- Amended Quarterly Report (10-Q/A)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

———————

FORM 10-Q/A

———————

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: December 31, 2009

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: _____________ to _____________

Commission File Number: 0-10707

———————

THERMODYNETICS, INC.

(Exact name of registrant as specified in its charter)

———————

Nevada	06-1042505
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

651 Day Hill Road, Windsor, CT 06095

(Address of Principal Executive Office) (Zip Code)

860-683-2005

( Registrant’s telephone number, including area code)

———————

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer ¨				Accelerated filer ¨
Non-accelerated filer ¨				Smaller reporting company þ
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at December 31, 2009
Common stock $.01 Par Value		4,600,306 Shares

AMENDMENT :

On March 31, 2010, the Audit Committee of the Company's Board of Directors and the Company's management concluded that the equity method of accounting for the May 2006 sale of 43.68% of Turbotec Products, Plc (" Turbotec ") and subsequent reporting for the remaining 56.32% interest in Turbotec is the proper method to utilize. Previously the Company utilized the consolidation method of accounting under Generally Accepted Accounting Principles (" GAAP ").

The affected consolidated financial statements are those for all periods since the May 2006 sale of the Turbotec shares through the quarter ended December 31, 2009; such financial statements should no longer be relied upon.

Thus, the Company hereby restates its financial statements for the fiscal periods ended December 31, 2009, 2008, 2007 and 2006, and restates its Management's Discussion and Analysis of Financial Condition and Results of Operations for the corresponding periods, by hereby amends its report on form 10-Q as had been filed February 16, 2010. Items 1, 2 and 4T of Part I and Item 6 of Part II are hereby amended and restated in their entirety as follows:

PART I : FINANCIAL INFORMATION

Item 1.

Financial Statements

THERMODYNETICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2009, 2008, 2007 AND 2006

(UNAUDITED)

(in 000's)

	2009			2008			2007			2006
	(Restated)			(Restated)			(Restated)			(Restated)
ASSETS
CURRENT ASSETS
Cash	$	220		$	611		$	242		$	946
Marketable securities		49			52			311			-
Prepaid expenses and other current assets		872			45			60			354
Total current assets		1,141			708			613			1,300

PROPERTY, PLANT AND EQUIPMENT, net		3,079			3,252			3,354			3,493

DEFERRED INCOME TAXES		1,200			1,200			1,200			1,492

OTHER ASSETS
Investments - at equity		3,416			5,245			4,723			3,895
Related party receivables		121			1,411			613			26
Other		74			197			174			165
Total other assets		3,611			6,853			5,510			4,086

	$	9,031		$	12,013		$	10,677		$	10,371

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit	$	1,087		$	1,021		$	-		$	-
Accounts payable		210			185			27			56
Accrued expenses and taxes		1,110			416			57			(37	)
Current portion of long-term debt		129			123			96			125
Current portion of liabilities from discontinued operations		-			-			-			33
Total current liabilities		2,536			1,745			180			177

LONG-TERM LIABILITIES
Long-term debt, less current maturities above		1,447			1,579			1,687			1,792
Long-term liabilities from discontinued operations		2,782			2,782			2,782			2,782
Total long-term liabilites		4,229			4,361			4,469			4,574

COMMITMENTS AND CONTINGENCIES		-			-			-			-

STOCKHOLDERS' EQUITY
Common stock, par value $.01 per share; authorized
25,000,000 shares		46			41			41			40
Additional paid-in capital		7,262			7,138			7,134			7,237
Accumulated other comprehensive income		20			24			88			-
Deficit		(5,062	)		(1,296	)		(1,235	)		(1,657	)
		2,266			5,907			6,028			5,620

	$	9,031		$	12,013		$	10,677		$	10,371

THERMODYNETICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE NINE MONTHS ENDED DECEMBER 31, 2009, 2008, 2007 AND 2006

(UNAUDITED)

(in 000's, except for earnings per share)

	2009			2008			2007			2006
	(Restated)			(Restated)			(Restated)			(Restated)

REVENUES
Consulting Fee & Rental Income	$	742		$	724		$	693		$	641
Manufacturing Sales		-			-			-			2,840

