UTEK CORP - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 2003

COMMISSION FILE NUMBER: 001-15941

UTEK CORPORATION

(Exact Name of Registrant as Specified in its Charter)

DELAWARE
(State or Jurisdiction of
Incorporation or Organization)

59-3603677
(IRS Employer
Identification No.)

202 S. Wheeler Street
Plant City, FL 33563
(Address of Principal Executive Offices)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (813) 754-4330

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 12 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods as 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 o

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). YES o NO x

On June 2, 2003 there were 4,255,672 shares outstanding of the
Registrant’s common stock, $0.01 par value.

UTEK CORPORATION

FORM 10-Q INDEX


PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
		Consolidated Balance Sheets as of March 31, 2003 (unaudited) and December 31, 2002	3
		Consolidated Statements of Operations — For the Three Months Ended March 31, 2003, and 2002 (unaudited)	4
		Consolidated Statements of Cash Flows — For the Three Months Ended March 31, 2003 and 2002 (unaudited)	5
		Consolidated Statements of Changes in Net Assets For the Three Months Ended March 31, 2003 and 2002 (unaudited)	6
		Financial Highlights For the Three Months Ended March 31, 2003 and 2002 (unaudited)	7
		Schedule of Investments as of March 31, 2003 (unaudited) and December 31, 2002	8
		Notes to Consolidated Financial Statements (unaudited)	12
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
	Item 3. Quantitative and Qualitative Disclosures about Market Risk		27
	Item 4. Controls and Procedures		27
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings		27
	Item 2. Changes in Securities and Use of Proceeds		27
	Item 3. Defaults Upon Senior Securities		27
	Item 4. Submission of Matters to a Vote of Security Holders		27
	Item 5. Other Information		27
	Item 6. Exhibits and Reports on Form 8-K		27
	Signatures		29

Page 2 of 32

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UTEK Corporation
Consolidated Balance Sheets


				March 31,			December 31,
				2003			2002

				(Unaudited)
ASSETS
	Investments in non-controlled affiliates (cost $9,523,785 and $9,541,631 at March 31, 2003 and December 31, 2002, respectively)			$	2,713,856		$	6,208,090
	Cash and cash equivalents				580,045			745,926
	Prepaid expenses and other assets				197,580			308,722
	Fixed assets, net				58,812			65,255
	Intangible assets				525,010			535,147

			TOTAL ASSETS		4,075,303			7,863,140

LIABILITIES
	Accrued expenses				223,826			126,947
	Income taxes payable				16,463			16,781
	Deferred revenue				298,971			127,766
	Deferred income taxes				—			245,589

			TOTAL LIABILITIES		539,260			517,083

			NET ASSETS	$	3,536,043		$	7,346,057

Commitments and Contingencies
Composition of net assets:
	Common stock, $.01 par value, 19,000,000 shares authorized; 3,925,672 shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively			$	39,257		$	39,257
	Preferred stock, $.01 par value, 1,000,000 shares authorized; none issued and outstanding				—			—
	Additional paid in capital				7,058,941			7,058,941
	Accumulated income:
		Accumulated net operating income			2,519,463			3,122,937
		Net realized loss on investments, net of income taxes of $378,000 and $315,000 at March 31, 2003 and December 31, 2002, respectively			(1,004,636	)		(836,125	)
		Net unrealized depreciation of investments, net of deferred income taxes of $2,219,823 and $787,000 at March 31, 2003 and December 31, 2002, respectively			(5,111,443	)		(2,091,988	)
		Foreign currency translation adjustment			34,461			53,035

Net assets				$	3,536,043		$	7,346,057

Net asset value per share				$	.90		$	1.87

See accompanying notes

Page 3 of 32

UTEK Corporation
Consolidated Statements of Operations
(Unaudited)


			Three Months Ended March 31

			2003			2002

Income from operations:
	Sale of technology rights		$	262,857		$	—
	Consulting fees			239,823			263,936
	Investment income, net			1,591			6,018

				504,271			269,954

Expenses:
	Salaries and wages			177,312			210,964
	Professional fees			260,861			157,242
	Sales and marketing			91,464			95,680
	General and administrative			285,711			228,020

				815,348			691,906

Loss before income taxes				(311,077	)		(421,952	)
Provision for income tax expense (benefit)				292,397			(150,902	)

	Net loss from operations			(603,474	)		(271,050	)

Net realized and unrealized gains (losses):
	Net realized loss on investments, net of income tax benefit of $101,669 and $16,881 for 2003 and 2002, respectively			(168,511	)		(27,979	)
	Change in unrealized appreciation (depreciation) of non-controlled affiliate investments, net of deferred tax benefit of $456,933 and $134,431 for 2003 and 2002, respectively			(3,019,455	)		(213,823	)

Net decrease in net assets from operations			$	(3,791,440	)	$	(512,852	)

Net decrease in net assets from operations per share:
		Basic	$	(.97	)	$	(.13	)
		Diluted	$	(.97	)	$	(.13	)
Weighted average shares:
		Basic		3,925,672			3,915,672
		Diluted		3,925,672			3,915,672

See accompanying notes

Page 4 of 32

UTEK Corporation
Consolidated Statements of Cash Flows
(Unaudited)


				For the Three Months Ended March 31

				2003			2002

Operating Activities:
	Net decrease in net assets from operations			$	(3,791,440	)	$	(512,852	)
	Adjustments to reconcile net decrease in net assets from operations to net cash provided by operating activities:
		Decrease in net unrealized appreciation of investments			3,476,388			342,830
		Depreciation			7,490			8,098
		Loss on disposal of fixed asset			—			1,024
		Loss on sale of investments			270,180			44,860
		Deferred income taxes			(245,589	)		(296,790	)
		Investment securities received from assignment of license			(262,857	)		—
		Services rendered in exchange for investment securities			(42,963	)		(188,511	)
	Changes in operating assets and liabilities:
		Prepaid expenses and other assets			119,913			49,802
		Deferred revenue			1,100			(26,263	)
		Accrued expenses			96,879			10,428

			Net cash used in operating activities		(370,899	)		(567,374	)

Investing Activities:
	Proceeds received on sale of investments				223,592			453,790
	Purchases of fixed assets				—			(4,455	)

			Net cash provided by investing activities		223,592			449,335

	Foreign currency translation adjustment				(18,574	)		(886	)

	Decrease in cash and cash equivalents				(165,881	)		(118,925	)
Cash and cash equivalents at beginning of year					745,926			1,432,473

Cash and cash equivalents at end of period				$	580,045		$	1,313,548

See accompanying notes

Page 5 of 32

UTEK Corporation
Consolidated Statements of Changes in Net Assets
(Unaudited)


			Three Months Ended March 31

			2003			2002

Changes in net assets from operations:
	Net loss from operations		$	(603,474	)	$	(271,050	)
	Net realized loss on sale of investments			(168,511	)		(27,979	)
	Change in net unrealized depreciation of investments, net of related deferred taxes			(3,019,455	)		(213,823	)

		Net decrease in net assets from operations		(3,791,440	)		(512,852	)

Foreign currency translation adjustment				(18,574	)		(9,334	)

Net decrease in net assets				(3,810,014	)		(522,186	)
Net assets at beginning of year				7,346,057			9,909,440

Net assets at end of period			$	3,536,043		$	9,387,254

See accompanying notes

Page 6 of 32

UTEK Corporation
Financial Highlights
(Unaudited)


		Three Months Ended March 31

		2003			2002

PER SHARE INFORMATION
Net asset value, beginning of period		$	1.87		$	2.53
	Net decrease from operations (1)		(0.15	)		(0.07	)
	Net change in realized and unrealized depreciation on investments, after taxes		(0.81	)		(0.06	)
	Foreign currency translation adjustment		(0.01	)		—

Net asset value, end of period		$	.90		$	2.40

Per share market value, end of period		$	5.70		$	7.00
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period		$	3,536,043		$	9,387,254
Ratio of expenses to average net assets (2)			15	%		7	%
Ratio of net loss to average net assets			(11	)%		(6	)%
Diluted weighted average number of shares outstanding during the period			3,925,672			3,915,672

(1)		Calculated based on diluted weighted average number of shares outstanding during the period.

