CurAegis 10Q 2007 Q3 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2007


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)

1169 Pittsford-Victor Road, Suite 125, Pittsford, New York 14534
(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 is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer þ

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:


Class		Number of Shares Outstanding at November 13, 2007

Common Stock, $.01 par value		31,624,767


Options Outstanding 1,823,895

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

INDEX


		PAGE
	PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements

	Torvec, Inc. and Subsidiaries Condensed Consolidated Balance Sheets — September 30, 2007 (Unaudited) and December 31, 2006 (Derived from Audited Financial Statements)	3

	Torvec, Inc. and Subsidiaries Condensed Consolidated Statements of Operations — Three and Nine Months Ended September 30, 2007 and 2006 (Unaudited) and September 25, 1996 (Inception) through September 30, 2007	4

	Torvec, Inc. and Subsidiaries Condensed Consolidated Statement of Changes in Stockholders’s Equity — Nine Months Ended September 30, 2007	5

	Torvec, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows — Three and Nine Months Ended September 30, 2007 and 2006 (Unaudited) and September 25, 1996 (Inception) through September 30, 2007	6

	Notes to Condensed Consolidated Financial Statements	7-28

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	35

	PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 3.	Defaults Upon Senior Securities	38

Item 4.	Submission of Matters to a Vote of Security Holders	38

Item 5.	Other Information	38

Item 6.	Exhibits	38-42

	SIGNATURES PAGE	43

	EXHIBIT INDEX	44
EX-31.1
EX-32

PART I — FINANCIAL INFORMATION

Item 1.FINANCIAL STATEMENTS.

TORVEC, INC. AND SUBSIDIARIES
(a development stage company)
Condensed Consolidated Balance Sheets
(Unaudited)


	September30,2007			December 31, 2006
				(Derived from
				Audited Financial
	(Unaudited)			Statements)
ASSETS
Current assets:
Cash	$	483,000		$	720,000
Accounts receivable		98,000			—
Prepaid expenses and other receivable		63,000			73,000

Total current assets		644,000			793,000

Property and equipment, net		124,000			156,000

Other Assets:
Deposits		2,000			252,000

Total Other Assets		2,000			252,000

Total Assets	$	770,000		$	1,201,000


LIABILITIES
Current liabilities:
Notes payable, current portion	$	14,000		$	14,000
Accounts payable		347,000			145,000
Accrued liabilities		1,541,000			1,541,000
Advance from stockholder		—			250,000

Total current liabilities		1,902,000			1,950,000
Deferred revenue		500,000			150,000
Notes payable, net of current portion		49,000			59,000

Total liabilities		2,451,000			2,159,000


STOCKHOLDERS’ DEFICIENCY
Preferred stock, $.01 par value, 100,000,000 shares authorized
3,300,000 designated as Class A, Non-voting, cumulative dividend $.40 per share, per annum, convertible, 732,493 shares issued and outstanding (liquidation preference $3,554,898)		9,000			9,000
300,000 designated as Class B, Non-voting, cumulative dividend $.50 per share, per annum, convertible, 97,500 shares issued and outstanding (liquidation preference $287,511)		—			—
Common stock, $.01 par value, 400,000,000 shares authorized, 31,495,595 and 31,307,792 issued and outstanding, at September 30, 2007 and December 31, 2006, respectively		315,000			313,000
Additional paid-in capital		45,369,000			43,767,000
Deficit accumulated during the development stage		(47,374,000	)		(45,047,000	)

Total Stockholders’ Deficit		(1,681,000	)		(958,000	)

Total Liabilities and Stockholders’ Deficit	$	770,000		$	1,201,000

See notes to condensed consolidated financial statements

TORVEC, INC. AND SUBSIDIARIES
(a development stage company)
Condensed Consolidated Statements of Operations
(Unaudited)


													September 25,
													1996
													(Inception)
	Three Months Ended						Nine Months Ended						Through
	September 30,						September 30,						September 30,
	2007			2006			2007			2006			2007
Revenue	$	98,000		$	—		$	126,000		$	—		$	126,000
Cost of goods sold		94,000			—			120,000			—			120,000

Gross profit		4,000			—			6,000			—			6,000
Cost and expenses:
Research and development		152,000			334,000			541,000			1,252,000			14,632,000
General and administrative		434,000			1,957,000			1,935,000			3,640,000			33,092,000
Asset impairment		—			—			—			—			1,071,000

Loss from operations		(582,000	)		(2,291,000	)		(2,470,000	)		(4,892,000	)		(48,789,000	)
Other income
Other income		13,000			—			143,000			—			143,000

Loss before minority interest		(569,000	)		(2,291,000	)		(2,327,000	)		(4,892,000	)		(48,646,000	)
Minority interest in loss of consolidated subsidiary		—			—			—			8,000			1,272,000

Net loss		(569,000	)		(2,291,000	)		(2,327,000	)		(4,884,000	)		(47,374,000	)
Preferred stock beneficial conversion feature		—			—			—			—			763,000
Preferred stock dividend		85,000			65,000			255,000			177,000			783,000

Net loss attributable to common stockholders	$	(654,000	)	$	(2,356,000	)	$	(2,582,000	)	$	(5,061,000	)	$	(48,920,000	)

Basic and diluted net loss attributable to common stockholders per share	$	(0.02	)	$	(0.08	)	$	(0.08	)	$	(0.17	)

Basic and diluted weighted average number of shares of common stock		31,457,000			30,640,000			31,805,000			30,472,000

See notes to condensed consolidated financial statements

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

Condensed Consolidated Statement of Changes in Stockholders’ Equity (Capital Deficit)
(Unaudited)


	Class A Preferred Stock				Class B Preferred Stock				COMMON STOCK							Deficit			Total
														Additional		Accumulated During the			Stockholders' Equity
	Shares		Amount		Shares		Amount		Shares			Amount		Paid-In Capital		Development Stage			(Capital Deficit)
Balance at January 1, 2007		732,493	$	8,000		97,500	$	1,000		31,307,792			313,000		43,767,000		(45,047,000	)		(958,000	)
Issuance of common stock for services										203,803			2,000		708,000					710,000
Contribution of services															225,000					225,000
Shares issued for purchase of Variable Gear										5,000			—		19,000					19,000
Exercise of consultants warrants										19,000			—							—
Issuance of warrants for consultanting services															650,000					650,000
Return of shares from litigation										(40,000	)		—
Net loss															—		(2,327,000	)		(2,327,000	)

Balance at September 30, 2007		732,493		8,000		97,500		1,000		31,495,595			315,000		45,369,000		(47,374,000	)		(1,681,000	)

See notes to the condensed consolidated financial statements.

TORVEC, INC. AND SUBSIDIARIES
(a development stage company)
Condensed Consolidated Statements of Cash Flows
(Unaudited)


							September 25,
							1996
							(Inception)
	Nine Months Ended						Through
	September 30,						September 30,
	2007			2006			2007
Cash flows from operating activities:
Net loss	$	(2,327,000	)	$	(4,884,000	)	$	(47,374,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		32,000			672,000			2,368,000
Loss on impairment of license		—			—			1,071,000
Impairment of goodwill		19,000			—			19,000
Gain on sale of fixed assets		—			—			(10,000	)
Minority interest in loss of consolidated subsidiary		—			(8,000	)		(1,272,000	)
Compensation expense attributable to common stock in Subsidiary		—			—			619,000
Common stock issued for services		710,000			921,000			11,316,000
Shares issued for future consulting services		—			(57,000	)		103,000
Stockholder contribution of services		225,000			225,000			2,334,000
Compensatory common stock, options and warrants		650,000			2,498,000			17,252,000
Changes in:
Accounts receivable		(98,000	)		—			(98,000	)
Prepaid expenses		10,000			(5,000	)		98,000
Deposits		—			(250,000	)		(2,000	)
Accounts payable and accrued expenses		202,000			44,000			3,796,000
Deferred revenue		350,000			—			500,000

Net cash used in operating activities		(227,000	)		(844,000	)		(9,280,000	)

Cash flows from investing activities:
Purchase of property and equipment		—			(10,000	)		(279,000	)
Cost of acquisition		—			—			(16,000	)
Proceeds from sale of property and equipment		—			—			10,000

Net cash used in investing activities		—			(10,000	)		(285,000	)

Cash flows from financing activities:
Net proceeds from sales of common stock and upon exercise of options and warrants		—			11,000			6,500,000
Net proceeds from sales of preferred stock		—			648,000			3,537,000
Net proceeds from sale of subsidiary stock		—			—			234,000
Net proceeds from sale of warrants		—			2,000			—
Proceeds from long — term borrowings		—			306,000			85,000
Repayments of long — term debt		(10,000	)		(4,000	)		(46,000	)
Proceeds from stockholders’ loans-net		—			—			103,000
Distributions		—			—			(365,000	)

Net cash (used in) provided by financing activities		(10,000	)		963,000			10,048,000

Net (decrease) increase in cash		(237,000	)		(109,000	)		483,000
Cash at beginning of period		720,000			51,000

Cash at end of period	$	483,000		$	160,000		$	483,000

Supplemental Disclosures:
Interest paid	$	9,000
Shares issued for future consulting services		—		$	192,000
Net cash investing and financing activities:
Shares issued for acquisition of Variable Gear, LLC		19,000			—

See notes to condensed consolidated financial statements

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

Notes to Condensed Consolidated Financial Statements
(Unaudited)

Note A — The Company and Basis of Presentation

			The interim information contained herein with respect to the three and nine month periods ended September 30, 2007 and 2006 and the period from September 25, 1996 (inception) through September 30, 2007 has not been audited but was prepared in conformity with generally accepted accounting principles for interim financial information and instructions for Form 10-Q and Item 310(b) of Regulation S-K. Accordingly, the condensed consolidated financial statements do not include all information and footnotes required by generally accepted accounting principles for financial statements. Included are ordinary adjustments which in the opinion of management are necessary for a fair presentation of the financial information for the three and nine month periods ended September 30, 2007 and 2006, and since inception. The results are not necessarily indicative of results to be expected for the entire year.

			Torvec, Inc. (the “company”) was incorporated as a New York State business corporation on September 25, 1996. The company, which is in the development stage, has developed production-ready automotive technologies for use in automotive applications. The company has developed and intends to commercialize its infinitely variable transmissions, its pump/motors, its Iso-Torque differential, its constant velocity joint and the substructure and components of its full terrain vehicle.

			On November 29, 2000, the company acquired Ice Surface Development, Inc. (“Ice Surface”) which had been incorporated in May 2000 for 1,068,354 shares of common stock valued at approximately $3,405,000. The acquisition was accounted for under the purchase method. On March 31, 2002, the company granted to three former officers of the company 28% of Ice Surface in exchange for previously granted fully vested options (See Note C). The exchange was valued at $618,000 and the carrying portion of the company’s investment deemed sold of $850,000 is reflected as a reduction of additional paid-in capital in stockholders’ deficiency. The sole asset of Ice Surface upon its acquisition by the company was a license granted by the Trustees of Dartmouth College for land-based vehicle applications of a novel ice adhesion modification system developed by Dr. Victor Petrenko of Dartmouth’s Thayer School of Engineering.

			Effective June 15, 2007, Ice Surface assigned the license to an unrelated company, Ice Engineering, LLC, in exchange for Ice Engineering’s agreement to pay the shareholders of Ice Surface Development an annual royalty equal to 5% of the annual gross revenues generated by the license and its agreement to assume the obligations to Dartmouth College under the license. See Note B [5].

			The company’s financial statements have been prepared assuming the company will continue as a going concern. For the period from September 25, 1996 (inception) through September 30, 2007, the company has accumulated a deficit of approximately $47,374,000 and at September 30, 2007 has a negative working capital position of $1,258,000 and Stockholders’ Deficiency of $1,681,000. The company has been dependent upon equity financings, advances from stockholders and issuance of stocks and warrants to meet its obligations and sustain operations. The company’s efforts have been principally devoted to the development of its technologies and commercializing its products. Management believes that based upon the company’s current cash position, its ability to adhere to a budget for business operations through September 30, 2008 and an outstanding commitment from a director/officer to fund any deficiencies which may arise, the company will be able to continue scaled operations for the next twelve months. The company’s ability to continue as a going concern is ultimately dependent upon achieving profitable business operations and generating sufficient cash flows from operations to meet future obligations.

			On January 25, 2007, the company’s shareholders approved an increase in common shares the company is authorized to issue from 40,000,000 to 400,000,000.

