3rd Quarter Results

RNS Number:4990L
UTEK Corporation
03 November 2006


FOR IMMEDIATE RELEASE                                         3 November 2006

                                UTEK CORPORATION

              RESULTS FOR Q3 AND 9 MONTHS ENDED 30 SEPTEMBER 2006

UTEK Corporation ("UTEK"), a specialty finance company focused on technology
transfer, announces its unaudited results for the three months and nine months
ended 30 September 2006. UTEK is quoted on AIM in the UK (LSE-AIM: UTK) and in
the USA (AMEX: UTK). It has operations in the US, UK and Israel.

Conference call today, Friday 3 November 2006

UTEK will hold a live conference call at 3:00 pm, London (10:00 a.m. ET) to
discuss its third quarter 2006 results. All interested parties are invited to
attend the conference call.

The conference call dial-in numbers are:

   * UK: 0800-032-3836
   * US & Canada: [phone]
   * Other international callers: [phone]
   * The conference call ID is #805 6804

Key points:

* Eight technology transfers completed in Q3 2006 vs. six technology
  transfers in Q3 2005.

* Revenue (Income from Operations) for Q3 2006 of $13.6 million vs.
  $10.4 million for Q3 2005.

* Net income from operations of $4.0 million for Q3 2006 vs. $3.7
  million for Q3 2005.

* Net assets of $67.6 million at September 30, 2006 vs. $44.4 million
  at December 31, 2005.

* Proceeds received on the sale of equity investments for the nine
  month period 2006 of $7.3 million vs. $1.7 million for the nine month period
  2005.


CONTACTS

UTEK Corporation:                                             [phone]
Cliff Gross, Chairman & CEO                                  www.utekcorp.com
Doug Schaedler, COO

USA:
Tania Bernier                                            [phone] x223

Consulting for Strategic Growth 1
Stan Wunderlich                                               [phone]

UK: Bankside
Steve Liebmann or Simon Bloomfield                           [phone]


About UTEK Corporation

UTEK(R) is a specialty finance company focused on technology transfer. UTEK's
services enable companies to acquire innovative technologies from universities
and research laboratories worldwide. UTEK facilitates the identification and
acquisition of external technologies for clients in exchange for their equity
securities. This unique process is called U2B(R). In addition, UTEK offers
companies the tools to search, analyse and manage university intellectual
properties. UTEK is a business development company with operations in the United
States, United Kingdom and Israel. For more information about UTEK, please visit
its website at www.utekcorp.com.



                 UTEK CORPORATION REPORTS FINANCIAL RESULTS FOR
                QUARTER AND NINE MONTHS ENDED 30 SEPTEMBER 2006

Overview

UTEK achieved significant growth during the nine months ended September 30,
2006. Twenty-four (24) technology transfers were completed in the nine months
ended September 30, 2006, with average revenues and costs per transaction of
$1.8 million and $468,000, respectively, as compared to ten (10) technology
transfer completed in the nine months ended September 30, 2005 with average
revenues and costs per transaction of $1.2 million and $337,000, respectively.
Because the consideration we received in such transactions consisted of
unregistered securities of the companies acquiring the transferred technology,
we recorded the revenue from such transactions based on the fair value of such
securities.

Quarter ended September 30, 2006 Operating Results

For the quarter ended September 30, 2006, revenue (income from operations) was
$13.6 million as compared to $10.4 million for the quarter ended September 30,
2005. Net income from operations for the quarter ended September 30, 2006 was
$4.0 million as compared to $3.7 million for the quarter ended September 30,
2005. Approximately 94% and 92% of our income from operations (revenue) was
received in the form of unregistered shares of common stock for the quarters
ended September 30, 2006 and 2005, respectively.

Net income (loss) (including net income from operations and realised and
unrealised gains and losses on investments) was ($4.5) million or ($0.50) per
weighted average diluted share outstanding for the quarter ended September 30,
2006, as compared to $5.7 million, or $0.74 per weighted average diluted share
outstanding for the quarter ended September 30, 2005. The net loss for the
quarter ended September 30, 2006 is primarily due to a significant decrease in
the fair value of two companies in our portfolio.

Proceeds received on the sale of equity investments during the three months
ended September 30, 2006 were $1.2 million, as compared to $1.0 million for the
same quarter of the prior year. These sales resulted in net realised losses, net
of income tax benefit, of $389,000 and $4.2 million for the three months ended
September 30, 2006 and 2005, respectively.

Weighted average diluted shares outstanding were 8,906,918 and 7,685,283 for the
quarters ended September 30, 2006 and 2005, respectively.

Nine Months ended September 30, 2006 Operating Results

For the nine months ended September 30, 2006, income from operations (revenue)
was $48.5 million as compared to $15.5 million for the nine months ended
September 30, 2005. Net income from operations for the nine months ended
September 30, 2006 was $17.4 million as compared to $3.9 million for the nine
months ended September 30, 2005. Approximately 94% 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, 2006 and 2005, respectively.