(2)		Excluding income taxes

See accompanying notes

Page 7 of 32

UTEK CORPORATION
Schedule of Investments
March 31, 2003
(Unaudited)


		Original
		Date of			Original		Fair
Shares		Acquisition			Cost		Value

				Common stock in non-controlled affiliates—76.7% of net assets
	236,000		3/01	Lexon, Inc., publicly traded over the counter—0%;	$	39,614	$	—
				developer of health care technology
	1,344,300		1/99	Image Analysis, Inc., privately held — 0%;		1,349,775		—
				medical and hospital equipment developer
	900,000		5/99	Nubar, Inc., privately held—0%; developer of construction materials		126,000		—
	980,778		6/99	Clean Water Technologies, Inc. (formerly NuElectric Corporation),		573,806		54,923
				publicly traded over the counter—1.5%; environmental services
	150		11/99	Rosbon, LLC (formerly Rosbon, Inc.), privately held—1.8%;		90,705		63,086
				real estate development
	136,093		3/00	Graphco Technologies, Inc., publicly traded over the counter—		1,025,257		280,351
				8.0%; developer of e-commerce technologies
	2,094,053		6/00	Advanced Recycling Sciences, Inc. (formerly The Quantum Group, Inc.)		1,970,952		108,891
				publicly traded over the counter—3.1%; tire recycling methodologies
	4,221,165		4/01	Stealth MediaLabs, Inc. (formerly BitzMart, Inc.) publicly traded		1,708,000		337,693
				over the counter—9.5%; software products
	62,089		5/01	Sense Holdings, Inc., publicly traded over the counter— .3%;		16,143		10,307
				biometric technologies
	1,493,550		9/01	Prime Pharmaceutical Corporation, privately held— 3.1%;		783,344		109,029
				pharmaceutical developments in dermatology
	1,000,000		11/01	Primapharm Funding Corporation, privately held— 3.1%;		413,617		109,000
				intellectual property development
	400,000		11/01	Palladium Communications, Inc. (formerly USAOnestar.Net Inc.) ,		12,028		—
				publicly traded over the counter—0%; telecom, educational internet service
	47,615		1/02	Group Management Corporation, publicly traded over the counter— 0%;		46,949		—
				corporate management
	3,669,429		1/02	Circle Group Holdings, Inc. (formerly Circle Group Internet, Inc.),
				publicly traded over the counter, digital design and consulting — 35.2%;		622,358		1,246,717
	633,750		2/02	Voice and Wireless Corporation, publicly traded over the counter		53.161		10,647
				—.3%; internet/technology services and products
	48,000		4/02	Hydrogen Technology Applications, Inc., privately held, — 0%;		14,040		—
				developer of energy technology
	486,750		6/02	FullCircle Registry, Inc., publicly traded over the counter, — 6.2%;		519,618		219,038
				developer of emergency information technology
	120,000		9/02	Innovative Medical Services, Inc., publicly traded over the counter,		59,559		67,200
				— 1.9% developer of anti-microbial technology
	83,478		1/03	Duraswitch Industries, Inc., publicly traded over the counter,		44,459		42,574
				—1.2% developer of electronic switch technologies
	160,000		3/03	Sequiam Corporation, publicly traded over the counter, — 1.5%		54,400		54,400
				developer of biological authentication and biometrics technologies

				TOTAL INVESTMENTS—76.7%	$	9,523,785	$	2,713,856

				Cash and other assets, less liabilities—23.3%				822,187

				Net assets at March 31, 2003—100%			$	3,536,043

Notes to Schedule of Investments:

Page 8 of 32

• As of March 31, 2003, all of the securities that we own are “restricted securities,” as that term is defined under Rule 144 of the Securities Act of 1933. These securities may not be sold in the absence of registration under the Securities Act of 1933 or an exemption therefrom. As a result, our ability to sell or otherwise transfer the securities we hold in our portfolio is limited.

• The Company owns more than 10% of the outstanding common stock of each of the above investments with the exception of Full Circle Registry, Inc., Graphco Technologies, Inc., Prime Pharmaceutical Corporation, Lexon, Inc., Voice and Wireless Corporation, Palladium Communications, Inc., Hydrogen Technology Applications, Inc., Innovative Medical Services, Inc., Sense Holdings, Inc., Advanced Recycling Sciences, Inc. and Group Management Corporation. As such, the Company is deemed to be an affiliate of these companies, as defined under Rule 144 of the Securities Act of 1933, except for those specifically noted.

See accompanying notes

Page 9 of 32

UTEK CORPORATION
Schedule of Investments
December 31, 2002


		Original
		Date of			Original		Fair
Shares		Acquisition			Cost		Value

				Common stock in non-controlled affiliates—84.5% of net assets
	236,000		3/01	Lexon, Inc., publicly traded over the counter—0%;	$	39,614	$	—
				developer of health care technology
	1,344,300		1/99	Image Analysis, Inc., privately held—0%; medical and		1,349,775		—
				hospital equipment developer
	1,343,400		5/99	Centrex, Inc., publicly traded over the counter—3.5%;		443,322		255,246
				developer of water and purification methodologies
	900,000		5/99	Nubar, Inc., privately held—0%; developer of construction materials		126,000		—
	980,778		6/99	Clean Water Technologies, Inc. (formerly NuElectric Corporation),		573,806		45,116
				publicly traded over the counter—.6%; environmental services
	150		11/99	Rosbon, LLC (formerly Rosbon, Inc.) , privately held—1.0%;		90,705		76,451
				real estate development
	100,799		3/00	Graphco Technologies, Inc., privately held—2.8%;		952,551		207,646
				developer developer of e-commerce technologies
	2,103,053		6/00	Advanced Recycling Sciences, Inc. (formerly The Quantum Group, Inc.)		1,978,242		231,336
				publicly traded over the counter—3.1%; tire recycling methodologies
	4,221,165		4/01	Stealth MediaLabs, Inc. (formerly BitzMart, Inc.) publicly traded		1,708,000		4,586,435
				over the counter—62.5%; software products
	228,089		5/01	Sense Holdings, Inc., publicly traded over the counter—1.0%;		59,303		70,708
				biometric technologies
	1,493,550		9/01	Prime Pharmaceutical Corporation, privately held—1.4%;		783,344		104,548
				pharmaceutical developments in dermatology
	1,000,000		11/01	Primapharm Funding Corporation, privately held—1.4%; intellectual		393,001		100,000
				property development
	400,000		11/01	Palladium Communications, Inc. (formerly USAOnestar.Net Inc.) ,		12,028		—
				publicly traded over the counter—0%; telecom, educational internet service
	47,615		1/02	Group Management Corporation, publicly traded over the counter—0%;		46,949		—
				corporate management
	2,844,000		1/02	Circle Group Holdings, Inc. (formerly Circle Group Internet, Inc.), publicly traded over the counter, digital design and consulting—.8%;		358,102		59,724
	633,750		2/02	Voice and Wireless Corporation, publicly traded over the counter,		53,161		13,942
				—.2%; internet/technology services and products
	48,000		4/02	Hydrogen Technology Applications, Inc., privately held,—0%;		14,040		—
				developer of energy technology
	486,750		6/02	FullCircle Registry, Inc., publicly traded over the counter,—5.6%;		519,803		413,738
				developer of emergency information technology
	120,000		9/02	Innovative Medical Services, Inc., publicly traded over the counter,		39,885		43,200
				—.6% developer of anti-microbial technology

				TOTAL INVESTMENTS—84.5%	$	9,541,631	$	6,208,090

				Cash and other assets, less liabilities—15.5%				1,137,967

				Net assets at December 31, 2002—100%			$	7,346,057

Notes to Schedule of Investments:

• The above investments with the exception of Rosbon, LLC are non-income producing. Equity investments that have not paid dividends within the last twelve months are considered non-income producing.

• The value of all securities for which there is no readily ascertainable market value is determined in good faith by the Board of Directors. In making its determination, the Board of Directors has considered valuation appraisals provided by an independent valuation service provider. (See Notes 1 and 2 to the consolidated financial statements).

• As of December 31, 2002, all of the securities that we own are “restricted securities,” as that term is defined under Rule 144 of the Securities Act of 1933. These securities may not be sold in the absence of registration under the Securities Act of 1933 or an exemption therefrom. As a result, our ability to sell or otherwise transfer the securities we hold in our portfolio is limited.

Page 10 of 32

• The Company owns more than 10% of the outstanding common stock of each of the above investments with the exception of Full Circle Registry, Inc., Centrex, Inc., Graphco Technologies, Inc., Prime Pharmaceutical Corporation, Lexon, Inc., Voice and Wireless Corporation, Palladium Communications, Inc., Hydrogen Technology Applications, Inc., Innovative Medical Services, Inc., Sense Holdings, Inc., Advanced Recycling Sciences, Inc. and Group Management Corporation. As such, the Company is deemed to be an affiliate of these companies, as defined under Rule 144 of the Securities Act of 1933, except for those specifically noted.

Page 11 of 32

UTEK Corporation
Notes to Consolidated Financial Statements
(Information as of March 31, 2003 and 2002 and for each of the three months periods
then ended is unaudited)

1. Nature of Business and Significant Accounting Policies

Interim Financial Information

The financial information for UTEK Corporation (the “Company”) as of March 31, 2003 and 2002 and for three month periods then ended is unaudited, but includes all adjustments (consisting only of normal recurring accruals) which, in the opinion of management are necessary in order to make the financial statements not misleading at such dates and for those periods. These financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all information and footnotes required by accounting principles generally accepted in the United States. These consolidated financial statements should be read in conjunction with the consolidated audited financial statements and related notes included in the Company’s Form 10-K for the year ended December 31, 2002. Operating results for the three months ended March 31, 2003 are not necessarily indicative of the results that may be expected for the entire year.

The Company

We are a non-diversified, closed-end management investment company that has elected to be treated as a Business Development Company (“BDC”) under the Investment Company Act of 1940 (“1940 Act”).

We commenced operations in 1997 as UTEK Corporation (“UTEK Florida”), which was incorporated under the laws of the State of Florida in August 1996. UTEK Florida was engaged in the business of technology transfer. On December 31, 1998, we formed UTEK, LLC, a limited liability company organized under the laws of the State of Florida. Subsequent thereto, the shareholders of UTEK Florida exchanged their shares of common stock for membership units in UTEK, LLC. In July 1999, we formed UTEK Corporation under the laws of the State of Delaware and in October 1999, UTEK LLC was merged into UTEK Corporation.

