##### 



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

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



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FOR THE QUARTERLY PERIOD
ENDED SEPTEMBER 30, 2002

COMMISSION FILE NUMBER: 001-15941

UTEK CORPORATION
(Exact Name of Registrant as Specified in its Charter)

DELAWARE
(State or Jurisdiction of
Incorporation or Organization)

59-3603677
(IRS Employer
Identification No.)

202 S. Wheeler Street
Plant City, FL 33566
(Address of Principal Executive Offices)

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

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 12 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods as the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   YES   [X]   NO   [   ]

On November 1, 2002, there were 3,925,672 shares outstanding of the
Registrants common stock, $0.01 par value.

Page 1 of 35



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UTEK CORPORATION

FORM 10-Q INDEX

|                               |                                                                                               |                                                                                                                    |  |    |    | 
|------------------------------ | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------ |  | -- | -- | 
|PART I  FINANCIAL INFORMATION |                                                                                               |                                                                                                                    |  |   
|                               | Item 1. Financial Statements                                                                  |                                                                                                                    |  |    |   
|                               |                                                                                               | Consolidated Balance Sheets as of September 30, 2002 (unaudited) and December 31, 2001                             |  |    | 3  | 
|                               |                                                                                               | Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2002 and 2001 (unaudited)  |  |    | 4  | 
|                               |                                                                                               | Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2002 and 2001 (unaudited)            |  |    | 5  | 
|                               |                                                                                               | Consolidated Statements of Changes in Net Assets for the Nine Months Ended September 30, 2002 and 2001 (unaudited) |  |    | 6  | 
|                               |                                                                                               | Financial Highlights for the Nine Months Ended September 30, 2002 and 2001 (unaudited)                             |  |    | 7  | 
|                               |                                                                                               | Schedule of Investments as of September 30, 2002 (unaudited) and December 31, 2001                                 |  |    | 8  | 
|                               |                                                                                               | Notes to Consolidated Financial Statements                                                                         |  |    | 11 | 
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                                    |  | 17 |   
|                               | Item 3. Quantitative and Qualitative Disclosures about Market Risk                            |                                                                                                                    |  | 30 |   
|                               | Item 4. Controls and Procedures                                                               |                                                                                                                    |  | 30 |   
|PART II  OTHER INFORMATION    |                                                                                               |                                                                                                                    |  |   
|                               | Item 1. Legal Proceedings                                                                     |                                                                                                                    |  | 30 |   
|                               | Item 2. Changes in Securities and Use of Proceeds                                             |                                                                                                                    |  | 30 |   
|                               | Item 3. Defaults Upon Senior Securities                                                       |                                                                                                                    |  | 30 |   
|                               | Item 4. Submission of Matters to a Vote of Security Holders                                   |                                                                                                                    |  | 30 |   
|                               | Item 5. Other Information                                                                     |                                                                                                                    |  | 30 |   
|                               | Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                                    |  | 31 |   
|                               | Signatures                                                                                    |                                                                                                                    |  | 32 |   
|                               | Certifications                                                                                |                                                                                                                    |  | 33 |   
|                               | Exhibits                                                                                      |                                                                                                                    |  |    |   

Page 2 of 35



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##### 



PART I  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UTEK Corporation
Consolidated Balance Sheets

|                              |  |                                                                                                                                                                                            |                                                                          |   |               |            |              |   |           |            |  
|----------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------ | - | ------------- | ---------- | ------------ | - | --------- | ---------- | -
|                              |  |                                                                                                                                                                                            |                                                                          |   | September 30, |            | December 31,
|                              |  |                                                                                                                                                                                            |                                                                          |   | 2002          |            | 2001        
|                              |  |                                                                                                                                                                                            |                                                                          |   |               |            |             
|                              |  |                                                                                                                                                                                            |                                                                          |   | (Unaudited)   |            |              |   |          
|ASSETS                        |  |                                                                                                                                                                                            |                                                                          |   |               |            |              |  
|                              |  | Investments in non-controlled affiliates
(cost $11,130,495 and $10,018,958 at September 30,
2002 and December 31, 2001, respectively)                                                      |                                                                          | $ | 7,182,595     |            |              | $ | 9,988,772 |           
|                              |  | Cash and cash equivalents                                                                                                                                                                  |                                                                          |   | 497,252       |            |              |   | 1,432,473 |           
|                              |  | Short-term marketable securities                                                                                                                                                           |                                                                          |   |              |            |              |   | 282,284   |           
|                              |  | Prepaid expenses and other assets                                                                                                                                                          |                                                                          |   | 144,956       |            |              |   | 192,450   |           
|                              |  | Fixed assets, net                                                                                                                                                                          |                                                                          |   | 137,611       |            |              |   | 88,286    |           
|                              |  | Intangible assets                                                                                                                                                                          |                                                                          |   | 460,922       |            |              |   | 426,693   |           
|                              |  |                                                                                                                                                                                            |                                                                          |   |               |            |              |  
|                              |  |                                                                                                                                                                                            | TOTAL ASSETS                                                             |   |               | 8,423,336  |              |   |           | 12,410,958 |  
|                              |  |                                                                                                                                                                                            |                                                                          |   |               |            |              |  
|LIABILITIES                   |  |                                                                                                                                                                                            |                                                                          |   |               |            |              |  
|                              |  | Accrued expenses                                                                                                                                                                           |                                                                          |   | 86,697        |            |              |   | 90,125    |           
|                              |  | Deferred revenue                                                                                                                                                                           |                                                                          |   | 114,644       |            |              |   | 523,406   |           
|                              |  | Deferred income taxes                                                                                                                                                                      |                                                                          |   | 503,359       |            |              |   | 1,887,987 |           
|                              |  |                                                                                                                                                                                            |                                                                          |   |               |            |              |  
|                              |  |                                                                                                                                                                                            | TOTAL LIABILITIES                                                        |   |               | 704,700    |              |   |           | 2,501,518  |  
|                              |  |                                                                                                                                                                                            |                                                                          |   |               |            |              |  
|                              |  |                                                                                                                                                                                            | NET ASSETS                                                               |   | $             | 7,718,636  |              |   | $         | 9,909,440  |  
|                              |  |                                                                                                                                                                                            |                                                                          |   |               |            |              |  
|Commitments and Contingencies |  |                                                                                                                                                                                            |                                                                          |   |               |            |              |  
|Composition of net assets:    |  |                                                                                                                                                                                            |                                                                          |   |               |            |              |  
|                              |  | Common stock, $.01 par value, 19,000,000
shares authorized; 3,925,672 shares issued
and outstanding at September 30, 2002 and
3,915,672 shares issued and outstanding
at December 31, 2001 |                                                                          | $ | 39,257        |            |              | $ | 39,157    |           
|                              |  | Preferred stock, $.01 par value, 1,000,000 shares
authorized; none issued and outstanding                                                                                                  |                                                                          |   |              |            |              |   |          |           
|                              |  | Additional paid in capital                                                                                                                                                                 |                                                                          |   | 7,058,941     |            |              |   | 6,988,141 |           
|                              |  | Accumulated income:                                                                                                                                                                        |                                                                          |   |               |            |              |   |           |           
|                              |  |                                                                                                                                                                                            | Accumulated net operating income                                         |   |               | 3,242,569  |              |   |           | 2,969,294  |  
|                              |  |                                                                                                                                                                                            | Net realized loss on investments,
net of income taxes                    |   |               | (199,826   | )            |   |           | (62,863    | )
|                              |  |                                                                                                                                                                                            | Net unrealized depreciation of investments,
net of deferred income taxes |   |               | (2,462,304 | )            |   |           | (18,827    | )
|                              |  |                                                                                                                                                                                            | Foreign currency translation adjustment                                  |   |               | 39,999     |              |   |           | (5,462     | )
|                              |  |                                                                                                                                                                                            |                                                                          |   |               |            |              |  
|Net assets                    |  | $                                                                                                                                                                                          | 7,718,636                                                                |   |               | $          | 9,909,440    |  
|                              |  |                                                                                                                                                                                            |                                                                          |   |               |            |              |  
|Net asset value per share     |  | $                                                                                                                                                                                          | 1.97                                                                     |   |               | $          | 2.53         |  
|                              |  |                                                                                                                                                                                            |                                                                          |   |               |            |              |  

See accompanying notes

Page 3 of 35



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##### 



UTEK Corporation
Consolidated Statements of Operations
(Unaudited)

|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          |                                  |           |                                 |            |         |           |            |            |           |           |           |            |           |           |  
|----------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | -------- | -------------------------------- | --------- | ------------------------------- | ---------- | ------- | --------- | ---------- | ---------- | --------- | --------- | --------- | ---------- | --------- | --------- | -
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          | Three Months Ended September 30, |           | Nine Months Ended September 30,
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          |                                  |           |                                
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          | 2002                             |           | 2001                            |            | 2002    |           | 2001      
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          |                                  |           |                                 |            |         |           |           
|Income from operations:                               |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          |                                  |           |                                 |            |         |           |            |            |           |           |           |           
|                                                      |                                                                                                                                                                                                                                                                                        | Sale of technology rights                                                                                                                                                                                                              |          | $        | 465,150                          |           |                                 | $          | 336,000 |           |            | $          | 2,088,254 |           |           | $          | 3,419,653 |          
|                                                      |                                                                                                                                                                                                                                                                                        | Consulting fees                                                                                                                                                                                                                        |          |          | 221,596                          |           |                                 |            | 231,000 |           |            |            | 796,009   |           |           |            | 231,000   |          
|                                                      |                                                                                                                                                                                                                                                                                        | Investment income, net                                                                                                                                                                                                                 |          |          | 2,082                            |           |                                 |            | 32,986  |           |            |            | 31,779    |           |           |            | 112,492   |          
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          |                                  |           |                                 |            |         |           |            |            |           |           |           |           
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        | 688,828  |          |                                  |           | 599,986                         |            |         |           | 2,916,042  |            |           |           | 3,763,145 |           
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          |                                  |           |                                 |            |         |           |            |            |           |           |           |           
|Expenses:                                             |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          |                                  |           |                                 |            |         |           |            |            |           |           |           |           
|                                                      |                                                                                                                                                                                                                                                                                        | Salaries and wages                                                                                                                                                                                                                     |          |          | 180,261                          |           |                                 |            | 116,837 |           |            |            | 599,238   |           |           |            | 338,408   |          
|                                                      |                                                                                                                                                                                                                                                                                        | Professional fees                                                                                                                                                                                                                      |          |          | 116,090                          |           |                                 |            | 60,797  |           |            |            | 427,851   |           |           |            | 295,398   |          
|                                                      |                                                                                                                                                                                                                                                                                        | Sales and marketing                                                                                                                                                                                                                    |          |          | 173,137                          |           |                                 |            | 88,261  |           |            |            | 613,280   |           |           |            | 791,401   |          
|                                                      |                                                                                                                                                                                                                                                                                        | General and administrative                                                                                                                                                                                                             |          |          | 176,814                          |           |                                 |            | 155,914 |           |            |            | 830,339   |           |           |            | 479,038   |          
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          |                                  |           |                                 |            |         |           |            |            |           |           |           |           
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        | 646,302  |          |                                  |           | 421,809                         |            |         |           | 2,470,708  |            |           |           | 1,904,245 |           
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          |                                  |           |                                 |            |         |           |            |            |           |           |           |           
|Income before income taxes                            |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        | 42,526   |          |                                  |           | 178,177                         |            |         |           | 445,334    |            |           |           | 1,858,900 |           
|Provision for income taxes                            |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        | 15,851   |          |                                  |           | 66,343                          |            |         |           | 172,059    |            |           |           | 701,755   |           
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          |                                  |           |                                 |            |         |           |            |            |           |           |           |           
|                                                      |                                                                                                                                                                                                                                                                                        | Net income from operations                                                                                                                                                                                                             |          |          | 26,675                           |           |                                 |            | 111,834 |           |            |            | 273,275   |           |           |            | 1,157,145 |          
|Net realized and unrealized losses:                   |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          |                                  |           |                                 |            |         |           |            |            |           |           |           |           
|                                                      |                                                                                                                                                                                                                                                                                        | Net realized loss on
investments, net of income tax
benefit of $20,786 and $82,640
for the three and nine months
ended September 30, 2002 and
$49,339 and $50,136 for the
three and nine months ended
September 30, 2001,
respectively |          |          | (34,444                          | )         |                                 |            | (81,778 | )         |            |            | (136,963  | )         |           |            | (83,098   | )        
|                                                      | Change in unrealized
depreciation of non-controlled
affiliate investments, net of
deferred tax benefit of $446,797
and $1,474,047for the three and
nine months ended September 30,
2002 and $898,288 and $705,102
for the three and nine months
ended September 30, 2001,
respectively |                                                                                                                                                                                                                                        |          | (740,546 | )                                |           |                                 | (1,488,871 | )       |           |            | (2,443,477 | )         |           |           | (1,168,675 | )        
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          |                                  |           |                                 |            |         |           |            |            |           |           |           |           
|Net decrease in net assets from
operations            |                                                                                                                                                                                                                                                                                        | $                                                                                                                                                                                                                                      | (748,315 | )        |                                  | $         | (1,458,815                      | )          |         | $         | (2,307,165 | )          |           | $         | (94,628   | )         
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          |                                  |           |                                 |            |         |           |            |            |           |           |           |           
|Net decrease in net assets from
operations per share: |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          |                                  |           |                                 |            |         |           |            |            |           |           |           |           
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        | Basic    |          | $                                | (0.19     | )                               |            | $       | (.38      | )          |            | $         | (0.59     | )         |            | $         | (.02      | )
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        | Diluted  |          | $                                | (0.19     | )                               |            | $       | (.38      | )          |            | $         | (0.59     | )         |            | $         | (.02      | )
|Weighted average shares:                              |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        |          |          |                                  |           |                                 |            |         |           |            |            |           |           |           |           
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        | Basic    |          |                                  | 3,925,672 |                                 |            |         | 3,857,505 |            |            |           | 3,920,141 |           |            |           | 3,815,725 |  
|                                                      |                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                        | Diluted  |          |                                  | 3,925,672 |                                 |            |         | 3,857,505 |            |            |           | 3,920,141 |           |            |           | 3,815,725 |  

