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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Utek Corp | LSE:UTK | London | Ordinary Share | COM STK USD0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 250.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number : 7685H
UTEK Corporation
10 November 2008
FOR IMMEDIATE RELEASE 10 November 2008
UTEK CORPORATION
RESULTS FOR Q3 AND 9 MONTHS ENDED 30 SEPTEMBER 2008
UTEK Corporation ("UTEK" or "the Company"; NYSE-Alternext & LSE-AIM: UTK), a leading innovation services company, announces its
unaudited results for the three and nine months ended 30 September 2008. UTEK is quoted on AIM in the UK (LSE: UTK) and in the USA
(NYSE-Alternext: UTK). It has operations in the US and the UK.
Conference call briefing today, 10 November 2008:
UTEK will hold a live conference call today at 3:00 pm, London, GMT (10:00 am, US, EST) to discuss its Q3, 2008 results. All interested
parties are invited to attend the conference call as follows:
· UK: 0800-032-3836
· US & Canada: +1 866-672-2663
· Other international callers: +1 404-665-9588
· Conference call ID: ž 70988572
Key points:
* The financial results for the 3 and 9 months to 30 September 2008 were:
3 months to 30 Sept 9 months to 30 Sept
2008 2007 2008 2007
Income from operations (revenue) $7.1m $3.7m $15.7 $18.0m
Income before income taxes (pre-tax ($1.3m) $0.4m ($2.6m) $7.5m
profit)
Net income from operations (profit ($5.5m) $0.2m ($6.4m) $4.4m
after tax)
· Cash, certificates of deposit and U.S. treasuries at 30 September 2008 were $8.8m (30 September 2007: $9.7m) and net assets were
$38.9 m (30 September 2007: $51.0 m).
· The revenue for Q3, 2008 show the progress made in establishing UTEK*s new corporate strategy of focusing on the provision of a
full suite of innovation consulting services, mainly in the US and the UK.
· Three acquisitions completed during the first nine months of the year with a fourth completed since the end of Q3.
Clifford M. Gross, Ph.D., UTEK's Chairman and CEO commented:
"Over the past year UTEK has made a strong push to position the company into a leading provider of Innovation Services for the Global
1,000. Importantly for our shareholders, UTEK is currently the only publicly traded company to our knowledge focused on providing a full
suite of services to help Companies achieve growth through innovation."
CONTACTS
UTEK Corporation: Cliff Gross, Chairman & CEO +1 813-754-4330
Doug Schaedler, COO www.utekcorp.com
USA: Allen & Caron, Inc. Brian Kennedy
UK: Bankside Steve Liebmann or Simon +44 (0)20-7367-8888
Bloomfield
Fairfax I.S. PLC Jeremy Porter + 44 (0)20-7598-5368
About UTEK Corporation
UTEK® is a leading innovation services company. UTEK's services enable clients to become stronger innovators, rapidly source externally
developed technologies and create value from their intellectual property. UTEK is a business development company with operations in the
United States and the United Kingdom. For more information about UTEK, please visit its website at www.utekcorp.com.
Overview
The revenue for the third quarter of 2008 shows the progress made in establishing UTEK's new corporate strategy, as outlined in previous
announcements, of focusing on the provision of a full suite of innovation consulting services, mainly in the US and the UK.
Innovation consulting services in the third quarter were $5.1 million (nil for the comparable period in 2007) and $7.7 million for the
nine months ended September 30, 2008 (nil for the comparable period in 2007). All income from innovation consulting services is cash income.
Similarly, our subscription and technology acquisition alliances service revenue increased by 60% to $1.0 million in Q3 2008 as compared to
$647,000 for Q3 2007 and increased to $3.0 million for the nine months ended September 30, 2008 as compared $2.7 million for the nine months
ended September 30, 2007.
This rapid development in innovation consulting services revenues reflects the acquisitions of Strategos and Innovaro during the nine
month period ended September 30, 2008. More recently, this aspect of our business was strengthened further by the acquisition of Social
Technologies in the fourth quarter of 2008, as discussed below. This new focus on innovation consulting services integrates with our
technology transfer alliances and patent analytics business permitting the Company to increase cash revenues and reduce the amount of
revenue in the form of unregistered shares of common stock in client companies. In subsequent periods it is our intention to pursue
additional strategic acquisitions to further enhance our ability to better service the innovation needs of our clients.