In September 2001, UTEK Corporation acquired 100% of the outstanding common stock of PAX Technology Transfer Ltd., a United Kingdom corporation, in a stock for stock transaction. In May 2002, UTEK Corporation acquired 100% of the outstanding common stock of Techex Acquisition Corporation (“TechEx”) in a stock for stock transaction. TechEx owned the TechEx.com website. The TechEx.com website is used by many technology transfer and research professionals to efficiently exchange biomedical licensing opportunities and innovations available for partnering. The financial position and results of operation of PAX Technology Transfer Ltd. and TechEx have been consolidated into the financial position and results of operation of the Company since the dates of their respective acquisition.

As a BDC, we must be primarily engaged in the business of furnishing capital and making available managerial assistance to companies that generally do not have ready access to capital through conventional financial channels. Such companies are termed “portfolio” companies.

The Company invests in portfolio companies that management believes are positioned to benefit from the acquisition of new technology. The Company’s investments in portfolio companies generally are used by the portfolio companies to acquire the license rights to new technologies developed at universities and/or government research facilities. The Company offers to provide portfolio companies with managerial assistance primarily related to technology transfer. Technology transfer is the process by which technologies developed by universities or research laboratories are licensed to companies for commercial use. The Company also may make additional investments to fund continued research and development of the acquired technologies.

We have executed or will execute our investments in portfolio companies through the creation and capitalization of a subsidiary to acquire a new technology, which subsidiary will then be merged with a portfolio company in a non-taxable exchange of shares of the portfolio company. In connection with such transaction, we receive shares of common stock in the portfolio company in exchange for the securities of our subsidiary company. In addition to holding a license to a new technology, our subsidiary company may also hold cash and other assets. The portfolio companies frequently have little or no prior operating history.

To establish on-going consulting engagements with its clients, the Company has also developed a strategic alliance consulting services. UTEK’s strategic alliances are designed to help technology companies rapidly enhance their new product pipeline through the acquisition of proprietary intellectual capital from universities and federal laboratories.

Page 12 of 32

Investments

Pursuant to the requirements of the 1940 Act, our Board of Directors is responsible for determining, in good faith, the fair value of our securities and assets for which market quotations are not readily available. In making its determination, the Board of Directors has considered valuation appraisals provided by an independent valuation service provider. With respect to equity securities in privately—owned companies, each investment is valued using industry valuation benchmarks, and then the value is assigned a discount reflecting the illiquid nature of the investment as well as our minority, non-control position. When an external event such as a purchase transaction, public offering, or subsequent equity sale occurs, the pricing indicated by the external event is used to corroborate our private equity valuation. Equity securities in public companies that carry certain restrictions on sale are generally valued at a discount from the market value of the securities as quoted on the stock exchanges. In addition, restricted and unrestricted publicly traded stocks may also be valued at further discounts due to the size of our investment or market liquidity concerns.

The Board of Directors bases its determination upon, among other things, applicable quantitative and qualitative factors. These factors may include, but are not limited to, type of securities, nature of business, marketability, market price of unrestricted securities of the same issue (if any), comparative valuation of securities of publicly-traded companies in the same or similar industries, current financial conditions and operating results, sales and earnings growth, operating revenues, competitive conditions and current and prospective conditions in the overall stock market.

Without a readily ascertainable market value, the value of our portfolio of equity securities may differ significantly from the values that would be placed on the portfolio if there existed a ready market for such equity securities. Equity securities owned at March 31, 2003 and December 31, 2002 (76.7% and 84.5% of net assets, respectively) are stated at fair value as determined by the Board of Directors, in the absence of readily ascertainable fair values. The Company uses the first-in, first-out (FIFO) method of accounting for sales of its investments.

Revenue Recognition

Sale of Technology Rights

The Company recognizes revenue from the sale of technology rights upon the exchange of the shares of our subsidiary companies with unrelated portfolio companies. The Company records revenue, based on the fair value as determined by the Board of Directors, of the consideration received. In most cases, the consideration received for the rights is unregistered shares of common stock of the purchaser. The common stock received is recorded as an investment at fair value as determined by the Board of Directors.

Consulting and Other Services

Revenue derived from consulting services is generally paid in unregistered shares of common stock of the client. When unregistered shares of common stock are received from the client, revenue is recognized as earned, ratably over the term of the underlying consulting agreements. The unregistered shares of common stock received are recorded as an investment at fair value as determined by the Board of Directors. In some cases, the Company is paid a fee for negotiating a successful technology transfer. In these instances, revenue is recognized upon consummation of the transaction.

In addition to technology transfer merger transactions we offer strategic alliance consulting services. A method of technology transfer already being used by PAX Technology Transfer Ltd., strategic alliance services are performed pursuant to service agreements (usually one year in length) in which the Company provides consulting services by identifying and evaluating technology acquisition opportunities in exchange for unregistered shares of the company, or cash. These agreements are cancelable at any time.

Revenues from strategic alliance agreements in which unregistered shares of common stock are received before they are earned, are deferred and recognized over the term of each agreement. For strategic alliance agreements in which the stock is received ratably over the agreement, revenue is recognized as earned. The common stock received as payment is recorded as an investment at fair value as determined by the Board of Directors.

The Company’s consolidated subsidiary, PAX Technology Transfer, Ltd., derives its revenue primarily from consulting contracts with third parties. Revenue from consulting contracts is recognized ratably over the term of the contract, typically ninety days. These contracts are generally paid in the form of cash.

Revenue from the sale of subscriptions to the TechEx.com website, generally is received in the form of cash, and initially is deferred and subsequently recognized ratably over the term of the subscription.

Page 13 of 32

Research and Development

Research and development costs consist of expenditures incurred during the course of planned searches and investigations aimed at discovery of new knowledge that will be useful in developing new products or processes. The Company expenses all research and development costs as they are incurred. During the periods ended March 31, 2003 and 2002, the Company incurred no such costs.

Foreign currency translation

The Company translates the assets and liabilities of its non-U.S. functional currency subsidiary into dollars at the current rates of exchange in effect at the end of each reporting period. Revenues and expenses are translated using rates that approximate those in effect during the period. Translation adjustments are included in net assets under the caption “Foreign currency translation adjustment.”

Stock-Based Compensation

At March 31, 2003, the Company had the following two stock-based equity compensation plans: The UTEK Corporation Stock Option Plan and 2000 Non-Qualified Stock Option Plan of UTEK Corporation. The Company accounts for these plans and related grants thereunder using the intrinsic value method prescribed in APB Opinion No. 25, “Accounting for Stock Issued to Employees”. However, pro forma information regarding net income and earnings per share as required by Statement of Financial Accounting Standards No. 123, “Accounting for Stock Based Compensation”, (SFAS 123) was provided in our annual report on Form 10-K for the year ended December 31, 2003; and was determined as if we had accounted for our employee and non-employee director stock options under the fair value method of SFAS 123.

Outstanding options as of March 31, 2003 had a weighted average remaining contractual life of 3.4 years. The per share weighted average fair value of options granted during the three months ended March 31, 2003 and 2002 was 2.36 and 2.61, respectively.

Pro forma information regarding net income and earnings per share is required by SFAS 123, which also requires that the information be determined as if we had accounted for our employee stock options granted subsequent to December 31, 1994 under the fair value method set forth in SFAS 123. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:


	March 31, 2003		March 31, 2002

Risk-free interest rate		4.78		4.92
Volatility factor		.19		.19
Dividend yield		—		—
Weighted average expected life of options		5		5

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Under the fair value method of accounting prescribed under SFAS 123, employee compensation cost related to stock options, net of related income tax effects, would have been $25,013 and $32,685 for the quarters ended March 31, 2003 and 2002, respectively. The pro forma net increase (decrease) in net assets from operations and basic and diluted earnings per share for the quarters ended March 31, 2003 and 2002 would have been as follows:


		March 31, 2003			March 31, 2002

Net increase (decrease) in net assets from operations:
	As reported	$	(3,791,440	)	$	(512,852	)
	Fair value stock compensation expense		(25,013	)		(32,685	)

	Pro forma	$	(3,816,453	)	$	(545,537	)
Earnings per share — Basic:
	As reported	$	(.97	)	$	(.13	)
	Pro forma		(.99	)		(.14	)
Earnings per share — Diluted:
	As reported	$	(.97	)	$	(.13	)
	Pro forma	$	(.99	)		(.14	)

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2. Investments

Equity securities at March 31, 2003 and December 31, 2002, (76.7% and 84.5% of net assets, respectively) were valued at fair value as determined by the Board of Directors, with the assistance of valuation appraisals provided by an independent valuation service provider, in the absence of readily ascertainable market values.

The values assigned to these securities are based upon available information and may not reflect amounts that could be realized if the Company found it necessary to immediately sell such securities, or amounts that ultimately may be realized. Accordingly, the fair values included in the accompanying schedule of investments may differ from the values that would have been used had a ready market existed for these securities and such differences could be significant.

As of March 31, 2003 and December 31, 2002, the Company had established three and four subsidiary companies, with $-0- net assets.

On January 11, 2002, the Company entered into a strategic alliance agreement with Circle Group Holdings, Inc. (formerly Circle Group Internet, Inc.). The agreement provides for a total of 48,000 unregistered shares of Circle Group Holdings, Inc.’s common stock to be distributed to the Company pro rata during the term of the agreement. As of March 31, 2003, the Company has received and recognized to date consulting fees in relation to 48,000 unregistered shares of Circle Group Holdings, Inc.

On January 21, 2002, the Company received 114,276 unregistered shares of Group Management Corporation’s common stock in connection with a strategic alliance agreement. The Company recognized consulting fees related to 47,615 shares. The strategic alliance was cancelled in June 2002 and 66,661 shares were returned to Group Management Corporation.