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. (69.26% owned at September 30, 2007 and 2006), 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] Accounts Receivable:

Accounts receivable are stated at estimated net realizable value. The company expects to evaluate its allowance for doubtful accounts based on a combination of historical experience, aging analysis and information on specific accounts. Account balances are written off when collection efforts have been exhausted and the potential for recovery is considered remote. The company has not recorded an allowance against receivables based upon management’s estimate.

[3] Property and Equipment:

Equipment, including a prototype vehicle, is stated at cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets which range from three to seven years. Leasehold improvements are being amortized over shorter of lease term or useful life.

[4] Research and development and patents:

Research and development costs and patent expenses are charged to operations as incurred.

[5] License:

In December, 2006, the company concluded that there was an impairment of the ice technology license and has written off the remaining balance of $1,071,000 in accordance with SFAS No. 144. Effective June 15, 2007, the company assigned the license to Ice Engineering, LLC. in exchange for Ice Engineering’s agreement to pay the shareholders of the company’s majority owned subsidiary, Ice Surface Development, Inc., an annual royalty equal to 5% of the annual gross revenues generated by the license and its agreement to assume all of the obligations to Dartmouth College under the license.

[6] 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 intangible 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.

[7] Loss per common share:

Statement of Financial Accounting Standards (“SFAS”) No. 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. At September 30, 2007 and 2006, the company excluded 4,690,088 and 4,335,951 potential common shares, respectively, relating to convertible preferred stock outstanding, options and warrants from its diluted per share net loss attributable to common stockholder calculation because they are anti-dilutive.

[8] Fair value of financial instruments:

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

[9] Stock-based compensation:

			In December 1997, the Board of Directors of the company approved a Stock Option Plan (the “Plan”) which provides for the granting of up to 2,000,000 shares of common stock, pursuant to which officers, directors, key employees and key consultants/advisors are eligible to receive incentive, nonstatutory or reload stock options. Options granted under the Plan are exercisable for a period of up to 10 years from date of grant at an exercise price which is not less than the fair value on date of grant, except that the exercise period of options granted to a stockholder owning more than 10% of the outstanding capital stock may not exceed five years and their exercise price may not be less than 110% of the fair value of the common stock at date of grant. Options may vest over five years.

			The Company follows Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share Based Payment.” SFAS 123R 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. 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 SFAS 123R.

			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 follow the alternative method of calculating the historical pool of windfall tax benefits as permitted by FASB Staff Position (FSP) No. SFAS 123R, “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 outstanding awards.

[10] Revenue recognition policy:

The company recognizes revenue when the amounts become fixed and determinable. Revenue is recognized when product is shipped, title has passed, collections are reasonably assured and the company has no further obligation to its customers. All sales are final with no right of return except for defective product.

[11] Shipping and handling costs:

Shipping and handling costs are classified in general and administrative expenses in the consolidated statements of operations. Shipping and handling costs were approximately $300 and $5,500 for the three and nine months ended September 30, 2007. There were no shipping and handling cost recorded for the three and nine months ended September 30, 2006.

[12] Income taxes:

			The Company adopted Financial Standards Board Interpretation No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”) an interpretation of FASB Statement 109 (“SFAS 109”) on January 1, 2007. As a result of the implementation of FIN 48, we recognized no material adjustment to unrecognized tax benefits. At the adoption date of January 1, 2007, we had $11,764,000 of unrecognized tax benefits, all of which would affect our effective tax rate if recognized. At September 30, 2007 we have $12,555,000 unrecognized tax benefits.

			We recognize interest and penalties related to uncertain tax positions in general and administrative expense. As of September 30, 2007, we have not recorded any provisions for accrued interest and penalties related to uncertain tax positions.

			Tax years 1999 through 2006 remain open to examination by the major taxing jurisdictions to which we are subject.

[13] Recent accounting pronouncements:

			In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” to define fair value, establish a framework for measuring fair value in accordance with generally accepted accounting principles, and expand disclosures about fair value measurements. SFAS No. 157 will be effective for fiscal years beginning after November 15, 2007. The company is assessing the impact the adoption of SFAS No. 157 will have on the company’s financial position and results of operations.

			In February, 2007 the FASB issued SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities”. SFAS No. 159 permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS no. 159 is effective for fiscal years beginning after November 15, 2007. We are currently assessing the impact, if any, that the adoption of SFAS No. 159 may have on our financial position and results of operations.

NOTE C — LICENSE FROM THE TRUSTEES OF DARTMOUTH COLLEGE

			On November 28, 2000, the company’s majority owned subsidiary, Ice Surface Development, Inc. (“Ice Surface”) entered into a 20-year exclusive license with the Trustees of Dartmouth College (“Dartmouth”) for land-based applications to a novel ice adhesion modification system developed by Dr. Victor Petrenko at Dartmouth’s Thayer School of Engineering. The license agreement provided for a single payment of $140,000 (paid by the company in 2000) for sponsored research and 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 thereafter. In addition, the agreement provided for the payment of 50% of sub-license fee income.

			Expense for the above agreements totaled $5,750 for the three month period ended September 30, 2006 and totaled $17,250 for the nine month period ended September 30, 2006. While in management’s opinion, the carrying value of the license had been impaired as of and for the year ended December 31, 2006, the company’s obligations under the license remained in effect.

			Effective June 15, 2007, Ice Surface assigned the license to an unrelated company, Ice Engineering, LLC 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 College under the license.

			Separately, Ice Engineering, LLC agreed to reimburse approximately $3,500,000 of acquisition and maintenance costs expended by Torvec in connection with the ice technology. Pursuant to the reimbursement agreement, Torvec received $500,000 on June 15, 2007. 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 has accounted for the receipt of the proceeds as deferred revenue, such amounts represents an initial payment and is subject to additional installments. In the circumstances, the recovery of the full selling price is dependant upon Ice Engineering having the necessary resources to make all payments under the agreement.

NOTE D — RELATED PARTY TRANSACTIONS

[1]		Commencing January 1, 2004, James Y Gleasman and Keith E. Gleasman (“the Gleasman”) entered into an arrangement with the company to provide consulting services and assign new patents, existing patent improvements and all know-how in connection with all their inventions to the company on a noncompensated basis. In addition, Keith E. Gleasman will continue to serve as President and as a director and James Y. Gleasman will serve as Chief Executive Officer, Interim Chief Financial Officer and as a director, again on a noncompensated basis. In accordance with this arrangement, for the three and nine month periods ended September 30, 2007 and 2006, the company did not pay the Gleasmans any consulting fees for their services. The company recorded approximately $75,000 for the estimated value of these services for each quarterly period as a contribution to capital based upon approved time and hours spent. For each quarterly period through March 31, 2007, the company recorded $50,000 to research and development and $25,000 to general and administrative. For the quarterly periods ended June 30, 2007 and September 30, 2007, the company recorded $25,000 to research and development and $50,000 to general and administrative to reflect the company’s operational shift from development of its technologies to the promotion and marketing of its technologies.

[2]		Payments to a member of the Gleasman family for administrative, engineering and technological services amounted to $23,400 and $12,600 for the three month periods ended September 30, 2007 and 2006 and $65,300 and $30,390 for the nine month periods ended September 30, 2007 and 2006.

[3]		On September 14, 2007, the company moved its executive offices from Pittsford, New York to Rochester, New York, which includes both a manufacturing and executive office facility. The Rochester facility is owned by a partnership, in which David M. Flaum, a company director, is a partner. The company is still engaged with the landlord in discussions concerning the final terms and conditions of the lease agreement with respect to the Rochester facility and anticipates that such discussions will be concluded shortly. The Company anticipates its monthly rent payment to approximately $5,700 for the first 5 years and payments are to commence on June 1, 2008.

NOTE E — ACCOUNTS PAYABLE AND ACCRUED LIABILITY EXPENSES

At September 30, 2007 and December 31, 2006, accounts payable and accrued expenses consisted of the following:


	September 30,		December 31,
	2007		2006
Professional fees	$	50,000	$	191,000
Non-management Directors compensation		58,000		—
Other accrued expenses		285,000		—
Salaries to officer/shareholders of Ice (Note C)		1,495,000		1,495,000

	$	1,888,000	$	1,686,000

NOTE F-— SHAREHOLDER, OFFICER AND OTHER NOTES PAYABLE

[1] Notes Payable — Financial Institution:

			During the year ended December 31, 2005, the company financed a vehicle as a prototype and pledged the vehicle as collateral for a loan. The loan in the amount of $24,000 is paid in monthly installments of $479 consisting of principal and interest at 6.59% per annum through December 2010.

			During the year ended December 31, 2006, the company refinanced two vehicles and pledged the vehicles as collateral for the loan. The loan in the amount of $56,174 is paid in monthly installments of $1,201 consisting of principal and interest at 10.3% per annum through August 2011.

			The following represents the required minimum payments per annum as of September 30, 2007:


For the years ending September 30,
2008	$	20,000
2009		20,000
2010		20,000
2011		15,000

Total minimum payments		75,000
Less-amount representing interest		12,000

		63,000
Less-Current Maturities		14,000

Long Term Portion	$	49,000

Interest expense for the three and nine month periods ended September 30, 2007 was $1,445 and $4,724, respectively.

[2] Advance from Shareholder:

			On June 19, 2006, a shareholder deposited $250,000 with the Monroe County, New York Treasurer representing the undertaking required to stay execution of a May 8, 2006 court order with respect to 40,000 common shares, 245,000 common stock warrants and 511,200 unexercised previous issued stock warrants pending the appellate court’s disposition of the company’s appeal of the court’s May 8, 2006 order. (See Note I).

			On July 25, 2006, the shareholder confirmed in writing his agreement to be repaid by the company the full amount of the advance, plus interest at 8.75% per annum, either by the issuance of the company’s Class A Preferred at $4.00 per share, associated warrants, cash and/or a combination thereof, with both the method of repayment as well as the timing of repayment totally within the company’s discretion.

			On March 16, 2007, the Appellate Division of the New York State Supreme Court reversed the lower Court’s May 8, 2006 order in its entirety. Pursuant to such reversal, on April 5, 2007, the lower Court ordered the return of the $250,000 deposit (less administrative costs of $4,032) to the company. The company repaid the entire $250,000 to the shareholder in April, 2007. Interest expense with respect to this loan for the three and nine month periods ended September 30, 2007 and 2006 amounted to $-0- and $1,334 and $1,334 and $4,183, respectively.

Note G — STOCKHOLDERS’ DEFICIENCY

[1] Class A Preferred stock:

In January 2002, the company authorized the sale of up to 2,000,000 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. Liquidation Rights

	(i)		In the event of any liquidation, dissolution or winding up of the company, whether voluntary or involuntary, the holders of Class A Preferred Shares then outstanding are entitled to be paid out of the assets of the company available for distribution to its shareholders, whether such assets are capital, surplus or earnings, before any payment or declaration and setting apart for payment of any amount in respect of any shares of any Junior Stock with respect to the payment of dividends or distribution of assets on liquidation, dissolution or winding up of the company, all accumulated and unpaid dividends (including a prorated dividend from the last Dividend Accrual Date) in respect of any liquidation, dissolution or winding up consummated except that, notwithstanding the provisions of Section B(ii), all of such accumulated and unpaid dividends will be paid in Class A Preferred Shares at a rate of 1 Class A Preferred Share for each $4.00 of dividends. No fractions of Class A Preferred Shares shall issue. The company shall pay cash in lieu of paying fractions of Class A Preferred Shares on a pro rata basis.

	(ii)		The Class A Preferred Shares will be entitled to participate on a pro rata basis in any distribution of assets as may be made or paid on Junior Stock upon the liquidation, dissolution or winding up of the company.

	(iii)		A consolidation or merger of the company with or into any other corporation or corporations or any other legal entity will not be deemed to constitute a liquidation, dissolution or winding up of the company as those terms are used in this Section C.

			The company has sold an aggregate 773,543 Class A Preferred for aggregate proceeds of $3,062,046. Class A Preferred shareholders have converted 41,050 Class A Preferred for an equal number of common shares.

			The company sold 78,750 Class A Preferred to investors for proceeds of $315,000 during the three month period ended September 30, 2006 and 162,000 Class A Preferred for proceeds of $648,000 during the nine month period ended September 30, 2006. The company issued 75,432 common stock warrants to investors in connection with the purchase of Class A Preferred for the three month period ended September 30, 2006 and 119,182 common stock warrants for the nine month period ended September 30, 2006. The company did not sell any Class A Preferred or issue any warrants during the three and nine month periods ended September 30, 2007.

