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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
   FORM 10-K
 (Mark One) [X]
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2003OR[  ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 COMMISSION FILE NUMBER: 001-15941 UTEK CORPORATION  DELAWARE(STATE OR JURISDICTION OF
INCORPORATION OR ORGANIZATION)
    
    59-3603677(IRS EMPLOYER
IDENTIFICATION NO.)
 202 S. WHEELER STREET, PLANT CITY, FL
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
    
    33563
(ZIP CODE)
 REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE: (813) 754-4330 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NAME OF EACH EXCHANGE ONTITLE OF EACH CLASS
    
    WHICH REGISTEREDCOMMON STOCK, $.01 PAR VALUE
    
    AMERICAN STOCK EXCHANGE
 SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter 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 [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ] Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
YES [ ] NO [x] The aggregate market value of the registrants common stock held by
non-affiliates of the registrant as of June 30, 2003 was approximately
$19,500,217 based upon the last sale price for the registrants common stock on
that date. As of March 2, 2004 there were 4,452,122 shares of the registrants
common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrants definitive proxy statement for the 2004
Annual Meeting of Shareholders are incorporated by reference into Part III of
this report.




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TABLE OF CONTENTS  
 PART IITEM 1.
    
    BUSINESS
    
    
    1ITEM 2.
    
    PROPERTIES
    
    
    17ITEM 3.
    
    LEGAL PROCEEDINGS
    
    
    17ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    17PART IIITEM 5.
    
    MARKET FOR
REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    17ITEM 6.
    
    SELECTED FINANCIAL DATA
    
    
    18ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    19ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
    
    
    27ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    28ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    52ITEM 9A.
    
    CONTROLS AND PROCEDURES
    
    
    52PART IIIITEM 10.
    
    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
    
    
    53ITEM 11.
    
    EXECUTIVE COMPENSATION
    
    
    53ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    53ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    53ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    53PART IVITEM 15.
    
    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
    
    
    54SIGNATURES
    
    
    59EXHIBIT INDEX
    
    
    60Ex-10.46 Strategic Alliance/Confidentiality AgmtEx-23.1 Pender Newkirk ConsentEx-23.2 Ernst & Young ConsentEx-31.1 Section 302 CEO CertificationEx-31.2 Section 302 CFO CertificationEx-32.1 Section 906 CEO CertificationEx-32.2 Section 906 CFO Certification
 2




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PART I 
 ITEM 1. Business General UTEK is an innovative technology transfer company. We assist companies in
acquiring technologies from universities and federal research laboratories. Our
business model generally involves two steps:  
    
    First, we form a strategic alliance and learn about the technologies that our client-companies need. We then find, acquire
and finance new technologies for our client-companies from the universities and research centers worldwide.  
    
    Second, we transfer the technologies to our client-companies in exchange for unregistered stock or cash. The result is an opportunity for our client-companies to grow and expand their
intellectual capital. We call this process U2B®. We are dedicated to building bridges between university-developed technologies
and commercial organizations. We, along with our TechEx, UVentures and
Techno-L on-lineservices and PAX Europeansubsidiary, identify and transfer
new technologies from universities and research centers to the marketplace. We
also provide research-outsourcing services to companies and technology-transfer
services to research institutions. We focus on creating value for universities and laboratory research centers by
facilitating the transfer of their intellectual capital to commercial partners.
Our client-companies benefit from having the opportunity to acquire and
commercialize new technologies primarily developed by universities, medical
centers and federal research laboratories. Corporate History and Offices We commenced operations in 1997. In October 2000, we conducted an initial
public offering of shares of our common stock. In September 2001, we acquired 100% of PAX Technology Transfer Ltd., a United
Kingdom corporation, in a stock for stock transaction. Prior to the
acquisition, PAX had provided transfer technology services for more than twenty
years. In May 2002, we acquired 100% of the outstanding common stock of Techex
Acquisition Corporation in a stock for stock transaction. TechEx owned the
TechEx.com website. The TechEx.com website, founded at Yale University, is used
by many technology transfer and research professionals to exchange licensing
opportunities and innovations available for partnering in the life sciences. In November 2003, we acquired the UVentures.com website and certain other
intellectual property assets from UVentures, Inc., an innovative Internet-based
exchange primarily used for the marketing of physical science technologies
developed at universities and research organizations. The transaction was
structured as an asset purchase. We may seek to make additional acquisitions of technology transfer entities or
financial services companies in the future. In considering whether to purchase
a technology transfer company, we evaluate a number of factors including
reputation in the industry, quality of service provided, purchase price,
strength of ties and relationships with clients, universities and research
centers, the extent of intellectual property rights to significant
technologies, and amount of equity ownership in portfolio companies which
possess significant opportunity for growth. We are a non-diversified, closed-end management investment company that has
elected to be regulated as a business development company (BDC) under the
Investment Company Act of 1940 (1940 Act). As a BDC, we must be primarily
engaged in the business of furnishing capital and making available managerial
assistance to companies that do not have ready access to capital through
conventional financial channels. We refer to such companies as portfolio
companies. Throughout our corporate history, we have been primarily engaged in
the business of technology transfer. We may not change the nature of our business so as to cease to be, or withdraw
our election as, a BDC unless authorized by a vote of a majority of our
outstanding voting securities, within the meaning of the 1940 Act. We do not
have a registered investment adviser and our management, under the supervision
of our Board of Directors, makes our investment and management decisions. Our
investment objectives, policies and investment diversification status may
change at any time and from time to time without stockholder approval. 1




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Our executive offices are located at 202 S. Wheeler Street, Plant City, Florida
33563 and our telephone number is (813) 754-4330. Available Information Our Internet address is www.utekcorp.com. We make available free of charge
through our website our annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K, and amendments to those reports as soon as
reasonably practicable after we electronically file such material with, or
furnish it to, the SEC. Information contained on our website is not
incorporated by reference into this Annual Report on Form 10-K and you should
not consider information contained on our website to be part of this Annual
Report on Form 10-K. Strategies Stock for Stock Exchanges Our primary investment objective is to increase our net assets by exchanging
stock in new companies that we form to acquire intellectual property, which we
refer to as an intellectual property acquisition company for cash and other
assets upon the completion of technology transfer transactions. We seek to
achieve our investment objective by creating intellectual property acquisition
companies to identify, license and market new technologies invented primarily
by employees of universities and federal research laboratories. We intend to
sell our intellectual property acquisition companies principally to privately
owned and publicly traded companies (which we refer to as portfolio companies
or our investments) in tax-free stock for stock exchanges. It is our plan
that shares of those privately owned and publicly traded companies received in
those exchanges will, in the course of our business, be sold for cash or other
assets to permit us to acquire additional technologies and to fund our
operations. We seek to sell our intellectual property acquisition companies
into publicly traded portfolio companies whenever possible, as this provides us
with the potential for added liquidity. As of December 31, 2003, we have
completed twenty-seven such transactions. Since our election to operate as a BDC, we have concentrated our efforts on
making equity investments in portfolio companies through the manner described
above. Our initial investment in our intellectual property acquisition
companies consists of funding to be used to identify, research and market new
technologies and for the acquisition of licenses to those new technologies and,
when appropriate, the support of sponsored research programs to further the
development of licensed technology. After we have made an investment in a
portfolio company through a tax-free stock for stock exchange, we offer to
provide the portfolio company with managerial assistance. This assistance may
include helping them by researching, identifying and transferring additional
technologies. Our investments are concentrated in small or development stage companies that
license and develop new technologies for commercial applications. Moreover, our
investments in portfolio companies may be concentrated in one or more
industries. In this event, we will not obtain any advantages that may result
from diversifying our portfolio company investments among more industries.
Generally, we intend to make initial investments in our intellectual property
acquisition companies in amounts sufficient to permit them to conduct initial
research, acquire technology licenses and, in some cases, to fund additional
development of new technologies and markets. Since all of our intellectual
property acquisition companies are early stage companies, our investments do
not benefit from any diversification of risk that may result from spreading
investments among companies at various stages of development. Furthermore, an
intellectual property acquisition company may spend all of the money that we
have invested without finding, acquiring or locating a new technology or
suitable market for a new technology, in which case we would likely lose our
entire investment in the intellectual property acquisition companies. We intend to take advantage of our experience in the field of technology
transfer to maximize the return on our investments in portfolio companies.
Technology transfer refers to the process by which new technologies, developed
in universities, government research facilities, or similar research settings,
are licensed to companies for commercial development and use. Our management
and certain members of our Board of Directors have experience in technology
transfer. Our investments in our portfolio companies are structured, through
our U2B® investment model, to allow us to take advantage of our managements
expertise. In addition, we intend to capitalize on relationships that members
of our management and Board of Directors have developed with universities and
government research laboratories. Strategic Alliance Process To facilitate establishing on-going consulting engagements with our clients, we
have developed a strategic alliance process. Our strategic alliances are
designed to help technology companies enhance their new product pipeline
through the acquisition of proprietary intellectual capital primarily from
universities and federal laboratories. 2




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We normally receive unregistered shares of common stock from our clients as
payment for the services we render under our strategic alliance consulting
engagements. Whenever possible, we will seek to receive cash payments as
compensation for our services. Our Investment Model We believe that technology transfer is marketplace driven and technology
fulfilled. Our investments generally follow a specific series of steps, which
our management believes provide the greatest opportunity for long-term
appreciation. As our investments are designed to bring and develop
technologies from their inception at universities to the private sector, we
refer to our investment model as U2B®. Using our U2B® investment model, we
create and capitalize intellectual property acquisition companies to acquire
new technologies and eventually exchange the securities of our intellectual
property acquisition company for securities in companies that acquire them. The
following is a list of the steps that we generally take when we make an
investment in a portfolio company using our investment model:  
    
    Evaluate potential technology growth fields.  
    
    Form and capitalize a intellectual property acquisition company to acquire new technologies.  
    
    Assist the intellectual property acquisition company in
the identification and evaluation of new technologies and markets
that offer significant opportunity for growth.  
    
    When appropriate, advise and assist the intellectual
property acquisition company in negotiating a sponsored research
agreement to further develop the technology.  
    
    Identify and contact potential portfolio companies to
acquire the intellectual property acquisition company.  
    
    Advise and assist the intellectual property acquisition
company in completing the technology transfer with the research
institution and acquiring the license to the technology.  
    
    Complete the sale of 100% of the intellectual property
acquisition company to the portfolio company and receive stock or
cash compensation for the sale of the stock we hold in the
intellectual property acquisition company.  
    
    Sell over time any securities received from the portfolio
company as payment for the intellectual property acquisition
company and use the proceeds to make additional investments or to
fund our operations. Investment Evaluation Process New technology opportunities may come to our attention from many sources. The
primary sources to date have been from our managements contacts with
universities and the private sector. We believe that the ability of our
management to maintain and develop relationships with university and research
laboratories is a key factor in our ability to identify new potential
investment opportunities. Prior to our committing funds to an investment opportunity, we will review the
prospects and risks of the potential investment. Our Scientific Advisory
Council (discussed below) and managements experience is helpful in evaluating:  
    
    new technologies,  
    
    products, 3




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
    
    markets,  
    
    industry trends,  
    
    financial requirements,  
    
    competition, and  
    
    the operating record and quality of the entrepreneurial group associated with a prospective investment. Although our management has scientific and professional experience, they may
have limited or no experience in the specific areas of business in which our
portfolio companies operate. Strategic Alliances With Client Companies To establish on-going consulting engagements with our clients, we have
developed a strategic alliance process. Our 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. This process usually includes performing the following activities:  
    
    Constructing a technology acquisition or disposition
profile that is approved by the client.  
    
    When appropriate, acquiring and reviewing new technology
acquisition opportunities from leading university and federal
laboratory research centers and other sources that potentially
meet this profile.  
    
    When a client has expressed an interest in learning more
about a specific technology acquisition opportunity, we will
acquire additional information about the technology and share it
with the client.  
    
    At our clients request, we will negotiate licenses to
acquire technologies.  
    
    On a case-by-case basis, when both our client and we
agree to move forward to acquire a specific technology, we will
propose our U2B® investment model for the technology acquisition
and transfer. Alternatively, our clients may acquire our
introduced technology directly from the research institutions. In addition, we intend to enter into strategic alliance agreements with
universities and private research organizations to increase pour access to the
various technologies developed by these entities. Our TechEx.com and
Uventures.com intellectual capital exchanges assist us in expanding our
supplier network by making available a wider array of technology acquisition
opportunities for our strategic alliance clients. Investments in Portfolio Companies Our initial investments will be made in transactions that will normally be
negotiated directly by our management, with the portfolio company or an
affiliate of the portfolio company. In all prior and most future instances, we
have executed or will execute our investments in portfolio companies through
the creation and capitalization of an intellectual property acquisition company
to acquire a new technology, which will then be sold to a portfolio company.
In connection with such transaction, we usually receive shares of common stock
in the portfolio company for the securities of our intellectual property
acquisition company. In addition to holding a license to a new technology, our
intellectual property acquisition company may also hold cash and other assets.
Our management will seek to structure the terms of the investment so as to
provide for the capital needs and success of the portfolio company and at the
same time to maximize our opportunity for long-term capital appreciation. We intend to limit our total cash investments in any individual portfolio
company to the lesser of $500,000 or an amount equal to ten percent of our net
assets at the time of investment. To date, our initial investments in portfolio
companies have been significantly less than $500,000. By limiting the size of
our total investment in any one portfolio company, we hope to reduce and
diversify our risks. In exchange for our investment, we will receive shares of
common stock in the portfolio company. To date, all of our portfolio company
securities have been common stock and warrants to purchase common stock, and we
anticipate that we will continue to acquire similar securities in our portfolio
companies. Use of the funds that we provide to intellectual property
acquisition companies is normally used for obtaining licenses to new
technologies and developing and marketing those technologies. 4




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Identifying New Technologies We have developed relationships with a number of universities and research
centers in the United States and Europe. In order to provide us early access to
new technologies, or to acquire or develop specific technologies, we have
previously entered into alliances, licensing, license option agreements and/or
sponsored research agreements with the following institutions:  
    
    Auburn University;  
    
    Brookhaven National Laboratory;  
    
    Caltech & the Jet Propulsion Laboratory;  
    
    Catholique de Louvain;  
    
    Cornell University;
    
    Dartmouth College;  
    
    Florida Atlantic University;  
    
    Florida Institute of Technology;  
    
    Florida International University;  
    
    Florida State University Research Foundation;  
    
    Fraunhofer Institute of Germany for Interfacial Engineering and Biotechnology IGB;  
    
    George Mason University;  
    
    Johns Hopkins University;  
    
    Los Alamos National Laboratory;  
    
    Nauka Scientific and Industrial Concern;  
    
    Oak Ridge National Laboratory;  
    
    Oklahoma State University;  
    
    Pacific Northwest National Laboratory;  
    
    Rockefeller University;  
    
    Rutgers University;  
    
    Sopartec of Louvain-la-Neuve, to review certain technologies developed at the Universite  
    
    The Interactive Institute;  
    
    U.S. Department of Agriculture- Agricultural Research Service;  
    
    University of Akron;  
    
    University of California, Irvine;  
    
    University of Florida;  
    
    University of Hawaii;  
    
    University of Loughborough;  
    
    University of Maryland;  
    
    University of Memphis;  
    
    University of Miami;  
    
    University of Missouri;  
    
    University of Rochester;  
    
    University of South Alabama;  
    
    University of South Carolina;  
    
    University of South Florida;  
    
    University of Warwick;  
    
    University of West Florida;  
    
    University of York;  
    
    Virginia Tech Intellectual Properties;  
    
    Yale University; The general terms and provisions of the above-referenced university agreements
may include:  
    
    The university may have us review and evaluate the
commercial potential of certain new technologies developed at the
university.  
    
    The university may grant us license option agreements
which will give us the exclusive rights to license specific
technology, provided mutually agreeable terms are reached, for
limited period of time. 5




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
    
    The term of the agreement may be three to five years, or
ongoing, but may be terminated by either party on 30 to 60 days
written notice.  
    
    The university may upon our request, file patents to
protect technologies that we wish to have protected. In additional to the above named institutions, we have technologies available
for license on our TechEx.com and Uventures.com intellectual capital exchanges
from more than 200 universities and research institutions worldwide. Evaluation and Acquisition of Technology With few exceptions, all technologies developed by university faculty are
the property of the universities and are licensed by the universitys
research foundations or similar organizations to our portfolio companies
for commercialization. To help facilitate the identification of and
access to new technology, we have created a Scientific Advisory Council
to review technologies developed at universities and laboratories. When we assist a portfolio company in evaluating a new technology, we
review the technology to make sure that it meets some or all of the
following criteria:  
    
    the technology should represent a significant advance over existing technologies;  
    
    there should be an existing global market for the technology once it is commercialized;  
    
    the technology should be socially responsible
(i.e., not intended for destructive or harmful purposes);
and  
    
    there should be a customer readily available for
the technology. If, in our managements view, a technology meets some or all of these
criteria, then we will assist the portfolio company in commencing
negotiations with the technology developer to arrange for a license.
Normally, we seek to acquire on behalf of our portfolio companies a
worldwide exclusive license for the field of use. These licenses usually
have an upfront fee, royalty provision, and minimum annual royalties.
Pursuant to the terms of our license agreements, all rights to royalties
remain with the university or research institute that grants the license.
The term for most agreements is for the life of the intellectual property
underlying the license. Our management will review license agreements and
advise portfolio companies as to license terms and requirements. In
addition, when we require assistance in evaluating a technology, our
management will have the technology reviewed by members of our Scientific
Advisory Council or other individuals we may deem appropriate. Scientific Advisory Council As of December 31, 2003, our Scientific Advisory Council consisted of the
following members: Name
    
    Title
    
    ExpertiseAlbert J. Anthony, D.M.D.
    
    Dentist, Retired
    
    Dentistry and dental equipmentJeffrey Bleil, Ph.D.
    
    Chief Technology Officer, UTEK Corp.
    
    Cell and developmental biologyAlain M. Boudet, Ph.D.
    
    Professor, University of Paul
Sabatier
    
    Cell and molecular plant biologyRussell Brantman, Ph.D.
    
    Engineering Technology Consultant
    
    Mechanical engineering/systems engineering/vehicle
safety systems/crash simulationsMarcel J. Crochet, Ph.D.
    
    Recteur, Université Catholique de
Louvain Louvain-la-Nueve, Belgium
    
    Fluid mechanicsTzann T. Fang, M.D.
    
    Physician, Bakersfield Hematology &
Medical Oncology
    
    Medical oncology / hematology, internal medicineS. Anders Flodström, Ph.D.
    
    President, Kungl Tekniska Högskolan
Royal Institute of Technology,
Stockholm, Sweden
    
    Solid state and semiconductor physicsHector J. Gomez, M.D. , Ph.D.
    
    Chairman of the Board of Directors,
DNAprint Genomics
    
    Pharmacology, pharmacogenomics, drug developmentSaid I. Hakky, M.D.
    
    Staff Urologist, Bay Pines V.A.
Center
    
    Urology
 6




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Name
    
    Title
    
    ExpertiseJui-Sung Hung, M.D.
    
    Professor, China Medical College
Hospital
    
    CardiologyWalter Kohn, Ph.D.
    
    Professor, University of California
at Santa Barbara
    
    ChemistryGerald Krueger, Ph.D., CPE
    
    Scientist/Ergonomist
    
    Human performance enhancement/human systems
design.Yun-Fan Liaw, M.D.
    
    Professor of Medicine, Chang Gung
Medical College
    
    Gastroenterology/hepatology.Vince Mazzeo, M.D.
    
    Radiologist, Boca Raton Community
Hospital
    
    Medical imaging & radiologySharrell L. Mikesell Ph.D.
    
    Executive Director, Ohio Polymer
Strategy Council
    
    Polymer sciencesO. Norman Nesheim, Ph.D.
    
    Professor, University of Florida
    
    Pesticide regulation and safety management/food
and water safetyDennis R. Pape, Ph.D.
    
    President, AlphaLaunch
    
    Optics, photonics, optical networks, acoustics
and electronicsPenio S. Penev, Ph.D.
    
    Research Staff Member, NEC
Laboratories
    
    Biometrics, optical imaging, computerized
facial recognitionCaroline Popper, M.D., MPH
    
    Independent Consultant
    
    Biotechnology and business developmentCharles Proctor, Ph.D., P.E.
    
    Owner, Proctor Engineering Research
& Consulting
    
    Orthopedic implants & devices, biomechanicsPeter Reischl, Ph.D.
    
    Professor, San Jose State University
    
    Electrical engineering / high frequency energy
conversionPhilip Ross
    
    Director, Cordless Group, UK
    
    Wireless communicationsBrian B. Schwartz, Ph.D.
    
