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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

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



FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 2003

COMMISSION FILE NUMBER: 001-15941

UTEK CORPORATION

(Exact Name of Registrant as Specified in its Charter)


DELAWARE
(State or Jurisdiction of
Incorporation or Organization)

59-3603677
(IRS Employer
Identification No.)

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

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



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

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

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



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UTEK CORPORATION

FORM 10-Q INDEX

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

Page 2 of 32



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PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UTEK Corporation
Consolidated Balance Sheets

|                              |                                                                                                                                                           |                                                                                                                                                           |                   |           |             |           |              |           |            |           | 
|----------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | --------- | ----------- | --------- | ------------ | --------- | ---------- | --------- | 
|                              |                                                                                                                                                           |                                                                                                                                                           |                   |           | March 31,   |           | December 31,
|                              |                                                                                                                                                           |                                                                                                                                                           |                   |           | 2003        |           | 2002        
|                              |                                                                                                                                                           |                                                                                                                                                           |                   |           |             |           |             
|                              |                                                                                                                                                           |                                                                                                                                                           |                   |           | (Unaudited) |           |              |           |           
|ASSETS                        |                                                                                                                                                           |                                                                                                                                                           |                   |           |             |           |              |          
|                              | Investments in non-controlled affiliates
(cost $9,523,785 and $9,541,631 at March 31,
2003 and December 31, 2002, respectively)                           |                                                                                                                                                           | $                 | 2,713,856 |             |           | $            | 6,208,090 |           
|                              | Cash and cash equivalents                                                                                                                                 |                                                                                                                                                           |                   | 580,045   |             |           |              | 745,926   |           
|                              | Prepaid expenses and other assets                                                                                                                         |                                                                                                                                                           |                   | 197,580   |             |           |              | 308,722   |           
|                              | Fixed assets, net                                                                                                                                         |                                                                                                                                                           |                   | 58,812    |             |           |              | 65,255    |           
|                              | Intangible assets                                                                                                                                         |                                                                                                                                                           |                   | 525,010   |             |           |              | 535,147   |           
|                              |                                                                                                                                                           |                                                                                                                                                           |                   |           |             |           |              |          
|                              |                                                                                                                                                           |                                                                                                                                                           | TOTAL ASSETS      |           |             | 4,075,303 |              |           |            | 7,863,140 | 
|                              |                                                                                                                                                           |                                                                                                                                                           |                   |           |             |           |              |          
|LIABILITIES                   |                                                                                                                                                           |                                                                                                                                                           |                   |           |             |           |              |          
|                              | Accrued expenses                                                                                                                                          |                                                                                                                                                           |                   | 223,826   |             |           |              | 126,947   |           
|                              | Income taxes payable                                                                                                                                      |                                                                                                                                                           |                   | 16,463    |             |           |              | 16,781    |           
|                              | Deferred revenue                                                                                                                                          |                                                                                                                                                           |                   | 298,971   |             |           |              | 127,766   |           
|                              | Deferred income taxes                                                                                                                                     |                                                                                                                                                           |                   |          |             |           |              | 245,589   |           
|                              |                                                                                                                                                           |                                                                                                                                                           |                   |           |             |           |              |          
|                              |                                                                                                                                                           |                                                                                                                                                           | TOTAL LIABILITIES |           |             | 539,260   |              |           |            | 517,083   | 
|                              |                                                                                                                                                           |                                                                                                                                                           |                   |           |             |           |              |          
|                              |                                                                                                                                                           |                                                                                                                                                           | NET ASSETS        |           | $           | 3,536,043 |              |           | $          | 7,346,057 | 
|                              |                                                                                                                                                           |                                                                                                                                                           |                   |           |             |           |              |          
|Commitments and Contingencies |                                                                                                                                                           |                                                                                                                                                           |                   |           |             |           |              |          
|Composition of net assets:    |                                                                                                                                                           |                                                                                                                                                           |                   |           |             |           |              |          
|                              | Common stock, $.01 par value, 19,000,000
shares authorized; 3,925,672 shares issued
and outstanding at March 31, 2003
and December 31, 2002, respectively |                                                                                                                                                           | $                 | 39,257    |             |           | $            | 39,257    |           
|                              | Preferred stock, $.01 par value, 1,000,000 shares
authorized; none issued and outstanding                                                                 |                                                                                                                                                           |                   |          |             |           |              |          |           
|                              | Additional paid in capital                                                                                                                                |                                                                                                                                                           |                   | 7,058,941 |             |           |              | 7,058,941 |           
|                              | Accumulated income:                                                                                                                                       |                                                                                                                                                           |                   |           |             |           |              |           |           
|                              |                                                                                                                                                           | Accumulated net operating income                                                                                                                          |                   |           | 2,519,463   |           |              |           | 3,122,937  |          
|                              |                                                                                                                                                           | Net realized loss on investments,
net of income taxes of $378,000 and $315,000 at March 31,
2003 and December 31, 2002, respectively                      |                   |           | (1,004,636  | )         |              |           | (836,125   | )        
|                              |                                                                                                                                                           | Net unrealized depreciation of investments,
net of deferred income taxes of $2,219,823 and $787,000 at March 31, 2003
and December 31, 2002, respectively |                   |           | (5,111,443  | )         |              |           | (2,091,988 | )        
|                              |                                                                                                                                                           | Foreign currency translation adjustment                                                                                                                   |                   |           | 34,461      |           |              |           | 53,035     |          
|                              |                                                                                                                                                           |                                                                                                                                                           |                   |           |             |           |              |          
|Net assets                    |                                                                                                                                                           | $                                                                                                                                                         | 3,536,043         |           |             | $         | 7,346,057    |          
|                              |                                                                                                                                                           |                                                                                                                                                           |                   |           |             |           |              |          
|Net asset value per share     |                                                                                                                                                           | $                                                                                                                                                         | .90               |           |             | $         | 1.87         |          
|                              |                                                                                                                                                           |                                                                                                                                                           |                   |           |             |           |              |          