			All such warrants are exercisable at $.01 per common share. 35,000 and 47,500 warrants were exercised during the three and nine month periods ended September 30, 2006.

			At September 30, 2007 and 2006, Class A Preferred dividends in arrears amounted to approximately $698,000 and $409,000, respectively.

[2] 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.

(1) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of Class B Preferred Shares then outstanding are entitled to be paid out of the assets of the Corporation available for distribution to its shareholders, whether such assets are capital, surplus or earnings, before any payment or declaration and setting apart for payment of any amount in respect of any shares of any Junior stock with respect to the payment of dividends or distribution of assets on liquidation, dissolution or winding up of the Corporation, all accumulated and unpaid dividends (including a prorated dividend from the last Dividend Accrual Date) in respect of any liquidation, dissolution or winding up consummated except that, notwithstanding the provisions of Section B(2), all of such accumulated and unpaid dividends will be paid in Class B Preferred Shares at a rate of 1 Class B Preferred Share for each $5.00 of dividends. No fractions of Class B Preferred Shares shall be issued. The Corporation shall pay cash in lieu of paying fractions of Class B Preferred Shares on a pro rata basis.

(2) The Class B Preferred Shares will be entitled to participate on a pro rata basis in any distribution of assets as may be made or paid on Junior Stock upon the liquidation, dissolution or winding up of the Corporation.

			The company has sold an aggregate 97,500 Class B Preferred for aggregate proceeds of $487,500. Class B Preferred Shareholders have not converted any Class B Preferred.

			During the three and nine month periods ended September 30, 2007 and 2006, the company did not sell any Class B Preferred.

			At September 30, 2007 and 2006, Class B Preferred dividends in arrears amounted to approximately $86,000 and $43,000, respectively.

[3] Business Consultants Stock Plan:

For the three month periods ended September 30, 2007 and 2006, the company issued 94,180 and 560,929 common shares to business consultants under the Business Consultants Stock Plan and charged $292,000 and $347,000 to operations in connection with these share issuances. For the nine month periods ended September 30, 2007 and 2006, the company issued 174,803 and 891,663 common shares and charged $702,000 and $939,000 to operations. 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 quarter effective October 13, 2006. As of September 30, 2007, 4,791,826 shares are available for future issuances under the Business Consultants Stock Plan.

[4] 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 plan on October 13, 2006, described below, the company did not grant any warrants under the Plan for the three month periods ended September 30, 2007 and 2006 and for the nine month period ended September 30, 2007. Prior to the changes, for the nine month period ended September 30, 2006, the company granted 26,500 warrants and the company recorded a charge of approximately $48,000 to general and administrative expenses.

			No previously issued warrants were exercised during the three month period ended September 30, 2007. During the three month period ended September 30, 2006, 3,000 previously issued warrants were exercised. During the nine month periods ended September 30, 2007 and 2006, 6,000 and 18,000 previously issued warrants were exercised.

			On October 13, 2006, the board modified the Plan to provide that, effective for periods commencing on and after July 1, 2006, a stipulated sum per annum should be paid to each nonmanagement director solely for his service as a director, with the amount of such payment determined by the board from time to time, based upon such considerations as risk, number of meetings, monitoring and reviewing company compliance with the Sarbanes-Oxley Act as well as all other applicable local, state, national and international rules and regulations, development and implementation of policies, including establishing and reviewing executive compensation, longevity, 24-hour a day availability, as well as oversight of management’s pursuit of one or more commercializing events for the company’s technologies. Until adjusted in accordance with such factors, the board determined that each nonmanagement director shall be paid $25,200 per annum exclusively for board and committee service, payable pro rata on a quarterly basis, provided each such director shall have attended, either in person or via telephonic conference, 75% of the meetings of the board and of the committee(s) of which he is a member, such attendance measured on an annual basis. Such amount shall be paid either in cash, Business Consultants stock or a combination of both and is payable to a newly elected director on a prospective basis upon his election as a director.

			At the same meeting, the board also determined that a stipulated sum per annum should be paid to those nonmanagement directors serving as chairman of the board, chairman of the executive committee, chairman of the audit committee, chairman of the nominating committee and chairman of the compensation and governance committee, exclusively for service rendered in such capacities. Until further adjusted, the board determined that the chairman of the board shall be paid $7,500 per annum, the chairman of the executive committee shall be paid $12,000 per annum, the chairman of the audit committee shall be paid $12,000 per annum, the chairman of the nominating committee shall be paid $5,100 per annum and the chairman of the compensation and governance committee shall be paid $5,100 per annum. Such amounts are to be paid pro rata on a quarterly

			basis with payments made in cash, Business Consultants stock or a combination of both and is payable to a newly elected chairman on a prospective basis upon his election as chairman. With respect to amounts payable to chairmen for calendar 2006, such amounts shall be payable retroactively to January 1, 2006 (except for the audit committee chairman who has received payment for the six month period ended June 30, 2006).

			Each unexercised, nonmanagement director warrant outstanding as of October 13, 2006 was amended to provide that such warrants may be exercised only upon the happening of the earlier to occur of the following events: death or disability of the director, termination of his service as a director, change in control of the company or the sale, license or other commercial transfer of a substantial amount of the company’s assets, all of such terms to be interpreted in accordance with the provisions of section 409A of the Internal Revenue Code of 1986 and the regulations promulgated thereunder.

			For the three month period ended September 30, 2007, the company issued 11,978 common shares pursuant to the Nonmanagement Directors Plan to satisfy the June 30, 2007 payable in the amount of $41,925 and recorded a charge of $41,925 for such period. For the nine month period ended September 30, 2007, the company has issued 21,960 common shares to satisfy the March 31, 2007 and June 30, 2007 payable in the aggregate amount of $83,850 and has recorded a charge of $83,850 for such period.

			The Nonmanagement Director Plan was amended on October 10, 2007 (See Note K).

[5] Shares issued for services and rent:

During 1997, the company granted 12,000 and 2,000 shares of common stock for services provided. The company valued the shares at their fair value of $1.50 and $3.00 per share, respectively. During 1998, the company granted 1,000 shares of common stock, valued at $3.00 per share, for services provided. During 2003 and 2002, 15,640 and 134,964 restricted shares were issued for services aggregating approximately $18,000 and $198,000 respectively. During 2005 and 2004, 100,000 and 35,000 restricted shares were issued for services and rent aggregating approximately $259,500 and $194,000. During the three and nine month periods ended September 30, 2007 and 2006, no restricted shares were issued.

[6] Business, Financial and Engineering Consultants:

			In connection with its business, financial and engineering operations for the three month period ended September 30, 2006, the company issued 85,333 warrants exercisable for ten years at $0.01 per common share to business, financial and engineering consultants. During the nine month period ended September 30, 2006, the company issued 492,833 warrants exercisable for ten years to such consultants. In connection with the issuance of these warrants, the company recorded a charge of $1,389,000 and $2,032,477 in consulting expense for the three months and nine months ended September 30, 2006.

			During the three month period ended September 30, 2007, the company did not issue any warrants to its business, financial and engineering consultants. During the nine month period ended September 30, 2007, the company issued 150,000 warrants exercisable for ten years at $5.00 per common share to such consultants. In connection with the issuance of these warrants, the company recorded a charge of $650,000 for the nine month period ended September 30, 2007. The 50,000 warrants issued during the first quarter of 2007 require that the company engage in a commercializing event for the warrants to become exercisable.

			During the three and nine month periods ended September 30, 2006, 90,750 of these warrants were exercised for proceeds of $908. No warrants were exercised for the three and nine month periods ended September 30, 2007.

[7] Stock Option Plan:

			In December, 1997, the board of directors approved 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.

			In 1997, in connection with certain consulting agreements, the company granted an aggregate 75,000 nonqualified options at an exercise price of $5.00 per common share. The options vested at a rate of 20% per annum and are exercisable through November 30, 2007. The company valued these options using the Black-Scholes option-pricing method. The fair value of these options was expensed over the term of the consulting agreements.

			In 1998, the company granted three directors an aggregate 380,000 options under the Option Plan, all exercisable immediately at $5.00 per common share. These options expire on January 1, 2008.

			In 2001, the company granted 100,000 options to an officer in his capacity as a consultant under the Option Plan exercisable immediately at $5.00 per common share. In connection with this grant, the company recorded a stock compensation charge of $398,000. The option expires in August 28, 2011.

			In 2002, in connection with certain consulting agreements, the company granted an aggregate 727,047 options under the Option Plan, all exercisable immediately at $5.00 per common share. The options were granted in payment of an aggregate $653,000 owed under the consulting agreements. These options expire on September 30, 2007.

			In 2003, in connection with the same consulting agreements, the company granted 166,848 options under the Option Plan, all exercisable immediately at $5.00 per common share. The options were granted in payment of an aggregate $265,000 owed under the consulting agreements. These options expire on December 22, 2013.

			In 2003, the company granted an aggregate 225,000 options under the Option Plan to three directors, all immediately exercisable at $5.00 per common share. These options expire on October 15, 2013.

			In 2003, the company granted 50,000 options to a consultant under the Option Plan, immediately exercisable at $2.26 per common share. In connection with this grant, the company recorded a stock compensation charge of $46,000. These options expire on May 20, 2013.

			In 2005, the company granted 100,000 options to a consultant under the Option Plan, immediately exercisable at $5.00 per common share. In connection with this grant, the company recorded a stock compensation charge of $247,000 allocated to research and development. These options expire on June 30, 2015.

			No options were granted under the Option Plan during the three and nine month periods ended September 30, 2007 and 2006.

			A summary of options granted under the Option Plan is set forth in the following table:


	Nine Months Ended September 30,
	2007				2006
			Weighted				Weighted
			Average				Average
			Exercise				Exercise
	Shares		Price		Shares		Price
Outstanding at beginning of year		1,823,895	$	4.85		1,823,895	$	4.85
Granted		—		—		—		—

Outstanding at September 30, 2007		1,823,895		4.85		1,823,895		4.85

Options exercisable September 30, 2007		1,823,895		4.85		1,823,895		4.85

			At September 30, 2007, 176,105 options are available for future grants under the Plan.

			The following table represents information relating to stock options outstanding at September 30, 2007:


	Options Outstanding			Options Exercisable
	Weighted		Weighted			Weighted
	Average		Average			Average
	Exercise		Remaining Life			Exercise
Shares	Price		in Years	Shares		Price
1,773,895	$	5.00	2.94		1,773,895	$	5.00
50,000		2.26	5.67		50,000		2.26

1,823,895		4.85	3.09		1,823,895		4.85

			As of September 30, 2007, the company did not have any unrecognized stock compensation related to unvested awards.

			The company did not record any stock based compensation for the three and nine month periods ended September 30, 2007 and 2006.

The following summarizes the activity of the company’s stock options for the three and nine month periods ended September 30, 2007 and 2006:


					Weighted
			Weighted		Average
			Average		Remaining			Aggregate
			Exercise		Contractual			Intrinsic
	Shares		Price		Term			Value
Number of shares under option plan:
Outstanding at January 1, 2007		1,823,895	$	4.85
Granted
Exercised
Canceled or expired

Outstanding at September 30, 2007		1,823,895	$	4.85		3.09	years	$	34,500

Exercisable at September 30, 2007		1,823,895	$	4.85		3.09	years	$	34,500

			At September 30, 2007, all outstanding options were fully vested.

			At September 30, 2007 the company has 134,964 restricted shares issued outside the plan.

[8] Warrants:

As of September 30, 2007, outstanding warrants to acquire shares of the company’s common stock are as follows:


		Number of
Exercise		Shares
Price	Expiration	Exercisable
(a)	(a)		125,000		(a)
$.75	None		500,000		(b)
$.01	None		511,200		(c)
$.01	None		54,500		(d)
$.01	None		39,000		(e)
$5.00	10 years		505,000		(f)
$.01	None		6,000		(g)
$.01	None		25,000		(h)
$1.00	None		20,500		(i)
(j)	(j)		(j	)	(j)
$3.27	10 years		400,000		(k)
$3.75	10 years		200,000		(l)
$5.00	10 years		50,000		(m)
$5.00	10 years		100,000		(n)

(a)		Exercisable only if company has an IPO at the IPO price and exercisable five years from IPO. Through September 30, 2007, the company has not completed an IPO.