See accompanying notes

Page 4 of 35



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UTEK Corporation
Consolidated Statements of Cash Flows
(Unaudited)

|                                                          |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |         |            |            |         |  
|--------------------------------------------------------- | ---------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | --------------------------------- | ---------- | --------------------------------------- | ---------- | ------- | ---------- | ---------- | ------- | -
|                                                          |                                                                  |                                                                                                                              |                                                                   |                                   |            | For the Nine Months Ended September 30,
|                                                          |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                        
|                                                          |                                                                  |                                                                                                                              |                                                                   |                                   |            | 2002                                    |            | 2001   
|                                                          |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |        
|Operating Activities:                                     |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |        
|                                                          |                                                                  | Net increase (decrease) in net assets from operations                                                                        |                                                                   | $                                 | (2,307,165 | )                                       |            | $       | (94,628    | )         
|                                                          |                                                                  | Adjustments to reconcile net increase (decrease)
in net assets from operations to net cash
provided by operating activities: |                                                                   |                                   |            |                                         |            |         |            |           
|                                                          |                                                                  |                                                                                                                              | (Increase) decrease in net unrealized depreciation
of investments |                                   |            | 3,917,714                               |            |         |            | 1,830,460  |        
|                                                          |                                                                  |                                                                                                                              | Depreciation                                                      |                                   |            | 25,489                                  |            |         |            | 18,267     |        
|                                                          |                                                                  |                                                                                                                              | Loss on disposal of fixed asset                                   |                                   |            | 1,024                                   |            |         |            |           |        
|                                                          |                                                                  |                                                                                                                              | Loss on sale of investments                                       |                                   |            | 219,603                                 |            |         |            | 133,233    |        
|                                                          |                                                                  |                                                                                                                              | Deferred income taxes                                             |                                   |            | (1,384,628                              | )          |         |            | (53,482    | )      
|                                                          |                                                                  |                                                                                                                              | Investment securities received for sale of portfolio companies    |                                   |            | (2,088,254                              | )          |         |            | (3,419,653 | )      
|                                                          |                                                                  |                                                                                                                              | Services rendered in exchange for investment securities           |                                   |            | (445,562                                | )          |         |            | (231,000   | )      
|                                                          |                                                                  |                                                                                                                              | Changes in operating assets and liabilities:                      |                                   |            |                                         |            |         |            |            |        
|                                                          |                                                                  |                                                                                                                              |                                                                   | Prepaid expenses and other assets |            |                                         | 12,782     |         |            |            | 54,287  |  
|                                                          |                                                                  |                                                                                                                              |                                                                   | Accrued expenses                  |            |                                         | (3,428     | )       |            |            | (55,136 | )
|                                                          |                                                                  |                                                                                                                              |                                                                   | Deferred revenue                  |            |                                         | (8,760     | )       |            |            |        |  
|                                                          |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |        
|                                                          |                                                                  | Net cash used in operating activities                                                                                        |                                                                   |                                   | (2,061,185 | )                                       |            |         | (1,817,652 | )         
|                                                          |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |        
|Investing Activities:                                     |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |        
|                                                          |                                                                  | Proceeds received on sale of investments                                                                                     |                                                                   |                                   | 1,084,958  |                                         |            |         | 362,208    |           
|                                                          |                                                                  | Purchase of investment securities                                                                                            |                                                                   |                                   |            |                                         |            |         | (474,450   | )         
|                                                          |                                                                  | Purchases of fixed assets                                                                                                    |                                                                   |                                   | (4,455     | )                                       |            |         | (24,003    | )         
|                                                          |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |        
|                                                          |                                                                  | Net cash provided by (used in) investing activities                                                                          |                                                                   |                                   | 1,080,503  |                                         |            |         | (136,245   | )         
|                                                          |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |        
|Financing Activities:                                     |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |        
|                                                          |                                                                  | Proceeds from issuance of common stock                                                                                       |                                                                   |                                   |           |                                         |            |         | 403,150    |           
|                                                          |                                                                  | Repayments on short-term borrowings                                                                                          |                                                                   |                                   |           |                                         |            |         | (39,975    | )         
|                                                          |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |        
|                                                          |                                                                  | Net cash provided by financing activities                                                                                    |                                                                   |                                   |           |                                         |            |         | 363,175    |           
|                                                          |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |        
|Foreign currency translation adjustment                   |                                                                  |                                                                                                                              | 45,461                                                            |                                   |            |                                         |           |        
|Decrease in cash and cash equivalents                     |                                                                  |                                                                                                                              | (935,221                                                          | )                                 |            |                                         | (1,590,722 | )      
|Cash and cash equivalents at beginning of period          |                                                                  |                                                                                                                              | 1,432,473                                                         |                                   |            |                                         | 3,952,280  |        
|                                                          |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |        
|Cash and cash equivalents at end of period                |                                                                  | $                                                                                                                            | 542,713                                                           |                                   |            | $                                       | 2,361,558  |        
|                                                          |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |        
|Supplemental Disclosures of Non-Cash Investing Activities |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |        
|                                                          | Acquisition of Techex Acquisition Corporation                    |                                                                                                                              | $                                                                 | 70,900                            |            |                                         | $          |        |           
|                                                          |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |        
|                                                          | Acquisition of PAX Technology Transfer Ltd, net of cash acquired |                                                                                                                              | $                                                                 |                                  |            |                                         | $          | 412,467 |           
|                                                          |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |        
|                                                          | Stock Received in Settlement of Receivable                       |                                                                                                                              | $                                                                 |                                  |            |                                         | $          | 39,615  |           
|                                                          |                                                                  |                                                                                                                              |                                                                   |                                   |            |                                         |            |        

See accompanying notes

Page 5 of 35



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##### 



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

|                                       |                                                                                        |                                            |                                                            |            |                                 |        |           |            |         |         | 
|-------------------------------------- | -------------------------------------------------------------------------------------- | ------------------------------------------ | ---------------------------------------------------------- | ---------- | ------------------------------- | ------ | --------- | ---------- | ------- | ------- | 
|                                       |                                                                                        |                                            |                                                            |            | Nine
Months Ended September 30,
|                                       |                                                                                        |                                            |                                                            |            |                                
|                                       |                                                                                        |                                            |                                                            |            | 2002                            |        | 2001     
|                                       |                                                                                        |                                            |                                                            |            |                                 |        |          
|Changes in net assets from operations: |                                                                                        |                                            |                                                            |            |                                 |        |           |           
|                                       | Net income from operations                                                             |                                            | $                                                          | 273,275    |                                 |        | $         | 1,157,145  |        
|                                       | Net realized loss on sale of investments, net of income tax benefit                    |                                            |                                                            | (136,963   | )                               |        |           | (83,098    | )      
|                                       | Change in net unrealized depreciation of
investments, net of deferred taxes            |                                            |                                                            | (2,443,477 | )                               |        |           | (1,168,675 | )      
|                                       |                                                                                        |                                            |                                                            |            |                                 |        |           |           
|                                       |                                                                                        | Net decrease in net assets from operations |                                                            |            | (2,307,165                      | )      |           |            | (94,628 | )      
|                                       |                                                                                        |                                            |                                                            |            |                                 |        |           |           
|Capital stock transactions:            |                                                                                        |                                            |                                                            |            |                                 |        |           |           
|                                       | 73,986 shares of common stock issued for cash                                          |                                            |                                                            |           |                                 |        |           | 375,617    |        
|                                       | 59,460 shares issued for acquisition of PAX Technology Transfer Ltd.                   |                                            |                                                            |           |                                 |        |           | 440,000    |        
|                                       | 10,000 shares of common stock issued for acquisition of Techex
Acquisition Corporation |                                            |                                                            | 70,900     |                                 |        |           |           |        
|                                       |                                                                                        |                                            |                                                            |            |                                 |        |           |           
|                                       |                                                                                        |                                            | Net increase in net assets from capital stock transactions |            |                                 | 70,900 |           |            |         | 815,617 | 
|                                       |                                                                                        |                                            |                                                            |            |                                 |        |           |           
|Foreign currency exchange adjustment   |                                                                                        |                                            | 45,461                                                     |            |                                 |        |          |           
|                                       |                                                                                        |                                            |                                                            |            |                                 |        |           |           
|Net increase (decrease) in net assets  |                                                                                        |                                            | (2,190,804                                                 | )          |                                 |        | 720,989   |           
|Net assets at beginning of year        |                                                                                        |                                            | 9,909,440                                                  |            |                                 |        | 8,455,002 |           
|                                       |                                                                                        |                                            |                                                            |            |                                 |        |           |           
|Net assets at end of period            |                                                                                        | $                                          | 7,718,636                                                  |            |                                 | $      | 9,175,991 |           
|                                       |                                                                                        |                                            |                                                            |            |                                 |        |           |           

See accompanying notes

Page 6 of 35



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##### 



UTEK Corporation
Financial Highlights
(Unaudited)

|                                                                        |                                                                                   |   |                                 |      |      |   |           |       |  
|----------------------------------------------------------------------- | --------------------------------------------------------------------------------- | - | ------------------------------- | ---- | ---- | - | --------- | ----- | -
|                                                                        |                                                                                   |   | Nine
Months Ended September 30,
|                                                                        |                                                                                   |   |                                
|                                                                        |                                                                                   |   | 2002                            |      | 2001
|                                                                        |                                                                                   |   |                                 |      |     
|PER SHARE INFORMATION                                                   |                                                                                   |   |                                 |      |      |   |           |      
|Net asset value, beginning of period                                    |                                                                                   | $ | 2.53                            |      |      | $ | 2.24      |      
|                                                                        | Net increase from operations (1)                                                  |   |                                 | 0.07 |      |   |           | 0.30  |  
|                                                                        | Net change in realized and unrealized
(depreciation) on investments (after taxes) |   |                                 | (.65 | )    |   |           | (0.41 | )
|                                                                        | Net increase from capital stock transactions                                      |   |                                 | 0.02 |      |   |           | 0.21  |  
|                                                                        |                                                                                   |   |                                 |      |      |   |           |      
|Net asset value, end of period                                          |                                                                                   | $ | 1.97                            |      |      | $ | 2.34      |      
|                                                                        |                                                                                   |   |                                 |      |      |   |           |      
|Per share market value, end of period                                   |                                                                                   | $ | 7.10                            |      |      | $ | 7.40      |      
|                                                                        |                                                                                   |   |                                 |      |      |   |           |      
|RATIOS/SUPPLEMENTAL DATA                                                |                                                                                   |   |                                 |      |      |   |           |      
|Net assets, end of period                                               |                                                                                   | $ | 7,718,636                       |      |      | $ | 9,175,991 |      
|Ratio of expenses to average net assets (2)(3)                          |                                                                                   |   | 29                              | %    |      |   | 22        | %    
|Ratio of net income to average net assets (3)                           |                                                                                   |   | 3                               | %    |      |   | 13        | %    
|Diluted weighted average number of shares
outstanding during the period |                                                                                   |   | 3,920,141                       |      |      |   | 3,815,725 |      



---

|(1) |  | Calculated based on diluted weighted average number of shares
outstanding during the period.
|--- |  | --------------------------------------------------------------------------------------------
|   
|(2) |  | Excluding income taxes                                                                      
|   
|(3) |  | Ratios are on an annualized basis                                                           