See accompanying notes

Page 3 of 32



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UTEK Corporation
Consolidated Statements of Operations
(Unaudited)

|                                                      |  |                                                                                                                                                                                |            |   |                             |           |          |   |          |           |  
|----------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------- | - | --------------------------- | --------- | -------- | - | -------- | --------- | -
|                                                      |  |                                                                                                                                                                                |            |   | Three Months Ended March 31
|                                                      |  |                                                                                                                                                                                |            |   |                            
|                                                      |  |                                                                                                                                                                                |            |   | 2003                        |           | 2002    
|                                                      |  |                                                                                                                                                                                |            |   |                             |           |         
|Income from operations:                               |  |                                                                                                                                                                                |            |   |                             |           |          |  
|                                                      |  | Sale of technology rights                                                                                                                                                      |            | $ | 262,857                     |           |          | $ |         |          
|                                                      |  | Consulting fees                                                                                                                                                                |            |   | 239,823                     |           |          |   | 263,936  |          
|                                                      |  | Investment income, net                                                                                                                                                         |            |   | 1,591                       |           |          |   | 6,018    |          
|                                                      |  |                                                                                                                                                                                |            |   |                             |           |          |  
|                                                      |  |                                                                                                                                                                                | 504,271    |   |                             |           | 269,954  |  
|                                                      |  |                                                                                                                                                                                |            |   |                             |           |          |  
|Expenses:                                             |  |                                                                                                                                                                                |            |   |                             |           |          |  
|                                                      |  | Salaries and wages                                                                                                                                                             |            |   | 177,312                     |           |          |   | 210,964  |          
|                                                      |  | Professional fees                                                                                                                                                              |            |   | 260,861                     |           |          |   | 157,242  |          
|                                                      |  | Sales and marketing                                                                                                                                                            |            |   | 91,464                      |           |          |   | 95,680   |          
|                                                      |  | General and administrative                                                                                                                                                     |            |   | 285,711                     |           |          |   | 228,020  |          
|                                                      |  |                                                                                                                                                                                |            |   |                             |           |          |  
|                                                      |  |                                                                                                                                                                                | 815,348    |   |                             |           | 691,906  |  
|                                                      |  |                                                                                                                                                                                |            |   |                             |           |          |  
|Loss before income taxes                              |  |                                                                                                                                                                                | (311,077   | ) |                             |           | (421,952 | )
|Provision
for income tax expense (benefit)            |  |                                                                                                                                                                                | 292,397    |   |                             |           | (150,902 | )
|                                                      |  |                                                                                                                                                                                |            |   |                             |           |          |  
|                                                      |  | Net loss from operations                                                                                                                                                       |            |   | (603,474                    | )         |          |   | (271,050 | )        
|                                                      |  |                                                                                                                                                                                |            |   |                             |           |          |   |          |          
|Net realized and unrealized gains (losses):           |  |                                                                                                                                                                                |            |   |                             |           |          |  
|                                                      |  | Net realized loss on investments, net of
income tax benefit of $101,669 and $16,881 for 2003 and 2002, respectively                                                            |            |   | (168,511                    | )         |          |   | (27,979  | )        
|                                                      |  | Change in unrealized appreciation (depreciation)
of non-controlled affiliate investments, net of
deferred tax benefit of $456,933
and $134,431 for 2003 and 2002, respectively |            |   | (3,019,455                  | )         |          |   | (213,823 | )        
|                                                      |  |                                                                                                                                                                                |            |   |                             |           |          |  
|Net decrease in net assets from operations            |  | $                                                                                                                                                                              | (3,791,440 | ) |                             | $         | (512,852 | )
|                                                      |  |                                                                                                                                                                                |            |   |                             |           |          |  
|Net decrease in net assets from operations per share: |  |                                                                                                                                                                                |            |   |                             |           |          |  
|                                                      |  |                                                                                                                                                                                | Basic      |   | $                           | (.97      | )        |   | $        | (.13      | )
|                                                      |  |                                                                                                                                                                                | Diluted    |   | $                           | (.97      | )        |   | $        | (.13      | )
|Weighted average shares:                              |  |                                                                                                                                                                                |            |   |                             |           |          |  
|                                                      |  |                                                                                                                                                                                | Basic      |   |                             | 3,925,672 |          |   |          | 3,915,672 |  
|                                                      |  |                                                                                                                                                                                | Diluted    |   |                             | 3,925,672 |          |   |          | 3,915,672 |  