(b)		On April 15, 2002, the company issued 1,000,000 warrants to purchase common stock at prices ranging from $.30 to $.75 to its then chairman of the board of directors and chief executive officer. Of the total warrants, 250,000 were exercisable at $.30, and 250,000 were exercisable at $.50 on the date the then board elected the executive to the board and named him chief executive officer. During the year ended December 31, 2002, 250,000 warrants were exercised for $.30 per share, resulting in proceeds of $75,000. During the year ended December 31, 2003, 250,000 warrants were exercised for $.50 per share, resulting in proceeds of $125,000. The remaining 500,000 warrants are exercisable upon the execution of the company of a binding agreement for the sale, transfer, license or assignment for value of any and/or all of its company’s technology at $.75 per share. The company will record a charge representing the fair value of the warrants when the warrants become exercisable.

(c)		The company has issued 1,080,000 warrants, exercisable at $.01 per share, to a management consulting firm in accordance with agreements between the company and a management firm. 528,800 of these warrants have been exercised for aggregate proceeds

		of $5,484. In accordance with the court of original jurisdiction’s order rendered on May 8, 2006 in connection with the litigation against such consulting firm as more fully described in Note I, the company was required to honor immediately the exercise of 40,000 common stock warrants at $.01 per common share, to issue 245,000 common stock warrants, exercisable at $.01 per common share and to honor, if and when presented for exercise, 511,200 previously issued unexercised warrants. The company appealed the lower court’s order to the Appellate Division of the New York State Supreme Court. On March 16, 2007, the Appellate Division unanimously reversed the lower court’s decision. During the pendency of its appeal, the company had been required to issue and deposit with the Clerk of the Court for Monroe County, New York, 40,000 common shares and 245,000 additional common stock warrants and deposit $250,000 with the Monroe County, New York Treasurer’s office. As a result of the Appellate Division’s decision, on April 5, 2007, the lower court ordered the return of the 40,000 shares, 245,000 warrants and $250,000 to the company. Upon such return, the shares and warrants were cancelled. Thus, 511,200 warrants does not include either the 40,000 warrants or the 245,000 warrants cancelled on the company’s books. See Notes I and J.

(d)		The company issued an aggregate 123,500 warrants to its nonmanagement directors for services rendered to the board under its Nonmanagement Directors Stock Plan prior to its amendment on October 13, 2006. For the years ended December 31, 2006, 2005 and 2004, the company issued 26,500, 44,000 and 53,000 warrants, immediately exercisable for a ten year term at $.01 per common share. No further warrants are issuable under the Plan as modified by the board of directors on October 13, 2006 (See Note G [4]). During 2005, 21,000 warrants were exercised. No warrants were exercised during the three month period ended September 30, 2007 and 3,000 warrants were exercised during the three month period ended September 30, 2006. During the nine month periods ended September 30, 2007 and 2006, 6,000 and 42,000 of these warrants were exercised for proceeds of $60 and $180.

(e)		In 2005, the company issued 12,000 warrants to a consultant, immediately exercisable at .01 per common share. During 2005, 3,000 warrants were exercised for proceeds of $30. In 2006, the company issued 30,000 warrants to consultants exercisable immediately for a ten year term at $5.00 per common share.

(f)		During 2005, the company issued 210,000 warrants to certain engineering consultants, exercisable immediately for a ten year term at $5.00 per common share. During 2006, the company issued 295,000 warrants to certain engineering consultants exercisable over a ten year term at $5.00 per common share, but only exercisable if the company sells, licenses or otherwise transfers one or more technologies for value. None of these warrants have been exercised through September 30, 2007.

(g)		During 2005, the company issued 6,000 warrants to a consultant, exercisable at .01 per common share. None of these warrants have been exercised through September 30, 2007.

(h)		During 2005, the company issued 62,500 warrants to investors in connection with their purchase of 62,500 Class A Preferred, exercisable at $.01 per common share. 50,000 of these warrants were exercised in 2005 for proceeds of $625. During 2006, the company issued 135,849 warrants to investors along with their purchase 162,000 Class A Preferred and 20,000 Class B Preferred, all immediately exercisable at $.01 per common share. During 2006, 110,849 of these warrants were exercised for proceeds of approximately $1,171. None of these warrants were exercised during the three month period ended September 30, 2007. 12,500 of these warrants were exercised during the nine month period ended September 30, 2007 for proceeds of $125.

(i)		During 2006, one investor purchased 20,500 warrants immediately exercisable at $1.00 per common share for a purchase price of $2,000. None of these warrants have been exercised through September 30, 2007.

(j)		In connection with its business and financial operations for the year ended December 31, 2006, the company issued 91,583 warrants, immediately exercisable over a ten year term at $.01 per common share. During the year ended December 31, 2006, 91,083 of these warrants were exercised for proceeds of $910. None of these warrants were exercised during the three month period ended September 30, 2007. 500 of these warrants were exercised during the nine month period ended September 30, 2007 for net proceeds of $5.

(k)		During 2006, the company issued 400,000 warrants immediately exercisable for ten years at an exercise price of $3.27 per common share to a business consultant. None of these warrants have been exercised through September 30, 2007.

(l)		During 2006, the company issued 200,000 warrants immediately exercisable for ten years at an exercise price of $3.75 per common share to its governmental affairs consultant. None of these warrants have been exercised through September 30, 2007. The company recorded a charge of $948,000 to general and administrative expenses.

(m)		During the quarter ended March 31, 2007, the company issued 50,000 warrants exercisable for a ten year period at $5.00 per common share upon the happening of a commercializing event. The warrants were issued to a consultant who assisted the company develop its New York State and national school bus program. None of these warrants have been exercised through September 30, 2007. The company recorded a charge of $249,000 to general and administrative expenses.

(n)		On April 19, 2007, the company issued 100,000 warrants immediately exercisable for ten years at an exercise price of $5.00 per common share to two engineering consultants in connection with the company’s engagement to furnish constant velocity joints to a military contractor. None of these warrants have been exercised through September 30, 2007. The company recorded a charge of $401,000 to general and administrative expenses.

		The following summarizes the activity of the company’s outstanding warrants for the nine months ended September 30, 2007:


						Weighted
				Weighted		Average
				Average		Remaining	Aggregate
				Exercise		Contractual	Intrinsic
	Warrants			Price		Term*	Value
Outstanding at January 1, 2007		2,652,700		$	2.19	7.44 years
Granted		150,000			5.00	9.59 years
Exercised		(19,000	)		0.01
Canceled or expired		(247,500	)		0.01

Outstanding at September 30, 2007		2,536,200		$	2.58	8.52 years	$	2,924,308

Exercisable at September 30, 2007		1,616,200		$	2.50	5.09 years	$	1,824,308

Does not include those shares with no expiration date.

The fair value of warrants were estimated using the Black-Scholes option pricing model utilizing the following assumptions: risk free rate of 3.76%; expected option life of 10 years; expected volatility of 1.64%; and expected dividend yield 0% for the nine months period ended September 30, 2007.

[9] Issuance of Stock and Warrants by Subsidiary:

The following is a summary of warrants outstanding issued by Ice Surface Development, Inc.


	Three Months Ended
	September 30,
	2007			2006
Outstanding at the beginning of the period		103,948			103,948
Forfeited		(103,948	)		—

Outstanding at the end of the period		—			103,948

All warrants had an exercise price of $.76 per share. On June 7, 2007, all of the 103,948 outstanding warrants issued by Ice Surface Development, Inc. were tendered and forfeited in connection with the vote of the shareholders of Ice Surface Development, Inc. to liquidate and dissolve the company.

[10] 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 issued 50,000 business consultant shares valued at $102,000 on September 27, 2005, contingent on the performance by the consultants of future services under such consultant agreements. The company fair values the shares issued to the trust using the closing market price of the company’s common stock on the date immediately prior to the date of issuance.

			No shares were sold in the trust during the 2005 calendar year. During the calendar year ended December 31, 2006, the company issued an aggregate 160,000 business consultant common shares valued in the aggregate at $419,000 to satisfy the payment of invoices submitted by the consultants for services rendered. During the year ended December 31, 2006, the trustee sold an aggregate 199,260 business consultant common shares for aggregate proceeds of $498,990 and distributed the proceeds from the trust to the consultants in accordance with the trust’s terms.

			During the three month periods ended September 30, 2007 and 2006, the company issued 45,000 and 50,000 business consultant common shares valued at $132,000 and $170,500 to satisfy invoices submitted by the consultants for services rendered. During the nine month periods ended September 30, 2007 and 2006, the company issued 87,500 and 150,000 business consultant common shares valued at $304,000 and $361,000 to satisfy invoices submitted by the consultants for services rendered. During the three month periods ended September 30, 2007 and 2006, the trustee sold 50,000 and 64,200 business consultant common shares and distributed $140,000 and $155,000 from the trust to the consultants in accordance with the trust’s terms.

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, not the company, 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.

[11] Commercializing Event Plan:

			On October 13, 2006, the board of directors adopted a Commercializing Event Plan (“Event Plan”) designed to reward the company’s directors, executives and certain administrative personnel for the successful completion of one or more commercializing events. Currently, eight people participate in the Event Plan. Under the Event Plan, if a commercializing event occurs, each participant will receive 50,000 business consultants common shares for each one of the technologies commercialized. If a second commercializing event occurs with respect to the same technology, each participant will receive an additional 25,000 business consultants common shares. No additional shares are issuable for any additional commercializing event for the same technology. Under the Event Plan, this commercializing event sequence applies separately to each of the company’s eight automotive technologies.

			In the event the entire company was to be acquired by a third party, regardless of the manner of acquisition, each participant would receive 400,000 business consultants common shares upon the consummation of the transaction. This feature of the Event Plan operates independently of the feature whereby each participant receives shares for a first or second commercializing event. Thus, under the Event Plan, it is possible for each participant to receive up to 1,000,000 business consultants common shares if each and every patented automotive invention was the subject of both a first and second commercializing event (8x75,000 shares) and then, subsequent to and independent of such events, the entire company were to be sold.

			Effective June 15, 2007, the company assigned the license granted by the Trustees of Dartmouth College pertaining to the ice technology in exchange for a royalty equal to 5% of the gross revenues generated by the license and the assumption by the assignee of the company’s obligations to Dartmouth College under the license agreement. See Note C. The company’s board of directors concluded that this transaction did not constitute a “commercializing event” as defined in the Event Plan and no shares were issued or are issuable under the Event Plan as the result of such assignment.

			No shares have been issued under the Event Plan since its inception through the period ended September 30, 2007.

			This Commercializing Event Plan was terminated effective October 10, 2007 and a new Commercializing Event Plan was adopted by the Board of Directors. See Note K.

Note H — Commitments and Other Matters

[1] Consulting Agreements:

			On June 30, 2005, the company entered into a non-exclusive two year consulting agreement for engineering design services. Under the terms of the consulting agreement, the company was required to issue annually 12,000 fully and immediately vested $.01 warrants exercisable into common stock of the company, payable on a quarterly basis. In addition, the company granted 100,000 stock options under its 1998 Stock Option Plan to acquire shares of its common stock to its engineering design consultant during the three months ended June 30, 2005. The option vested immediately and has a term of ten years. The exercise price for the option is $5.00 per share. The company valued the options at $247,000 using the Black-Scholes option/pricing model and charged operations. This agreement was terminated in the third quarter of 2005.

			During 2005, the company entered into non-exclusive two year consulting agreements with various consultants. Under the terms of the consulting agreements, the company will issue payment to be made in cash, business consultants stock or a combination hereof, in the company’s sole discretion. The consultants were issued common stock warrants exercisable at $5.00 per common share. The number of warrants aggregated 210,000. Such warrants are fully vested, exercisable immediately and have a ten year term. The company valued the warrants at $377,000 using the Black-Scholes option/pricing model and charged operations.

			During the year ended December 31, 2006, the company issued an additional 295,000 warrants exercisable immediately over a ten year term at $5.00 per common share to the same consultants. The company valued the warrants at $1,441,000 using the Black-Scholes option/pricing model and charged operations. The company also issued 200,000 warrants in connection with its engagement of a governmental affairs consultant. The warrants are immediately exercisable over a 10 year period at an exercise price of $3.75 per common share. The company valued the warrants at $948,000.

			No additional securities have been issued under new and/or existing consulting agreements during the three and nine month periods ended September 30, 2007 and no outstanding securities issued under these consulting agreements were exercised during the three and nine month periods ended September 30, 2007.

[2] Variable Gear, LLC:

			Under the operating agreement of Variable Gear, LLC, the company was required to purchase the 51% membership interest it does not own in such entity on January 1, 2008 at the then fair market value. Since inception, Variable Gear, LLC generated no revenues, incurred no expenses and had no operations. On June 3, 2007, the company and the 51% owner agreed that his membership interest would be repurchased in exchange for 5,000 common shares of the company, valued at the close of trading on such date ($3.85 per share) at $19,250. Such repurchase was closed on June 6, 2007.

