September 4, 2007

Dear Shareholders,

This CEO Update is the first of a four part series providing our shareholders----- new and old----- with the most recent developments regarding Torvec’s four principal automotive technologies.

This Update will highlight the technological breakthroughs achieved by our constant velocity joint, its market potential, manufacturing advantages, environmental benefits and commercial status. Subsequent Updates will feature our IsoTorque™ differential, our full terrain vehicle (“FTV”) and our infinitely variable transmission (“IVT”).

You may remember that I stated at our last shareholders meeting that Torvec is no longer a “research and development” company. During the past decade since our beginning in the fall of 1996, we raised the dollars to develop our technologies and have designed, built, tested and refined our products to a stage where U.S. and foreign automotive companies and their suppliers now are discussing licenses, joint venture arrangements, supply contracts and yes, outright purchase of our technologies. Our “development” work is largely finished. What we are doing now is providing units which have been adapted and tailored to each manufacturer’s specifications and needs. This is a natural, logical and necessary step------ each company we are dealing with wants to incorporate our technologies in their products before “pulling the trigger” to propose and finalize a deal. The point I want to stress is simply this---- through and up to the middle to the end of 2006, we had provided no manufacturer or first-tier supplier with any of our products to evaluate. Their interest had been sustained through visiting our facility for on-site demonstrations of each technology’s physical properties, functionality and efficiency. Today, their interest has intensified to where they are paying us significant dollars for evaluation units. These steps have lead us closer to a commercializing event than we have ever been in our history. Thus, we made the decision to lease almost 14,000 sq. ft. of manufacturing space to “gear up” for anticipated significant purchase orders from companies with whom we will have a joint venture, license or similar relationship. You should also know we have the ability to lease as much additional space as we need from time to time on a going forward basis.

I will repeat that our efforts along these lines do not mean that we have abandoned efforts to sell the company. On the contrary, the taking of these steps greatly increases the likelihood that a realistic proposal based upon the inherent value of our technologies will be made as we become more of an economic threat to vehicle suppliers.

Torvec’s Constant Velocity Joint

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1. Why is Torvec’s Constant Velocity Joint Technology Superior to Conventional CVJ Technology?

Torvec’s constant velocity joint (“Torvec CVJ”) uses a gear and has rolling contact rather than sliding balls to function which results in greater efficiency than conventional constant velocity joints. The gear has a large contact area which spreads the load over a wide surface and its rolling motion is much more efficient.

Present day cvj technology was developed over eighty years ago and has remained virtually the same with a few minor improvements. Existing constant velocity joints function by allowing hardened steel balls to slide in hardened, steel curved tracks. This design mechanism creates an inherent lubrication problem as the balls move through their cycle. An additional inherent weakness of this design is that the torque is transferred by the sliding balls and other components, creating a concentrated sliding contact. This very “sliding” motion is a very inefficient method to transfer torque. Consequently, conventional constant velocity joints require tailor-made high pressure lubrication whereas the Torvec CVJ does not. This lower friction will lead to increased fuel economy.

Traditional cvj design requires extremely accurate tolerances to function properly whereas the Torvec CVJ has less parts to begin with and relatively few parts require tight tolerances.

Torvec’s CVJ has been designed to fit in the usual spot in a vehicle’s suspension without vehicle alteration. In fact, Torvec’s CVJ is generally smaller than conventional cvjs. In 2005, GKN, the world’s largest producer of cvjs,came out with a new design for its cvj which it claimed was 35% lighter than previously existing technology. Torvec’s CVJ is as light as GKN’s newest model.

Torvec’s CVJ could be as much as 50% less costly to manufacture because there is no requirement to have a dedicated manufacturing facility, the moving parts can be sinter-metal and net formed with little or no secondary machining. Conventional CV Joint technology requires extensive, very accurate grinding on all surfaces, including the “inner and outer raceways”----- the curved tracks. The ball cage must be spherically ground, both inside and outside. This grinding is done with ball grinders which lose tolerance very quickly, necessitating constant replacement. The ground surfaces are very hard and require a precision surface finish such that the hardened metal balls will fit exactly. Torvec’s CVJ only has three small areas that need such accurate grinding.