    Professor, Graduate School of the
City University of New York
    
    Physics and material science.Eugene Starr, Ph.D.
    
    Independent Consultant
    
    Engineering physicsMichael Zaworotko, Ph.D.
    
    Professor, University of South
Florida
    
    Nanotechnology / crystal engineering / x-ray
crystallography
 Subsidiary Companies As of December 31, 2003, our investments in our subsidiary companies
represented less than 5% of our total assets. We have controlling
interests in each of our subsidiary companies and members of our
management also serve as officers and directors of each subsidiary. We
have not made loans to any of our subsidiary companies. The following is a list of our subsidiary companies as of December 31,
2003, with a brief description of their business: PAX Technology Transfer Ltd., a United Kingdom corporation, is
a company that has provided technology transfer for over 25 years.
PAX has an international network of technology transfer associates
and facilitators around the world. PAX services include finding
technology and product opportunities for industrial companies,
technology licensing, facilitating university technology transfer,
expert witnesses in patent and licensing litigation. Techex Acquisition Corporationowns the TechEx.com website. The
TechEx.com website, founded at Yale University, is used by many technology
transfer and research professionals to exchange licensing opportunities
and innovations. UTEK Real Estate Holdings, Incwas formed to hold future real estate
assets for us. We, through UTEK Real Estate Holdings, Inc., may purchase
real estate for investment and/or the acquisition of businesses in the
real estate service industry. We own 100% of the common stock of UTEK Real
Estate Holdings, Inc. We have invested $900 in UTEK Real Estate Holdings,
Inc. as of December 31, 2003. Sam Reiber, our vice president and general
counsel, is the sole director and president of UTEK Real Estate Holdings,
Inc. We have executed or will likely execute our investments in portfolio companies
through the creation and capitalization of newly formed subsidiary companies
which we referred to as an intellectual property acquisition companies to
acquire a new technology, which will then be sold to a portfolio company. In
connection with such transaction, we usually receive shares of 7




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common stock in
the portfolio company for the securities of our intellectual property
acquisition company. In addition to holding a license to a new technology, our
intellectual property acquisition company may also hold cash and other assets. Identifying Acquisition Candidates In order to realize a return on our investments in our intellectual property
acquisition companies, we must sell our intellectual property acquisition
companies or the technology and development rights they hold. Based on current
federal tax law and industry conditions, it is our policy to sell our
intellectual property acquisition companies to companies in transactions where
we receive shares in the acquiring company in a federal tax-free exchange for
all of our shares in our intellectual property acquisition company. In this
manner, all rights to technologies held by our intellectual property
acquisition company transfer to the acquirer, and the acquirer assumes all
obligations under the license agreement and any sponsored research agreements.
Our transactions to date have been with thinly traded public companies and
private companies whose common stock is not publicly traded. As a result of
these technology transfer transactions, we hold shares in thinly traded public
or private companies. As of December 31, 2003, all of the securities that we
have received in exchange for our intellectual property acquisition companies
are subject to legal and other restrictions or will otherwise be less liquid
than public companies which have actively traded securities. As a result, our
ability to sell or otherwise transfer the securities we hold will be limited.
Our management and staff have primary responsibility for locating suitable
acquisition partners. Technology transfer transactions that we have completed during the year ended
December 31, 2003, include the following: Circle Group Holdings, Inc. (Assignment of License) In March 2003, we assigned our license with Brookhaven Science Associates, LLC
to Circle Group Holdings, Inc., a development stage company with shares quoted
on the OTC Bulletin Board under the symbol CRGQ. In connection with the
assignment, we received 821,429 unregistered shares of common stock of Circle
Group Holdings, Inc. As a result of the assignment, Circle Group Holdings, Inc.
acquired an exclusive license to a patent for a mini-lidar stand off sensor
device. We owned 3,800,637 shares of common stock of Circle Group Holdings,
Inc. as of December 31, 2003, which represents approximately 13.5% of its
outstanding common stock. Advanced Illumination Technologies, Inc. / GloTech Industries, Inc. In June 2003, Advanced Illumination Technologies, Inc., our intellectual
property acquisition company, was acquired by GloTech Industries, Inc. GloTech
Industries, Inc. is a development stage company with shares quoted on the OTC
Bulletin Board under the symbol GTHI. In connection with the acquisition, we
received 1,000,000 unregistered shares of common stock of GloTech Industries,
Inc. As a result of the acquisition, GloTech Industries, Inc. acquired a
non-exclusive license to a patent pending lighted line technology, which is a
flexible illuminated safety line used to assist safety and rescue teams. We
owned 3,198,571 shares of common stock of GloTech Industries, Inc. as of
December 31, 2003, which represents approximately 12% of its outstanding common
stock. Please see recent developments for an update on GloTech Industries, Inc. Circle Group Holdings, Inc. (Assignment of License). In July 2003, we assigned a license with the Board of Trustees of the
University of Illinois to Circle Group Holdings Inc., a development stage
company with shares quoted on the OTC Bulletin Board under the symbol CRGQ.
In connection with the assignment, we received 130,208 unregistered shares of
common stock of Circle Group Holdings, Inc. As a result of the assignment,
Circle Group Holdings, Inc. acquired a worldwide exclusive license to a
Nutritional Analysis Tool website. We owned 3,800,637 shares of common stock of
Circle Group Holdings, Inc. as of December 31, 2003, which represents
approximately 13.5% of the issued and outstanding common stock. Fingerprint Detection Technologies, Inc/ Sequiam Corporation In September 2003, Fingerprint Detection Technologies, Inc., our intellectual
property acquisition company, was acquired by Sequiam Corporation. Sequiam
Corporation is a development stage company with shares quoted on the OTC
Bulletin Board under the symbol SQUM. In connection with the acquistion, we
received 485,000 unregistered shares of common stock of Sequiam Corporation. As
a result of the acquistion, Sequiam Corporation acquired a worldwide exclusive
license to a patent pending BitePrint fingerprint detection technology, which
is a LED-based headband mounted light-source. We owned 645,000 shares of common
stock of Sequiam Corporation as of December 31, 2003, which represents
approximately 1.5 % of its outstanding common stock. 8




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Sport Technologies, Inc. / GloTech Industries, Inc. In September 2003, Sport Technologies, Inc., our intellectual property
acquisition company, was acquired by GloTech Industries, Inc. GloTech
Industries, Inc. is a development stage company with shares quoted on the OTC
Bulletin Board under the symbol GTHI. In connection with the acquisition, we
received 2,130,000 unregistered shares of common stock of GloTech Industries,
Inc. As a result of the acquisition, GloTech Industries, Inc. acquired a
worldwide exclusive license to a patented illuminating helmet technology. We
owned 3,198,571 shares of common stock of GloTech Industries, Inc. as of
December 31, 2003, which represents approximately 12% of the issued and
outstanding common stock. Please see recent developments for an update on
GloTech Industries, Inc. Medical Safety Technologies, Inc. / E Med Future, Inc. In December 2003, Medical Safety Technologies, Inc., our intellectual property
acquisition company, was acquired by E Med Future, Inc. E Med Future, Inc. is a
development stage company with shares quoted on the OTC Bulletin Board under
the symbol EMDF. In connection with the acquisition, we received 1,250,000
unregistered shares of common stock of E Med Future, Inc. As a result of the
acquisition, E Med Future, Inc. holds the worldwide exclusive license to a
patented invention, known as the Safe Receptacle for Sharps, which is designed
to aid in the safe transport of sterile and used sharp medical instruments. We
owned 1,284,000 shares of common stock of E Med Future, Inc. as of December 31,
2003, which represents approximately 5.2% of the issued and outstanding common
stock. We have entered into the following strategic alliance and consulting agreements
during the year ended December 31, 2003: Shriners Hospitals For ChildrenOn November 21, 2002, we entered into a
technology transfer engagement agreement to provide technology outsourcing
services in exchange for monthly cash payments and fifty percent of the upfront
consideration received by Shriners Hospitals For Children from the outsourcing
of their technologies by us. The term of the agreement is for one year
commencing on January 1, 2003. We have recognized $109,992 in consulting
revenue in 2003 related to the agreement. Diamond V Mills, Inc.On January 13, 2003, we entered into a strategic alliance
agreement to provide consulting services in exchange for monthly cash payments.
The term of the agreement is for three months commencing on January 13, 2003.
We have recognized $20,000 in consulting revenue in 2003 related to the
agreement. Duraswitch Industries, Inc.On January 15, 2003, we entered into a strategic
alliance agreement to provide consulting services in exchange for in exchange
for 83,478 unregistered shares of common stock of Duraswitch Industries, Inc.
The term of the agreement is for one year commencing on January 15, 2003. We
have recognized $29,031 in consulting revenue in 2003 on 34,782 shares of
common stock we earned related to the agreement. The strategic alliance was
cancelled in June 2003 and the unvested 48,696 shares were returned to
Duraswitch Industries, Inc. Circle Group Holdings, Inc.On February 5, 2003, we entered into a strategic
alliance agreement with Circle Group Holdings, Inc. The agreement provides for
a total of 48,000 unregistered shares of Circle Group Holdings, Inc.s common
stock to be distributed to us pro rata during the term of the agreement. We
have recognized to date $47,814 in consulting revenue relating to 44,000
unregistered shares of Circle Group Holdings, Inc. Seqiuam CorporationOn March 18, 2003, we entered into a strategic alliance
agreement to provide consulting services in exchange for 160,000 unregistered
shares of common stock of Sequiam Corporation. The term of the agreement is for
one year commencing on March 18, 2003. We have recognized $42,724 in consulting
revenue in 2003 on 125,778 shares of common stock we earned related to the
agreement. Graphco Holdings CorporationOn March 26, 2003, we entered into a strategic
alliance agreement to provide consulting services in exchange for 35,294
unregistered shares of common stock of Graphco Holdings Corporation. The term
of the agreement is for one year commencing on March 26, 2003. We have
recognized $7,055 in consulting revenue in 2003 on 26,953 shares of common
stock we earned related to the agreement. GloTech Industries, Inc.On April 11, 2003, we entered into a strategic
alliance agreement to provide consulting services in exchange for 68,571
unregistered shares of common stock of GloTech Industries, Inc. The term of the
agreement is for one year commencing on April 11, 2003. We have recognized
$15,319 in consulting revenue in 2003 on 49,140 shares of common stock we
earned related to the agreement. E Med Future, Inc.On June 17, 2003, we entered into a strategic alliance
agreement to provide consulting services in exchange for 34,000 unregistered
shares of common stock of E Med Future, Inc. The term of the agreement is for
one year commencing on June 17, 2003. We have recognized $14,731 in consulting
revenue in 2003 on 18,227 shares of common stock we earned related to the
agreement. 9




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Magic Media Networks, Inc.On December 3, 2003, we entered into a strategic
alliance agreement to provide consulting services in exchange for 545,000
unregistered shares of common stock of Magic Media Networks, Inc. The term of
the agreement is for six months commencing on December 3, 2003. We have
recognized $25,433 in consulting revenue in 2003 on 82,043 shares of common
stock we earned related to the agreement. AssureTec Holdings, Inc.On December 10, 2003, we entered into a strategic
alliance agreement to provide consulting services in exchange for 34,000
unregistered shares of common stock of AssureTec Holdings, Inc. The term of the
agreement is for one year commencing on December 10, 2003. We have recognized
$1,626 in consulting revenue in 2003 on 13,548 shares of common stock we earned
related to the agreement. Revenue from strategic alliance agreements are deferred and recognized over the
term of each agreement. For a detailed discussion of the strategic alliance
process see Business Strategic Alliances. Portfolio Company Transactions The capital stock we receive from portfolio companies is expected to be
acquired primarily in private transactions negotiated directly with the
portfolio company or an affiliate. Our management will continue to be
principally responsible for conducting negotiations with respect to our
investments in portfolio companies. In addition to securities of portfolio companies that we receive as a result of
acquisitions of our intellectual property acquisition company, we may invest a
portion of our other assets in the publicly traded securities of public
companies. Such investments and other investments that are not qualifying
assets may not exceed 30% of the value of our total assets at the time of any
such investment. Based on the amount of existing available funds, it is not likely that we will
be able to acquire securities in a large number of companies. As a result, our
investments will not be substantially diversified. Furthermore, the
technologies that our intellectual property acquisition companies acquire have
been, and are expected to be sold primarily to early stage public and private
companies. Accordingly, the securities we receive upon the acquisition of our
intellectual property acquisition companies will not be diversified among
companies at various stages of development and we will not derive the benefits,
which may arise from making multi-tiered investments. Determination of Net Asset Value We determine the net asset value per share of our common stock quarterly. The
net asset value per share of our common stock is equal to the value of our
total assets minus total liabilities divided by the total number of shares of
common stock outstanding. At December 31, 2003, approximately 69.5% of our total net assets represented
investments recorded at fair value. Value, as defined in Section 2(a)(41) of
the 1940 Act, is (i) the market price for those securities for which a market
quotation is readily available and (ii) for all other securities and assets,
fair value is as determined in good faith by our Board of Directors. Since
there is typically no readily available market value for the investments in our
portfolio, we value substantially all of our investments at fair value as
determined in good faith by the Board of Directors. In making its
determination, our Board of Directors considers valuation appraisals provided
by independent financial experts. Because of the inherent uncertainty of
determining the fair value of investments that do not have a readily available
market value, the fair value of our investments determined in good faith by the
Board of Directors may differ significantly from the values that would have
been used had a ready market existed for the investments, and the differences
could be material. There is no single standard for determining fair value in good faith. As a
result, determining fair value requires that judgment be applied to the
specific facts and circumstances of each portfolio investment while employing a
consistently applied valuation process for the types of investments we make.
We will record unrealized depreciation on investments when we believe that an
investment has become impaired, including where realization of an equity
security is doubtful. Conversely, we will record unrealized appreciation if we
have an indication that the underlying portfolio company has appreciated in
value and, therefore, our equity security has also appreciated in value, where
appropriate. 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.
Restricted and unrestricted publicly traded stocks may also be valued at
discounts due to the size of our investment or market liquidity concerns. 10




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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. We have retained Bolten Financial Consulting, Inc. to provide us with quarterly
valuations of our portfolio of equity securities. We pay Bolten Financial
Consulting, Inc. a fee each time it values our investments. In 2003, we paid
Bolten Financial Consulting, Inc. $112,502 for its valuation services. Employees As of December 31, 2003, we had sixteen employees in our two offices. Of these
employees, nine are based in our Plant City, Florida office; six are based in
our UK office. We believe our relations with our employees are good. Regulation We have elected to be regulated as a BDC under the 1940 Act. A BDC is defined
and regulated by the 1940 Act. A BDC must be organized in the United States
for the purpose of investing in or lending to primarily private companies and
making
managerial assistance available to them. A BDC may use capital provided by
public shareholders and from other sources to invest in long-term, private
investments in businesses. A BDC provides shareholders the ability to retain
the liquidity of a publicly traded stock, while sharing in the possible
benefits, if any, of investing in primarily privately owned companies. As a BDC, we may not acquire any asset other than qualifying assets
unless, at the time we make the acquisition, the value of our qualifying assets
represent at least 70% of the value of our total assets. The principal
categories of qualifying assets relevant to our business are:  
    
    Securities purchased in transactions not
involving any public offering, the issuer of
which is an eligible portfolio company;  
    
    Securities received in exchange for or
distributed with respect to securities
described in the bullet above or pursuant to
the exercise of options, warrants or rights
relating to such securities; and  
    
    Cash, cash items, government securities or high quality debt
securities (within the meaning of the 1940 Act), maturing in
one year or less from the time of investment. An eligible portfolio company is generally a domestic company that is not an
investment company and that:  
    
    does not have a class of securities registered on an exchange or a class of securities with
respect to which a broker may extend margin credit;  
    
    is actively controlled by the BDC and has an affiliate of a BDC on its Board of Directors; or  
    
    meets such other criteria as may be established by the SEC. Control under the 1940 Act is presumed to exist where a BDC beneficially owns
more than 25% of the outstanding voting securities of the portfolio company. To include certain securities described above as qualifying assets for the
purpose of the 70% test, a BDC must make available to the issuer of those
securities significant managerial assistance. We offer to provide significant
managerial assistance to each of our portfolio companies. As a BDC, we are entitled to issue senior securities in the form of stock or
senior securities representing indebtedness, including debt securities and
preferred stock, as long as each class of senior security has asset coverage of
at least 200% immediately after each such issuance. We may sell our securities at a price that is below the net asset value per
share only (i) after a majority of our disinterested directors has determined
that such a sale would be in our best interests and the best interests of our
stockholders, and (ii) upon the approval by the holders of a majority of our
outstanding voting securities, including a majority of the voting securities
held by non-affiliated persons, of such a policy or practice within one year
prior to such sale. If the offering of the securities is 11




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underwritten, a
majority of the disinterested directors must determine in good faith that the
price of the securities being sold is not less than a price which closely
approximates the market value of the securities, less any distribution
discounts or commissions. As defined in the 1940 Act, the phrase majority of
our outstanding voting securities means the vote of (i) 67% or more of our
common stock present at a meeting, if the holders of more than 50% of our
outstanding common stock are present or represented by proxy, or (ii) more than
50% of our outstanding common stock, whichever is less. We may also be prohibited under the 1940 Act from knowingly participating in
certain transactions with our affiliates without the prior approval of our
Board of Directors who are not interested persons and, in some cases, prior
approval by the SEC We are periodically examined by the SEC for compliance with the 1940 Act. As with other companies regulated by the 1940 Act, a BDC must adhere to certain
substantive regulatory requirements. A majority of our directors must be
persons who are not interested persons, as that term is defined in the 1940
Act. Additionally, we are required to provide and maintain a bond issued by a
reputable fidelity insurance company to protect us against larceny and
embezzlement. Furthermore, as a BDC, we are prohibited from protecting any
director or officer against any liability to our company or our shareholders
arising from willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such persons office. We maintain a code of ethics that establishes procedures for personal
investment and restricts certain transactions by our personnel. Our code of
ethics generally does not permit investment by our employees in securities that
may be purchased or held by us. We may not change the nature of our business so as to cease to be, or withdraw
our election as, a BDC unless authorized by vote of a majority of the
outstanding voting securities, as defined in the 1940 Act, of our shares. Income Tax Matters For federal and state income tax purposes, we are taxed at regular corporate
rates on ordinary income and recognize gains on distributions of appreciated
property. We are not entitled to the special tax treatment available to most
regulated investment companies because, among other reasons, we do not
distribute at least 90% of investment company taxable income as required by
the Internal Revenue Code for such treatment. Distributions of cash or property
by us to our stockholders, if any, will be taxable as dividends only to the
extent that we have current or accumulated earnings and profits. Distributions
in excess of current or accumulated earnings and profits will be treated first
as a return of capital to the extent of the holders tax basis and then as gain
from the sale or exchange of property. Each investor is urged to consult with
his or her tax advisor concerning the federal, state and local, and foreign tax
consequences of an investment in our company. Competition The technology transfer business is highly competitive. We expect that if our
investment model proves to be successful, our current competitors in the
technology transfer market may duplicate our strategy and new competitors may
enter the market. We compete against other technology transfer companies, some
of which are much larger and have significantly greater financial resources
than we do. In addition, these companies will be competing with our portfolio
companies to acquire technologies from universities and government research
laboratories. We cannot assure you that we will be able to successfully compete
against these competitors in the acquisition of technology licenses, funding of
technology development or marketing of portfolio companies. Risk Factors Investing in us involves a number of significant risks relating to our business
and investment objective. As a result, there can be no assurance that we will
achieve our investment objective. In addition to the risk factors described
below, other factors that could cause actual results to differ materially
include:  
    
    risks associated with possible disruption in our operations due to terrorism;  
    
    future regulatory actions and conditions in our operating areas; and  
    
    other risks and uncertainties as may be detailed from time to time in our public announcements and SEC filings. 12




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Our financial results are largely dependent upon the performance of Circle
Group Holdings, Inc. Our financial results are largely dependent upon the performance of Circle
Group Holdings, Inc. As of December 31, 2003, the value of its investment in
Circle Group Holdings, Inc. was approximately $5.9 million or 53% of its net
assets. Our quarterly and annual results could fluctuate significantly. Our 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 Our
performance in future quarters and years. Our investment model is highly speculative in nature and our history of 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 and research laboratories, 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 13