			The Company has recorded the purchase of the membership interests as additional goodwill. The Company then recorded the deferred revenue of $150,000 as revenue at June 30, 2007 because all of the Company’s obligations regarding this payment have been met. Since there are no operations of the Variable Gear entity since inception, the Company has concluded that there is no future benefit to the purchased interest and has treated as impaired the goodwill at June 30, 2007.

[3] Leases:

			The company leased premises for use as its executive offices. The lease was for a period of 3 years, commencing July 1, 2004 expiring on June 30, 2007 with monthly rental payments of approximately $2,200. Under the lease, the company was also responsible for its share of real estate taxes, certain maintenance and repair costs, and increases in utility costs associated with the premises. The company has not renewed this lease.

			On August 1, 2004, the company sublet, as a tenant, a portion of a facility located in Webster, New York for a term of six months at a rental rate of $600 per month. On December 31, 2004, the company purchased from the previous owner certain assets for approximately $68,000 and assumed the lease of the underlying tenant for the entire premises. The lease calls for payment of a rental of $2,100 per month. The initial lease term expired on February 28, 2007 and was renewed for an additional two years, through February 28, 2009. The company anticipates that, upon completion of the remodeling to the Rochester facility, it will move its operations carried on at the Webster facility to its Rochester facility. The company has made arrangements with the owner of the Webster facility that the existing lease may be terminated upon thirty days written notice with no penalty. We believe that the Rochester facility will be sufficient to meet our future needs.

			For the nine month periods ended September 30, 2007 and 2006, rent expense was approximately $39,000 and $42,000.

Note I — Management Agreement

On February 20, 2004 the company entered into an agreement with a management-consulting firm to develop and implement a business plan to commercialize its full terrain vehicle. Upon execution of the agreement, the company granted 15,306 business consultants common shares to pay a one-time fee of $75,000 charged by the firm for attendance at the company’s annual shareholders meeting. Pursuant to the February 20th agreement, the company issued 28,792 common shares in monthly fees and granted an aggregate 620,000 warrants, of which 153,600 were exercised during 2004. The parties terminated the February 20, 2004 agreement with respect to all its terms and intended to replace it with a new agreement pursuant to which the management of the company was to be taken over by the management consulting firm through the provision of individuals to serve as the company’s chief executive officer, chief financial officer and chairman of its board of directors. The company intended that this new agreement between the parties would be for an initial term of 24 months and be renewed for additional 24 month periods unless either party provided notice to the other party at least sixty days prior to the end of the term. In the light of certain of its members’ new roles and significant added responsibilities, the management consulting firm was to be compensated at the monthly rate of $50,000, plus 20,000 warrants exercisable at $.01 per common share. In lieu of such payment, upon the happening of a revenue producing event, the company would be obligated to grant 40,000 warrants per month, exercisable at $.01 per common share. In furtherance of the intent of the parties with respect to this new agreement, the company granted 200,000 warrants on August 20, 2004 to the management consulting firm and recorded a charge of $1,191,000 in connection with the issuance of the warrant. The parties intended that the new agreement was to provide for certain additional success and other fees payable to the management consulting firm in the form common shares and warrants for common shares.

Under the February 20th agreement with the management consulting firm, the company had been obligated to grant warrants exercisable at $.01 per common share based upon a formula if the closing bid price of the company’s common stock was equal to or greater than $5.00 per share (“equity incentive provision”). In connection with this obligation the company granted 500,000 warrants with a fair value of $2,972,000 during the second quarter of 2004 as a result of the stock price exceeding $5.00 per share. The company recorded a charge of $444,000 respectively for these warrants for the year ended December 31, 2005.

At its meeting held June 9, 2004, at which meeting approval of certain salient terms of the new agreement to replace the terminated February 20th agreement was supposed to have been given, the board of directors specifically considered and rejected the equity incentive provision and, in lieu thereof, voted to increase the consulting firm’s success fee from 3% to 8%. Thus, the new agreement, as approved by the board, was not to contain the equity incentive provision. On August 11, 2004, the board, now chaired by a member of the management consulting firm, voted unanimously to approve the minutes of the June 9, 2004 board meeting, which minutes reflected the board’s unequivocal rejection of the equity incentive provision. The August 11, 2004 board meeting was attended additionally by two members of the management consulting firm in their capacities as chief executive officer and chief financial officer.

On April 12, 2005 the board voted to terminate the agreement it believed it had approved on June 9, 2004 at the specific request of the management consulting firm due to such firm’s internal reorganization. At the same meeting, the board approved a continuation of the relationship with the reorganized management consulting firm based upon the same terms as had been approved at the June 9, 2004 board meeting.

Upon its creation on July 8, 2005, the executive committee of the board of directors reviewed the text of agreements between the company and the management consulting firm, dated June 30, 2004 and April 12, 2005, as such agreements had been filed with the Securities and Exchange Commission as exhibits to certain of the company’s periodic reports. The committee discovered that, despite board rejection of the equity incentive provision, both agreements, as filed, contained an equity incentive provision.

Based upon its comprehensive analysis of the circumstances surrounding the negotiation and execution of the June 30th and April 12th agreements, including the contents of a report furnished to it by an independent special counsel engaged by it, the committee concluded that the board of directors had never approved either agreement since each contained the specifically-rejected equity incentive provision. Consequently, after consultation with independent special counsel, the executive committee concluded that the agreements are null and void from inception and is withdrawing the June 30th and April 12th agreements from the exhibits deemed filed with the Commission as part of this report.

As stated, the company does not believe the June and/or the April agreements are valid. However, to the extent a court of applicable jurisdiction finally determines that the agreements, or any portion of them, are valid, the company has provided formal notice to the management consulting firm that, in accordance with the agreements’ terms, such agreements have been terminated effective June 30, 2006.

Note J— Litigation

(1) On September 30, 2005, the company filed a declaratory judgment action in the Supreme Court of the State of New York for the Seventh Judicial District seeking that Court’s (the “lower Court”) determination that the June and/or April agreements with the management consulting firm are null and void and unenforceable as against the company, its officers and directors. See Note I.

On February 1, 2006, the company moved for an order granting summary judgment in favor of the company and for such other and further relief as the lower Court deems just and proper. The company’s motion is based upon its contention that specific provisions of the purported agreements unduly restrict the right of the board to manage the company’s affairs and, therefore, the agreements are null and void. The provisions require that James and Keith Gleasman, as directors and stockholders of the company, vote their shares and vote as directors to perpetuate certain members of the management consulting firm as directors and officers of the company.

common share. The lower Court also ordered the company to honor the approximately 511,200 additional warrants previously granted to the firm under the contested June and April agreements if and to the extent such firm exercised such warrants.

As stated, the lower Court’s May 8, 2006 judgment and order directed the company to issue to the management consulting firm an aggregate 40,000 common shares, grant an additional warrant for 245,000 common shares and honor the approximately 511,200 warrants previously issued to such firm upon their exercise. On June 16, 2006, the lower Court granted the company’s request to stay the terms of its May 8, 2006 judgment and order, conditioned upon the deposit of the 40,000 shares and 245,000 warrants with the Monroe County Clerk and further conditioned upon the deposit of $250,000 in escrow with the Monroe County Treasurer. The company complied with both conditions on June 19, 2006 and, therefore, the stay became effective.

Compliance with the lower Court’s May 8, 2006 order required the company to issue 40,000 shares of common stock and grant of 245,000 common stock warrants. Compliance with future adverse orders, if any, rendered by the lower Court similarly may require the issuance of additional shares of common stock, the issuance of additional warrants and/or the payment of damages. The 40,000 shares represent the number of warrants tendered for exercise by the management consulting firm, which the company had not honored upon presentation. The company has previously recorded a charge at the date of grant.

The 245,000 common stock warrants were fair valued and the company recorded a compensation charge of $415,000 as of the year ended December 31, 2006.

On May 9, 2006, the Company filed a notice of appeal with respect to the lower Court’s judgment, order and decision with the Appellate Division of the Supreme Court, Fourth Department (“Appellate Court”).

On September 21, 2006, the company filed its brief with the Appellate Court to support its appeal. On October 23, 2006, the management consulting firm filed its answering brief with the Appellate Court to which the company replied on November 2, 2006.

On March 16, 2007, the Appellate Court unanimously reversed the lower Court’s judgment, ruling that provisions of a contract requiring directors of a corporation to select and maintain certain individuals as corporate officers are void because they are in violation of New York Business Corporation Law section 701. The Appellate Court further determined that whether such illegal provisions unduly restricted the company’s board of directors is a question of fact. In addition, the Court stated that the lower Court abused its discretion by refusing to permit the company to amend its complaint to allege fraud in the inducement.

As the result of the Appellate Court’s decision, the company is entitled to rescind the issuance of 40,000 shares of common stock and 245,000 common stock warrants to the management consulting firm. In addition, the company is no longer obligated to honor the approximately 551,200 common stock warrants registered to the management consulting firm during the pendency of the dispute. Finally, the company will no longer be required to maintain a $250,000 escrow with the Monroe County Treasurer.

In effect, the Appellate Court determined that the company and the management consulting firm should be afforded the opportunity to litigate their various claims rather than having such claims accepted or rejected through the procedure of summary judgment. The company intends to pursue its claims against the management consulting firm vigorously.

Pursuant to the lower Court order dated April 5, 2007, the company rescinded and cancelled the stock certificate for 40,000 common shares issued to the management consulting firm and rescinded and cancelled the 245,000 common stock warrants previously issued to such firm. The company has not reversed the charges recorded in March, 2007, due to the ongoing litigation.

On April 12, 2007, the company commenced litigation against the same management consulting firm in the Supreme Court, Seventh Judicial District, alleging that the company has been damaged in excess of $6 million by such firm.

(2) The controlling persons of Torvec’s majority-owned subsidiary, Ice Surface Development, Inc. (“ISDI”), namely, ISDI’s chief executive officer, chief operating officer and vice-president of manufacturing sought to obtain a preliminary injunction from the Supreme Court of the State of New York, Seventh Judicial District against ISDI and Torvec, Inc. to prevent the assignment of the ice technology license to an unrelated company owned by the technology’s principal inventor in exchange for a royalty equal to 5% of the gross revenues generated by the license. The injunction was sought to support the plaintiffs in their efforts to arbitrate their claims they are owed monies under the provisions of their employment agreements with ISDI.

On September 12, 2007, the Court denied plaintiffs’ request for a preliminary injunction against Torvec, Inc., noting that Torvec is not and never was a party to the employment agreements. The Court further denied plaintiffs’ request that the assignment of the license be enjoined, noting that the assignment was completed before the plaintiffs’ action for a preliminary injunction was commenced.

The Court did grant a preliminary injunction against ISDI to prevent it from liquidating and dissolving until the plaintiffs have had the opportunity to arbitrate their claims against ISDI. The grant of the preliminary injunction was conditioned upon plaintiffs commencing the arbitration within 30 days of the Court’s decision and order.

On October 8, 2007, the plaintiffs filed for arbitration of the dispute. ISDI has opposed the demand primarily on the grounds that plaintiffs’ demand is time-barred.

As of December 31, 2006, the company had accrued approximately $1,541,000 on its consolidated financial statements attributable to unpaid salaries for such executive officers. In accordance with the terms of the employment agreements, at the discretion of the Board of Directors, this total amount was paid with 15% of the common stock of ISDI at a special meeting of shareholders held on June 7, 2007 in connection with the assignment of the Dartmouth license to Ice Engineering. As recited above, the executive officers of ISDI have filed arbitration claims totaling approximately $1,480,000 against ISDI. As of September 30, 2007, this amount is included in the accrued liabilities caption on the accompanying financial statements, pending the final resolution of the arbitration.

Note K — Subsequent Events

(1) On October 31, 2007, the Board of Directors approved the termination of the company’s Commercializing Event Plan, effective October 10, 2007 and the warrants granted to the engineers and security personnel be cancelled, effective October 10, 2007.

The Board approved a new Commercializing Event Plan, effective October 10, 2007, which would provide as follows:

Participants

All directors and officers of Torvec as well as all engineering consultants and security personnel.

Any other individual recommended by the Governance Committee and approved by the Board of Directors from time to time.

