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Re: Nzed post# 13243

Wednesday, 12/12/2007 4:43:26 PM

Wednesday, December 12, 2007 4:43:26 PM

Post# of 35337
I have copied the CEO update below...still reading it myself...

Message from the CEO
December 12, 2007

Dear Shareholders,

I am pleased to announce that on December 12, 2007, Torvec granted High Density Powertrain, Inc. (“HDP”) of Waterford, Michigan an exclusive, worldwide license to incorporate Torvec’s Constant Velocity Joint technology(our Sphere-Gear™ CV Joint) in HDP’s family of highly powered, multifueled, fuel efficient, light weight, cost effective internal combustion piston engines. Under the license agreement, Torvec has been appointed HDP’s exclusive supplier of Sphere-Gear CV Joints at appropriately competitive prices for installation on HDP’s multifuel engines’ swash-plate mounting structures.

In consideration for the grant of the license, Torvec will receive annual royalties equal to 5% of annual gross revenues generated by the sale of HDP’s multifuel engines and 5% of gross revenues received from all sublicenses of HDP’s engine technology.

The license is limited to Torvec’s CV Joint technology and under the license agreement, Torvec retains all rights in its CV Joint technology for all applications other than its use in HDP’s multifuel engine.

HDP is in the business of providing customers with a total Powertrain solution, including an engine that is 25% of the size and weight, has 20% of the parts and a 25% increase in fuel efficiency compared to conventional engines. HDP intends to utilize Torvec’s CV Joint technology to minimize engine piston friction. HDP is affiliated with LSM System Engineering, also based in Waterford, Michigan, which is a designer and producer of some of the world’s top performance Powertrain components.

In connection with this arrangement, Mr. Clifford Carlson has agreed to join our staff as a consultant to Torvec. Cliff retired from General Motors Advanced Powertrain after more than 30 years. The owner of numerous auto-related patents, Cliff is internationally recognized for the development of the world’s first closed-loop fuel injection carbureted car in 1977 and the first production-model vehicle with a cost effective, fuel injected base engine in 1983. After retiring from General Motors as the Manager of Advanced Poweretrain Architecture and Propulsion Concepts, Cliff spent the next 7 years in the same position at Ford Motor Company. At Ford, Cliff managed the development of the first Hydraulic Launch Assist system.

After his retirement from Ford, Cliff became a Powertrain consultant for the Army’s hydraulic hybrid program (“Project Hammer”).

As you can see, Cliff brings over 40 years of development expertise and industry-wide Powertrain contacts that can be readily applied to all of Torvec’s technologies. Cliff is a partner in HDP and is convinced that HDP’s new, highly compact, cost and fuel efficient multifuel engine will create many synergies with Torvec’s automotive technologies.

I have inserted a link of Cliff’s complete background with this Update.

http://torvec.com/images/LSM/CLIFF_barckground.pdf

The other principal of HDP is Mr. Steven Lowe, his background is linked below.

http://torvec.com/images/LSM/Steve_Lowe_Background.pdf



As the result of our relationship with HDP, Torvec will be positioned to offer all the components for the world’s most advanced driveline, specifically a highly compact, multifuel engine, an infinitely variable transmission, Isotorque differential and constant velocity joint. This synergistic combination can have enormous impact in enabling auto companies meet new and ever-tightening fuel emission and fuel economy standards imposed by Congress.

In addition, Cliff Carlson’s consulting services have already proved to be invaluable and his numerous contacts throughout the automotive industry, especially at General Motors and at Ford, have already enhanced our ability to penetrate the industry with all of our technologies. Cliff has already attended meetings with high level automotive executives and in doing so, has provided them with an independent and experienced assessment of the IsoTorque differential’s capabilities. For example, after a recent meeting, he commented:

“After the meeting, Keith and I demonstrated the IsoTorque differential’s capabilities in an old parking lot. The asphalt was badly worn, there were large pockets of gravel and ice in pot holes randomly covering 50% of the surface area. You could not find a moremiserable place to drive a rear wheel drive sports car on full throttle accelerations and cornering. Except for the sound of gravel and the feel of pot holes, the car did everythingthat it was asked to do as if it were on dry solid pavement…
I have never seen anything like it.”



