UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, ~~2010~~2011

[ ] 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 of	(I.R.S. Employer Identification
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)
Incorporation or Organization)	Number)

651 Day Hill Road, Windsor, Connecticut	06095	(860) 683-2005
(Address of Principal Executive Offices)	(Zip Code)	(Registrant's telephone number)

Securities registered pursuant to Section 12(b) of the Exchange Act:

	Name of Each Exchange
Title of Each Class	on which Registered
None	None

Securities registered pursuant to Section 12(g) of the Exchange Act:

Title of Class

Common Stock $.01 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ~~Yes [ ] No [X]~~

Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [ ] No [X]

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 past 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 [ X ] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ X ]

Thermodynetics, Inc.

Annual Report on Form 10-K

Page 1

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer [ ]		Accelerated filer [ ]
	Non-accelerated filer [ ]		Smaller reporting company [ X ]
	(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 [ X ]~~

AsYes of[ ] No ~~June~~[ 9,X 2010, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $1,900,000 based on the price at which the common equity was last sold, or based on the average of the closing bid and asked prices of such common equity as reported by the Pink OTC Markets' electronic interdealer quotation and trading system: OTCQB or other qualified interdealer quotation medium such as finance.yahoo.com.]

As of July 1, 2011, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $770,000 based on the price at which the common equity was last sold, or based on the average of the closing bid and asked prices of such common equity as reported by the quotation medium finance.yahoo.com.

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

Class	Outstanding as of June 9, ~~2010~~2011
Common Stock $.01 par value	46,~~600~~165,306 Common Shares

2The following documents are incorporated by reference: None.

Thermodynetics, Inc.

Annual Report on Form 10-K

Page 2

PART I

Item 1. Business.

(a) Business Development - Thermodynetics, Inc. (the "Company") was incorporated in Delaware in 1981 and reincorporated by merger in Nevada in 2008.

The Company is engaged in managing its real estate and business holdings, and ~~offering consulting services to, and~~ investing in, other companies. The Company competes with other companies which have been established for a longer period of time, are larger, and possess substantially greater financial resources and substantially larger staffs. No assurances can be given that the Company will be able to successfully compete with such firms. The Company owns two commercial buildings which it leases to two commercial/industrial tenants; the leases ~~expire~~expired on ~~August~~September 3130th, 2010 and March 3131st, 2011. ~~The~~One ~~Company~~tenant ~~does~~extended ~~not~~its ~~anticipate~~lease ~~either~~through ~~tenant~~December ~~renewing~~31st, ~~its~~2011; ~~lease~~see Item 3. The loss and ~~the~~projected loss of ~~both~~its tenants is having and is expected to have a material adverse effect upon the Company. The Company's bank initiated legal proceedings on June 2828th, ~~2010~~2011 against the Company seeking recovery through foreclosure of each of the two commercial buildings; negative outcomes in either of such proceedings will have a material adverse effect upon the Company; see Item 3. The Company listed its two commercial buildings for sale, and the buildings are actively being marketed.

Prior to the May 2006 London initial public offering ("IPO") described below, the Company was principally engaged in the manufacture of spirally fluted metal tubes used for a variety of heat transfer applications through its then subsidiary, Turbotec Products, Inc. ("Turbotec"). After the IPO, Turbotec and its new parent, Turbotec Products Plc (the “PLC"), operated independently of the Company as a requirement of the UK underwriter and as a result of the April 28, 2006 Relationship Agreement (“RA”). The RA became the subject of unsuccessful litigation between the Company and the PLC described in Item 3 herein (the "London judgment"). As of April 12, 2011 an aggregate of 12,806,773 ordinary shares of the PLC were issued and outstanding. At ~~June~~July 281, ~~2010~~2011, the Company owned 32,~~812~~712,407 shares of the PLC, constituting 29approximately 21.7718% of the PLC.

As a result of the London judgment, the Company currently has no revenue producing consulting arrangements; such result has had a material adverse affect upon the Company. The Company has a significant tax loss carryforward, which tax loss carryforward is believed to be of significant value. The Company is seeking a merger partner to utilize the tax loss carryforward.

Turbotec Investment and London IPO

In December 2005, the Company formed the PLC as a 100% owned subsidiary organized in the United Kingdom and contributed 100% of the outstanding shares of Turbotec to the PLC. In 2006 an offering and sale of 43.68% of the PLC was sold through the IPO. On April 26, 2010 the Company sold 3,400,000 of its 7,212,407 ordinary shares of the PLC (the "Sale") reducing its ownership to 3,812,407 ordinary shares of the PLC representing a 29.77% holding in the PLC. The PLC ordinary shares are trading under the symbol “TRBO” on the Alternative Investment Market (“AIM Market”) of the London Stock Exchange. As of April 30, 2010 an aggregate of 12,806,773 ordinary shares of the PLC were issued and outstanding.

Under the terms of the RA, the Company and its directors had agreed to certain limitations of the Company's voting rights. The RA contained provisions whereby Turbotec was to conduct its business independently of the Company, and contained other restrictive provisions which were the subject of the litigation; see Item 3. The RA terminated in accordance with its terms by virtue of the Sale which reduced the Company's holdings in the PLC below 30%.

The Company maintains its registered U.S. trademark "THERMODYNETICS®" and believes such mark to be valuable.

Subsidiaries.

TPI Systems, Inc. ("TPI") and National Energy Systems, Inc. ("NES"), 100% owned subsidiaries, have been dormant with little or no activity for many years. In 2003, the Company ~~financed~~acquired ~~the acquisition of~~ Vulcan Industries, Inc. ("Vulcan") as an operating subsidiary~~. In~~; ~~September,~~its ~~2005,~~operations ~~Vulcan~~were ~~was~~ closed and ~~liquidated. The~~the ~~Company~~assets ~~restructured its debt in November, 2005. A further loan restructuring along with significant debt repayments~~ were ~~made~~liquidated inby ~~May 2006 as a result of the proceeds from the IPO. In December 2006, the Company refinanced~~ its ~~remaining~~secured ~~debt~~lender ~~obligations~~in ~~with its current bank~~2005. ~~See item 1(b)(13).~~

~~The Company does not have majority control over any manufacturing concern~~Thermodynetics, ~~and as such, it has no foreign operations, no inventory, does not export products or services, its present business is not seasonal in nature nor does the Company offer or produce any products~~Inc. The Company does not have any patents. The Company's business does not and is not expected to involve contracts or subcontracts with the United States government. The Company is not conducting any research and development. During the fiscal year ended March 31, 2010, there was no material effect on the business of the Company with respect to its requirements to comply with environmental laws.

AtAnnual ~~June~~Report ~~28, 2010, the Company had 2 salaried employees and 1 part-time employee compensated~~ on anForm ~~hourly basis.~~10-K

~~Working~~Page ~~Capital Items - At March 31, 2010, the Company had a negative working capital position of $4,549,268. See Item 7 herein.~~3

AtTPI ~~March~~was ~~31,~~reincorporated ~~2010,~~in Delaware in May 2011 with the intention of a dividend spin-off by the Company's ~~material~~to ~~credit~~its ~~facilities~~shareholders ~~consisted~~of record as of: July 15, 2011; such dividend spin-off is anticipated to be completed at the end of July 2011. The ~~Company’s~~Board ~~bank~~of ~~has~~Directors ~~provided~~of Thermodynetics on June 29, 2011 approved the spin-off and distribution of a ~~revolving~~dividend ~~line~~to its shareholders of ~~credit~~record ~~dated~~on ~~December~~July ~~21st~~15, ~~2006~~2011 ~~with~~in a ~~maximum~~spin-off ~~credit~~transaction. Those ~~limit~~shareholders who are owners of $at least 1,~~100,~~000; ~~this~~shares ~~revolving~~of ~~line~~Thermodynetics ofcommon ~~credit~~stock ~~provides~~will ~~for~~receive ~~borrowings~~shares of TPI on a ~~demand~~one-for-one ~~basis~~(1:1) ~~with~~pro ~~interest~~rata ~~payable~~basis at the ~~bank’s~~record ~~prime rate~~date. AtAll ~~March~~other ~~31,~~Thermodynetics ~~2010~~shareholders ~~the~~will ~~principal~~receive ~~balance~~a ~~due~~distribution ~~under~~of ~~this~~$0.0002/share ~~line~~for each of ~~credit~~the ~~was~~shares, $1pro rata,~~087,000~~ ~~which~~they ~~matured~~owned of Thermodynetics as of the record date. There is no effect on ~~July~~any ~~31,~~holdings ~~2009~~in Thermodynetics. The ~~bank~~spin-off ~~and~~will ~~the~~occur ~~Company~~through ~~had~~a ~~been~~dividend in ~~discussions~~stock ~~with~~of ~~respect~~TPI towhich ~~repayment~~will orequal ~~further~~at ~~extensions~~least 80% and no more than 85% of the ~~line~~now outstanding shares of ~~credit~~TPI, and Thermodynetics is retaining the remaining shares. ~~The~~TPI ~~bank~~has ~~initiated~~nominal ~~legal~~assets ~~proceedings~~and ontherefore ~~June~~the ~~28,~~shares ~~2010;~~have ~~see~~nominal ~~Item~~value ~~3. The~~and ~~credit~~have ~~facility~~been isvalued ~~secured~~ by the ~~Company’s~~Thermodynetics ~~Day~~Board ~~Hill~~of ~~Road~~Directors ~~facility~~at $0.0002 per share.

The Company does not have majority control over any manufacturing concern, and as such, it has no foreign operations, no inventory, does not export products or services, its present business is not seasonal in nature nor does the Company offer or produce any products. The Company does not have any patents. The Company's business does not and is not expected to involve contracts or subcontracts with the United States government. The Company is not conducting any research and development. During the fiscal year ended March 31, 2011, there was no material effect on the business of the Company with respect to its requirements to comply with environmental laws.

At July 1, 2011, the Company had 2 salaried employees and no employees compensated on an hourly basis.

Working Capital Items - At March 31, 2011, the Company had a negative working capital position of $1,252,400. See Item 7 herein.

At March 31, 2011, the Company's material credit facilities consisted of: the Company’s bank has provided a revolving line of credit dated December 21st, 2006 with a maximum credit limit of $1,100,000; this revolving line of credit provides for borrowings on a demand basis with interest payable at the bank’s prime rate. At March 31, 2011 the principal balance due under this line of credit was $877,000 which matured on July 31, 2009. The bank initiated legal proceedings on June 28th, 2010; see Item 3. The credit facility is secured by the Company’s Day Hill Road facility.

Item 1A. Risk Factors.

Not required for smaller reporting companies.

Item 1B. Unresolved Staff Comments.

~~Not required~~None.

Item 2. Properties.

Facilities:

The Company's executive offices are located at its approximately 55,000 square foot one story building (of which 40,000 sq. ft. was constructed in 1981 and a 15,000 sq. ft. addition was constructed in 2000) on a six acre site located at 651 Day Hill Road, Windsor, Connecticut. The Day Hill facility is a steel frame structure with polystyrene and stucco outer walls, has parking for approximately 115 cars and contains approximately 45,000 square feet of factory space and approximately 10,000 square feet of office space. The Day Hill facility is owned by the Company in fee simple and is subject to a $900,000 mortgage term note for the Day Hill Road facility, payable in 120 equal monthly installments of $3,750 plus interest through December 2016 with the balance due at that time. At March 31, ~~2010~~2011 the interest rate in effect was 7.5% and the unpaid balance was $~~753~~689,~~750~~900. See Notes 10 and 11 of Notes to Financial Statements. The bank initiated legal proceedings on June 2828th, 2010; see Item 3.

4Thermodynetics, Inc.

~~The~~Annual ~~Company~~Report ~~owns in fee simple a light manufacturing multi-purpose facility~~ on ~~approximately~~Form 3.5 acres located at 50 Baker Hollow Road, Windsor, Connecticut, contiguous to the Day Hill site. The Baker Hollow facility was constructed in 1991 and is comprised of a steel frame structure with concrete block outer walls, has parking for approximately 95 cars and contains approximately 28,500 square feet of factory space. The Company's Baker Hollow facility is subject to a $1,000,000 ten year mortgage from its bank which is due August 2011 with an interest rate of 6.9%. At March 31, 2010 the Company owed $746,653 under such mortgage. The bank initiated legal proceedings on June 28, 2010; see Item 3.10-K

Page 4

The Company owns in fee simple a light manufacturing multi-purpose facility on approximately 3.5 acres located at 50 Baker Hollow Road, Windsor, Connecticut, contiguous to the Day Hill site. The Baker Hollow facility was constructed in 1991 and is comprised of a steel frame structure with concrete block outer walls, has parking for approximately 95 cars and contains approximately 28,500 square feet of factory space. The Company's Baker Hollow facility is subject to a $1,000,000 ten year mortgage from its bank which is due August 2011 with an interest rate of 6.9%. At March 31, 2011 the Company owed $712,500 under such mortgage. The bank initiated legal proceedings on June 28th, 2010; see Item 3.

Leases:

The Company,'s ~~as lessor, and Turbotec, as the lessee, entered into~~ two five -year real estate leases ~~effective May 8th, 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~~. The~~ ~~five-year~~terminated ~~term of both leases terminate~~ on March 31st, 2011, ~~with~~and ~~extension~~its ~~options. Rent~~second ~~charges~~lease ~~with~~at ~~respect~~50 toBaker ~~the~~Hollow ~~651 Day Hill~~ Road ~~property~~terminated ~~equaled~~September to30th, ~~seven~~2010. However, ~~dollars~~the ~~per~~Company, ~~square~~as ~~foot~~lessor, ~~in years one~~ and ~~two~~Turbotec, ~~escalating~~as bythe ~~$0.25~~lessee, ~~per~~entered ~~square~~into ~~foot~~a ~~annually~~nine ~~thereafter~~(9) ~~through~~month ~~each~~lease offor ~~the~~fifty-two ~~extension~~thousand ~~terms;~~five ~~monthly~~hundred ~~fixed~~(52,500) ~~rent~~square infeet ~~year~~at ~~one~~the ~~equals~~Day ~~$31,792,~~Hill ~~escalating~~facility toending ~~$36~~December 31st,~~333~~ ~~monthly~~2011; inrent ~~year five. Rent~~ charges ~~with~~are ~~respect~~equal tofive ~~the~~dollars 50per ~~Baker~~square ~~Hollow~~foot; ~~Road~~monthly ~~property~~fixed ~~were~~rent ~~equal~~equals to $521,875.50 In ~~per~~addition ~~square~~to ~~foot~~fixed inrent, ~~year~~the ~~one,~~tenant ~~escalating~~is bypaying ~~$0.25~~common ~~per~~area ~~square~~maintenance ~~foot~~charges, ~~annually~~plus ~~thereafter~~utilities ~~through~~and ~~each~~real ofestate ~~the~~taxes. The ~~extension~~Company ~~terms;~~has ~~monthly~~reserved ~~fixed~~from ~~rent~~the inTurbotec ~~year~~651 ~~one~~Day ~~equals~~Hill $7lease,~~792,~~ ~~escalating~~and continues to $9use,~~208~~ ~~monthly~~its existing executive office space in ~~year~~the ~~five~~Day Hill facility. The ~~Company~~Baker ~~and~~Hollow ~~Turbotec~~leases ~~Products~~expired ~~are~~on ~~currently~~September ~~litigating~~30th, ~~with~~2010 ~~respect~~and toMarch ~~monies~~31st, ~~owed~~2011, and ~~encroachment~~that ~~issues~~rental ~~under~~income ~~the~~aggregated ~~leases. See~~$34,750 ~~Item~~for 3the ~~"Legal~~year ~~Proceedings"~~ended ~~herein~~March 31, 2011. ItThere isare ~~not~~currently ~~anticipated~~no ~~that~~tenants ~~Turbotec~~in ~~will~~the ~~exercise~~Baker ~~either~~Hollow ~~lease extension beyond March 31st, 2011~~facility.