Effective Date of Amendment

October 10, 2007

Terms of the Plan as Amended

Upon the happening of any commercializing event, each of the directors and officers of Torvec as well as certain management personnel shall be entitled to share equally in 6% of the gross revenues derived or to be derived from the transaction

and/or transactions constituting a commercializing event. Upon the happening of any commercializing event, each of the company’s engineering and security consultants shall be entitled to share equally in 2% of the gross revenues derived and/or to be derived from the transaction and/or transactions constituting a commercializing event.

Additional individuals may be added to the plan from time to time, either at the 6% management level or at the 2% engineering level. With respect to each additional individual, however, the actual number of shares issuable as the result of any commercializing event shall be calculated based upon the closing price of the company’s common stock on the OTCBB (or if the company’s shares are listed on an exchange, including NASDAQ, on such exchange) on the date the individual becomes a participant in the plan as determined by the Board of Directors.

In order to actually receive payment under the commercializing event plan, each Participant must be both a) employed by, a consultant to or associated with Torvec and b) judged to be “in good standing” with the company at the time of any and all such payments, all as determined by the Board of Directors as of the date of the Board’s authorization of payments to be made under the plan.

For purposes of the plan, a commercializing event shall consist in any completed transaction, or series of completed transactions, regardless of form, structure or size and/or dollar amount by which the company and/or its shareholders derive gross revenue or are expected to derive gross revenue under the terms of the transaction and/or the terms of any agreement or working arrangement entered into by the company. For purposes of the plan, payments to be made to participants with respect to each given commercializing event shall be made in full upon the finalization of the commercializing event even if the company is to be paid in installments or some other type of revenue-deferred arrangement. Where payments are to be made pursuant to an arrangement, such as a license or supply contract, where the aggregate consideration to be received by the company as the result of the commercializing event is not stated, the aggregate dollar-value ascribed to the license, supply contract or similar instrument based upon an estimate of the total dollars to be received over the term of the instrument shall be utilized for purposes of fixing the gross revenues to be derived from the commercializing event.

It is expressly provided that the participants in the commercializing event plan shall be entitled to receive payments as described in the plan regardless of the number of commercializing events, in the aggregate or with respect to any given technology.

(2) On October 31, 2007, the company’s Board of Directors approved that certain adjustments be made to the company’s Nonmanagement Directors Plan, as that Plan had been modified by the Board of Directors on October 13, 2006.

The Board approved an increase of 5% per annum to the amounts payable for board service and an additional increase of 5% per annum for service as chairman of the board and of the board’s standing committees. As adjusted in accordance with this recommendation, each nonmanagement director (a total of 4 persons) would receive $26,460 for board and committee service per annum. In addition, the chairman of the audit committee would receive $12,600 per annum and the chairman of the nominating committee would receive $5,355 per annum.

The Board approved that the chairman of the board, chairman of the executive committee and chairman of the governance and compensation committee, one person, be paid an aggregate $110,000 per annum for all services rendered by him as a

director and in such capacities.

The Board approved that the effective date for these adjustments be July 1, 2007 so that all payments made to the company’s nonmanagement directors for the third quarter of 2007 and all future quarters reflect the increases.

(3) On November 8, 2007, the controlling persons of Torvec’s majority-owned subsidiary, Ice Surface Development, Inc (“ISDI”) commenced a second action against ISDI with respect to their claim that ISDI is indebted to them in the amount of $1,405,000 in unpaid executive officer salaries. The action was commenced in the United States District Court for the Western District of New York and added the company, Keith Gleasman and Morton Polster as defendants. The plaintiffs allege that the assignment of the ice technology license held by ISDI for a royalty equal to 5% of the gross revenues generated by the license was for inadequate consideration and that, as a consequence, plaintiffs are entitled to a portion of the reimbursement amount payable to Torvec. Legal costs incurred in defending these claims were charged to general and administrative expense.

The company believes plaintiffs position is without merit and will defend the action vigorously.

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

PLAN OF OPERATION

(a)Overall Business Strategy

The company’s overall business strategy relating to the commercialization of its technologies continues to be:

•

to license or sell any one or a number of its automotive technologies (i.e. the infinitely variable transmissions, the hydraulic pump/motor system, the Iso-Torque™ differential, the constant velocity joint mechanism, and the full terrain vehicle) in order to provide the capital management believes is necessary to commercialize its FTV™ worldwide, especially in the Asian, African, South and Central American, and Eastern European markets.

The company’s plan of operation relative to its automotive inventions during the year ending December 31, 2007 is:

	•		to continue its working relationship with the National Aeronautics and Space Administration with respect to that agency’s development of a lunar rover to return to the moon by approximately the year 2020;

	•		to continue refining the company’s infinite variable transmissions to maximize the cost savings, fuel-efficiencies and pollution reduction capabilities of such transmissions as compared to conventional automatic transmission technologies;

	•		to continue its attempt to generate governmental support for the company’s New York State and national school bus program;

	•		to initiate working relationships with automotive manufacturers, first-tier suppliers and local municipalities, including entering into supply contracts with such companies and municipalities, either in preparation for or in concert with one or more licensing arrangements with such entities;

	•		to provide constant velocity joint units to a military contractor for integration in a newly-designed demonstration vehicle;

	•		to continue demonstrating the company’s automotive technologies to interested representatives of the traditional auto industry, government and innovative auto companies with advanced automotive technologies for selected, niche markets;

•

to adapt and modify the company’s automotive technologies to the specification requirements of end-users with whom the company may be engaged and as adapted and modified, to file new patent applications to the extent necessary and appropriate.

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.

Through June 14, 2007, the company held a license to ice technology granted by the Trustees of Dartmouth College. This license was held through the company’s majority-owned subsidiary, Ice Surface Development, Inc. The license required the company to pay Dartmouth College a royalty of 3.5% 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 license provided for the payment of 50% of sub-license fee income.

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

During the period beginning November 29, 2000 through to the year ending December 31, 2006, Dr. Petrenko’s efforts to develop the technology to where it would be capable of deicing large surface areas, such as the windshield of a car, truck and/or bus, appeared to be making steady progress. In addition, numerous companies, especially certain major glass manufacturers, continued to express relatively high interest in sublicensing the technology from the company or, at a minimum, provide dollars to the company to accelerate the development process. More specifically, during most of 2006, the company was engaged in serious sublicensing discussions with one domestic and an unrelated foreign glass company.

However, despite the company’s best efforts, no glass manufacturer or other third party has expressed continuing interest in sublicensing the technology from the company given its current stage of development. Moreover, no glass company or other third party apparently is willing to provide the company with the development dollars necessary to enable the technology, even utilizing the pulse method favored by Dr. Petrenko, to deice relatively large surfaces within acceptable automotive power requirements.

In December, 2006, the company was informed by Dr. Petrenko that while the physics underlying the ice technology is still valid and the technology remains promising, he can not estimate with any degree of assurance a time frame when the technology will be mature enough for automotive commercialization, although he does believe such maturation will not occur in the next twelve months.

Given Dr. Petrenko’s assessment with respect to the ice technology and the reticence of glass companies to either sublicense or provide the company with development dollars, management concluded that the carrying amount of its Dartmouth College license as of December 31, 2006 ($1,071,000) exceeded the estimated discounted cash flows the company reasonably expected to receive for the twelve month period beginning January 1, 2007 and ending December 31, 2007 and therefore, determined that the full amount of such excess should be recorded as an impairment in accordance with SFAS No. 144 as of and for the year ended December 31, 2006.

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

The company separately entered into a reimbursement agreement with Ice Engineering pursuant to which that enterprise will reimburse the company for a portion of the acquisition and maintenance expenses paid by the company over the approximate seven years the license was held. Under the reimbursement arrangement, the company will receive approximately $3.5 million, payable as follows:


$500,000		paid upon closing, June 15, 2007;
$300,000		payable quarterly, commencing March 1, 2008, until entire amount paid*

• With respect to the March 1, 2008 quarterly payment only, the $300,000 will be offset by approximately $91,000 of licenses-associated expenses paid by Ice Engineering on the company’s behalf.

In anticipation of the assignment, the shareholders of Ice Surface Development, Inc. adopted and approved a Plan of Liquidation and Dissolution on June 7, 2007. Pursuant to the Plan, all liabilities owed by Ice Surface Development to its former officers, approximating $1.5 million, were extinguished in exchange for an increase in their percentage equity interest in Ice Surface Development. The executive officers of Ice Surface Development are seeking to compel arbitration with respect to this liability, and we are reflecting the amount of such liability on our balance sheet until the matter is resolved.

(b)Current Status of Automotive Product Development

Each of the company’s automotive technologies, namely the full terrain vehicle ( including the steer drive, suspension system and high speed tracks), its infinitely variable transmissions, the IsoTorque differential and the constant velocity joint, have been researched, designed, developed, built, tested and refined to become production-ready. In this sense, the company is no longer “developing” its technologies. The company has satisfied itself that each of the technologies functions as it was designed to function and no further development is required to “prove” the functionality of the technologies.

The next phase is requiring that each of the company’s technologies be modified and adapted to accommodate the design specifications presented by automotive manufacturers, first-tier suppliers, municipalities, local, state and national governmental agencies and other end-users with whom the company has established working relationships and arrangements. That is, each technology must be made “design specific.”

The following is a partial list of the major projects in which the company is engaged as of October 12, 2007:

• A major U.S. automotive manufacturer has requested that the company adapt its patented FTV substructure(steer drive, suspension system and high-speed tracks) to fit on one of its cabover trucks to determine its suitability for the manufacturer to go into production of FTVs, with initial sales to be primarily in the North American market. The truck has been delivered by the manufacturer to and is now being fitted with the company’s substructure;

• A different major U.S. automotive manufacturer has inquired about our IsoTorque differential, not only for certain classes of its flagship vehicles but also for all of its car and truck models;

• We have delivered our constant velocity joints to a major military contractor per their purchase order and have been informed that the units have more than met the manufacturer’s expectations. The units are now undergoing durability analysis.

• A California metropolitan bus company has requested that we build a specialized version of our constant velocity joint to enable its new hybrid bus model to function. We are adapting our constant velocity joint technology to meet the bus company’s need and believe that we will ship them a unit during the fourth quarter, 2007;

• A Malaysian company has requested that we adapt our constant velocity joint technology to solve a major problem inherent in the current design of its monorail system. We are in the process of designing the adaptation;

• Pursuant to our working relationship with the National Aeronautics and Space Administration (“NASA”), we have delivered the Isotorque differentials to NASA under the existing purchase order and will be delivering electrically-modified transmissions to NASA as called for under the purchase order. The company continues to further modify the transmission to meet NASA’s ever-developing specifications as that Agency continues to improve the vehicle it is designing for our America’s return to the moon.

• An American subsidiary of a Korean manufacturer has discussed with the company a proposal to acquire our hydraulic pump and motor for incorporation in its construction and agriculture vehicles;

• Another Fortune 500 company has discussed with the company a proposal to acquire rights to our constant velocity joint technology.

After the company’s technologies have been validated with respect to these specific end-user vehicle applications as well other ongoing projects, it is anticipated that one or more of these end-users will enter into licensing agreements, supply contracts and/or similar arrangements resulting in the profitable commercialization of the company’s technologies. One or more of these end-users may seek to acquire all of the company’s automotive technologies by an outright purchase of the company using cash, stock or a combination of stock and cash as the consideration for such purchase.

(c)Company Expenses

The net loss for the three month period ended September 30, 2007 was $569,000 as compared to the three month period ended September 30, 2006 net loss of $2,291,000. The decrease in the net loss of $1,722,000 is principally related to decrease in consulting expense of $1,450,000 and an increase in other income of $143,000 generated by the acquisition of Variable Gear, LLC.

Cost of goods sold for the three and nine month period ended September 30, 2007 amounted to $94,000 and $120,000 as compared to $0 for the three and nine month period ended September 30, 2006. This increase is due to the company’s sale of products to NASA and Lockheed Martin for the period ended September 30, 2007.

Research and development expenses for the three month period ended September 30, 2007 amounted to $152,000 as compared to $334,000 for the three month period ended September 30, 2006. This decrease of $182,000 is principally attributable to the expenditure of fewer dollars for the development of the company’s products.

General and administrative expenses for the three month period ended September 30, 2007 amounted to $434,000 as compared to $1,957,000 for the three month period ended September 30, 2006. This decrease amounted to $1,523,000 and is principally due to decrease in consulting fees of $250,000 and the charge in the Management Directors Plan of $1,250,000.