On February 11, 2002, the Company entered into a strategic alliance agreement with Voice and Wireless Corporation. The agreement provides for a total of 540,000 unregistered shares of Voice and Wireless Corporation’s common stock to be distributed to the Company pro rata during the term of the agreement. The Company recognized consulting fees related to 315,000 shares. The strategic alliance was cancelled in August 2002.

On April 2, 2002, the Company received 48,000 unregistered shares of common stock from Hydrogen Technology Applications, Inc. in a strategic alliance agreement. As of March 31, 2003, the Company has recognized consulting fees to date relating to 48,000 shares.

On May 7, 2002, the Company sold its Nitrone Scientific, Inc. subsidiary company to Prime Pharmaceutical Corporation for 683,550 shares of Prime Pharmaceutical Corporation’s common stock in a non-taxable exchange.

On May 7, 2002, the Company sold its Digital Image Enhancement Technologies, Inc. subsidiary company to Image Analysis, Inc. for 465,000 unregistered shares of Image Analysis, Inc.’s common stock in a non-taxable exchange.

On May 31, 2002, the Company received 30,000 unregistered shares of common stock from FullCircle Registry, Inc. in a strategic alliance agreement. As of March 31, 2003, the Company has recognized consulting fees to date relating to 25,000 shares.

On June 11, 2002, the Company sold its Energy Management Technologies, Inc. subsidiary company to Voice and Wireless Corporation for 318,750 unregistered shares of Voice and Wireless Corporation’s common stock in a non-taxable exchange.

On June 12, 2002, the Company sold its Electronic Luminescent Technologies, Inc. subsidiary company to FullCircle Registry, Inc. for 68,250 unregistered shares of FullCircle Registry, Inc.’s common stock in a non-taxable exchange.

On August 27, 2002, the Company sold its Fiber-Gel Technologies, Inc. subsidiary company to Circle Group Holdings, Inc. (formerly Circle Group Internet, Inc.) for 2,800,000 unregistered shares of Circle Group Holdings, Inc.’s common stock and a warrant to purchase an additional 500,000 shares of its common stock at $0.36 per share in a non-taxable exchange.

On September 27, 2002, the Company sold its Spoken Data Technologies, Inc. subsidiary company to FullCircle Registry, Inc. for 157,500 unregistered shares of FullCircle Registry, Inc.’s common stock in a non-taxable exchange.

On September 12, 2002, the Company received 120,000 unregistered shares of common stock from Innovative Medical Services, Inc. in a strategic alliance agreement. As of March 31, 2003, the Company has recognized consulting fees to date relating to 65,922 shares.

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On December 24, 2002, the Company received 231,000 unregistered shares of common stock from FullCircle Registry, Inc. at $.86 in connection with a consulting agreement. The Company has recognized consulting fees to date relating to 231,000 shares.

On January 15, 2003, the Company received 83,478 unregistered shares of common stock from Duraswitch Industries, Inc. in a strategic alliance agreement. As of March 31, 2003, the Company has recognized consulting fees to date relating to 17,392 shares.

On March 18, 2003, the Company received 160,000 unregistered shares of common stock from Sequiam Corporation in a strategic alliance agreement. As of March 31, 2003, the Company has recognized consulting fees to date relating to 5,778 shares.

On March 26, 2003, the Company received 35,294 unregistered shares of common stock from Graphco Technologies, Inc. in a strategic alliance agreement. As of March 31, 2003, the Company has recognized consulting fees to date relating to 484 shares.

On March 26, 2003, the Company received 821,429 unregistered shares of common stock from Circle Group Holdings, Inc. at $.32 per share in connection with an assignment of license. The Company has recognized technology transfer income to date relating to the 821,429 shares received.

3. Commitments and Contingencies

From time to time, some of the Company’s portfolio companies may receive correspondence or other notices of alleged breach of the license agreement. Some of these correspondences and notices provide for a period of time in which to cure the alleged breach. The failure of the portfolio companies to cure the alleged breach may have a material adverse impact on the Company’s results of operations and financial position.

4. Valuations

The Board of Directors bases its determination of fair value upon, among other things, applicable quantitative and qualitative factors. These factors may include, but are not limited to, type of securities, nature of business, marketability, market price of unrestricted securities of the same issue (if any), comparative valuation of securities of publicly-traded companies in the same or similar industries, current financial conditions and operating results, sales and earnings growth, operating revenues, competitive conditions and current and prospective conditions in the overall stock market.

One of our investments, which has represented a significant portion of our investments, Stealth MediaLabs, Inc., filed a Form 8-K in April 2003 disclosing, among other things, their agreement to sell a substantial number of shares of common stock and warrants for eight cents per share. Stealth MediaLabs, Inc. also filed its most recent Form 10-Q in April 2003 further describing a deteriorating financial position as of January 31, 2003. As a result of these public disclosures, the Company has valued its shares of Stealth MediaLabs, Inc. at March 31, 2003 at eight cents per share and its warrants to purchase 200,000 shares of Stealth MediaLabs, Inc. at zero value. This resulted in unrealized depreciation of $4,249,000 in the first quarter of 2003, before income tax effects.

5. Subsequent Events

In April 2003, the Company completed a private placement transaction of 330,000 shares of its common stock at $3.00 per share. The purchasers of the shares of common stock agreed not to sell or otherwise transfer the shares for a period of one-year after the completion of the private placement transaction. In addition, the purchasers of the shares of common stock were granted certain piggyback registration rights, which will allow the purchasers to include their shares in a registered offering initiated by UTEK Corporation within the next twelve months.

In April 2003, the Company also obtained a loan for $1,000,000 at 12% per annum with all interest paid in advance. The loan matures on April 7, 2005 and no principal repayments are required prior to maturity. The loan is non-recourse except with respect to 360,360 shares of common stock of UTEK Corporation pledged as collateral under the loan.

The total net proceeds of these transactions to UTEK Corporation, after deducting investment banking fees and prepaid interest, was $1,650,500.

On June 2, 2003, UTEK received a court order of the Circuit Court for Hillsborough County, Florida (Case No. 02-8638-CA) appointing a receiver for Graphco Technologies, Inc. (one of our investments). UTEK currently has a strategic alliance agreement with Graphco Technologies, Inc. and holds 136,093 shares of its common stock. As of March 31, 2003, UTEK valued the shares of common stock of Graphco Technologies, Inc. at $2.06 per share. At this time, UTEK cannot determine the effect of this information on the valuation of its investment in Graphco Technologies, Inc.; however, it could likely have a material negative impact on UTEK’s valuation of Graphco Technologies, Inc. and, as a result, on UTEK’s financial condition and results of operations.

Page 16 of 32


ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our financial statements and the notes thereto included elsewhere in this Form 10-Q. This Form 10-Q contains forward-looking statements regarding the plans and objectives of management for future operations. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and we cannot assure you that these projections included in these forward-looking statements will come to pass. Our actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements. On a regular basis, management reviews these estimates and assumptions including those related to revenue recognition and the valuation of investments.

Management believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

Revenue Recognition

The Company recognizes revenue from the sale of technology rights upon the exchange of the shares of our subsidiaries with unrelated merger partners. The Company records revenue based on the value of the consideration received. In most cases, the consideration received for the rights is the common stock of the purchaser. The common stock received is recorded as an investment at fair value. Revenue derived from consulting services is recognized as earned, over the life of the underlying consulting agreements. Revenue from strategic alliance agreements is deferred and recognized over the term of each agreement, typically twelve months. These agreements are cancelable at any time. In some cases, the Company is paid a fee for negotiating a successful technology transfer. In these instances, revenue is recognized upon consummation of the transaction.

Valuation of Investments

The income that we derive from our investments in our portfolio consists of both cash and equity securities that we receive upon disposition of our investments. The value of the equities that we receive makes up most of our revenues. Pursuant to the requirements of the 1940 Act, our Board of Directors is responsible for determining in good faith the fair value of our securities and assets for which market quotations are not readily available. In making its determination, the Board of Directors may consider valuation appraisals provided by independent valuation service providers. With respect to private equity securities, each investment is valued using industry valuation benchmarks, and then the value is assigned a discount reflecting the illiquid nature of the investment as well as our minority, non-control position. When an external event such as a purchase transaction, public offering, or subsequent equity sale occurs, the pricing indicated by the external event is used to corroborate our private equity valuation. Equity securities in public companies that carry certain restrictions on sale are generally valued at a discount from the public market value of the securities.

We have retained Bolten Financial Consulting, Inc., to provide us with valuations of our investments (the securities we own), and also updated valuations as of each quarter end. We pay Bolten Financial Consulting, Inc. a fee each time it values our investments. For the three months ended March 31, 2003 and 2002, we paid Bolten Financial Consulting, Inc. a total of $21,388 and $17,292, respectively for its valuation services.

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Without a readily ascertainable market value, the value of our portfolio of equity securities may differ significantly from the values that would be placed on the portfolio if there existed a ready market for such equity securities. Any changes in fair value are recorded in the Company’s Statements of Operations as “Net realized and unrealized gains (losses)” during the period of change.

General

Our primary business is to make investments in companies that possess or will likely identify emerging and established technologies and markets for those technologies. Our primary investment objective is to increase our net assets by exchanging stock in our subsidiaries for stock, cash and other assets we will use to acquire licenses to additional technologies and fund our operations. We believe that we will be able to achieve our objectives by concentrating on investments in companies which we believe are likely to benefit from our management’s expertise in technology transfer.