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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. 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, 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 cash investments in our portfolio companies to
provide them with capital to further develop licensed technologies. We may have to make additional cash 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 which 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 subject to legal restrictions on resale. Furthermore, our ability
to sell the securities in our portfolio may be limited by, and subject to, the
lack of or limited nature of a trading market for such securities. 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 sales transactions, structured as tax-free exchanges to
sell our intellectual property acquisition companies. A change in the Internal
Revenue Code affecting tax-free exchanges could reduce our ability to sell our
intellectual property acquisition companies. We do not anticipate selling any of our intellectual property acquisition
companies, except in connection with these type 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 intellectual
property acquisition companies on commercially reasonable terms. If we are
unable to successfully sell our intellectual property acquisition companies in
a merger transaction, we may lose our investment. 14




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The agreements we have with universities do not guarantee that the universities
will grant licenses to us our intellectual property acquisition 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 intellectual
property acquisition companies. We are dependent upon our managements ability to identify portfolio companies
to acquire our intellectual property acquisition companies. Our investment strategy is based upon selling our intellectual property
acquisition companies in stock for stock exchanges to portfolio companies that
wish to acquire the technologies owned by our intellectual property acquisition
companies but which they may be neither operating nor established. We do not
expect to sell any securities of our intellectual property acquisition
companies to the public. Therefore, if we fail to identify a portfolio company
to acquire a intellectual property acquisition companies, our entire investment
could be lost. We are dependent upon and have little or no control over the efforts of
portfolio companies to successfully commercialize the acquired technologies or
to retain the license to the technology. We receive common stock from the portfolio company based upon the mutually
agreed upon values of the intellectual property acquisition company, its
licensed technology and the portfolio company. We then intend to sell the
securities that we acquire in exchange for intellectual property acquisition
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
intellectual property acquisition companies will be dependent upon successfully
commercializing the technologies they acquire. We do not have control over the
portfolio companies that acquire our intellectual property acquisition
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 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
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 or that our portfolio companies will not take actions
that could be detrimental to us. 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. All of our portfolio investments are recorded at fair value as determined in
good faith by our Board of Directors and, as a result, there is uncertainty
regarding the value of our portfolio investments. At December 31, 2003 and December 31, 2002, respectively, investments amounting
to $7,745,354 or 69.5% 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.
Pursuant to the requirements of the 1940 Act, the Board of Directors is
responsible for determining in good faith the fair value of our investments for
which market quotations are not readily available. Since there is typically no
readily available market value for the investments in our portfolio, our Board
of Directors determines in good faith the fair value of these investments
pursuant to a valuation policy and a consistently applied valuation process.
There is no single standard for determining fair value in good faith. As a
result, determining fair value requires that judgment be applied to the
specific facts and circumstances of each portfolio investment while employing a
consistently applied valuation process for the types of investments we make. 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 15




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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. We adjust quarterly the valuation of our portfolio to reflect the Board of
Directors determination of the fair value of each investment in our portfolio.
Any changes in fair value are recorded in our statement of operations as
Change in unrealized appreciation (depreciation) of non-controlled affiliate
investments. Our business depends on key personnel. We rely on, and will continue to be substantially dependent upon, the continued
services of our management, principally our Chief Executive Officer and
Chairman, 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 its relationships
with companies in the private sector in order to effectuate the sale of our
intellectual property acquisition company. Any transactions we engage in with affiliates may involve conflicts of
interest. The 1940 Act restricts transactions between us and any of our affiliates,
including our 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 intellectual property acquisition 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 would have a material adverse
effect on our financial condition and the price of our common stock. If our portfolio companies fail to comply with the requirements of the forum in
which their securities are quoted or the trading market on which their
securities are listed, the liquidity and prices of our investments would be
materially adversely affected. At December 31, 2003, $7,661,264 or 69% of our total assets consisted of
investments at fair value in companies whose securities are quoted on the OTC
Bulletin Board. In order for the securities of our portfolio companies to be
eligible for continued quotation on the OTC Bulletin Board, our portfolio
companies must remain in compliance with certain standards. Among other things,
these standards require that our portfolio companies remain current in their
filings with the SEC and comply with certain of the provisions of the
Sarbanes-Oxley Act of 2002. If our portfolio companies are no longer in
compliance with these requirements, there would be no forum or market for the
quotation or listing of the securities of our portfolio companies. Without such
a forum or market, the liquidity and prices of our investments would be
materially adversely affected. We cannot give any assurance that our portfolio
companies will remain in compliance with the requirements to be quoted on the
OTC Bulletin Board. 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 1940 Act. The 1940 Act imposes
numerous restrictions on our activities, including restrictions on the nature
of our investments and transactions with affiliates. 16




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##### Table of Contents



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 40% of our common stock as of December 31, 2003. Therefore Dr.
Gross may be able to exert influence over our management and policies. Dr.
Gross may acquire additional equity in the future. The concentration of
ownership may also have the effect of delaying, preventing or deterring a
change of control of our company, could deprive our shareholders of an
opportunity to receive a premium for their common stock as part of the sale of
our company and might ultimately affect the market price of our common stock. 
 Item 2.Properties Our principal office is located at 202 S. Wheeler Street, Plant City, Florida.
Our lease for approximately 2700 square feet of office space at that location
expires in March 2004. We have two (2) one year options to continue to lease
the space at the current rate. We have exercised an option to continue to lease
the space for the next twelve months beginning in March 2004. Beginning in
2004, we have also leased space in Palo Alto, California. Our UK office has expanded and moved to new office space located at Hardy
House, Northbridge Road, Berkhamsted Herts, HP4 1EF, UK. Our lease of office
space at the new location expires in September 2009. We believe our office space is suitable for our needs for the foreseeable
future. 
 Item 3.Legal Proceedings We may be a party from time to time in certain lawsuits in the normal course of
business. While the outcome of these legal proceedings cannot at this time be
predicted with certainty, we do not expect that these proceedings will have a
material effect upon our financial condition or results of operations. 
 Item 4.Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of shareholders during the quarter ended
December 31, 2003. 
 PART II 
  Item 5.
    Market for Registrants Common Equity, Related Stockholder Matters,
and Issuers Purchases of Equity Securities Computershare Trust Company Inc., 350 Indiana Street, Suite 800, Golden, CO
80401; 303-262-0600, serves as transfer agent for our common stock. Our shares of common stock began to trade on the Nasdaq SmallCap Market on
October 25, 2000, under the symbol UTOB. On March 25, 2002, our shares of
common stock commenced trading on the American Stock Exchange (AMEX) under the
symbol UTK. In conjunction with our move to AMEX, our common stock no longer
trades on the Nasdaq Small Cap Market. We had approximately 500 stockholders of
record at March 7, 2004. The net asset value per share of our common stock at
December 31, 2003 was $2.33. The following table reflects the high and low
closing prices by quarter for our common stock on the AMEX and Nasdaq SmallCap
Market for 2003 and 2002, as appropriate. High
    
    LowFiscal year 2002First quarter
    
    $
    7.50
    
    
    $
    5.75Second quarter
    
    $
    8.05
    
    
    $
    7.00Third quarter
    
    $
    8.45
    
    
    $
    7.40Fourth quarter
    
    $
    7.55
    
    
    $
    7.00Fiscal year 2003First quarter
    
    $
    6.20
    
    
    $
    5.50Second quarter
    
    $
    8.45
    
    
    $
    5.64Third quarter
    
    $
    9.25
    
    
    $
    8.20Fourth quarter
    
    $
    11.10
    
    
    $
    9.19
 17




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##### Table of Contents



On November 14, 2003, we issued 257,000 shares of our common stock to certain
accredited investors for an aggregate offering pricing of $1,542,000 pursuant
to an exemption from the registration requirements of the Securities Act of
1933, as amended, under Section 4(2) of the Securities Act or Regulation D
promulgated thereunder as transactions by an issuer not involving any public
offering. 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 transaction. GunnAllen Financial, Inc. acted as the placement agent in
connection with the offering of such shares and received an aggregate
commission of $144,000 for its services in connection therewith. On December 30, 2003, we issued 71,428 shares of our common stock to Laurus
Funds at $7.00 per share, for an aggregate offering pricing of $466,500 after
subtracting transaction costs. The shares were issued pursuant to an exemption
from the registration requirements of the Securities Act of 1933, as amended,
under Section 4(2) of the Securities Act or Regulation D promulgated thereunder
as transactions by an issuer not involving any public offering. 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 transaction. We have never declared or paid any dividends to the holders of our common stock
and we do not anticipate paying dividends in the foreseeable future. We
currently intend to retain all earnings for general corporate purposes. Our
Board of Directors will have sole discretion in determining whether to declare
and pay dividends in the future. The declaration of dividends will depend on
our profitability, financial condition, cash requirements, future prospects and
other factors deemed relevant by our Board of Directors. Our ability to pay
dividends in the future could be limited or prohibited by regulatory
requirements and the terms of financing agreements that we may enter into or by
the terms of any preferred stock that we may authorize and issue. 
 Item 6.Selected Financial Data The following table presents our selected consolidated financial and other data
and has been derived from our audited financial statements for the years ended
December 31, 2003, 2002, 2001, 2000 and 1999. The information below should be
read in
conjunction with Managements Discussion and Analysis of Financial Condition
and Results of Operations and our consolidated financial statements and the
notes thereto, each of which is included in another section of this report. Year Ended December 31,2003
    
    2002
    
    2001
    
    2000
    
    1999Consolidated Statement of Operations Data:Income from operations
    
    $
    3,805,177
    
    
    $
    3,385,335
    
    
    $
    4,075,248
    
    
    $
    4,576,814
    
    
    $
    1,315,373Expenses
    
    
    3,512,416
    
    
    
    3,140,151
    
    
    
    2,611,970
    
    
    
    1,883,868
    
    
    
    728,322Income before income taxes
    
    
    292,761
    
    
    
    245,184
    
    
    
    1,463,278
    
    
    
    2,692,946
    
    
    
    587,051Provision for income taxes
    
    
    112,193
    
    
    
    91,541
    
    
    
    555,298
    
    
    
    1,018,334
    
    
    
    301,190Net income from operations
    
    
    180,568
    
    
    
    153,643
    
    
    
    907,980
    
    
    
    1,674,612
    
    
    
    285,861Net realized and unrealized gains (losses)
    
    
    (704,432
    )
    
    
    (2,846,423
    )
    
    
    (263,697
    )
    
    
    (551,912
    )
    
    
    122,919Net increase (decrease) in net assets from operations
    
    $
    (523,864
    )
    
    $
    (2,692,780
    )
    
    $
    644,283
    
    
    
    1,122,700
    
    
    $
    408,780Net increase (decrease) in net assets from
operations per share:Basic
    
    $
    (.12
    )
    
    $
    (.69
    )
    
    $
    .17
    
    
    $
    .38
    
    
    $
    .15Diluted
    
    $
    (.12
    )
    
    $
    (.69
    )
    
    $
    .17
    
    
    $
    .38
    
    
    $
    .15Weighted average shares:Basic
    
    
    4,266,918
    
    
    
    3,921,535
    
    
    
    3,840,714
    
    
    
    2,968,018
    
    
    
    2,682,420Diluted
    
    
    4,266,918
    
    
    
    3,921,535
    
    
    
    3,882,914
    
    
    
    2,968,720
    
    
    
    2,682,420
 December 31,2003
    
    2002
    
    2001
    
    2000
    
    1999Balance Sheet Data:Investments at fair value
    
    $
    7,745,354
    
    
    $
    6,208,090
    
    
    $
    9,988,772
    
    
    $
    5,949,582
    
    
    $
    2,594,931Investments at cost
    
    
    11,861,995
    
    
    
    9,541,631
    
    
    
    10,018,959
    
    
    
    5,695,788
    
    
    
    1,418,212Cash and cash equivalents
    
    
    3,704,327
    
    
    
    745,926
    
    
    
    1,432,473
    
    
    
    3,952,280
    
    
    
    1,007,229Total assets
    
    
    12,549,448
    
    
    
    7,863,140
    
    
    
    12,410,958
    
    
    
    10,088,666
    
    
    
    4,205,345Total liabilities
    
    
    1,397,078
    
    
    
    517,083
    
    
    
    2,501,518
    
    
    
    1,633,664
    
    
    
    920,892Net assets
    
    
    11,152,370
    
    
    
    7,346,057
    
    
    
    9,909,440
    
    
    
    8,455,002
    
    
    
    3,284,453Common stock outstanding at year end
    
    
    4,790,550
    
    
    
    3,925,672
    
    
    
    3,915,672
    
    
    
    3,782,226
    
    
    
    2,782,226
 18




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Item 7.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-K. This
Form 10-K 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. We believe that our investment valuation process involves the most significant
judgments and estimates used in the preparation of its consolidated financial
statements. The most significant accounting estimate inherent in the preparation of our
consolidated financial statements is the valuation of our investments and the
related amounts on unrealized appreciation and depreciation on investments
recorded. The value of the equity securities that we receive makes up most of our
revenues. Pursuant to the requirements of the Investment Company Act of 1940
(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. Although many of the securities we hold in our
portfolio are quoted on the OTC Bulletin Board, our Board of Directors is
required to fair value price such securities if the validity of the market
quotations appears to be questionable, or if the number of quotations is such
as to indicate that there is a thin market in the security. In making its
determination, the Board of Directors considers 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 appraisal 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. 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. General Valuation Policy: We carry our investments at fair value, as determined
by our Board of Directors. In making its determination, the Board of Directors
considers valuation appraisals provided by independent valuation service
providers. Each investment is valued at the time of receipt and at the end of
each quarter by the independent valuation service provider and a report is
generated reflecting the valuation determined. The Audit Committee reviews each
report along with information provided by management which may include
correspondence that could materially affect the value of the investment, recent

SEC filings that have information that could materially affect the valuations,
answers to questions that management has posed on a quarterly basis to the
CEOs of the investments which make up the majority of the total value. The
Audit Committee reviews the information provided and makes a recommendation to
the Board regarding the valuation reports and other information pertinent to
the final valuation. The Board of Directors then determines on the value of the
investments based on all the information provided. Due to the uncertainty
inherent in the valuation process, such estimates of fair value may differ
significantly from the values that would have been obtained had a ready market
for the securities existed, and the differences could be material.
Additionally, changes in the market environment and other events that may occur
over the life of the investments may cause the gains or losses ultimately
realized on these investments to be different than the valuations currently
assigned. No single standard for determining fair value in good faith exists
since fair value depends upon circumstances of each individual case. In
general, fair value is the amount that we might reasonably expect to receive
upon the current sale of the security. 19




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We have retained Bolten Financial Consulting, Inc., to provide us with
valuations of our investments 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 year ended December 31, 2003 and 2002, we paid Bolten
Financial Consulting, Inc. a total of $112,502 and $90,232, respectively for
its valuation services. General Our primary business is to invest 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
investing in companies that possess or will likely identify emerging and
established technologies and markets for those technologies. 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, travel and other expenses that vary with revenues. General and
administrative costs include rent, depreciation, office, investor relations and
other overhead costs. Financial Condition Our total assets were $12,549,448 an in
crease of 60% and our net assets were $11,152,370, an increase of 52% at December 31, 2003, compared to $7,863,140
and $7,346,057 at December 31, 2002, respectively. Net asset value per share (NAV) was $2.33 at December 31, 2003, as compared
to $1.87 at December 31, 2002. Net assets increased by $3,806,313 (25%) in
2003. The increase in total assets, net assets and net asset value during 2003 were
primarily attributable to:  
    
    Six technology transfers valued at approximately $2.7 million and
nine strategic alliance agreements and other consulting
agreements with earned revenue of approximately $457,000.  
    
    An overall decline in unrealized depreciation in our investments of approximately $760,000.  
    
    A loss on sale of approximately $367,000 as a result of sales of our investments.  
    
    Cash generated from the sale of our investments of approximately $427,000.  
    
    The utilization of approximately $3.5 million in cash to fund our operations.  
    
    Cash generated from the issuance of common stock through private
placements and stock options exercised of approximately $4.3 million. Our common shares outstanding as of December 31, 2003 were 4,790,550, compared
to 3,925,672 at December 31, 2002. The number of our outstanding common shares
increased as a result of the completion of four private placement transactions
as well as the issuance of common shares upon the exercise of employee stock
options that were exercised during the year ended December 31, 2003. Our 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 December 31, 2003, $7,661,264 or 99% of our investments consisted of equity
securities at fair value in companies whose securities were quoted on the OTC
Bulletin Board and $84,090 or 1% of our investments consisted of equity
securities at fair value in private companies. At December 31, 2002, $5,719,445 or 92% of our investments consisted of equity
securities at fair value in companies whose securities were quoted on the OTC
Bulletin Board and $488,645 or 8% of our investments consisted of equity
securities at fair value in private companies. The net increase in the value of publicly traded securities from $5,719,445 to
$7,661,264 in 2003 is primarily due to the following events: 20




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##### Table of Contents




    
    During 2003, we completed six technology transfer transactions with
publicly traded companies. Two transactions were completed with Circle
Group Holdings, Inc. that generated $369,628 in initial value; there
were also two transactions completed with GloTech Industries, Inc. that
generated $1,535,400 in initial value and one transaction each with
Sequiam Corporation and E Med Future, Inc. that generated $793,450 in
combined initial value. In addition, we had seventeen strategic alliance
or consulting agreements that generated $457,027 in initial value.
Transactions of this nature result in an increase in the number of and
value of publicly traded securities held in our portfolio.  
    
    During 2003, we sold all of our shares in Sense Holdings, Inc. and
Centrex, Inc. In addition, we sold shares representing investments in
Advanced Recycling Sciences, Inc., Clean Water Technologies, Inc. and
Innovative Medical Services, Inc. As a result of these sales, the value
of the publicly traded securities decreased by approximately $507,000.
Transactions of this nature result in a decrease in the number of and
value of publicly traded securities held in our portfolio.  
    