The net loss for the nine month period ended September 30, 2007 was $2,327,000 as compared to the nine month period ended September 30, 2006 net loss of $4,884,000. The decrease in the net loss of $2,557,000 is principally related to decrease in consulting expense of $1,450,000 and the increase in other income of $143,000 generated by the acquisition of Variable Gear, LLC.

Research and development expenses for the nine month period ended September 30, 2007 amounted to $541,000 as compared to $1,252,000 for the nine month period ended September 30, 2006. This decrease of $711,000 is principally attributable to the expenditure of fewer dollars for the development of the company’s products.

General and administrative expenses for the nine month period ended September 30, 2007 amounted to $1,935,000 as compared to $3,631,000 for the nine month period ended September 30, 2006. This decrease amounted to $1,705,000 and is principally due to decrease in consulting fees of $420,000 and expense recorded from the Management Directors Plan of $1,280,000.

(d)Liquidity and Capital Resources

The company’s business activities during the three and nine month periods ended September 30, 2007 were funded principally through cash on hand as the result of the sale of 273,250 shares of Class A Preferred for $1,093,000 and sale of 55,000 shares of Class B Preferred for $274,000 during the year ended December 31, 2006. In addition, the company received approximately $9,000 through the sale of transmission and differential prototypes in the first quarter of 2007 and approximately $500,000 in reimbursement monies from the assignee of the company’s ice technology license on June 15, 2007.

The company’s business activities during the three and nine month periods ended September 30, 2006 were funded principally through the sale of 58,250 Class A Preferred in the first quarter of 2006, 25,000 Class A Preferred in the second quarter, and 78,750 Class A Preferred in the third quarter for proceeds of $233,000, $100,000 and $315,000 respectively.

James and Keith Gleasman have developed a working arrangement with the company that assures the company with continued access to the Gleasmans’ expertise without the expenditure of funds and/or the issuance of stock to pay their consulting fees. Under this arrangement, James and Keith Gleasman continue to provide consulting services and assign new patents, existing patent improvements and all know-how in connection with all their inventions to the company. In addition, Keith Gleasman continues to serve as president and as a director and James Gleasman continues to serve as chief executive officer, interim chief financial officer and as a director.

For calendar 2007, each of the Gleasmans from time to time may sell, from his own personal holdings of Torvec, an average of approximately 500 common shares at prevailing market prices at the time of sale. The total number of shares sold under this plan, if shares were sold on a daily basis throughout the remainder of the 2007 year, would represent approximately 2% of the current Gleasman family holdings. No shares were sold by the Gleasmans under this plan for the nine months ended September 30, 2007.

At September 30, 2007, the company’s cash position was $483,000 and the company has a negative working capital position of $1,258,000. The company’s cash position at anytime during the three and nine month periods ended September 30, 2007 was primarily dependent upon its success in selling Class A Preferred during 2007. The company’s cash position was increased during the second quarter of 2007 by virtue of its receipt of approximately $500,000 in reimbursement monies from the assignment of its ice technology license and the sale of one of its products to NASA for $28,000. The company has received purchase orders from NASA and a military contractor which, when the orders are paid, will generate approximately $300,000 in revenues.

The company believes that current, ongoing discussions with governmental and private sector companies worldwide could very well create a significant revenue producing event during the 2007 calendar year. However, it can not predict when such a transaction will be consummated and therefore, the company does not know whether it will generate significant revenues from its business activities during the 2007 calendar year.

At September 30, 2007 and December 31, 2006, the company had accounts payable and accrued expenses of $1,888,000 and $1,686,000, respectively.

(e)Critical Accounting Policies

Revenue Recognition

The company recognizes revenue when the amounts become fixed and determinable. Revenue is recognized when product is shipped, title has passed, collectors are reasonably assured and the company has no further obligation to its customers. All sales are final with no right of return except for defective product.

Recent Accounting Pronouncement

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” to define fair value, establish a framework for measuring fair value in accordance with generally accepted accounting principles, and expand disclosures about fair value measurements. SFAS No. 157 will be effective for fiscal years beginning after November 15, 2007, the beginning of the Company’s 2008 fiscal year. The Company is assessing the impact the adoption of SFAS No. 157 will have on the Company’s financial position and results of operations.

In February, 2007 the FASB issued SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities”. SFAS No. 159 permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS no. 159 is effective for fiscal years beginning after November 15, 2007. We are currently assessing the impact of SFAS No. 159 on our financial position and results of operations.

(f)Impact of Inflation

Inflation has not had a significant impact on the company’s operations to date and management is currently unable to determine the extent inflation may impact the company’s operations during the three and nine month periods ended September 30, 2007.

(g)Quarterly Fluctuations

As of September 30, 2007 and 2006, the company had not engaged in significant revenue producing operations. Once the company actually commences significant revenue producing operations, the company’s operating results may fluctuate significantly from period to period as a result of a variety of factors, including 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.

At September 30, 2007, the company does not engage in investment activities and has no material, outstanding indebtedness that would subject it to commodity price and/or equity price market risk. The company does not engage in activities that would subject it to foreign currency exchange rate risk. On June 19, 2006, a shareholder advanced the company $250,000 by depositing the full amount with the Monroe County Treasurer in order to perfect a stay with respect to a lower Court order directing the company to transfer 40,000 common shares and 245,000 common stock warrants to a management consulting firm with which the company is in litigation. The company agreed to reimburse the shareholder on a current basis in cash for his interest expense, currently at a rate of 8.75% per annum. The rate is variable depending upon the prime rate while the advance remains outstanding and, thus, the company is subject to market risk with respect the amount of interest payable.

On March 16, 2007, the Appellate Court unanimously reversed the lower Court’s judgment against the company and, as a result, on April 5, 2007, the lower Court ordered the $250,000, less administrative expenses of $4,032, returned to the company. The company has repaid the full amount of the advance, $250,000, to the shareholder.

Forward-Looking Statements

This Form 10-Q contains forward-looking statements that are based on current expectations, estimates, and projections about the industries in which the company operates, as well as management’s beliefs and assumptions. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such

forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions (“Future Factors”) that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

The Future Factors that may affect the operations, performance, and results of the company’s business include the following:

	a.		the company’s ability to raise significant capital to fund its plan of operation;

	b.		the company’s ability to sell and/or commercialize one or more of its technologies, and/or to enter into collaborative joint working arrangements, formal joint venture arrangements with domestic and/or foreign governments, automotive industry manufacturers and suppliers to manufacture and promote the company’s inventions;

	c.		industry and consumer acceptance of the company’s inventions;

	d.		the level of competition and resistance to the company’s inventions in the automotive and related industries;

	e.		general economic and competitive conditions in the markets and countries in which the company will operate, and the risks inherent in any future international operations;

	f.		the strength of the U.S. dollar against currencies of other countries where the company may operate, as well as cross-currencies between the company’s future operations outside of the U.S. and other countries with whom it transacts business.

	g.		changes in business, political and economic conditions and the threat of future terrorist activity in the U.S. and other parts of the world and related military action.

Item 4.CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

The company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the company in reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported on a timely basis and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, as appropriate, to allow for timely decisions regarding required disclosure.

The company’s management, including the chief executive officer and interim chief financial officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of September 30, 2007 pursuant to Rule 13a-15(b) under the Exchange Act and has concluded that our disclosure controls and procedures were effective as of September 30, 2007.

Changes in Internal Control Over Financial Reporting

The company’s management, with the participation of the company’s chief executive officer and interim chief financial officer, has concluded that there were no changes in the company’s internal control over financial reporting that occurred during the quarter ended September 30, 2007 that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1.Legal Proceedings

1. On September 30, 2005, the company filed a declaratory judgment action in the Supreme Court of the State of New York for the Seventh Judicial District seeking that Court’s (the “lower Court”) determination of the June and/or April agreements with the management consulting firm are null and void and unenforceable as against the company, its officers and directors.

On February 1, 2006, the company moved for an order granting summary judgment in favor of the company and for such other and further relief as the lower Court deemed just and proper. The company’s motion was based upon its contention that specific provisions

of the purported agreements unduly restrict the right of the board to manage the company’s affairs and, therefore, the agreements are null and void. The provisions require that James and Keith Gleasman, as directors and shareholders of the company, vote their shares and vote as directors to perpetuate certain members of the management consulting firm as directors and officers of the company. The company’s motion was also based upon its view that the enforcement of the purported agreements would result in unjust enrichment since the company believes that the management consulting firm has not provided the services called for under the agreements and that the firm has already been paid far more than the value of the services actually rendered by it. In the company’s view, the management consulting firm, in effect, breached any relationship it may have had with the company by failing to perform the services it had promised it would perform for the company.

On April 27, 2006, the lower Court dismissed the company’s summary judgment motion as to the illegality of the agreements. In addition, the lower Court granted the management consulting firm’s motion for summary judgment as to a limited number of counterclaims brought against the company solely with respect to the February 20th agreement. On May 8, 2006, the lower Court entered a judgment and order directing the company to honor the exercise of two warrants (under both the February and June agreements) which had previously presented to the company for an aggregate 40,000 common shares and, in addition, grant a warrant to the management consulting firm for 245,000 common shares under the contested equity incentive provision, exercisable at $.01 per common share. The lower Court also ordered the company to honor the approximately 511,200 additional warrants previously granted to the firm under the contested June and April agreements if and to the extent such firm exercised such warrants.
On June 16, 2006, the lower Court granted the company’s request to stay the terms of its May 8, 2006 judgment and order, conditioned upon the deposit of the 40,000 shares and 245,000 warrants with the Monroe County Clerk and further conditioned upon the deposit of $250,000 in escrow with the Monroe County Treasurer. The company complied with both conditions on June 19, 2006 and, therefore, the stay became effective.

The company believes the lower Court’s May 8, 2006 judgment, order and decision contain numerous reversible errors and on May 9, 2006, the company filed a notice of appeal with respect to the lower Court’s judgment, order and decision with the Appellate Division of the Supreme Court, Fourth Department (“Appellate Court”).

On March 16, 2007, the Appellate Court unanimously reversed the lower Court’s judgment, ruling that provisions of a contract requiring directors of a corporation to select and maintain certain individuals as corporate officers are void because they are in violation of New York Business Corporation Law section 701. The Appellate Court further determined that whether such illegal provisions unduly restricted the company’s board is a question of fact. In addition, the Appellate Court stated that the lower Court abused its discretion by refusing to permit the company to amend its complaint to allege fraud in the inducement.

The company has also filed a new lawsuit against the same management consulting firm in the Supreme Court, Seventh Judicial District, alleging that the company has been damaged in excess of $6 million by such firm. The company alleges that such harm was caused by the failure of the management consulting firm to fulfill its obligations to the company, breach of contract, breach of fiduciary duty, fraud, conversion, unjust enrichment and by fraudulently inducing the company to enter into a series of purported agreements by which the management consulting firm was paid amounts far in excess of the benefits derived from its services. The company is seeking that the management consulting firm pay at least $6 million in damages to the company for the harm it has caused.

On October 8, 2007, the plaintiffs filed for arbitration of the dispute. ISDI has opposed the demand primarily on the grounds that plaintiffs’ demand is time-barred.

There is no other litigation involving the company. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against the company.

The company believes plaintiffs position is without merit and will defend the action vigorously.

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, 2006, other than those described in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operation; Item 3, Quantitative and Qualitative Discussions About Market Risk; and Part II, Item 1, Legal Proceedings, all as set forth herein.

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

All sales of unregistered equity securities taking place during the quarter ended September 30, 2007 were timely reported in current reports on Form 8-K filed by the company.

Item 3.Defaults Upon Senior Securities.

None

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

None

Item 5.Other Information.

None.

Item 6.Exhibits

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

(2) Plan of acquisition, reorganization, arrangement, liquidation, or succession

2.1

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

(3) Articles of Incorporation, By-laws

	3.1		Certificate of Incorporation, incorporated by reference to Form 10-SB/A , Registration Statement, registering Company’s $.01 par value common stock under section 12(g) of the Securities Exchange Act of 1934;

	3.2		Certificate of Amendment to the Certificate of Incorporation dated August 30, 2000, incorporated by reference to Form SB-2 filed October 19, 2000;

	3.3		Certificate of Correction dated March 22, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2002;

	3.4		By-laws, as amended by shareholders on January 24, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2002;

	3.5		Certification of Amendment to the Certificate of Incorporation dated October 21, 2004 setting forth terms and conditions of Class B Preferred, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2004.

