June 16, 2008

In my May 5, 2008 Update, I discussed the interest of the U.S. Air Force in partnering with Torvec to develop an Advanced Combat Firefighting Vehicle for its Robotic Firefighting Technology Program (ACFV). In this Update, I would like to share with you very significant developments concerning the FTV and the Air Force since May 5 th as well as other ongoing activities involving all of our technologies.

The FTV, the Air Force and Other Federal Agencies

On May 31, 2008, Torvec received a purchase order from the Air Force for one preproduction Ford Tracked Vehicle for evaluation. The amount of the purchase order is $106,000 and the order was accompanied by a “sole source justification statement” which specified that the Air Force had undertaken “extensive research” and had concluded that, worldwide, there is only one tracked vehicle that is able to meet its specifications,

i.e. --------------

“a vehicle that is able to reach speeds of 45-60 mph,
operate on a fully suspended tracked system, carry
a load of no less than three thousand pounds and
turn on its axis on dry pavement.”

The “sole source” statement is extremely significant since it means that the ACFV project will not be the subject of competitive bidding, a factor that has already increased the number of companies that are interested in partnering with Torvec on the project.

The Air Force has invited Torvec to ship our existing FTV to Tyndale Air Force Base, Panama City, Florida so that we may demonstrate the vehicle on July 8, 2008 in front of representatives of the Department of Homeland Security (Science and Technology Division), FEMA, the Department of the Interior (Forestry Service) and others.

We envision that the Air Force will need an undetermined number of ACFVs for its own bases worldwide with more vehicles required by other branches of the U.S. Armed Forces. We envision a significant number of similar vehicles will be required for boarder patrol (Homeland Security), emergency and rescue (FEMA), parkland and other similar environmentally sensitive needs (Interior).

We also envision that Torvec and its partner(s) will be able to commercialize the vehicle as the most advanced firefighting vehicle of its kind in the world, especially since we will be able to incorporate all of the Air Force’s advanced firefighting technologies. As a result, we will be able to market a fully patented, one of a kind firefighting vehicle to the more than 30,000 U.S. firefighting departments, let alone the firefighting agencies located in the rest of the world.

The combination of the technical superiority of the FTV and the Air Force’s “sole source” statement has galvanized interest from numerous companies wishing to partner with us on the project. It also has gathered enthusiastic response from a number regional and national firefighting associations to whom the Air Force has shown our FTV videos during the last several weeks.

The IsoTorque™ Differential, GM and Others

We have completed sample production IsoTorque differentials for installation in three GM vehicle models. We anticipate shipping these units to GM within the next few days.

General Motors also requested that we furnish them with a series of mathematical formulas governing the operation of the IsoTorque™ differential so that they would be able to evaluate the performance of the IsoTorque on all of their models through computerized programming, eliminating the need to generate hardware for each and every model.

We provided GM with the formulas it requested and believe that these recent activities continue to enhance our GM relationship significantly.

Chrysler has requested that we build a sample production IsoTorque™ differential for installation in its Chrysler 300 series and Dodge Charger model and we anticipate that this unit also will be shipped to them within the next few days.

During the last several months, we have been working to enable Nissan to place a purchase order for an initial quantity of IsoTorque™ differentials. This has entailed such items as refining the production unit design to minimize field complications, the solicitation of cost quotations which would enable Torvec to market the units at both an acceptable cost and with acceptable profit margins, securing for Torvec the designation of a “qualified Nissan supplier” and the investigation of the controls and distribution systems of potential Torvec-suppliers to enhance the quality of the units and the timeliness of their delivery. We believe we are nearing the completion of this, rather laborious, process, and will be engaged with Nissan in the very near future.

On another note, our shareholders may be interested to know that the August issue (on newstands in July) of “Car & Driver” magazine will feature a major piece on the Car & Driver sponsored 350Z Nissan race car, complete with a centerfold portrait of the car. Look for the Torvec logo on the car. The article will discuss the racing team’s recent performances and we have been told that it will contain favorable references to the IsoTorque™ differential.

The car and team will be racing at Watkins Glen over the July 4 th weekend and everyone is welcome to attend.

Our Infinitely Variable Transmission

We have built our most advanced model infinitely variable Transmission, a unit which will fit all mid-size cars and trucks, including school and metropolitan buses. We have installed sensors and have programmed the software necessary to gather accurate and abundant data on the operation of the transmission---- more than enough data to furnish any potential customer with the answers needed for decision-making.

We now are in the process of fine-tuning the programming of the transmission in anticipation of hosting numerous additional visitors to our Mount Read facility over the coming weeks.

Our Constant Velocity Joint

We have completed arrangements to assist Lockheed-Martin and us to evaluate our constant velocity joint technology on state-of-the-art equipment to facilitate the installation of constant velocity joint units in Lockheed’s tactical wheeled vehicle program.

As you can see, these are exciting----and very busy---- times at Torvec. However, we still want you to feel free to give us a call, or send us an email, about anything that is on your mind. Lastly, as always, I will try my very best to keep you as up to date as I am able on fresh developments.

Sincerely,

James Gleasman
CEO