See accompanying notes

Page 7 of 35



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##### 



UTEK CORPORATION
Schedule of Investments
September 30, 2002
(Unaudited)

|          |  |             |       |  |  |                                                                       |  |          |            |       |  |   |           |  |  | 
|--------- |  | ----------- | ----- |  |  | --------------------------------------------------------------------- |  | -------- | ---------- | ----- |  | - | --------- |  |  | 
|          |  | Original    |       |  |  |                                                                       |  |          |            |       |  |   |           | 
|          |  | Date of     |       |  |  |                                                                       |  | Original |            | Fair 
|Shares    |  | Acquisition |       |  |  |                                                                       |  | Cost     |            | Value
|          |  |             |       |  |  |                                                                       |  |          |            |      
|          |  |             |       |  |  | Common stock in non-controlled affiliates93.1%                       |  |          |            |       |  |   |           | 
|236,000   |  |             | 3/01  |  |  | Lexon, Inc.,publicly traded over the counter 0%;                     |  | $        | 39,614     |       |  | $ |          | 
|          |  |             |       |  |  | developer of health care technology                                   |  |          |            |       |  |   |           | 
|1,344,300 |  |             | 1/99  |  |  | Image Analysis, Inc., privately held 16.9%; medical and              |  |          | 1,349,775  |       |  |   | 1,303,971 | 
|          |  |             |       |  |  | hospital equipment developer                                          |  |          |            |       |  |   |           | 
|1,418,400 |  |             | 5/99  |  |  | Centrex, Inc., publicly traded over the counter5.9%;                 |  |          | 468,072    |       |  |   | 453,888   | 
|          |  |             |       |  |  | developer of water and purification methodologies                     |  |          |            |       |  |   |           | 
|900,000   |  |             | 5/99  |  |  | Nubar, Inc., privately held0%; developer of construction materials   |  |          | 126,000    |       |  |   |          | 
|1,037,957 |  |             | 6/99  |  |  | Clean Water Technologies, Inc. (formerly NuElectric Corporation),     |  |          | 590,388    |       |  |   | 114,175   | 
|          |  |             |       |  |  | publicly traded over the counter1.5%; environmental services.        |  |          |            |       |  |   |           | 
|150       |  |             | 11/99 |  |  | Rosbon, LLC (formerly Rosbon, Inc.), privately held1.0%;             |  |          | 90,705     |       |  |   | 75,945    | 
|          |  |             |       |  |  | real estate development                                               |  |          |            |       |  |   |           | 
|100,799   |  |             | 3/00  |  |  | Graphco Technologies, Inc., privately held0%; developer              |  |          | 952,551    |       |  |   |          | 
|          |  |             |       |  |  | of e-commerce technologies                                            |  |          |            |       |  |   |           | 
|2,268,053 |  |             | 6/00  |  |  | Advanced Recycling Sciences, Inc., (formerly The Quantum              |  |          |            |       |  |   |           | 
|          |  |             |       |  |  | Group, Inc.),publicly traded over the counter10.9%; tire             |  |          |            |       |  |   |           | 
|          |  |             |       |  |  | recycling methodologies                                               |  |          | 2,111,892  |       |  |   | 839,180   | 
|630,466   |  |             | 11/00 |  |  | Torvec, Inc., publicly traded over the counter6.8%;                  |  |          |            |       |  |   |           | 
|          |  |             |       |  |  | advanced automotive technologies 1,267,237 523,287                    |  |          |            |       |  |   |           | 
|641,667   |  |             | 4/01  |  |  | BitzMart, Inc., privately held 34.1%; software products              |  |          | 1,658,000  |       |  |   | 2,637,546 | 
|1,694,558 |  |             | 5/01  |  |  | Sense Holdings, Inc., publicly traded over the counter6.8%;          |  |          | 440,585    |       |  |   | 525,313   | 
|          |  |             |       |  |  | biometric technologies                                                |  |          |            |       |  |   |           | 
|1,493,550 |  |             | 9/01  |  |  | Prime Pharmaceutical Corporation, privately held1.4%;                |  |          | 783,344    |       |  |   | 109,029   | 
|          |  |             |       |  |  | pharmaceutical developments in dermatology                            |  |          |            |       |  |   |           | 
|1,000,000 |  |             | 11/01 |  |  | Primapharm Funding Corporation, privately held1.3%; intellectual     |  |          | 417,316    |       |  |   | 100,000   | 
|          |  |             |       |  |  | property development                                                  |  |          |            |       |  |   |           | 
|400,000   |  |             | 11/01 |  |  | Palladium Communications, Inc. (formerly USAOnestar.Net               |  |          |            |       |  |   |           | 
|          |  |             |       |  |  | Inc.), publicly traded over the counter -0%; telecom,                 |  |          | 12,028     |       |  |   |          | 
|          |  |             |       |  |  | educational internet service                                          |  |          |            |       |  |   |           | 
|47,615    |  |             | 1/02  |  |  | Group Management Corporation,publicly traded over the counter        |  |          |            |       |  |   |           | 
|          |  |             |       |  |  | .1%; corporate management                                             |  |          | 46,949     |       |  |   | 1,714     | 
|2,832,000 |  |             | 1/02  |  |  | Circle Group Internet, Inc.,publicly traded over the counter, 3.0%;  |  |          |            |       |  |   |           | 
|          |  |             |       |  |  | digital design and consulting                                         |  |          | 357,754    |       |  |   | 233,640   | 
|633,750   |  |             | 2/02  |  |  | Voice and Wireless Corporation, publicly traded over the              |  |          |            |       |  |   |           | 
|          |  |             |       |  |  | counter, .5%; internet/technology services and products              |  |          | 53,161     |       |  |   | 43,095    | 
|48,000    |  |             | 4/02  |  |  | Hydrogen Technology Applications, Inc.,privately held,  0%;          |  |          |            |       |  |   |           | 
|          |  |             |       |  |  | developer of energy technology                                        |  |          | 14,040     |       |  |   |          | 
|255,750   |  |             | 6/02  |  |  | FullCircle Registry, Inc.,publicly traded over the counter, 2.5%;    |  |          |            |       |  |   |           | 
|          |  |             |       |  |  | developer of emergency information technology                         |  |          | 321,084    |       |  |   | 191,812   | 
|120,000   |  |             | 9/02  |  |  | Innovative Medical Services, Inc., publicly traded  over the counter, |  |          |            |       |  |   |           | 
|          |  |             |       |  |  | .4% developer of anti-microbial technology                           |  |          | 30,000     |       |  |   | 30,000    | 
|          |  |             |       |  |  |                                                                       |  |          |            |       |  |   |           |  |  | 
|          |  |             |       |  |  | TOTAL INVESTMENTS93.1%                                               |  | $        | 11,130,495 |       |  | $ | 7,182,595 | 
|          |  |             |       |  |  |                                                                       |  |          |            |       |  |   |           |  |  | 
|          |  |             |       |  |  | Cash and other assets, less liabilities6.9%                          |  |          |            |       |  |   | 536,041   | 
|          |  |             |       |  |  |                                                                       |  |          |            |       |  |   |           |  |  | 
|          |  |             |       |  |  | Net assets at September 30, 2002--100%                                |  |          |            |       |  | $ | 7,718,636 | 
|          |  |             |       |  |  |                                                                       |  |          |            |       |  |   |           |  |  | 

Notes to Schedule of Investments:



| | o |  | 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.                                                                                                                                                                                                                                                                                                                                                                   
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | o |  | The value of all securities for which there are no readily ascertainable market values 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 expert. (Notes 1 and 2).                                                                                                                                                                                                                                                                    
|
| | o |  | As of September 30, 2002, all of the investment securities that we own are restricted securities, as that
term is defined under Rule 144 of the Securities Act of 1933. These securities may not be sold in the absence of registration under the Securities
Act of 1933 or an exemption therefrom. As a result, our ability to sell or otherwise transfer the securities we hold in our portfolio is limited.                                                                                                                                                       
|
| | o |  | The Company owns more than 10% of the outstanding common stock of each of the above investments with the exception of Full Circle Registry, Inc.,
Centrex, Inc., Graphco Technologies, Inc., Torvec, Inc., Lexon, Inc., Voice and Wireless Corporation, Palladium Communications, Inc., Hydrogen
Technology Applications, Inc., Innovative Medical Services, Inc. and Group Management Corporation. As such, the Company is deemed to be an affiliate
of these companies, as defined under Rule 144 of the Securities Act of 1933, except for those specifically noted.

Page 8 of 35



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##### 



UTEK Corporation
Schedule of Investments
December 31, 2001

|          |  |             |       |  |  |                                                           |  |          |            |       |  |   |           |   | 
|--------- |  | ----------- | ----- |  |  | --------------------------------------------------------- |  | -------- | ---------- | ----- |  | - | --------- | - | 
|          |  | Original    |       |  |  |                                                           |  |          |            |       |  |   |           |  
|          |  | Date of     |       |  |  |                                                           |  | Original |            | Fair 
|Shares    |  | Acquisition |       |  |  |                                                           |  | Cost     |            | Value
|          |  |             |       |  |  |                                                           |  |          |            |      
|          |  |             |       |  |  | Common stock in non-controlled affiliates 100.8%         |  |          |            |       |  |   |           |  
|236,000   |  |             | 3/01  |  |  | Lexon, Inc. publicly traded over the                     |  |          |            |       |  |   |           |  
|          |  |             |       |  |  | counter  .2%; developer of health care technology        |  | $        | 39,614     |       |  | $ | 21,240    |  
|879,300   |  |             | 1/99  |  |  | Image Analysis, Inc., privately held  17.2%;             |  |          |            |       |  |   |           |  
|          |  |             |       |  |  | medical and hospital equipment developer                  |  |          | 219,825    |       |  |   | 1,705,842 |  
|1,584,000 |  |             | 5/99  |  |  | Centrex, Inc., publicly traded over the counter  15.7%;  |  |          |            |       |  |   |           |  
|          |  |             |       |  |  | developer of water and purification methodologies         |  |          | 522,720    |       |  |   | 1,552,320 |  
|900,000   |  |             | 5/99  |  |  | Nubar, Inc., privately held  0%;  developer              |  |          |            |       |  |   |           |  
|          |  |             |       |  |  | of construction materials                                 |  |          | 126,000    |       |  |   |          |  
|1,037,957 |  |             | 6/99  |  |  | NuElectric Corporation,publicly traded over the counter  |  |          |            |       |  |   |           |  
|          |  |             |       |  |  | 3.8%; environmental services                              |  |          | 590,388    |       |  |   | 373,665   |  
|150       |  |             | 11/99 |  |  | Rosbon, Inc., privately held  0.8%;                      |  |          |            |       |  |   |           |  
|          |  |             |       |  |  | real estate development                                   |  |          | 90,705     |       |  |   | 76,768    |  
|100,799   |  |             | 3/00  |  |  | Graphco Technologies, Inc., privately held  5.1%;        |  |          |            |       |  |   |           |  
|          |  |             |       |  |  | developer of e-commerce technologies                      |  |          | 952,362    |       |  |   | 511,050   |  
|2,326,153 |  |             | 6/00  |  |  | Advanced Recycling Sciences, Inc., (formerly The Quantum  |  |          |            |       |  |   |           |  
|          |  |             |       |  |  | Group, Inc.), publicly traded over the                    |  |          |            |       |  |   |           |  
|          |  |             |       |  |  | counter  10.6%; tire recycling methodologies             |  |          | 2,158,952  |       |  |   | 1,046,769 |  
|1,068,354 |  |             | 11/00 |  |  | Torvec, Inc., publicly traded over the counter  8.7%;    |  |          |            |       |  |   |           |  
|          |  |             |       |  |  | advanced automotive technologies                          |  |          | 2,147,392  |       |  |   | 865,367   |  
|641,667   |  |             | 4/01  |  |  | Bitzmart, Inc.,privately held  18.8%; software products  |  |          | 1,658,000  |       |  |   | 1,867,251 |  
|1,850,000 |  |             | 5/01  |  |  | Sense Holdings, Inc.,publicly traded over the counter    |  |          |            |       |  |   |           |  
|          |  |             |       |  |  | 10.3%; biometric technologies                             |  |          | 481,000    |       |  |   | 1,017,500 |  
|810,000   |  |             | 9/01  |  |  | Prime Pharmaceutical Corporation,privately held -         |  |          |            |       |  |   |           |  
|          |  |             |       |  |  | 4.1%; pharmaceutical developments in dermatology          |  |          | 486,000    |       |  |   | 405,000   |  
|1,000,000 |  |             | 11/01 |  |  | Primapharm Funding Corporation,privately held -           |  |          |            |       |  |   |           |  
|          |  |             |       |  |  | 4.9%; intellectual property development                   |  |          | 490,000    |       |  |   | 490,000   |  
|400,000   |  |             | 11/01 |  |  | Palladium Communications, Inc.,(formerly                  |  |          |            |       |  |   |           |  
|          |  |             |       |  |  | USAOnestar.Net Inc),publicly traded over the              |  |          |            |       |  |   |           |  
|          |  |             |       |  |  | counter - .6%; telecom educational internet service       |  |          | 56,000     |       |  |   | 56,000    |  
|          |  |             |       |  |  |                                                           |  |          |            |       |  |   |           |   | 
|          |  |             |       |  |  | TOTAL INVESTMENTS  100.8%                                |  | $        | 10,018,958 |       |  | $ | 9,988,772 |  
|          |  |             |       |  |  |                                                           |  |          |            |       |  |   |           |   | 
|          |  |             |       |  |  | Cash and other assets, less liabilities  (.8)%           |  |          |            |       |  |   | (79,332   | )
|          |  |             |       |  |  |                                                           |  |          |            |       |  |   |           |   | 
|          |  |             |       |  |  | Net assets at December 31, 2001  100%                    |  |          |            |       |  | $ | 9,904,440 |  
|          |  |             |       |  |  |                                                           |  |          |            |       |  |   |           |   | 