See accompanying notes

Page 4 of 32



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UTEK Corporation
Consolidated Statements of Cash Flows
(Unaudited)

|                                               |                                                                                                                   |                                                           |         |                                           |           |                                     |           |          |          |   |          |  
|---------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------- | ------- | ----------------------------------------- | --------- | ----------------------------------- | --------- | -------- | -------- | - | -------- | -
|                                               |                                                                                                                   |                                                           |         |                                           |           | For the Three Months Ended March 31
|                                               |                                                                                                                   |                                                           |         |                                           |           |                                    
|                                               |                                                                                                                   |                                                           |         |                                           |           | 2003                                |           | 2002    
|                                               |                                                                                                                   |                                                           |         |                                           |           |                                     |           |         
|Operating Activities:                          |                                                                                                                   |                                                           |         |                                           |           |                                     |           |         
|                                               | Net decrease in net assets from operations                                                                        |                                                           | $       | (3,791,440                                | )         |                                     | $         | (512,852 | )       
|                                               | Adjustments to reconcile net decrease
in net assets from operations to net cash
provided by operating activities: |                                                           |         |                                           |           |                                     |           |          |         
|                                               |                                                                                                                   | Decrease in net unrealized appreciation
of investments    |         |                                           | 3,476,388 |                                     |           |          | 342,830  |  
|                                               |                                                                                                                   | Depreciation                                              |         |                                           | 7,490     |                                     |           |          | 8,098    |  
|                                               |                                                                                                                   | Loss on disposal of fixed asset                           |         |                                           |          |                                     |           |          | 1,024    |  
|                                               |                                                                                                                   | Loss on sale of investments                               |         |                                           | 270,180   |                                     |           |          | 44,860   |  
|                                               |                                                                                                                   | Deferred income taxes                                     |         |                                           | (245,589  | )                                   |           |          | (296,790 | )
|                                               |                                                                                                                   | Investment securities received from assignment of license |         |                                           | (262,857  | )                                   |           |          |         |  
|                                               |                                                                                                                   | Services rendered in exchange for investment securities   |         |                                           | (42,963   | )                                   |           |          | (188,511 | )
|                                               | Changes in operating assets and liabilities:                                                                      |                                                           |         |                                           |           |                                     |           |          |         
|                                               |                                                                                                                   | Prepaid expenses and other assets                         |         |                                           | 119,913   |                                     |           |          | 49,802   |  
|                                               |                                                                                                                   | Deferred revenue                                          |         |                                           | 1,100     |                                     |           |          | (26,263  | )
|                                               |                                                                                                                   | Accrued expenses                                          |         |                                           | 96,879    |                                     |           |          | 10,428   |  
|                                               |                                                                                                                   |                                                           |         |                                           |           |                                     |           |         
|                                               |                                                                                                                   |                                                           |         | Net cash used in operating activities     |           |                                     | (370,899  | )        |          |   | (567,374 | )
|                                               |                                                                                                                   |                                                           |         |                                           |           |                                     |           |         
|Investing Activities:                          |                                                                                                                   |                                                           |         |                                           |           |                                     |           |         
|                                               | Proceeds received on sale of investments                                                                          |                                                           |         | 223,592                                   |           |                                     |           | 453,790  |         
|                                               | Purchases of fixed assets                                                                                         |                                                           |         |                                          |           |                                     |           | (4,455   | )       
|                                               |                                                                                                                   |                                                           |         |                                           |           |                                     |           |         
|                                               |                                                                                                                   |                                                           |         | Net cash provided by investing activities |           |                                     | 223,592   |          |          |   | 449,335  |  
|                                               |                                                                                                                   |                                                           |         |                                           |           |                                     |           |         
|
|                                               | Foreign currency translation adjustment                                                                           |                                                           |         | (18,574                                   | )         |                                     |           | (886     | )       
|                                               |                                                                                                                   |                                                           |         |                                           |           |                                     |           |         
|                                               | Decrease in cash and cash equivalents                                                                             |                                                           |         | (165,881                                  | )         |                                     |           | (118,925 | )       
|Cash and cash equivalents at beginning of year |                                                                                                                   |                                                           | 745,926 |                                           |           |                                     | 1,432,473 |         
|                                               |                                                                                                                   |                                                           |         |                                           |           |                                     |           |         
|Cash and cash equivalents at end of period     |                                                                                                                   | $                                                         | 580,045 |                                           |           | $                                   | 1,313,548 |         
|                                               |                                                                                                                   |                                                           |         |                                           |           |                                     |           |         