COST OF SALES		-			-			-			2,160

OPERATING EXPENSES		2,240			1,265			975			1,225

Income (loss) from operations		(1,498	)		(541	)		(282	)		96

EQUITY IN EARNINGS OF UNCONSOLIDATED SUBSIDIARY		363			829			851			294

OTHER INCOME (EXPENSE)
Other, net		51			55			21			64
Interest expense		(116	)		(112	)		(98	)		(140	)
Gain of sale of investment in unaffiliated company		-			-			-			-
Gain on sale of stock of subsidiary		-			-			-			2,666
Gain on extinguishment of debt		-			-			-			606
Realized Loss on Impairment		(2,196	)		-			-			-
		(2,261	)		(57	)		(77	)		3,196

Income (loss) before provision for income taxes		(3,396	)		231			492			3,586

PROVISION FOR INCOME TAXES		2			38			(149	)		375

Income from continuing operations		(3,398	)		193			641			3,211

DISCONTINUED OPERATIONS
Loss from discontinued operations including gain on extinguishment
of debt of $605,929		-			-			-			(9	)
Net income on discontinued operations		-			-			-			(9	)

Net income (loss)		(3,398	)		193			641			3,202

OTHER COMPREHENSIVE INCOME (LOSS), net of tax		(5	)		(16	)		-			-

Comprehensive income (loss)	$	(3,403	)	$	177		$	641		$	3,202


EARNINGS PER COMMON SHARE	$	(0.78	)	$	0.05		$	0.16		$	0.80

THERMODYNETICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2009, 2008, 2007 AND 2006

(UNAUDITED)

(in 000's)

	2009			2008			2007			2006
	(Restated)			(Restated)			(Restated)			(Restated)

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(3,398	)	$	193		$	641		$	3,202
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization		279			131			121			124
Earnings in unconsolidated subsidiary		(289	)		(745	)		(377	)		(295	)
Realized loss on impairment		2,196			-			-
Gain on sale of stock of subsidiary		-			-			-			(2,666	)
Gain on extinguishment of debt		-			-			-			(606	)
Deconsolidation of subsidiary, net of cash		-			-			-			117
Increase (decrease) in deferred tax liability		-			-			-			(445	)
Issuance of stock		129			-			-			-
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable		-			-			-			(1,147	)
Decrease (increase) in inventories		-			-			-			1,090
(Increase) decrease in prepaid expenses and
other current assets		(288	)		(20	)		(23	)		237
(Increase) decrease in other assets		-			(30	)		(5	)		4
Increase (decrease) in accounts payable		5			104			(10	)		(356	)
Increase (decrease) in accrued expenses and taxes		558			206			(31	)		76
Net cash provided by (used in) operating activities		(808	)		(161	)		316			(665	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(142	)		(17	)		(15	)		(76	)
(Purchase) proceeds - marketable securities		(3	)		194			10			-
Net cash provided by (used in) investing activities		(145	)		177			(5	)		(76	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net (increase) decrease in related party receivable		768			(414	)		(604	)		(23	)
Proceeds from issuance of stock		-			-			-			3,213
Proceeds from short-term borrowings		25			921			-			176
Principal payments on debt and capital lease obligations		(95	)		(88	)		(79	)		(1,679	)
Net cash provided by (used in) financing activities		698			419			(683	)		1,687

NET INCREASE (DECREASE) IN CASH		(255	)		435			(372	)		946

CASH, beginning of year		475			176			614			-

CASH, end of year	$	220		$	611		$	242		$	946

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2009, 2008, 2007 AND 2006

(UNAUDITED)

NOTE 1: BASIS OF PRESENTATION

The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for a fair statement of results for the interim period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The results of operations for the nine months ended December 31, 2009, 2008, 2007 and 2006 are not necessarily indicative of the results to be expected for the full year.

NOTE 2: SUBSIDIARY TRANSACTIONS

On May 8, 2006, the Company completed the sale of a 43.68% minority interest of its subsidiary, Turbotec Products Plc, (the “PLC”), through an offering on the AIM Market of the London Stock Exchange.

The Company and the PLC entered into a Relationship Agreement (RA) which provides for an annual administration fee; restrictions on related party transactions; restrictions on appointments to the board of the PLC and mutual confidentiality and reporting undertakings. See Part II, Item 1. As part of the transaction, the Company and the PLC established independent officers and directors and the two boards of directors act independently.

As a result of the transaction and the terms of the RA, the Company began to account for Turbotec under the equity method of accounting effective May 8, 2006.