Net income (including net income from operations and realised and unrealised
gains and losses on investments) was $12.1 million or $1.37 per weighted average
diluted share outstanding for the nine months ended September 30, 2006, as
compared to a net increase of $2.0 million, or $0.28 per weighted average
diluted share outstanding for the nine months ended September 30, 2005.

Proceeds received on the sale of equity investments during the nine months ended
September 30, 2006 were $7.3 million, as compared to $1.7 million for the same
nine months of the prior year. These sales resulted in net realised gains
(losses), net of income tax expense (benefit), of $1.8 million and ($4.0)
million for the nine months ended September 30, 2006 and 2005, respectively.

Weighted average diluted shares outstanding were 8,869,276 and 7,104,371 for the
nine months ended September 30, 2006 and 2005, respectively.

Liquidity and Capital Resources

At September 30, 2006, UTEK had cash and cash equivalents of $5.1 million, U.S.
Treasuries and certificates of deposit of $10.5 million, total assets of $80.3
million and net assets of $67.6 million. Net asset value per common share
outstanding was $7.57 at September 30, 2006 as compared to $5.58 at December 31,
2005, an increase of 36%. The Company had no long-term debt outstanding at
September 30, 2006.

Financial Position Information

The following tables contain comparative selected financial data as of 30
September 2006 and 31 December 2005:

+-----------------------------+--------------+-----------------+--------------+
|                             |  30 September|          31 Dec.|    Percentage|
|                             |          2006|             2005|      Increase|
+-----------------------------+--------------+-----------------+--------------+
|Total investments            |   $70,807,732|      $38,752,926|           83%|
+-----------------------------+--------------+-----------------+--------------+
|Total assets                 |   $80,307,052|      $49,005,960|           64%|
+-----------------------------+--------------+-----------------+--------------+
|Total net assets             |   $67,571,956|      $44,441,118|           52%|
+-----------------------------+--------------+-----------------+--------------+
|Common shares outstanding    |     8,930,384|        7,961,505|           12%|
+-----------------------------+--------------+-----------------+--------------+
|Net asset value per share    |         $7.57|            $5.58|           36%|
+-----------------------------+--------------+-----------------+--------------+


Consolidated Statements of Assets and Liabilities (Unaudited)

                                                       As at 30     As at 31
                                                      September     December
                                                           2006         2005
ASSETS
Investments:
Non-affiliate investments (cost: 2006 -
$29,081,597; 2005 - $12,482,927)                    $15,162,503   $9,805,423
Affiliate investments (cost: 2006 - $36,054,058;
2005 - $17,656,837)                                  30,066,816   15,457,750
Control investments (cost: 2006 - $11,524,605;
2005 - $2,126,573)                                   15,041,085    1,888,396
U.S. Treasuries and certificates of deposit
(cost: 2006 - $10,537,328; 2005 - $11,601,357)       10,537,328   11,601,357
Total investments                                    70,807,732   38,752,926
Cash and cash equivalents                             5,053,917    5,275,626
Accounts receivable, net of allowance for bad           296,501      746,207
debt
Prepaid expenses and other assets                       280,797      448,810
Fixed assets, net                                       597,077      311,103
Goodwill                                              2,995,760    3,128,139
Intangible assets, net                                  275,268      343,149
                                                                  

TOTAL ASSETS                                         80,307,052   49,005,960

LIABILITIES
Accrued expenses                                        425,004      367,763
Deferred revenue                                      2,405,242    1,606,242
Deferred tax liability                                9,904,850    2,590,837
                                                               
TOTAL LIABILITIES                                    12,735,096    4,564,842
                                                               

NET ASSETS                                          $67,571,956  $44,441,118

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, 19,000,000 shares                
authorised; 8,930,384
shares issued and outstanding at September 30,
2006 and 7,961,505
shares issued and outstanding at December 31,
2005                                                    $89,304      $79,616
Additional paid-in capital                           51,380,598   40,347,663
Accumulated income:
Accumulated net operating income                     27,359,723   10,134,057
Net realised loss on investments, net of tax        (1,145,357)  (2,968,399)
Net unrealised depreciation of investments, net
of deferred tax                                    (10,222,355)  (3,138,939)
Foreign currency translation adjustment                 110,043     (12,880)
Net assets                                          $67,571,956  $44,441,118

Net asset value per share                                 $7.57        $5.58



Consolidated Statements of Operations (Unaudited)

                                       3 Months Ended           9 Months Ended
                                         30 September             30 September
                                     2006        2005         2006        2005
Income from operations:
Sale of technology rights     $12,173,009 $ 9,286,961  $44,012,206 $12,466,301
Consulting and other            1,275,790   1,010,452    3,822,114   2,745,145
services
Investment income, net            163,377     150,970      644,169     318,263