See accompanying notes

Page 5 of 32



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

|                                        |                                                                                     |                                            |            |                             |            |      |           |          |          |  
|--------------------------------------- | ----------------------------------------------------------------------------------- | ------------------------------------------ | ---------- | --------------------------- | ---------- | ---- | --------- | -------- | -------- | -
|                                        |                                                                                     |                                            |            | Three Months Ended March 31
|                                        |                                                                                     |                                            |            |                            
|                                        |                                                                                     |                                            |            | 2003                        |            | 2002
|                                        |                                                                                     |                                            |            |                             |            |     
|Changes in net assets from operations:  |                                                                                     |                                            |            |                             |            |      |           |         
|                                        | Net loss from operations                                                            |                                            | $          | (603,474                    | )          |      | $         | (271,050 | )       
|                                        | Net realized loss on sale of investments                                            |                                            |            | (168,511                    | )          |      |           | (27,979  | )       
|                                        | Change in net unrealized depreciation of
investments, net of related deferred taxes |                                            |            | (3,019,455                  | )          |      |           | (213,823 | )       
|                                        |                                                                                     |                                            |            |                             |            |      |           |         
|                                        |                                                                                     | Net decrease in net assets from operations |            |                             | (3,791,440 | )    |           |          | (512,852 | )
|                                        |                                                                                     |                                            |            |                             |            |      |           |         
|Foreign currency translation adjustment |                                                                                     |                                            | (18,574    | )                           |            |      | (9,334    | )       
|                                        |                                                                                     |                                            |            |                             |            |      |           |         
|Net decrease in net assets              |                                                                                     |                                            | (3,810,014 | )                           |            |      | (522,186  | )       
|Net assets at beginning of year         |                                                                                     |                                            | 7,346,057  |                             |            |      | 9,909,440 |         
|                                        |                                                                                     |                                            |            |                             |            |      |           |         
|Net assets at end of period             |                                                                                     | $                                          | 3,536,043  |                             |            | $    | 9,387,254 |         
|                                        |                                                                                     |                                            |            |                             |            |      |           |         

See accompanying notes

Page 6 of 32



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##### 



UTEK Corporation
Financial Highlights
(Unaudited)

|                                                                        |                                                                                |   |                             |       |      |   |           |       |  
|----------------------------------------------------------------------- | ------------------------------------------------------------------------------ | - | --------------------------- | ----- | ---- | - | --------- | ----- | -
|                                                                        |                                                                                |   | Three Months Ended March 31
|                                                                        |                                                                                |   |                            
|                                                                        |                                                                                |   | 2003                        |       | 2002
|                                                                        |                                                                                |   |                             |       |     
|PER SHARE INFORMATION                                                   |                                                                                |   |                             |       |      |   |           |      
|Net asset value, beginning of period                                    |                                                                                | $ | 1.87                        |       |      | $ | 2.53      |      
|                                                                        | Net decrease from operations (1)                                               |   |                             | (0.15 | )    |   |           | (0.07 | )
|                                                                        | Net change in realized and unrealized
depreciation on investments, after taxes |   |                             | (0.81 | )    |   |           | (0.06 | )
|                                                                        | Foreign currency translation adjustment                                        |   |                             | (0.01 | )    |   |           |      |  
|                                                                        |                                                                                |   |                             |       |      |   |           |      
|Net asset value, end of period                                          |                                                                                | $ | .90                         |       |      | $ | 2.40      |      
|                                                                        |                                                                                |   |                             |       |      |   |           |      
|Per share market value, end of period                                   |                                                                                | $ | 5.70                        |       |      | $ | 7.00      |      
|RATIOS/SUPPLEMENTAL DATA                                                |                                                                                |   |                             |       |      |   |           |      
|Net assets, end of period                                               |                                                                                | $ | 3,536,043                   |       |      | $ | 9,387,254 |      
|Ratio of expenses to average net
assets (2)                             |                                                                                |   | 15                          | %     |      |   | 7         | %    
|Ratio of net loss to average net
assets                                 |                                                                                |   | (11                         | )%    |      |   | (6        | )%   
|Diluted weighted average number of shares
outstanding during the period |                                                                                |   | 3,925,672                   |       |      |   | 3,915,672 |      