The Company ~~has~~built ~~reserved~~the ~~from~~Day Hill facility and the ~~Turbotec~~Baker ~~Windsor~~Hollow ~~leases,~~facility ~~and~~for ~~continues~~the tooperating ~~use,~~needs of its ~~existing~~then ~~executive~~subsidiary, ~~office~~Turbotec, ~~space~~not for investment purposes. Turbotec is in process of relocating its operations to North Carolina; this leaves the ~~Day~~Company ~~Hill~~without ~~facility,~~its significant and ~~additional~~primary ~~office/storage~~tenant ~~space~~which inhas had a material adverse effect on the ~~Baker~~Company’s ~~Hollow~~revenues and liabilities. The Company is actively seeking a purchaser or tenants for the Day Hill facility. ~~See~~Currently ~~Item~~the 3Baker ~~"Legal~~Hollow ~~Proceedings"~~facility ~~herein~~is also listed for sale with a commercial broker.

The Company is currently leasing approximately 11,500 square feet of the Baker Hollow facility to an unaffiliated third-party with monthly rental of $5,750, triple net which lease will expire August 31, 2010. It is not expected that the tenant will renew such lease beyond August 31, 2010. See Note 10 of Notes to Financial Statements.

The Company built the Day Hill facility and the Baker Hollow facility for the operating needs of Turbotec, not for investment purposes. The stated intention by Turbotec to relocate its operations to North Carolina leaving the Company without its significant and primary tenant will have a material adverse effect on the Company’s revenues and liabilities. The Company is actively seeking a purchaser or tenant for either or both buildings.

Vehicles

The Company has an $83,464 term loan dated December 1, 2006, which is payable in 60 monthly installments of $1,628 including principal and interest at 6.39%. The unpaid balance at March 31, ~~2010~~2011 was $3012,~~943~~725. The note is secured by a vehicle. The Company ~~has~~had a second term loan in the amount of $34,557 dated May 6, 2008, which iswas ~~payable~~paid in 36full ~~monthly~~on ~~installments~~May ~~of $974 including principal and interest at 1%. The unpaid balance at March 31~~4, ~~2010 was $12,631~~2011.

Item 3. Legal Proceedings.

There are no material legal proceedings known or threatened against the Company, except:

5(a) The lawsuit instituted by the Company on January 8, 2008 in England 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 10th, 2010. The net effect of the London judgment held that the Company was required to reimburse the PLC for 85% of the PLC’s legal expenses which the PLC has claimed approximate £795,000; the Company is contesting such amount. On May 24th, 2010 in accordance with the judgment, the Company paid £350,000 to the PLC on account of their costs. The Company could ultimately be responsible for up to an additional £325,000 of legal costs claimed by the PLC, although the Company believes the amount may be substantially less.

(ab) ~~The~~ Turbotec ~~Company's~~Products, ~~bank~~Inc. ~~initiated~~commenced ~~and~~a ~~served~~lawsuit ~~two~~against ~~separate~~Thermodynetics ~~lawsuits~~ on ~~June~~February 2827th, ~~2010~~2008 ~~against the Company~~ in the Connecticut Superior Court, Judicial District of Hartford, alleging ~~defaults~~that ofThermodynetics ~~certain~~breached ~~mortgages of record and seeking recovery through foreclosure of the lien against the~~ two commercial ~~buildings. Negative~~leases, ~~outcomes~~and inthat ~~either~~Thermodynetics ofimproperly ~~such~~withdrew ~~proceedings~~funds ~~will~~from ~~have~~ a ~~material~~sinking ~~adverse~~fund ~~effect~~established ~~upon~~under the ~~Company. The~~leases, ~~Company~~and ~~is current on both primary mortgages~~ for ~~each~~fraudulent ofinducement, ~~the~~fraudulent ~~buildings~~misrepresentation, and isviolation ~~current~~of ~~on its interest payments against~~ the ~~line~~Connecticut ofUnfair ~~credit~~Trade ~~which~~Practices ~~had~~Act. The ~~matured~~parties insettled ~~2009;~~ the ~~default~~lawsuit ~~against such line of credit is that it has matured~~ and ~~has~~on ~~not~~January ~~been~~10th, ~~repaid~~2011 inmutual ~~whole~~releases ~~through~~were ~~refinancing~~exchanged orbetween ~~payment~~Thermodynetics inand ~~full~~Turbotec, ~~thus~~and the ~~bank~~lawsuit ~~has~~was ~~claimed~~dismissed awithout ~~cross-default~~any ~~against~~financial ~~the~~obligation ~~other~~owed ~~mortgages~~to either party. ~~The~~An ~~Company~~outcome ~~believes there is material equity value in the buildings exceeding the value~~ of ~~all of~~ the ~~bank~~settlement ~~debt. The~~was ~~Company~~that ~~intends~~Turbotec toextended ~~defend~~ its ~~rights~~leasehold ~~vigorously,~~interest ~~including~~in ~~seeking a right to sell~~ the ~~buildings~~Day ~~over~~Hill anfacility ~~extended~~through ~~period~~December of31st, ~~time~~2011. ~~Both buildings are currently listed for sale with a commercial real estate broker.~~

~~(b) The lawsuit instituted by the Company on January 8~~Thermodynetics, ~~2008 in the High Court in England, file no~~Inc. 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 the 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.

~~(c) Turbotec~~Annual ~~Products,~~Report ~~Inc. commenced a lawsuit against Thermodynetics~~ on ~~February~~Form 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. 4210-110b, 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 pretrial conference 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.K

~~(d) There~~Page 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.5

~~Item~~(c) The Company's bank initiated and served two separate lawsuits on June 28th, 2010 against the Company in the Connecticut Superior Court, Judicial District of Hartford, alleging defaults of a line of credit and certain mortgages and seeking recovery through foreclosure of the liens against the two commercial buildings. Negative outcomes in either of such proceedings will have a material adverse effect upon the Company. At March 31st, 2011, the Company was current on both primary mortgages and was current on its interest payments against the line of credit which had matured in 2009. The default initially was against the line of credit which has not been repaid and the bank has claimed a cross-default against the mortgages. The Company believes there is material equity in the buildings exceeding the value of all of the bank debt. The current balance due under the line of credit and mortgages equals approximately $2.4 million; the Bank is claiming such balance plus costs and legal expenses of the proceeding. ~~Submission~~ In the event the bank is successful in its foreclosure proceedings and a qualified buyer for the properties is not secured, the loss to the Company could exceed the amounts due under the line of ~~Matters~~credit and mortgages. However, in the event of a strict foreclosure, under Connecticut foreclosure law, a court would apply a fair market value to the properties and buildings based upon a ~~Vote~~then to be appraised value as of ~~Security~~the ~~Holders~~date title vested in the bank; therefore, the likely risk of loss to the Company would be the loss of the land and buildings but not further financial deficiency claims. Both properties are currently listed for sale with a commercial real estate broker, and management would also consider any long-term lease opportunities.

NoItem ~~matters~~4. Removed ~~were~~and ~~submitted to a vote of the securities holders of the Company during the fourth quarter of the fiscal year for which this report is filed~~Reserved.

Reserved.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market for Common Equity and Related Stockholder Matters

(a) The Company's Common Stock is quoted and traded in the over-the-counter market on the Pink OTC Markets' electronic interdealer quotation and trading system system: OTCQB under the symbol: "TDYT".

6The following table indicates high and low bid and asked quotations for the Company's Common Stock for the April 1, 2009 through March 31, 2011 periods based upon information obtained from finance.yahoo.com and represent prices between dealers and do not include retail mark-up, mark-down or commissions; and may not represent actual transactions.

(i) The following table indicates high and low bid and asked quotations for the Company's Common Stock for the April 1, 2009 through March 31, 2010 periods based upon information obtained from finance.yahoo.com and represent prices between dealers and do not include retail mark-up, mark-down or commissions; and may not represent actual transactions. (ii) The following table indicates high and low bid and asked quotations for the Company's Common Stock for the April 1, 2008 through March 31, 2009 periods based upon information compiled by the Pink OTC Markets, Inc. and represent prices between dealers and do not include retail mark-up, mark-down or commissions; and may not represent actual transactions.

Quarter Ended	High Price		Low Price

March 31, 2011	$	0.75	$	0.20
December 31, 2010	$	0.98	$	0.10
September 30, 2010	$	1.10	$	0.32
June 30, 2010	$	1.10	$	0.80

Quarter Ended	High Price		Low Price

March 31, 2010	$	1.20	$	0.30
December 31, 2009	$	1.35	$	0.30
September 30, 2009	$	0.95	$	0.26
June 30, 2009	$	1.01	$	0.20

Quarter Ended	High Price		Low Price
March 31, 2010	$	1.20	$	0.30
December 31, 2009	$	1.35	$	0.30
September 30, 2009	$	0.95	$	0.26
June 30, 2009	$	1.01	$	0.20

----------------------

	Bid Prices				Asked Prices
Quarter Ended	High		Low		High		Low
March 31, 2009	$	0.30	$	0.20	$	1.01	$	0.50
December 31, 2008	$	0.75	$	0.30	$	2.25	$	0.40
September 30, 2008	$	1.45	$	0.68	$	1.50	$	1.30
June 30, 2008	$	1.79	$	1.01	$	1.93	$	1.35

(b) At March 31, 2011, the number of record holders of the Company's Common Stock was 2,149.

(bc) AtThe ~~March~~Company ~~31,~~has ~~2010,~~not paid any dividends on the ~~number~~Common Stock since inception. The Board declared the issuance of a dividend to shareholders of record ~~holders~~July 15, 2011 in the form of common stock of one of its non-operating subsidiaries to the Company's ~~Common~~shareholders ~~Stock~~holding ~~was~~1,000 shares or more, and a nominal cash dividend to the Company's shareholders holding less than 1,~~797~~000 shares of the Company's Common Stock.

~~(c) The~~Thermodynetics, ~~Company has not paid any dividends on the Common Stock since inception and does not expect to pay any dividends in the foreseeable future~~Inc.

Annual Report on Form 10-K

Page 6

(d) Securities Authorized for Issuance under Equity Compensation Plans. The following table sets forth as of the end of the most recently ended fiscal year, compensation plans under which equity securities of the Company are authorized for issuance:

Plan Category	(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights		(b) Weighted - average exercise price of outstanding options, warrants and rights	~~(b) Weighted - average exercise price of outstanding options, warrants and rights~~		(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))	~~(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))~~
Equity Compensation Plans Approved by Shareholders:	0	0	0		0	200,000		0
Equity Compensation Plans Not Approved by Shareholders:	0	0	0		0	0		0
Total	0	0	0		0	200,000		0

(e) Recent Sales of Unregistered Securities - The Company has not made any sales of any unregistered securities within the past three (3) years ~~other than shares sold under the Company’s 401(k) plan~~. ~~The exemption from the registration requirements of Section 5 of the Securities Act of 1933 claimed was under §4(2) of the Act not involving a public offering.~~

Item 6. Selected Financial Data.

Not required for smaller reporting companies.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations

2011 Compared to 2010

Income in both 2010 and 2011 resulted from rental income. One tenant’s lease terminated in the 2010 and the other (Turbotec) continued through fiscal year end, March 2011. For the period beginning April 2011, Tubotec vacated one building (which continues to be vacant) and signed a lease for a short term ending December 31, 2011 for the main facility. Both buildings are being marketed for sale.

The Company is engaged in managing its real estate and business holdings, and investing in other companies. In addition in June 2011 the Company acquired the rights to a software program that is to be marketed in the wagering industry. The software is designed to assist individuals in selecting winning wagers in horse racing events.

The Company disposed of a portion of its holdings in Turbotec and now owns approximately 21% of that company. Net proceeds of approximately $1.8 million were received and used to pay litigation costs and certain accounts payable. In addition, the Company made a number of adjustments to its investment portfolio and both purchased and sold securities. As a result of the sale of these securities, the Company has classified its holdings as marketable securities as the Company does not have any significant influence over the entity. The 2010 treatment is shown as equity in earnings, while the 2011 is recorded as other comprehensive income (loss). In 2010, an impairment loss was recorded in the amount of $2.6 million against the Turbotec holding.

The Company recorded a loss before extraordinary items in both fiscal 2010 and 2011. Operating expenses increased in fiscal 2011 because of legal costs involved in litigation; one case was settled and the second resulted in a decision partially in favor of the opposition obligating the Company to pay Turbotec’s legal expenses which claim approximates £795,000; the Company is contesting such amount.

Thermodynetics, Inc.

Annual Report on Form 10-K

Page 7

During fiscal 2011, the effect of closing of Vulcan in 2005 was reflected in the financial statements wherein Vulcan’s $2.8 million of debts were written off as all secured creditors had been satisfied and unsecured Vulcan creditors passed the statute of limitations, resulting in a gain of $1.6 million (net of tax) which is shown as an extraordinary item.

2010 Compared to 2009

The Company is engaged in managing its real estate and business holdings, offering consulting services to, and investing in, other companies. The Company competes with other companies which have been established for a longer period of time, are larger, and possess substantially greater financial resources and substantially larger staffs. No assurances can be given that the Company will be able to successfully compete with such firms.

Income resulted from rental income in fiscal 2010.

Operating expenses increased ~~during~~in ~~these~~2010 ~~periods~~vs. 2009 reflecting primarily the legal costs involved in the litigation regarding the interpretation of the relationship agreement that was required to consummate the London IPO of Turbotec in May 2006.

The equity in earnings of Turbotec Products Plc (the Plc) ~~derives~~was derived from the 56.32% ownership by the Company of the Plc shares. Additionally, an impairment of $2.6 million was recorded against the Turbotec investment. The sale of one of the Company’s other holdings in an unaffiliated entity was realized in fiscal 2009.

The Company recorded a loss in fiscal 2009 primarily as a result of increased operating expenses and the reduced equity in the earnings of the PLC, partially offset by the sale of the stock of an unaffiliated company. The loss in 2010 was caused primarily by litigation expenses and the normal operating expenses of the Company.

Rental income derives from the two buildings located in Windsor, CT that ~~are~~were ~~currently~~ rented in the years ended 2010 and 2009. The current tenants are not expected to renew their leases and the properties are being offered for sale or rent, although there can be no assurance that a sale or rental will be consummated, nor if it is able to do so, the financial effect of such transactions, if any.

The Company is seeking other organizations that could be interested in obtaining assistance through consulting assignments 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. There can be no assurance that the Company will be able to consummate such opportunities.

2009 Compared to 2008

Income resulted from consulting fees earned and rental income in fiscal 2009 and 2008 in roughly equal amounts.

The equity in earnings of Turbotec Products, Plc derives from the 56.32% holding of that company’s shares. The sale of the 43.68% interest in the PLC is reflected in 2007 while the sale of one of the Company’s holdings in an unaffiliated entity was realized in 2009.

The Company recorded net income in fiscal 2008 primarily as a result of the equity in the increased earnings of Turbotec Products, Plc and a loss in fiscal 2009 primarily as a result of increased operating expenses and the reduced equity in the earnings of the PLC, partially offset by the sale of the stock of an unaffiliated company.

Rental income derives from the two buildings located in Windsor CT that are currently rented. While the current tenants are not expected to renew their leases in 2010 as to a lease at a rental of $5,750 per month and 2011 as to leases at an aggregate rentals of $45,542 per month, the properties are being offered for sale or rent, although there can be no assurance that the Company will be able to rent or sell such properties, or if it is able to do so, the amount that will be received as a result.

The Company is seeking other organizations that could be interested in obtaining assistance in consulting and management of their organizations. Such opportunities are possible from a modular building manufacturer that is currently seeking financing and other firms that have approached the Company’s management on a preliminary basis. There can be no assurance that the Company will be able to consummate such opportunities as a result of the generally weak economy and the lack of credit available through banks.