Notes to Schedule of Investments:



| | o |  | The above investments are non-income producing. Equity
investments that have not paid dividends within the last twelve
months are considered non-income producing.                                                                                                                                                                                                                                        
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | o |  | The value of all restricted securities is determined in good
faith by the Board of Directors. In making its determination, the
Board of Directors may consider valuation appraisals provided by
independent financial experts. (Notes 1 and 2).                                                                                                                                                           
|
| | o |  | As of December 31, 2001, all of the securities that we have
received in exchange for our portfolio companies are restricted
securities, as that term is defined under Rule 144. These
securities may not be sold in the absence of registration under the
1933 Act or an exemption therefrom. As a result, our ability to sell
or otherwise transfer the securities we hold in our portfolio is
limited.
|
| | o |  | The Company owns more than 10% of the outstanding common
stock of each of the above investments with the exception of Graphco
Technologies, Inc., Torvec, Inc., Lexon, Inc., and Prime
Pharmaceutical Corporation. As such, the Company is deemed to be an
affiliate of the above companies, as defined under Rule 144, except
for those specifically noted.                                              

See accompanying notes

Page 10 of 35



---



##### 



UTEK Corporation
Notes to Consolidated Financial Statements

(Information as of September 30, 2002 and 2001 and for the three and nine month
periods then ended is Unaudited)

1. Nature of Business and Significant Accounting Policies

Interim Financial Information

The financial information for UTEK Corporation (the Company) as of
September 30, 2002 and 2001 and for the nine month periods then ended is
unaudited, but includes all adjustments (consisting only of normal recurring
accruals), which, in the opinion of management are necessary in order to make
the financial statements not misleading at such dates and for those periods.
These financial statements have been prepared in accordance with the
instructions for Form 10-Q and, therefore, do not include all information and
footnotes required by accounting principles generally accepted in the United
States. These consolidated financial statements should be read in conjunction
with the consolidated audited financial statements and related notes included
in the Companys Form 10-K for the year ended December 31, 2001. Operating
results for the three or nine months ended September 30, 2002 are not
necessarily indicative of the results that may be expected for the entire year.

The Company

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

We commenced operations in 1997 as UTEK Corporation (UTEK Florida),
which was incorporated under the laws of the State of Florida in August 1996.
UTEK Florida was engaged in the business of technology transfer. On December
31, 1998, we formed UTEK, LLC, a limited liability company organized under the
laws of the State of Florida. Subsequent thereto, the shareholders of UTEK
Florida exchanged their shares of common stock for membership units in UTEK,
LLC. In July 1999, we formed UTEK Corporation under the laws of the State of
Delaware and in October 1999, UTEK LLC was merged into UTEK Corporation. In
September 2001, UTEK Corporation acquired 100% of the outstanding common stock
of PAX Technology Transfer Ltd., a United Kingdom corporation, in a stock for
stock transaction. In May 2002, UTEK Corporation acquired 100% of the
outstanding common stock of Techex Acquisition Corporation (TechEx) in a
stock for stock transaction. TechEx owned the TechEx.com website. The
TechEx.com website is used by many technology transfer and research
professionals to efficiently exchange 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.

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. 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 provides
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.

The Company seeks merger partners for portfolio companies, whereby the
Company generally receives common stock in the merger partner in a non-taxable
exchange for shares of the portfolio company. The Company generally seeks
merger partners that are in the early stages of development. The merger
partners normally have little or no prior operating history.

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 rapidly enhance
their new product pipeline through the acquisition of proprietary intellectual
capital from universities and federal laboratories.

Investments

Pursuant to the requirements of the 1940 Act, our Board of Directors is
responsible for determining, in good faith, the fair value of our securities
and assets for which market quotations are not readily available. In making
its determination, the Board of Directors has considered valuation appraisals
provided by an independent financial expert. With respect to private equity
securities, each investment is valued using industry valuation benchmarks, and
then the value is assigned a discount reflecting

Page 11 of 35



---



##### 



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

Without a readily ascertainable market value, the value of our
portfolio of equity securities that has been determined in good faith by the Board of Directors may differ significantly from the values that
would be placed on the portfolio if there existed a ready market for such
equity securities. Equity securities at September 30, 2002 and December 31,
2001 (93.1% and 100.8% of net assets, respectively) are stated at fair value as
determined by the Board of Directors, in the absence of readily ascertainable
fair values.

Revenue Recognition

The Company recognizes revenue from the sale of technology rights upon the
exchange of the shares of portfolio companies with unrelated merger partners.
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 the unregistered shares of common stock of the
purchaser. The common stock received is recorded as an investment at fair value
as determined by the Board of Directors. Revenue derived from consulting
services, in which shares of unregistered shares of common stock are received
from the client is recognized as earned, over the life of the underlying
consulting agreements. The unregistered shares of common stock received are
recorded as an investment at fair value as determined by the Board of
Directors. In some cases, the Company is paid a fee for negotiating a
successful technology transfer. In these instances, revenue is recognized upon
consummation of the transaction.

In addition to technology transfer merger transactions; we have put in
place the strategic alliance agreement. A method of technology transfer already
being used by PAX Technology Transfer Ltd., the strategic alliance agreement is
a service agreement in which UTEK provides consulting services by identifying
and evaluating technology acquisition opportunities. The contract term is
usually one year, and the form of payment for UTEK customers, (as with the
merger transactions) generally is in the form of unregistered shares of the
company, or cash, for which the services are provided.

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, typically twelve months. For
strategic alliance agreements in which the stock is received ratably over the
agreement, revenue is recognized as earned. The common stock received is
recorded as an investment at fair value as determined by the Board of
Directors. These agreements are cancelable at any time.

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

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

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
nine months ended September 30, 2002 and 2001, the Company incurred $-0- and
$356,000, respectively, 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.

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Impact of Recent Accounting Standards

In September 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets(SFAS 142). SFAS 142 revises the standards of accounting
for goodwill and indefinite-lived intangible assets. SFAS 142 prohibits the
amortization of goodwill and intangible assets with indefinite useful lives and
requires that these assets be reviewed for impairment at least annually, or
more frequently if impairment indicators arise. Intangible assets with finite
lives will continue to be amortized over their estimated useful lives. The
non-amortization provisions of SFAS 142 apply to goodwill and indefinite lived
intangible assets acquired in a business combination after June 30, 2001. As a
result, the goodwill recorded in connection with the Companys September 2001
acquisition of PAX Technology Transfer Ltd. will not be amortized. Effective
January 1, 2002, the Company had fully adopted the provisions of SFAS 142.

The provisions of SFAS 142 require that a transitional impairment test for
goodwill be performed as of the adoption date. The Company has performed this
test and has determined that there is no impact in applying SFAS 142 in its
financial statements. On an ongoing basis, absent any impairment indicators,
the Company expects to perform its annual evaluation during the fourth quarter.

On August, 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS 144 supercedes SFAS 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of. SFAS 144 applies to all long-lived assets (including
discontinued operations) and consequently amends Accounting Principles Board
Opinion No. 30. SFAS 144 develops one accounting model for long-lived assets
that are to be disposed of by sale. SFAS 144 requires that long-lived assets
that are to be disposed of by sale be measured at the lower of book value or
fair value less cost to sell. Additionally, SFAS 144 expands the scope of
discontinued operations to include all components of an entity with operations
that (1) can be distinguished from the rest of the entity and (2) will be
eliminated from the ongoing operations of the entity in a disposal transaction.
Effective July 1, 2002 the Company has fully adopted the provisions of SFAS 144
and has determined there was no impact as a result of the adoption.

2. Investments

Equity securities at September 30, 2002 and December 31, 2001 (93.1 % and
100.8% 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 financial expert, in the absence of readily ascertainable market
values.

The values assigned to these securities
are based upon available
information and may not reflect amounts that could be realized if the
Company were forced to sell such securities, nor 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 September 30, 2002 and December 31, 2001, the Company had
established three and four portfolio companies, respectively, which had $-0-
net assets.

On February 19, 2001, the Company sold its Technology Development, Inc.
portfolio company to Advanced Recycling Sciences, Inc., (formerly known as The
Quantum Group, 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.
portfolio company to BitzMart, Inc. for 450,000 unregistered shares of
BitzMart, Inc. common stock in a non-taxable exchange.

On May 31, 2001, the Company sold its Micro Sensor Technologies, Inc.
portfolio 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. portfolio company to Prime Pharmaceutical Corporation for
560,000 shares of Prime Pharmaceutical Corporation common stock in a
non-taxable exchange.

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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 746,575 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.

On November 28, 2001, the Company received 400,000 unregistered shares of
common stock from Palladium Communications, Inc. (formerly known as
USAOnestar.net, Inc.) in a strategic alliance agreement. The Company has
recognized consulting fees to date relating to 342,740 shares.

On January 11, 2002, the Company entered into a strategic alliance
agreement with Circle Group Internet, Inc. The agreement provides for a total
of 48,000 unregistered shares of Circle Group Internet, Inc.s common stock to
be distributed to the Company pro rata during the term of the agreement. The
Company has received and recognized to date consulting fees in relation to
32,000 unregistered shares of Circle Group Internet, Inc.

On January 21, 2002, the Company received 114,276 unregistered shares of
Group Management Corporations common stock in connection with a strategic
alliance agreement. The Company 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 24,000 shares.

On May 7, 2002, the Company sold its Nitrone Scientific, Inc. portfolio
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. portfolio 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
Company has recognized consulting fees to date relating to 10,000 shares.

On June 11, 2002, the Company sold its Energy Management Technologies,
Inc. portfolio 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. portfolio 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.
portfolio company to Circle Group Internet, Inc. for 2,800,000 unregistered
shares of Circle Group Internet, 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.
portfolio 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 5,922
shares.

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3. Income Taxes

Prior to October 14, 1999, the Companys business was structured as a
limited liability company (LLC). The LLC elected to be treated as a
partnership under the provisions of Subchapter K of the Internal Revenue Code.
Under those provisions, the LLC did not pay corporate income taxes on its
taxable income. Instead, the owners of the LLC were individually liable for
income taxes on the LLCs taxable income. The LLCs subsidiaries, including
UTEK Holdings and UTEK Corporation, were all taxed as C corporations.

On October 14, 1999, the Company restructured its business, whereby the
members of the LLC contributed their membership interests to the Company, a
newly created corporation. As a result, all of the LLCs assets, including the
stock of its subsidiaries, were transferred to the Company and the LLC was
dissolved. In addition, UTEK Holdings and UTEK Corporation were liquidated into
the Company. As of October 14, 1999, the Company is taxable as a C corporation.

4. Commitments and Contingencies

On September 10, 2001, the Company secured a $500,000 revolving line of
credit with a local financial institution. Advances under the line of credit
would bear interest at the financial institutions prime rate less .25%. The
line of credit was due on demand and was secured by a pledge of a portion of
our investments in non-controlled affiliates. At December 31, 2001, we had no
borrowings outstanding under the line of credit. During the quarter
ended September 30, 2002, the Company elected to not
renew the revolving line of credit.

During the quarter ended September 30, 2002, three companies that the
Company has investments inLexon, Inc., Image Analysis, Inc., and Centrex,
Inc.received notices of termination of certain licenses that these companies
hold. The notices are based upon the allegations of the licensor that these
companies are in material default of certain terms and provisions of their
license agreements. The licensor gave these companies until September 14, 2002
to cure the alleged default. The same group of shareholders controls these
companies. The Company is not a party to these license disputes; however, these
companies did acquire the disputed licenses in transactions with the Company.

