May 18, 2009

Dear shareholders,

The U.S. Government has set aside hundreds of millions of dollars for advancements in hybrid technology, through the Department of Energy for which we would qualify. This past month the government has reduced by 60% funding the fuel cell research in support of hybrid technology. For more information on our efforts in Washington D.C. reefer to our March 9, 2009.

As you well know we have been working with NASA on an all electric version of our IVT for the next generation Lunar Rover, and that program has borne other fruit that we are quite excited about. Our Patented IVT gearing, affords us design flexibility to create a Power Split Device (PSD) for Gas Electric Hybrid Technology.

The term PSD is essentially a transmission with more then one power source (i.e. gas/diesel engine & electric motor powered by battery pack). The Toyota Prius™ is the number one selling hybrid in the world, and it is the standard on which hybrid technology is judged. Since their PSD is patented and is the key to their success, other automakers have tried to get around Toyota’s technology and have limited success. Torvec’s Patented PSD has the ability to level the playing field for companies that compete with Toyota and their Prius PSD technology. Torvec’s technology will function similarly to Toyota’s, with the same driver feel and performance and with future investigation might afford several advantages over Toyota’s technology.

This PSD technology is ideal for compact to full sized vehicles, while our Hydraulic IVT design will afford larger vehicles greater fuel savings.

In addition, we are please to report on the results of Formula SAE competition in Michigan are in, and out of 120 registered teams Rochester Institute of Technology finished 2nd overall running with our IsoTorque® differential! We at Torvec are very impressed and would like to congratulate the RIT team on a job well done and wish them continued success in the California and Germany competition later this summer.

Sincerely,

James Gleasman
CEO