Operating results for the three months ended September 30, 2008
Global credit and other financial markets have suffered substantial stress, volatility, illiquidity and disruption. This deterioration
in the equity markets has had a significant impact on the valuations of our investments. During the third quarter of 2008, management
determined that a valuation allowance of $9.3 million should be recorded against the related deferred tax asset. A portion of the valuation
allowance ($4.5 million) was recorded as part of the provision for income tax expense and a similar portion ($4.8 million) was included in
the change in unrealised depreciation of investments. The valuation allowance resulted in a significant additional decrease to our net
decrease in net assets from operations. If financial conditions related to our investments improve in future periods, the valuation
allowance could be reversed.
During the third quarter of 2008, management determined that a valuation allowance of $9.3 million should be recorded against the
related deferred tax asset. A portion of the valuation allowance ($4.5 million) was recorded as part of the provision for income tax expense
and a similar portion ($4.8 million) was included in the change in unrealised depreciation of investments. The valuation allowance resulted
in a significant additional decrease to our net decrease in net assets from operations.
For the quarter ended September 30, 2008, income from operations (revenue) was $7.1 million as compared to $3.7 million for the quarter
ended September 30, 2007. Net (loss) income from operations for the quarter ended September 30, 2008 was ($5.5 million) as compared to
$188,000 for the quarter ended September 30, 2007. Approximately 11% and 82% of our income from operations (revenue) was received in the
form of unregistered shares of common stock for the quarters ended September 30, 2008 and 2007, respectively.
Historically the Company's corporate strategy has been focused on the sale of technology rights for which the company received as
consideration shares of stock valued at fair market value. During 2008, the Company shifted its corporate strategy to a focus of providing
innovative consulting services for which cash is received as consideration. As a result of this shift in corporate strategy, cash income
from operations (revenue) increased to $6.3 million for the three months ended September 30, 2008 as compared to $678,000 for the three
months ended September 30, 2007.
The net decrease in net assets from operations (including net income (loss) from operations and realised and unrealised gains and losses
on investments) was ($12.3 million) or ($1.21) per weighted average diluted share outstanding for the quarter ended September 30, 2008, as
compared to ($134,000) or ($.01) per weighted average diluted share outstanding for the quarter ended September 30, 2007. Of the $12.3
million decrease in net assets from operations, $9.3 million was related to the deferred tax valuation allowance, $2.0 million was related
to realised and unrealised losses on the investments and $1.0 million was related to operations.
The value of the Company's investment portfolio was $17.6 million at September 30, 2008, as compared to $37.9 million at September 30,
2007. Cash and cash equivalents were $5.6 million at September 30, 2008, as compared to $9.7 million at September 30, 2007. Net assets
were $38.9 million at September 30, 2008, as compared to $51.0 million at September 30, 2007. Net asset value per common share outstanding
was $3.74 at September 30, 2008, as compared to $5.71 at September 30, 2007.
Weighted average diluted shares outstanding were 10,176,742 and 9,009,776 for the quarters ended September 30, 2008 and 2007,
respectively.
Operating Results for the Nine Months Ended September 30, 2008
For the nine months ended September 30, 2008, income from operations (revenue) was $15.7 million as compared to $18.0 million for the
nine months ended September 30, 2007. Net (loss) income from operations for the nine months ended September 30, 2008 was ($6.4 million) as
compared to $4.4 million for the nine months ended September 30, 2007. Approximately 30% and 86% of our income from operations (revenue) was
received in the form of unregistered shares of common stock for the nine months ended September 30, 2008 and 2007, respectively. As a result
of the Company's shift in corporate strategy as discussed above, cash income from operations (revenue) increased to $11.0 million for the
nine months ended September 30, 2008 as compared to $2.6 million for the nine months ended September 30, 2007.
The net decrease in net assets from operations (including net income (loss) from operations and realised and unrealised gains and losses
on investments) was ($20.8 million) or ($2.15) per weighted average diluted share outstanding for the nine months ended September 30, 2008,
as compared to ($4.1 million) or ($0.46) per weighted average diluted share outstanding for the nine months ended September 30, 2007. Of the
$20.8 million decrease in net assets, $9.3 million was related to the deferred tax valuation allowance, $9.6 was related to realised and
unrealised losses on the investments and $1.9 was related to operations.
Weighted average diluted shares outstanding were 9,653,725 and 8,982,339 for the nine months ended September 30, 2008 and 2007,
respectively.