                               13,612,176  10,448,383   48,478,489  15,529,709

Expenses:
Acquisition of technology       4,089,649   2,144,467   11,236,776   3,371,262
rights
Salaries and wages                746,916     812,751    2,339,161   1,831,906
Professional fees                 331,550     204,133      914,846     547,906
Sales and marketing               781,200     538,012    2,521,375   1,667,597
General and administrative      1,132,889     763,307    3,575,020   1,799,871

                                7,082,204   4,462,670   20,587,178   9,218,542


Income before income taxes      6,529,972   5,985,713   27,891,311   6,311,167
Provision for income taxes      2,503,371   2,252,424   10,487,780   2,374,892

Net income from operations      4,026,601   3,733,289   17,403,531   3,936,275

Net realised and unrealised
gains (losses):
Net realised gain (loss) on
investments, net of income
tax expense (benefit) of
($234,851) and $1,099,905
for the three and nine
months ended September 30,
2006, respectively, and
($2,766,652) and
($2,435,937) for the three
and nine months ended
September 30, 2005,
respectively                    (389,255) (4,178,503)    1,823,042 (4,037,454)

Change in unrealised
appreciation (depreciation)
of investments, net of
deferred tax expense
(benefit) of ($4,893,610)
and ($4,273,672) for the
three and nine months ended
September 30, 2006,
respectively, and
$2,765,722 and $1,243,611
for the three and nine
months ended September 30,
2005, respectively            (8,110,934)   6,108,475  (7,083,416)   2,061,229

Net increase (decrease) in   ($4,473,588) $ 5,663,261  $12,143,157  $1,960,050
net assets from operations

Net increase (decrease) in
net assets from operations
per share:
Basic                             ($0.50)       $0.75        $1.39       $0.28
Diluted                           ($0.50)       $0.74        $1.37       $0.28
Weighted average shares:
Basic                           8,906,918   7,563,853    8,767,230   6,957,300
Diluted                         8,906,918   7,685,283    8,869,276   7,104,371

Dividend declared per                   -           -        $0.02           -
share:


Consolidated Statements of Cash Flows (Unaudited)
                                                                 9 Months Ended
                                                                   30 September
                                                             2006          2005

Operating Activities:
Net increase in net assets from operations            $12,143,157    $1,960,050
Adjustments to reconcile net increase (decrease) in
net assets from operations to net cash flows from
operating activities:
Change in net unrealised (appreciation)
depreciation of investments                            11,357,088   (3,304,838)
Depreciation and amortisation                             161,379       100,177
Goodwill impairment - UTEKip, Ltd.                        234,940             -
(Gain)/loss on sale of investments                    (2,922,947)     6,473,482
Loss on disposal of fixed assets                           38,965             -
Bad debt expense                                           60,755             -
Stock compensation                                        395,752             -
Deferred income taxes                                   7,314,013     1,182,576
Investment securities received in connection with
the sale of technology rights                        (44,012,206)  (12,368,870)
Consulting and other services rendered in exchange
for investment securities                             (1,501,538)   (1,207,201)
Changes in operating assets and liabilities:
Accounts receivable                                       428,692        93,433
Prepaid expenses and other assets                         168,013       (7,796)
Deferred revenue                                          (4,321)       425,894
Accrued expenses                                           57,242        21,914
Net cash flows from operating activities             (16,081,016)   (6,631,179)

Investing Activities:
Acquisition of 22nd Street of Ybor City, Inc.         (1,000,000)            -
Acquisition of Knowledge Express (net cash acquired             -   (1,473,577)
$26,423)
Net proceeds from sale (purchases) of short-term        1,064,029   (9,748,303)
investments
Proceeds received on sale of equity investments         7,304,113     1,713,437
Purchases of investment securities                      (685,365)     (545,800)
Purchases of fixed assets                               (415,399)     (104,046)
Net cash flows from investing activities                6,267,378  (10,158,289)

Financing Activities:
Distributions to shareholders                           (177,865)             -
Payments of bank debt                                           -      (23,516)
Net proceeds from issuance of common stock              8,955,182    15,794,705
Proceeds from exercise of stock options                   691,689     1,239,550
Net cash flows from financing activities                9,469,006    17,010,739

Foreign currency translation adjustment                   122,923      (12,546)
Increase/(decrease) in cash and cash equivalents        (221,709)       208,725
Cash and cash equivalents at beginning of year          5,275,626     3,785,873
Cash and cash equivalents at end of period             $5,053,917    $3,994,598


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 gains and losses, UTEK's dependence
on the performance of companies in its portfolio, the possibility that advances
in technology could render the technologies it has transferred obsolete, the
loss of technology licenses 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, 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

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