    During 2003, we experienced a net decline in the fair market value of
our publicly traded securities. This decline may be partially
attributable to the movement of the broad market in general and to the
overall economic conditions of 2003. In addition, some of the decline in
the fair market value of our publicly traded securities may be
attributable to the individual investments themselves. Two of our
investments experienced significant declines in their fair market values
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.). We recorded an
unrealized loss approximately $4.5 million in our investment in Stealth
MediaLabs and an unrealized loss of approximately $975,000 in our
investment in GloTech Industries, Inc. We also recorded unrealized
losses in several of our other investments. We recorded an unrealized
gain of approximately $5.4 million in our investment in Circle Group
Holdings, Inc. As a result of these conditions, the value of the
publicly traded securities decreased by approximately $470,000, net of
the income tax effect. A summary of our investment portfolio is as follows: December 31,2003
    
    2002Investments, at cost
    
    $
    11,816,995
    
    
    $
    9,541,631Unrealized depreciation, before income tax
    
    
    (4,116,641
    )
    
    
    (3,333,541
    )Investments, at fair value
    
    $
    7,745,354
    
    
    $
    6,208,090
 Following an initial investment in a portfolio company, we may make additional
investments in such portfolio company or subsequent acquirer in order to: (1)
increase our ownership percentage; (2) exercise warrants or options that were
acquired in a prior financing; (3) preserve our 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 our investment. Such additional investments are referred to as
follow-on investments. There can be no assurance that we 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 our investment or could result in a missed
opportunity for us to participate to a greater extent in a portfolio companys
successful operations. We attempt to maintain adequate liquid capital to make
follow-on investments in its private portfolio companies. However there can be
no assurance that we will have liquid capital. We may elect not to make a
follow-on investment either because we do not want to increase our
concentration of risk, because we prefer other opportunities, or because we are
inhibited by compliance with BDC requirements, even though the follow-on
investment opportunity appears attractive. The following table is a summary of our capital investments made in our
intellectual property acquisition company during the year ended December 31,
2003: Capital investments made in intellectual property acquisition company :
    
    AmountAdvanced Illumination Technologies, Inc. (1)
    
    $
    55,000Fingerprint Detection Technologies, Inc. (2)
    
    
    20,000Sport Technologies, Inc. (3)
    
    
    128,000Medical Safety Technologies, Inc. (4)
    
    
    213,000Total
    
    $
    416,000
   (1)
    
    Advanced Illumination Technologies, Inc. was acquired by GloTech
Industries, Inc. in June 2003. 21




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##### Table of Contents



(2)
    
    Fingerprint Detection Technologies, Inc. was acquired by Sequiam
Corporation in September 2003.(3)
    
    Sport Technologies, Inc. was acquired by GloTech Industries, Inc. in
September 2003.(4)
    
    Medical Safety Technologies, Inc. was acquired by E Med Future, Inc. in
December 2003. Of the total capital invested in our intellectual property acquisition
companies during the year ended December 31, 2003, $-0- was expended on
research and development costs, $66,000 was expended on license and consulting
fees, and $350,000 remained in our intellectual property acquisition companies
at the time they were sold to our portfolio companies. All of these items are
reflected in the Consolidated Statement of Operations as sales and marketing
expenses. Results of Operations The principal measure of our financial performance is the Net increase in net
assets from operations which is the sum of three elements. The first element
is Net income from operations, which is the difference between our income
from technology transfers, consulting fees, interest, dividends, fees and other
income and our operating expenses, net of applicable income tax provision. The
second element is Net realized gain (loss) on investments, which is the
difference between 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 our 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. Year Ended December 31, 2003 Compared To The Year Ended December 31, 2002 Income from operations.Income from operations increased 12% to $3,805,177 for
the year ended December 31, 2003 from $3,385,335 for the year ended December
31, 2002. The increase in income from operations resulted from completing six
sales of technology rights, generating an average of $450,000 per transaction
in revenue, in 2003 as compared to six sales of technology rights, generating
an average of $348,000 per transaction in revenue, in 2002. The increase in
technology transfer income in 2003 was partially offset by a decrease in
consulting fees of $178,185 related to strategic alliance agreements. As
described below, we completed six sale of technology rights in 2003 in which we
received securities valued at $2,698,478, compared to six sale of technology
rights in 2002 valued at $2,088,254. In 2003, we completed the following transactions:  
    
    Circle Group Holdings, Inc. in which we received 821,429 shares of common stock valued at $.32 per share,  
    
    GloTech Industries, Inc. in which we received 1,000,000 shares of common stock valued at $.30 per share,  
    
    GloTech Industries, Inc. in which we received 2,130,000
shares of common stock valued at $.58 per share,  
    
    Sequiam Corporation in which we received 485,000 shares of common stock valued at $.27 per share,  
    
    Circle Group Holdings, Inc. in which we received 130,208 shares valued at $.82 per share, and  
    
    E Med Future, Inc. in which we received 1,250,000 shares valued at $.53 per share. Our Board of Directors determines the fair value of the shares we receive in
the absence of readily available market values. In making its determination,
the Board of Directors has considered valuation reports provided by an
independent valuation service provider. Consulting fees decreased to $1,086,064 in the year ended December 31, 2003
from $1,264,349 in the year ended December 31, 2002. The decrease in the
amount of income derived from consulting fees resulted from a decrease in the
fair value of the securities received for such services in 2003 as compared to
2002. The number of companies for which we provided such services remained
relatively constant in 2003. Of the fees received during 2003, 23% were paid in
the form of unregistered shares of common stock in our client; the balance was
paid in cash. Of the fees received during 2002, 51% were paid in the form of
unregistered shares of common stock in our client; the balance was paid in
cash. Expenses.Total operating expenses for the year ended December 31, 2003 were
$3,512,416 consisting of salaries and wages of $746,171, professional fees of
$734,658, sales and marketing expenses of $817,615, and general and
administrative expenses of $1,213,972. These expenses compared to the
$3,140,151 reported for the year ended December 31, 2002, consisting of
salaries and wages of $762,914, professional fees of $515,164, sales and
marketing expenses of $723,962, and general and administrative expenses of
$1,138,111. The 12% increase in total operating expenses in 2003 was primarily
due to increased professional fees on 22




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##### Table of Contents



specific projects during 2003, greater
technology transfer costs, interest expense on our loan, increased investment
banking fees, and the cost of an increased marketing effort. The 13% increase
in sales and marketing expenses was largely due to an increase in the costs
associated with acquisition of technologies that we subsequently transferred.
The 2% decrease in salaries and wages reflect a decrease in the number of our
employees in 2003 as compared to 2002. The 13% increase in professional fees is
largely due to the increased costs associated with reporting and auditing
requirements as a result of the Sarbanes-Oxely Act of 2002, as well as
additional attorneys and other professional fees for work related to specific
projects in early 2003 and the increase cost of quarterly valuation reports due
to the increasing number of investments. The 7% increase in general and
administrative costs is largely due to the interest expense paid during 2003
for a loan obtained by us in May 2003. Net Realized and Unrealized Gains (Losses) and Income Taxes. Net realized
losses on investments net of income tax effect amounted to $228,871 for the
year ended December 31, 2003 and were related to sales of: Company Name
    
    Number Of Shares
    
    Gain (Loss) On SaleAdvanced Recycling Sciences, Inc.
    
    
    9,000
    
    
    
    (3,556
    )Full Circle Registry, Inc.
    
    
    98,250
    
    
    
    (116,302
    )Circle Group Holdings, Inc.
    
    
    43,000
    
    
    
    45,455Clean Water Technologies, Inc.
    
    
    20,000
    
    
    
    (335
    )Centrex, Inc.
    
    
    1,343,400
    
    
    
    (160,284
    )Sense Holdings, Inc.
    
    
    228,089
    
    
    
    (8,655
    )Innovative Medical Services, Inc.
    
    
    120,000
    
    
    
    14,806$
    (228,871
    )
 Net realized
losses on investments net of income tax effect amounted to $773,262 for the
year ended December 31, 2002 and were related to sales of: Company Name
    
    Number Of Shares
    
    Gain (Loss) On SaleAdvanced Recycling Sciences, Inc.
    
    
    223,103
    
    
    
    (67,956
    )Torvec, Inc.
    
    
    1,068,354
    
    
    
    (634,806
    )Clean Water Technologies, Inc.
    
    
    57,179
    
    
    
    (6,425
    )Centrex, Inc.
    
    
    240,600
    
    
    
    (6,459
    )Sense Holdings, Inc.
    
    
    1,621,911
    
    
    
    (57,616
    )$
    (773,262
    )
 Changes in Unrealized Appreciation or Depreciation.We determine the value of
each investment in our portfolio on a quarterly basis, and changes in value
result in unrealized appreciation or depreciation being recognized. At
December 31, 2003, approximately 69.5% of our net assets represented
investments recorded at fair value. Value, as defined in Section 2(a)(41) of
the 1940 Act, is (i) the market price for those securities for which a market
quotation is readily available and (ii) for all other securities and assets,
fair value is as determined in good faith by the Board of Directors. Although
many of the securities we hold in our portfolio are quoted on the OTC Bulletin
Board, our Board of Directors is required to fair value price such securities
if the validity of the market quotations appears to be questionable, or if the
number of quotations is such as to indicate that there is a thin market in the
security. Since there is typically no readily available market value for the
investments in our portfolio, we value all of our investments at fair value as
determined in good faith by the Board of Directors. In making its
determination, our Board of Directors may consider valuation appraisals
provided by independent valuation service providers. Because of the inherent
uncertainty of determining the fair value of investments that do not have a
readily available market value, the fair value of our investments determined in
good faith by the Board of Directors may differ significantly from the values
that would have been used had a ready market existed for the investments, and
the differences could be material. The net unrealized depreciation of investments, net of taxes, is $475,561 for
the year ended December 31, 2003, compared to net unrealized depreciation, net
of taxes, of $2,073,161 for the year ended December 31, 2002. The net
unrealized losses consisted of fluctuations in fair value resulting from the
Board of Directors valuation of our assets for the year ended December 31,
2003 and 2002. There were declines in value in 2003 related to our investments
in Graphco Holdings Corporation, Rosbon, Inc., Advanced Recycling Sciences,
Inc., Voice and Wireless, Inc., FullCircle Registry, Inc., Stealth MediaLabs,
Inc., Primapharm Funding Corporation, Prime Pharmaceutical Corporation, Sequiam
Corporation, GloTech Industries, Inc. and E Med Future, Inc. However the
decline in value was partially offset by an increase in value in our
investments in Circle Group Holdings, Inc. and Duraswitch Industries, Inc.,
Clean Water Technologies, Inc. and Peak Entertainment Holdings, Inc. Circle
Group Holdings, Inc. had an increase in value of approximately $5.4 million,
while Stealth MediaLabs, Inc. and GloTech Industries, Inc. had a total decrease
in value of approximately $5.5 million. The remaining investments made up the
additional net decline of approximately $375,000. The Companys most significant portfolio investment is in Circle Group
Holdings, Inc. The following is a simplified summary of the methodology that we
used to determine the fair value of this investment. 23




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Circle Group Holdings, Inc.At December 31, 2003, the fair value of our
investment in Circle Group was approximately $5.9 million. The fair value of
our investment in Circle Group increased by approximately $5.4 million for the
year ended December 31, 2003. 23 % of the increase in the fair value of our
investment in Circle Group resulted from the acquisition of an additional
956,637 shares of its common stock in connection with a technology transfer
transaction. The remaining increase in the fair value of our investment in
Circle Group resulted from our Board of Directors determination that our
investment in Circle Group had appreciated by 7.635% in fair value. In
determining the fair value of our investment in Circle Group, our Board of
Directors discounted the public market value of Circle Groups shares of common
stock in light of the legal restrictions imposed upon our resale of such
shares. Our net realized and unrealized gains (losses) can vary substantially, due to a
variety of factors, therefore, current results may or may not be indicative of
our future performance. Year Ended December 31, 2002 Compared To The Year Ended December 31, 2001 Income from operations.Income from operations decreased 16.9% to $3,385,335
for the year ended December 31, 2002 from $4,075,248 for the year ended
December 31, 2001. The decrease in income from operations in 2002 resulted from
completing six tax-free mergers, generating an average of $348,000 per
transaction in revenue in 2002, as compared to four tax-free mergers in 2001,
generating an average of $855,000 per transaction in revenue, partially offset
by an increase in consulting fees of $729,467 related to strategic alliance
agreements. As described below, we completed six tax free mergers in 2002 in
which we received securities valued at $2,088,254, compared to four tax-free
transactions in 2001 valued at $3,419,653. In 2002, we completed the following transactions:  
    
    We received 465,000 unregistered shares of common stock
of Image Analysis, Inc. that we valued at $2.43 per share in
connection with a technology transfer.  
    
    We received 683,550 unregistered shares of common stock
of Prime Pharmaceutical Corporation that we valued at $0.435 per
share in connection with a technology transfer.  
    
    We received 318,750 unregistered shares of common stock
of Voice and Wireless Corporation that we valued at $0.94 per
share in connection with a technology transfer.  
    
    We received 68,250 unregistered shares of common stock of
FullCircle Registry, Inc. that we valued at $2.43 per share in
connection with a technology transfer.  
    
    We received 2,800,000 unregistered shares of common stock
of Circle Group Holdings, Inc. that we valued at $0.12 per share
in connection with a technology transfer. We received 157,500 unregistered shares of common stock of FullCircle Registry,
Inc. that we valued at $0.82 per share in connection with a technology
transfer. Consulting fees increased to $1,264,249 in the year ended December 31, 2002
from $534,782 in the year ended December 31, 2001. The majority of the fees
were paid in the form of unregistered shares of common stock in our client. The
increase was a direct result of the implementation of the strategic alliance
initiative, which began in 2001. To facilitate establishing on-going consulting
engagements with its clients, the Company has developed a strategic alliance
process. UTEKs strategic alliances are designed to help technology companies
enhance their new product pipeline through the acquisition of proprietary
intellectual capital from universities and federal laboratories. Expenses.Total operating expenses for the year ended December 31, 2002 were
$3,140,151 consisting of salaries and wages of $762,914, professional fees of
$515,164, sales and marketing expenses of $723,962, and general and
administrative expenses of $1,138,111. These expenses compared to the
$2,611,970 reported for the year ended December 31, 2001, consisting of
salaries and wages of $616,796, professional fees of $372,029, sales and
marketing expenses of $904,141, and general and administrative expenses of
$719,004. The 20.2% increase in total operating expenses was primarily due to
expenses incurred in retaining investment banking firms to potentially raise
capital and to sell our investments, additional expenses incurred in the
operation of PAX Technology for a full year in 2002 as compared to three months
in 2001, and an increase in costs associated with being a public company. The
19.9% decrease in sales and marketing expenses was largely due to a reduction
in the costs associated with acquisition of technologies that we subsequently
transferred and was partially offset by an increase in the amount paid to
employees to consummate these technology transfers. The 23.7% increase in
salaries and wages reflect additional expenses incurred in the operation of PAX
Technology for a full year in 2002 as compared to three months in 2001. The
38.5% increase in professional fees 24




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##### Table of Contents



is largely due to the increased costs
associated with operating as a public company, reporting requirements of a
public company, preparing the corporate and subsidiary tax returns, as well as
additional attorneys fees for work related to intellectual property and
complying with BDC regulatory requirements and the increased cost associated
with obtaining quarterly valuation reports for our increasing number of
investments. The 58.3% increase in general and administrative costs is largely
due to the increased expenses incurred in the operation of PAX Technology for a
full year in 2002 as compared to three months in 2001, expenses incurred in
retaining investment banking firms to potentially raise capital and to sell our
investments, expenses incurred in listing of our shares of common shares on the
American Stock Exchange. Net Realized and Unrealized Gains (Losses) and Income Taxes.Net realized
losses on investments amounting to $737,262 and $86,578, respectively for the
year ended December 31, 2002 and 2001 were substantially related to sales of: December 31, 2002 Company Name
    
    Number Of Shares
    
    Loss On SaleTorvec, Inc.
    
    
    1,068,354
    
    
    $
    (634,806
    )Advanced Recycling Sciences, Inc.
    
    
    223,103
    
    
    
    (67,956
    )Clean Water Technologies, Inc.
    
    
    57,179
    
    
    
    (6,425
    )Centrex, Inc.
    
    
    240,600
    
    
    
    (6,459
    )Sense Holdings, Inc.
    
    
    1,621,911
    
    
    
    (57,616
    )$
    (773,262
    )
 December 31, 2001 Company Name
    
    Number Of Shares
    
    Loss On SaleAdvanced Recycling Sciences, Inc.
    
    
    51,000
    
    
    
    (5,099
    )Lexon, Inc.
    
    
    924,973
    
    
    
    (83,271
    )Other investment holdings
    
    
    231,241
    
    
    
    1,792$
    (86,578
    )
 Net realized losses on investments amounted to $86,578 for the year ended
December 31, 2001 and were substantially related to sales of 855,973 shares of
Lexon, Inc. common stock for $62,037 during the reporting period. The net unrealized depreciation of investments, net of taxes, was $2,073,161
for the year ended December 31, 2002, compared to an net unrealized
depreciation, net of taxes of $177,119 for the year ended December 31, 2001.
The net unrealized losses consisted of fluctuations in fair value resulting
from the Board of Directors valuation of our assets for the year ended
December 31, 2002 and 2001. There were declines in value in 2002 related to our
investments in Lexon, Inc., Centrex, Inc., Clean Water Technologies, Inc.,
Rosbon, Inc., Torvec, Inc., Advanced Recycling Sciences, Inc., Sense Holdings,
Inc., Palladium Communications, Inc., Group Management, Inc., Circle Group
Holdings, Inc., Voice and Wireless, Inc., FullCircle Registry, Inc., Image
Analysis, Inc., Graphco Technologies, Inc., Primapharm Funding Corporation,
Hydrogen Technologies, Inc. and Prime Pharmaceutical Corporation, Inc. However
the decline in value was partially offset by an increase in value in our
investments in Stealth MediaLabs, Inc. and Innovative Medical Services, Inc.
Stealth MediaLabs, Inc. became a publicly traded company with a value increase
of $2,607,184 for the year ended December 31, 2002. Our net realized and unrealized gains (losses) can vary substantially, due to a
variety of factors, therefore, current results may or may not be indicative of
our future performance. Liquidity and Capital Resources Net assets increased 52% to $11,152,370 at December 31, 2003 from $7,346,057 at
December 31, 2002, primarily attributable to a the completion of four private
placement transactions totaling $3,925,668 during the year as well as net
income from operations$180,568, offset by realized losses, and the unrealized
depreciation of non-controlled affiliate investments. Our primary source of liquidity and capital for the year ended December 31,
2003 was from the completion of four private placement transactions of our
securities and loan proceeds, as described below. Our income from operations
consists primarily of the sale of technology rights and consulting income from
strategic alliances for equity securities rather than cash. In 2003, 25




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##### Table of Contents



77% of our
income from operations were paid in the form of equity securities. Our goal is
to monetize the equity stakes we receive in consideration for the technology
rights transactions and our consulting services. The following is a brief discussion of the equity and debt financing
transactions that we undertook in 2003:
In April 2003, we completed a private placement transaction of 330,000 shares
of our common stock at $3.00 per share. The net proceeds, after deducting
investment banking fees of $99,500, was $890,500. 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 transaction. In August 2003, we completed a private placement transaction of 146,450 shares
of our common stock at $6.00 per share. The net proceeds, after investment
banking fees of $96,444, were $782,257. 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 transaction. In October 2003, we completed a private placement transaction of 257,000 shares
of our common stock at $7.00 per share. The net proceeds, after investment
banking fees of $144,000, were $1,398,000. 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 transaction. In December 2003, we completed a private placement transaction of 71,428 shares
of our common stock at $7.00 per share. The net proceeds, after investment
banking fees of $33,496, were $466,500. 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 transaction. In December 2003, we began an additional private placement transaction of
107,986 shares of our common stock at $7.00 per share. The net proceeds
received as of December 31, 2003 related to 66,286 shares of the total private
placement were $388,412, net of investment banking fees of $75,590
and are
reflected in Capital Stock Payable as the shares were not issued as of December
31, 2003. 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 transaction. In August 2003, 50,000 employee stock options were exercised which resulted in
the issuance of 50,000 shares of common stock and net proceeds to us of
$282,000. In November 2003, 10,000 employee stock options were exercised which
resulted in the issuance of 10,000 shares of common stock and net proceeds to
us of $74,000. In April 2003, we obtained a loan for $1,000,000 at 12% per annum with interest
paid in advance, which resulted in net proceeds of $760,000 with an effective
interest rate of approximately 14%. The term of the loan is two years, and no
principal payments are required prior to maturity. The loan is non-recourse
except with respect to 360,360 unissued shares of our common stock pledged as
collateral to secure the loan. The total net proceeds of all of these transactions after deducting investment
banking fees was and prepaid interest was $5,041,669. On December 31, 2003, we had $3,704,327 in cash and cash equivalents. The following table shows the funds we generated from the sale of our equity
investments and the cost of the equity investments that were sold to generate
such funds: December 31, 2003
    
    December 31, 2002
    
    December 31, 2001Funds generated
    
    $
    4,374,699
    
    
    $
    0
    
    
    $
    475,000Cost of Equity Securities Sold
    
    $
    449,030
    
    
    $
    0
    
    
    $
    99,389
 We are not currently generating sufficient cash flows from operations to
support our current operations. We have and will continue to be dependent upon
equity or debt financing sources to fund our operations. Contractual Obligations The following table reflects a summary of our contractual cash obligations and
other commercial commitments as of December 31, 2003: Payments due by periodMore than 5Contractual Obligations
    
    2004
    
    2005
    
    2006
    
    2007
    
    2008
    
    YearsLong-term debt
    
    $
    -0-
    
    
    $
    847,890
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-
    
    
    $
    -0-Employment contract
    
    
    150,000
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-Long term leases
    
    
    48,972
    
    
    
    43,891
    
    
    
    43,891
    
    
    
    43,891
    
    
    
    43,891
    
    
    