FINANCIAL ACCOUNTING STANDARDS

In June ~~2009~~2011, the Financial Accounting standards Board (“FASB”) issued ~~the~~ASU ~~ASC~~No. ~~which~~2011-05, ~~has~~Comprehensive ~~become~~Income ~~the~~(Topic ~~single~~220): ~~source~~Presentation of ~~accounting~~Comprehensive ~~principles~~Income, ~~generally~~or ~~accepted~~ASU 2011-05. The amendments in ~~the~~this ~~United~~ASU ~~States~~require ~~(“GAAP”)~~an ~~recognized~~entity byto present the ~~FASB~~total inof comprehensive income, the ~~preparation~~components of ~~financial~~net ~~statements. The~~income, ~~ASC~~and ~~does~~the ~~not~~components ~~supersede~~of ~~the~~other ~~rules~~comprehensive orincome ~~regulations~~either ofin ~~the~~a ~~Securities~~single ~~and~~continuous ~~Exchange~~statement ~~Commission~~of ~~(“SEC”),~~comprehensive ~~therefore,~~income ~~the~~or ~~rules~~in ~~and~~two ~~interpretive~~separate ~~releases~~but ofconsecutive ~~the~~statements. ASU ~~SEC~~2011-05 ~~continue~~eliminates the option to bepresent ~~additional~~the ~~sources~~components of ~~GAAP~~other ~~for~~comprehensive income as part of the ~~Company~~statement of equity. ~~The~~ASU2011-05 ~~Company~~is ~~adopted~~effective ~~the~~for ~~ASC~~fiscal asyears, ofand ~~August~~interim 1periods within those fiscal years, ~~2009~~beginning ~~and~~on ~~has~~or ~~replaced~~after ~~all~~December ~~FASB~~15, ~~references~~2011, with ~~ASC~~early ~~references~~adoption permitted. We ~~The~~are ~~ASC~~currently ~~does~~evaluating ~~not~~the ~~change~~impact ~~GAAP~~of ~~and~~our ~~did~~pending ~~not~~adoption ~~have~~of anASU ~~effect~~2011-05 on ~~the~~our ~~Company’s~~ consolidated financial statements.

In May ~~2009~~2011, the FASB issued ~~guidance~~ASU ~~which~~2011-04, ~~is included in ASC 855~~ “~~Subsequent~~Amendments ~~Events”~~to ~~(“ASC~~Achieve ~~855”). ASC~~Common ~~855~~Fair ~~establishes~~Value ~~general~~Measurement ~~standards of accounting for~~ and ~~disclosure~~Disclosure ofRequirements ~~events~~in ~~that~~U. ~~occur~~S. ~~after~~GAAP ~~the~~& ~~balance~~IFRS,” ~~sheet~~which ~~date~~results ~~but~~in ~~before~~common ~~the~~fair ~~financial~~value ~~statements~~measurement ~~are~~and ~~issued~~disclosure orrequirements ~~are~~in ~~available~~U.S. toGAAP beand ~~issued~~IFRS. Consequently, ~~Although~~ the ~~standard~~amendments ischange ~~based on~~ the ~~same~~wording ~~principles~~used asto ~~those~~describe ~~that~~many ~~previously~~of ~~existed~~the ~~for~~requirements ~~subsequent~~in ~~events,~~U.S. itGAAP ~~included~~for ameasuring ~~new~~fair ~~required~~value ~~disclosure~~and offor ~~the~~disclosing ~~date~~information ~~through~~about ~~which~~fair anvalue ~~entity has evaluated subsequent events~~measurements. ASU ~~The~~2011-04 ~~Company~~is ~~adopted~~effective ~~the~~for ~~guidance~~interim inand ~~the~~annual ~~first~~periods ~~quarter~~beginning ofafter ~~fiscal~~December ~~year~~15, ~~2010~~2011. The ~~and the~~ adoption ~~did~~is not expected to have a ~~significant~~material impact on ~~the~~our ~~Company’s consolidated~~ financial statements. ~~We have evaluated subsequent events through the date that the financial statements are issued.~~

~~In August 2009~~Thermodynetics, ~~the FASB issued Accounting Standards Update (“ASU”) 2009-05, “Fair Value Measurements and Disclosures (Topic 820): Measuring Liabilities at Fair Value” ("ASU 2009-05")~~Inc. ASU 2009-05 provides clarification to entities that measure liabilities at fair value under circumstances where a quoted price in an active market is not available. The Company adopted ASU 2009-05 as of November 1, 2009. The adoption did not have a significant impact on the Company’s consolidated financial statements.

InAnnual ~~January~~Report 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”). ASU 2010-06 provides amendments to ASC 820 by requiring new disclosures for transfers in and out of Levels 1 and 2 of the fair value measurement hierarchy, and expands disclosures related to activity in Level 3 fair value measurements. ASU 2010-06 also clarifies existing disclosures on ~~the~~Form level of detail required for assets and liabilities measured at fair value from their respective line items on the statement of financial position, and the valuation techniques and inputs used in fair value measurements that fall within Level 2 or Level 3 of the fair value hierarchy. ASU 201010-06 is effective for the Company as of May 1, 2010. Since the revised guidance only requires additional disclosures about the Company’s fair value measurements, its adoption will not affect the Company’s financial position or results of operations.K

9Page 8

In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”). ASU 2010-06 provides amendments to ASC 820 by requiring new disclosures for transfers in and out of Levels 1 and 2 of the fair value measurement hierarchy, and expands disclosures related to activity in Level 3 fair value measurements. ASU 2010-06 also clarifies existing disclosures on the level of detail required for assets and liabilities measured at fair value from their respective line items on the statement of financial position, and the valuation techniques and inputs used in fair value measurements that fall within Level 2 or Level 3 of the fair value hierarchy. ASU 2010-06 was effective for the Company as of May 1, 2010. We adopted the standard of this pronouncement, which did not have a material impact on our financial statements.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s working capital position was a negative ~~$4,549,268~~ at March 31, 2010 and 2011. It is anticipated that ~~in the~~ future working capital will be generated by the sale of assets ~~or from consulting assignments~~ and through rents, although no assurance can be given that these efforts will be successful.

~~The~~At July 13, 2009, the Company’s line of credit was due to be repaid in July 2009 and ~~discussions with~~ the lender ashas ~~to repayment and extension had been pursued by the Company. However, the Company's bank~~ initiated ~~legal proceedings on June 28, 2010 against the Company seeking recovery through~~ foreclosure ~~of the two commercial buildings; negative outcomes in either of such~~ proceedings ~~will have a material adverse effect upon the Company; see Item 3~~.

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

~~Management~~The ~~believes~~Company ~~that~~anticipates ~~actions~~collection ~~taken~~of ~~since~~rents, ~~fiscal~~to ~~year~~be ~~end,~~applied ~~along~~against ~~with~~ its ~~plans~~defaulted tobank ~~raise~~loans, ~~cash~~ through ~~the~~December ~~sale of long-term assets~~31, ~~are expected to satisfy going concern issues for the forseeable future~~2011. ~~However,~~The itCompany iscurrently ~~acknowledged~~does ~~that~~not ~~there~~have ~~can~~any beexisting noprospects ~~assurance that the Company will be able~~ to ~~timely~~lease ~~resolve~~its ~~those~~facilities ~~issues~~in 2012.

Considerations regarding Forward-Looking Disclosures.

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 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not required for smaller reporting companies.

Item 8. Financial Statements and Supplementary Data.

Attached, following Item 15.

Thermodynetics, Inc.

Annual Report on Form 10-K

Page 9

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

No change in the Company’s principal independent accountants occurred during the Company’s two most recent fiscal years or any subsequent interim period, nor did any disagreements occur with the Company’s accountants on any matter of accounting principles or practices or financial statement disclosure that would require a current report on Form 8-K.

10Item 9A. Controls and Procedures.

Item 9A(T). Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures -

The Company’s principal executive and principal financial officers believe, based on their evaluation, that as of March 31, ~~2010~~2011 the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) were effective tosuch ~~provide~~that the material information required to be disclosed by the Company in reports that it files or submits under the Exchange Act within the specified time periods under the Exchange Act and such information is: (i) recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms, and (ii) accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding disclosure.

(b) Management’s Annual Report on Internal Control Over Financial Reporting –

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as such term is defined in ~~Exchange Act~~ Rule 13a-15(f) under the Exchange Act. Under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, an evaluation of the effectiveness of our control over financial reporting was conducted based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the evaluation under the framework, management has concluded that the Company’s internal control over financial reporting was effective as of March 31, ~~2010~~2011.

~~This~~Attestation ~~annual~~reports ~~report does not include an attestation report~~ of the Company’s registered public accounting firm regarding internal control over financial reporting~~. Management’s~~ ~~report~~are ~~was~~ not ~~subject~~required tofor ~~attestation~~smaller byreporting ~~the Company’s registered public accounting firm~~companies, ~~pursuant~~therefore tono ~~temporary~~attestation ~~rules~~report ofis ~~the Securities and Exchange Commission, that permit the Company to provide only Management’s Report in this annual report~~included.

There were no changes made and no corrective actions taken during the fourth quarter of the most recent fiscal year 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.

Item 99B.B. Other Information.

Not applicable.

11Thermodynetics, Inc.

Annual Report on Form 10-K

Page 10

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

(a) At ~~June~~July 91, ~~2010~~2011 the executive officers and directors of the Company were:

Name	Born	Position	Officer or Director Since

John F. Ferraro	1934	Chairman of the Board, Treasurer, Chief Financial Officer, and Secretary	1979
Robert A. Lerman	1935	President, Chief Executive Officer and Director	1979
John J. Hughes	1926	Director	2003

Retired Directors

Fred H. Samuelson 1931 Director 2003-2010

The directors of the Company are each elected to one-year terms. The term of each director and officer expires when his successor is elected and qualified.

The following is a brief account of the business experience of each director and executive officer of the Company during the past five years.

John F. Ferraro holds the degree of Bachelor of Science in Industrial Engineering, New York University (1962). In 1979, Mr. Ferraro was elected Secretary and a Director of the Company. In 2006 Mr. Ferraro was elected Treasurer and Chief Financial Officer of the Company. Since 1981, Mr. Ferraro has been Chairman of the Board of the Company. Mr. Ferraro was appointed a Director of Initio, Inc. in 2003. See Item 13 “Certain Relationships”.

Qualifications: Mr. Ferraro has over 30 years of management and operating experience with the Company. Based on his current role as Chairman of the Company and his history with the Company and the industry, Mr. Ferraro provides the Board with skillful leadership and in-depth industry knowledge.

Robert A. Lerman holds the degrees of Bachelor of Mechanical Engineering, College of the City of New York (1957), Master of Science in Mathematics, Adelphi College (1961), and Master of Science in Electrical Engineering, University of Connecticut (1964). In 1979, Mr. Lerman was elected Treasurer and a Director, in 1980 President of the Company and was appointed Chief Executive Officer in 2002. Mr. Lerman co-authored the text book, Nonlinear Systems Dynamics, which was published in 1992 by Van Nostrand Reinhold, New York, New York. ~~In 1998~~ Mr. Lerman ~~became~~served as a Director of Bio Minerals n.v.; hefrom ~~resigned~~1998 ~~such~~into ~~position in~~ 2009. Mr. Lerman was appointed in June 2008 as Chairman and a director of Tower Acquisitions Limited; he resigned such position in January 2010. Mr. Lerman was appointed in February 2009 as president, CEO and a director of Tower Structures, Inc. and resigned in 2010. See Item 13 “Certain Relationships”.

Qualifications: Mr. Lerman has over 30 years of management and operating experience with the Company. Based on his current role as CEO of the Company and his history with the Company and the industry, Mr. Lerman provides the Board with skillful leadership and in-depth industry knowledge.

John J. Hughes was appointed a Director of the Company in 2003. Mr. Hughes was the founder, and served from 1970 through 1990 as the president and chief executive officer of East Windsor Metal Fabricating Inc.; Mr. Hughes continues to provide services on a consulting basis to that company.

Qualifications: Mr. Hughes has over 30 years of management and operating experience with his company in the metal fabrication industry. Based on his current role as a director and his history with the Company and the industry, Mr. Hughes strengthens the Board’s collective knowledge and capabilities.

~~Fred H. Samuelson retired from his directorship on March 31~~Thermodynetics, ~~2010~~Inc.

Annual Report on Form 10-K

Page 11

(d) Certain Legal Proceedings of Directors or Officers. The Company knows of no legal proceedings pending or threatened or judgments entered against any director, director nominee, or officer of the Company or of any of its subsidiaries as specified in the rules of the Securities and Exchange Commission (the “SEC”).

(e) Audit Committee and Audit Committee Financial Expert.

Audit Committee. The Audit Committee consists of John J. Hughes who is an independent member of the Board of Directors. The Audit Committee has the responsibility to ascertain that the Company's financial statements reflect fairly the financial condition and operating results of the Company and to appraise the accounting and operating controls. The Audit Committee is to (i) serve as an independent and objective party to monitor the Company's financial reporting process and internal control system, (ii) review and appraise the audit efforts of the Company's independent auditors, (iii) review and confirm the Company’s financial statements contained in filings with the SEC, (iv) review and confirm matters relating to the examination of the Company by its independent auditors, (v) review the use and security of the Company’s liquid assets through the review of the Treasurer’s function, (vi) reassess its charter annually and recommend any proposed changes to the Board for approval, and (vii) recommend the appointment of independent auditors to the Board of Directors for its consideration and approval. The above responsibilities of the Audit Committee are set forth in a written charter, which is included as Exhibit 99.a to this report.

During fiscal ~~2010~~2011, the Company did not have an “Audit Committee Financial Expert” serving on the Audit Committee because the Audit Committee members did not qualify as such under the rules of the SEC. In 2005, the Audit Committee engaged Mr. David S. Federman ~~and~~who ~~he has since~~ served as a financial expert advisor to the Committee until February 2011. Mr. Federman is a certified public accountant, and is senior partner of the accounting firm of Federman, Lally & Remis. Mr. Federman ~~has~~had ~~experience~~served ~~in financial and tax matters. Mr. Federman is independent and meets the requirements to qualify~~ as an ~~Audit Committee Financial Expert; Mr. Federman serves as an~~ advisor but hewas isnever ~~not~~ a member of the Audit Committee.

Senior Officer Code of Ethics

The Company’s Code of Business Conduct (the "Code") includes a code of ethics (the "Senior Officer Code of Ethics") that applies to the Company's Chief Executive Officer and senior financial officers (including the Company's Chief Financial Officer, Controller and persons performing similar functions) (collectively, the "Senior Financial Officers"). The Company will provide a copy of the Senior Financial Officer Code of Ethics, without charge, upon written request to the Office of the Treasurer at the Company.

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely on a review of the forms submitted to the Company during and with respect to the most recent fiscal year, the Company is not aware that any report required by §16(a) of the Exchange Act to be filed by any director, officer or principal shareholder that was not filed on a timely basis, except Robert A. Lerman, John F. Ferraro, and John H. Hughes each did not file on a timely basis one Form 4 which reported one transaction for each.

Item 11. Executive Compensation.

(a)-(b) Summary Compensation Table - The following table sets forth on an accrual basis for the most recently ended two fiscal years, the remuneration of each of the Company's officers whose remuneration exceeded $100,000.

13Thermodynetics, Inc.

SUMMARY COMPENSATION TABLE
Name & Principal Position	Year (1)	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compen- sation ($)	Non-qualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Thermodynetics
Robert A. Lerman(1) President, CEO & Director	2010	208,659	0	75,000	0	0	0	5,390	289,049
	2009	276,553	0	0	0	0	0	6,087	282,640
John F. Ferraro (1) Chairman of the Board, Treasurer and CFO, Secretary & Director	2010	157,410	0	37,500	0	0	0	2,762	197,672
	2009	208,628	0	0	0	0	0	6,089	214,717

Annual Report on Form 10-K

~~Notes:~~Page 12

(1) See (1) in sub-item (c) Narrative Disclosure to Summary Compensation Table.

SUMMARY COMPENSATION TABLE
Name & Principal Position	Year (1)	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compen- sation ($)	Non-qualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Thermodynetics
Robert A. Lerman(1) President, CEO & Director	2011	266,760	0	10,000	0	0	0	5,831	282,591
	2010	208,659	0	75,000	0	0	0	5,390	289,049
John F. Ferraro (1) Chairman of the Board, Treasurer and CFO, Secretary & Director	2011	200,521	0	10,000	0	0	0	2,563	213,084
	2010	157,410	0	37,500	0	0	0	2,762	197,672

Notes: (21) See (21) in sub-item (c) Narrative Disclosure to Summary Compensation Table.