The International Auto Parts Expo In China

In other news, Elizabeth Harrington, along with Gary Eidlin and Paul Lui, Torvec’s authorized representatives in China, conducted a series of Torvec-related meetings at the Chinese International Auto Parts Expo sponsored by the Chinese Ministry of Commerce in Beijing, China on November 28 th to December 1, 2007. As part of the Expo, Elizabeth Harrington was the keynote speaker at the Taizhou, China seminar to an audience of over 500 leading auto/parts representatives. In addition, Elizabeth conducted a China-U.S. seminar attended by approximately 150 individuals from auto/parts companies. Elizabeth was also interviewed by a senior reporter for the China Auto News, the authoritative automotive publication in China. In the interview, Elizabeth discussed opportunities for Chinese companies to acquire leading edge US auto technology and cited Torvec as a key example of such technology.

Elizabeth furnished us with a report on all of her activities undertaken by Elizabeth and her colleagues at the Auto Show on behalf of Torvec. I thought I would share with some of the highlights of her report:

Nov 28 -- Dinner at the Great Hall of the People

The Ministry of Commerce hosted a dinner at the Great Hall of the People on Nov 28. I was a guest of honor at the VIP table. Paul joined me at the dinner. I introduced him as my colleague and the person to contact in China regarding Torvec. I met Wei Jianguo, Vice Minister of Commerce. I talked with him about Torvec and how its innovative, next generation technology could help Chinese auto companies develop superior, differentiated products which will help them compete successfully in the global and domestic auto markets. He was very impressed with the technology. I advised him of our discussions with SAIC, the City of Chicago, and Xu Kunagdi. He asked me to keep him advised on our discussions with SAIC and agreed with Mr Xu's recommendation that we also talk with the private auto companies. I also met and talked with Wang Qinhua,Director General, Department of Mechanical Engineering and High Technology, Ministry of Commerce. Additionally, I talked with Feng Ming, Director General, and Zhang TaiAn, Division Chief, Foreign Trade and Economic Cooperation Bureau, Zhejiang Province. The City of Hangzhou, in Zhejiang, is one of the key centers of high technology and auto/auto parts production. Wanxiang, one of China's leading auto parts companies, is headquartered in Hangzhou and has their US base in Chicago. They were also impressed with Torvec's technology.

Nov 29 -- Opening Ceremony for the Expo

I was a VIP guest and assisted Minister Wei to open the expo. I took the opportunity to reinforce our discussion about Torvec. The President of Bosch/China was the other VIP guest.

Nov 29 -- Expo Meetings

Geely -- Paul and I met with two executives from Geely:Wang Ziliang, Vice President; Tang Haibo, Senior Representative. Geely is China's leading private auto company. They have a reputation for innovation and aggressive development. They recently set up a manufacturing center in Mexico as a base to enter the US market and serve Latin America. We gave Mr Wang a print out of the Torvec website. Paul did an excellent job of explaining the technology in Chinese. Mr Wang is interested and will present the technology to his management. Paul will follow-up with Mr Wang, assist him and attend meetings with Geely in China, with Torvec's approval. Mr Wang and his senior management will attend the Detroit auto show in January. We suggested they come to Rochester to meet Torvec and see the technology. They will consider it.

Chery -- We met with Shu Simon, Manager of the Sales Department. Mr Shu will take the Torvec information to his management. Paul will follow-up, with Torvec's approval.

Wanxiang -- We met breifly with Wanxiang, introduced the Torvec technology and City of Chicago's program to test it. Wanxiang's US headquarters is in Chicago.

Nov 30 -- Elizabeth's Speech at Taizhou Seminar

Taizhou is one of the largest and most advanced auto/auto parts manufacturing and export areas in China. I was a VIP speaker at the Taizhou session. The audience included over 500 leading auto/auto parts representatives. In my presentation I spoke about Torvec. The response was very positive. The Mayor of Taizhou, Hu SiQui, is anxious for Paul and I to visit Taizhou as soon as possible to have in-depth meetings with their key companies. We also met 3 senior leaders from other areas who had a similar response: Huang Xiwen, Vice General Director, Department of Commerce, Jilin Province; Wang JinDi, Vice General Secretary, Liaoning Province; Pan Xianzheng, Vice Mayor of Changchun.

Nov 30 -- Elizabeth's Speech at China-US Seminar

About 150 individuals from auto/auto parts companies attended this seminar. I included Torvec again in my presentation and it was well received. Gary arrived from the US, joined us for this presentation, and met some of the senior people from the Ministry of Commerce.

Nov 27 -- Elizabeth Interviewed by China Auto News

I was interviewed by Madame Song, a senior reporter with China Auto News, the authoritative publication on the auto industry in China. Summaries of its articles are regularly translated and included in Automotive News in the US. I discussed opportunities for Chinese companies to acquire leading edge US auto technology and cited Torvec as an example. The Ministry of Commerce will send us a copy of the article.



Sincerely,

James Gleasman
CEO

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