2. What is the Size of the Constant Velocity Joint Market?

The world’s largest producer of cvjs, GKN with 42% of sales, states that the annual production exceeds 200,000,000 annually. The cvj market has grown substantially since the 1960’s, primarily because of the growth in sales of front wheel drive vehicles. GKN states that it has produced over 1 billion cvjs and that cvjs are now fitted to approximately 85% of new cars and light vehicles. The number of cvjs produced annually is projected to increase by approximately 27% by 2014 so that, beginning in year, the number of cvjs produced could reach nearly 254,000,000 per year.

Torvec’s unique CVJ technology will penetrate this market because of its breakthrough design(using a gear),lower manufacturing costs and greater efficiency.

Significantly, Torvec’s CVJ has a larger operating angle (i.e. the angle that a vehicle’s wheels can be turned in order to steer). This attribute improves the vehicle’s drivability by allowing tighter turning circles. The operating angle of Torvec’s CVJ is 8 degrees larger (60 degrees vs. 52 degrees) than the most advanced GKN cvj technology. According to GKN’;s corporate website, every 2 degrees improvement in operating angle produces a corresponding 3.2 ft. reduction in a vehicle’s turning circle, thus improving handling, safety and parking.

Finally, Torvec’s CVJ is truly “constant-velocity” through all angles, this reducing driveline noise, vibration and “harshness” (NVH).

3. What is Torvec Doing to Commercialize Its CVJ Technology?

(a) We have announced, in both our SEC filings and in prior CEO Updates, that we are working with a major military contractor to design and build a constant velocity joint specially-designed for integration in a vehicle the contractor is developing for submission in connection with the Department of Defense’s Joint Light Tactical Vehicle program, a vehicle designed to replace the Humvee as the military’s vehicle of choice for the 21 st century battlefield. We adapted our CVJ technology to increase the ground clearance to enable the vehicle to better withstand roadside explosives.

The contractor has indicated that Torvec would become its exclusive, military supplier of CVJs were it to be awarded the contract, which currently calls for at least 320,000 constant velocity joints annually and at least 1,280,000 over the life of the program. A sales price of approximately $500 per CVJ would generate approximately $160,000,000 in gross revenues annually and approximately $640,000,000 over the life of the program.

We delivered CVJ units to the contractor in accordance with our working relationship on August 23, 2007 for installation in the manufacturer’s base vehicle. We have been informed that the next phase calls for the production of up to thirty vehicles fitted with at least 8 Torvec CVJs per vehicle for presentation to the Defense Department early next spring.

(b) A leading manufacturer of hybrid metropolitan buses has submitted a purchase order to acquire a CVJ unit specially-adapted to function as the main drive shaft for the newest model in its fleet. The manufacturer’s newest hybrid requires a high angle drive shaft to maximize its efficiency which can not be solved with existing, conventional technology. The manufacturer has indicated that it will outfit its entire fleet with Torvec’s CVJ technology functioning as a drive-shaft upon the successful integration of the shipped unit.

As any reasonable person can see, we are making progress --- we have moved from developing our technologies to validate their functionality (1996-2006) to actual working relationships with companies ordering units for installation in their vehicles with the expectation of major orders producing significant revenue.

The process has taken some time --- perhaps more time than anyone (including those of us at Torvec) would have wanted. However, what is going on at Torvec now is very different than what went on during the “development” phase---- our products are ready, we are providing manufacturers with functioning units and they are beginning to respond positively--- meaning, with revenue generating proposals.

While I will, of course, keep you current on developments regarding our CVJ, I plan in my next Update to focus on our IsoTorque™ differential.

In the meantime, if you do have questions and/or concerns, please feel free to email me at jgleasman@torvec.com and call me at 585-248-0740. Please note that we have begun our move to our new facility, so be patient if you are unable to reach me due to logistical issues.

Sincerely,

James Gleasman
CEO