(1) Messrs. Lerman and Ferraro each entered into five-year employment contracts with the Company which were extended in 2009 through March 31st, 2014. Each employment contract provides for a basic annual salary for Mr. Ferraro and for Mr. Lerman of $208,000 and $276,000 respectively at April 1st, 2009 with an annual increase at April 1st of each year based on increases in the Consumer Price Index for all Urban Consumers for the New York, New Jersey, and Connecticut Region. Each employment contract requires the Company to provide medical insurance coverage for the employee as well as $50,000 of group term insurance, and $65,000 annual expense reimbursement of additional insurance of each employee's selection. In addition, each employment contract contains a provision providing that in the event of disability, the employee will receive disability payments equal to the annual salary of the employee for five years (with proportional reductions in the event of partial disability) and that the employee will receive $6,500 per year for tax planning services. The contract may be terminated by the employee on 120 days prior written notice. The ~~contract~~contracts may also be terminated by the Company in which event the respective employee will be paid termination compensation equal to each employee's then current salary for five years; in the event there is a change in control of the Company and the employee is terminated, the employee shall receive twice the amount of compensation as termination compensation which would otherwise be due. Further, the employee may opt to terminate the employment contract and shall be paid a lump-sum equal to 12 months' basic salary.

However, the Compensation Committee had requested, and Messrs. Ferraro and Lerman agreed, to reduce their respective salaries twenty-five (25%) percent from April 11st, 2009 through March 3131st, 2010, and in consideration of such cash deferrals such committee recommended that a stock bonus award of 150,000 and 300,000 shares to those two officers, respectively, be issued; both stock bonuses were issued in August 2009.

~~(2)~~Stock ~~Remuneration~~bonuses –of ~~For~~150,000 ~~the~~and ~~fiscal~~300,000 ~~year~~shares ~~ending~~to ~~March~~the 31two officers, ~~2011~~respectively, ~~the~~were ~~Company~~issued ~~anticipates~~in ~~paying~~August ~~aggregate~~2009. On ~~direct~~February ~~remuneration~~15th, ~~(based~~2011, onthe ~~current~~Company's ~~salaries)~~Board of ~~approximately~~Directors ~~$375,000~~awarded tostock ~~all~~bonuses ~~officers~~effective asMarch a15th, ~~group~~2011 ~~(two~~of ~~persons)~~750,000 shares of ~~which~~common ~~Mr.~~stock ~~Lerman~~of ~~will~~the beCompany ~~paid~~to ~~approximately~~each ~~$225,000,~~of ~~and Mr~~Messrs. Ferraro ~~will~~and ~~be paid approximately $150,000~~Lerman.

14Thermodynetics, Inc.

Annual Report on Form 10-K

Page 13

(2)

Remuneration – For the fiscal year ending March 31, 2012, the Company anticipates paying aggregate direct remuneration (based on current salaries) of approximately $125,000 to all officers as a group (two persons) of which Mr. Lerman will be paid approximately $75,000 plus the remaining amounts owed under the existing employment agreement will be accrued as an obligation of the Company, and Mr. Ferraro will be paid approximately $50,000 plus the remaining amounts owed under the existing employment agreement will be accrued as an obligation of the Company.

(d) Outstanding Equity Awards at Fiscal Year-End

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
	~~Option Awards~~	Option Awards				~~Stock Awards~~										Stock Awards
Name	~~Number of Securities Underlying Unexercised Options (#) Exercisable~~	Number of Securities Underlying Unexercised Options (#) ~~Unexercisable~~Exercisable	~~Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)~~	~~Option Exercise Price ($)~~	~~Option Expiration Date~~	Number of ~~Shares~~Securities orUnderlying ~~Units~~Unexercised ~~That~~Options ~~Have Not Vested~~ (#) Unexercisable	~~Market Value of Shares or Units That Have Not Vested ($)~~	~~Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)~~	~~Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)~~	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expira-tion Date		Number of Shares or Units That Have Not Vested (#)		Market Value of Shares or Units That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Robert A. Lerman	0	0	0	0	0	0	0	0	0
John F. Ferraro			0				0				0		0		0		0		0		0		0
John F. Ferraro	0	0	0	0	0	0	0	0	0
Robert A. Lerman			0				0				0		0		0		0		0		0		0

2002 Incentive Stock Option Plan - On October 22nd, 2002, the Company's stockholders approved the adoption of the Company's 2002 Incentive Stock Option Plan (the "2002 ISO Plan") reserving 100,000 shares (on a post-split basis) of the Company's Common Stock for issuance pursuant to incentive stock options (“ISOs”) qualified under the U.S. Internal Revenue Code of 1986 which may be granted under the 2002 ISO Plan at exercise prices at least equal to 100% of the fair market value of the Common Stock on effective date of the grant of the option.

~~At March 31, 2010 and at June 9, 2010 no ISOs under the 2002 ISO Plan were outstanding.~~ No options under the 2002 ISO Plan were granted or outstanding in fiscal year ended March 31, ~~2010~~2011. The 2002 ISO Plan ~~will~~expires ~~expire~~ on July 31st, ~~2012~~2013.

2002 Non-Qualified Stock Incentive Plan - On October 22nd, 2002, the Company's stockholders approved the adoption of the Company's 2002 Non-Qualified Stock Incentive Plan ("2002 NQ Plan") reserving 100,000 shares (on a post-split basis) of the Company's Common Stock for issuance pursuant to the 2002 NQ Plan in the form of stock options, stock bonus, or stock appreciation rights ("SAR"). The purchase price for the exercise of shares subject to any option shall not be less than 33.33% of the fair market value ("FMV") of the shares of common stock of the Company on the effective date of the option and in no event shall be less than the par value of the common stock; the value of the shares subject to any bonus shall be equal in value to a fixed dollar amount and such value shall not be less than 33.33% of the FMV of the shares of common stock of the Company on the effective date of the bonus and in no event shall be less than the par value of the common stock; the value of an SAR award of stock is equal to or less than (as the Board may determine) the excess of the FMV of one share of stock on the date of the exercise of the SAR less the FMV of one share of stock on the effective date of the award, the result of which is multiplied by the number of shares with respect to which the SAR shall have been exercised.

No stock incentive awards were issued or outstanding under the 2002 NQ Plan in fiscal year ended March 31, ~~2010~~2011. The 2002 NQ Plan will expire on December 31, ~~2012~~2013.

~~(e) Additional Narrative Disclosure – See Item 11(b) with respect to certain employment contracts~~Thermodynetics, ~~and retirement and termination benefits provided to the executive officers of the Company~~Inc. ~~See Item 11(g) with respect to the Company’s employee 401(k) retirement savings plan.~~

15Annual Report on Form 10-K

~~(f) Directors’~~Page ~~Compensation – During the fiscal year ended March 31, 2010, the Company’s nonexecutive and nonemployee directors were compensated as shown in the following table.~~14

DIRECTOR COMPENSATION
Name	Fees Earned or Paid in Cash ($)	Stock Award ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
John J. Hughes (1)	3,500	1,250	0	0	0	0	4,750
Fred H. Samuelson(1) (2)	3,500	1,250	0	0	0	0	4,750

(e) Additional Narrative Disclosure – See Item 11(c) with respect to certain employment contracts, and retirement and termination benefits provided to the executive officers of the Company. See Item 11(g) with respect to the Company’s employee 401(k) retirement savings plan.

~~Note~~ (1f)~~: Each~~ Directors’ ~~independent~~Compensation ~~director~~– ~~receives~~During anthe ~~annual~~fiscal ~~retainer~~year ofended $5March 31,~~000~~ 2011, ~~$500~~the ~~for~~Company’s ~~each~~nonexecutive ~~Board meeting attended~~ and ~~$500~~nonemployee ~~for~~directors ~~each~~were ~~committee~~compensated ~~meeting~~as ~~attended,~~shown ~~and~~in ~~an annual stock award of 5,000 shares of~~ the ~~Company's~~following ~~common stock~~table.

Note (2): Mr. Samuelson retired effective March 31, 2010.

DIRECTOR COMPENSATION
Name	Fees Earned or Paid in Cash ($)		Stock Award ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
John J. Hughes (1)		0		667		0		0		0		0		667

Note (g1) ~~Employee~~: Each ~~Retirement~~independent ~~Savings~~director ~~Plans~~receives -an ~~The~~annual ~~Company~~retainer ~~made~~bonus noof ~~contributions to the Thermodynetics~~$5,000, ~~Inc.~~$500 ~~401(k)~~for ~~Profit-Sharing~~each ~~Plan~~Board ~~(the~~meeting ~~"TDYT~~attended ~~401(k)~~and ~~Plan")~~$500 for ~~the~~each ~~plan~~committee ~~year~~meeting ~~ending December 31~~attended, ~~2009. The~~and ~~assets~~an ofannual ~~the~~stock ~~TDYT~~award ~~401(k)~~of ~~Plan~~5,000 ~~are~~shares ~~held~~of ~~in trust for~~ the ~~exclusive~~Company's ~~benefit~~common ofstock. The ~~the~~annual ~~participants~~stock byaward ~~the trustees~~ of ~~the Plan~~5,000 ~~Messrs.~~shares ~~Hughes~~for 2010 and ~~Lerman. The~~2011 ~~Company~~was ~~intends~~included toin ~~terminate~~the ~~this~~50,000 ~~plan~~share ~~and~~stock; ~~distribute~~see ~~its~~Note ~~assets among its plan participants~~(2).

Note (h2) ~~Other~~: On ~~Plans~~February ~~and~~15th, ~~Employment~~2011, ~~Contracts~~the ~~- The~~ Company's ~~does~~Board ~~not~~of ~~have~~Directors ~~any~~awarded ~~other~~a ~~pension~~stock orbonus ~~similar~~effective ~~plan. See~~March ~~Item~~15th, ~~11(a)~~2011 atof ~~footnotes~~50,000 ~~(1)~~shares ~~and~~of ~~(3)~~common ~~therein~~stock asof to the Company's ~~employment~~to ~~contracts with Messrs~~Mr. ~~Lerman and Ferraro which provide for the terms of their compensation and disability and termination payment provisions~~Hughes.

(g) Employee Retirement Savings Plans - The Company made no contributions to the Thermodynetics, Inc. 401(k) Profit-Sharing Plan (the "Plan") for the plan year ending December 31, 2010; the Plan was terminated at December 31, 2010 and all of the Plan assets were distributed to the Plan participants.

(h) Other Plans and Employment Contracts - The Company does not have any other pension or similar plan. See Item 11(c) as to the Company's employment contracts with Messrs. Lerman and Ferraro which provide for the terms of their compensation and disability and termination payment provisions.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth, as of June 9, ~~2010~~2011, the number of shares of the Company's Common Stock owned beneficially, to the knowledge of the Company, by each beneficial owner of more than 5% of such Common Stock, by each director, by each officer named in the Summary Compensation Table and by all officers and directors of the Company as a group. ~~The shares underlying the ISOs held by one officer which are presently exercisable are deemed beneficially owned.~~

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership	~~Amount and Nature of Beneficial Ownership~~	Percent of Class Owned	~~Percent of Class Owned~~
Directors and Officers(1)
Robert A. Lerman	2,115,186 shs (2)	~~1,441,353 shs (2)~~34.3%		~~31.3%~~
John F. Ferraro	1,739,561 shs	~~1,000,739 shs (3)~~28.2%		~~21.8 %~~
John J. Hughes	78,500 shs	~~28,500 shs~~1.3%		~~0.6%~~
Directors and Officers
All above listed officers and directors as a group (three persons)	3,933,247 shs(5)	~~2,470,592 shs(5)~~	63.8%	~~53.7%~~
Other 5% Shareholders
Turbotec Products, Inc. 401(k) Retirement Savings Plan	298,156 shs	~~298,156 shs~~	4.8%	~~6.5%~~

(1) The address of all officers and directors of the Company is c/o Thermodynetics, Inc., 651 Day Hill Road, Windsor, CT 06095. ~~Mr. Samuelson retired his directorship effective March 31, 2010.~~

(2) Includes ~~76,359 shares held for Mr. Lerman in trust under the TDYT 401(k) Plan; includes~~ 48,905 shares held by the spouse of Mr. Lerman~~; excludes 135,793 shares held in trust by the trustees, including Mr~~. ~~Lerman, of the TDYT 401(k) Plan for all of the participating employees.~~ Mr. Lerman owns 66,500 shares which are subject to a Rule 10b5-1 sales plan. ~~The plan has terminated as the broker is no longer with RBC.~~

~~(3) Includes 50~~Thermodynetics,~~802~~ ~~shares held for Mr~~Inc. ~~Ferraro in trust under the TDYT 401(k) Plan; excludes 135,793 shares held in trust by the trustees, including Mr. Ferraro, of the TDYT 401(k) Plan for all of the participating employees.~~

16Annual Report on Form 10-K

Page 15

Item 13. Certain Relationships and Related Transactions, and Director Independence.

(a) Transactions with Management and Others and Certain Business Relationships - None of the officers and directors of the Company are currently engaged in businesses competitive to the business of the Company. Since the beginning of the Company’s last fiscal year, the Company has not been engaged in any material transaction(s) in which any officer, director, person or entity with which they were affiliated, or beneficial holders of more than 5% of its outstanding voting securities, had a direct or indirect interest and no such transactions currently proposed, except as presented below.

Tower Structures, Inc. Tower Structures, Inc. (“TSI”) iswas a modular building manufacturer ~~and was incorporated in Connecticut in February 2009~~. OnIn ~~February 20,~~ fiscal-2009, the Company ~~committed to loan, and has since~~ loaned $300,000 to finance the start-up and early operations of TSI. The loan iswas secured by the assets of TSI and by a total of 45% of the outstanding common shares of TSI which are pledged in favor of the Company by two principals of TSI. The Company was also issued common stock in TSI comprising 6% of its outstanding capital stock. Robert A. Lerman on February 20, 2009 became president, CEO and a director of TSI’s; ~~operations~~he ~~have~~was ~~ceased~~compensated by TSI at the rate of $5,000 per month for six months through July 2009. He was issued common stock in TSI comprising 5% of its outstanding capital stock as a performance incentive.

~~Robert~~TSI's A.facilities ~~Lerman,~~were ~~the~~destroyed ~~president,~~in ~~CEO~~the ~~and~~24-inch aplus ~~director~~snowstorm ~~of the Company,~~ on ~~February~~January 2024, ~~2009~~2011 ~~became~~rendering ~~president, CEO and a director of TSI; he was compensated by TSI at~~ the ~~rate~~turnkey ofoperation ~~$5,000~~unusable ~~per month~~ and ~~such~~beyond ~~fee has not been paid since July 2009~~resurrection. HeMr. ~~was~~Lerman ~~issued~~had ~~common~~resigned ~~stock~~as inan ~~TSI~~officer ~~comprising~~and 5%director of ~~its~~TSI ~~outstanding~~effective ~~capital~~2010. The ~~stock~~Company ashas awritten ~~performance~~off ~~incentive~~the loan.

The Company’s 6% share holding and Mr. Lerman’s 5% share holding are protected against dilution until completion of a financing of TSI. The Company is to be paid a loan fee of $60,000 by TSI upon a further financing of TSI, which fee has not been paid to date. In the event of a legal conflict between the Company and TSI, TSI had agreed that Mr. Lerman will resign as an officer and director of TSI, and Mr. Lerman will assist the Company in pursuing any legal remedies the Company may then have against TSI. The Company is considering what business alternatives are available to TSI before taking legal action.

The Company does not have any formal policies and procedures for review, approval or ratification of related party transactions. In the transaction reported above, the terms of the transaction with Mr. Lerman were on the same terms as with unrelated third parties who participated.

(b) Director Independence. Mr. John J. Hughes is an independent director of the Company~~; Mr~~. ~~Fred H. Samuelson resigned as a director effective March 31, 2010.~~ In making the determination that Mr. Hughes is an independent director, the Board used the criteria of applicable NASDAQ rules to determine his independence. Mr. Hughes is the sole member of the Company’s Audit, Compensation and Nominating/Corporate Governance Committees and under the criteria of applicable NASDAQ rules is also an independent member of such Committees. In determining independence, the Board of Directors did not consider any transaction, relationship or arrangement under the independence definition of the NASDAQ rules. Messrs. Lerman and Ferraro are also members of the Nominating/Corporate Governance Committee but are not independent under the criteria of the applicable NASDAQ rules as they are officers of the Company.