---

|(1) |  | Calculated based on diluted weighted average number of shares
outstanding during the period.
|--- |  | --------------------------------------------------------------------------------------------
|   
|(2) |  | Excluding income taxes                                                                      

See accompanying notes

Page 7 of 32



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##### 



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

|       |           |             |  |          |       |      |  |                                                                            |  |      |           |  |  |   |           | 
|------ | --------- | ----------- |  | -------- | ----- | ---- |  | -------------------------------------------------------------------------- |  | ---- | --------- |  |  | - | --------- | 
|       |           |             |  | Original |       |      |  |                                                                            |  |      |           |  |  |  
|       |           |             |  | Date of  |       |      |  | Original                                                                   |  | Fair
|Shares |           | Acquisition |  |          |       | Cost |  | Value                                                                     
|       |           |             |  |          |       |      |  |                                                                           
|       |           |             |  |          |       |      |  | Common
stock in non-controlled affiliates76.7%
of net assets              |  |      |           |  |  |   |           | 
|       | 236,000   |             |  |          | 3/01  |      |  | Lexon, Inc.,publicly traded over the counter0%;                           |  | $    | 39,614    |  |  | $ |          | 
|       |           |             |  |          |       |      |  | developer of health care technology                                        |  |      |           |  |  |   |           | 
|       | 1,344,300 |             |  |          | 1/99  |      |  | Image
Analysis, Inc., privately held  0%;                                 |  |      | 1,349,775 |  |  |   |          | 
|       |           |             |  |          |       |      |  | medical and hospital equipment developer                                   |  |      |           |  |  |   |           | 
|       | 900,000   |             |  |          | 5/99  |      |  | Nubar, Inc., privately held0%; developer of construction materials        |  |      | 126,000   |  |  |   |          | 
|       | 980,778   |             |  |          | 6/99  |      |  | Clean Water Technologies, Inc. (formerly NuElectric Corporation),          |  |      | 573,806   |  |  |   | 54,923    | 
|       |           |             |  |          |       |      |  | publicly traded over the counter1.5%; environmental services              |  |      |           |  |  |   |           | 
|       | 150       |             |  |          | 11/99 |      |  | Rosbon, LLC (formerly Rosbon, Inc.), privately held1.8%;                  |  |      | 90,705    |  |  |   | 63,086    | 
|       |           |             |  |          |       |      |  | real estate development                                                    |  |      |           |  |  |   |           | 
|       | 136,093   |             |  |          | 3/00  |      |  | Graphco Technologies, Inc., publicly traded over the counter              |  |      | 1,025,257 |  |  |   | 280,351   | 
|       |           |             |  |          |       |      |  | 8.0%;
developer of e-commerce technologies                                 |  |      |           |  |  |   |           | 
|       | 2,094,053 |             |  |          | 6/00  |      |  | Advanced Recycling Sciences, Inc. (formerly The Quantum Group, Inc.)       |  |      | 1,970,952 |  |  |   | 108,891   | 
|       |           |             |  |          |       |      |  | publicly traded over the counter3.1%; tire recycling methodologies        |  |      |           |  |  |   |           | 
|       | 4,221,165 |             |  |          | 4/01  |      |  | Stealth MediaLabs, Inc. (formerly BitzMart, Inc.)publicly traded           |  |      | 1,708,000 |  |  |   | 337,693   | 
|       |           |             |  |          |       |      |  | over
the counter9.5%; software products                                   |  |      |           |  |  |   |           | 
|       | 62,089    |             |  |          | 5/01  |      |  | Sense Holdings, Inc., publicly traded over the counter .3%;               |  |      | 16,143    |  |  |   | 10,307    | 
|       |           |             |  |          |       |      |  | biometric technologies                                                     |  |      |           |  |  |   |           | 
|       | 1,493,550 |             |  |          | 9/01  |      |  | Prime Pharmaceutical Corporation, privately held 3.1%;                    |  |      | 783,344   |  |  |   | 109,029   | 
|       |           |             |  |          |       |      |  | pharmaceutical developments in dermatology                                 |  |      |           |  |  |   |           | 
|       | 1,000,000 |             |  |          | 11/01 |      |  | Primapharm Funding Corporation, privately held 3.1%;                      |  |      | 413,617   |  |  |   | 109,000   | 
|       |           |             |  |          |       |      |  | intellectual property development                                          |  |      |           |  |  |   |           | 
|       | 400,000   |             |  |          | 11/01 |      |  | Palladium Communications, Inc. (formerly USAOnestar.Net Inc.),             |  |      | 12,028    |  |  |   |          | 
|       |           |             |  |          |       |      |  | publicly traded over the counter0%; telecom, educational internet service |  |      |           |  |  |   |           | 
|       | 47,615    |             |  |          | 1/02  |      |  | Group Management Corporation,publicly traded over the counter 0%;         |  |      | 46,949    |  |  |   |          | 
|       |           |             |  |          |       |      |  | corporate management                                                       |  |      |           |  |  |   |           | 
|       | 3,669,429 |             |  |          | 1/02  |      |  | Circle Group Holdings, Inc. (formerly Circle Group Internet, Inc.),        |  |      |           |  |  |   |           | 
|       |           |             |  |          |       |      |  | publicly traded over the counter, digital design and consulting  35.2%;   |  |      | 622,358   |  |  |   | 1,246,717 | 
|       | 633,750   |             |  |          | 2/02  |      |  | Voice
and Wireless Corporation, publicly traded over the counter           |  |      | 53.161    |  |  |   | 10,647    | 
|       |           |             |  |          |       |      |  | .3%;
internet/technology services and products                            |  |      |           |  |  |   |           | 
|       | 48,000    |             |  |          | 4/02  |      |  | Hydrogen Technology Applications, Inc.,privately held,  0%;               |  |      | 14,040    |  |  |   |          | 
|       |           |             |  |          |       |      |  | developer of energy technology                                             |  |      |           |  |  |   |           | 
|       | 486,750   |             |  |          | 6/02  |      |  | FullCircle Registry, Inc.,publicly traded over the counter,  6.2%;        |  |      | 519,618   |  |  |   | 219,038   | 
|       |           |             |  |          |       |      |  | developer of emergency information technology                              |  |      |           |  |  |   |           | 
|       | 120,000   |             |  |          | 9/02  |      |  | Innovative Medical Services, Inc., publicly traded over the counter,       |  |      | 59,559    |  |  |   | 67,200    | 
|       |           |             |  |          |       |      |  |  1.9% developer of anti-microbial technology                              |  |      |           |  |  |   |           | 
|       | 83,478    |             |  |          | 1/03  |      |  | Duraswitch
Industries, Inc., publicly traded over the counter,             |  |      | 44,459    |  |  |   | 42,574    | 
|       |           |             |  |          |       |      |  | 1.2% developer of electronic switch technologies                          |  |      |           |  |  |   |           | 
|       | 160,000   |             |  |          | 3/03  |      |  | Sequiam Corporation, publicly traded over the counter,  1.5%              |  |      | 54,400    |  |  |   | 54,400    | 
|       |           |             |  |          |       |      |  | developer of biological authentication and biometrics technologies         |  |      |           |  |  |   |           | 
|       |           |             |  |          |       |      |  |                                                                            |  |      |           |  |  |   |           | 
|       |           |             |  |          |       |      |  | TOTAL
INVESTMENTS76.7%                                                    |  | $    | 9,523,785 |  |  | $ | 2,713,856 | 
|       |           |             |  |          |       |      |  |                                                                            |  |      |           |  |  |   |           | 
|       |           |             |  |          |       |      |  | Cash
and other assets, less liabilities23.3%                              |  |      |           |  |  |   | 822,187   | 
|       |           |             |  |          |       |      |  |                                                                            |  |      |           |  |  |   |           | 
|       |           |             |  |          |       |      |  | Net assets at March 31, 2003100%                                          |  |      |           |  |  | $ | 3,536,043 | 
|       |           |             |  |          |       |      |  |                                                                            |  |      |           |  |  |   |           | 

