June 20, 2007

On June 18, 2007, we filed a Current Report (Form 8-K) with the SEC to describe the principal terms of our deal to transfer our ice technology license agreement with Dartmouth College to Ice Engineering, LLC --- a company owned by the original inventor of the technology, Dr. Victor Petrenko. See the report SEC 8-K

We are very pleased with this deal. First, it puts $3.5 million in our coffers --- we already have put $500,000 in the bank and will be receiving the balance of the monies at a rate of $300,000 per quarter beginning March 1, 2008. Second, it gives us an interest in the future success resulting from the commercialization of the ice technology, not only in removing ice from car windshields but from the future sale of units deicing the refrigeration systems of trucks and railway cars as well as from a host of other commercial applications in the field covered by the license---- that is, motorized and nonmotorized land-based vehicles.

As stated in our Annual Report (Form 10-K) filed with the SEC, Dr. Petrenko had informed us in December, 2006 that, in his opinion, the successful commercialization of the ice technology would require considerable additional capital, greater utilization of his lab facilities located at Dartmouth College and additional manpower. He also stated that, while the future for the ice technology was indeed promising, he could not predict when the technology would be sufficiently developed for successful commercialization.

Given Dr. Petrenko’s assessment, management had no choice, under accounting rules governing public companies, to treat the ice technology license as an “impaired” asset for financial statement purposes. This treatment did not mean that the ice technology was worthless or that we never expected to make any money as a result of our ownership of the license. Under the accounting rules, it simply meant that, as of December 31, 2006 when the decision had to be made, we did not expect that the cash flows from the technology during the 2007 calendar year would at least equal its then carrying value of approximately $1,100,000. See Note B(4) of Torvec's Dec 31, 2006 Financial Statement (Form 10-K)

 Speaking of our financial statements, we believe that our balance sheet for the quarter ending this June 30th will be strengthened considerably as the result of this transaction. First, it adds $500,000 to cash. Second, it will add a note receivable equal to $3,000,000. Third, it will remove approximately $1,500,000 in consolidated liabilities due to the adoption by the shareholders of our ice subsidiary, Ice Surface Development, Inc. of a Plan of Complete Liquidation and Dissolution on June 7, 2007. The transaction represents, therefore, an approximate $5,000,000 positive “swing” on our balance sheet. In addition, Torvec will no longer be responsible for paying minimum royalties and ongoing patent maintenance expenses to Dartmouth as a condition to keeping the license viable. This aspect of the deal will save us approximately $125,000 per year.

Despite all of these positives resulting from the ice technology deal, the board of directors has concluded that this transaction does not constitute a “commercializing event” under the board’s Commercializing Event Plan. Therefore, no shares will be issued under the Plan as the result of this transaction.

Finally, Dr. Petrenko’s December, 2006 revelations convinced your management that Torvec did not have the manpower, lab facilities or, most importantly, the capital necessary to develop the ice technology to the point it could be successfully commercialized. We also were well aware of the numerous projects that were in the offing ( many of which were discussed at the January shareholders meeting) and the need to focus our limited resources on the successful implementation of those, as well as new projects that have since surfaced. In truth, therefore, the transaction almost became a “no brainer.”

As stated, Torvec and its shareholders will share in the future success of Dr. Petrenko’s continuing developmental efforts. And, we believe those efforts will, ultimately, be realized. I want to share with you a recent presentation concerning the ice technology which appeared on CNBC’s “On the Money” program entitled “Dartmouth College Research.”

CNBC VIDEO

Sincerely,

James Gleasman
CEO