Commercial Leases :

The Company and Turbotec Products, Inc. (“Turbotec Products”), a wholly-owned subsidiary of the PLC entered into formal real estate leases effective May 8, 2006, for approximately 54,500 square feet at 651 Day Hill Road, Windsor, CT, and approximately 17,000 square feet at 50 Baker Hollow Road, Windsor, CT. See Part II, Item 1. The leases commenced April 1, 2006 with a five-year term, and one extension option for three years, and a second extension option for two years. Rent charges with respect to the 651 Day Hill Road property are equal to seven dollars per square foot in years one and two, escalating annually thereafter through each of the extension terms; monthly fixed rent in year one equals $31,792, escalating to $42,010 monthly in year ten, assuming both lease extensions are exercised. Rent charges with respect to the 50 Baker Hollow Road property are equal to $5.50 per square foot in year one, escalating annually thereafter through each of the extension terms; monthly fixed rent in year one equals $7,792, escalating to $10,979 monthly in year ten, assuming both lease extensions are exercised.

NOTE 3: RESTATEMENT

The accompanying financial statements have been restated to utilize the equity method of accounting for the May 2006 sale of 43.68% of Turbotec Products, Plc and subsequent reporting for the remaining 56.32% interest in Turbotec Products, Plc. Previously the Company utilized the consolidation method of accounting under Generally Accepted Accounting Principles ("GAAP). A summary of the effects of this change is shown in the following schedules.

THERMODYNETICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2009, 2008, 2007 AND 2006

	As Restated												As Previously Reported												Change
	2009			2008			2007			2006			2009			2008			2007			2006			2009			2008			2007			2006

ASSETS
CURRENT ASSETS
Cash	$	220		$	611		$	242		$	946		$	2,023		$	2,000		$	799		$	946		$	(1,803	)	$	(1,389	)	$	(557	)	$	-
Accounts receivable, net of allowance for doubtful
accounts		-			-			-			-			1,089			2,014			2,252			2,394			(1,089	)		(2,014	)		(2,252	)		(2,394	)
Marketable securities		49			52			311			-			49			52			311			-			-			-			-			-
Inventories														3,971			3,944			3,312			3,862			(3,971	)		(3,944	)		(3,312	)		(3,862	)
Prepaid expenses and other current assets		872			45			60			354			115			283			269			511			757			(238	)		(209	)		(157	)
Total current assets		1,141			708			613			1,300			7,247			8,293			6,943			7,713			(6,106	)		(7,585	)		(6,330	)		(6,413	)

PROPERTY, PLANT AND EQUIPMENT, net		3,079			3,252			3,354			3,493			8,302			8,119			7,672			7,435			(5,223	)		(4,867	)		(4,318	)		(3,942	)

DEFERRED INCOME TAXES		1,200			1,200			1,200			1,492			980			980			980			1,492			220			220			220			-

OTHER ASSETS
Investments - at equity		3,416			5,245			4,723			3,895			-			-			-			-			3,416			5,245			4,723			3,895
Related party receivables		121			1,411			613			26			-			-			-			-			121			1,411			613			26
Other		74			197			174			165			255			298			255			259			(181	)		(101	)		(81	)		(94	)
Total other assets		3,611			6,853			5,510			4,086			255			298			255			259			3,356			6,555			5,255			3,827

TOTAL ASSETS	$	9,031		$	12,013		$	10,677		$	10,371		$	16,784		$	17,690		$	15,850		$	16,899		$	(7,753	)	$	(5,677	)	$	(5,173	)	$	(6,528	)

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit	$	1,087		$	1,021		$	-		$	-		$	1,087		$	1,021		$	-		$	-		$	-		$	-		$	-		$	-
Accounts payable		210			185			27			56			1,362			1,738			1,171			1,898			(1,152	)		(1,553	)		(1,144	)		(1,842	)
Accrued expenses and taxes		1,110			416			57			(37	)		1,338			1,041			654			193			(228	)		(625	)		(597	)		(230	)
Current portion of long-term debt		129			123			96			125			229			302			285			784			(100	)		(179	)		(189	)		(659	)
Current portion of liabilities from discontinued operations		-			-			-			33			-			-			-			33			-			-			-			-
Total current liabilities		2,536			1,745			180			177			4,016			4,102			2,110			2,908			(1,480	)		(2,357	)		(1,930	)		(2,731	)

LONG-TERM LIABILITIES
Long-term debt, less current maturities above		1,447			1,579			1,687			1,792			1,550			1,791			2,071			2,035			(103	)		(212	)		(384	)		(243	)
Long-term liabilities from discontinued operations		2,782			2,782			2,782			2,782			2,782			2,782			2,782			2,782			-			-			-			-
Total long-term liabilities		4,229			4,361			4,469			4,574			4,332			4,573			4,853			4,817			(103	)		(212	)		(384	)		(243	)