Item 14. Principal Accountant Fees and Services.

Audit Fees –The aggregate fees billed for the professional audit services rendered by Mahoney Sabol & Co., LLP for the audit of the Company's annual financial statements for the years ended March 31, 2011 and 2010 and for the restated financial statements for the years ended March 31, 2009, 2008 and 2007 equaled $6697,~~900~~273, and $7066,~~000~~900 respectively.

17Audit-Related Fees –The aggregate fees billed for assurance and related services by Mahoney Sabol & Co., LLP that are reasonably related to the performance of the audit or review of the Company’s financial statements that are not reported above for the fiscal years ended March 31, 2011 and 2010 equaled $9,000, and $13,450, respectively. The nature of such services were the quarterly reviews of the quarterly reports on Form 10-Q.

~~Audit-Related Fees –The aggregate fees billed for assurance and related services by Mahoney Sabol & Co.~~Thermodynetics, LLP that are reasonably related to the performance of the audit or review of the Company’s financial statements that are not reported above for the fiscal years ended March 31, 2010 and 2009 equaled $13,450, and $21,500, respectivelyInc. ~~The nature of such services were the quarterly reviews of the quarterly reports on Form 10-Q and an audit of the 401(K) Plan.~~

~~Tax~~Annual ~~Fees~~Report ~~–The~~on ~~aggregate~~Form ~~fees billed for tax compliance, tax advice and tax planning services by Mahoney Sabol & Co., LLP for the fiscal years ended March 31, 2010 and 2009 equaled $7,820, and $7,500, respectively.~~10-K

~~All~~Page Other Fees – The aggregate fees billed for products and services provided by Mahoney Sabol & Co., LLP , other than as reported above, for the fiscal years ended March 31, 2010 and 2009 equaled $8,850, and $32,150, respectively. Such services consisted of accounting services in connection with a tax audit, and SEC comment letters.16

~~Auditor~~Tax ~~Independence –~~Fees –The ~~Audit~~aggregate ~~Committee~~fees ~~evaluated~~billed ~~whether~~for ~~providing~~tax ~~non-audit~~compliance, tax advice and tax planning services by Mahoney Sabol & Co., LLP for the fiscal ~~year~~years ended March 31, ~~2010~~2011 isand ~~compatible~~2010 ~~with~~equaled ~~maintaining the principal accountant's independence~~$11,500, and ~~concluded~~$7,820, ~~it is independent~~respectively.

All Other Fees – The aggregate fees billed for products and services provided by Mahoney Sabol & Co., LLP , other than as reported above, for the fiscal years ended March 31, 2011 and 2010 equaled $0, and $8,850, respectively. Such services consisted of accounting services in connection with a tax audit, and SEC comment letters.

Auditor Independence – The Audit Committee evaluated whether providing non-audit services by Mahoney Sabol & Co., LLP for the fiscal year ended March 31, 2011 is compatible with maintaining the principal accountant's independence, and concluded it is independent.

Pre-Approval Policy – The Audit Committee pre-approves all audit and permissible non-audit services provided by the independent auditors. The non-audit services include audit-related services and tax services. The Audit Committee’s policy is to pre-approve all services and fees for up to one year, which approval includes the appropriate detail with regard to each particular service and its related fees. In addition, the Audit Committee can be convened on a case-by-case basis to approve any services not anticipated or services whose costs exceed the pre-approved amounts.

During the last two fiscal year ended March 31, ~~2010~~2011, 100% of all audit and permissible non-audit services were approved by the Audit Committee.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) Financial Statements

Report of Independent Registered Public Accounting Firm.

Balance Sheets - March 31, ~~2010~~2011 and March 31, ~~2009~~2010.

Statements of Operations - For The Years Ended March 31, ~~2010~~2011 and ~~2009~~2010.

Statements of Stockholders' Equity - For The Years Ended March 31, ~~2010~~2011 and ~~2009~~2010.

Statements of Cash Flows - For The Years Ended March 31, ~~2010~~2011 and ~~2008~~2010.

Notes to Financial Statements

(b) Exhibits

(3)(a)

Articles of Incorporation, as filed with the Nevada Secretary of State. (a)

(3)(b)

Articles of Merger, as filed with the Nevada Sec. of State. (b)

(3)(c)

Certificate of Merger, as filed with the Delaware Secretary of State. (c)

(3)(b) By-Laws. (d)

(11)(i)

Calculations of Earnings Per Common Share. This information is presented in Note 13 to the Financial Statements.

Thermodynetics, Inc.

Annual Report on Form 10-K

Page 17

(10.1)

Lease dated January 2011 between Thermodynetics, Inc. as landlord, and Turbotec Products, Inc. as tenant.

(10)(i-i)

Form of Employment Contract for Chairman, and for President of the Company(i).

(10)(i-ii)

Thermodynetics, Inc. 2002 Incentive Stock Option Plan (j).

(10)(i-iii)

Thermodynetics, Inc. 2002 Non-Qualified Stock Incentive Plan (k).

(10)(i-iv)

Loan Agreement between Thermodynetics, Inc., and Wachovia Bank, National Association, dated December 21, 2006(l).

(10)(i-v)

Promissory Note in the original principle amount of $900,000 from Thermodynetics, Inc., to Wachovia Bank, National Association, dated December 21, 2006(m).

(10)(i-vi)

Promissory Note with a revolving line of credit feature of $1,100,000 from Thermodynetics, Inc., to Wachovia Bank, National Association, dated December 21, 2006(n).

(14.1)

Code of Ethics. (e)

(21)

Subsidiaries.

(31.1a) CEO Certification

(31.2b) CFO Certification

(32.1a) CEO Certification

(32.2b) CFO Certification

(99.a)

Audit Committee Charter (f)

(99.b)

Compensation Committee Charter (g)

(99.c)

Nominating Committee/Corporate Governance Charter (h)

Incorporated by Reference to:

(a) Appendix C to Proxy Statement for October 2121st, 2008 Annual Meeting filed September 1515th, 2008 (File No. 0-10707)

(b) Appendix B to Proxy Statement for October 2121st, 2008 Annual Meeting filed September 1515th, 2008 (File No. 0-10707)

(c) Appendix E to Proxy Statement for October 2121st, 2008 Annual Meeting filed September 1515th, 2008 (File No. 0-10707)

(d) Appendix D to Proxy Statement for October 2121st, 2008 Annual Meeting filed September 1515th, 2008 (File No. 0-10707)

(e)

Exhibit 14.1 to Annual Report on Form 10-Ksb for fiscal year ended 2005 filed July 29th, 2005 (File No. 0-10707)

~~(f)~~Thermodynetics, ~~Exhibit 99~~Inc.~~a to Annual Report on Form 10-Ksb for fiscal year ended 2005 (File No. 0-10707)~~

Annual Report on Form 10-K

Page 18

(f)

Exhibit 99.a to Annual Report on Form 10-Ksb for fiscal year ended 2005 filed July 29th, 2005 (File No. 0-10707)

(g)

Exhibit 99.b to Annual Report on Form 10-Ksb for fiscal year ended 2005 filed July 29th, 2005 (File No. 0-10707)

(h)

Exhibit 99.c to Annual Report on Form 10-Ksb for fiscal year ended 2005 filed July 29th, 2005 (File No. 0-10707)

19(i) Exhibit 10(i) to Annual Report on Form 10-Ksb for fiscal year ended 2004 filed June 29th, 2004 (File No. 0-10707)

~~Pursuant to the requirements of Section 13 or 15~~(dj) ofExhibit ~~the~~A ~~Securities~~to ~~Exchange~~Proxy ~~Act~~Statement offor ~~1934~~October 22nd, ~~the~~2002 ~~registrant~~Annual ~~has~~Meeting ~~duly~~filed ~~caused~~September ~~this report to be signed on its behalf by the undersigned~~20th, ~~thereunto~~2002 ~~duly~~(File ~~authorized~~No. 0-10707)

(~~Registrant~~k) Exhibit B to Proxy Statement for October 22nd, 2002 Annual Meeting filed September 20th, 2002 (File No. 0-10707)

~~THERMODYNETICS~~(l) Exhibit 10.1 to Current Report on Form 8-K filed December 29th, ~~INC~~2006 (File No. 0-10707)

~~By:~~(m) ~~/s/~~Exhibit ~~Robert~~10.2 Ato Current Report on Form 8-K filed December 29th, 2006 (File No. ~~Lerman~~ 0-10707)

~~Robert~~(n) AExhibit 10.3 ~~Lerman,~~to ~~President~~Current Report on Form 8-K filed December 29th, 2006 (File No. 0-10707)

Chief Executive Officer,

and Director

Date: July 13, 2010

(Registrant)

THERMODYNETICS, INC.

Pursuant to the requirements of Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Robert A. Lerman			/s/ John F. Ferraro
Robert A. Lerman, President,			John F. Ferraro, Chairman of
Chief Executive Officer, and Director			the Board, Treasurer, Chief Financial Officer,
			Secretary and Director
Date: July 13, 2010			Date: July 13, 2010

/s/ John J. Hughes John J. Hughes, Director Date: July 13, 2010

THERMODYNETICS, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~ 2010

THERMODYNETICS, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

YEARS ENDED MARCH 31, 2011 AND 2010

CONTENTS

	Page
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM	F-1
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets	F-2
Consolidated Statements of Operations and Comprehensive Income (Loss)	F-3
Consolidated Statements of Stockholders’ Equity	F-4
Consolidated Statements of Cash Flows	F-5
Notes to Consolidated Financial Statements	F-6 – ~~F-20~~21

Report of Independent Registered Public Accounting Firm

To the Board of Directors and

Stockholders of

Thermodynetics, Inc. and Subsidiaries

Windsor, Connecticut

We have audited the accompanying consolidated balance sheets of Thermodynetics, Inc. and Subsidiaries (the “Company”) as of March 31, ~~2010~~2011 and ~~2009~~2010, and the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Thermodynetics, Inc. and Subsidiaries as of March 31, ~~2010~~2011 and ~~2009~~2010 and the results of its operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ Mahoney Sabol & Company, LLP

Certified Public Accountants

Glastonbury, Connecticut

July 98, ~~2010~~2011

F-1

THERMODYNETICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

MARCH 31, ~~2010~~2011 AND ~~2009~~2010

	2010			2009
	2011				2010
ASSETS
CURRENT ASSETS
Cash	$	~~229~~325,~~440~~647		$	~~475~~229,~~399~~440
Marketable securities		44,625			50,767
Restricted Cash		459,773			-
Prepaid expenses and other current assets		14,179			583,644
Marketable securities		1,645,904			44,625
Total current assets		288,244			1,109,810
Prepaid expenses and other current assets		26,302			14,179
PROPERTY, PLANT AND EQUIPMENT, net		3,017,850			3,207,949
Total current assets		2,457,626			288,244
DEFERRED INCOME TAXES		1,200,000			1,200,000
PROPERTY, PLANT AND EQUIPMENT, net		1,934,852			3,017,850
DEFERRED INCOME TAXES		-			1,200,000
OTHER ASSETS
Investments - at equity		3,198,412			5,323,704
Assets held for sale		850,000			-
Related party receivables		42,024			889,297
Investments - at equity		-			3,198,412
Other		76,489			82,580
Related party receivables		-			42,024
Total other assets		3,316,925			6,295,581
Other		-			76,489
	$	7,823,019		$	11,813,340
Total other assets		850,000			3,316,925
	$	5,242,478		$	7,823,019
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit	$	1876,~~087,000~~777		$	1,~~062~~087,000
Accounts payable		~~214~~179,~~350~~400			~~205~~214,~~264~~350
Accrued expenses and taxes		21,~~005~~237,~~028~~702			~~552~~2,~~515~~005,028
Current portion of long-term debt		1,~~531~~416,~~134~~147			~~110~~1,~~681~~531,134
Total current liabilities		43,~~837~~710,~~512~~026			14,~~930~~837,~~460~~512
LONG-TERM LIABILITIES
Long-term debt, less current maturities above		~~12,843~~-			112,~~561,174~~843
Long-term liabilities from discontinued operations		~~2,782,195~~-			2,782,195
Total long-term liabilities		~~2,795,038~~-			42,~~343~~795,~~369~~038
COMMITMENTS AND CONTINGENCIES (Notes 3 and 20)		-			-
STOCKHOLDERS' EQUITY
Common stock, par value $.01 per share; authorized
Common stock, par value $.01 per share; authorized 25,000,000 shares		61,653			46,003
25,000,000 shares		46,003			40,903
Additional paid-in capital		7,455,070			7,262,053
Additional paid-in capital		7,262,053			7,138,403
Accumulated other comprehensive income		288,938			15,645
Accumulated other comprehensive income		15,645			24,554
Accumulated deficit		(6,273,209	)		(7,133,232	)
Accumulated deficit		(7,133,232	)		(1,664,349	)
Total stockholders' equity		1,532,452			190,469
Total stockholders' equity		190,469			5,539,511
	$	5,242,478		$	7,823,019
	$	7,823,019		$	11,813,340

The accompanying notes are an integral part of these consolidated financial statements.

F-2

THERMODYNETICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~2010

	2010			2009
	2011			2010
REVENUES
Consulting Fee & Rental Income	$	521,894		$	967,557
Rental Income	$	552,401		$	521,894
OPERATING EXPENSES		31,~~833~~107,~~864~~258			23,~~269~~833,~~860~~864
Loss from operations		(3554,~~311,970~~857	)		(13,~~302~~311,~~303~~970	)
EQUITY IN EARNINGS OF UNCONSOLIDATED SUBSIDIARY		~~525,440~~-			~~913~~525,~~536~~440
OTHER INCOME (EXPENSE)
Other, net		4751,~~897~~010			5247,~~331~~897
Interest expense		(~~153~~146,~~111~~158	)		(~~147~~153,~~699~~111	)
Gain of sale of investment in unaffiliated company		-			328,928
Loss on impairment of asset held for sale		(53,626	)		-
Gain on sale of subsidiary stock		-			-
Loss on the sale of stock		(18,541	)		-
Realized loss on impairment		~~(2,575,000~~-	)		-(2,575,000	)
		(2,680,214	)		233,560
		(167,315	)		(2,680,214	)
Loss before provision for income taxes		(5722,~~466,744~~172	)		(~~155~~5,~~207~~466,744	)
PROVISION FOR INCOME TAXES		~~2,139~~-			392,~~862~~139
Net loss		(5,468,883	)		(195,069	)
Loss Before Extraordinary Item		(722,172	)		(5,468,883	)
OTHER COMPREHENSIVE LOSS, net of tax		(8,909	)		(12,136	)
EXTRAORDINARY ITEM - Gain on extinguishment of debt net of taxes of $1,200,000		1,582,195			-
Comprehensive loss	$	(5,477,792	)	$	(207,205	)
Net income (loss)		860,023			(5,468,883	)
EARNINGS PER COMMON SHARE	$	(1.24	)	$	(0.05	)
OTHER COMPREHENSIVE INCOME (LOSS), net of tax		273,293			(8,909	)
Comprehensive income (loss)	$	1,133,316		$	(5,477,792	)
EARNINGS (LOSS) BEFORE EXTRAORDINARY ITEM PER COMMON SHARE	$	(14.25	)	$	(1.24	)
EARNINGS (LOSS) PER COMMON SHARE	$	16.97		$	(1.24	)

The accompanying notes are an integral part of these consolidated financial statements.