    -0-Total
    
    $
    198,972
    
    
    $
    803,891
    
    
    $
    43,891
    
    
    $
    43,891
    
    
    $
    43,891
    
    
    $
    -0-
 26




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##### Table of Contents



Recent Developments In January 2004, GloTech Industries, Inc. announced a reverse split of 5.37 to
1 of their common stock and a change of their ticker symbol to IRAE and the
name to Intra-Asia Entertainment Corporation. In January 2004, we completed the private placement we began in December 2003
for 107,986 shares of our common stock at $7.00 per share. The total net
proceeds received inclusive of the December receipts was $680,312, net of
investment banking fees of $75,590. 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 transaction. In January 2004, we completed an additional private placement transaction of
300,000 shares of our common stock at $7.00 per share. The net proceeds after
investment banking fees of $210,000 was $1,890,000. 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 transaction. In February 2004, we repaid the loan that was obtained in April 2003, by
issuing 125,715 shares of our common stock to the loan holder. The balance owed
at the time the shares were issued was $880,000. The shares were issued at an
effective value of $7.00 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 transaction As a result of this transaction,
the Company currently has no long-term or short-term debt. As a result of the above transactions, as of March 5, 2004, there were
5,324,251 shares of our common stock outstanding. In February 2004, we sold 195,892 shares of common stock of Circle Group
Holdings, Inc. for net proceeds of $1,234,160. We also exercised 500,000
warrants to purchase the common stock of Circle Group Holdings, Inc. for $.36
per share for a total of $180,000. As of March 5, 2004, we owned 4,089,745
shares of common stock in Circle Group Holdings, Inc. In January 2004 we announced the appointment of a new Vice President to head
the Companys new California office in Palo Alto, California. In January 2004, we entered into a strategic alliance with the Laurus Master
Fund, Ltd., a financial institution that makes direct investments in US listed
small and micro cap companies. The purpose of the alliance is to assist, when
appropriate, Laurus Funds portfolio companies in identifying and adopting
synergistic, university technologies. We have hired an executive to head
the Companys Strategic Alliance with Laurus Master Fund Ltd. in New York City. We believe that the establishment of the office in California and the strategic
alliance with the Laurus Family of Funds in New York will expand our ability to
develop and maintain local relationships with clients in those areas. 
 Item 7A.Quantitative and Qualitative Disclosure About Market Risk Market risk is the risk of loss arising from adverse changes in market rates
and prices. We are primarily exposed to equity price risk. The following is a
discussion of our equity market risk. Equity price risk arises from exposure to securities that represent an
ownership interest in our portfolio companies. The value of our equity
securities and our other investments are based on quoted market prices or our
Board of Directors good faith determination of their fair value (which is
based, in part, on quoted market prices). Market prices of common equity
securities, in general, are subject to fluctuations, which could cause the
amount to be realized upon sale or exercise of the instruments to differ
significantly from the current reported value. The fluctuations may result
from perceived changes in the underlying economic characteristics of our
portfolio companies, the relative price of alternative investments, general
market conditions and supply and demand imbalances for a particular security. 27




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##### Table of Contents



Item 8.Financial Statements and Supplementary Data UTEK CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES Documents
    
    PageReport of
Pender Newkirk & Company, Independent Certified Public Accountants
    
    
    29Report of
Ernst & Young, LLP, Independent Certified Public Accountants
    
    
    30Consolidated Balance Sheets at December 31, 2003 and 2002
    
    
    31Consolidated Statements of Operations for the years ended December 31, 2003, 2002 and 2001
    
    
    32Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001
    
    
    33Consolidated Statements of Changes in Net Assets for the years ended December 31, 2003, 2002 and 2001
    
    
    34Schedule of Investments at December 31, 2003 and 2002
    
    
    35Notes to Consolidated Financial Statements
    
    
    39Selected Per Share Data and Ratios for the years ended December 31, 2003, 2002, 2001, 2000, 1999
    
    
    52
 28




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##### Table of Contents



REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors
UTEK Corporation and Subsidiaries
Plant City, Florida We have audited the
accompanying consolidated balance sheet of UTEK Corporation including
the schedule of investments as of December 31, 2003 and the
related consolidated statements of operations, cash flows and changes
in net assets for the year then ended. These consolidated financial
statements and schedule of investments are the responsibility of the
management of UTEK Corporation. Our responsibility is to express an
opinion on these consolidated financial statements and schedule of
investments based on our audits. We conducted our audit in
accordance with auditing standards generally accepted in the United
States of America. These standards require that we plan and perform
the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the consolidated financial statements. Our
procedures also included the physical inspection of securities owned
as of December 31, 2003. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion. In our opinion, the
consolidated financial statements and schedule of investments
referred to above present fairly, in all material respects, the
financial position of UTEK Corporation as of December 31, 2003
and the results of its operations, cash flows and changes in net
assets for the year then ended in conformity with accounting
principles generally accepted in the United States of America. /s/ Pender
Newkirk & Company Pender
Newkirk & Company
Certified Public Accountants
Tampa, Florida
March 5, 2004 29




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##### Table of Contents



REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board
of Directors and Shareholders
 
UTEK Corporation We have audited the
accompanying consolidated balance sheet of UTEK Corporation, including
the schedules of investments, as of December 31, 2002, and the
related consolidated statements of operations, cash flows and changes
in net assets for each of the two years in the period ended
December 31, 2002, and selected per share data and ratios for
each of the four years in the period ended December 31, 2002. These consolidated financial
statements and selected per share data and ratios are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these financial statements and selected per share data and
ratios based on our audits. We conducted our audits in
accordance with auditing standards generally accepted in the United
States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the
financial statements and per share data and ratios are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our
procedures included the physical inspection of securities owned
as of December 31, 2002 and 2001. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion. In our opinion, the
consolidated financial statements and selected per share data and
ratios referred to above present fairly, in all material respects, the
consolidated financial position of UTEK Corporation at
December 31, 2002, and the consolidated results of its
operations, its cash flows and changes in net
assets for each of the two years in the period ended
December 31, 2002, and the selected per share data and ratios
for each of the four years in the period ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States. /S/ ERNST & YOUNG LLP Tampa, Florida
February 19, 2003
   except for Note 12 as to which
   the date is March 20, 2003 30




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##### Table of Contents



UTEK Corporation 
 Consolidated Balance Sheets
 December 31,
    
    December 31,2003
    
    2002ASSETSInvestments in non-controlled affiliates
(cost $11,861,995 and $9,541,631 at December 31,
2003 and December 31, 2002, respectively)
    
    $
    7,745,354
    
    
    $
    6,208,090Cash and cash equivalents
    
    
    3,704,327
    
    
    
    745,926Accounts receivable, net of allowance for bad debt
    
    
    177,138
    
    
    
    182,172Prepaid expenses and other assets
    
    
    200,353
    
    
    
    126,550Deferred tax asset
    
    
    67,075
    
    
    
    Fixed assets, net
    
    
    44,279
    
    
    
    65,255Goodwill
    
    
    523,807
    
    
    
    472,519Intangible assets
    
    
    87,115
    
    
    
    62,628TOTAL ASSETS
    
    
    12,549,448
    
    
    
    7,863,140LIABILITIESNote payable
    
    
    847,890Accrued expenses
    
    
    187,897
    
    
    
    126,947Income taxes payable
    
    
    
    
    
    
    16,781Deferred revenue
    
    
    361,291
    
    
    
    127,766Deferred tax liability
    
    
    
    
    
    
    245,589TOTAL LIABILITIES
    
    
    1,397,078
    
    
    
    517,083NET ASSETS
    
    $
    11,152,370
    
    
    $
    7,346,057Commitments and ContingenciesComposition of net assets:Common stock, $.01 par value, 19,000,000
shares authorized; 4,790,550 shares issued
and outstanding at December 31, 2003 and
3,925,672 shares issued and outstanding
at December 31, 2002
    
    $
    47,906
    
    
    $
    39,257Common stock
subscribed
    
    
    388,412Preferred stock, $.01 par value, 1,000,000 shares
authorized; none issued and outstanding
    
    
    
    
    
    
    Additional paid in capital
    
    
    10,943,549
    
    
    
    7,058,941Accumulated income:Accumulated net operating income
    
    
    3,303,505
    
    
    
    3,122,937Net realized loss on investments,
net of income taxes
    
    
    (1,064,996
    )
    
    
    (836,125
    )Net unrealized depreciation of investments,
net of deferred income taxes
    
    
    (2,567,549
    )
    
    
    (2,091,988
    )Foreign currency translation adjustment
    
    
    101,543
    
    
    
    53,035Net assets
    
    $
    11,152,370
    
    
    $
    7,346,057Net asset value per share
    
    $
    2.33
    
    
    $
    1.87
 See accompanying notes 31




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##### Table of Contents



UTEK Corporation 
 Consolidated Statements of Operations
 Year ended December 312003
    
    2002
    
    2001Income from operations:Sale of technology rights
    
    $
    2,698,478
    
    
    $
    2,088,254
    
    
    $
    3,419,653Consulting and other services
    
    
    1,086,064
    
    
    
    1,264,249
    
    
    
    534,782Investment income, net
    
    
    20,635
    
    
    
    32,832
    
    
    
    120,8133,805,177
    
    
    
    3,385,335
    
    
    
    4,075,248Expenses:Salaries and wages
    
    
    746,171
    
    
    
    762,914
    
    
    
    616,796Professional fees
    
    
    734,658
    
    
    
    515,164
    
    
    
    372,029Sales and marketing
    
    
    817,615
    
    
    
    723,962
    
    
    
    904,141General and administrative
    
    
    1,213,972
    
    
    
    1,138,111
    
    
    
    719,0043,512,416
    
    
    
    3,140,151
    
    
    
    2,611,970Income before income taxes
    
    
    292,761
    
    
    
    245,184
    
    
    
    1,463,278Provision for income taxes
    
    
    112,193
    
    
    
    91,541
    
    
    
    555,298Net income from operations
    
    
    180,568
    
    
    
    153,643
    
    
    
    907,980Net realized and unrealized gains (losses):Net realized loss on investments, net of
income tax benefit of $138,085, $466,536 and
$52,236 for 2003, 2002 and 2001, respectively
    
    
    (228,871
    )
    
    
    (773,262
    )
    
    
    (86,578
    )Change in unrealized depreciation of non-controlled
affiliate investments, net of deferred tax benefit
of $286,772, $1,250,811 and $106,681 for
2003, 2002 and 2001 respectively
    
    
    (475,561
    )
    
    
    (2,073,161
    )
    
    
    (177,119
    )Net decrease in net assets from operations
    
    $
    (523,864
    )
    
    $
    (2,692,780
    )
    
    $
    644,283Net increase decrease in net assets from operations per share:Basic
    
    $
    (.12
    )
    
    $
    (.69
    )
    
    $
    .17Diluted
    
    $
    (.12
    )
    
    $
    (.69
    )
    
    $
    .17Weighted average shares:Basic
    
    
    4,266,918
    
    
    
    3,921,535
    
    
    
    3,840,714Diluted
    
    
    4,266,918
    
    
    
    3,921,535
    
    
    
    3,882,914
 See accompanying notes 32




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##### Table of Contents



UTEK Corporation 
 Consolidated Statements of Cash Flows
 Year Ended December 312003
    
    2002
    
    2001Operating Activities:Net increase (decrease) in net assets from operations
    
    $
    (523,864
    )
    
    $
    (2,692,780
    )
    
    $
    644,283Adjustments to reconcile net increase (decrease)
in net assets from operations to net cash
used in operating activities:Change in net unrealized depreciation of investments
    
    
    783,100
    
    
    
    3,415,355
    
    
    
    283,980Depreciation and amortization
    
    
    41,284
    
    
    
    35,657
    
    
    
    23,297Loss on disposal of fixed asset
    
    
    
    
    
    
    1,024
    
    
    
    (Gain) loss on sale of investments
    
    
    366,957
    
    
    
    1,215,050
    
    
    
    138,814Deferred income taxes
    
    
    (312,664
    )
    
    
    (1,642,398
    )
    
    
    396,199Investment securities received for sale of intellectual
property holding companies
    
    
    (2,698,478
    )
    
    
    (2,200,254
    )
    
    
    (3,419,653
    )Services rendered in exchange for investment securities
    
    
    (266,610
    )
    
    
    (633,420
    )
    
    
    (453,635
    )Changes in operating assets and liabilities:Prepaid expenses and other assets
    
    
    (32,832
    )
    
    
    (162,098
    )
    
    
    (117,032
    )Income taxes payable
    
    
    (16,781
    )
    
    
    16,781Deferred revenue
    
    
    83,656
    
    
    
    32,332
    
    
    
    27,008Accrued expenses
    
    
    60,950
    
    
    
    36,822
    
    
    
    (11,776
    )Net cash used in operating activities
    
    
    (2,515,282
    )
    
    
    (2,577,929
    )
    
    
    (2,488,515)Investing Activities:Proceeds received on sale of investments
    
    
    427,636
    
    
    
    1,888,263
    
    
    
    5,049,343Purchase of investment securities
    
    
    
    
    
    
    (50,000
    )
    
    
    (5,411,844
    )Cash acquired in acquisition of PAX Technology Transfer Ltd.
    
    
    
    
    
    
    
    
    
    
    27,533Purchases of fixed assets
    
    
    (44,130
    )
    
    
    (5,378
    )
    
    
    (26,504
    )Net cash
provided by (used in) investing activities
    
    
    (383,606
    )
    
    
    1,832,885
    
    
    
    (361,472
    )Financing Activities:Proceeds from short term borrowings
    
    
    
    
    
    
    
    
    
    
    150,000Repayments on short-term borrowings
    
    
    
    
    
    
    
    
    
    
    (189,975
    )Net proceeds from issuance of common stock
    
    
    4,281,669
    
    
    
    
    
    
    
    375,617Net proceeds from issuance of debt
    
    
    760,000
    
    
    
    
    
    
    
    Net cash
provided by (used in) financing activities
    
    
    5,041,669
    
    
    
    
    
    
    
    335,642Foreign currency translation adjustment
    
    
    48,508
    
    
    
    58,497
    
    
    
    (5,462
    )Increase (decrease) in cash and cash equivalents
    
    
    2,958,401
    
    
    
    (686,547
    )
    
    
    (2,519,807
    )Cash and cash equivalents at beginning of period
    
    
    745,926
    
    
    
    1,432,473
    
    
    
    3,952,280Cash and cash equivalents at end of period
    
    $
    3,704,327
    
    
    $
    745,926
    
    
    $
    1,432,473Supplemental Disclosures of Non-Cash Investing ActivitiesAcquisition of Techex Acquisition Corporation
    
    $
    
    
    
    $
    70,900
    
    
    $
    Acquisition of PAX Technology Transfer Ltd, net of cash acquired
    
    $
    
    
    
    $
    
    
    
    $
    412,467Stock received in settlement of receivable
    
    $
    
    
    
    $
    
    
    
    $
    39,614
 See accompanying notes 33




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##### Table of Contents



UTEK Corporation 
 Consolidated Statements of Changes in Net Assets
 Year ended December 312003
    
    2002
    
    2001Changes in net assets from operations:Net income from operations
    
    $
    180,568
    
    
    $
    153,643
    
    
    $
    907,980Net realized gain (loss) on sale of investments
    
    
    (228,871
    )
    
    
    (773,262
    )
    
    
    (86,578
    )Change in net unrealized depreciation of
investments, net of related deferred taxes
    
    
    (475,561
    )
    
    
    (2,073,161
    )
    
    
    (177,119
    )Net increase (decrease) in net assets from operations
    
    
    (523,864
    )
    
    
    (2,692,780
    )
    
    
    644,283Capital stock transactions:Proceeds from issuance of common stock (including the exercise of
common stock options), net of offering costs of $449,030
and $99,383
for the year ended December 31, 2003 and 2001, respectively
    
    
    4,281,669
    
    
    
    
    
    
    
    375,617Common stock issued in acquisition of PAX Technology Transfer Ltd.
    
    
    
    
    
    
    
    
    
    
    440,000Common stock issued in acquisition of Techex Acquisition
Corporation
    
    
    
    
    
    
    70,900
    
    
    
    Net increase in net assets from stock transactions
    
    
    4,281,669
    
    
    
    70,900
    
    
    
    815,617Foreign currency translation adjustment
    
    
    48,508
    
    
    
    58,497
    
    
    
    (5,462
    )Net increase (decrease) in net assets
    
    
    3,806,313
    
    
    
    (2,563,383
    )
    
    
    1,454,438Net assets at beginning of year
    
    
    7,346,057
    
    
    
    9,909,440
    
    
    
    8,455,002Net assets at end of year
    
    $
    11,152,370
    
    
    $
    7,346,057
    
    
    $
    9,909,440
 See accompanying notes 34




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##### Table of Contents



UTEK CORPORATION 
 Schedule of Investments
December 31, 2003
 OriginalDate of
    
    
    
    Original
    
    FairShares
    
    Acquisition
    
    
    
    Cost
    
    ValueCommon stock in non-controlled affiliates69.5% of our net assets1,344,300
    
    1/99
    
    ClearImage, Inc., (formerly Image Analysis, Inc.) privately held 
0% of our net assets; medical and hospital equipment developer
    
    $
    1,349,775
    
    
    $
    900,000
    
    5/99
    
    Nubar, Inc., privately held0%; developer of construction
materials
    
    
    126,000
    
    
    
    960,779
    
    6/99
    
    Clean Water Technologies, Inc.,publicly traded over the
counter1.0% of our net assets; environmental services.
    
    
    568,006
    
    
    
    115,294150
    
    11/99
    
    Rosbon, LLC, privately held.5% of our net assets;
real estate development
    
    
    90,705
    
    
    
    55,290136,093
    
    3/00
    
    Graphco Holdings Corp., publicly traded over the counter  0% of
our net assets; developer of e-commerce technologies
    
    
    959,606
    
    
    
    2,094,052
    
    6/00
    
    Advanced Recycling Sciences, Inc.,\publicly traded over the
counter  0% of our net assets; tire recycling methodologies
    
    
    1,970,952
    
    
    
    236,000
    
    3/01
    
    Lexon, Inc.,publicly traded over the counter 0% of our net
assets; developer of health care technology
    
    
    39,614
    
    
    
    4,221,165
    
    4/01
    
    Stealth MediaLabs, Inc.publicly traded over the counter  0% of
our net assets; software products
    
    
    1,708,000
    
    
    
    1,493,550
    
    9/01
    
    Prime Pharmaceutical Corporation, privately held 0% of our net
assets; pharmaceutical developments in dermatology
    
    
    783,344
    
    
    
    1,000,000
    
    11/01
    
    Primapharm Funding Corporation, privately held0% of our net
assets; intellectual property development
    
    
    413,617
    
    
    
    4,000
    
    11/01
    
    Peak Entertainment Holdings, Inc. (formerly Palladium
Communications, Inc.), publicly traded over the counter .1% of
our net assets; telecom, educational internet service
    
    
    12,028
    
    
    
    1,52047,615
    
    1/02
    
    Silver Screen Studios, Inc.(formerly Group Management
Corporation),publicly traded over the counter  0% of our net
assets; corporate management
    
    
    46,949
    
    
    
    3,800,637
    
    1/02
    
    Circle Group Holdings, Inc. (formerly Circle Group Internet,
Inc.),
publicly traded over the counter, 53.0% of our net assets;
digital design and consulting
    
    
    753,719
    
    
    
    5,908,898633,750
    
    2/02
    
    Voice and Wireless Corporation, publicly traded over the counter,
 0%; of our net assets; internet/technology services and products
    
    
    53,161
    
    
    
    48,000
    
    4/02
    
    Hydrogen Technology Applications, Inc.,privately held,  0% of
our net assets; developer of energy technology
    
    
    14,040
    
    
    
    388,500
    
    6/02
    
    FullCircle Registry, Inc.,publicly traded over the counter,
0.1% of our net assets; developer of emergency information
technology
    
    
    324,002
    
    
    
    15,54034,782
    
    1/03
    
    Duraswitch Industries, Inc., publicly traded over the counter,
0.3% of our net assets; developer of electronic switch
technologies
    
    
    29,031
    
    
    
    39,999645,000
    
    3/03
    
    Sequiam Corporation, publicly traded over the counter,  1.4% of
our net assets; developer of biological authentication and
biometrics technologies
    
    
    181,887
    
    
    
    154,8003,198,571
    
    4/03
    
    GloTech Industries, Inc., publicly traded over the counter, 
5.2% of our net assets; developer of lighted technology devices
    
    
    1,554,218
    
    
    
    575,7431,284,000
    
    6/03
    
    E Med Future, Inc., publicly traded over the counter,  6.1% of
our net assets; manufacturer of needle destruction device
    
    
    685,591
    
    
    
    680,520545,000
    
    12/03
    
    Magic Media Networks, Inc., publicly traded over the counter,
1.5% of our net assets; operator of digital display monitor
networks
    
    
    168,950
    
    
    
    168,950240,000
    
    12/03
    
    Assuretec Holdings, Inc.,privately held ,  .3% of our net
assets; security solutions to automate, manage and authenticate
identification documents
    
    
    28,800
    
    
    
    28,800TOTAL INVESTMENTS69.5%
    
    $
    11,861,995
    
    
    $
    7,745,354Cash and other assets, less liabilities30.5%
    
    
    
    
    
    
    3,407,016Net assets at December 31, 2003100%
    
    
    
    
    
    $
    11,152,370
 35




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##### Table of Contents



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 available 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, 2003, all of the securities that we
own are subject to legal restrictions on resale. As a
result, our ability to sell or otherwise transfer the
securities we hold in our portfolio is limited.
    