The licensor has indicated that the
licenses of Lexon, Inc. and Centrex, Inc. have been terminated.  To the best of the
Company's knowledge, the licensor and Image Analysis, Inc. are continuing to
negotiate with respect to the termination of the license.  The Company, following the recommendation of its independent valuation expert, has
determined the fair value of these three companies to be as follows:



| |  |  | -        Lexon, Inc.- the terminated license was
critical to the overall valuation and business purpose of Lexon, Inc.  The Company
determined the fair value of this investment to be zero at September 30, 2002.
The Company had previously determined the fair value of this investment to be
$13,452 as of June 30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | -        Centrex, Inc.- The terminated license was
not critical to the overall valuation and business purpose of Centrex, Inc.  The
Company has determined the fair value of this investment to be $453,888 as of
September 30, 2002.  The Company had previously determined the fair value of this
investment to be $617,760 as of June 30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  |  | -        Image Analysis, Inc.- The license in dispute
is critical to the overall valuation and business purpose of Image Analysis, Inc.  The
licensor is alleging that Image Analysis, Inc. has failed to use its best efforts to
develop, manufacture, market and sell products incorporating the licensed technology.
To the best of the Company's knowledge, Image Analysis, Inc. and the licensor are
continuing to negotiate for the retention of the license by Image Analysis, Inc.
However, there can be no assurances as to the outcome or completion of the negotiation.
The Company has determined the fair value of this investment to be $1,303,971 as of
September 30, 2002.  The Company had previously determined the fair value of this
investment to be $2,607,942 as of June 30, 2002.

The Company continues to have a
significant investment in Image Analysis, Inc. and the underlying license has a
material effect on the valuation of Image Analysis, Inc.  The failure of Image
Analysis, Inc. to successfully negotiate or cure the alleged breach would have
a material adverse effect on the valuation of Image Analysis, Inc.  There can
be no assurance that Image Analysis, Inc. will be able to cure the alleged breach
or negotiate a satisfactory resolution.  A failure to cure the alleged breached
by Image Analysis, Inc. or reach a satisfactory resolution would have a material
negative impact on the Company's financial condition and results of operations.

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5. Acquisition of Techex Acquisition Corporation

In May 2002, UTEK Corporation acquired 100% of the outstanding common
stock of Techex Acquisition Corporation for 10,000 shares UTEK common stock
valued at $70,900. TechEx owned the TechEx.com website. The TechEx.com website
is used by many technology transfer and research professionals to efficiently
exchange licensing opportunities and innovations available for partnering. The
acquisition, recorded under the purchase method of accounting, included the
purchase of all outstanding shares of Techex Acquisition Corporation. The
purchase price has been allocated to assets acquired. There was no goodwill
associated with this transaction. There were no operating results for Techex
Acquisition Corporation for the three and nine-month period ended September 30,
2002.

6. Subsequent Events

In October 2002, the
Company entered into a one-year agreement with Westminster Securities
Corporation (Westminster) to assist the Company in the
sale of all or substantially all of its investment securities and in
obtaining financing through the sale of shares of its common stock.
Westminster will also provide the Company with other strategic advice
regarding business strategy, capital structure, investor relations
and general corporate finance. Finally, the Company has granted,
under certain circumstances, Westminster the right to act as the
Companys agent in connection with certain business combination
transactions and future equity financing transactions.

Under the terms of
the agreement, the Company will pay Westminster an initial retainer
fee of $12,000, plus a fee of $6,000 per month during the term of the
agreement. In addition, Westminster will receive a fee equal to 10%
of the gross proceeds from sales that it has made of the
Companys investment securities. Also, in the event that the
Company elects to proceed with the sale of shares of its common
stock, Westminster shall be entitled to receive a flat fee of
$30,000, plus a fee of up to 13% of the gross proceeds derived from
such sale.

The Company may
terminate the agreement if Westminster does not generate net proceeds
of at least $1.5 million through the sale of the Companys
investment securities by January 15, 2003 on terms reasonably
acceptable to the Company.

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Subsequent to
September 30, 2002, the Company received 4,121,165
unregistered shares of Stealth MediaLabs, Inc.s common stock in exchange for
the 641,667 unregistered shares of BitzMart, Inc.s common stock then held by
the Company pursuant to a Share Exchange Agreement, dated August 23, 2002,
between BitzMart, Inc. and KidsToysPlus.Com, Inc. (subsequently named
Stealth MediaLabs, Inc.) In connection with this acquisition
transaction, Bitzmart, Inc. will become a wholly-owned subsidiary of
Stealth MediaLabs, Inc.

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

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

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements. You should understand that our reported operating results,
financial condition and changes in financial condition depend on estimates and
assumptions we use in applying these significant accounting policies. On a
regular basis, management reviews these estimates and assumptions including
those related to revenue recognition and the valuation of investments.

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

Revenue Recognition

The Company recognizes revenue from the sale of technology rights upon the
exchange of the shares of portfolio companies with unrelated merger partners.
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 technology rights is the common stock of the purchaser. The
common stock received is recorded as an investment at fair value as determined
by the Board of Directors. Revenue derived from consulting services, in which
shares of common stock are received from the client is recognized as earned,
over the life of the underlying consulting agreements. The common stock
received is recorded as an investment at fair value as determined by the Board
of Directors. In some cases, the Company is paid a fee for negotiating a
successful technology transfer. In these instances, revenue is recognized upon
consummation of the transaction.

Revenues from strategic alliance agreements in which shares of common
stock are received before they are earned, are deferred and recognized over the
term of each agreement, typically twelve months. For strategic alliance
agreements in which the

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stock is received ratably over the agreement, revenue
is recognized as earned. The common stock received is recorded as an
investment at fair value as determined by the Board of Directors. These
agreements are cancelable at any time.

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

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

Valuation of Investments

The income that we derive from our investments in our portfolio companies
consists primarily of equity securities and, in some instances, cash that we
receive upon disposition of our portfolio companies. The value of the equities
that we receive makes up most of our revenues. Pursuant to the requirements of
the 1940 Act, our Board of Directors is responsible for determining in good
faith the fair value of our securities and assets for which market quotations
are not readily available. In making its determination, the Board of Directors
has considered valuation appraisals provided by an independent financial
expert. 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.

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.

We have retained Bolten Financial Consulting, Inc. to provide us with
valuations of the securities we own updated to each quarterly
valuation date.

Without a readily ascertainable market value, the value of our
portfolio of equity securities may differ significantly from the values that
would be placed on the portfolio if there existed a ready market for such
equity securities. Any changes in fair value are recorded in the Companys
Statement of Operations as change in unrealized depreciation of non-controlled
affiliate investments For the nine months ended September 30, 2002, our net
asset value per share would have decreased by approximately $0.18 per share if
our determination of the fair value of our portfolio assets had been 10% lower.

GENERAL

Our primary business is to make investments in companies that possess or
will likely identify emerging and established technologies and markets for
those technologies. Our primary investment objective is to increase our net
assets by exchanging stock in our portfolio companies for cash and other
assets, which we will use to acquire licenses to additional technologies. We
believe that we can increase the likelihood of achieving our objectives by
concentrating on investments in companies which we believe are likely to
benefit from our managements expertise in technology transfer.

The income that we derive from our investments in our portfolio companies
consists primarily of equity securities and, in some instances cash that we
receive upon disposition of our portfolio companies. The value of the equities
that we receive makes up most of our revenues. Pursuant to the requirements of
the 1940 Act, our Board of Directors is responsible for determining in good
faith the fair value of our securities and assets for which market quotations
are not readily available. In making its determination, the Board of Directors
has considered valuation appraisals provided by an independent financial
expert. 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.

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

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or similar industries, current financial conditions and operating results, sales and
earnings growth, operating revenues, competitive conditions and current and
prospective conditions in the overall stock market.

Without a readily ascertainable market value, the value of our
portfolio of equity securities that has been determined in good faith
by the Companys Board of Directors may differ significantly from the values that
would be placed on the portfolio if there existed a ready market for such
equity securities. Any changes in value are recorded in the
Companys Consolidated Statement of Operations as Net realized and unrealized
gains (losses) during the period of change.

Prior to September 2002, we held all of our investments until such time as
they became available for sale pursuant to the provisions of Rule 144 under the
Securities Act of 1933. This practice resulted in liquidity constraints for us
as most of our investments required a holding period of at least two years, or
longer, before they became freely tradable under the provisions of Rule 144.

Beginning in October
2002, we implemented a new strategy whereby we will seek to sell our
investments as soon as possible after the acquisition of such
investments through sales to unrelated third parties in order to
provide us with additional liquidity and allow us to make new
investments. We hired the investment banking firm of Westminster
Securities Corporation to help us implement this new strategy. We can
provide no assurance that such strategy will ultimately be
successful. However, we believe that there are potential investors
who may be interested in purchasing our investments in such
transactions.

As a result of this

strategy, we may recognize less of the long-term capital appreciation
of our investments. We intend to minimize the potential loss of such
appreciation through the retention of a portion of the investments we
sell in such transactions and when possible, to obtain warrants to purchase shares
of common stock in connection with the investments we make in the
future.

We have retained Bolten Financial Consulting, Inc. to provide us with
valuations of the securities we own, updated to each quarterly valuation date. We pay Bolten Financial Consulting,
Inc. a fee each time it values our investments. For the nine months ended
September 30, 2002 and 2001, we paid Bolten Financial Consulting, Inc. a total
of $68,932 and $38,216, respectively, for its valuation services.

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

The Companys total assets were $8,423,336 and its net assets were
$7,718,636 at September 30, 2002, compared to $12,410,958 and $9,909,440 at
December 31, 2001, respectively.

Net asset value per share (NAV) was $1.97 at September 30, 2002,
compared to $2.53 at December 31, 2001. Net assets decreased by $2,190,804 in
the nine months ended September 30, 2002 and increased by $1,454,438 in the
year ended December 31, 2001.

The Companys common shares outstanding as of September 30, 2002 and
December 31, 2001 were 3,925,672 and 3,915,672, respectively.

The Companys financial condition is dependent on a number of factors
including the ability to effectuate technology transfers and the performance of
the equity stakes 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 September 30,
2002, $2,956,104 or 35% of the Companys total assets consisted of investments
at fair value in thinly traded public securities, of which net unrealized
depreciation, after income tax effect, was ($1,728,044); the remaining
$4,226,491 of the investments which represents 50% of the Companys total
assets consisted of non-publicly traded securities at fair value of which net
unrealized depreciation, after income tax effect, was ($734,260). See Note 2
to the accompanying consolidated financial statements.

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

|                                                   |  |               |            |              |  |   |            |  
|-------------------------------------------------- |  | ------------- | ---------- | ------------ |  | - | ---------- | -
|                                                   |  | September 30, |            | December 31,
|                                                   |  | 2002          |            | 2001        
|                                                   |  |               |            |             
|                                                   |  | (Unaudited)   |            |              |  |  
|Investments, at cost                               |  | $             | 11,130,495 |              |  | $ | 10,018,958 |  
|Unrealized depreciation, before income tax benefit |  |               | (3,947,900 | )            |  |   | (30,186    | )
|                                                   |  |               |            |              |  |   |            |  
|Investments, at fair value                         |  | $             | 7,182,595  |              |  | $ | 9,988,772  |  
|                                                   |  |               |            |              |  |   |            |  

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

Results of Operations

The Company accounts for its operations under generally accepted
accounting principles for investment companies. On this basis, the principal
measure of a Companys financial performance is the Net increase (decrease)
in net assets from operations which is the sum of three elements. The first
element is Net income (loss) from operations, which is the difference
between the Companys income from technology transfers, consulting fees,
interest, dividends, fees and other income and its operating expenses, net of
applicable income tax provision. The second element is Net realized gain
(loss) on investment, 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 the Companys investment portfolio, net of increase (decrease) in deferred
income taxes that would become payable if the unrealized appreciation were
realized through the sale or other disposition of the investment portfolio.

Three months ended September 30, 2002 compared to the three months ended September 30, 2001.

Income from operations. Income from operations increased 15% to $688,828
for the three months ended September 30, 2002 from $599,986 for the three
months ended September 30, 2001. For the three months ended September 30, 2002,
approximately 81% of our income from operations (revenue) was received in the
form of unregistered shares of common stock, which was received for the sale of
technology rights and for providing consulting services. The increase in income
from operations resulted from the completion of two technology transfers in the
three months ended September 30, 2002 compared to one technology transfer in
the three months ended September 30, 2001. During the three months ended
September 30, 2002, we completed sales of technology rights valued at $465,150,
compared to sales valued at $336,000 for the three months ended September 30,
2001. Our Board of Directors determines the fair value of the shares we
receive in the absence of readily ascertainable market values. In making its
determination, the Board of Directors has considered valuation appraisals
provided by an independent financial expert. During the three months ended
September 30, 2002, we completed transactions with Circle Group Internet, Inc.,
in which we received 2,800,000 shares of unregistered common stock of Circle
Group Internet, Inc. that were valued at the time of sale at $.12 per share;
and with Full Circle Registry, Inc., in which we received 157,500 shares of
unregistered common stock of Full Circle Registry, Inc. valued at the time of
sale at $.82 per share.