Our expenses include salaries and wages, professional fees, sales and marketing costs as well as general and administrative costs. Sales and marketing costs include license and sponsored research fees, as well as advertising, commissions, salaries, travel and other expenses that vary with revenues. General and administrative costs include rent, depreciation, office, investor relations expenses and other overhead costs.

Financial Condition

The Company’s total assets were $4,075,303 and its net assets were $3,536,043 at March 31, 2003, compared to $7,863,140 and $7,346,057 at December 31, 2002, respectively.

Net asset value per share (“NAV”) was $.90 at March 31, 2003 and $1.87 at December 31, 2002. Net assets decreased by $3,810,014 for the three months ended March 31, 2003 and decreased by $522,186 for the three months ended March 31, 2002.

The net decrease in total assets, net assets and net asset value during the three months ended March 31, 2003 were primarily attributable to:

• One technology transfer valued at approximately $263,000 and nine strategic alliance agreements and other consulting agreements with earned revenue of approximately $240,000.

• A loss on sale, net of income tax benefit, of approximately $169,000 as a result of sales of the Company’s investment of $224,000.

• A decrease of approximately $3,019,000 in the value of the Company’s investments.

• The utilization of approximately $371,000 in cash to fund the Company’s operations.

The net decrease in total assets, net assets and net asset value during the three months ended March 31, 2002 were primarily attributable to:

• Four strategic alliance agreements and other consulting agreements with earned revenue of approximately $264,000.

• A decline of approximately $214,000 in the value of the Company’s investments.

• A loss on sale of approximately $45,000 as a result of sales of the Company’s investment of $454,000.

• The utilization of approximately $567,000 in cash to fund the Company’s operations.

The Company’s common shares outstanding as of March 31, 2003 and December 31, 2002 were 3,925,672.

The Company’s financial condition is dependent on a number of factors including the ability to effectuate technology transfers and the performance of the equity securities that we receive for these transfers. The Company has invested a substantial portion of its assets in private development stage or start-up companies. These private businesses are thinly capitalized, unproven, small companies that lack management depth, are dependent on new, commercially unproven technologies and have no history of operations. At March 31, 2003, $2,432,741 or 60% of the Company’s total assets consisted of investments at fair value in thinly traded public companies, of which net unrealized depreciation, was $4,313,563; an additional $281,115 or

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6.9% of the Company’s total assets consisted of non-publicly traded securities at fair value of which net unrealized depreciation, was $2,496,366.

At December 31, 2002, $5,719,445 or 72.7% of the Company’s total assets consisted of investments at fair value in thinly traded public companies, of which net unrealized depreciation, after income tax effect, was $70,334; an additional $488,645 or 6.6% of the Company’s total assets consisted of non-publicly traded securities at fair value of which net unrealized depreciation, after income tax effect, was $2,021,654.

The net decrease in the value of publicly traded securities from $5,719,445 to $2,432,741 in the three months ended March 31, 2003 is primarily due to the following events:

• During the quarter ended March 31, 2003, the Company completed a technology transfer transaction with a publicly traded company. The transaction was completed with Circle Group Holdings, Inc. and added $262,857 in value. In addition, the Company entered into three new strategic alliance agreements that generated $192,218 in initial value. Transactions of this nature result in an increase in the value of thinly traded public securities.

• During the quarter ended March 31, 2003, the Company sold all of its shares in Centrex, Inc. and a portion of its shares in Sense Holdings, Inc. As a result of these sales, the value of the thinly traded public securities decreased by approximately $307,000. Transactions of this nature result in a decrease in the value of thinly traded public securities.

• During the quarter ended March 31, 2003, the Company experienced an overall decrease in the fair market value of its thinly traded public securities. This decrease is primarily attributable to a decrease in the value of Stealth MediaLabs, Inc. of approximately $4,250,000 partially offset by an increase in value of Circle Group Holdings, Inc. of approximately $1,187,000. The Company’s other investments experienced declines in their fair market value. The Company’s investments can decrease due to factors that are specific to these investments (inability to obtain additional capital, inability to execute their business model, termination of their technology licenses, etc.) or to general marketplace factors. As a result of these conditions, the value of our publicly traded securities decreased by approximately $3,300,000.

A summary of the Company’s investment portfolio is as follows:


	March 31, 2003			December 31, 2002

	(Unaudited)
Investments, at cost	$	9,523,785		$	9,541,631
Unrealized depreciation, before income tax		(6,809,929	)		(3,333,541	)

Investments, at fair value	$	2,713,856		$	6,208,090

Following an initial investment in a portfolio company, the Company may make additional investments in such portfolio company or subsequent acquirer in order to: (1) increase its ownership percentage; (2) exercise warrants or options that were acquired in a prior financing; (3) preserve the Company’s proportionate ownership in a subsequent financing; (4) transfer additional technologies to enhance the portfolio company’s intellectual capital or (5) attempt to preserve or enhance the value of the Company’s investment. Such additional investments are referred to as “follow-on” investments. There can be no assurance that the Company will make follow-on investments or have sufficient funds to make additional investments. The failure to make such follow-on investments could jeopardize the viability of the portfolio company and the Company’s investment or could result in a missed opportunity for the Company to participate to a greater extent in a portfolio company’s successful operations. The Company attempts to maintain adequate liquid capital to make follow-on investments in its private portfolio companies. However, there can be no assurance that the Company will have liquid capital. The Company may elect not to make a follow-on investment either because it does not want to increase its concentration of risk, because it prefers other opportunities, or because it is inhibited by compliance with BDC requirements, even though the follow-on investment opportunity appears attractive.

Results of Operations

The Company accounts for its operations under generally accepted accounting principles for investment companies. On this basis, the principal measure of a Company’s financial performance is the “Net increase (decrease) in net assets from operations” which is the sum of three elements. The first element is “Net income (loss) from operations,” which is the difference between the Company’s income from technology transfers, interest, dividends, fees and other income and its operating expenses, net of applicable income tax provision. The second element is “Net realized gain (loss) on investments,” which is the difference between

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the proceeds received from dispositions of portfolio securities and their stated cost, net of applicable income tax provision. The third element, “Increase (decrease) in unrealized appreciation on investments,” is the net change in the fair value of the Company’s investment portfolio, net of increase (decrease) in deferred income taxes that would become payable if the unrealized appreciation were realized through the sale or other disposition of the investment portfolio.

Three months ended March 31, 2003 compared to the three months ended March 31, 2002.

Income from operations. Income from operations increased 87% to $504,271 for the three months ended March 31, 2003 from $269,954 for the three months ended March 31, 2002. The increase in income from operations resulted from completing a sale of technology licensing rights during the period. In the three months ended March 31, 2003, we also rendered services in connection with nine strategic alliances (five of which began in the three months ended March 31, 2003) valued at $107,293, which are included in consulting services. Other consulting services comprise the balance. In the three months ended March 31, 2003, we completed a sale of technology licensing rights valued at $262,857, as compared to no sales of technology rights for the three months ended March 31, 2002. Our Board of Directors determines the fair value of the shares we receive in the absence of readily ascertainable market values. In making its determination, the Board of Directors has considered valuation appraisals provided by an independent valuation service provider. On March 26, 2003, we received 821,429 shares of common stock of Circle Group Holdings, Inc. that were valued at $.32 per share for the sale of technology licensing rights describe above.

Expenses. Total operating expenses for the three months ended March 31, 2003 were $815,348, consisting of salaries and wages of $177,312, professional fees of $260,861, sales and marketing expenses of $91,464, and general and administrative expenses of $285,711. These expenses compared to the $691,906 reported for the three months ended March 31, 2002, consisting of salaries and wages of $210,964, professional fees of $157,242, sales and marketing expenses of $95,680, and general and administrative expenses of $228,020. The 18% increase in total operating expenses was due to the increased costs of insurance and additional nonrecurring professional fees and outside services. The 4% decrease in sales and marketing expenses was due to less travel related costs and a reduced sales staff. The 16% decrease in salaries and wages reflects a reduction in staff, specifically the Company’s president. The 66% increase in professional fees is largely due to the costs associated with a specific project. The 25% increase in general and administrative costs is largely due to an increase in insurance costs and an increase in outside investment banking type services related to the sale of investments that we own.

Income from operations can vary substantially on a quarterly basis due to the small number and wide range of value of the transactions. Therefore, quarterly income from operations should not be annualized to predict expected annual results.

Net Realized and Unrealized Gains (Losses) and Income Taxes. Net realized losses on investments amounted to $168,511 for the three months ended March 31, 2003 and were substantially related to sales as follows:


	Number of		Realized
Company Name	Shares		Loss

Advanced Recycling Sciences, Inc.		9,000	$	(3,556	)
Centrex, Inc.		1,343,400		(160,284	)
Sense Holdings, Inc.		166,000		(4,671	)

Total			$	(168,511	)

Net realized losses on investments amounted to $27,979 for the three months ended March 31, 2002 and related to the sales of 35,100 shares of its Advanced Recycling Sciences, Inc. common stock for $19,997 in cash and the sales of 93,500 shares of its Torvec, Inc. common stock for $151,509 in cash.