DEFERRED INCOME TAXES		-			-			-			-			387			140			366			908			(387	)		(140	)		(366	)		(908	)

COMMITMENTS AND CONTINGENCIES (Note 23)		-			-			-			-			-			-			-			-			-			-			-			-
STOCKHOLDERS' EQUITY
Common stock, par value $.01 per share; authorized
25,000,000 shares		46			41			41			40			46			41			40			40			-			-			1			-
Additional paid-in capital		7,262			7,138			7,134			7,237			7,262			7,138			7,134			7,237			-			-			-			-
Accumulated other comprehensive income		20			24			88			-			20			24			89			-			-			-			(1	)		-
Deficit		(5,062	)		(1,296	)		(1,235	)		(1,657	)		(3,482	)		(1,960	)		(1,956	)		(1,868	)		(1,580	)		664			721			211
Total Thermodynetics , Inc. Stockholders Equity		2,266			5,907			6,028			5,620			3,846			5,243			5,307			5,409			(1,580	)		664			721			211
Noncontrolling Interest		-			-			-			-			4,203			3,632			3,214			2,857			(4,203	)		(3,632	)		(3,214	)		(2,857	)
Total Equity		2,266			5,907			6,028			5,620			8,049			8,875			8,521			8,266			(5,783	)		(2,968	)		(2,493	)		(2,646	)

TOTAL LIABILITIES AND EQUITY	$	9,031		$	12,013		$	10,677		$	10,371		$	16,784		$	17,690		$	15,850		$	16,899		$	(7,753	)	$	(5,677	)	$	(5,173	)	$	(6,528	)

THERMODYNETICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE NINE MONTHS ENDED DECEMBER 31, 2009, 2008, 2007 AND 2006

	As Restated												As Previously Reported												Change
	2009			2008			2007			2006			2009			2008			2007			2006			2009			2008			2007			2006


REVENUES
Consulting Fee & Rental Income	$	742		$	724		$	693		$	641														$	742		$	724		$	693		$	641
Manufacturing Sales											2,840		$	14,682		$	22,251		$	20,874		$	17,312			(14,682	)		(22,251	)		(20,874	)		(14,472	)

COST OF SALES		-			-			-			2,160			10,277			15,582			15,431			13,624			(10,277	)		(15,582	)		(15,431	)		(11,464	)

OPERATING EXPENSES		2,240			1,265			975			1,225			4,994			5,276			3,833			2,814			(2,754	)		(4,011	)		(2,858	)		(1,589	)

Income from operations		(1,498	)		(541	)		(282	)		96			(589	)		1,393			1,610			874			(1,651	)		(2,658	)		(2,585	)		(1,419	)

EQUITY IN EARNINGS OF UNCONSOLIDATED SUBSIDIARY		363			829			851			294			-			-			-			-			363			829			851			294

OTHER INCOME (EXPENSE)
Other, net		51			55			21			64			23			40			(2	)		613			28			15			23			(549	)
Interest expense		(116	)		(112	)		(98	)		(140	)		(120	)		(126	)		(122	)		(197	)		4			14			24			57
Gain of sale of investment in unaffiliated company		-			-			-			-			-			-			-			-			-			-			-			-
Gain on sale of stock of subsidiary		-			-			-			2,666			-			-			-			2,666			-			-			-			-
											606																								606
Realized loss on impairment		(2,196	)
		(2,261	)		(57	)		(77	)		3,196			(97	)		(86	)		(124	)		3,082			32			29			47			114

Income before provision for income taxes		(3,396	)		231			492			3,586			(686	)		1,307			1,486			3,956			(2,710	)		(1,076	)		(994	)		(370	)

PROVISION FOR INCOME TAXES		2			38			(149	)		375			318			753			423			555			(316	)		(715	)		(572	)		(180	)

Income from continuing operations		(3,398	)		193			641			3,211			(1,004	)		554			1,063			3,401			(2,394	)		(361	)		(422	)		(190	)

DISCONTINUED OPERATIONS
Income from discontinued operations including gain on
extinguishment of debt of $605,929		-			-			-			(9	)		-			-			-			(9	)		-			-			-			-
Net income on discontinued operations		-			-			-			(9	)		-			-			-			(9	)		-			-			-			-

