The
Torvec Annual Shareholders' Meeting, held on January
27th, was attended by approximately 300 shareholders.
If you were unable to attend, or if you would
like to review the presentations made by Torvec's
Senior Executives, please click on the attached
links.
Remarks
by Read McNamara, Chairman of the Board
Remarks
by Dick Ottalagana, Chief Executive Officer
Remarks
by Philip Fain, Chief Financial Officer
Remarks
by Dick Ottalagana,
Chief Executive Officer
Good
evening. My name is Dick Ottalagana, and I have
been your CEO since June 15th.
My
report to you tonight is centered on two themes:
- Theme
#1 -- We are actively and deeply involved in
commercializing all of our technologies.
- Theme
#2 -- We believe that 2005 will be a very active
and successful year for us.
As a prelude to discussing the details of these
two themes, I would first like to share with you
the restructuring of Torvec’s management
and our management processes. The restructuring
was required to lay the foundation for executing
the two themes I mentioned above.
As
many of you are aware, effective June 15th, Torvec
appointed a new Chairman, CFO and CEO. The three
of us, Read McNamara, Phil Fain and myself, have
a great deal of experience in building successful
global businesses. Collectively, we are using
our expertise, broad experience and extensive
networks to help transition Torvec from a development
stage company to a successful commercial enterprise.
- In
order to improve our productivity, we moved
quickly to institute the following:
We defined specific responsibilities for all
Torvec employees.
- We
implemented recurring staff meetings.
- We
moved into a professional office suite in Powder
Mill Office Park.
- We
purchased a state-of-the-art Mustang Dynamometer
to facilitate development and testing of our
technologies and products. I want to stress
the importance of our dynamometer and test facility.
There is up to a six month wait for usage of
high tech dynamometers at very high costs…not
to mention logistical difficulties regarding
location, continuous access and confidentiality.
We
have also greatly enhanced our external communications.
Our website has been redesigned to better showcase
our Company and technologies with broader global
reach. The website serves as a valuable tool to
communicate with potential business partners.
It also provides me the platform to issue what
we refer to as the “CEO Update” every
few weeks. These updates include photos and movie
clips of our technology in action. It enables
our Management Team to answer your questions,
to the extent we are permitted under SEC regulations.
Furthermore, our website provides centralized
access to all of Torvec’s SEC filings. I
encourage all of you to access our website at
“www.Torvec.com”, and I am certain
you will find it very informative.
Relative
to Theme #1, I would like to share with you the
following:
As
many of you know, we are currently testing our
infinitely variable transmission. For reasons
of confidentiality, I will not release the specific
results of the tests we have completed thus far.
However, I will share with you my excitement and
optimism over the test results which we have achieved
to date. Through the tweaking and fine tuning
of the IVT electronics, we continue to optimize
fuel mileage in many different driving scenarios.
In this regard, I want to share this critical
point with you.
All
auto manufacturers are faced with complying with
US Government mandates for both gasoline and diesel
fuel efficiencies. New mandates for light trucks
and SUV’s are in effect for the years 2005,
2006 and 2007. As most of you know, light trucks
and SUV’s now account for over 50% of automotive
sales and a disproportionate share3 of automakers’
profits., Severe fines are being imposed by the
Government for failure to achieve these standards.
These fines can very well be enormous -- up to
$55 per each vehicle manufactured and sold for
each one tenth of an MPG below the standard. OEM’s
(Original Equipment Manufacturers) are seeking
solutions to these problems. Accordingly, this
is the reason why we are fine tuning our IVT…to
be capable of delivering the optimal fuel efficiency
possible so that the OEM’s will be able
to comply with the new mandates.
We
have developed a comprehensive marketing and public
relations strategy for our IVT, including international
media coverage. We will disseminate our test results
on a global basis, to the general public, as well
as to opinion leaders and decision makers in the
worldwide automotive industry. Our strategy includes
utilizing some of the world’s most recognized
media outlets and in some cases the visits and
contacts have already been made. Of course, our
website will become an important vehicle to keep
interested parties abreast of breaking developments.
Next,
we have successfully implemented our strategy
of spinning off various Torvec technologies into
subsidiaries which are wholly-owned by Torvec.