The net unrealized depreciation of investments, net of taxes, increased by $3,019,455 for the three months ended March 31, 2003, compared to net unrealized depreciation of $213,823 for the three months ended March 31, 2002. The net unrealized losses consisted of fluctuations in fair value resulting from the Board of Directors’ valuation of the Company’s assets for the three months ended March 31, 2003 and 2002. There was an increase in value in the three months ended March 31, 2003 in our investments in Clean Water Technologies, Inc., Circle Group Holdings, Inc., Prime Pharmaceutical Corporation, Primapharm Funding Corporation, and Innovative Medical Services, Inc. However, this was fully offset by a decline in value related to our investments in Rosbon, Inc., Advanced Recycling Sciences, Inc., Stealth MediaLabs, Inc., Sense Holdings, Inc., Voice and

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Wireless, Inc., FullCircle Registry, Inc., and Duraswitch Industries, Inc. Stealth MediaLabs, Inc. had a significant decline in value at March 31, 2003 due to publicly-disclosed information about its financial condition and agreement to sell a substantial number of shares for eight cents per share.

On a quarterly basis, net realized and unrealized gains can vary substantially, due to a variety of factors. Therefore, quarterly net realized and unrealized gains should not be annualized to predict expected annual results, and may not be indicative of future performance.

Income Taxes

The Company reflected an income tax expense of $292,397 on its first quarter 2003 net loss from operations due to a valuation allowance which was recorded to fully offset the associated net deferred tax assets. Similarly, the income tax benefit arising from the change in unrealized depreciation was reduced by the recording of a valuation allowance against the associated deferred tax assets. Future periods' income tax expense or benefit will depend on the results of operations, realized and unrealized gains or losses on investments, and the continued evaluation of the expected realizability of any deferred tax assets.

The income tax provision in 2002's first quarter was a benefit primarily due to the existence of deferred tax liabilities which more than offset deferred tax assets arising from the losses.

Liquidity and Capital Resources

Net assets decreased 52% to $3,536,043 at March 31, 2003 from $7,346,057 at December 31, 2002. This decline was due to an overall loss from operations, and realized and unrealized losses on investments. The most significant loss was the $3,019,455 unrealized decline in value of our investments, more specifically as a result of the significant decline in fair value of Stealth MediaLabs, Inc.

Our primary source of liquidity and capital for the three months ended March 31, 2003 was from the sales of our investments. Our income from operations consists primarily of the sale of technology rights and consulting income from strategic alliances for equity securities rather than cash.

On March 31, 2003 and December 31, 2002, we had $580,045 and $745,926, respectively, in cash and cash equivalents.

In April 2003, the Company completed a private placement transaction of 330,000 shares of its common stock at $3.00 per share. The purchasers of the shares of common stock agreed not to sell or otherwise transfer the shares for a period of one-year after the completion of the private placement transaction. In addition, the purchasers of the shares of common stock were granted certain piggyback registration rights, which will allow them to include their shares in a registered offering initiated by UTEK Corporation within the next twelve months.

In April 2003, the Company also obtained a loan for $1,000,000 at 12% per annum with interest paid in advance. The term of the loan is two years and is non-recourse except with respect to 360,360 shares of common stock of UTEK Corporation pledged as collateral under the loan.

The total net proceeds of these transactions to UTEK Corporation, after deducting investment banking fees and prepaid interest, was $1,650,500.

The Company believes its cash on hand, combined with any cash generated from operations, will be sufficient to allow it to continue its operation for at least the next twelve months.

Risk Factors

Investing in the Company involves a number of significant risks relating to its business and investment objective. As a result, there can be no assurance that the Company will achieve its investment objective. In addition to the risk factors described below, other factors that could cause actual results to differ materially include:

• the ongoing global economic downturn;

• risk associated with possible disruption in the Company’s operations due to terrorism;

• future regulatory actions and conditions in the Company’s operating areas; and

• other risks and uncertainties as may be detailed from time to time in the Company’s public announcements and SEC filings.

The Company’s financial results are dependent upon the performance of Circle Group Holdings, Inc.

The Company’s financial results are dependent upon the performance of Circle Group Holdings, Inc. As of March 31, 2003, the value of its investment in Circle Group Holdings, Inc. was approximately $1.3 million or 36% of its net assets.

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Our quarterly and annual results could fluctuate significantly.

The Company’s quarterly and annual operating results could fluctuate significantly due to a number of factors. These factors include the small number and range of values of the transactions that are completed each quarter, fluctuations in the values of our investments, the timing of the recognition of unrealized gains and losses, the degree to which we encounter competition in our markets, the volatility of the stock market and its impact on our unrealized gains and losses, as well as other general economic conditions. As a result of these factors, quarterly and annual results are not necessarily indicative of the Company’s performance in future quarters and years.

Our investment model is highly speculative in nature and our history of investments using the model is limited.

Our investment model is highly speculative since it involves making investments in new development stage companies and having those companies invest in new, untested technology. Furthermore, we have only been using our investment model for a relatively short period of time and have little or no historical information upon which to judge whether or not the model is successful. We cannot assure you that our investment model will be successful or that any of our investments will be successful.

Our portfolio companies are development stage companies dependent upon the successful commercialization of new technologies. Each of our investments in portfolio companies is subject to a high degree of risk and we may lose all of our investment in a portfolio company if it is not successful.

We invest in development stage companies that our management believes can benefit from our expertise in technology transfer. Development stage companies are subject to all of the risks associated with new businesses. In addition, our portfolio companies are also subject to the risks associated with research and development of new technologies. These risks include the risk that new technologies cannot be identified, developed or commercialized, may not work, or become obsolete. Our portfolio companies must successfully acquire licenses to new technologies, and in some cases further develop new technologies. We cannot assure you that any of our investments in our portfolio companies will be successful. Our portfolio companies will be competing with larger, established companies, with greater access to, and resources for, further development of these new technologies. We may lose our entire investment in any or all of our portfolio companies.

Our portfolio companies depend upon the research and development activities of universities, over which neither our portfolio companies nor we have any control.

Our portfolio companies depend upon the research activities of universities and government research facilities. Neither we, nor our portfolio companies, have any control over the research activities of universities and research laboratories. As neither we, nor our portfolio companies provide supervision of any university or laboratory research, we cannot warrant that the research will be done properly and that the results, which we may license will be reproducible. In addition, we have no control over what types of research are presented to us by universities and government research facilities for evaluation and commercial development. Further, the licenses to technologies that our portfolio companies obtain may be non-exclusive. In the event that we make an investment in a portfolio company, and we are unable to locate a new technology to be acquired by the portfolio company, we could lose our entire investment.

Technologies acquired by our portfolio companies may become obsolete before we can sell their securities.

Neither our portfolio companies nor we have any control over the pace of technology development. There is a significant risk that a portfolio company could acquire the rights to a technology that is currently or is subsequently made obsolete by other technological developments. We cannot assure you that any of our portfolio companies will successfully acquire, develop and transfer any new technology.

The patents on the technologies that our portfolio companies’ license may infringe upon the rights of others and patent applications that the universities have submitted may not be granted.

Many of our portfolio companies rely upon patents to protect the technologies that they license. If the patents on technologies that they license are found to infringe upon the rights of others, or are held to be invalid, then the licenses to such technologies will have little or no value to our portfolio companies. In addition, if a patent licensed by a portfolio company is found to infringe upon the rights of others, the portfolio company may be liable for monetary damages. Our portfolio companies are dependent upon the universities or government research facilities to file, secure and protect patents on licensed technologies. In the event that a patent is challenged or violated, our portfolio companies may not have the financial resources to defend the patent either in the preliminary stages of litigation or in court. In addition, if our portfolio companies acquire licenses to technologies with patents pending, we cannot assure you that such patents will be granted.

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Technologies that have been developed with funding from the United States government may have limits on their use, which could affect the value of the technology to a portfolio company.

Technologies developed with funds provided by the United States government have restrictions regarding where they may be sold and have limits on exclusivity. A portfolio company that acquires a technology developed with federal funding may be limited as to where it can sell the technology. The technology may only be allowed to be sold or manufactured within the United States. In addition, under Section 23 of the United States Code, the U.S. government has the right to use technologies that it has funded regardless of whether the technology has been licensed to a third party. Such regulations may limit the marketability of a technology and therefore reduce the value of the technology to our portfolio companies.

We may need to make additional investments in our portfolio companies to provide them with capital to further develop licensed technologies.

We may have to make additional investments in our portfolio companies to protect our overall investment value in the particular company. We retain the discretion to make any additional investments as our management determines. The failure to make such additional investments may jeopardize the continued viability of a portfolio, and our initial (and subsequent) investments. Moreover, additional investments may limit the number of companies in which we can make initial investments. We have no established criteria in determining whether to make an additional investment except that our management will exercise its business judgment and apply criteria similar to those used when making the initial investment. We cannot assure you that we will have sufficient funds to make any necessary additional investments, which could adversely affect our success and result in the loss of a substantial portion or all of our investment in a portfolio company.

We may be unable or decide not to make additional investments in our portfolio companies that, could result in our losing our initial investment if the portfolio company fails. Our ownership and control may be diluted if a portfolio company obtains additional funds from third-party investors.

Our agreement with third-party investors restricts the size of our investment in any single portfolio company and, as a result, could prohibit an additional investment in a portfolio company in the event that our initial investment represented 10% or more of our assets. Even if we are able to make an additional investment in a portfolio company within the prescribed limits, we may elect not to make an additional investment in a portfolio company in order to limit the size of our investment, which is at risk. It is also our policy not to make loans to our portfolio companies that in the aggregate exceed 25% of our net assets. Therefore, if a portfolio company requires additional funds to continue operating, and we cannot or choose not to make an additional investment, our investment in the portfolio company may decline in value. In addition, to the extent that a portfolio company seeks additional financing from third parties, our ownership interest and control of the portfolio company may be diluted.