Net income (loss)		(3,398	)		193			641			3,202			(1,004	)		554			1,063			3,392			(2,394	)		(361	)		(422	)		(190	)

Less Net Income attributable to the Noncontrolling Interest		-			-			-			-			(224	)		(456	)		(504	)		(201	)		224			456			504			201

Net income (loss) attributable to Thermodynetics, Inc.		(3,398	)		193			641			3,202			(1,228	)		98			559			3,191			(2,170	)		95			82			11

OTHER COMPREHENSIVE INCOME (LOSS), net of tax		(5	)		(16	)		-			-			(5	)		(16	)		-			-			-			-			-			-

Comprehensive income (loss) attributable to Thermodynetics	$	(3,403	)	$	177		$	641		$	3,202		$	(1,233	)	$	82		$	559		$	3,191		$	(2,170	)	$	95		$	82		$	11


EARNINGS PER COMMON SHARE	$	(0.78	)	$	0.05		$	0.16		$	0.80		$	(0.28	)	$	0.02		$	0.14		$	0.79		$	(0.50	)	$	0.02		$	0.02		$	0.00

THERMODYNETICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2009, 2008, 2007 AND 2006

	As Restated												As Previously Reported												Change
	2009			2008			2007			2006			2009			2008			2007			2006			2009			2008			2007			2006

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(3,398	)	$	193		$	641		$	3,202			(1,228	)	$	98		$	559		$	3,191		$	(2,170	)	$	95		$	82		$	11
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization		279			131			121			124			376			362			332			295			(97	)		(231	)		(211	)		(171	)
Earnings in unconsolidated subsidiary		(289	)		(745	)		(377	)		(295	)		-			-			-			-			(289	)		(745	)		(377	)		(295	)
Noncontrolling interest in earnings of subsidiary		-			-			-			-			288			480			50			201			(288	)		(480	)		(50	)		(201	)
Amortization of share based payment expense		-			-			-			-			-			-			-			-			-			-			-			-
Gain on sale of investments in unaffiliated companies		-			-			-			-			-			-			-			-			-			-			-			-
Realized loss in impairment		2,196			-			-			-			-			-			-						-			-			-
Gain on sale of stock of subsidiary		-			-			-			(2,666	)		-			-			-			(2,666	)		-			-			-			-
Gain on extinguishment of debt		-			-			-			(606	)		-			-			-			(606	)		-			-			-			-
Deconsolidation of subsidiary, net of cash		-			-			-			117			-						-						-
Increase (decrease) in deferred tax liability		-			-			-			(445	)		4			(156	)		31			311			(4	)		156			(31	)		(756	)
Unrealized gain on marketable securities		-			-			-						-			-			-			-			-			-			-			-
Issuance of stock		129			-			-			-			129			-			-			-			-			-			-			-
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable		-			-			-			(1,147	)		771			896			588			(344	)		(771	)		(896	)		(588	)		(803	)
Decrease (increase) in inventories		-			-			-			1,090			(399	)		(808	)		104			(861	)		399			808			(104	)		1,951
(Increase) decrease in prepaid expenses and
other assets		(288	)		(20	)		(23	)		237			176			(87	)		(117	)		(66	)		(464	)		67			94			303
(Increase) decrease in other assets		-			(30	)		(5	)		4			-			-			-			-			-			(30	)		(5	)		4
Increase (decrease) in accounts payable		5			104			(10	)		(356	)		456			(308	)		(924	)		(361	)		(451	)		412			914			5
Increase (decrease) in accrued expenses and taxes		558			206			(31	)		76			134			223			(321	)		(136	)		424			(17	)		290			212
Cash provided from operating activities of discontinued operations		-			-			-			-			-			-			-			(8	)		-			-			-			8
Net cash provided by (used in) operating activities		(808	)		(161	)		316			(665	)		707			700			302			(1,050	)		(3,711	)		(861	)		14			268

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(142	)		(17	)		(15	)		(76	)		(451	)		(666	)		(369	)		(575	)		309			649			354			499
(Purchase) proceeds - marketable securities		(3	)		194			10			-			(3	)		207			-			-			-			(13	)		10			-
Net cash provided by (used in) investing activities		(145	)		177			(5	)		(76	)		(454	)		(459	)		(369	)		(575	)		309			636			364			499