Notes to Schedule of Investments:



| |  |  | The above investments with the exception of Rosbon, LLC are
non-income producing. Equity investments that have not paid dividends
within the last twelve months are considered non-income producing.                                                                                                                                                    
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The value of all securities for which there is no readily
ascertainable market value is determined in good faith by the Board of
Directors. In making its determination, the Board of Directors has
considered valuation appraisals provided by an independent valuation
service provider. (See Notes 1 and 2 to the consolidated financial
statements).

Page 8 of 32



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##### 





| |  |  | As of March 31, 2003, all of the securities that we own are
restricted securities, as that term is defined under Rule 144 of the
Securities Act of 1933. These securities may not be sold in the absence
of registration under the Securities Act of 1933 or an exemption
therefrom. As a result, our ability to sell or otherwise transfer the
securities we hold in our portfolio is limited.                                                                                                                                                                                                                                    
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The Company owns more than 10% of the outstanding common stock of
each of the above investments with the exception of Full Circle
Registry, Inc., Graphco Technologies, Inc., Prime Pharmaceutical
Corporation, Lexon, Inc., Voice and Wireless Corporation, Palladium
Communications, Inc., Hydrogen Technology Applications, Inc., Innovative
Medical Services, Inc., Sense Holdings, Inc., Advanced Recycling
Sciences, Inc. and Group Management Corporation. As such, the Company is
deemed to be an affiliate of these companies, as defined under Rule 144
of the Securities Act of 1933, except for those specifically noted.