Recent Developments
On October 10, 2008, the Company purchased 100% of Social Technologies Group, Inc. "Social Technologies" incorporated in Virginia
pursuant to a stock purchase agreement. Social Technologies was acquired for potentially 998,027 shares of UTEK's unregistered common stock
valued at $10.0 million as of such date. Social Technologies has helped clients across a wide range of industries guide policy, shape
business strategy, explore new markets, and develop new products and services through innovation consulting services. Social Technologies
helps organisations protect against unexpected risks, spot opportunities before competitors do, and ultimately prepare for the future from
an informed, empowered perspective.
Financial Position Information
The following tables contain comparative selected financial data as of September 30, 2008 and September 30, 2007 and for the three and
nine month periods ended September 30, 2008 and 2007:
Consolidated Statements of Operations
(Unaudited)
3 months ended 9 months ended
September 30 September 30
2008 2007 2008 2007
Income from operations:
Innovation consulting services $5,139,683 $ - $7,719,310 $ -
Sale of technology rights 750,000 2,920,800 4,684,680 14,835,550
Subscription and other 1,033,792 647,329 2,995,214 2,716,094
services
Investment income, net 134,931 126,785 254,386 479,490
7,058,406 3,694,914 15,653,590 18,031,134
Expenses:
Direct costs of innovation 4,567,812 - 6,885,694 -
consulting services
Acquisition of technology 300,000 837,565 1,780,000 3,170,844
rights
Salaries and wages 1,140,570 889,349 3,505,608 2,663,656
Professional fees 275,967 504,500 834,229 1,118,608
Sales and marketing 602,236 398,110 1,836,020 1,488,388
General and administrative 1,471,260 665,879 3,375,794 2,105,432
Goodwill impairment - - - 33,030
8,357,845 3,295,403 18,217,345 10,579,958
Income (loss) before income (1,299,439) 399,511 (2,563,755) 7,451,176
taxes
Provision for income tax 4,198,654 211,319 3,853,627 3,093,762
expense (benefit)
(5,498,093)
Net (loss) income from 188,192 (6,417,382) 4,357,414
operations
Net realised and unrealised
gains (losses):
Net realised loss on (275,303) (551,958) (3,752,177) (1,690,238)
investments,
net of income tax benefit
Change in unrealised (6,541,649) 229,749 (10,589,276) (6,792,496)
appreciation (depreciation) of
investments, net of deferred
tax expense (benefit)
Net decrease in net assets
from operations $(12,315,045) $(134,017) $(20,758,835) $(4,125,320)
Net decrease in net assets
from operations per share:
Basic $(1.21) $(0.01) $(2.15) $(0.46)
Diluted $(1.21) $(0.01) $(2.15) $(0.46)
Weighted average shares:
Basic 10,176,742 9,009,776 9,653,725 8,982,339
Diluted 10,176,742 9,009,776 9,653,725 8,982,339
Consolidated Statements of Assets and Liabilities
September 30, 2008 September 30, 2007
(Unaudited) (Unaudited)
ASSETS
Investments:
Non-affiliate investments
(cost: 2008 - $37,619,164; $7,246,230 $6,912,000
2007 - $32,154,481)
Affiliate investments (cost: 3,950,000 20,305,800
2008 - $36,562,344; 2007 -
$46,655,285)
Controlled investments 3,233,300 6,909,928
(cost: 2008 - $12,430,248;
2007 - $12,540,376)
U.S. Treasuries and 3,203,990
certificates of deposit (cost: 2,097,482
2008 - $3,203,990; 2007 -
$2,097,482)
Total investments 17,633,520 36,225,210
Cash and cash equivalents 5,588,306 5,864,351
Accounts receivable, net of 424,466
allowance for bad debt (2008 - 3,448,907
$176,000; 2007 - $50,000)
Prepaid expenses and other 738,150 334,234
assets
Fixed assets, net 493,012 512,629
Goodwill 9,993,865 3,014,145
Intangible assets, net 9,437,828 138,908
Deferred tax asset - 2,784,968
TOTAL ASSETS 47,333,588 49,298,911
LIABILITIES
Accrued expenses 6,740,553 645,292
Deferred revenue 1,090,154 817,523
Deferred tax liability 652,796 -
TOTAL LIABILITIES 8,483,503 1,462,815
NET ASSETS $38,850,085 $47,836,096
Commitments and Contingencies
Composition of net assets:
Preferred stock, $.01 par
value, 1,000,000 shares
authorised; none issued and - -
outstanding
Common stock, $.01 par
value, 29,000,000 shares
authorised; 11,136,932 and
9,009,776 shares issued; $103,782 $90,099
10,378,083 and 9,009,776
shares outstanding at
September 30, 2008 and
December 31, 2007,
respectively
Additional paid-in capital 69,734,893 52.959.222
Accumulated income:
Accumulated net 27,080,725 34,078,780
operating income
Net realised loss on (7,264,775) (3.755.456)
investments, net of income
taxes
Net unrealised (50,292,449) (35.689.621)
depreciation of investments,
net of deferred income taxes
Foreign currency translation (512,091) 153,072
adjustment
NET ASSETS $38,850,085 $47.836.096
Net asset value per share $3.74 $5.31
Consolidated Statements of Cash Flows
Nine Months Ended Sept 30
2008 2007
Operating Activities:
Net decrease in net assets from $(20,758,835) $(4,125,320)
operations
Adjustments to reconcile net decrease in
net assets from operations to net cash
flows from operating activities:
Change in net unrealised depreciation of 9,274,746 10,890,646
investments
Net proceeds from sale (purchases) of (1,705,644) 2,487,169
short-term investments
Proceeds received on sale of equity 1,865,052 1,169,783
investments
Net repayment from (investment in) 1,965,261 (721,156)
UTEK Real Estate Holdings, Inc.