CASH FLOWS FROM FINANCING ACTIVITIES
Net (increase) decrease in related party receivable		768			(414	)		(604	)		(23	)		-			-			-			-			768			(414	)		(604	)		(23	)
Proceeds from issuance of stock		-			-			-			3,213			-			-			18			-			-			-			(18	)		3,213
Proceeds from short-term borrowings		25			921			-			176			25			921			357			657			-			-			(357	)		(481	)
Payments of debt from stock offering proceeds		-			-			-			-			-			-			-			(4,619	)		-			-			-			4,619
Cash used to finance activities of discontinued operations		-			-			-			-			-			-			-			(21	)		-			-			-			21
Compensation Expense from stock options		-			-			-			-			-			-			28						-			-			(28	)
Principal payments on debt and capital lease obligations		(95	)		(88	)		(79	)		(1,679	)		(239	)		(188	)		(196	)		(201	)		144			100			117			(1,478	)
Net cash provided by (used in) financing activities		698			419			(683	)		1,687			(214	)		733			207			(4,184	)		912			(314	)		(890	)		5,871

NET INCREASE (DECREASE) IN CASH		(255	)		435			(372	)		946			39			974			140			(5,809	)		(294	)		(539	)		(512	)		6,755

CASH, beginning of year		475			176			614			-			1,984			1,062			659			-			(1,509	)		(886	)		(45	)		-

CASH, end of year	$	220		$	611		$	242		$	946		$	2,023		$	2,036		$	799		$	(5,809	)	$	(1,803	)	$	(1,425	)	$	(557	)	$	6,755

NOTE 4: EQUITY METHOD INVESTMENT

The Company’s 56.32% investment in its unconsolidated subsidiary Turbotec Products, Plc, in which the Company exercises significant influence, is carried at cost, adjusted for the Company’s proportionate share of their undistributed earnings or losses.

At December 31, 2009, 2008, 2007 and 2006, the market values of the common stock investment in Turbotec Products, Plc were as follows:

Year	Carrying Value		Per Share MV		Market Value

2009	$	3,416	$	0.44	$	3,160
2008		5,245		0.67		4,804
2007		4,723		1.64		11,886
2006		3,895		1.36		9,821

As a result of a decline in the market value of Turbotec Products, Plc at September 30, 2009, the carrying amount of the investment exceeded its market value. Management evaluated this decline in market value, and deemed the decline to be other than temporary as of September 30, 2009. Accordingly, an impairment loss of $2,196 has been charged to operations during the nine months ended December 31, 2009.

Following is a summary of financial position and results of operations of Turbotec Products, Plc for the nine months ended:

	2009		2008		2007		2006
Current assets	$	7,139	$	7,565	$	6,469	$	5,653
Property and equipment, net		5,221		4,867		4,318		3,941
Other assets, net		101		101		95		95
Total assets		12,461		12,533		10,882		9,689

Current liabilities		1,627		2,358		1,959		1,997
Long-term Debt		103		212		475		242
Deferred liabilities		781		728		573		908
		2,511		3,298		3,007		3,147
Stockholders' equity		9,950		9,235		7,875		6,542
		12,461		12,533		10,882		9,689

Sales		14,682		22,251		20,874		17,312
Net income	$	510	$	1,342	$	1,387	$	672

Included in consulting fees and rental income on the income statement is $690, $672, $643, and $593 from Turbotec Products, Plc, for the nine months ended December 31, 2009, 2008, 2007 and 2006, respectively. Additionally, included in receivables on the balance sheet are net amounts from Turbotec Products, Plc which represents consulting fees, dividends receivable (net of an allowance) and pass-through rent amounts. The balances are $121, $1,411, $613 and $26 at December 31, 2009, 2008, 2007 and 2006 respectively .

NOTE 5: EARNINGS PER SHARE

Earnings per share for the nine months ended December 31, 2009, 2008, 2007 and 2006 have been computed based on the weighted average of outstanding shares during the periods.

The weighted average numbers of shares outstanding used in the calculations are as follows:

	Nine Months Ended December 31, (in 000's)
	2009	2008	2007	2006
Weighted Average Shares Outstanding-Basic	4,373,023	4,080,306	4,051,906	4,023,261
Weighted Average Shares Outstanding-Diluted	4,373,023	4,080,306	4,051,906	4,023,261

NOTE 6: CASH FLOW INFORMATION AND NON CASH INVESTING ACTIVITIES

The following supplemental information is disclosed pursuant to the requirements of ASC 230-10.