Expenses.Total operating expenses for the three months ended September
30, 2002 were $646, 312 consisting of salaries and wages of $180,261,
professional fees of $116,090, sales and marketing expenses of $173,137, and
general and administrative expenses of $176,814. These expenses compared to the
$421,809 reported for the three months ended September 30, 2001, consisting of
salaries and wages of $116,837, professional fees of $60,797, sales and
marketing expenses of $88,261, and general and administrative expenses of
$155,914. The 53% increase in total operating expenses was due to the increased
number of employees including the PAX employees, the operating costs of PAX,
the cost of recruiting new employees, increased costs of insurance and
professional fees, costs related to financing efforts and our ongoing effort
to develop the UTEK U2B(®) brand. The 96% increase in sales and marketing
expenses was due to an increased marketing effort including travel and trade
shows, the addition of a full time chief technology transfer officer and the
additional costs of a second technology transfer. The 54% increase in salaries
and wages reflects increased salary costs and the addition of the PAX
employees. The 91% increase in professional fees is largely due to the costs
associated with increased audit and accounting fees and additional

Page 20 of 35



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valuation fees due to an increased number of investments. The 14% increase in general
and administrative costs is largely due to the addition of PAX administrative
expenses.

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

Net Realized and Unrealized Gains (Losses) and Income Taxes.Net realized
losses on investments amounted to $34,444 for the three months ended September
30, 2002 and related to the sale of 165,600 shares of Centrex, Inc. common stock
for $69,042 in cash, the sale of 163,534 shares of Torvec, Inc. common stock
for $254,435 in cash and the sale of 155,442 shares of Sense Holdings, Inc.
common stock for $45,057 during the reporting period. Net realized losses on
investments amounted to $81,778 for the three months ended September 30, 2001
and related to the sale of 777,324 shares of its Lexon, Inc. common stock for
$117,354 in cash during the reporting period. In addition, the Company sold
commercial paper that it purchased in September for $199,728 at a gain of $278.

The net unrealized depreciation of investments increased by $740,546 for
the three months ended September 30, 2002, compared to an increase in unrealized
depreciation after income taxes of $1,488,871 for the three months ended
September 30, 2001. The net unrealized depreciation after income taxes
consisted of a net decline in the fair value resulting from the Board of
Directors valuation of the Companys assets for the three months ended
September 30, 2002. The net decline in fair value of our portfolio was a
result of reduced valuations on privately owned companies due to lack of
funding, as well as the overall decline in value of the stock markets
in the United States. There were declines in value related to all of our investments with
the exception of our investments in Clean Water Technologies, Inc., Rosbon LLC,
Advanced Recycling Sciences, Inc. and Voice and Wireless Corporation which had
increases in value for the quarter ended September 30, 2002.

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

Our effective tax rate was 38% and 37%, respectively, for the three months
ended September 30, 2002 and September 30, 2001.

Subsequent to June 30, 2002, three companies that the Company has
investments inLexon, Inc., Image Analysis, Inc., and Centrex, Inc.received
notices of termination of certain licenses that these companies hold. The
notices are based upon the allegations of the licensor that these companies are
in material default of certain terms and provisions of their license
agreements. The licensor gave these companies until September 14, 2002 to cure
the alleged default. These companies are controlled by the same group of
shareholders. The Company is not a party to these license disputes; however,
these companies did acquire the disputed licenses in transactions with the
Company.

During the quarter ended September 30, 2002, three companies that the
Company has investments inLexon, Inc., Image Analysis, Inc., and Centrex,
Inc.received notices of termination of certain licenses that these companies
hold. The notices are based upon the allegations of the licensor that these
companies are in material default of certain terms and provisions of their
license agreements. The licensor gave these companies until September 14, 2002
to cure the alleged default. The same group of shareholders controls these
companies. The Company is not a party to these license disputes; however, these
companies did acquire the disputed licenses in transactions with the Company.

The licensor has indicated that the
licenses of Lexon, Inc. and Centrex, Inc. have been terminated.  To the best of the
Company's knowledge, the licensor and Image Analysis, Inc. are continuing to
negotiate with respect to the termination of the license.  The Company, following the recommendation of its independent valuation expert, has
determined the fair value of these three companies to be as follows:



| |  |  | -        Lexon, Inc.- the terminated license was
critical to the overall valuation and business purpose of Lexon, Inc.  The Company
determined the fair value of this investment to be zero at September 30, 2002.
The Company had previously determined the fair value of this investment to be
$13,452 as of June 30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | -        Centrex, Inc.- The terminated license was
not critical to the overall valuation and business purpose of Centrex, Inc.  The
Company has determined the fair value of this investment to be $453,888 as of
September 30, 2002.  The Company had previously determined the fair value of this
investment to be $617,760 as of June 30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  |  | -        Image Analysis, Inc.- The license in dispute
is critical to the overall valuation and business purpose of Image Analysis, Inc.  The
licensor is alleging that Image Analysis, Inc. has failed to use its best efforts to
develop, manufacture, market and sell products incorporating the licensed technology.
To the best of the Company's knowledge, Image Analysis, Inc. and the licensor are
continuing to negotiate for the retention of the license by Image Analysis, Inc.
However, there can be no assurances as to the outcome or completion of the negotiation.
The Company has determined the fair value of this investment to be $1,303,971 as of
September 30, 2002.  The Company had previously determined the fair value of this
investment to be $2,607,942 as of June 30, 2002.