	3.6		Certificate of Amendment to the Certificate of Incorporation dated January 26, 2007 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 September 30, 1999;

	10.5		Operating Agreement of Variable Gear, LLC dated June 28, 2000, incorporated by reference to Form 10-QSB filed for the quarter ended June 30, 2000;

	10.6		License Agreement between Torvec, Inc. and Variable Gear, LLC dated June 28, 2000, incorporated by reference to Form SB-2 filed October 19, 2000;

	10.7		Investment Agreement with Swartz Private Equity, LLC dated September 5, 2000, together with attachments thereto, incorporated by reference to Form 8-K filed October 2, 2000;

	10.8		Extension of and Amendment to Consulting Agreement with James A. Gleasman, incorporated by reference to Form 10-KSB filed for the fiscal year ended December 31, 2000;

	10.9		Extension of and Amendment to Consulting Agreement with Keith E. Gleasman, incorporated by reference to Form 10-KSB filed for the fiscal year ended December 31, 2000;

	10.10		Extension of and Amendment to Consulting Agreement with Vernon E. Gleasman, incorporated by reference to Form 10-KSB filed for the fiscal year ended December 31, 2000;

	10.11		Option and Consulting Agreement with Marquis Capital, LLC dated February 10, 1999, incorporated by reference to Form 10-QSB filed for quarter ended March 31, 2001;

	10.12		Option and Consulting Agreement with PMC Direct Corp., dated February 10, 1999, incorporated by reference to Form 10-QSB filed for quarter ended March 31, 2001;

	10.13		Investment Banking Services Agreement with Swartz Institutional Finance (Dunwoody Brokerage Services, Inc.) dated December 8, 2000, incorporated by reference to Form 10-QSB filed for quarter ended March 31, 2001;

	10.14		Employment Agreement with Michael Martindale, Chief Executive Officer, dated August 1, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2001;

	10.15		Employment Agreement with Jacob H. Brooks, Chief Operating Officer, dated August 1, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2001;

	10.16		Employment Agreement with David K. Marshall, Vice-President of Manufacturing, dated September 1, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2001;

	10.17		Investment Banking Services Agreement with Swartz Institutional Finance (Dunwoody Brokerage Services, Inc.), as amended, dated October 23, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2001;

	10.18		Stock Option Agreement with Samuel Bronsky, Chief Financial and Accounting Officer, dated August 28, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2001;

	10.19		Pittsford Capital Group, LLC Agreement dated January 30, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2001;

	10.20		Gleasman-Steenburgh Indemnification Agreement dated April 9, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2001;

	10.21		Series B Warrant dated April 10, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2001;

	10.22		Billow Butler & Company, LLC investment banking engagement letter dated October 1, 2003, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2003;

	10.23		Letter of Acknowledgement and Agreement with U.S. Environmental Protection Agency dated February 4, 2004, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2003;

	10.24		Letter Agreement with CXO on the GO, L.L.C. dated February 20, 2004, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2003;

	10.25		Letter Amendment with CXO on the GO, L.L.C. dated February 23, 2004, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2003;

	10.26		Lease Agreement for premises at Powder Mills Office Park, 1169 Pittsford-Victor Road, Suite 125, Pittsford, New York 14534, dated July 16, 2004; incorporated by reference to Form 10-QSB filed for fiscal quarter ended June 30, 2004;

	10.27		Lease Agreement for testing facility and Mustang dynamometer, dated July 21, 2004; incorporated by reference to Form 10-QSB filed for fiscal quarter ended June 30, 2004;

	10.28		Advisory Agreement with PNB Consulting, LLC, 970 Peachtree Industrial Blvd., Suite 303, Suwanee, Georgia 30024; incorporated by reference to Form 10-QSB filed for fiscal quarter ended June 30, 2004;

	10.29		Agreement between Torvec and ZT Technologies, Inc. dated July 21, 2004, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2004;

	10.30		Assignment and Assumption of Lease between William J. Green and Ronald J. Green and Torvec, Inc. effective as of December 31, 2004, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2004;

	10.31		Bill of Sale between Dynamx, Inc. and Torvec, Inc. for equipment and machinery, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2004;

	10.32		Lease and Services Agreement between Robert C. Horton as Landlord and Torvec, Inc. as Tenant dated March 18, 2005, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2004;

	10.33		Settlement Agreement and Mutual Release between Torvec, Inc. and ZT Technologies, Inc. dated March 29, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;

	10.34		Advisory Agreement between Robert C. Horton and Torvec, Inc. dated February 15, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;

	10.35		Lease and Services Agreement between Dennis J. Trask as Landlord and Torvec, Inc. as Tenant dated April 18, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended March 31, 2005;

	10.36		Consulting Agreement with Matthew R. Wrona, dated June 30, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended June 30, 2005;

	10.37		Option Agreement between Matthew R. Wrona and Torvec, Inc. dated June 30, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended June 30, 2005;

	10.38		Trust Agreement between Matthew R. Wrona, Donald Gabel, Lawrence Clark, Steven Urbanik, Floyd G. Cady,Jr., and Michael Pomponi as Grantors and Richard B. Sullivan as Trustee, dated September 22, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;

	10.39		Consultant Agreement with Floyd G. Cady, Jr., dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;

	10.40		Consultant Agreement with Lawrence W. Clark, dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;

	10.41		Consultant Agreement with Donald W. Gabel, dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;

	10.42		Consultant Agreement with Michael A. Pomponi, dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;

	10.43		Consultant Agreement with Steven Urbanik, dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;

	10.44		Consultant Agreement with Kiwee Johnson, dated September 30, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;

	10.45		Confidentiality Agreement with Joseph B. Rizzo, dated October 24, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005.

	10.46		Minutes of meeting Board of Directors Torvec, Inc., held October 19, 2004, 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, 2007;

	10.52		License Assignment and Transfer Agreement by and between Ice Engineering, LLC and Torvec, Inc. made effective June 15, 2007 assigning license granted by Dartmouth College with respect to ice technology from Torvec to Ice Engineering, incorporated by reference to Form 8-K filed on July 18, 2007.

(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

(23.1) Eisner LLP Consent

(24) Power of attorney

None

(31) 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.


	TORVEC, INC.
Date: November 15, 2007	By:	/s/ James Y. Gleasman
		James Y. Gleasman, Chief Executive Officer

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

Dated: November 15, 2007



	By:	/s/ James Y. Gleasman
		James Y. Gleasman, Chief Executive Officer and
		Interim Chief Financial Officer

EXHIBIT INDEX


EXHIBIT			PAGE

(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	N/A
		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	N/A
		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,	N/A
		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	N/A
		filed for fiscal year ended December 31, 2002;

	3.4	By-laws, as amended by shareholders on January 24, 2002, incorporated by reference to	N/A
		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	N/A
		setting forth terms and conditions of Class B Preferred, incorporated by reference to
		Form 10-QSB filed for fiscal quarter ended September 30, 2004.

	3.6	Certificate of Amendment to the Certificate of Incorporation dated January 26,2007	N/A
		increasing 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		N/A

(9)	Voting Trust Agreement None		N/A

(10)	Material Contracts

	10.1	Certain Employment Agreements, Consulting Agreements, certain assignments of patents,	N/A
		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;		N/A

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 Statement 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;		N/A

10.4	Termination of Neri Service and Space Agreement dated August 31, 1999, incorporated by reference to Form 10-QSB filed for the quarter ended September 30, 1999;		N/A

10.5	Operating Agreement of Variable Gear, LLC dated June 28, 2000, incorporated by reference to Form 10-QSB filed for the quarter ended June 30, 2000;		N/A

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;		N/A


EXHIBIT		PAGE

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;	N/A

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;	N/A

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;	N/A

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;	N/A

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;	N/A

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;	N/A

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;	N/A

10.14	Employment Agreement with Michael Martindale, Chief Executive Officer, dated August 1, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2001;	N/A

10.15	Employment Agreement with Jacob H. Brooks, Chief Operating Officer, dated August 1, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2001;	N/A

10.16	Employment Agreement with David K. Marshall, Vice-President of Manufacturing, dated September 1, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2001;	N/A

10.17	Investment Banking Services Agreement with Swartz Institutional Finance (Dunwoody Brokerage Services, Inc.), as amended, dated October 23, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2001;	N/A

10.18	Stock Option Agreement with Samuel Bronsky, Chief Financial and Accounting Officer, dated August 28, 2001, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2001;	N/A

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;	N/A

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;	N/A

10.21	Series B Warrant dated April 10, 2002, incorporated by reference to Form 10-KSB filed for fiscal year ended December 31, 2001;	N/A

10.22	Billow Butler & Company, LLC investment banking engagement letter dated October 1, 2003, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2003;	N/A

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;	N/A

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;	N/A

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;	N/A

10.26	Lease Agreement for premises at Powder Mills Office Park, 1169 Pittsford-Victor Road, Suite 125, Pittsford, New York 14534, dated July 16, 2004, incorporated by reference to Form 10-QSB filed for fiscal quarter ended June 30, 2004;	N/A

10.27	Lease Agreement for testing facility and Mustang dynamometer, dated July 21, 2004; incorporated by reference to Form 10-QSB filed for fiscal quarter ended June 30, 2004;	N/A

10.28	Advisory Agreement with PNB Consulting, LLC, 970 Peachtree Industrial Blvd., Suite 303, Suwanee, Georgia 30024; incorporated by reference to Form 10-QSB filed for fiscal quarter ended June 30, 2004;	N/A

10.29	Agreement between Torvec and ZT Technologies, Inc. dated July 21, 2004, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2004;	N/A


EXHIBIT		PAGE

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;	N/A

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;	N/A

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;	N/A

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;	N/A

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;	N/A

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;	N/A

10.36	Consulting Agreement with Matthew R. Wrona, dated June 30, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended June 30, 2005;	N/A

10.37	Option Agreement between Matthew R. Wrona and Torvec, Inc. dated June 30, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended June 30, 2005;	N/A

10.38	Trust Agreement between Matthew R. Wrona, Donald Gabel, Lawrence Clark, Steve Urbanik, Floyd G. Cady, Jr. and Michael Pomponi as Grantors and Richard B. Sullivan as Trustee, dated September 22, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;	N/A

10.39	Consultant Agreement with Floyd G. Cady, Jr., dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;	N/A

10.40	Consultant Agreement with Lawrence W. Clark, dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;	N/A

10.41	Consultant Agreement with Donald W. Gabel, dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;	N/A

10.42	Consultant Agreement with Michael A. Pomponi, dated October 1, 2005, incorporated b y reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;	N/A

10.43	Consultant Agreement with Steven Urbanik, dated October 1, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;	N/A

10.44	Consultant Agreement with Kiwee Johnson, dated September 30, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005;	N/A

10.45	Confidentiality Agreement with Joseph B. Rizzo, dated October 24, 2005, incorporated by reference to Form 10-QSB filed for fiscal quarter ended September 30, 2005	N/A

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 for fiscal year ended December 31, 2005	N/A

10.47	Excerpts from minutes of the meeting of Board of Directors Torvec, Inc., adopting changes to the non-management directors plan creating a commercializes 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, incorporated by reference to Form 8-K filed on October 16, 2006.	N/A

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;	N/A

10.49	Letter agreement with American Continental Group, LLC dated October 27, 2006 incorporated by reference to Form 8-K filed on October 30, 2006;	N/A

10.50	New York State School Bus Proposal, incorporated by reference to Form 10-Q filed for the quarter ended March 31, 2006;	N/A


EXHIBIT		PAGE

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, 2007;	N/A

10.52	License Assignment and Transfer Agreement by and between Ice Engineering, LLC and Torvec, Inc. made effective June 15, 2007 assigning license granted by Dartmouth College with respect to ice technology to Ice Engineering, incorporated by reference to Form 8-K filed on July 18, 2007.	N/A

(11)	Statement regarding computation of per share earnings (loss) Not applicable	N/A

(14)	Code of Ethics	N/A

(16)	Letter on change in certifying accountant None	N/A

(18)	Letter regarding change in accounting principles None	N/A

(20)	Other documents or statements to security holders None	N/A

(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)	N/A

(22)	Published report regarding matters submitted to vote of security holders None	N/A

(23)	Consents of experts and counsel	N/A

(24)	Power of attorney None	N/A

(31.1)	Rule 13(a)-14(a)/15(d)-14(a) Certifications	50

(32)	Section 1350 Certifications	51

(99)	Additional exhibits None	N/A

Positive
Negative
Uncertain
Constraining
Legalese
Litigious
Readability	H.S. freshman Avg

CurAegis (CRGS) 10-Q2007 Q3 Quarterly report

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