	Nine Months Ended December 31,
	(in 000's)
		2009		2008		2007		2006
Cash payments for interest		$	116	$	112	$	98	$	140

During the nine months ended December 31, 2008, long – term debt of approximately $35,000 was incurred to acquire a vehicle. During the nine months ended December 31, 2006, long – term debt of approximately $83,000 was incurred to acquire a vehicle

NOTE 7: INVESTMENT/LOAN

As of December 31, 2009, $300,000 had been advanced to a manufacturer of commercial buildings under loans which bear interest at 12%, payable monthly, and are repayable upon the financing of the manufacturer or on August 31, 2010, whichever comes first. As a consideration of the loan described above, shares were issued to the Company representing 6% of the manufacturer; Thermodynetics’ CEO is also serving as the manufacturer’s CEO, and he has been issued shares equal to 5% of the manufacturer as an incentive.

Payments due under the loan are currently overdue and payment of the loan is in doubt, although it is the intent to be repaid. The company is currently seeking capital. Part of the consideration for making the loan was an escrow of additional shares to bring the total owned to 51%. It is intended that the shares are to be called if the loan is not paid in the near term. A reserve of $250,000 has been established.

NOTE 8: LINE OF CREDIT

The Company’s $1.1 million line of credit matured on July 31, 2009 and is due in full; however, the Company's bank has proposed terms for an extension of the due date and this is a continuing discussion. Since July 31, 2009, the Company has continued to pay interest under the terms of the line of credit.

NOTE 9: FINANCIAL ACCOUNTING STANDARDS

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of Accounting Research Bulletin No. 51 (“SFAS 160”). SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS 160 is effective for fiscal years beginning after December 15, 2008 and has been adopted in these financial statements.

NOTE 10: LEGAL PROCEEDINGS

The following are the known or threatened legal proceedings:

The lawsuit instituted by the Company on January 8, 2008 in the High Court in England, file no. HC08C00046, against Turbotec Products Plc was concluded in February, 2010. A judgment in favor of the Company on one count and against it on two counts was rendered on May 10, 2010. The net effect of the judgment held that administrative fees were not payable to the Company, and that the Company was required under British law to reimburse the PLC for a substantial portion of the PLC’s legal expenses. All administrative fees that had been paid to the Company by the PLC were credited against the dividends that had been due to the Company, and no further previously declared dividend payments are payable. The PLC has claimed total legal costs of approximately £700,000 which are to be subject to an assessment by the court if they cannot be agreed. The PLC will be entitled to 85% of its legal costs after assessment by the court. On May 24, 2010, in accordance with the judgment, the Company paid £350,000 to the PLC on account of their costs. The exchange rate of pounds sterling for US dollars is approximately $1.45 per £1.

Turbotec Products, Inc. commenced a lawsuit against Thermodynetics on February 27, 2008 in the Connecticut Superior Court, Judicial District of Hartford, alleging that Thermodynetics breached two commercial leases, and that Thermodynetics improperly withdrew funds from a sinking fund established under the leases. The lawsuit was transferred from the regular docket to the Housing Session and now is entitled Turbotec Product, Inc. v. Thermodynetics, Inc., Connecticut Superior Court, J.D. of Hartford, Housing Session, Docket No. 7712.

In 2009, Turbotec Products filed an amended complaint adding counts for fraudulent inducement, fraudulent misrepresentation, and violation of the Connecticut Unfair Trade Practices Act (Conn. Gen. Stat. Sect. 42-110b, et seq.). Thermodynetics has completed discovery. The Company's motion to transfer the case back to the regular docket given the nature of the new claims was granted on August 5, 2009. A prejudgment hearing is scheduled for July 21, 2010.

Turbotec Products claims that it suffered damages in excess of $350,000 and such damages are continuing to accrue. Thermodynetics denies the allegations, is vigorously defending the case, and filed counterclaims for sums due under the two leases, and has claimed the case for a jury trial. Thermodynetics does not view the risk of loss in the case as probable or material.

There are a number of threatened and pending actions against Vulcan, and a number of material judgments obtained against Vulcan. Thermodynetics and its other subsidiaries are not and have not been a party to any such Vulcan actions.

Item 2. Management's Discussion in Analysis of Financial Condition and Results of Operations.

Results of Operations .

Income resulted from consulting fees and rental income in the 3, 6 and 9 month periods ended June, September and December 2006, 2007, 2008 and 2009 respectively, in roughly equal amounts while the period from April 1, 2006 through May 10, 2006 also reflected that period’s manufacturing revenues generated by Turbotec Products, Inc.