The Company continues
to have a significant investment in Image Analysis, Inc. and the
underlying license has a material effect on the valuation of Image
Analysis, Inc. The failure of Image Analysis, Inc. to successfully
negotiate or cure the alleged breach would have a material adverse
effect on the valuation of Image Analysis, Inc.  There can be no
assurance that Image Analysis, Inc. will be able to cure the alleged
breach or negotiate a satisfactory resolution. A failure to cure the
alleged breach by Image Analysis, Inc. or reach a satisfactory
resolution would have a material negative impact on the Company's
financial condition and results of operations.
Page 21 of 35Nine months ended September 30, 2002 compared to the nine months ended September 30, 2001.Income from operations. Income from operations decreased 23% to
$2,916,042 for the nine months ended September 30, 2002 from $3,763,145 for the
nine months ended September 30, 2001. For the nine months ending September 30,
2002, approximately 87% of our income from operations (revenue) was received in
the form of stock, which was received for the sale of technology rights and for
providing consulting services. The decrease in income from operations resulted
from completing six sales of technology rights with substantially less value
attributed to such transactions, which was offset by an increase in consulting
income from services rendered in connection with eight strategic alliances (six
of which began in the nine months ended September 30, 2002) valued at $445,373,
as well as consulting income from the wholly owned subsidiary PAX Technology
Transfer, Ltd. (PAX) of $343,635. PAX was not acquired until September 28,
2001, therefore no income was included from their operation in the nine months ended September 30,2001.
As described below, in the nine months ended September 30, 2002 we completed
six sales of technology rights valued at $2,088,254 compared to four sales of
technology rights valued at $3,419,653 for the nine months ended September 30,
2001. Our Board of Directors determines the fair value of the shares we
receive in the absence of readily ascertainable market values. In making its
determination, the Board of Directors has considered valuation appraisals
provided by an independent financial expert. During the nine months ended
September 30, 2002, we completed transactions with Prime Pharmaceutical
Corporation, in which we received 683,550 shares of unregistered common stock
of Prime Pharmaceutical Corporation that were valued at the time of sale at
$.435 per share; with Image Analysis, Inc., in which we received 465,000 shares
of unregistered common stock of Image Analysis, Inc. valued at the time of sale
at $2.43; with Voice and Wireless Corporation, in which we received 318,750
unregistered shares of Voice and Wireless Corporation valued at the time of
sale at $.094; with Full Circle Registry, Inc., in which we received 68,250 of
unregistered common stock of Full Circle Registry, Inc. valued at the time of
sale at $2.43; with BitzMart, Inc., in which we received 450,000 shares of
common stock valued at the time of sale at $2.31 per share; with Sense
Holdings, Inc., in which we received 1,850,000 shares valued at the time of
sale at $.26 per share; with Advanced Recycling Sciences, Inc. (formerly The
Quantum Group, Inc.), in which we received 1,446,153 shares of common stock
valued at the time of sale at $1.00 per share; with Circle Group Internet,
Inc., in which we received 2,800,000 shares of unregistered common stock of
Circle Group Internet, Inc. that were valued at the time of sale at $.12 per
share; with Full Circle Registry, Inc., in which we received 157,500 shares of
unregistered common stock of Full Circle Registry, Inc. valued at the time of
sale at $.82.Expenses.Total operating expenses for the nine months ended September
30, 2002 were $2,470,708 consisting of salaries and wages of $599,238,
professional fees of $427,851, sales and marketing expenses of $613,280, and
general and administrative expenses of $830,339. These expenses compared to the
$1,904,245 reported for the nine months ended September 30, 2001, consisting of
salaries and wages of $338,408, professional fees of $295,398, sales and
marketing expenses of $791,401, and general and administrative expenses of
$479,038. The 30% increase in total operating expenses was due to the increased
number of employees including the PAX employees, the operating costs of PAX,
the cost of recruiting new employees, increased costs of insurance,
professional fees, costs to related financing efforts and our ongoing effort to
develop the UTEK U2B(®) brand. The 23% decrease in sales and marketing expenses
was due to lower costs related to the sales of technology rights. The 77%
increase in salaries and wages reflects increased salary costs and the addition
of PAX salaries. The 45% increase in professional fees is largely due to the
costs associated with increased audit fees and additional valuation fees due to
an increasing list of investments. The 73% increase in general and
administrative costs is largely due to the addition of PAX administrative
costs, as well as costs of recruiting new employees, an increase in insurance,
printing costs, new stock exchange fees and the costs related to financing
efforts.Income from operations can vary substantially on a quarterly basis due to
the small number and wide range of value of the transactions. Therefore,
quarterly income from operations should not be annualized to predict expected
annual results.Net Realized and Unrealized Gains (Losses) and Income Taxes.Net
realized losses on investments amounted to $136,963 for the nine months ended
September 30, 2002 and related to the sale 165,600 shares of Centrex, Inc.
common stock for $69,042 in cash, the sale of 437,888 shares of Torvec, Inc.
common stock for $659,318 in cash and the sale of 155,442 shares of Sense
Holdings, Inc. for $45,057 in cash and 58,100 shares of Advanced Recycling
Sciences, Inc. common stock for $29,256 in cash during the reporting period.
Net realized losses on investments amounted to $83,098 for the nine months
ended September 30, 2001 and substantially related to the sale of 924,973 share
of Lexon, Inc. common stock for $162,480 in cashPage 22 of 35during the reporting period. In addition the Company sold commercial paper that
it purchased in September 2001 for $199,728 at a gain of $278.The net unrealized depreciation of investments increased by $2,443,477 for
the nine months ended September 30, 2002, versus an increase in unrealized
depreciation after taxes of $1,168,675 for the nine months ended September 30,
2001. The net unrealized depreciation after taxes consisted of increases and
declines in fair value resulting from the Board of Directors valuation of the
Companys assets for the nine months ended September 30, 2002. There were
declines in value related to all of our investments with the exception of our
investments in Torvec, Inc. had which had an increase in value for the nine
months ended September 30, 2002.Net realized and unrealized gains can vary substantially on a quarterly
basis, due to a variety of factors,. Therefore, quarterly net realized and
unrealized gains should not be annualized to predict expected annual results,
and may not be indicative of future performance.Our effective tax rate was a provision of approximately 39% and 38%,
respectively for the nine months ended September 30, 2002 and September 30,
2001.Liquidity and Capital ResourcesNet assets decreased 22% to $7,718,636 at September 30, 2002 from
$9,909,440 at December 31, 2001, attributable to income from operations and the
acquisition of Techex Acquisition Corporation (TechEx) offset by the
unrealized depreciation of non-controlled affiliate investments. TechEx held
the TechEx.com website and other intangible assets. The TechEx.com website is
used by many technology transfer and research professionals to efficiently
exchange licensing opportunities and innovations available for partnering.Our primary source of liquidity through September 30, 2002 was from the
sales of investments in non-controlled affiliates. Our income from operations
consists primarily of the sale of technology rights for equity securities
rather than cash. During the nine months ended September 30, 2002, we
generated $802,674 in proceeds from sales of investments. During 2001, we
completed a private placement transaction resulting in proceeds of $375,617 and
generated $395,342 in proceeds from sales of investments.On September 10, 2001, the Company secured a $500,000 revolving line of
credit with a local financial institution. Advances under the line of credit
would bear interest at the financial institutions prime rate less .25%. The
line of credit was due on demand and was secured by a pledge of a portion of
our investments in non-controlled affiliates. At December 31, 2001, we had no
borrowings outstanding under the line of credit. The Company elected to not
renew the revolving line of credit. The Company has decided to seek to monetize
its investments in its portfolio companies in an effort to increase
liquidity and provide capital for new investments.On September 30, 2002 and December 31, 2001, we had $497,252 and
$1,432,473, respectively, in cash and cash equivalents. While management
believes that we have sufficient resources to meet our funding requirements for
the remainder of the year, we will need to complete additional financing
initiatives in 2002 or early 2003 to generate the liquidity necessary to
continue our operations at the current level in 2003. Due to current economic
conditions, we may not be able to secure additional financing on terms we deem
acceptable. If we obtain additional funds by selling any of our equity
securities, the percentage ownership of our existing stockholders will be
reduced, stockholders may experience additional dilution, or the equity
securities may have rights, preferences or privileges senior to the common
stock. If we obtain additional funds by selling our investments, there can be
no assurance that we will be able to negotiate a favorable price for those
investments or that the loss of those investments will not affect our future
business prospects. If adequate funds are not available to us or available to
us on satisfactory terms, we may be required to limit our marketing and
research and development activities or other operations, or otherwise modify
our business strategy.In October 2002, the Company entered
into a one-year agreement with Westminster Securities Corporation
(Westminster) to assist the Company in the sale of all or
substantially all of its investment securities and in obtaining
financing through the sale of shares of its common stock. Westminster
will also provide the Company with other strategic advice regarding
business strategy, capital structure, investor relations and general
corporate finance. Finally, the Company has granted, under certain
circumstances, Westminster the right to act as the Companys
agent in connection with certain business combination transactions
and future equity financing transactions.Under the terms of the agreement, the
Company will pay Westminster an initial retainer fee of $12,000, plus
a fee of $6,000 per month during the term of the agreement. In
addition, Westminster will receive a fee equal to 10% of the gross
proceeds from sales that it has made of the Companys investment
securities. Also, in the event that the Company elects to proceed
with the sale of shares of its common stock, Westminster shall be
entitled to receive a flat fee of $30,000, plus a fee of up to 13% of
the gross proceeds derived from such sale.The Company may terminate the
agreement if Westminster does not generate net proceeds of at least
$1.5 million through the sale of the Companys investment
securities by January 15, 2003 on terms reasonably acceptable to
the Company.Impact of Recent Accounting StandardsPage 23 of 35In September 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets(SFAS 142). SFAS 142 revises the standards of accounting
for goodwill and indefinite-lived intangible assets. SFAS 142 prohibits the
amortization of goodwill and intangible assets with indefinite useful lives and
requires that these assets be reviewed for impairment at least annually, or
more frequently if impairment indicators arise. Intangible assets with finite
lives will continue to be amortized over their estimated useful lives. The
non-amortization provisions of SFAS 142 apply to goodwill and indefinite lived
intangible assets acquired in a business combination after September 30, 2001.
As a result, the goodwill recorded in connection with the Companys September
2001 acquisition of PAX Technology Transfer Ltd. will not be amortized.
Effective January 1, 2002, the Company fully adopted the provisions of SFAS
142.The provisions of SFAS 142 require that a transitional impairment test for
goodwill be performed as of the adoption date. The Company has performed this
test and has determined there is no impact in applying SFAS 142 in its
financial statements. On an ongoing basis, absent any impairment indicators,
the Company expects to perform its annual evaluation during the fourth quarter.Investment ConsiderationsOur quarterly and annual results could fluctuate significantly.The Companys quarterly and annual operating results could fluctuate
significantly due to a number of factors. These factors include the small
number and range of values of the transactions that are completed each
quarter, 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 as it relates to our unrealized gains and losses, as well as
other general economic conditions. As a result of these factors, quarterly
and annual results are not necessarily indicative of the Companys
performance in future quarters and years.Our investment model is highly speculative in nature and our history of investments using the model is limited.Our investment model is highly speculative since it involves making
investments in new development stage companies and having those companies
invest in new, untested technology. Furthermore, we have only been using our
investment model for a relatively short period of time and have little or no
historical information upon which to judge whether or not the model is
successful. We cannot assure you that our investment model will be successful
or that any of our investments will be successful.Our portfolio companies are development stage companies dependent upon the
successful commercialization of new technologies. Each of our investments in
portfolio companies is subject to a high degree of risk and we may lose all of
our investment in a portfolio company if it is not successful.We invest in development stage companies that our management believes can
benefit from our expertise in technology transfer. Development stage companies
are subject to all of the risks associated with new businesses. In addition,
our portfolio companies are also subject to the risks associated with research
and development of new technologies. These risks include the risk that new
technologies cannot be identified, developed or commercialized, may not work,
or are obsolete. Our portfolio companies must successfully acquire licenses to
new technologies, and in some cases further develop new technologies, and then
complete a merger transaction for our investments to be successful. 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. In addition, for an investment to be successful, our
portfolio companies often must develop the technology and identify buyers who
are willing to acquire the technology, in exchange for their common stock or
other consideration. We cannot assure you that any of our portfolio companies
will be successful or that we will successfully sell our portfolio companies or
sell or relicense the technology rights held by our portfolio companies. We may
lose our entire investment in any or all of our portfolio companies.Our portfolio companies depend upon the research and development activities of
universities, over which neither our portfolio companies nor we have any
control.Our portfolio companies depend upon the research activities of
universities and government research facilities. Neither we, nor our portfolio
companies, have any control over the research activities of universities and
research laboratories. As neither we, nor our portfolio companies provide
supervision of any university or laboratory research, we cannot warrant that
the research will be done properly and that the results, which we may license
will be reproducible. In addition, we have no control over what types of
research are presented to us by universities and government research facilities
for evaluation and commercial development. Further, the licenses to
technologies that our portfolio companies obtain may be non-exclusive. In the
event that we make an investment in a portfolio company, and we are unable to
locate a new technology to be acquired by the portfolio company, we could lose
our entire investment.Page 24 of 35Technologies acquired by our portfolio companies may become obsolete before we
can sell the portfolio companies.Neither our portfolio companies nor we have any control over the pace of
technology development. There is a significant risk that a portfolio company
could acquire the rights to a technology that is currently or is subsequently
made obsolete by other technological developments. We cannot assure you that
any of our portfolio companies will successfully acquire, develop and transfer
any new technology.The patents on the technologies that our portfolio companies license may
infringe upon the rights of others and patent applications that the
universities have submitted may not be granted.Many of our portfolio companies rely upon patents to protect the
technologies that they license. If the patents on technologies that they
license are found to infringe upon the rights of others, or are held to be
invalid, then the licenses to such technologies will have little or no value to
our portfolio companies. In addition, if a patent licensed by a portfolio
company is found to infringe upon the rights of others, the portfolio company
may be liable for monetary damages. Our portfolio companies are dependent upon
the universities or government research facilities to file, secure and protect
patents on licensed technologies. In the event that a patent is challenged or
violated, our portfolio companies may not have the financial resources
to defend the patent either in the preliminary stages of litigation or in
court. In addition, if our portfolio companies acquire licenses to technologies
with patents pending, we cannot assure you that such patents will be granted.Technologies that have been developed with funding from the United States
government may have limits on their use, which could affect the value of the
technology to a portfolio company.Technologies developed with funds provided by the United States government
have restrictions regarding where they may be sold and have limits on
exclusivity. A portfolio company that acquires a technology developed with
federal funding may be limited as to where it can sell the technology. The
technology may only be allowed to be sold or manufactured within the United
States. In addition, under Section 23 of the United States Code, the U.S.
government has the right to use technologies that it has funded regardless of
whether the technology has been licensed to a third party. Such regulations may
limit the marketability of a technology and therefore reduce the value of the
technology to our portfolio companies.We may need to make additional investments in our portfolio companies to
provide them with capital to further develop licensed technologies.We may have to make additional investments in portfolio companies to
protect our initial investments. 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
company 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 illiquid and we may not
be able to sell the portfolio company securities we hold for amounts equal to
their recorded value, if at all.Our portfolio companies are all private entities and we acquire securities
in our portfolio company in private transactions. As a result, all of the
securities we hold in our portfolio companies are restricted securities, as
defined under the Securities ActPage 25 of 35of 1933, and are subject to restrictions on
resale. Furthermore, we do not anticipate that a public market will exist for
any of the securities we hold in our portfolio companies. Therefore, any sale
or other transfer of the securities we hold in portfolio companies will be made
in private transactions and 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.We are dependent on merger transactions, structured as tax-free exchanges to
sell our portfolio companies. A change in the Internal Revenue Code affecting
tax-free exchanges could reduce our ability to sell our portfolio companies.We do not anticipate selling any of our portfolio companies, except in
connection with merger transactions. We anticipate that most, if not all, of
such merger transactions will be structured as tax-free exchanges under Section
368 of the Internal Revenue Code. If Section 368 were to be amended so that we
were no longer able to structure our merger transactions as tax-free exchanges,
we may not be able to sell our portfolio companies on commercially reasonable
terms. If we are unable to successfully sell a portfolio company in a merger
transaction, we may lose our investment.We have been dependent on a small number of companies, several of which are
controlled by the same investor group for the purchase of our portfolio
companies. We have only limited experience selling our portfolio companies and
of the nineteen transactions that we have completed, seven have been to
companies controlled by the same group of investors.As of September 30, 2002, we have completed only twenty-one transactions,
including twenty mergers and one stock sale, wherein we sold portfolio
companies to other companies and seven of these sales have been made to
companies that are controlled by the same investor group. As of September 30,
2002, the same investor group had control of Lexon, Inc., Image Analysis, Inc.,
Centrex, Inc. and Nubar, Inc. As a result, we have only had the benefit and
experience of negotiating such agreements with a small number of investors. We
cannot assure you that we will be able to successfully negotiate merger
transactions for the sale of our portfolio companies in the future.The agreements we have with universities do not guarantee that the universities
will grant licenses to our portfolio 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 portfolio
companies.We are dependent upon our managements ability to identify acquirers for our
portfolio companies.Our investment strategy is based upon selling our portfolio companies in
stock for stock exchanges to companies that wish to acquire the technologies
owned by our portfolio companies but which themselves may be neither operating
nor established. We do not expect to sell any portfolio company securities to
the public. Therefore, if we fail to identify an acquirer for a portfolio
company, our entire investment in the portfolio company could be lost.We are dependent upon and have little or no control over the efforts of
companies that acquire our portfolio companies to successfully commercialize
the acquired technologies.When we sell a portfolio company, we receive common stock from the
acquiring company based upon the mutually agreed upon values of the portfolio
company, its licensed technology and the acquiring company. We then intend to
sell the securities that we acquire in exchange for our portfolio companies at
some time in the future. Therefore, our ability to profit from an investment in
a portfolio company is ultimately dependent upon the price we receive for the
shares of the acquiring company. In most cases, the companies that acquire our
portfolio companies will be dependent upon successfully commercializing the
technologies they acquire. We do not have control over the companies that
acquire our portfolio companies and we do not intend to provide them with
managerial assistance. These operating companies may face intense competition,
including competition from companies with greater financial resources, more
extensive research and development, manufacturing, marketing and service
capabilities and a greater number of qualified and experienced managerial and
technical personnel. They may face additional risks of product and
technological obsolescence and government regulation over which we will have
little or no control. They may need additional financing which they are unable
to secure and we are unable or unwilling to provide or they may be subject to
adverse developments related or unrelated to the technologies they acquire. We cannot
assure you that any of the companies that acquire our 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 company.The companies that have merged with our portfolio companies and the companies
for which we render services in connection with strategic alliances to date are
development stage companies and, as a result, the value of the securities that
we receive in such merger transactions is subject to significant fluctuations.Page 26 of 35Historically we have merged, and we intend to continue to merge, our
portfolio companies with companies in related fields that are development stage
companies. In addition, the companies for which we render services in
connection with strategic alliances are development stage companies. As a
result, the securities that we receive in such transactions are subject to all
of the risks associated with securities of development stage companies. The
values of these securities may be subject to significant fluctuations. We
cannot assure you that when we sell these securities we will receive the value
ascribed to the securities either at the time of acquisition or during
subsequent valuation periods.Our investments in our portfolio companies may be concentrated in one or more
industries and if these industries should decline or fail to develop as
expected our investments will be lost.Our investments in our portfolio companies may be concentrated in one or
more industries. This concentration will mean that our investments will be
particularly dependent on the development and performance of those industries.
Accordingly, our investments may not benefit from any advantages, which might
be obtained with greater diversification of the industries in which our
portfolio companies operate. If those industries should decline or fail to
develop as expected, our investments in our portfolio companies in those
industries will be subject to loss.We generally receive equity securities of the companies that acquire our
portfolio companies and for the services we render in connection with strategic
alliances, rather than cash. We record revenues from these transactions;
however, the securities that we receive will be subject to restrictions on
resale, which will limit our ability to sell these securities and attain
liquidity.The securities that we receive in exchange for our portfolio companies and
in connection with strategic alliances will be subject to restrictions on
resale, which will limit our ability to sell these securities.As of September 30, 2002, all of the securities we have received in
exchange for our portfolio companies and in connection with strategic alliances
are restricted securities, as such term is defined under Rule 144 of the
Securities Act of 1933. These shares are restricted securities because they
were issued in private transactions not involving a public offering and may not
be sold in the absence of registration other than in accordance with Rule 144
under the Securities Act of 1933 or another exemption from registration. As a
result of such restrictions, our ability to sell or otherwise transfer the
securities will be limited. We cannot assure you that we will be able to
receive upon resale, the recorded value of our portfolio company securities.We may not be able to merge our portfolio companies with publicly traded
entities and so we may receive non-publicly traded securities in exchange for
our portfolio companies. We may be required to sell the securities we receive
at a substantial discount to their appraised value if no public market exists.At September 30, 2002, we have completed twenty-one sales of portfolio
companies. Of these sales, fourteen have been to companies that are currently
public, and the remaining transactions have been with non-public companies. We
are substantially dependent upon the ability of non-public acquirers of our
portfolio companies to implement a plan, which would facilitate a trading
market for their securities, or other strategy, which would allow for the
potential sale of our ownership interest. In addition, to the extent that we
own more than 10% of an acquirers shares, we may be deemed to be an affiliate
of the acquirer which would limit our ability to dispose of securities we
receive for our portfolio companies. Further, our ability to sell the
securities we receive for our portfolio companies may be limited by, and
subject to, the lack of or limited nature of a trading market for the
securities and the volatility of the stock market as a whole. Such limitations
could prevent or delay any sale of our investments or significantly reduce the
amount of proceeds, if any, that might otherwise be realized there from. The
values we place on our investments may not accurately reflect their future
value or the value that we will receive for them when we sell them.The values we place on our investments may not accurately reflect their future
value or the value that we will receive for them when we sell them.At September 30, 2002 and December 31, 2001 respectively, equity
securities amounting to $7,182,595 or 93.1% of net assets and $9,988,772 or
100.8% of net assets, have been valued at fair value as determined by our Board
of Directors. As a general matter, restricted securities and securities without
an active trading market are more difficult to accurately value than
unrestricted, actively traded securities of public companies. Pursuant to the
requirements of the 1940 Act, the Board of Directors is responsible for
determining in good faith the fair value of our securities and assets for which
market quotations are not readily available. In making its determination, the
Board of Directors has considered valuation appraisals provided by an
independent financial expert. If we were required to sell any of such
investments, there is no assurance that the fair value, as determined by the
Board of Directors, would be obtained. If we were unable to obtain fair value
for such investments, there would be an adverse effect on our net asset value
and on the price of our common stock.Page 27 of 35Your ownership interest and the value of the shares of our common stock may be
diluted by the exercise of stock options and warrants we have granted or may
grant in the future.We have adopted two stock option plans under which certain of our
employees, officers and directors may be granted options. As of September 30,
2002, we have granted options to purchase 685,020 shares of our common stock to
certain officers and employees. We have also reserved an additional 64,980
shares of our common stock for issuance under our two stock option plans to key
employees and directors. In addition, we have issued warrants to the
underwriter of our initial public offering, upon payment of the purchase price of $.0003 per warrant, to
purchase 100,000 shares of common stock at an exercise price of $9.90 per
share. The warrants expire on October 25, 2005. The issuance and sale of
these shares of common stock will dilute the ownership interest of investors
and may have an adverse effect on the price of our common stock.Our business depends on key personnel.We rely, and will continue to be substantially dependent upon, the
continued services of our management, principally our Chief Executive Officer
and Chairman of the Board, Clifford M. Gross. Our management team is
responsible for the review of potential investments by and the provision of
advice to our portfolio companies regarding the acquisition of technologies and
additional research and development. We also depend upon our managements
key contacts with universities, to maintain our access to new technologies, and
their relationships with companies in the private sector in order to effectuate
the sale of our portfolio companies.Any transactions we engage in with affiliates may involve conflicts of
interest.The 1940 Act restricts transactions between the Company and any of its
affiliates, including its officers, directors or employees and principal
stockholders. In many cases, the 1940 Act prohibits transactions between such
persons and ourselves unless we first apply for and obtain an exemptive order
from the SEC. Delays and costs in obtaining necessary approvals may decrease or
even eliminate any profitability of such transactions or make it impracticable
or impossible to consummate such transactions. These affiliations could cause
circumstances that would require the SECs approval in advance of proposed
transactions by us in portfolio companies. Further, depending upon the extent
of our managements influence and control with respect to such portfolio
companies, the selection of the affiliates of management to perform such
services may not be a disinterested decision, and the terms and conditions for
the performance of such services and the amount and terms of such compensation
may not be determined at arms-length negotiations.We have a limited amount of funds available for investment in portfolio
companies and, as a result, our investments will lack diversification.Based on the amount of our existing available funds, it is unlikely that
we will be able to commit our funds to investments in, and the acquisition of,
securities of a large number of companies. We intend to continue to operate as
a non-diversified investment company within the meaning of the 1940 Act.
Prospective investors should understand that our current investments are not,
and in the future may not be, substantially diversified. We will not be able to
achieve the same level of diversification as larger entities engaged in similar
venture capital activities. Therefore, our assets may be subject to greater
risk of loss than if they were more widely diversified, because the failure of
one or more of our limited number of investments could have a material adverse
effect on our financial condition and the price of our common stock.We are subject to government regulations because of our status as a business
development company.We have elected to be treated as a BDC under the Small Business Incentive
Act of 1980, which modified the 1940 Act. Although the Incentive Act relieves
BDCs from compliance with many of the provisions of the 1940 Act, the Incentive
Act imposes on BDCs greater restrictions on permitted types of investments.
Moreover, the applicable provisions of the 1940 Act impose numerous
restrictions on our activities, including restrictions on the nature of our
investments and transactions with affiliates. We cannot assure you that this
legislation will be interpreted or administratively implemented in a manner
consistent with our objectives and manner of operations. Upon approval of a
majority of our stockholders, we may elect to withdraw our status as a BDC. If
we elect to withdraw our election, or if we otherwise fail to qualify as a BDC,
we may be subject to substantially greater regulation under the 1940 Act.
Compliance with such regulations would significantly increase our costs of
doing business.We have a limited operating history upon which you can assess our prospects and
we are subject to the risks associated with any new business.As a result of our short history of operations, we have only consummated
transactions with a very small number of companies. Therefore, there is little
historical information regarding our operations upon which you can base your
investmentPage 28 of 35decision. In addition, we are subject to all of the business risks
and uncertainties associated with any new business enterprise. We cannot assure
you that our investment objective will be attained.Our management has limited experience operating a technology transfer business,
and managing and operating a business development company.The members of our management have been engaged in the operation of our
business for a short period of time and so have limited experience. Some of our
directors and executive officers only have experience in science and research.
Furthermore, we commenced operations as a business development company in
September 2000 and so our directors and executive officers have only had
experience operating a business development company. In addition, our
management has had limited experience in the areas of corporate finance and
corporate mergers.One of our current stockholders has significant influence over our management
and affairs.Clifford M. Gross, our Chief Executive Officer and Chairman, beneficially
owns approximately 50% of our common stock as of September 30, 2002. Therefore,
Dr. Gross will be able, among other things, to elect directors, change our
investment policies, and withdraw our election to operate as a BDC.We are dependent upon the availability of additional financings.On September 30, 2002 and December 31, 2001, we had $497,252 and
$1,432,473, respectively, in cash and cash equivalents. While management
believes that we have sufficient resources to meet our funding requirements for
the remainder of the year, we will need to complete additional financing
initiatives in 2002 or early 2003 to generate the liquidity necessary to
continue our operations at the current level in 2003. Due to current economic
conditions, we may not be able to secure additional financing on
terms we deem acceptable. If we obtain additional funds by selling any of our equity
securities, the percentage ownership of our stockholders will be reduced,
stockholders may experience additional dilution, or the equity securities may
have rights, preferences or privileges senior to the common stock. If we obtain
additional funds by selling our investments, there can be no assurance that we
will be able to negotiate a favorable price for those investments or that the
loss of those investments will not affect our future business prospects. If
adequate funds are not available to us or available to us on satisfactory
terms, we may be required to limit our marketing and research and development
activities or other operations, or otherwise modify our business strategy.Page 29 of 35ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISKSThere has been no material change in the qualitative and quantitative
disclosures about market risk since December 31, 2001.ITEM 4. CONTROLS AND PROCEDURESDisclosure Controls and Procedures.The Registrants Chief Executive Officer and Chief Financial Officer have
evaluated the Registrants disclosure controls and procedures
(as defined in Rule 13a-14 and Rule 15d-14 of the Securities Exchange
Act of 1934) within the 90
days prior to the date of filing of this Quarterly Report on Form 10-Q. Based
upon such review, the Chief Executive Officer and Chief Financial Officer have
concluded that the Registrant's disclosure controls and procedures are
effective in timely alerting them to material information relating to
the Registrant that is required to be disclosed in the reports it
files or submits under the Securities Exchange Act of 1934.Internal controlsSince the date of
evaluation described above, there have not been any significant
changes in our internal accounting controls or in other factors that
could significantly affect those controls.PART II   OTHER INFORMATIONItem 1. Legal ProceedingsAlthough the Company may from time to time be involved in litigation and
claims arising out of its operations in the normal course of our business, as
of September 30, 2002, the Company was not a party to any material pending
legal proceedings.Item 2. Changes in Securities and Use of ProceedsNot applicable.Item 3. Defaults upon Senior SecuritiesNot applicable.Item 4. Submission of Matters to a Vote of Security HoldersNot applicableItem 5. Other InformationOn September 1, 2002, the Companys President, Uwe Reischl, Ph.D., M.D.
resigned to pursue other interests.Page 30 of 35Item 6. Exhibits and Reports on Form 8-K(a)  List of exhibits.