The securities we hold in our portfolio companies are subject to restriction on resale and we may not be able to sell the securities we hold for amounts equal to their recorded value, if at all.

Our portfolio companies are all private entities or thinly traded public companies and we acquire securities in our portfolio company in private transactions. As a result, all of the securities we hold in our portfolio companies are restricted securities, as defined under the Securities Act of 1933, and are subject to restrictions on resale. Furthermore, we do not anticipate that a highly liquid public market will exist for any of the securities we hold in our portfolio companies. Therefore, we cannot assure you that we will be able to sell our portfolio company securities for amounts equal to the values that we have ascribed to them or at the time we desire to sell.

We are dependent on merger transactions, structured as tax-free exchanges to sell our subsidiary companies. A change in the Internal Revenue Code affecting tax-free exchanges could reduce our ability to sell our subsidiary companies.

We do not anticipate selling any of our subsidiary companies, except in connection with merger transactions. We anticipate that most, if not all, of such merger transactions will be structured as tax-free exchanges under Section 368 of the Internal Revenue Code. If Section 368 were to be amended so that we were no longer able to structure our merger transactions as tax-free exchanges, we may not be able to sell our subsidiary companies on commercially reasonable terms. If we are unable to successfully sell our subsidiary companies in a merger transaction, we may lose our investment.

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We have been dependent on a small number of companies, several of which are controlled by the same investor group for the purchase of our subsidiary companies. We have only limited experience selling our subsidiary companies and of the twenty-one transactions that we have completed, seven have been to companies controlled by the same group of investors.

As of March 31, 2003, we have completed only twenty-one transactions, including twenty mergers and one stock sale, wherein we sold our subsidiary companies to other companies and seven of these sales have been made to companies that are controlled by the same investor group. As of March 31, 2003, the same investor group had control of Lexon, Inc., Image Analysis, Inc., Centrex, Inc. and Nubar, Inc. As a result, we have only had the benefit and experience of negotiating such agreements with a small number of investors. We cannot assure you that we will be able to successfully negotiate merger transactions for the sale of our subsidiary companies in the future.

The agreements we have with universities do not guarantee that the universities will grant licenses to our subsidiary companies.

The agreements that we have entered into with universities provide us with the ability to evaluate the commercial potential for technologies at an early stage of development. These agreements, however, do not provide us with any guarantee that following our evaluation, a university will grant us a license. As a result, we may expend time and resources evaluating a technology and not be able to secure a license to such technology for one of our subsidiary companies.

We are dependent upon our management’s ability to identify portfolio companies to acquire our subsidiary companies.

Our investment strategy is based upon selling our subsidiary companies in stock for stock exchanges to portfolio companies that wish to acquire the technologies owned by our subsidiary companies but which they may be neither operating nor established. We do not expect to sell any securities of our subsidiary companies to the public. Therefore, if we fail to identify a portfolio company to acquire a subsidiary company, our entire investment in the portfolio company could be lost.

We are dependent upon and have little or no control over the efforts of companies that acquire our subsidiary companies to successfully commercialize the acquired technologies or to retain the license to the technology.

When we sell a subsidiary company, we receive common stock from the portfolio company based upon the mutually agreed upon values of the subsidiary company, its licensed technology and the portfolio company. We then intend to sell the securities that we acquire in exchange for our subsidiary companies at some time in the future. Therefore, our ability to profit from an investment is ultimately dependent upon the price we receive for the shares of the portfolio company. In most cases, the companies that acquire our subsidiary companies will be dependent upon successfully commercializing the technologies they acquire. We do not have control over the portfolio companies that acquire our subsidiary companies. These portfolio companies may face intense competition, including competition from companies with greater financial resources, more extensive research and development, manufacturing, marketing and service capabilities and a greater number of qualified and experienced managerial and technical personnel. They may face additional risks of product and technological obsolescence and government regulation over which we will have little or no control. They may need additional financing which they are unable to secure and we are unable or unwilling to provide or they may be subject to adverse developments unrelated to the technologies they acquire. They may lose the rights granted to them for the technology for failure to comply with the license agreement. We cannot assure you that any of the portfolio companies that acquire our subsidiary companies will be successful or that we will be able to sell the securities we receive at a profit or for sufficient amounts to even recover our initial investment in the portfolio companies.

The companies that have merged with our subsidiary companies and the companies for which we render services in connection with strategic alliances to date are development stage companies and, as a result, the value of the securities that we receive in such merger transactions is subject to significant fluctuations.

Historically we have merged, and we intend to continue to merge, our subsidiary companies with companies in related fields that are development stage companies. In addition, the companies for which we render services in connection with strategic alliances are development stage companies. As a result, the securities that we receive in such transactions are subject to all of the risks associated with securities of development stage companies. The values of these securities may be subject to significant fluctuations. We cannot assure you that when we sell these securities we will receive the value ascribed to the securities either at the time of acquisition or during subsequent valuation periods.

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Our investments in our portfolio companies may be concentrated in one or more industries and if these industries should decline or fail to develop as expected our investments will be lost.

Our investments in our portfolio companies may be concentrated in one or more industries. This concentration will mean that our investments will be particularly dependent on the development and performance of those industries. Accordingly, our investments may not benefit from any advantages, which might be obtained with greater diversification of the industries in which our portfolio companies operate. If those industries should decline or fail to develop as expected, our investments in our portfolio companies in those industries will be subject to loss.

We generally receive equity securities of the portfolio companies that acquire our subsidiary companies and for the services we render in connection with strategic alliances, rather than cash. We recognize revenues from these transactions; however, the securities that we receive will be subject to restrictions on resale, which will limit our ability to sell these securities and attain liquidity.

The securities that we receive in exchange for our subsidiary companies and in connection with strategic alliances will be subject to restrictions on resale, which will limit our ability to sell these securities. As of December 31, 2002, all of the securities we have received in exchange for our subsidiary companies and in connection with strategic alliances are “restricted securities,” as such term is defined under Rule 144 of the Securities Act of 1933. These shares are restricted securities because they were issued in private transactions not involving a public offering and may not be sold in the absence of registration other than in accordance with Rule 144 under the Securities Act of 1933 or another exemption from registration. As a result of such restrictions, our ability to sell or otherwise transfer the securities will be limited. We cannot assure you that we will be able to receive upon resale, the recorded value of our portfolio company securities.

We may not be able to merge our subsidiary companies with publicly traded entities and so we may receive non-publicly traded securities in exchange for our subsidiary companies. We may be required to sell the securities we receive at a substantial discount to their appraised value if no public market exists.

At March 31 2003, we have completed twenty-one sales of subsidiary companies. Of these sales, fifteen have been to companies that are currently publicly traded, and the remaining transactions have been with privately-owned companies. We are substantially dependent upon the ability of non-public acquirers of our subsidiary companies to implement a plan, which would facilitate a trading market for their securities, or other strategy, which would allow for the potential sale of our ownership interest. In addition, to the extent that we own more than 10% of an portfolio company’s shares, we may be deemed to be an affiliate of the portfolio company which would limit our ability to dispose of securities we receive for our subsidiary companies. Further, our ability to sell the securities we receive for our subsidiary companies may be limited by, and subject to, the lack of or limited nature of a trading market for the securities and the volatility of the stock market as a whole. Such limitations could prevent or delay any sale of our investments or significantly reduce the amount of proceeds, if any, that might otherwise be realized therefrom.

The values we place on our investments may not accurately reflect their future value or the value that we will receive for them when we sell them.

At March 31, 2003 and December 31, 2002, respectively, investments amounting to $2,713,856 or 76.7% of net assets and $6,208,090 or 84.5% of net assets, have been valued at fair value as determined by our Board of Directors. As a general matter, restricted securities and securities without an active trading market are more difficult to accurately value than unrestricted, actively traded securities of public companies. Pursuant to the requirements of the 1940 Act, the Board of Directors is responsible for determining in good faith the fair value of our securities and assets for which market quotations are not readily available. In making its determination, the Board of Directors has considered valuation appraisals provided by an independent valuation service provider. If we were required to sell any of such investments, there is no assurance that the fair value, as determined by the Board of Directors, would be obtained. If we were unable to obtain fair value for such investments, there would be an adverse effect on our net asset value and on the price of our common stock.

Your ownership interest and the value of the shares of our common stock may be diluted by the exercise of stock options and warrants we have granted or may grant in the future.

We have adopted two stock option plans under which certain of our employees, officers and directors may be granted options. As of March 31, 2003, we have granted options to purchase 637,534 shares of our common stock to certain officers and employees. We have also reserved an additional 112,466 shares of our common stock for issuance under our two stock option plans to key employees and directors. In addition, we have issued warrants to the underwriter of our initial public

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offering, upon payment of the purchase price of $.0003 per warrant, to purchase 100,000 shares of common stock at an exercise price of $9.90 per share. The warrants expire on October 25, 2005. The issuance and sale of these shares of common stock will dilute the ownership interest of investors and may have an adverse effect on the price of our common stock.

Our business depends on key personnel.

We rely, and will continue to be substantially dependent upon, the continued services of our management, principally our Chief Executive Officer and Chairman of the Board, Clifford M. Gross. Our management team is responsible for the review of potential investments by and the provision of advice to our portfolio companies regarding the acquisition of technologies and additional research and development. We also depend upon our management’s key contacts with universities, to maintain our access to new technologies, and their relationships with companies in the private sector in order to effectuate the sale of our subsidiaries.

Any transactions we engage in with affiliates may involve conflicts of interest.