F-3

THERMODYNETICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~2010

	~~Common Stock~~	Common Stock
																~~Accumulated~~		Accumulated
								~~Additional~~		Additional						~~Other~~		Other
	~~Number of~~	Number of						~~Paid-in~~		Paid-in		~~Accumulated~~		Accumulated		~~Comprehensive~~		Comprehensive
	~~Shares~~	Shares		~~Amount~~		Amount		~~Capital~~		Capital		~~(Deficit)~~		(Deficit)		~~Income~~		Income		~~Total~~		Total
Balance, March 31, 2008	4,080,306			$	40,803			$	7,137,803			$	(1,469,280	)		$	36,690			$	5,746,016
Balance, March 31, 2009			4,090,306			$	40,903			$	7,138,403			$	(1,664,349	)		$	24,554			$	5,539,511
Issuance of common stock	~~10,000~~		510,000		~~100~~		5,100		~~600~~		123,650		-		-		-		-		~~700~~		128,750
Net income	-				-				-				(195,069	)			(12,136	)		$	(207,205	)
Net loss			-				-				-				(5,468,883	)			(8,909	)			(5,477,792	)
Balance, March 31, 2009	4,090,306			$	40,903			$	7,138,403			$	(1,664,349	)		$	24,554			$	5,539,511
Balance, March 31, 2010			4,600,306			$	46,003			$	7,262,053			$	(7,133,232	)		$	15,645			$	190,469
Issuance of common stock	~~510,000~~		1,565,000		~~5,100~~		15,650		~~123,650~~		193,017		-				-				~~128,750~~		208,667
Net loss	-				-				-				(5,468,883	)			(8,909	)			(5,477,792	)
Net income			-				-				-				860,023				273,293				1,133,316
Balance, March 31, 2010	4,600,306			$	46,003			$	7,262,053			$	(7,133,232	)		$	15,645			$	190,469
Balance, March 31, 2011			6,165,306			$	61,653			$	7,455,070			$	(6,273,209	)		$	288,938			$	1,532,452

The accompanying notes are an integral part of these consolidated financial statements.

F-4

THERMODYNETICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~2010

	2010			2009
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(5,468,883	)	$	(195,069	)
Net income (loss)	$	860,023		$	(5,468,883	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Adjustments to reconcile net loss to net
Depreciation and amortization		191,864			180,806
cash provided by operating activities:
Earnings in unconsolidated subsidiary		(449,708	)		(803,266	)
Depreciation and amortization		221,258			191,864
Realized loss on impairment		2,575,000			-
Earnings in unconsolidated subsidiary		-			(449,708	)
Gain on sale of investments in unaffiliated companies		-			(328,928	)
Realized loss on impairment		53,626			2,575,000
Issuance of stock		128,750			-
Loss on sale of stock		(18,541	)
Realized loss on investment in affiliated company		35,863			-
Gain on extinguishment of debt		(1,582,195	)
Issuance of stock		208,667			128,750
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses and other current assets		569,461			(558,445	)
(Increase) decrease in prepaid expenses and
(Increase) decrease in other assets		4,330			6,173
other current assets		(12,123	)		569,461
Increase (decrease) in accounts payable		9,086			124,497
(Increase) decrease in other assets		-			4,330
Increase (decrease) in accrued expenses and taxes		1,452,513			342,606
Increase (decrease) in accounts payable		(34,950	)		9,086
Net cash used in operating activities		(987,587	)		(1,231,626	)
Increase (decrease) in accrued expenses and taxes		(767,326	)		1,452,513
Net cash used in operating activities		(1,035,698	)		(987,587	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		-(1,260	)		~~(19,917~~-	)
(Purchase) proceeds - marketable securities		(21,~~767~~888,967	)		~~196~~(2,~~429~~767	)
Proceeds from sale of investment in unaffiliated companies		-			438,442
Net cash provided by investing activities		1,887,707			(2,767	)
Investment in unaffiliated company		-			(35,863	)
Net cash provided by (used in) investing activities		(2,767	)		579,091
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in related party receivable		~~847~~42,~~273~~024			~~108~~847,~~261~~273
Proceeds from issuance of stock		-			700
Proceeds from (payments on) short-term borrowings		(210,223	)		25,000
Proceeds from short-term borrowings		25,000			962,000
Principal payments on debt and capital lease obligations		(127,830	)		(127,878	)
Principal payments on debt and capital lease obligations		(127,878	)		(119,095	)
Net cash provided by financing activities		(296,029	)		744,395
Net cash provided by financing activities		744,395			951,866
NET INCREASE (DECREASE) IN CASH		555,980			(245,959	)
NET INCREASE (DECREASE) IN CASH		(245,959	)		299,331
CASH, beginning of year		229,440			475,399
CASH, beginning of year		475,399			176,068
CASH, end of year	$	785,420		$	229,440
CASH, end of year	$	229,440		$	475,399

The accompanying notes are an integral part of these consolidated financial statements.

F-5

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~2010

NOTE 1 – BASIS OF PRESENTATION:

The consolidated financial statements include the accounts of Thermodynetics, Inc. and its wholly owned subsidiaries, Vulcan Industries, Inc., TPI Systems, Inc. and National Energy Systems, Inc. (collectively the “Company”). All material intercompany balances and transactions have been eliminated.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of Operations:

Thermodynetics, Inc., is engaged in managing its real estate and business holdings, ~~marketing consulting services to other companies~~ and investing in other companies.

Estimates:

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Cash, Cash Equivalents and Restricted Cash:

The Company considers all highly liquid instruments purchased with original maturities of three months or less to be cash equivalents. The restricted cash represents cash held in escrow to be utilized toward any obligations due relating to litigation with Turbotec Products, Plc (Plc) as more fully discussed in Note 22 a). As of July 1, 2011, this cash is not longer subject to the restrictions.

Marketable Securities:

The Company determines the appropriate classification of debt and equity securities at the time of purchase and reevaluates such designation as of each balance sheet date.

Property and Equipment:

Property and equipment of the Company are carried at cost. For financial and income tax reporting purposes, depreciation is computed using straight-line and accelerated methods over the estimated useful lives of the assets. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized; expenditures for maintenance and repairs are charged to expense as incurred.

Estimated useful lives to compute depreciation are as follows:

Office equipment, furniture and fixtures	7 years
Building and improvements	40 years

F-6

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~2010

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

Revenue Recognition:

Rental income ~~and~~is ~~consulting fee income are~~ recognized when services are rendered or when the revenue is earned.

Income Taxes:

The Company files consolidated federal and combined state corporate income tax returns with all of its subsidiaries. Tax credits are recorded as a reduction of income taxes in the year realized. The Company utilizes the asset and liability method of accounting for deferred income taxes as prescribed by ASC 740 ~~(formerly Statement of Financial Accounting Standards No~~. ~~109 (SFAS 109) "Accounting for Income Taxes.")~~ This method requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the tax return and financial statement reporting bases of certain assets and liabilities.

The Company ~~also~~ follows ASC 740, “Income Taxes” (“ASC 740”), ~~formerly FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes” (an interpretation of FASB Statement No. 109),~~ which clarifies the accounting for uncertainty in income taxes recognized in financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

Earnings Per Common Share:

InThe ~~fiscal 1999, the~~ Company ~~adopted~~follows ASC ~~505-10 (formerly Statement of Financial Accounting Standards (SFAS) No. 128~~260, ~~“Earnings~~which ~~Per Share”). ASC 505-10~~ simplifies the standards for computing earnings per share (EPS) and makes them comparable to international EPS standards. ~~It replaced the presentation of primary EPS with a presentation of basic EPS.~~

Reclassification:

Certain amounts as of March 31, ~~2009~~2010 have been reclassified to conform with the March 31, ~~2010~~2011 presentation. The reclassifications have no material affect on the financial statements.

New Pronouncements:

In June ~~2009~~2011, the Financial Accounting standards Board (“FASB”) issued ~~the~~ASU ~~ASC~~No. ~~which~~2011-05, ~~has~~Comprehensive ~~become~~Income ~~the~~(Topic ~~single~~220): ~~source~~Presentation of ~~accounting~~Comprehensive ~~principles~~Income, ~~generally~~or ~~accepted~~ASU 2011-05. The amendments in ~~the~~this ~~United~~ASU ~~States~~require ~~(“GAAP”)~~an ~~recognized~~entity byto present the ~~FASB~~total inof comprehensive income, the ~~preparation~~components of ~~financial~~net ~~statements. The~~income, ~~ASC~~and ~~does~~the ~~not~~components ~~supersede~~of ~~the~~other ~~rules~~comprehensive orincome ~~regulations~~either ofin ~~the~~a ~~Securities~~single ~~and~~continuous ~~Exchange~~statement ~~Commission~~of ~~(“SEC”),~~comprehensive ~~therefore,~~income ~~the~~or ~~rules~~in ~~and~~two ~~interpretive~~separate ~~releases~~but ofconsecutive ~~the~~statements. ASU ~~SEC~~2011-05 ~~continue~~eliminates the option to bepresent ~~additional~~the ~~sources~~components of ~~GAAP~~other ~~for~~comprehensive income as part of the ~~Company~~statement of equity. ~~The~~ASU2011-05 ~~Company~~is ~~adopted~~effective ~~the~~for ~~ASC~~fiscal asyears, ofand ~~August~~interim 1periods within those fiscal years, ~~2009~~beginning ~~and~~on ~~has~~or ~~replaced~~after ~~all~~December ~~FASB~~15, ~~references~~2011, with ~~ASC~~early ~~references.~~adoption permitted. The ~~ASC~~Company ~~does~~is ~~not~~currently ~~change~~evaluating ~~GAAP~~the ~~and~~impact ~~did~~of ~~not~~this ~~have~~pending anadoption ~~effect~~of ASU 2011-05 on the ~~Company’s~~ consolidated financial statements.

F-7

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~2010

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

In May ~~2009~~2011, the FASB issued ~~guidance~~ASU ~~which~~2011-04, ~~is included in ASC 855~~ “~~Subsequent~~Amendments ~~Events”~~to ~~(“ASC~~Achieve ~~855”). ASC~~Common ~~855~~Fair ~~establishes~~Value ~~general~~Measurement ~~standards of accounting for~~ and ~~disclosure~~Disclosure ofRequirements ~~events~~in ~~that~~U. ~~occur~~S. ~~after~~GAAP ~~the~~& ~~balance~~IFRS,” ~~sheet~~which ~~date~~results ~~but~~in ~~before~~common ~~the~~fair ~~financial~~value ~~statements~~measurement ~~are~~and ~~issued~~disclosure orrequirements ~~are~~in ~~available~~U.S. toGAAP beand ~~issued~~IFRS. Consequently, ~~Although~~ the ~~standard~~amendments ischange ~~based on~~ the ~~same~~wording ~~principles~~used asto ~~those~~describe ~~that~~many ~~previously~~of ~~existed~~the ~~for~~requirements ~~subsequent~~in ~~events,~~U.S. itGAAP ~~included~~for ameasuring ~~new~~fair ~~required~~value ~~disclosure~~and offor ~~the~~disclosing ~~date~~information ~~through~~about ~~which~~fair anvalue ~~entity has evaluated subsequent events~~measurements. ASU ~~The~~2011-04 ~~Company~~is ~~adopted~~effective ~~the~~for ~~guidance~~interim inand ~~the~~annual ~~first~~periods ~~quarter~~beginning ofafter ~~fiscal~~December ~~year~~15, ~~2010~~2011. The ~~and the~~ adoption ~~did~~is not expected to have a ~~significant~~material impact on ~~the~~these ~~Company’s consolidated~~ financial statements.

In ~~August~~January ~~2009~~2010, the FASB issued ~~Accounting Standards Update (“~~ASU”) ~~2009~~2010-0506, “Fair Value Measurements and Disclosures (Topic 820): ~~Measuring~~Improving ~~Liabilities~~Disclosures atabout Fair Value Measurements” ("“ASU ~~2009~~2010-~~05"~~06”). ASU ~~2009~~2010-0506 provides ~~clarification~~amendments to ~~entities~~ASC ~~that~~820 ~~measure~~by requiring new disclosures for transfers in and out of Levels 1 and 2 of the fair value measurement hierarchy, and expands disclosures related to activity in Level 3 fair value measurements. ASU 2010-06 also clarifies existing disclosures on the level of detail required for assets and liabilities measured at fair value ~~under~~from ~~circumstances~~their ~~where~~respective aline ~~quoted~~items ~~price~~on the statement of financial position, and the valuation techniques and inputs used in anfair ~~active~~value ~~market~~measurements isthat ~~not~~fall ~~available. The~~within ~~Company~~Level ~~adopted~~2 or Level 3 of the fair value hierarchy. ASU ~~2009~~2010-0506 was effective for the Company as of ~~November~~May 1, ~~2009~~2010. The ~~adoption~~Company adopted the standard of this pronouncement, which did not have a ~~significant~~material impact on ~~the~~these ~~Company’s consolidated~~ financial statements.

In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”). ASU 2010-06 provides amendments to ASC 820 by requiring new disclosures for transfers in and out of Levels 1 and 2 of the fair value measurement hierarchy, and expands disclosures related to activity in Level 3 fair value measurements. ASU 2010-06 also clarifies existing disclosures on the level of detail required for assets and liabilities measured at fair value from their respective line items on the statement of financial position, and the valuation techniques and inputs used in fair value measurements that fall within Level 2 or Level 3 of the fair value hierarchy. ASU 2010-06 is effective for the Company as of May 1, 2010. Since the revised guidance only requires additional disclosures about the Company’s fair value measurements, its adoption will not affect the Company’s financial position or results of operations.

NOTE 3 – GOING CONCERN:

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which ~~contemplates~~contemplate continuation of the Company as a going concern. However, the Company has sustained substantial operating losses in recent years, has used substantial amounts of working capital in its operations and at March 31, ~~2010~~2011, current liabilities exceed current assets by $41,~~549~~252,~~268~~400. The Company is currently in default on their line of credit and one of its long-term mortgages and subsequent to year end, the bank has commenced an action (Note 21). ~~Management~~Certain ~~will~~of ~~propose~~the ~~alternatives~~Company’s inassets anare ~~attempt~~held for sale which are expected to be able to cure the defaults.

In view of these matters, realization of a major portion of the assets in the accompanying consolidated balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon ~~the~~ curing the defaults, satisfying its current liabilities and the success of its future operations. Management believes that actions presently being taken (partial sale of an ~~investment~~asset, see Note 216) along with management’s future plans to raise cash through the sale of other long-term assets, provide the opportunity for the Company to continue as a going concern.

F-8

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~2010

NOTE 4 – FINANCIAL INSTRUMENTS:

Concentrations of Credit Risk:

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and ~~other~~marketable ~~assets~~securities.

· Cash – At various times during the fiscal year, the Company’s cash balances exceeded federally insured limits. The cash balance was ~~not~~ in excess of federally insured limits at March 31, ~~2010~~2011, ~~and~~but ~~2009~~was not at March 31, ~~respectively~~2010.

Marketable Securities – These securities are primarily held in one entity, the PLC.

Fair Value of Financial Instruments:

ASC 825-10 ~~(formerly Statement of Financial Accounting Standards (SFAS) No. 107, “Fair Value of Financial Instruments”),~~ requires disclosure of the fair value of financial instruments for which the determination of fair value is practicable. ASC 825-10 ~~(formerly SFAS No. 107)~~ defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties.

The carrying amounts of the Company’s financial instruments approximate their fair value as outlined below:

Cash and trade payables – The carrying amounts approximate their fair value because of the short maturity of those instruments.

· Line of credit – The carrying amount approximates fair value as the line of credit has a ~~variable~~fixed ~~interest~~ rate ~~which~~but ~~fluctuates~~there ~~with~~has not been much fluctuation in the market.

Long-term debt and capital leases – The carrying amount approximates fair value as the interest rates on the various notes/leases approximate the Company’s estimated incremental borrowing rate.

The Company’s financial instruments are held for other than trading purposes.

NOTE 5 – MARKETABLE SECURITIES:

The Company invests in certain marketable securities that are categorized as available for sale. The cost and market values of marketable securities as well as the unrealized gains and losses are as follows at March 31:

	2010		2009
	2011		2010
Cost	$	281,~~980~~356,966	$	2628,~~213~~980
Unrealized gains		15288,~~645~~938		2415,~~554~~645
Market value	$	441,~~625~~645,904	$	5044,~~767~~625

F-9

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~2010

NOTE 6 – NET PROPERTY AND EQUIPMENT:

Property and equipment are summarized by major classifications as follows at March 31:

	2010		2009
	2011		2010
Buildings	$	43,~~915~~327,~~481~~770	$	4,915,481
Leasehold improvements		~~954~~667,~~339~~162		~~967~~954,~~312~~339
Land		204,484		204,484
Furniture and equipment		145,120		143,860
Furniture and equipment		143,860		140,486
Land		100,912		204,484
		6,218,164		6,227,763
		4,240,964		6,218,164
Less accumulated depreciation
Less accumulated depreciation and amortization		2,306,112		3,200,314
and amortization		3,200,314		3,019,814
	$	1,934,852	$	3,017,850
	$	3,017,850	$	3,207,949

The building located at 50 Baker Hollow Road is presently listed for sale, and has been classified as Assets Held for Sale on the balance sheet. As the carrying value of the building exceeds the anticipated selling price less direct costs of disposal, the building has been written down to $850,000. A loss on impairment in the amount of $53,626 has been recorded during the year ended March 31, 2011.