See accompanying notes

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##### 



UTEK CORPORATION
Schedule of Investments
December 31, 2002

|       |           |             |  |          |       |      |  |                                                                                                                                          |  |      |           |  |  |   |           | 
|------ | --------- | ----------- |  | -------- | ----- | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- |  |  | - | --------- | 
|       |           |             |  | Original |       |      |  |                                                                                                                                          |  |      |           |  |  |  
|       |           |             |  | Date of  |       |      |  | Original                                                                                                                                 |  | Fair
|Shares |           | Acquisition |  |          |       | Cost |  | Value                                                                                                                                   
|       |           |             |  |          |       |      |  |                                                                                                                                         
|       |           |             |  |          |       |      |  | Common stock in non-controlled affiliates84.5%
of net assets                                                                            |  |      |           |  |  |   |           | 
|       | 236,000   |             |  |          | 3/01  |      |  | Lexon, Inc.,publicly traded over the counter0%;                                                                                         |  | $    | 39,614    |  |  | $ |          | 
|       |           |             |  |          |       |      |  | developer of health care technology                                                                                                      |  |      |           |  |  |   |           | 
|       | 1,344,300 |             |  |          | 1/99  |      |  | Image Analysis, Inc., privately held0%; medical and                                                                                     |  |      | 1,349,775 |  |  |   |          | 
|       |           |             |  |          |       |      |  | hospital equipment developer                                                                                                             |  |      |           |  |  |   |           | 
|       | 1,343,400 |             |  |          | 5/99  |      |  | Centrex, Inc., publicly traded over the counter3.5%;                                                                                    |  |      | 443,322   |  |  |   | 255,246   | 
|       |           |             |  |          |       |      |  | developer of water and purification methodologies                                                                                        |  |      |           |  |  |   |           | 
|       | 900,000   |             |  |          | 5/99  |      |  | Nubar, Inc., privately held0%; developer of construction materials                                                                      |  |      | 126,000   |  |  |   |          | 
|       | 980,778   |             |  |          | 6/99  |      |  | Clean Water Technologies, Inc. (formerly NuElectric Corporation),                                                                        |  |      | 573,806   |  |  |   | 45,116    | 
|       |           |             |  |          |       |      |  | publicly traded over the counter.6%; environmental services                                                                             |  |      |           |  |  |   |           | 
|       | 150       |             |  |          | 11/99 |      |  | Rosbon, LLC (formerly Rosbon, Inc.), privately held1.0%;                                                                                |  |      | 90,705    |  |  |   | 76,451    | 
|       |           |             |  |          |       |      |  | real estate development                                                                                                                  |  |      |           |  |  |   |           | 
|       | 100,799   |             |  |          | 3/00  |      |  | Graphco Technologies, Inc., privately held2.8%;                                                                                         |  |      | 952,551   |  |  |   | 207,646   | 
|       |           |             |  |          |       |      |  | developer developer of e-commerce technologies                                                                                           |  |      |           |  |  |   |           | 
|       | 2,103,053 |             |  |          | 6/00  |      |  | Advanced Recycling Sciences, Inc. (formerly The Quantum Group, Inc.)                                                                     |  |      | 1,978,242 |  |  |   | 231,336   | 
|       |           |             |  |          |       |      |  | publicly traded over the counter3.1%; tire recycling methodologies                                                                      |  |      |           |  |  |   |           | 
|       | 4,221,165 |             |  |          | 4/01  |      |  | Stealth MediaLabs, Inc. (formerly BitzMart, Inc.)publicly traded                                                                         |  |      | 1,708,000 |  |  |   | 4,586,435 | 
|       |           |             |  |          |       |      |  | over the counter62.5%; software products                                                                                                |  |      |           |  |  |   |           | 
|       | 228,089   |             |  |          | 5/01  |      |  | Sense Holdings, Inc., publicly traded over the counter1.0%;                                                                             |  |      | 59,303    |  |  |   | 70,708    | 
|       |           |             |  |          |       |      |  | biometric technologies                                                                                                                   |  |      |           |  |  |   |           | 
|       | 1,493,550 |             |  |          | 9/01  |      |  | Prime Pharmaceutical Corporation, privately held1.4%;                                                                                   |  |      | 783,344   |  |  |   | 104,548   | 
|       |           |             |  |          |       |      |  | pharmaceutical developments in dermatology                                                                                               |  |      |           |  |  |   |           | 
|       | 1,000,000 |             |  |          | 11/01 |      |  | Primapharm Funding Corporation, privately held1.4%; intellectual                                                                        |  |      | 393,001   |  |  |   | 100,000   | 
|       |           |             |  |          |       |      |  | property development                                                                                                                     |  |      |           |  |  |   |           | 
|       | 400,000   |             |  |          | 11/01 |      |  | Palladium Communications, Inc. (formerly USAOnestar.Net Inc.),                                                                           |  |      | 12,028    |  |  |   |          | 
|       |           |             |  |          |       |      |  | publicly traded over the counter0%; telecom, educational internet service                                                               |  |      |           |  |  |   |           | 
|       | 47,615    |             |  |          | 1/02  |      |  | Group Management Corporation,publicly traded over the counter0%;                                                                        |  |      | 46,949    |  |  |   |          | 
|       |           |             |  |          |       |      |  | corporate management                                                                                                                     |  |      |           |  |  |   |           | 
|       | 2,844,000 |             |  |          | 1/02  |      |  | Circle
Group Holdings, Inc. (formerly Circle Group Internet, Inc.),
publicly traded over the counter, digital design and consulting.8%; |  |      | 358,102   |  |  |   | 59,724    | 
|       | 633,750   |             |  |          | 2/02  |      |  | Voice and Wireless Corporation, publicly traded over the counter,                                                                        |  |      | 53,161    |  |  |   | 13,942    | 
|       |           |             |  |          |       |      |  | .2%; internet/technology services and products                                                                                          |  |      |           |  |  |   |           | 
|       | 48,000    |             |  |          | 4/02  |      |  | Hydrogen Technology Applications, Inc.,privately held,0%;                                                                               |  |      | 14,040    |  |  |   |          | 
|       |           |             |  |          |       |      |  | developer of energy technology                                                                                                           |  |      |           |  |  |   |           | 
|       | 486,750   |             |  |          | 6/02  |      |  | FullCircle Registry, Inc.,publicly traded over the counter,5.6%;                                                                        |  |      | 519,803   |  |  |   | 413,738   | 
|       |           |             |  |          |       |      |  | developer of emergency information technology                                                                                            |  |      |           |  |  |   |           | 
|       | 120,000   |             |  |          | 9/02  |      |  | Innovative Medical Services, Inc., publicly traded over the counter,                                                                     |  |      | 39,885    |  |  |   | 43,200    | 
|       |           |             |  |          |       |      |  | .6% developer of anti-microbial technology                                                                                              |  |      |           |  |  |   |           | 
|       |           |             |  |          |       |      |  |                                                                                                                                          |  |      |           |  |  |   |           | 
|       |           |             |  |          |       |      |  | TOTAL INVESTMENTS84.5%                                                                                                                  |  | $    | 9,541,631 |  |  | $ | 6,208,090 | 
|       |           |             |  |          |       |      |  |                                                                                                                                          |  |      |           |  |  |   |           | 
|       |           |             |  |          |       |      |  | Cash and other assets, less liabilities15.5%                                                                                            |  |      |           |  |  |   | 1,137,967 | 
|       |           |             |  |          |       |      |  |                                                                                                                                          |  |      |           |  |  |   |           | 
|       |           |             |  |          |       |      |  | Net assets at December 31, 2002100%                                                                                                     |  |      |           |  |  | $ | 7,346,057 | 
|       |           |             |  |          |       |      |  |                                                                                                                                          |  |      |           |  |  |   |           | 

