				1,203,016
William W. Destler			18,483,783				981,506
Herbert H. Dobbs			18,341,133				1,124,156
Asher J. Flaum			18,372,768				1,092,521
James Y. Gleasman			17,941,754				1,523,535
Keith E. Gleasman			18,258,946				1,206,343
Joseph B. Rizzo			18,372,373				1,092,916
Gary A. Siconolfi			18,400,816				1,064,473

2.

Ratification of the appointment of Eisner LLP by the Audit Committee of the board of directors as the Independent Registered Public Accounting Firm of the company for its year ending December 31, 2009.

For		Against				Abstained
29,139,372			1,481,916				290,979
			15

The number of “broker non-votes” was 11,446,978. Broker non-votes occur when common shares are held in “street name” (i.e. the shares are registered in the name of the broker, not the shareholder who is the beneficial owner) and the broker does not vote such shares in the absence of the beneficial owner’s instructions. The ratification of the audit committee’s appointment of Eisner LLP as the company’s Independent Registered Public Accounting Firm for the year ended December 31, 2009 is considered a “routine” matter upon which brokers voted without instructions from beneficial owners. On the other hand, beginning with the company’s annual meeting held on January 28, 2010 and for future annual meetings, the election of directors is considered a “non-routine” matter upon which brokers will not vote without specific instructions.

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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