NOTE 7 – OTHER ASSETS:

Other assets consist of the following at March 31:

	2010		2009
	2011		2010
Deferred financing costs	$	~~40,626~~-	$	4640,~~717~~626
Investments in unaffiliated companies		~~35,863~~-		35,863
	$	~~76,489~~-	$	8276,~~580~~489

~~NOTE~~The 8deferred –financing ~~EQUITY~~costs ~~METHOD~~and ~~INVESTMENT~~the investment were written off during the fiscal year ended March 31, 2011. Additionally, a $300,000 loan receivable, previously written down, was written off during fiscal 2011.

~~The~~NOTE ~~Company’s~~8 ~~56.32%~~– ~~investment~~INVESTMENT inIN ~~its~~TURBOTEC ~~unconsolidated subsidiary Turbotec Products~~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.~~PLC

The Company’s investment in the PLC is carried at market value at March 31, 2011, and is included in marketable securities on the balance sheet, as the Company no longer has significant influence. At March 31, 2010, the equity method of accounting was utilized whereby the investment was carried at cost and ~~2009,~~adjusted for the ~~market~~Company’s ~~values~~proportionate share of their undistributed earnings or losses. On April 26, 2010 and December 21, 2010, the ~~common~~Company sold 3,400,000 and 1,100,000 shares, respectively, of the stock of the PLC. Prior to the sales, the Company held a 56.32% investment in ~~Turbotec~~the ~~Products,~~PLC ~~Plc~~and ~~were~~currently asowns ~~follows:~~21.18%.

Year	Carrying Value		Per Share MV		Market Value
2010	$	3,198,412		$0.39	$	2,794,055
2009		5,323,704		$0.39		2,819,352

As a result of a decline in the market value of Turbotec Products, Plc at March 31, 2010 and 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. Accordingly an impairment loss of $2,575,000 has been recognized and charged to operations during the year ended March 31, 2010.

F-10

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~2010

NOTE 8 – EQUITY METHOD INVESTMENT (Continued):

Following is a summary of financial position and results of operations of ~~Turbotec~~the ~~Products~~PLC as of March 31, ~~Plc~~2010 and the year then ended:

	2010		~~2009~~
Current assets	$	6,754,348	$	~~6,734,746~~
Property and equipment, net		5,423,920		~~5,018,725~~
Other assets, net		203,191		~~100,991~~
Total assets	$	12,381,459	$	~~11,854,462~~
Current liabilities		1,203,486		~~1,531,336~~
Long-term Debt		82,243		~~167,040~~
Deferred liabilities		781,000		~~781,000~~
		2,066,729		~~2,479,376~~
Stockholders' equity		10,314,730		~~9,375,086~~
	$	12,381,459	$	~~11,854,462~~
Sales	$	19,822,873	$	~~26,985,712~~
Net income	$	798,489	$	~~1,446,983~~

Included in ~~consulting fee and~~ rental income on the statements of operations, is $~~452~~517,~~894,~~651 and $~~898~~452,~~857~~894 from ~~Turbotec~~the ~~Products~~PLC, ~~Plc,~~ for the years ended March 31, ~~2010~~2011 and ~~2009~~2010, respectively. Additionally, included in receivables on the balance sheet are net amounts from ~~Turbotec~~the ~~Products,~~PLC ~~Plc~~ which represent ~~consulting fees, dividends receivable (net of an allowance) and~~ pass-through rent amounts. The balances are $425,~~024~~058 and $~~889~~42,~~297~~024 at March 31, ~~2010~~2011 and ~~2009~~2010, respectively.

NOTE 9 – LINES OF CREDIT:

~~During~~The ~~December~~Company’s ~~2006~~$1,100,000 ~~the Company entered into a~~ line of credit ~~(the~~matured ~~“Line”)~~on ~~agreement~~July ~~with~~31, a2009 ~~bank. The~~and ~~agreement~~is ~~provides~~due ~~for~~in afull; ~~borrowing~~the ~~base~~Company ~~of $1,100,000. Interest~~ is ~~charged~~currently atin ~~the bank’s prime rate (3~~default.~~25%~~ On ~~and~~June ~~3.25% at March 31~~28, 2010 ~~and~~the ~~2009,~~Bank ~~respectively)~~commenced legal action. The ~~Line~~Company ishas ~~secured~~continued byto ~~certain~~pay ~~real~~interest ~~property~~under of the ~~Company. At~~terms ~~March~~of ~~31, 2009,~~ the ~~Company~~line ~~had available borrowings~~ of ~~$38,000. The~~credit ~~line~~through ~~expired~~March ~~on July~~ 31, ~~2009~~2011 and ~~the~~has ~~Company~~made isprincipal ~~currently~~payments inof ~~default~~approximately $200,000. ~~Negotiations~~See ~~relating~~Note to22 ~~renewal~~for ~~and~~further ~~repayment terms are on going~~discussion.

Subsequent to March 31, 2010, the bank commenced legal action. See Note 21 for further discussion.

F-11

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~2010

NOTE 10 – NOTES PAYABLE AND LONG-TERM DEBT:

In December 2006, the Company refinanced the mortgage on the Day Hill Road property by obtaining a 10-year, $900,000 mortgage note payable from a bank. The mortgage note is secured by a first mortgage on the building. The note is payable in monthly principal installments of $3,750 plus accrued interest commencing January 21, 2007. Interest is accrued on the unpaid principal at ~~the~~a 30fixed ~~day LIBOR market Index~~ rate ~~(.2598%,~~of ~~and~~ 7.~~5325% at March 31, 2010 and 2009, respectively) plus 1.~~5%.

In August 2004 the Company refinanced the mortgage on its multi-purpose building by obtaining a 10-year, $1,000,000 mortgage note payable. The mortgage note is secured by a first mortgage on the multi-purpose building. The note is payable in one hundred twenty monthly installments of principal and interest of $8,932 and has a fixed interest rate of 6.9%.

As a result of the default relative to the Line (Note 9) and the cross default provisions of the Line agreement, the two mortgages above are technically in default as of March 31, ~~2010~~2011. Therefore, these mortgages are classified as current liabilities in these financial statements. The Company has continued to pay principal and interest under the terms of the mortgages through March 31, 2011.

The Company has a term loan dated December 1, 2006, which is payable in 60 monthly installments of $1,628 including principal and interest at 6.39%. The note is secured by a vehicle. The Company also has a term loan dated May 6, 2008, which is payable in 36 monthly installments of $974 including principal and interest at 1%. The note is secured by a vehicle.

The balances are as follows at March 31:

	2010		2009
	2011		2010
Mortgage loan	$	~~753~~712,~~750~~500	$	~~798~~753,750
Mortgage note payable –
Mortgage note payable –multi-purpose building		689,902		746,653
multi-purpose building		746,653		799,860
Notes payable – vehicles		13,745		43,574
Notes payable – vehicles		43,574		73,245
	$	1,416,147	$	1,543,977
	$	1,543,977	$	1,671,855

Maturities of notes payable and long-term debt from continuing operations ~~for~~are ~~each~~shown ofon the ~~years~~balance ~~succeeding~~sheet ~~March~~as ~~31,~~current ~~2010~~liabilities as they are asall ~~follows:~~due in fiscal year 2012 either by their terms or due to the default provisions.

Year ending March 31,	Amount
2011	$	1,531,134
2012		12,843
	$	1,543,977

F-12

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~2010

NOTE 11 – LEASES:

The Company and Turbotec Products, Inc. entered into real estate leases 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. The leases commenced April 1, 2006 with five-year terms, 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~~were 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 $36,333 monthly in year five. Rent charges with respect to the 50 Baker Hollow Road property ~~are~~were 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 $9,208 monthly in year five. Turbotec is in the process of relocating its operations to North Carolina and plans to complete the move by December 31, 2011. The lease for 50 Baker Hollow Road terminated as of March 31, 2011, and was not renewed. A new lease for 651 Day Hill Road has been entered into through December 31, 2011 under which Turbotec will pay $5 triple net for the space it is occupying.

The Company ~~leases~~leased a portion of its Baker Hollow Road building to an unrelated tenant under an agreement which ~~expires~~expired ~~August~~September 3130, 2010. Rental income aggregated $34,750 and $69,000, respectively for ~~each of~~ the years ended March 31, ~~2010~~2011 and ~~2009~~2010 and is included in rental income in the accompanying consolidated statements of operations and comprehensive income.

NOTE 12 – STOCK OPTION PLAN:

In October 2002, the Company adopted the 2002 Incentive Stock Option Plan (“2002 ISO Plan”) and the 2002 Non Qualified Stock Incentive Plan (“2002 NQ Plan”). The 2002 ISO Plan provides for an aggregate number of shares available for grant of options, not to exceed 100,000 shares ~~(post split)~~. The option price is not to exceed 100% of fair market value for the stock. The 2002 NQ Plan provides for an aggregate number of shares available for stock options, stock bonuses and stock appreciation rights (SARS), not to exceed 100,000 shares ~~(post split)~~.

The option price and the value awarded for bonuses shall not exceed 33.33% of the fair market value on the effective date of the option or bonus. The value awarded for stock appreciation rights shall be equal to the excess of fair market value on the day of exercise less the fair market value on the effective date of the award. Through March 31, ~~2010~~2011, no options, shares or SARS had been granted under these plans.

F-13

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~2010

NOTE 13 – EARNINGS PER COMMON SHARE:

A reconciliation of the numerators and denominators of the basic and diluted Earnings per Common Share (EPS) computations for the years ended March 31:

	2010					2009
	2011					2010
	Income			Shares		Income			Shares
	(Numerator)			(Denominator)		(Numerator)			(Denominator)
Net income (loss)	$	(5,468,883	)			$	(195,069	)
Basic EPS
Income (loss) before
extraordinary items available
to common stockholders	$	(722,172	)		50,674	$	(5,468,883	)		4,413,813
Effect of Dilutive Securities
Stock warrants		-			-		-			-
Diluted EPS
Income (loss) before
extraordinary items available
to common stockholders
including assumed conversions	$	(722,172	)		50,674	$	(5,468,883	)		4,413,813
Basic EPS
Income (loss) available to
common stockholders	$	(5860,~~468,883~~023	)		450,~~413,813~~674		(~~195~~5,~~069~~468,883	)		4,~~083~~413,~~895~~813
Effect of Dilutive Securities
Stock warrants		-			-		-			-
Diluted EPS
Income (loss) available to
common stockholders including
assumed conversions	$	(5860,~~468,883~~023	)		450,~~413,813~~674	$	(~~195~~5,~~069~~468,883	)		4,~~083~~413,~~895~~813

NOTE 14 – INCOME TAXES:

The provision (benefit) for income taxes consists of the following as of March 31:

	2010		2009
	2011		2010
Current	$	~~2,139~~-	$	392,~~862~~139
Deferred		-		-
	$	~~2,139~~-	$	392,~~862~~139

F-14

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~2010

NOTE 14 – INCOME TAXES (Continued):

The alternative minimum tax (AMT) had no effect on the tax provision for financial reporting purposes~~, as the Company’s AMT income was completely offset by application of AMT net operating loss carryforwards and the AMT exemption~~. State taxes accrued were based on net income on a separate company basis.

The provision for income taxes differs from the amount computed by applying the statutory rates to income before income taxes for continuing operations for fiscal years ~~2010~~2011 and ~~2009~~2010. The principal reasons for this difference are listed in the following table as of March 31:

	2010				2009
	2011			2010
Statutory federal and state income tax		39	%		39	39%	%
Change in valuation allowance		(4041	)		(40	~~(39~~)	)
Other		12			1	~~(26~~	)
		-	%		-	~~(26~~%	)%

The significant components of the deferred tax provision are as follows as of March 31:

	2010			2009
	2011			2010
Net operating loss	$	1(523,~~484,~~000	)	$	61,484,000
Reserves		~~146~~(264,000	)		-146,000
Deferred Revenue		-(1,224,000	)		-
Valuation allowance		(1,433,000	)		397,000
Other		322,000
Equity method investment		(198,000	)		(402,000	)
Valuation allowance		(644,000	)		(1,433,000	)
Property and equipment, net		1,000			(1,000	)
Equity method investment		1,134,000			(198,000	)
	$	-		$	-
Property and equipment, net		(1,000	)		1,000
	$	(1,200,000	)	$	-

F-15

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~2010

NOTE 14 – INCOME TAXES (Continued):

~~NOTE~~The 14components ~~– INCOME~~of ~~TAXES~~the ~~(Continued)~~net deferred tax asset as of March 31, 2011 and 2010 are as follows:

The components of the net deferred tax asset as of March 31, 2010 and 2009 are as follows:

	2011			2010
Deferred tax assets:
Net operating loss	$	2,340,000		$	2,863,000
Reserves		-			264,000
Deferred revenue		-			1,224,000
Other		322,000			-
Valuation allowance		(2,203,000	)		(1,559,000	)
Total deferred tax assets		459,000			2,792,000
Deferred tax liabilities:
Equity method investment		-			(1,134,000	)
Property and equipment, net		(459,000	)		(458,000	)

Net deferred tax asset	$	-		$	1,200,000

	2010			2009
Deferred tax assets:
Net operating loss	$	2,863,000		$	1,379,000
Reserves		264,000			118,000
Deferred revenue		1,224,000			1,224,000
Valuation allowance		(1,559,000	)		(126,000	)
Total deferred tax assets		2,792,000			2,595,000
Deferred tax liabilities:
Equity method investment		(1,134,000	)		(936,000	)
Property and equipment, net		(458,000	)		(459,000	)
Net deferred tax asset	$	1,200,000		$	1,200,000

Differences between financial reporting and tax reporting relate primarily to equity method accounting, reserves, deferred revenue and differences between depreciation for financial reporting and tax reporting purposes. Net operating loss carryforwards of approximately $6,000,000 and $7,000,000 are available for federal and state income tax purposes. The carryforwards begin to expire in 2026 for federal income tax purposes and 2023 for state income tax purposes.

Differences between financial reporting and tax reporting relate primarily to equity method accounting, reserves, deferred revenue and differences between depreciation for financial reporting and tax reporting purposes. Net operating loss carryforwards of approximately $5,600,000 and $7,367,000 are available for federal and state income tax purposes. The carryforwards begin to expire in 2026 for federal income tax purposes and 2023 for state income tax purposes.

In July 2006, the FASB issued ASC 740-10. The Company adopted the provisions of ASC 740-10 effective April 1, 2007. This interpretation was issued to clarify the accounting for uncertainty in income taxes recognized in the financial statements by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

The cumulative effect of adopting ASC 740-10 did not have a material impact on the financial statements of the Company. At March 31, ~~2010~~2011 and ~~2009~~2010, the Company had no material gross unrecognized tax benefits. At this time, the Company’s best estimate of the reasonably possible change in the amount of the gross unrecognized tax benefits is deemed not to be material during the next twelve months mainly due to the expiration of certain statutes of limitations. The federal statute of limitations remains open for this fiscal year. Tax years ~~2005~~2007 and forward are subject to audit by state tax authorities depending on open statute of limitations waivers and the tax code of each state.

F-16

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~ 2010

NOTE 15 – 401(k) PLANS:

During the year ended March 31, 2008, the Company formed a deferred compensation/retirement plan covering employees of Thermodynetics. ANo ~~contribution~~contributions ofwere $0made ~~and $1,750, was accrued~~ to the plan during the years ended March 31, ~~2010~~2011 and ~~2009~~2010, respectively~~, and was paid through a contribution of shares of Thermodynetics common stock~~. It The ~~is the~~ Company’s ~~intention~~terminated ~~to terminate~~ the plan ~~and~~effective ~~distribute~~December ~~assets~~31, ~~to the participants~~2010.