    We own more than 10% of the outstanding common stock of
Image Analysis, Inc., Nubar, Inc., Clean Water
Technologies, Inc., Rosbon LLC, Stealth MediaLabs, Inc.,
Circle Group Holdings, Inc., GloTech Industries, Inc.
and Primapharm Funding Corporation. See accompanying notes 36




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##### Table of Contents



UTEK CORPORATION
Schedule of Investments
December 31, 2002 OriginalDate of
    
    
    
    Original
    
    FairShares
    
    Acquisition
    
    
    
    Cost
    
    ValueCommon stock in non-controlled affiliates84.5% of our net assets236,000
    
    3/01
    
    Lexon, Inc., publicly traded over the counter 0% of our net assets;
developer of health care technology
    
    $
    39,614
    
    
    $
    1,344,300
    
    1/99
    
    Image Analysis, Inc., privately held  0% of our net assets;
medical and hospital equipment developer
    
    
    1,349,775
    
    
    
    1,343,400
    
    5/99
    
    Centrex, Inc., publicly traded over the counter3.5% of our net assets;
developer of water and purification methodologies
    
    
    443,322
    
    
    
    255,246900,000
    
    5/99
    
    Nubar, Inc., privately held0% of our net assets;
developer of construction materials
    
    
    126,000
    
    
    
    980,778
    
    6/99
    
    Clean Water Technologies, Inc. publicly traded over the
counter.6% of our net assets; environmental services.
    
    
    573,806
    
    
    
    45,116150
    
    11/99
    
    Rosbon, LLC,privately held1.0% of our net assets; real
estate development
    
    
    90,705
    
    
    
    76,451100,799
    
    3/00
    
    Graphco Technologies, Inc., privately held 2.8% of our net assets;
developer of e-commerce technologies
    
    
    952,551
    
    
    
    207,6462,103,053
    
    6/00
    
    Advanced Recycling Sciences, Inc. publicly traded over the
counter  3.1%; tire recycling methodologies
    
    
    1,978,242
    
    
    
    231,3364,221,165
    
    4/01
    
    Stealth MediaLabs, Inc. publicly traded over the counter
 62.5% of our net assets; software products
    
    
    1,708,000
    
    
    
    4,586,435228,089
    
    5/01
    
    Sense Holdings, Inc., publicly traded over the counter 1.0%
of our net assets; biometric technologies
    
    
    59,303
    
    
    
    70,7081,493,550
    
    9/01
    
    Prime Pharmaceutical Corporation, privately held 1.4%
of our net assets; pharmaceutical developments in dermatology
    
    
    783,344
    
    
    
    104,5481,000,000
    
    11/01
    
    Primapharm Funding Corporation,privately held 1.4% of our net
assets; intellectual property development
    
    
    393,001
    
    
    
    100,000400,000
    
    11/01
    
    Palladium Communications, Inc., publicly traded over the
counter 0% of our net assets; telecom, educational internet service
    
    
    12,028
    
    
    
    47,615
    
    1/02
    
    Group Management Corporation, publicly traded over the
counter  0% of our net assets; corporate management
    
    
    46,949
    
    
    
    2,844,000
    
    1/02
    
    Circle Group Holdings, Inc. publicly traded over the
counter, developer of technology companies  .8% of our net assets;
    
    
    358,102
    
    
    
    59,724633,750
    
    2/02
    
    Voice and Wireless Corporation, publicly traded over the counter,
 .2% of our net assets; internet/technology services and products
    
    
    53,161
    
    
    
    13,94248,000
    
    4/02
    
    Hydrogen Technology Applications, Inc., privately held,  0%
of our net assets; developer of energy technology
    
    
    14,040
    
    
    
    486,750
    
    6/02
    
    FullCircle Registry, Inc., publicly traded over the counter,  5.6%
of our net assets; developer of emergency information technology
    
    
    519,803
    
    
    
    413,738120,000
    
    9/02
    
    Innovative Medical Services, Inc., publicly traded over the counter,
.6% of our net assets; developer of anti-microbial technology
    
    
    39,885
    
    
    
    43,200TOTAL INVESTMENTS84.5%
    
    $
    9,541,631
    
    
    $
    6,208,090Cash and other assets, less liabilities15.5%
    
    
    
    
    
    
    1,137,967Net assets at December 31, 2002100.0%
    
    
    
    
    
    $
    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 available 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
financial valuation service provider. (See Notes 1 and 2
to the consolidated financial statements). 37




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##### Table of Contents




    
    As of December 31, 2003, all of the securities that we
own are subject to legal restrictions on resale. As a
result, our ability to sell or otherwise transfer the
securities we hold in our portfolio is limited.
    
    We own 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. See accompanying notes 38




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##### Table of Contents



UTEK Corporation 
 Notes to Consolidated Financial Statements
 1. Nature of Business and Significant Accounting Policies 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, founded at Yale University, 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
Acquisition Corporation have been consolidated into the financial position and
results of operation of the Company, since the dates of their respective
acquisition. In November 2003, UTEK Corporation acquired the UVentures.com website and
certain other intellectual property assets from UVentures, Inc., an innovative
Internet-based exchange primarily used for the marketing of physical science
technologies developed at universities and research organizations. 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, but has not
done so to date. Usually we have executed or will execute our investments in portfolio companies
through the creation and capitalization of a intellectual property acquisition
company to acquire a new technology, which subsidiary will then be acquired by
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
intellectual property acquisition company. In addition to holding a license to
a new technology, our intellectual property acquisition 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 arrangement. 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. Some of our strategic alliance clients
engage us to license their existing proprietary technologies. Principles of Consolidation The consolidated financial statements include the accounts of UTEK Corporation
and its wholly owned subsidiaries. All intercompany transactions and balances
are eliminated in consolidation. Wholly-owned intellectual property acquisition
company used to acquire new technologies are consolidated with the Company
prior to exchange of their shares with a portfolio company. 39




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Accounts Receivable The Company provides an allowance for losses on trade receivables based on a
review of the current status of existing receivables and managements
evaluation of periodic aging of accounts. The Company charges off accounts
receivable against the allowance for losses when an account is deemed to be
uncollectible. It is not the Companys policy to accrue interest
on past due receivables. The provision for doubtful accounts and notes was $4,639 and
$32,995 for the years ended December 31, 2003 and 2002, respectively. Impairment of Long-lived Assets We account for long-lived asset impairments under Statement of Financial
Accounting Standards No. 144 (SFAS 144), Accounting for the Impairment or
Disposal of Long Lived Assets. Consistent with prior guidance, SFAS 144
requires a three-step approach for recognizing and measuring the impairment of
assets to be held and used. The Company recognizes impairment losses on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets carrying amounts. The impairment loss is measured by
comparing the fair value of the asset to its carrying amount. Fair value is
estimated based on discounted future cash flows. Assets to be sold must be
stated at the lower of the assets carrying amount or fair value and
depreciation is no longer recognized. SFAS 144 was adopted on January 1, 2002.
Prior to SFAS 144s adoption, we accounted for impairments under Statement of
Financial Accounting Standards No. 121 (SFAS 121), Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. Goodwill Goodwill is the excess cost over the fair value of net identifiable assets
acquired relating to the September 28, 2001 acquisition of Pax Technology
Transfer, Ltd. The Company adopted Statement of Financial Accounting Standards
No. 142, Goodwill and Other Intangible Assetsand, as a result, the related
goodwill is not being amortized. Goodwill is reviewed for possible impairment
at least annually or more upon the occurrence of an event or when circumstances
indicate that the carrying amount is greater than its fair value. During the
year ended December 31, 2003, the Company determined that there was no
impairment in the value of Goodwill. Changes in the carrying amount of Goodwill are summarized in the
following table: For the year ended
    
    For the year endedDecember 31, 2003
    
    December 31, 2002Beginning balance
    
    $
    472,519
    
    
    $
    426,693Currency exchange adjustment
    
    
    51,288
    
    
    
    45,826Ending balance
    
    $
    523,807
    
    
    $
    472,519
 Intangible Assets Other intangible assets include the software relating to the May 2002
acquisition of TechEx.com and UVentures.com websites. Accumulated amortization
was $22,452 and $8,272 at December 31, 2003 and 2002 respectively. The software
is being amortized over five years. At each balance sheet date, the Company
evaluates the value of intangible assets for impairment. Based upon its most
recent analysis, the Company believes that no impairment of intangible assets
exists at December 31, 2003. Segment Disclosures Management considers the Company as operating in only one segment, the transfer
of new technologies. A wholly-owned subsidiary of UTEK Corporation has assets
in the United Kingdom, however, the assets and operations are not significant. Use of 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 and accompanying notes. Actual results could differ from those
estimates. Investments Pursuant to the requirements of the Investment Company Act of 1940 (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. 40




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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 available 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. All
equity securities owned at December 31, 2003 and December 31, 2002 (69.5% and
84.5% of net assets, respectively) are stated at fair value as determined by
the Board of Directors, in the absence of readily available fair values. The
Company uses the first-in, first-out (FIFO) method of accounting for sales of
its investments. Cash and Cash Equivalents The Company considers all highly liquid fixed income investments with
maturities of three months or less at the time of acquisition, to be cash
equivalents. Income Taxes Deferred taxes are provided on the liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and tax
credit carry forwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment. Revenue Recognition Sale Of Technology Rights The Company recognizes revenue from the sale of technology rights upon the
exchange of the shares of our intellectual property acquisition 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 portfolio company. The common stock received is recorded
as an investment at fair value as determined by the Board of Directors. Consulting and Other Services In addition to technology transfer transactions, we offer the 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 UTEK
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. In some cases the Company is paid a
fee in connection with a technology transfer transaction. In these instances,
revenue is recognized upon consummation of the transaction. 41




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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 and UVentures.com
websites generally is received in the form of cash and initially is deferred
and subsequently recognized ratably over the term of the subscription. Fixed Assets Fixed assets are stated at cost, less accumulated depreciation. Depreciation is
recorded using the straight-line method over the estimated useful lives of the
respective assets (generally five and seven years). Leasehold improvements are
amortized over the shorter of the estimated useful life of the assets or lease
term. The carrying amount of all long-lived assets is evaluated periodically to
determine if adjustment to the depreciation and amortization period or the
unamortized balance is warranted. Based upon its most recent analysis, the
Company believes that no impairment of property and equipment exists at
December 31, 2003. Maintenance and repairs are charged to operations when
incurred. Betterments and renewals are capitalized. When property, plant and
equipment are sold or otherwise disposed of, the asset account and related
accumulated depreciation account are relieved, and any gain or loss is included
in operations. Stock-Based Compensation At December 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.
No stock-based employee compensation cost is reflected in net increase
(decrease) in net assets from operations, as all of the options granted under
those plans had an exercise price equal to the market value of the underlying
common stock on the date of grant. The following table illustrates the effect
of the net increase (decrease) in net assets from operations and the net
increase (decrease) in net assets from operations per share if the Company had
applied the fair value recognition provisions of SFAS 123, Accounting for
Stock-based Compensation to the stock-based employee awards. The pro forma net increase (decrease) in net assets from operations and basic
and diluted earnings per share for the years ended December 31, 2003, 2002 and
2001 would have been as follows: Year endedDecember 31,
    
    December 31,
    
    December 31,2003
    
    2002
    
    2001Net increase (decrease) in net assets from operations:As reported
    
    $
    (523,864
    )
    
    $
    (2,692,780
    )
    
    $
    644,283Deduct: Total stock-based employee compensation
expense determined under fair value based
method for all awards, net of related tax effects
    
    
    (292,719
    )
    
    
    (247,457
    )
    
    
    (197,692
    )Pro forma
    
    $
    (816,583
    )
    
    $
    (2,940,237
    )
    
    $
    446,591Net increase (decrease) in net assets from
operations per share  Basic:As reported
    
    $
    (.12
    )
    
    $
    (.69
    )
    
    $
    .17Pro forma
    
    $
    (.19
    )
    
    $
    (.75
    )
    
    $
    .12Net increase (decrease) in net assets from
operations per share  Diluted:As reported
    
    $
    (.12
    )
    
    $
    (.69
    )
    
    $
    .17Pro forma
    
    $
    (.19
    )
    
    $
    (.75
    )
    
    $
    .12
 Concentrations of Credit Risk Cash and cash equivalents are financial instruments that potentially subject
the Company to concentrations of credit risk. The fair value of financial
instruments approximates the carrying value based on available market
information. The Company invests its excess available funds primarily in U.S.
Government backed securities. The Companys customers are typically located in
the United States. 42




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Research and Development Research and development costs consist of expenditures incurred during the
course of planned search and investigation 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
twelve months ended December 31, 2003, 2002 and 2001, the Company incurred
$-0-, $-0- and $356,000, in 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 the Consolidated Balance Sheets under the caption
Foreign currency translation adjustment. Impact of Future Accounting Standards SFAS 148 In December 2002, the Financial Accounting Standards Board issued SFAS No. 148,
Accounting for Stock-Based Compensation  Transition and Disclosure. SFAS No.
148 provides alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee compensation.
SFAS No. 148 also amends the disclosure requirements of SFAS No. 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of
the method used on reported results. The Company is required to follow the
prescribed format and provide the additional disclosures required by SFAS No.
148 in its annual financial statements for the year ending December 31, 2003
and is also required to provide the disclosures in its quarterly reports
containing financial statements for interim periods. The Company adopted SFAS
148 on January 1, 2003 and elected to continue to account for its stock based
compensation plans under the provisions of APB Opinion No. 25, Accounting for
Stock Issued to Employees as are described in Note 3 of these audited
consolidated financial statements. The adoption did not have an impact on the
Companys consolidated financial statements. SFAS 149 In April 2003, the Financial Accounting Standards Board issued SFAS No. 149,
Amendment of Statement 133 on Derivative Instruments and Hedging Activities.
SFAS No. 149 amends and clarifies financial accounting and reporting for
derivative instruments, including certain derivative instruments embedded in
other contracts and for hedging activities under SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 149 is effective for
contracts entered into or modified after June 30, 2003, and hedging
relationships designated after June 30, 2003, except for those provisions of
SFAS No. 149 which relate to SFAS No. 133 Implementation Issues that have been
effective for fiscal quarters that began prior to June 15, 2003. The Company
does not expect the adoption of SFAS 149 to have a material impact on the
Companys consolidated financial statements. SFAS 150 In May 2003, the Financial Accounting Standards Board issued SFAS No. 150,
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity. SFAS No. 150 establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of
both liabilities and equity. SFAS No. 150 requires that an issuer classify a
financial instrument that is within its scope as a liability (or as an asset in
some circumstances). SFAS No. 150 is effective for financial instruments
entered into or modified after May 31, 2003 and otherwise effective on July 1,
2003 for financial instruments created before May 31, 2003. The Company does
not expect the adoption of SFAS No. 150 to have a material impact on the
Companys consolidated financial statements. FIN 45 In November 2002, the FASB published Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. FIN 45 requires that a guarantor
recognize a liability for the fair value of an obligation assumed under a
guarantee and also discusses additional disclosures to be made in the interim
and annual financial statements of the guarantor regarding obligations under
certain guarantees. The initial measurement and recognition requirements of FIN
45 are effective prospectively for guarantees issued or modified after December
31, 2002. The adoption did not have an impact on the Companys consolidated
financial statements at December 31, 2003. In the normal course of business
the Company enters into contracts that contain a variety of representations,
which provide general indemnifications. The Companys maximum exposure under
these arrangements is unknown as this would involve future claims 43




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that may be made against the Company that have not yet occurred. However,
based on experience, the Company expects the risk of loss to be remote. FIN 46 In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities. This standard clarifies the application of
Accounting Research Bulletin No. 51, Consolidated Financial Statements, and
addresses consolidation by business enterprises of variable interest entities
(more commonly known as Special Purpose Entities or SPEs). FIN 46 requires
existing unconsolidated variable interest entities to be consolidated by their
primary beneficiaries if the entities do not effectively disperse risk among
the parties involved. FIN 46 also enhances the disclosure requirements related
to variable interest entities. This statement is effective for variable
interest entities created or in which an enterprise obtains an interest after
January 31, 2003. In October 2003, the FASB voted to defer the implementation
until after the fourth quarter of 2003. The Company does not expect the
adoption of FIN 46 to have a material impact on the consolidated financial
statements. 2. Investments Equity securities at December 31, 2003 and December 31, 2002 (69.5 % and 84.5%
of net assets, respectively) were valued at fair value as determined by the
Board of Directors, with the assistance of appraisals provided by an
independent valuation service provider, in the absence of readily available
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 December 31, 2003 and December 31, 2002, the Company had established
three and four intellectual property acquisition companies, respectively, which
had $-0- net assets. On February 19, 2001, the Company sold its Technology Development, Inc.
intellectual property acquisition company to Advanced Recycling Sciences, Inc.,
for 1,446,153 unregistered shares of Advanced Recycling Sciences, Inc. common
stock in a non-taxable exchange. On April 20, 2001, the Company sold its Watermark Technologies, Inc.
intellectual property acquisition company to Stealth MediaLabs, Inc. for
450,000 unregistered shares of Stealth MediaLabs, Inc. common stock in a
non-taxable exchange. On May 31, 2001, the Company sold its Micro Sensor Technologies, Inc.
intellectual property acquisition company to Sense Holdings, Inc. for 1,850,000
unregistered shares of Sense Holdings, Inc. common stock in a non-taxable
exchange. On August 14, 2001, the Company acquired 41,667 unregistered shares of common
stock from BitzMart, Inc. at $3.00 per share for $125,000. On September 27, 2001, the Company acquired 250,000 unregistered shares of
common stock from Prime Pharmaceutical Corporation at $.60 per share for
$150,000. On September 28, 2001, the Company sold its Advanced Microsphere Technology,
Inc. intellectual property acquisition company to Prime Pharmaceutical
Corporation for 560,000 shares of Prime Pharmaceutical Corporation common stock
in a non-taxable exchange. On September 14, 2001, the Company received 100,000 unregistered shares of
common stock from BitzMart, Inc. at $2.31 per share in connection with a
strategic alliance agreement. On October 29, 2001, the Company received 1,000,000 unregistered shares of
common stock from Primapharm Funding Corporation in connection with a strategic
alliance agreement. The Company has recognized consulting fees to date relating
to 1,000,000 shares. On November 1, 2001, the Company received 50,000 unregistered shares of common
stock from BitzMart, Inc. at $2.91 per share in connection with a strategic
alliance agreement. 44




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On November 28, 2001, the Company received 400,000 unregistered shares of
common stock from Palladium Communications, Inc. (formerly known as Palladium
Communications, Inc.) in a strategic alliance agreement. The Company has
recognized consulting fees to date relating to 400,000 shares. On January 11, 2002, the Company entered into a strategic alliance agreement
with Circle Group Holdings, 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
December 31, 2003, the Company has recognized consulting fees to date relating
to 48,000 shares. The strategic alliance was renewed in February 2003. 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. As of December 31, 2003, the Company has recognized consulting fees
to date 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 has recognized consulting fees to date 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. The Company has recognized consulting fees to date relating to
48,000 shares. On May 7, 2002, the Company sold its Nitrone Scientific, Inc. intellectual
property acquisition 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. intellectual property acquisition company to Clear Image, Inc. (formerly
Image Analysis, Inc.) for 465,000 unregistered shares of Clear Image, 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. The
Company has recognized consulting fees to date relating to 30,000 shares. On June 11, 2002, the Company sold its Energy Management Technologies, Inc.
intellectual property acquisition 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. intellectual property acquisition 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.
intellectual property acquisition company to Circle Group Holdings, 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.
intellectual property acquisition 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. The Company has recognized consulting fees to date relating to
120,000 shares. 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 11, 2002, the Company entered into a strategic alliance agreement
with Circle Group Holdings, 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. The
Company has recognized consulting fees to date in relation to 48,000
unregistered shares of Circle Group Holdings, Inc. The strategic alliance was
renewed in February 2003. 45




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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. We have recognized consulting fees to date 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. We
have recognized consulting fees to date 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. The agreement was not renewed in April 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. intellectual
property acquisition 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. intellectual property acquisition 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. The
agreement was not renewed in May 2003. The Company has recognized consulting
fees to date relating to 30,000 shares. On June 11, 2002, the Company sold its Energy Management Technologies, Inc.
intellectual property acquisition 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. intellectual property acquisition 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.
intellectual property acquisition company to Circle Group Holdings, 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.
intellectual property acquisition 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. The Company has recognized consulting fees to date relating to
120,000 shares. On December 24, 2002, the Company received 231,000 unregistered shares of
common stock from FullCircle Registry, Inc. 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. The
Company has recognized consulting fees to date relating to 34,782 shares. The
strategic alliance was cancelled in June 2003 and unvested 48,696 shares were
returned to Duraswitch Industries, Inc. On February 5, 2003, the Company entered into a strategic alliance agreement
with Circle Group Holdings, 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. The
Company has recognized to date consulting fees relating to 44,000 unregistered
shares of Circle Group Holdings, Inc. On March 4, 2003, Peak Entertainment Holdings, Inc. (formerly Palladium
Communications, Inc.) completed a 100 for 1 reverse split, which reduced the
number of shares the Company holds to 4,000 from 400,000 shares. On March 18, 2003, the Company received 160,000 unregistered shares of common
stock from Sequiam Corporation in a strategic alliance agreement. The Company
has recognized consulting fees to date relating to 125,778 shares. 46