Our rationale for doing this is to provide greater
focus on our specific technologies, thereby providing
greater opportunities for joint ventures, IPO’s
or other commercializing events. We firmly believe
that in the case of Torvec, the sum of the parts
is far more valuable than the whole. We believe
that creating these subsidiaries will generate
greater opportunity for the creation of shareholder
wealth.
IVT
Diesel Corporation was formed to facilitate joint
ventures with strategic partners to offer complete
diesel drive-train units to the US military and
for use in commercial vehicles, including Class
3 trucks (by that I mean, UPS, Coca Cola, Federal
Express, etc.) and significantly…school
buses. We anticipate that the joint venture partners
will furnish custom electronic engine control
units, high performance engines, ABS braking systems
and emission control systems as well as manufacturing
and assembly facilities. We have also assigned
our CV joint patent and pending heavy-duty CV
joint patents to IVT Diesel Corporation. The combined
technological improvements should result in fuel
savings, lower environmental emissions, increased
driving performance, enhanced safety and greater
reliability and durability.
The
market opportunities for diesel drive-train units
have increased dramatically for both US military
and commercial applications. The increased weight
of armoring the Humvee military vehicles as well
as the difficult desert terrain where they are
presently deployed requires continuous retrofitting
of engines, transmissions and parts. Moreover,
the 2007 Government emissions standards for commercial
vehicles, higher fuel prices, the high level of
school bus emissions and the resulting health
concerns faced by state and municipal governments,
all present opportunities for Torvec’s proprietary
technology. Torvec’s IVT Diesel Corporation
has been established to work with joint venture
partners to provide such innovative, cost effective
solutions.
We
are currently in discussions with possible joint
venture partners.
Iso-Torque
Corporation was established for a similar reason…to
facilitate joint ventures, IPO’s and other
commercializing events for our Iso-Torque technology.
The Iso-Torque will be a production ready differential
designed to fit major automotive platforms. We
believe that the market demand is significant,
based on discussions which we have had with major
automotive companies and OEM tier one suppliers.
These companies have expressed a high level of
interest in this product.
The
market demand for a lighter, less expensive, better
differential is at a critical point, especially
with Toyoda now owning the Torsen differential.
It is significant that Toyoda paid over $100 Million
in 2003 for the Torsen differential; a technology
which has not dramatically changed since Vernon
Gleasman designed it in 1954. It is even more
significant that the Torsen when purchased by
Toyoda no longer had patent protection. Our Iso-Torque
does have patent protection and, accordingly,
we believe that our differential with its patent
protection will command a premium from interested
parties.
Iso-Torque
differentials will also be provided to our IVT
Diesel Corporation for use in the diesel drive-train
units to be supplied for use in military vehicles,
Class 3 trucks and buses.
We
have also completed a comprehensive business plan
for our Full Terrain Vehicle (FTV). This plan
has been provided to a variety of interested parties.
As a public company, we do not divulge the names
of all of the companies with which we have ongoing
relationships. The announcement of names tends
to drive our stock up followed by a decline if
no further announcements concerning the relationships
are immediately forthcoming. To announce names
would give great leverage to these companies in
the negotiating process. This is especially true
since we do not have full control over the time
required to consummate a transaction. However,
I am pleased to tell you that our wholly-owned
subsidiary, IVT Diesel Corporation has entered
into an agreement with MotoTron, Inc., a division
of Brunswick Corporation, a Fortune 500 Company
and Traxen Corporation to collaborate in entering
our FTV in the 2005 DARPA (Defense Advance Research
Project Agency) Grand Challenge. The DARPA Grand
Challenge is sponsored and operated by the US
Department of Defense to review and showcase technology
which will allow compliance with US legislation
requiring 30% of all military vehicles to be fully
autonomous…..meaning it runs without human
intervention…..by the year 2015. We and
our partners will be working together to fully
robotize our FTV for entry in this competition
which covers a 142 mile course across the Mojave
Desert. We expect extensive media coverage and
keen interest from decision makers in the public
sector. Participation in the DARPA challenge will
create the opportunity to be among the leaders
in advanced autonomous robotic technology, not
to mention the $2 Million prize.
Wrapping
up developments in Theme #1, Ice Surface Development
Inc., our majority owned subsidiary, continues
forward progress with a variety of initiatives,
including discussions with Dupont, Amercan Glass
Products, Nissan, BMW, and Volkswagen, among others.