NOTE 16 – EMPLOYMENT CONTRACTS:

The Company has ~~extended its~~ employment agreements with two employees ~~and~~ /directors through March 2014. These agreements provide for annual base salaries of approximately $~~276~~278,000 and $~~208~~210,000, respectively, updated annually for increases in the Consumer Price Index, as well as certain medical, life and disability insurance coverage. For fiscal year ~~2010~~2011, these employees ~~reduced~~and ~~their~~the Company wrote off $400,000 of salaries byaccrued ~~25%~~and unpaid from prior years.

In the event of termination, each agreement provides for the continuation of compensation and benefits. However, the employees may not compete with the Company within the United States for a period of two years after termination and are subject to the terms and conditions of confidentiality agreements.

NOTE 17 – STOCK ~~BONUSES~~BASED COMPENSATION:

During the years ended March 31, ~~2010~~2011 and ~~2009~~2010, the Company issued a total of ~~460~~1,565,000 and 10460,000 shares, respectively, to certain members of its Board of Directors.

NOTE 18 – CASH FLOW INFORMATION:

Cash paid for interest was $~~153~~134,~~111~~277 and $~~147~~153,~~699~~111 for the years ended March 31, ~~2010~~2011 and ~~2009~~2010, respectively.

Long term debt of $34,555 was incurred to acquire vehicles during the years ended March 31, 2009.

F-17

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~ 2010

NOTE 19 – DISCONTINUED OPERATIONS:

In August 2005, the Company discontinued the operations of Vulcan. From that date through March 31, 2007 the Company liquidated Vulcan’s remaining assets and settled all secured liabilities.

~~The~~Total ~~Company~~long-term ~~allocates~~liabilities ~~interest expense based on the named debtor~~ of ~~all~~discontinued ~~interest~~operations ~~bearing~~were ~~debt. Interest~~$- ~~expense~~for ~~included~~March in31, ~~discontinued~~2011 ~~operations~~and ~~was~~ $02,782,195 for ~~the years ended~~ March 31, 2010 ~~and 2009~~.

~~Assets~~During ~~and~~the fiscal quarter ended September 30. 2010, the Company extinguished debts totaling $2,782,195, which reflected liabilities offrom Vulcan. Vulcan ~~were~~was ~~reported~~closed asduring ~~assets~~2005 and all secured creditors were satisfied. The remaining liabilities were payable by Vulcan alone to unsecured creditors, and with the passing of ~~discontinued~~their ~~operations~~statutory atrights, ~~March~~those 31liabilities were written off resulting in a gain, ~~2010~~net ~~and~~of ~~2009~~taxes of $1,582,195, which has been reflected as an extraordinary item.

~~Total~~NOTE ~~long-term~~20 ~~liabilities~~– ofFAIR ~~discontinued~~VALUE ~~operations were $2,782,195 for both March 31, 2010 and 2009.~~MEASUREMENTS:

In September 2006, The ~~following~~Financial ~~amounts~~Accounting ofStandards ~~Vulcan~~Board ~~are~~issued ~~included~~Financial inAccounting ~~discontinued~~Standards ~~operations~~Codification onNo. 820, Fair Value Measurements and Disclosures (FASB ASC 820), which established a framework for identifying and measuring fair value. FASB ASC 820 provided a fair value hierarchy, giving the ~~consolidated~~highest ~~statement~~priority to quoted prices in active markets, and is expected to be applied to fair value measurements of ~~operations:~~derivative contracts that are subject to mark to market accounting and other assets and liabilities reported at fair value.

	2010		2009
Revenues	$	-	$	-
Pre-tax income (loss)	$	-	$	-

ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value.

~~NOTE~~Financial 20assets –and ~~COMMITMENTS~~liabilities ~~AND~~recorded ~~CONTINGENCIES~~on the accompanying consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:

~~The~~Level ~~following~~1 ~~are~~– ~~the~~measurements ~~known~~utilize unadjusted quoted prices in active markets for identical assets or ~~threatened~~liabilities ~~legal~~that ~~proceedings:~~the entity has the ability to access. These consist primarily of listed equity securities; exchange traded fixed income securities, derivatives and certain U.S. government treasury securities.

a)Level ~~The~~2 ~~lawsuit~~– ~~instituted~~measurements byinclude ~~the~~quoted ~~Company~~prices onfor ~~January~~similar 8,assets ~~2008~~and inliabilities ~~the High Court~~ in ~~England,~~active ~~file no. HC08C00046~~markets, ~~against~~quoted ~~Turbotec~~prices ~~Products~~for ~~Plc~~identical ~~was~~or ~~concluded~~similar inassets ~~February,~~or ~~2010.~~liabilities ~~A judgment~~ in ~~favor~~markets ~~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~~are ~~fees were~~ not ~~payable to the Company~~active, and ~~that~~other ~~the~~observable ~~Company~~inputs ~~was~~such ~~required~~as ~~under~~interest ~~British~~rates ~~law~~and toyield ~~reimburse~~curves ~~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.~~observable ~~The~~at ~~PLC~~commonly ~~has~~quoted ~~claimed total legal costs of approximately £700,000 which are to be subject to an assessment by the court if they cannot be agreed~~intervals. These ~~The~~consist ~~PLC~~primarily ~~will be entitled to 85%~~ of ~~its~~non-exchange ~~legal~~traded ~~costs~~derivatives ~~after~~such ~~assessment~~as ~~by the court. On May 24~~swaps, ~~2010~~forward incontracts ~~accordance with the judgment, the Company paid £350,000 to the PLC on account~~ of ~~their~~options ~~costs. These legal fees have been accrued at March 31, 2010~~ and ~~are~~most ~~included~~fixed inincome ~~accrued expenses in these financial statements~~securities.

F-18

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~ 2010

NOTE 20 – ~~COMMITMENTS~~FAIR ~~AND~~VALUE ~~CONTINGENCIES~~MEASUREMENTS (Continued):

b)Level ~~Turbotec~~3 ~~Products,~~– ~~Inc.~~measurements ~~commenced~~use aunobservable ~~lawsuit~~inputs ~~against~~for ~~Thermodynetics~~assets onor ~~February 27~~liabilities, ~~2008~~are inbased on the ~~Connecticut~~best ~~Superior~~information ~~Court,~~available ~~Judicial~~and ~~District~~might ofinclude ~~Hartford,~~the ~~alleging~~entity’s ~~that~~own ~~Thermodynetics~~data. In ~~breached~~some ~~two commercial leases~~valuations, ~~and~~the ~~that~~inputs ~~Thermodynetics~~used ~~improperly~~may ~~withdrew~~fall ~~funds~~into ~~from~~different alevels ~~sinking~~of ~~fund~~hierarchy. In ~~established~~these ~~under~~cases, the ~~leases.~~financial ~~The~~instrument’s ~~lawsuit~~level ~~was~~within ~~transferred~~the ~~from~~fair ~~the~~value ~~regular~~hierarchy ~~docket~~is tobased on the ~~Housing~~lowest ~~Session~~level ~~and~~of ~~now~~input that is ~~entitled~~significant ~~Turbotec~~to ~~Product,~~the ~~Inc.~~fair vvalue measurement. These ~~Thermodynetics,~~consist ~~Inc.,~~mainly ~~Connecticut~~of ~~Superior~~assets ~~Court,~~and ~~J.D.~~liabilities ofvalued ~~Hartford,~~through ~~Housing~~an ~~Session,~~internal ~~Docket~~modeling Noprocess. ~~7712.~~

InAvailable-for-Sale ~~2009,~~and ~~Turbotec~~Held-to-Maturity ~~Products~~Securities ~~filed~~– anThe ~~amended~~Company ~~complaint~~uses ~~adding~~pricing ~~counts~~computed ~~for~~utilizing ~~fraudulent~~the ~~inducement,~~quoted ~~fraudulent~~market ~~misrepresentation,~~prices ~~and violation~~ of the ~~Connecticut~~securities ~~Unfair~~to ~~Trade~~determine ~~Practices~~fair ~~Act~~value ~~(Conn.~~for ~~Gen.~~these ~~Stat.~~classes ~~Sect.~~of ~~42-110b, et seq~~securities.~~). Thermodynetics~~ Since ~~has~~these ~~completed~~financial ~~discovery. The~~assets ~~Company's~~consist ~~motion~~of toexchange ~~transfer~~traded ~~the~~fixed ~~case~~income ~~back~~and toequity ~~the~~securities, ~~regular~~they ~~docket~~are ~~given~~classified ~~the~~in ~~nature~~Level 1 of the ~~new~~financial ~~claims was granted on August 5, 2009~~hierarchy. ~~A pretrial conference is scheduled for July 21, 2010.~~

~~Turbotec~~Assets ~~Products~~Held ~~claims~~for ~~that~~Sale it– ~~suffered~~The ~~damages~~Company inutilized ~~excess of $350,000 and such damages are continuing to accrue. Thermodynetics denies~~ the ~~allegations,~~sales iscontract ~~vigorously~~as ~~defending~~ the ~~case,~~basis ~~and filed counterclaims~~ for ~~sums due under~~ the ~~two~~computation ~~leases, and has claimed the case for a jury trial. Thermodynetics does not view the risk~~ of ~~loss~~fair ~~in the case as probable or material~~value.

~~(c)~~Investments ~~There~~– ~~are~~at aequity ~~number~~– ofAt ~~threatened~~March ~~and~~31, ~~pending actions against Vulcan~~2010, ~~and~~this ainvestment ~~number~~was ofdeemed ~~material~~impaired ~~judgments~~and ~~obtained~~written ~~against~~down ~~Vulcan.~~to ~~Thermodynetics and~~ its ~~other~~fair ~~subsidiaries~~value ~~are~~based ~~not~~on ~~and~~quoted ~~have~~market ~~not been a party to any such Vulcan actions~~prices.

NOTE 21 – SUBSEQUENT EVENTS:

Sale of Shares of Turbotec Products, Plc:

On April 26, 2010, the Company entered into an agreement for the sale and purchase of 3,400,000 ordinary shares of Turbotec Products, Plc between the Company as the seller and the buyers, for approximately $1,300,000 before fees and transaction expenses.

The Relationship Agreement, dated April 28, 2006 was terminated in accordance with its terms by virtue of the sale of shares which reduced the Company’s holding in Turbotec Products, Plc below 30%.

Judgment from High Court in England:

On May 10, 2010, a judgment was rendered in the High Court in England against Thermodynetics and in favor of Turbotec Products, Plc (See Note 20).

F-19

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, ~~2010~~2011 AND ~~2009~~ 2010

NOTE 2120 – ~~SUBSEQUENT~~FAIR ~~EVENTS~~VALUE MEASUREMENTS (Continued):

~~Bank~~The ~~Action~~following table presents information about the Company’s respective assets and liabilities measured at fair value on a recurring basis at December 31, 2010, including the fair value measurements and the level of inputs used in determining those fair values:

The Company's bank initiated and served two separate lawsuits on June 28, 2010 against the Company, alleging defaults of certain mortgages of record and seeking recovery through foreclosure of the lien against the two commercial buildings. The Company is current on both primary mortgages for each of the buildings, and is current on its interest payments against the line of credit which had matured in 2009; the default against such line of credit is that it has matured and has not been repaid in whole through refinancing or payment in full, thus the bank has claimed a cross-default against the other mortgages. The Company believes there is material equity value in the buildings exceeding the value of all of the bank debt. The Company intends to seek the right to sell the buildings over an extended period of time. Both buildings are currently listed for sale with a commercial real estate broker

March 31, 2011

Description	Level 1		Level 3		Total

Assets:
Marketable Securities	$	1,645,904		-	$	1,645,904
Assets Held for Sale		-	$	850,000		850,000

Total	$	1,645,904	$	850,000	$	2,495,904



March 31, 2010

Description	Level 1		Level 3		Total

Assets:
Marketable Securities	$	44,625			$	44,625
Investments - at equity		3,198,412		-		3,198,412

Total	$	3,198,412	$	-	$	3,198,412

NOTE 21 – SUBSEQUENT EVENTS:

Distribution of Subsidiary Stock:

The Board of Directors of Thermodynetics has approved the distribution of a dividend to shareholders of record on July 15, 2011 in a spin-off transaction. Those shareholders who are owners of at least 1,000 shares of Thermodynetics common stock are receiving shares of TPI Systems, Inc. ("TPI") on a one-for-one (1:1) pro rata basis. All other Thermodynetics shareholders, being those holding less than 1,000 shares of Thermodynetics, are receiving a distribution of $0.0002 per share for each of the shares, pro rata, they owned of Thermodynetics as of the record date. There is no effect on any holdings in Thermodynetics.

The dividend in stock will equal at least 80% and no more than 85% of the now outstanding shares of TPI, and the parent is retaining the remaining shares.

Subsequent Events:

Management has evaluated subsequent events through July 98, ~~2010~~2011, the date at which these financial statements were available for issue.

F-20

THERMODYNETICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, 2011 AND 2010

NOTE 22 – COMMITMENTS AND CONTINGENCIES:

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 London judgment held that the Company was required to reimburse the PLC for 85% of the PLC’s legal expenses which the PLC has claimed approximate £795,000; the Company is contesting such amount. On May 24, 2010 in accordance with the judgment, the Company paid £350,000 to the PLC on account of their costs. The Company could ultimately be responsible for £325,000 of legal costs claimed by the PLC, although the Company believes the amount may be substantially less. These legal fees have been accrued at March 31, 2010 and are included in accrued expenses in these financial statements as of March 31, 2011 and 2010.

Turbotec Products, Inc. commenced a lawsuit against Thermodynetics on February 27th, 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, and for fraudulent inducement, fraudulent misrepresentation, and violation of the Connecticut Unfair Trade Practices Act. The parties settled the lawsuit and on January 10th, 2011 mutual releases were exchanged between Thermodynetics and Turbotec, and the lawsuit was dismissed without any financial obligation owed to either party. An outcome of the settlement was that Turbotec extended its leasehold interest in the Day Hill facility through December 31st, 2011.

The Company's bank initiated and served two separate lawsuits on June 28th, 2010 against the Company in the Connecticut Superior Court, Judicial District of Hartford, alleging defaults of a line of credit and certain mortgages and seeking recovery through foreclosure of the liens against the two commercial buildings. Negative outcomes in either of such proceedings will have a material adverse effect upon the Company. At March 31st, 2011, the Company was current on both primary mortgages and was current on its interest payments against the line of credit which had matured in 2009. The default initially was against the line of credit which has not been repaid and the bank has claimed a cross-default against the mortgages. The Company believes there is material equity in the buildings exceeding the value of all of the bank debt. The current balance due under the line of credit and mortgages equals approximately $2.4 million; the Bank is claiming such balance plus costs and legal expenses of the proceeding. In the event the bank is successful in its foreclosure proceedings and a qualified buyer for the properties is not secured, the loss to the Company could exceed the amounts due under the line of credit and mortgages. However, in the event of a strict foreclosure, under Connecticut foreclosure law, a court would apply a fair market value to the properties and buildings based upon a then to be appraised value as of the date title vested in the bank; therefore, the likely risk of loss to the Company would be the loss of the land and buildings but not further financial deficiency claims. Both properties are currently listed for sale with a commercial real estate broker, and management would also consider any long-term lease opportunities.

F-21

Thermodynetics, Inc.

Annual Report on Form 10-K

Signature Page

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant)

THERMODYNETICS, INC.

By:	/s/ Robert A. Lerman
	Robert A. Lerman, President,
	Chief Executive Officer,
	and Director

Date: July 13, 2011

By:	/s/ Robert A. Lerman	By:	/s/ John F. Ferraro
	Robert A. Lerman, President,		John F. Ferraro, Chairman of
	Chief Executive Officer, and Director		the Board, Treasurer, Chief Financial Officer,
			Secretary and Director

Date: July 13, 2011		Date: July 13, 2011

By:	/s/ John J. Hughes
	John J. Hughes, Director

Date: July 13, 2011

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