The 1940 Act restricts transactions between the Company and any of its affiliates, including its officers, directors or employees and principal stockholders. In many cases, the 1940 Act prohibits transactions between such persons and ourselves unless we first apply for and obtain an exemptive order from the SEC. Delays and costs in obtaining necessary approvals may decrease or even eliminate any profitability of such transactions or make it impracticable or impossible to consummate such transactions. These affiliations could cause circumstances that would require the SEC’s approval in advance of proposed transactions by us in portfolio companies. Further, depending upon the extent of our management’s influence and control with respect to such portfolio companies, the selection of the affiliates of management to perform such services may not be a disinterested decision, and the terms and conditions for the performance of such services and the amount and terms of such compensation may not be determined at arm’s-length negotiations.

We have a limited amount of funds available for investment in either portfolio or subsidiary companies and, as a result, our investments will lack diversification.

Based on the amount of our existing available funds, it is unlikely that we will be able to commit our funds to investments in, and the acquisition of, securities of a large number of companies. We intend to continue to operate as a non-diversified investment company within the meaning of the 1940 Act. Prospective investors should understand that our current investments are not, and in the future may not be, substantially diversified. We will not be able to achieve the same level of diversification as larger entities engaged in similar venture capital activities. Therefore, our assets may be subject to greater risk of loss than if they were more widely diversified, because the failure of one or more of our limited number of investments could have a material adverse effect on our financial condition and the price of our common stock.

We are subject to government regulations because of our status as a business development company.

We have elected to be treated as a BDC under the Small Business Incentive Act of 1980, which modified the 1940 Act. Although the Incentive Act relieves BDCs from compliance with many of the provisions of the 1940 Act, the Incentive Act imposes on BDCs greater restrictions on permitted types of investments. Moreover, the applicable provisions of the 1940 Act impose numerous restrictions on our activities, including restrictions on the nature of our investments and transactions with affiliates. We cannot assure you that this legislation will be interpreted or administratively implemented in a manner consistent with our objectives and manner of operations. Upon approval of a majority of our stockholders, we may elect to withdraw our status as a BDC. If we elect to withdraw our election, or if we otherwise fail to qualify as a BDC, we may be subject to substantially greater regulation under the 1940 Act. Compliance with such regulations would significantly increase our costs of doing business.

We have a limited operating history upon which you can assess our prospects and we are subject to the risks associated with any new business.

As a result of our short history of operations, we have only consummated transactions with a very small number of companies. Therefore, there is little historical information regarding our operations upon which you can base your investment decision. In addition, we are subject to all of the business risks and uncertainties associated with any new business enterprise. We cannot assure you that our investment objective will be attained.

Our management has limited experience operating a technology transfer business, and managing and operating a business development company.

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The members of our management have been engaged in the operation of our business for a short period of time and so have limited experience. Some of our directors and executive officers only have experience in science and research. Furthermore, we commenced operations as a business development company in September 2000 and so our directors and executive officers have only had experience operating a business development company. In addition, our management has had limited experience in the areas of corporate finance and corporate mergers.

One of our current stockholders has significant influence over our management and affairs.

Clifford M. Gross, our Chief Executive Officer and Chairman, beneficially owns approximately 50% of our common stock as of March 31, 2003. Therefore, Dr. Gross will be able, among other things, to elect directors, change our investment policies, and withdraw our election to operate as a BDC.

ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISKS

There has been no material change in the qualitative and quantitative disclosures about market risk since December 31, 2002.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures (as defined in Rule 13a-14 and Rule 15d-14 of the Securities Exchange Act of 1934) within the 90 days prior to the date of filing of this Quarterly Report on Form 10-Q. Based upon such review, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company that is required to be disclosed in the reports it files or submits under the Securities Exchange Act of 1934.

Internal controls

Since the date of evaluation, there have not been any significant changes in the Company’s internal accounting controls or in other factors that could significantly affect those controls.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Not Applicable

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Not Applicable

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable

ITEM 5. OTHER INFORMATION

Not Applicable

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

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(a) List of exhibits.

a. The following exhibits are filed with this report or are incorporated herein by reference to a prior filing, in accordance with Rule 12b-32 under the Securities Exchange Act of 1934.


99.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K.

There were no Form 8-K’s filed in the first quarter of 2003.

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SIGNATURES

Pursuant to the requirements 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.


				UTEK CORPORATION (Registrant)


Date: June 6, 2003				/s/ Clifford M. Gross

				Clifford M. Gross Chairman and Chief Executive Officer


Date: June 6, 2003				/s/ Carole R. Wright

				Carole R. Wright, CPA Chief Financial Officer

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CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Clifford M. Gross, Chief Executive Officer of UTEK Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of UTEK Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Dated this 6th day of June, 2003

/s/ Clifford M. Gross
Clifford M. Gross

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CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Carole R. Wright, Chief Financial Officer of UTEK Corporation, certify that:

Dated this 6th day of June, 2003

/s/ Carole R. Wright
Carole R. Wright

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	•		The above investments with the exception of Rosbon, LLC are non-income producing. Equity investments that have not paid dividends within the last twelve months are considered non-income producing.

	•		The value of all securities for which there is no readily ascertainable market value is determined in good faith by the Board of Directors. In making its determination, the Board of Directors has considered valuation appraisals provided by an independent valuation service provider. (See Notes 1 and 2 to the consolidated financial statements).

	•		As of March 31, 2003, all of the securities that we own are “restricted securities,” as that term is defined under Rule 144 of the Securities Act of 1933. These securities may not be sold in the absence of registration under the Securities Act of 1933 or an exemption therefrom. As a result, our ability to sell or otherwise transfer the securities we hold in our portfolio is limited.

	•		The Company owns more than 10% of the outstanding common stock of each of the above investments with the exception of Full Circle Registry, Inc., Graphco Technologies, Inc., Prime Pharmaceutical Corporation, Lexon, Inc., Voice and Wireless Corporation, Palladium Communications, Inc., Hydrogen Technology Applications, Inc., Innovative Medical Services, Inc., Sense Holdings, Inc., Advanced Recycling Sciences, Inc. and Group Management Corporation. As such, the Company is deemed to be an affiliate of these companies, as defined under Rule 144 of the Securities Act of 1933, except for those specifically noted.

	•		The above investments with the exception of Rosbon, LLC are non-income producing. Equity investments that have not paid dividends within the last twelve months are considered non-income producing.

	•		The value of all securities for which there is no readily ascertainable market value is determined in good faith by the Board of Directors. In making its determination, the Board of Directors has considered valuation appraisals provided by an independent valuation service provider. (See Notes 1 and 2 to the consolidated financial statements).

	•		As of December 31, 2002, all of the securities that we own are “restricted securities,” as that term is defined under Rule 144 of the Securities Act of 1933. These securities may not be sold in the absence of registration under the Securities Act of 1933 or an exemption therefrom. As a result, our ability to sell or otherwise transfer the securities we hold in our portfolio is limited.

•		One technology transfer valued at approximately $263,000 and nine strategic alliance agreements and other consulting agreements with earned revenue of approximately $240,000.

•		A loss on sale, net of income tax benefit, of approximately $169,000 as a result of sales of the Company’s investment of $224,000.

•		A decrease of approximately $3,019,000 in the value of the Company’s investments.

•		The utilization of approximately $371,000 in cash to fund the Company’s operations.

•		Four strategic alliance agreements and other consulting agreements with earned revenue of approximately $264,000.

•		A decline of approximately $214,000 in the value of the Company’s investments.

•		A loss on sale of approximately $45,000 as a result of sales of the Company’s investment of $454,000.

•		The utilization of approximately $567,000 in cash to fund the Company’s operations.

	•		During the quarter ended March 31, 2003, the Company completed a technology transfer transaction with a publicly traded company. The transaction was completed with Circle Group Holdings, Inc. and added $262,857 in value. In addition, the Company entered into three new strategic alliance agreements that generated $192,218 in initial value. Transactions of this nature result in an increase in the value of thinly traded public securities.

	•		During the quarter ended March 31, 2003, the Company sold all of its shares in Centrex, Inc. and a portion of its shares in Sense Holdings, Inc. As a result of these sales, the value of the thinly traded public securities decreased by approximately $307,000. Transactions of this nature result in a decrease in the value of thinly traded public securities.

	•		During the quarter ended March 31, 2003, the Company experienced an overall decrease in the fair market value of its thinly traded public securities. This decrease is primarily attributable to a decrease in the value of Stealth MediaLabs, Inc. of approximately $4,250,000 partially offset by an increase in value of Circle Group Holdings, Inc. of approximately $1,187,000. The Company’s other investments experienced declines in their fair market value. The Company’s investments can decrease due to factors that are specific to these investments (inability to obtain additional capital, inability to execute their business model, termination of their technology licenses, etc.) or to general marketplace factors. As a result of these conditions, the value of our publicly traded securities decreased by approximately $3,300,000.

•		the ongoing global economic downturn;

•		risk associated with possible disruption in the Company’s operations due to terrorism;

•		future regulatory actions and conditions in the Company’s operating areas; and

•		other risks and uncertainties as may be detailed from time to time in the Company’s public announcements and SEC filings.


	(a) List of exhibits.

	a. The following exhibits are filed with this report or are incorporated herein by reference to a prior filing, in accordance with Rule 12b-32 under the Securities Exchange Act of 1934.

1.		I have reviewed this quarterly report on Form 10-Q of UTEK Corporation;

2.		Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.		Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

	a)		designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	c)		presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

	a)		all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and