Now
on to Theme #2, what is in store for us in 2005?
It
is critical to stress that we are in the process
of building relationships of trust with very large,
very influential companies. The process of building
such relationships with many companies for each
of our technologies is ongoing and progressing
well, but frankly the process does take time.
It is also a complicated balancing act to be moving
on multiple fronts with several different potential
partners.
We
are communicating constantly with auto companies,
OEM tier one suppliers and others as to their
issues and needs, and we respond with information,
test results, and other forms of assistance in
order to build a relationship of trust and accelerate
the decision making process. To this end, we have
expanded our facilities, including the previously
mentioned purchase of a dynamometer, the leasing
of office space and expanded testing facilities
to accomplish the two-way communication necessary
to consummate a successful transaction. We have
utilized these facilities to host top executives
of major auto companies during 2004 and anticipate
intensifying the in person visits of the highest
level of executives as 2005 progresses.
I
should highlight the fact that we are building
a Company to maximize long-term shareholder value.
We are not making decisions or issuing press releases
to please or assist day traders in our stock…indeed
such activity would be illegal. Rather, we are
working with companies to consummate the best
business transactions. All shareholders should
clearly understand that just because there is
no public announcement concerning these ongoing
discussions does not mean that they are not happening,
or that other positive developments are not occurring.
In his chairman’s remarks, Read referred
to the constraints under which we operate regarding
the reporting of our progress. Silence, therefore,
definitely does not equate to lack of progress.
2005
may very well be our year. Our technologies are
maturing, we have the proper engineering and management
expertise in place and we believe that the relevance
of Torvec’s technology has never been greater.
However, there can be no guarantee, primarily
because we cannot control the actual decision
making of any one with whom we are dealing.
Thus
far, 2005 has been very encouraging for us. I
am also pleased…and excited… to share
with you tonight that we have on-going initiatives
in China. Specifically, we are moving forward
toward the execution of a letter of intent with
Troitec Automotive Electronics Company, Ltd. which
is a 100% wholly-owned subsidiary of Chery Automotive.
Chery Automotive is owned by the Chinese Government.
Troitec
is responsible for developing an engine management
system for Chery’s automotive line. Upon
receipt of the signed letter of intent which we
expect momentarily, we will be working with Troitec
towards the execution of a definitive agreement
to integrate a customized Torvec infinitely variable
transmission with Chery’s automobiles. Torvec
and Troitec recognize that a great deal of synergy
can be achieved as our companies collaborate to
develop a transmission for Chery’s small
car market throughout the world.
Chery
Automotive is referred to as one of China’s
up and coming “Fighting Tiger” automakers,
projecting the no-boundary spirit that is driving
China’s economic expansion. Chery was founded
eight years ago and has supplied cars for the
China market. It has an ambitious plan to expand
its lineup, which currently has one subcompact
and three sedans. Chery has contracted with two
of Italy’s top automotive designers, Bertone
and Pinninfarina, for the design and engineering
of a new generation of vehicles. These designers
are world famous for their work with Ferrari,
Lamborghini, Alfa Romeo, and Fiat among other
famous brands. Six new models are planned for
2005 and 2006, with three models slated for export,
including the US and Europe. Chery, through its
Troitec Subsidiary is committed to including fuel
saving performance within the engines and transmissions
of its vehicles.
I
have just previously mentioned building relationships
with various companies and our introduction to
Troitec was made by MotoTron, Inc., a division
of Brunswick Corporation. MotoTron is supplying
Torvec with the electronic control system utilized
with our infinitely variable transmission and
has proven to be a valuable strategic partner.
On
this subject, I would like to read to you a quote
from yesterday’s USA Today, “If you
own a company that is not already operating in
China, or does not have pretty concrete plans
to become involved, sell it”.
To
sum up, I am pleased that all of our hard work
is beginning to pay off. As you can see, the multiple
initiatives we have undertaken on several technology
fronts, are beginning to yield results. We are
moving inexorably toward the commercialization
of our valuable assets on a global basis. I look
forward to sharing more good news with you in
the very near future.
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Symbol
TOVC
[Quote]
Exchange
OTC
Shares
Outstanding
Approximately 29,000,000
52
Wk. Range
$1.25 - $9.98
2005
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