Depreciation and amortization 663,104 160,455
Goodwill impairment - 33,030
Loss on sale of investments 6,016,002 2,710,019
Loss on disposal of fixed assets 13,363 14,360
Bad debt expense 78,886 150,467
Stock-based compensation 560,257 443,047
Deferred income taxes 2,904,339 (2,024,168)
Investment securities received in (4,559,680) (14,635,550)
connection with the sale of
technology rights
Consulting and other services rendered in (45,269) (953,590)
exchange for investment securities
Changes in operating assets and
liabilities:
Accounts receivable (695,819) 252,286
Prepaid expenses and other assets (265,799) 40,773
Deferred revenue (290,439) (232,483)
Accrued expenses 4,466,976 202,548
Net cash flows from operating activities (513,499) (4,137,684)
Investing Activities:
Cash received in connection with 747,808 -
acquisitions
Purchases of fixed assets (29,725) (41,251)
Net cash flows from investing activities 718,083 (41,251)
Financing Activities:
Distributions to stockholders - (179,032)
Proceeds from exercise of stock options 189,794 523,091
Net cash flows from financing activities 189,794 344,059
Foreign currency translation adjustment (60,648) 14,116
Increase (decrease) in cash and cash 333,730 (3,820,760)
equivalents
Cash and cash equivalents at beginning of 5,254,576 9,685,111
year
Cash and cash equivalents at end of $5,588,306 $5,864,351
period
Forward-Looking Statements
Certain matters discussed in this press release are "forward-looking statements." These forward-looking statements can generally be
identified as such because the context of the statement will include words, such as UTEK "expects," "should," "believes," "anticipates" or
words of similar import. Similarly, statements that describe UTEK's future plans, objectives or goals are also forward-looking statements.
Such forward-looking statements are subject to certain risks and uncertainties, including the financial performance of UTEK and the
valuation of UTEK's investment portfolio, which could cause actual results to differ materially from those currently anticipated. Although
UTEK believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it cannot give any assurance
that its expectations will be attained. Shareholders, potential investors and other readers are urged to consider these factors carefully in
evaluating any forward-looking statements. Certain factors could cause results and conditions to differ materially from those projected in these forward-looking statements, and some of these
factors are discussed below. These factors are not exhaustive. New factors, risks and uncertainties may emerge from time to time that may
affect the forward-looking statements made herein. These forward-looking statements are only made as of the date of this press release and
UTEK does not undertake any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
UTEK's operating results could fluctuate significantly due to a number of factors. These factors include the small number of
transactions that are completed each quarter, the value of individual transactions, the timing of the recognition and the magnitude of
unrealised and realised gains and losses of companies in its portfolio, UTEK's dependence on the performance of its operating divisions as
well as the companies in its portfolio, the possibility that advances in technology could render the technologies it has transferred
obsolete, the loss of technology licences by companies in its portfolio, the degree to which it encounters competition in its markets, the
volatility of the stock market and the volatility of the valuations of the companies it has invested in as it relates to its realised and
unrealised gains and losses, the concentration of investments in a small number of companies, marketplace demand for innovation consulting
services as well as other general economic conditions. As a result of these and other factors, current results may not be indicative of UTEK's future performance. For more information on UTEK and for a more
complete discussion of the risks pertaining to an investment in UTEK, please refer to UTEK's filings with the Securities and Exchange
Commission.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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