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On March 26, 2003, the Company received 35,294 unregistered shares of common
stock from Graphco Technologies, Inc. in a strategic alliance agreement. The
Company has recognized consulting fees to date relating to 26,953 shares. On March 26, 2003, the Company received 821,429 unregistered shares of common
stock from Circle Group Holdings, Inc. in connection with an assignment of a
technology license. On April 11, 2003, the Company received 68,571 unregistered shares of common
stock from GloTech Industries, Inc. in a strategic alliance agreement. The
Company has recognized consulting fees to date relating to 49,141 shares. On June 17, 2003, the Company received 34,000 unregistered shares of common
stock from E Med Future, Inc. in a strategic alliance agreement. The Company
has recognized consulting fees to date relating to 18,228 shares. On June 23, 2003, the Company sold its Advanced Illumination Technologies, Inc.
intellectual property acquisition company to GloTech Industries, Inc. for
1,000,000 unregistered shares of GloTech Industries, Inc.s common stock in a
non-taxable exchange. On July 23, 2003, the Company received 130,208 unregistered shares of common
stock from Circle Group Holdings, Inc. in connection with an assignment of a
technology license. On August 28, 2003, the Company sold its Sports Technologies, Inc. intellectual
property acquisition company to GloTech Industries, Inc. for 2,130,000
unregistered shares of GloTech Industries, Inc.s common stock in a non-taxable
exchange. On September 10, 2003, the Company sold its Fingerprint Detection Technologies,
Inc. intellectual property acquisition company to Sequiam Corporation for
485,000 unregistered shares of Sequiam Corporations common stock in a
non-taxable exchange. On December 3, 2003, the Company received 545,000 unregistered shares of common
stock from Magic Media Networks, Inc. in a six-month strategic alliance
agreement. The Company has recognized consulting fees to date relating to
82,043 shares. On December 10, 2003, the Company received 240,000 unregistered shares of
common stock from AssureTec Holdings, Inc. in a strategic alliance agreement.
The Company has recognized consulting fees to date relating to 13,548 shares On December 30, 2003, the Company sold its Medical Safety Technologies, Inc.
intellectual property holding to E Med Future, Inc. for 1,250,000 unregistered
shares of E Med Future, Inc.s common stock in a non-taxable exchange. 3. Fixed Assets  Fixed assets consist of the following: December 31,2003
    
    2002Computer Equipment
    
    $
    89,845
    
    
    $
    87,815Furniture and Fixtures
    
    
    46,008
    
    
    
    44,974Leasehold Improvements
    
    
    22,555
    
    
    
    20,455Uventures Website
    
    
    40,000
    
    
    
    198,408
    
    
    
    153,244Less accumulated depreciation
    
    
    (115,462
    )
    
    
    (87,989
    )$
    82,946
    
    
    $
    65,255
 4. Note Payable In April 2003, the Company obtained a loan for $1,000,000 at 12% per annum with
interest paid in advance, which resulted in net proceeds of $760,000 with an
effective interest rate of approximately 14%. The term of the loan is two
years, and no principal payments are required prior to maturity. The loan is
non-recourse except with respect to 360,360 unissued shares of common stock of
UTEK Corporation pledged as collateral to secure the loan. 5. Income Taxes The Company accounts for income taxes under FASB No. 109, Accounting for
Income Taxes(SFAS No. 109). Deferred income tax assets and liabilities are
determined based upon differences between financial reporting and tax bases of
assets and 47




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##### Table of Contents



liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. The components of the income tax provision on operations, excluding income tax
expense (benefit) on realized gains (losses) and unrealized appreciation
(depreciation) of investments are as follows: Year Ended December 31,2003
    
    2002
    
    2001Current:Federal
    
    $
    
    
    
    $
    
    
    
    $
    State
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    
    
    
    
    16,781
    
    
    
    $
    
    
    
    $
    16,781
    
    
    $
    Deferred:Federal
    
    $
    95,795
    
    
    $
    64,250
    
    
    $
    473,320State
    
    
    16,398
    
    
    
    10,510
    
    
    
    81,978112,193
    
    
    
    74,760
    
    
    
    555,298$
    112,193
    
    
    $
    91,541
    
    
    $
    555,298
 A reconciliation of the differences between the effective income tax rate and the statutory federal tax rate follows: Year Ended December 31,2003
    
    2002
    
    2001Tax at U.S. statutory rate
    
    $
    99,487
    
    
    $
    80,028
    
    
    $
    497,255State taxes, net of federal benefit
    
    
    10,766
    
    
    
    8,820
    
    
    
    54,104Other
    
    
    1,940
    
    
    
    2,693
    
    
    
    3,939$
    112,193
    
    
    $
    91,541
    
    
    $
    555,298
 Significant components of the Companys deferred tax assets and liabilities are as follows: As of December 31,2003
    
    2002Net operating loss carryforward
    
    $
    1,695,622
    
    
    $
    1,050,332Capital loss carryforward
    
    
    
    
    
    
    Tax credit carryforward
    
    
    16,781
    
    
    
    16,781Other
    
    
    (1,011
    )
    
    
    (2,301
    )Investments in non-controlled affiliates
    
    
    (1,644,317
    )
    
    
    (1,310,401
    )Net deferred tax asset (liability)
    
    $
    67,075
    
    
    $
    (245,589
    )
 SFAS No. 109 requires a valuation allowance to reduce the deferred tax assets
reported if, based on the weight of the evidence, it is more likely than not
that some portion or all of the deferred tax assets will not be realized. After
consideration of all the evidence, both positive and negative, management has
determined that a valuation allowance was not necessary as of December 31, 2003
and 2002. At December 31, 2003, the Company has available U.S. net operating loss
carryforwards of approximately $4,506,037, which expire in years 2012, 2018,
2019, 2020, 2021, 2022 and 2023. At December 31, 2003 the Company has a capital
loss carryforward of approximately $-0-. 6. Stockholders Equity Transactions in common stock for the four years ended December 31, 2003 were as
follows: Common Stock
    
    Shares
    
    Par Value
    
    Paid In CapitalBalance at December 31, 2000
    
    
    3,782,226
    
    
    
    37,822
    
    
    
    6,173,859Private placementJune 2001
    
    
    73,986
    
    
    
    740
    
    
    
    374,877
 48




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##### Table of Contents



Common Stock
    
    Shares
    
    Par Value
    
    Paid In CapitalAcquisition PAX Technology Transfer, LtdSeptember 2001
    
    
    59,460
    
    
    
    595
    
    
    
    439,405Balance at December 31, 2001
    
    
    3,915,672
    
    
    
    39,157
    
    
    
    6,988,141Acquisition of Techex Acquisition CorporationMay 2002
    
    
    10,000
    
    
    
    100
    
    
    
    70,800Balance at December 31, 2002
    
    
    3,925,672
    
    
    
    39,257
    
    
    
    7,058,941Employee stock options exercised
    
    
    60,000
    
    
    
    600
    
    
    
    355,400Private placementApril 2003
    
    
    330,000
    
    
    
    3,300
    
    
    
    887,200Private placementJuly 2003
    
    
    146,450
    
    
    
    1,464
    
    
    
    780,792Private placementNovember 2003
    
    
    257,000
    
    
    
    2,570
    
    
    
    1,395,430Private placemenDecember 2003
    
    
    71,428
    
    
    
    714
    
    
    
    465,786Balance at December 31, 2003
    
    
    4,790,550
    
    
    $
    47,905
    
    
    $
    10,943,549
 In December 2003, the Company had an additional private placement; the
transfer agent as of this date had not issued the shares. Therefore the net
proceeds of $388,412 for the shares sold as of December 31, 2003 is reflected
in the stockholders equity section under Common Stock Payable. 7. Stock Compensation, Stock Options and Warrants Pursuant to an agreement we entered into in connection with our initial public
offering, the Company issued 100,000 warrants on October 25, 2000 at $.0003 to
the underwriter, to purchase an equal number of shares of the Companys common
stock. These warrants are exercisable over the next three years at $9.90 per
share. The warrants expire on October 25, 2005. The Company accounts for stock grants to employees in exchange for services in
accordance with APB No 25, Accounting for Stock Issued to Employees.Stock
grants to non-employees in exchange for services are accounted for in
accordance with FAS 123, Accounting for Stock-Based
Compensation. There were
no expenses related to stock grants to employees and non-employees in exchange
for services during fiscal 2003, 2002, and 2001. In the year ended December 31, 1999, the Company reserved 750,000 shares of
common stock for issuance in connection with the stock option plans. The
Company adopted a fixed incentive stock option plan in September 1999 (the
1999 Plan) and a fixed non-qualified stock option plan in February 2000 (the
2000 Plan). Under the terms of the 1999 Plan, the Company is authorized to
issue options to purchase up to 500,000 shares of the Companys common stock.
The options are intended to be incentive stock options within the meaning of
Section 422 of the Internal Revenue Code (the Code), however, options may be
issued under the 1999 Plan that do not qualify for incentive treatment under
the Code. Under the terms of the 2000 Plan, the Company is authorized to issue
options to purchase up to 250,000 shares of the Companys common stock. Under
the 2000 Plan, the Company may only issue options that do not qualify for
incentive treatment under Section 422 of the Code. The per share exercise price
of each stock option granted under the 1999 Plan and the 2000 Plan must be
equal to the quoted fair market value of the stock on the date of grant, except
in the case of a more than 10% shareholder for which grants are exercisable at
110% of fair market value of the stock on the date of grant. At December 31,
2003, 712,534 options from the 1999 Plan and 240,000 options from the
2000 Plan had been granted; 222,517 options from the
1999 Plan and 50,000 options from the 2000 Plan had been cancelled; and 60,000 shares
from the 1999 Plan were exercised. Pursuant to SFAS No. 123 Accounting for Stock-Based Compensation,the Company
has elected to account for its stock option plan under APB Opinion 25,
Accounting for Stock Issued to Employees,and adopt the disclosure-only
provisions of SFAS No. 123. Under APB 25, no compensation costs were recognized
relating to the option grants because the exercise price of the options awarded
was equal to the market value of the underlying common stock on the dates of
grant. Under SFAS No. 123, the net decrease in net assets from operations would
have increased by $292,719, or $.07 per share, for the year ended December 31,
2003, $247,457, or $.06 per share, for the year ended December 31, 2002, and
the net increase in net assets from operations would have decreased by
$197,692, or $.05 per share, for the year ended December 31, 2001. The fair value of each option granted in 2003, 2002 and 2001 was estimated
using the Black-Scholes option-pricing model with the following assumptions: 2003
    
    2002
    
    2001Expected dividend yield
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %Expected volatility
    
    
    23.84
    %
    
    
    19.00
    %
    
    
    30.90
    %Risk-free interest
    
    2.78% to 3.08%
    
    2.94% to 4.74%
    
    3.69% to 5.09%Expected term
    
    5 years
    
    5 years
    
    5 years
 A summary of the Companys stock option activity, and related information
follows: 49




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##### Table of Contents



Weighted
    
    
    
    WeightedAverage
    
    
    
    AverageExercise
    
    
    
    ExercisePrice
    
    
    
    PriceOptions
    
    Per Share
    
    Warrants
    
    Per ShareOutstanding at December 31, 2000
    
    
    240,000
    
    
    $
    6.30
    
    
    
    100,000
    
    
    $
    9.90Granted
    
    
    258,000
    
    
    
    7.02
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Canceled / Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at December 31, 2001
    
    
    498,000
    
    
    $
    6.67
    
    
    
    100,000
    
    
    $
    9.90Granted
    
    
    294,534
    
    
    
    7.09
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Canceled / Expired
    
    
    (155,000
    )
    
    
    6.81
    
    
    
    
    
    
    
    Outstanding at December 31, 2002
    
    
    637,534
    
    
    $
    6.79
    
    
    
    100,000
    
    
    $
    9.90Granted
    
    
    160,000
    
    
    
    6.64
    
    
    
    
    
    
    
    Exercised
    
    
    (60,000
    )
    
    
    5.93
    
    
    
    
    
    
    
    Canceled / Expired
    
    
    (117,517
    )
    
    
    7.20
    
    
    
    
    
    
    
    Outstanding at December 31, 2003
    
    
    620,017
    
    
    $
    6.89
    
    
    
    100,000
    
    
    $
    9.90
 For the years ended December 31
    
    2003
    
    2002
    
    2001Weighted
average fair value of options granted:
    
    $
    2.26
    
    
    $
    1.91
    
    
    $
    2.51
 The following table summarizes information about outstanding stock options at December 31, 2003: Outstanding
    
    Exercise Price
    
    Remaining Contractual
    
    ExercisableOptions
    
    Per Share
    
    Life
    
    Options135,000
    
    $
    6.00
    
    
    1 year 10 months
    
    
    
    135,00055,000
    
    $
    6.13
    
    
    1 year 11 months
    
    
    
    55,00020,000
    
    $
    5.75
    
    
    2 years 0 months
    
    
    
    15,0002,000
    
    $
    7.50
    
    
    2 years 2 months
    
    
    
    2,0005,000
    
    $
    7.00
    
    
    2 years 4 months
    
    
    
    5,0005,000
    
    $
    7.41
    
    
    2 years 5 months
    
    
    
    5,000115,000
    
    $
    7.40
    
    
    2 years 9 months
    
    
    
    85,0002,500
    
    $
    7.23
    
    
    2 years 11 months
    
    
    
    2,5001,000
    
    $
    7.13
    
    
    2 years 11 months
    
    
    
    1,0007,744
    
    $
    7.05
    
    
    3 years 9 months
    
    
    
    5,2441,000
    
    $
    7.08
    
    
    3 years 2 months
    
    
    
    1,000155,000
    
    $
    7.10
    
    
    3 years 5 months
    
    
    
    82,5005,000
    
    $
    7.25
    
    
    3 years 7 months
    
    
    
    2,50028
    
    $
    6.30
    
    
    4 years 0 months
    
    
    
    28745
    
    $
    6.10
    
    
    4 years 0 months
    
    
    
    74520,000
    
    $
    5.64
    
    
    4 years 4 months
    
    
    
    20,00020,000
    
    $
    6.99
    
    
    4 years 5 months
    
    
    
    20,00015,000
    
    $
    6.75
    
    
    4 years 5 months
    
    
    
    3,75025,000
    
    $
    6.99
    
    
    4 years 5 months
    
    
    
    6,25030,000
    
    $
    8.40
    
    
    4 years 7 months
    
    
    
    7,500620,017
    
    
    
    
    
    
    
    
    
    
    455,017
 Weighted
average exercise price of options exercisable at December 31, 2003
    
    $
    6.75
 8. 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. 50




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##### Table of Contents



Effective September 1, 1999, the Company entered into a five year employment
agreement with its CEO and President providing for an annual base salary of
$150,000 for his services. 9. Related Party Transactions Sam Reiber, the Companys General Counsel and a director of the Company is also
a partner with the law firm Linsky & Reiber in Tampa, Florida. Linsky & Reiber
has received approximately $16,197 and $16,377 in December 31, 2003 and 2002,
respectively, in compensation during the past fiscal year for services
performed for the Company and holds 6,100 shares of the Companys common stock. John Micek, a Director of the Company is also a partner in Silicon Prairie
Partner, LP. Silicon Prairie Partners, LP invested $102,000 or 17,000 shares at
$6.00 per share in a private placement offering in November 2003. 10. Interim Financial Information (Unaudited) Fiscal year 2003:
    
    March 31
    
    June 30
    
    September 30
    
    December 31Income from operations (Revenue)
    
    $
    504,271
    
    
    $
    606,635
    
    
    $
    1,723,250
    
    
    $
    971,021Net income (loss) from operations
    
    
    (603,474
    )
    
    
    (13,299
    )
    
    
    835,144
    
    
    
    (37,803
    )Net increase (decrease) in net assets from operations
    
    
    (3,791,440
    )
    
    
    864,833
    
    
    
    3,406,071
    
    
    
    (1,482,792
    )Net increase (decrease) in net assets from operations per shareBasic
    
    $
    (.97
    )
    
    $
    (.20
    )
    
    $
    .79
    
    
    $
    (.35
    )Diluted
    
    $
    (.97
    )
    
    $
    (.20
    )
    
    $
    .76
    
    
    $
    (.35
    )
 Fiscal year 2002:
    
    March 31
    
    June 30
    
    September 30
    
    December 31Income from operations (Revenue)
    
    $
    269,954
    
    
    $
    1,957,260
    
    
    $
    688,828
    
    
    $
    469,293Net income (loss) from operations
    
    
    (271,050
    )
    
    
    517,650
    
    
    
    26,675
    
    
    
    (119,932
    )Net increase (decrease) in net assets from operations
    
    
    (512,852
    )
    
    
    (1,045,998
    )
    
    
    (748,315
    )
    
    
    (385,615
    )Net increase (decrease) in net assets from operations per shareBasic
    
    $
    (.13
    )
    
    $
    (.27
    )
    
    $
    (.19
    )
    
    $
    (.10
    )Diluted
    
    $
    (.13
    )
    
    $
    (.27
    )
    
    $
    (.19
    )
    
    $
    (.10
    )
 11. Subsequent Events In January 2004, we completed the private placement it began in December 2003
for 107,986 shares of our common stock at $7.00 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. The total net proceeds received inclusive of the December receipts
was $680,312, net of investment banking fees of $75,590. In January 2004, we completed an additional private placement transaction of
300,000 shares of our common stock at $7.00 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.
The net proceeds after investment banking fees of $210,000 was $1,890,000. In January 2004, we repaid the loan that was obtained in April 2003, by issuing
125,715 shares of our common shares to the loan holder. The balance owed at
the time the shares were issued was $880,000. The shares were issued at an
effective value of $7.00 per share. In February 2004, we sold 195,892 shares of common stock of Circle Group
Holding, Inc. for net proceeds of $1,234,160. The Company also exercised
500,000 warrants to purchase the common stock of Circle Group Holdings, Inc.
for $.36 per share for a total of $180,000. As of March 5, 2004, we own
4,089,745 million shares of Circle Group Holdings, Inc. common stock. 51




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##### Table of Contents



SELECTED PER SHARE DATA AND RATIOS Year Ended December 312003
    
    2002
    
    2001
    
    2000
    
    1999Per share informationNet asset value, beginning of year
    
    $
    1.87
    
    
    $
    2.53
    
    
    $
    2.24
    
    
    $
    1.18
    
    
    $
    0.56Net increase from operations(1)
    
    
    .04
    
    
    
    .04
    
    
    
    .23
    
    
    
    0.56
    
    
    
    0.10Net change in realized and unrealized
appreciation/depreciation on
investments (after taxes)
    
    
    (.53
    )
    
    
    (.73
    )
    
    
    (.14
    )
    
    
    (.87
    )
    
    
    (.04
    )Foreign currency translation adjustment
    
    
    .01
    
    
    
    .01
    
    
    
    (.01
    )
    
    
    
    
    
    
    Net increase from stock transactions
    
    
    .94
    
    
    
    .02
    
    
    
    .21
    
    
    
    1.37
    
    
    
    0.56Net asset value, end of year
    
    $
    2.33
    
    
    $
    1.87
    
    
    $
    2.53
    
    
    $
    2.24
    
    
    $
    1.18Per share market value, end of year(2)
    
    $
    11.10
    
    
    $
    6.25
    
    
    $
    7.10
    
    
    $
    5.75
    
    
    
    N/ARatios/supplemental dataNet assets, end of year
    
    $
    11,152,370
    
    
    $
    7,346,057
    
    
    $
    9,909,440
    
    
    $
    8,455,002
    
    
    $
    3,284,453Ratio of expenses to average net assets(3)
    
    
    38
    %
    
    
    36
    %
    
    
    28
    %
    
    
    32
    %
    
    
    31
    %Ratio of net income to average net assets
    
    
    2
    %
    
    
    2
    %
    
    
    10
    %
    
    
    29
    %
    
    
    12
    %Diluted weighted average number of
shares outstanding during the year
    
    
    4,266,918
    
    
    
    3,921,535
    
    
    
    3,882,914
    
    
    
    2,968,720
    
    
    
    2,682,420
    (1)
    
    Calculated based on diluted weighted average number of shares
outstanding during the year.(2)
    
    Not applicable - Prior to public offering of shares.(3)
    