Operating expenses increased because of the legal costs involved in the litigation regarding the interpretation of the relationship agreement that was required to complete the London IPO of Turbotec in May 2006.

The equity in earnings of Turbotec Products Plc derives from the 56.32% ownership by the Company of the Plc shares. The sale of the 43.68% interest in the Plc is included in fiscal 2007 while the sale of a different holding in an unaffiliated entity was realized in fiscal 2009.

The Company recorded net income in each of the relevant periods except in fiscal 2009 when a loss occurred in each reported period.

Rental income derives from the two buildings located in Windsor, CT that are currently rented. The current tenants are not expected to renew their leases and the property is being actively offered for sale or rent. There can be no assurance that a sale or rental will be consummated, nor as to the financial effect of such transactions, if any.

With respect to the impairment of the Turbotec share holdings, the issues considered are the value that is carried on the Company’s books, the price of the shares as they trade on the open market, the underlying causes of the changes in share value and the duration of the price trends of the shares. The holdings were valued at the end of each quarterly period based on GAAP and were compared to the market value based on the quoted share price; careful consideration was given to all the issues noted above as to whether the value was impaired or not. The prevalent determining factors of these evaluations were the time duration of the decreased valuation and the affects of the global economy and related currency fluctuations, therefore it was determined that at June 30, 2009 the impairment was temporary as the price rose subsequent to June 30 and the value had only been depressed for a few months. When evaluated during the 3 month period ended September 30, 2009, it was determined that the decrease was now other than temporary and the impairment was entered in the Company’s records as of the end of the second quarter of fiscal 2010.

The Company is seeking other entities that would be interested in obtaining assistance through consulting efforts for their organizations. Such opportunities are possible from a modular building manufacturer that is currently seeking financing and a metal finishing company that has approached the Company’s management on a preliminary basis. The difficulty in consummating such assignments is believed to be a result of the general sluggish economy and the lack of credit available through banks or other lenders.

Liquidity .

The Company’s working capital position was positive at June 30, September 30 and December 31, 2006 and 2007 and negative at June 30, September 30 and December 31, 2008 and 2009. It is anticipated that future working capital will be generated by the sale of assets or from consulting assignments and rents, although no assurance can be given that these efforts will be successful.

The Company’s line of credit was due to be repaid in July 2009 and discussions with the lender as to repayment are ongoing.

Cash was generated from short term borrowings and the sale of assets as well as from fees and rents received.

FORWARD LOOKING STATEMENTS

This report contains certain forward-looking statements regarding the Company, its business prospects and results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause the Company’s actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that may affect such forward-looking statements include, without limitation: the Company’s ability to successfully and timely develop and finance new projects, the impact of competition on the Company’s revenues, the real estate market in Connecticut, and the economy as it relates to companies seeking and able to pay for consulting services.

When used, words such as "believes," "anticipates," "expects," "continue", "may", "plan", "predict", "should", "will", "intends" and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. The Company undertakes no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made by the Company in this report, news releases, and other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect the Company’s business.

Item 4T.

Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures -

The Company’s principal executive and principal financial officers have concluded, based on their evaluation, that the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “ Exchange Act ”)), as of the end of the period covered by this report, were not effective to provide the material information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the Exchange Act. Utilization of the consolidation method of accounting under GAAP rather than equity method of accounting was the result of the ineffective procedures.

(b) Changes in Internal Controls -

There were no changes made and no corrective actions taken during the quarter ended for this report with respect to the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect the Company's internal control over its financial reporting, except the utilization of the equity method of accounting in the restated financial statements.

PART II - OTHER INFORMATION

Item 6.

Exhibits.

(a) Exhibits :

Rule 13a-14(a)/15d-14(a) Certifications:

Exhbit 31(a)

Certification of Chief Executive Officer.

Exhbit 31(b)

Certification of Chief Financial Officer.

Section 1350 Certifications:

Exhbit 32(a)

Certification of Chief Executive Officer.

Exhbit 32(b)

Certification of Chief Financial Officer.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		THERMODYNETICS, INC.

Date: June 25, 2010	By:	/s/ R obert A. L erman
		Robert A. Lerman
		President and Chief Executive Officer

Date: June 25, 2010	By:	/s/ J ohn F. F erraro
		John F. Ferraro
		Treasurer and Chief Financial Officer

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