|           |  |                                                                                                                                                                                       
|---------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a.         |  | The following exhibits are filed with this report or are incorporated herein by reference to a prior filing, in accordance with Rule 12b-32 under the Securities Exchange Act of 1934.
|          
|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)(4)  |  | 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.                                                                                                                                                    
|99.1       |  | Certification Of Clifford M. Gross Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                  
|99.2       |  | Certification Of Michael O. Sullivan Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                



---

|(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).

(b)  Reports on Form 8-K.

The Company filed a Current Report on Form 8-K on September 10, 2002 regarding
the disposition of Fiber Gel Technologies, Inc.

The Company filed a Current Report on Form 8-K/A on October 9, 2002 regarding
the acquisition of Techex Acquisition Corporation.

The Company filed a Current Report on Form 8-K on October 9, 2002 regarding the
disposition of Spoken Data Technologies, Inc.

Page 31 of 35



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##### 



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                        |  |                                     
|----------------------- |  | ------------------------------------
|                        |  | UTEK CORPORATION                    
|                        |  |                                     
|                        |  | (Registrant)                        
|                        |  |                                     
|Date: November 13, 2002 |  | /s/ Clifford M. Gross               
|                        |  |                                     
|                        |  | Clifford M. Gross                   
|                        |  | Chairman and Chief Executive Officer
|                        |  |                                     
|Date: November 13, 2002 |  | /s/ Michael O. Sullivan             
|                        |  |                                     
|                        |  | Michael O. Sullivan                 
|                        |  | Chief Financial Officer             

Page 32 of 35



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##### 



Certification Of Chief Executive Officer

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

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

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

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

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



| |                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
|
| | (ii) Evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of the report
(Evaluation Date); and                                                                                                                
|
| | (iii) Presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;                                                                                                                      

(5) The
registrants other certifying officer and I have disclosed, based on our most
recent evaluation, to the registrants auditors and the audit committee of the
board of directors (or persons fulfilling the equivalent function):



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
|
| | (ii) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls; and                                                                                                                                       

(6) The
registrants other certifying officers and I have indicated in the report
whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

|                        |  |                        
|----------------------- |  | -----------------------
|Date: November 13, 2002 |  | /s/ Clifford M. Gross  
|                        |  |                        
|                        |  | Clifford M. Gross      
|                        |  | Chief Executive Officer

Page 33 of 35



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##### 



Certification Of Chief Financial Officer

I, Michael O. Sullivan, Chief Financial Officer of UTEK Corporation,
certify that:

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

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

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

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



| |                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
|
| | (ii) Evaluated the effectiveness of the
registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of the report
(Evaluation Date); and                                                                                                                
|
| | (iii) Presented
in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;                                                                                                                      

(5) The
registrants other certifying officer and I have disclosed, based on our most
recent evaluation, to the registrants auditors and the audit committee of the
board of directors (or persons fulfilling the equivalent function):



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
|
| | (ii) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls; and                                                                                                                                       

(6) The registrants other certifying officers
and I have indicated in the report
whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

|                        |  |                        
|----------------------- |  | -----------------------
|Date: November 13, 2002 |  | /s/ Michael O. Sullivan
|                        |  |                        
|                        |  | Michael O. Sullivan    
|                        |  | Chief Financial Officer

Page 34 of 35