    Excluding income taxes. 
 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosures On September 5, 2003, Ernst & Young LLP resigned as our independent public
accountants effective immediately. On September 16, 2003, we engaged Pender
Newkirk & Company to serve as our independent public accountants for the fiscal
year ended December 31, 2003. In connection with the audits for the 2002 and 2001 fiscal years and through
September 5, 2003, (1) there were no disagreements with
Ernst & Young LLP on any
matter of accounting principle or practice, financial statement disclosure,
auditing scope or procedure, whereby such disagreements, if not resolved to the
satisfaction of Ernst & Young LLP, would have caused them to make reference thereto
in their report on the financial statements for such years; and (2) there has
been no reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K). The reports of Ernst &
Young LLP on our financial statements for fiscal years ended
December 31, 2002 and 2001 contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle. We had not consulted with Pender Newkirk & Company during 2002 or 2001 or the
period from January 1, 2003 through September 16, 2003, on either the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion Pender Newkirk & Company
might issue on our financial statements. 
 Item 9A. Controls and Procedures a. Our Chief Executive Officer and Chief Financial Officer have evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of
1934) as of the end of the period covered by this report. Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are effective in timely alerting
them to material information relating to us (including our consolidated
subsidiaries) that is required to be disclosed in the reports we filed or
submit under the Securities Exchange Act of 1934. b. There was no significant change in our internal control over financial
reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934)
that occurred during our most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting. 52




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##### Table of Contents



PART III 
 Item 10.Directors and Executive Officers of the Registrant Code of Business Conduct and Ethics for Directors and Employees We have adopted a Code of Business Conduct and Ethics for all of our directors
and employees, including our Chief Executive Office and Chief Financial
Officer. We have posted a copy of our Code of Business Conduct and Ethics on
our Internet website at www.utekcorp.com. Any waivers of the Code of Business
Conduct and Ethics must be approved, in advance, by our full Board of
Directors. Any amendments to, or waivers from the Code of Business Conduct and
Ethics that apply to our executive officers and directors will be posted on our
Internet website located at www.utekcorp.com. The information set forth under the caption ELECTION OF DIRECTORS, MEETINGS
OF THE BOARD OF DIRECTORS AND COMMITTEES and SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE in our Proxy Statement for the 2004 Annual
Meeting of Stockholders to be filed pursuant to Regulation 14A under the
Securities Exchange Act of 1934 within 120 days from the fiscal year end, is
incorporated herein by reference. 
 Item 11.Executive Compensation The information set forth under the caption COMPENSATION OF EXECUTIVE OFFICERS
AND DIRECTORS, in the Companys Proxy Statement for the 2004 Annual Meeting of
Stockholders to be filed pursuant to Regulation 14A under the Securities
Exchange Act of 1934 within 120 days from the fiscal year end, is incorporated
herein by reference. 
 Item 12.Security Ownership of Certain Beneficial Owners and Management The information set forth under the caption SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS AND EQUITY COMPENSATION PLAN INFORMATION in our
Proxy Statement for the 2004 Annual Meeting of Stockholders to be filed
pursuant to Regulation 14A under the Securities Exchange Act of 1934 within 120
days from the fiscal year end, is incorporated herein by reference. 
 Item 13.Certain Relationships and Related Transactions The information set forth under the caption CERTAIN TRANSACTIONS in our Proxy
Statement for the 2004 Annual Meeting of Stockholders to be filed pursuant to
Regulation 14A under the Securities Exchange Act of 1934 within 120 days from
the fiscal year end, is incorporated herein by reference. 
 Item 14.Principal Accountant Fees and Services The information set forth under the caption AUDIT FEES and AUDIT COMMITTEE
PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES in our Proxy
Statement for the 2004 Annual Meeting of Stockholders to be filed pursuant to
Regulation 14A under the Securities Exchange Act of 1934 within 120 days from
the fiscal year end, is incorporated herein by reference. 53




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##### Table of Contents



PART IV 
 Item 15.Exhibits, Financial Statement Schedules, and Reports on Form 8-K  (a)
    
    The following documents are filed as part of this
report:1.
    
    Financial StatementsThe following financial
statements of the Company are contained in Item 8 of this Form
10-K:
    
    Consolidated Balance SheetsAt December 31, 2003 and 2002
    
    Consolidated Statements of OperationsFor the years ended
December 31, 2003, 2002 and 2001
    
    Consolidated Statements of Cash FlowsFor the years ended
December 31, 2003, 2002 and 2001
    
    Consolidated Statements of Changes in Net AssetsFor the years
ended December 31, 2003, 2002 and 2001
    
    Schedule of InvestmentsAt December 31, 2003 and 2002
    
    Notes to the Consolidated Financial Statements
    
    Selected Per Share Data and Ratios for the years ended December 31,
2003, 2002, 2001, 2000, and 1999
    
    Report of Pender Newkirk & Company, Independent Certified Public Accountants
    
    Report of Ernst & Young LLP, Independent Certified Public Accountants2.
    
    Financial Statement Schedules were omitted, as
they are not required or are not applicable, or the required
information is included in the Financial Statements.3.
    
    Exhibitsa.
    
    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. 3.(i)(1)
    
    
    
    Certificate of Incorporation, dated July 6, 1999, as filed and recorded with the
Secretary of State of the State of Delaware on July 13, 1999.3.(ii)(2)
    
    
    
    Certificate of Amendment to Certificate of Incorporation, dated October 14, 1999, as
filed and recorded with the Secretary of State of the State of Delaware on October 15,
1999.3.(iii)(3)
    
    
    
    By-Laws of UTEK Corporation.3.(iv)(54)
    
    
    
    Certificate of Amendment to Certificate of Incorporation dated October 14, 1999, as
filed and recorded with the Secretary of State of the State of Delaware on July 24,
2001.4.1(4)
    
    
    
    Form of Representatives Warrant.4.2(5)
    
    
    
    Certificate of Merger of UTEK Corporation and UTEK LLC, dated October 18, 1999, as
filed and recorded with the Secretary of State of the State of Delaware on October 25,
1999.4.3(6)
    
    
    
    Specimen Common Stock Certificate.10.1(7)
    
    
    
    Form of Financial Consulting Agreement between UTEK Corporation and Schneider
Securities, Inc.10.2(8)
    
    
    
    1999 Incentive Stock Option Plan, as corrected.10.3(9)
    
    
    
    2000 Non-Qualified Stock Option Plan, as corrected.10.4(10)
    
    
    
    Employment Agreement with Clifford M. Gross.10.5(11)
    
    
    
    Employment Agreement with Uwe Reischl.10.6(12)
    
    
    
    Agreement dated January 30, 1998 between UTEK Corporation and the University of South
Florida.
 54




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##### Table of Contents



10.7(13)
    
    
    
    Master Agreement dated June 18, 1999 between UTEK Corporation and Johns Hopkins
University.10.8(14)
    
    
    
    Strategic Alliance dated November 3, 1999 between UTEK Corporation and Fraunhofer
Institute for Interfacial Engineering and Biotechnology IGB.10.9(15)
    
    
    
    Strategic Alliance dated October 18, 1999 between UTEK Corporation and University of
Florida.10.10(16)
    
    
    
    Services Agreement dated May 18, 1998 between UTEK Corporation and the University of
Memphis.10.11.(17)
    
    
    
    Consulting Agreement between UTEK Corporation and NuElectric Corporation, dated
November 16, 1998.10.12(18)
    
    
    
    Consulting Agreement between UTEK Corporation and Darby Group Companies, dated May 3,
1999.10.13(19)
    
    
    
    License Agreement dated July 13, 1999 between The Regents of the University of
California and E. Coli Measurement Systems, Inc.10.14(20)
    
    
    
    License Agreement dated January 1, 1999 between Clean Water Technologies, Inc. and the
University of South Florida Research Foundation, Inc.10.15(21)
    
    
    
    Sponsored Research Agreement dated February 12, 1999 between Advanced Reinforcing
Technologies, Inc. and Cornell University.10.16(22)
    
    
    
    License Agreement between Cornell Research Foundation, Inc. and Advanced Reinforcing
Technologies, Inc. dated March 1, 1999.10.17(23)
    
    
    
    License Agreement dated December 15, 1999 between the California Institute of
Technology and Digital Personnel, Inc.10.18(24)
    
    
    
    License Agreement dated September 1999 between Safe Water Technologies, Inc. and
University of South Florida Research Foundation, Inc.10.19(25)
    
    
    
    Strategic Alliance dated December 13, 1999 between UTEK Corporation and Virginia Tech
Intellectual Properties, Inc.10.20(26)
    
    
    
    Agreement and Plan of Merger dated March 21, 2000 between UTEK Corporation, Digital
Personnel, Inc. and Graphco-DPI Holding Company, Inc.10.21(27)
    
    
    
    License Agreement dated as of March 28, 2000 between Johns Hopkins University and
Zorax, Inc.10.22(28)
    
    
    
    Sponsored Research Agreement dated March 31, 2000 between Johns Hopkins University and
Zorax, Inc.10.23(29)
    
    
    
    Strategic Alliance dated December 23, 1999 between UTEK Corporation and Florida State
University Research Foundation.10.24(30)
    
    
    
    Strategic Alliance dated March, 23, 2000 between UTEK Corporation and Florida
Institute of Technology.10.25(31)
    
    
    
    Strategic Alliance dated April 14, 2000 between UTEK Corporation and Sopartec.10.26(32)
    
    
    
    Strategic Alliance dated June 1, 2000 between UTEK Corporation and Auburn University.10.27(33)
    
    
    
    Commercial Pledge and Security Agreement dated September 13, 2000 between UEK
Corporation and The Bank of Tampa.10.28(34)
    
    
    
    Merger Agreement dated September 21, 2000 between UTEK Corporation, NuElectric
Corporation. and Zorax, Inc.10.29(35)
    
    
    
    Merger Agreement dated November 29, 2000 between UTEK Corporation, Torvec, Inc., and
Ice Surface Development, Inc.10.30(36)
    
    
    
    Safekeeping Agreement dated December 12, 2000 between UTEK Corporation and Bank of
Tampa.10.31(37)
    
    
    
    Corporate Custody Agreement dated November 27, 2000 between UTEK Corporation and Bank
of Tampa.10.32(38)
    
    
    
    License Agreement dated as of February 9, 2000 between Dartmouth College and
Technology Development, Inc.10.33(39)
    
    
    
    Strategic Alliance dated December 14, 2000 between UTEK Corporation and Dartmouth
College.10.34(40)
    
    
    
    Merger Agreement dated February 19, 2000, between UTEK Corporation, Technology
Development, Inc. and The Quantum Group, Inc.10.35(41)
    
    
    
    Marketing Agreement dated April 15, 1999 between UTEK Corporation and Wolfram
Weinsheimer.10.36(42)
    
    
    
    Amendment dated March 28, 2000 to the Marketing Agreement between UTEK Corporation and
Wolfram Weinsheimer.
 55




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##### Table of Contents



10.37(43)
    
    
    
    Marketing Agreement dated December 8, 1998 between UTEK Corporation and Seth Frielich.10.38(44)
    
    
    
    Amendment dated March 28, 2000 to the Marketing Agreement between UTEK Corporation and
Seth Frielich.10.39(45)
    
    
    
    Marketing Agreement dated January 26, 1999 between UTEK Corporation and Gerald Krueger.10.40(46)
    
    
    
    Amendment dated March 29, 2000 to the Marketing Agreement between UTEK Corporation and
Gerald Krueger.10.41(47)
    
    
    
    Marketing Agreement dated November 6, 2000 between UTEK Corporation and GunnAllen
Financial.10.42(48)
    
    
    
    Marketing Agreement dated January 10, 2001 between UTEK Corporation and Schneider
Securities, Inc.10.43(50)
    
    
    
    Extension of Agreement dated January 10, 1998 between UTEK Corporation and the
University of South Florida.10.44(51)
    
    
    
    Stock Purchase Agreement dated September 28, 2001 between UTEK Corporation and PAX
Technology Transfer, Ltd.10.45(52)
    
    
    
    Strategic Alliance Agreement dated August 14, 2001 between UTEK Corporation and
BitzMart, Inc.10.46*
    
    
    
    Laurus Master Fund, Ltd. UTEK Corporation strategic alliance & confidentiality agreement23.1*
    
    
    
    Consent of Pender Newkirk &
Company, Independent Certified Public Accountants.23.2*
    
    
    
    Consent of Ernst & Young LLP,
Independent Certified Public Accountants.24.1
    
    
    
    Powers of Attorney (included on signature page).31.1*
    
    
    
    Certification of the Chief Executive Officer
pursuant to Rule 13a-14 of the Securities Exchange
Act of 1934.31.2*
    
    
    
    Certification of the Chief Financial Officer
pursuant to Rule 13a-14 of the Securities Exchange
Act of 1934.32.1*
    
    
    
    Certification of the Chief Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. Section 1350.32.2*
    
    
    
    Certification of the Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. Section 1350.99.1(53)
    
    
    
    Code of Ethics of UTEK Corporation.
   *
    
    Filed Herewith.(1)
    
    Incorporated by reference to Exhibit 3.1 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(2)
    
    Incorporated by reference to Exhibit 3.2 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(3)
    
    Incorporated by reference to Exhibit 3.3 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(4)
    
    Incorporated by reference to Exhibit 4.1 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(5)
    
    Incorporated by reference to Exhibit 4.2 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(6)
    
    Incorporated by reference to Exhibit 4.3 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(7)
    
    Incorporated by reference to Exhibit 10.1 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(8)
    
    Incorporated by reference to Exhibit 10.2 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(9)
    
    Incorporated by reference to Exhibit 10.3 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(10)
    
    Incorporated by reference to Exhibit 10.4 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(11)
    
    Incorporated by reference to Exhibit 10.5 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913). 56




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##### Table of Contents



(12)
    
    Incorporated by reference to Exhibit 10.6 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(13)
    
    Incorporated by reference to Exhibit 10.7 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(14)
    
    Incorporated by reference to Exhibit 10.8 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(15)
    
    Incorporated by reference to Exhibit 10.9 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(16)
    
    Incorporated by reference to Exhibit 10.10 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(17)
    
    Incorporated by reference to Exhibit 10.11 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(18)
    
    Incorporated by reference to Exhibit 10.12 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(19)
    
    Incorporated by reference to Exhibit 10.13 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(20)
    
    Incorporated by reference to Exhibit 10.14 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(21)
    
    Incorporated by reference to Exhibit 10.15 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(22)
    
    Incorporated by reference to Exhibit 10.16 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(23)
    
    Incorporated by reference to Exhibit 10.17 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(24)
    
    Incorporated by reference to Exhibit 10.18 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(25)
    
    Incorporated by reference to Exhibit 10.19 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(26)
    
    Incorporated by reference to Exhibit 10.20 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(27)
    
    Incorporated by reference to Exhibit 10.21 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(28)
    
    Incorporated by reference to Exhibit 10.22 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(29)
    
    Incorporated by reference to Exhibit 10.23 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(30)
    
    Incorporated by reference to Exhibit 10.24 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(31)
    
    Incorporated by reference to Exhibit 10.25 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(32)
    
    Incorporated by reference to Exhibit 10.26 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(33)
    
    Incorporated by reference to Exhibit 10.27 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(34)
    
    Incorporated by reference to Exhibit 10.28 to the Companys
registration statement on Form N-2A filed with the Commission on October
2, 2000 (File No. 333-93913).(35)
    
    Incorporated by reference to Exhibit 10.1 to the Companys report on
Form 10-Q for the quarter ended September 30, 2000.(36)
    
    Incorporated by reference to Exhibit 10.30 to the Companys report on
Form 10-K for the year ended December 31, 2000.(37)
    
    Incorporated by reference to Exhibit 10.31 to the Companys report on
Form 10-K for the year ended December 31, 2000.(38)
    
    Incorporated by reference to Exhibit 10.32 to the Companys report on
Form 10-K for the year ended December 31, 2000.(39)
    
    Incorporated by reference to Exhibit 10.33 to the Companys report on
Form 10-K for the year ended December 31, 2000.(40)
    
    Incorporated by reference to Exhibit 2 to the Companys report on
Form 8-K filed on March 6, 2001.(41)
    
    Incorporated by reference to Exhibit 10.35 to the Companys report on
Form 10-K for the year ended December 31, 2000. 57




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##### Table of Contents



(42)
    
    Incorporated by reference to Exhibit 10.36 to the Companys report on
Form 10-K for the year ended December 31, 2000.(43)
    
    Incorporated by reference to Exhibit 10.37 to the Companys report on
Form 10-K for the year ended December 31, 2000.(44)
    
    Incorporated by reference to Exhibit 10.38 to the Companys report on
Form 10-K for the year ended December 31, 2000.(45)
    
    Incorporated by reference to Exhibit 10.39 to the Companys report on
Form 10-K for the year ended December 31, 2000.(46)
    
    Incorporated by reference to Exhibit 10.40 to the Companys report on
Form 10-K for the year ended December 31, 2000.(47)
    
    Incorporated by reference to Exhibit 10.41 to the Companys report on
Form 10-K for the year ended December 31, 2000.(48)
    
    Incorporated by reference to Exhibit 10.42 to the Companys report on
Form 10-K for the year ended December 31, 2000.(49)
    
    Incorporated by reference to Exhibit 10.43 to the Companys report on
Form 10-K for the year ended December 31, 2000.(50)
    
    Incorporated by reference to Exhibit 10.44 to the Companys report on
Form 10-K for the year ended December 31, 2000.(51)
    
    Incorporated by reference to Exhibit 10.45 to the Companys report on
Form 10-K for the year ended September 30, 2001.(52)
    
    Incorporated by reference to Exhibit 10.46 to the Companys report on
Form 10-K for the year ended September 30, 2001.(53)
    
    Incorporated by reference to Exhibit 99 to the Companys report on
Form 10-K for the year ended December 31, 2000.(54)
    
    Incorporated by reference to Exhibit 99 to the Companys report on
Form 10-K for the year ended December 31, 2000.b.
    
    Reports on Form 8-K filed during the quarter ended December 31, 2003:  The Company furnished a Current Report on Form 8-K dated November 3, 2003
pursuant to Item 12 on November 3, 2003 announcing it had released a press
release of its financial results for the quarter ended September 30, 2003.The Company filed a Current Report on Form 8-K dated pursuant to Item 5 on
November 17, 2003 disclosing that it had completed a private placement
transaction of 257,000 shares of its common stock at $7.00 per share.The Company filed a Current Report on Form 8-K dated December 30, 2003,
pursuant to Item 5 on January 2, 2004 regarding the disposition of Medical
Safety Technologies, Inc., its wholly owned intellectual property holding,
to Sequiam Corporation. 58




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##### Table of Contents



SIGNATURES Pursuant to the requirements of Section 13 or 15(d) Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized on March 19, 2004. UTEK CORPORATIONBy:
    
    /s/ CLIFFORD M. GROSSClifford M. GrossChairman and Chief Executive Officer
 Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated. Signature
    
    Title(Capacity)
    
    Date/s/ CLIFFORD M. GROSS

Clifford M. Gross
    
    Chairman and Chief Executive
Officer (Principal Executive
Officer)
    
    March 18, 2004/s/ CAROLE R. WRIGHT

Carole R. Wright
    
    Chief Financial Officer (Principal
Financial and Accounting Officer)
    
    March 18, 2004/s/ SAM REIBER

Sam Reiber
    
    Director
    
    March 18, 2004/s/ STUART M. BROOKS

Stuart M. Brooks
    
    Director
    
    March 18, 2004/s/ KWABENA GYIMAH-BREMPONG

Kwabena Gyimah-Brempong
    
    Director
    
    March 18, 2004/s/ ARTHUR CHAPNIK

Arthur Chapnik
    
    Director
    
    March 18, 2004/s/ JOHN MICEK

John Micek
    
    Director
    
    March 18, 2004/s/ KEITH A. WITTER

Keith A. Witter
    
    Director
    
    March 18, 2004
 59




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##### Table of Contents



EXHIBIT INDEX The following exhibits are filed with this report in accordance with Rule
12b-32 under the Securities Exchange Act of 1934. ExhibitNo.
    
    Description10.46*
    
    Laurus Master Fund, Ltd.- UTEK
Corporation strategic alliance & confidentiality agreement23.1*
    
    Consent of Pender Newkirk &
Company, Independent Certified Public Accountants.23.2*
    
    Consent of Ernst & Young LLP,
Independent Certified Public Accountants31.1*
    
    Certification of the Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.31.2*
    
    Certification of the Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.32.1*
    
    Certification of the Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.32.2*
    
    Certification of the Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.