Notes to Schedule of Investments:



| |  |  | The above investments with the exception of Rosbon, LLC are
non-income producing. Equity investments that have not paid dividends
within the last twelve months are considered non-income producing.                                                                                                                                                                                                
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The value of all securities for which there is no readily
ascertainable market value is determined in good faith by the Board of
Directors. In making its determination, the Board of Directors has
considered valuation appraisals provided by an independent valuation
service provider. (See Notes 1 and 2 to the consolidated financial
statements).                                            
|
| |  |  | As of December 31, 2002, all of the securities that we own are
restricted securities, as that term is defined under Rule 144 of the
Securities Act of 1933. These securities may not be sold in the absence
of registration under the Securities Act of 1933 or an exemption
therefrom. As a result, our ability to sell or otherwise transfer the
securities we hold in our portfolio is limited.

Page 10 of 32



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##### 





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

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##### 



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

1. Nature of Business and Significant Accounting Policies

Interim Financial Information

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

The Company

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

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

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

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

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

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

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

Page 12 of 32



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##### 



Investments

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

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

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

Revenue Recognition

Sale of Technology Rights

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

Consulting and Other Services

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

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

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

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

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

Page 13 of 32



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##### 



Research and Development

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

Foreign currency translation

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

Stock-Based Compensation

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

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

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

|                                          |  |                |      |                |  |  |      | 
|----------------------------------------- |  | -------------- | ---- | -------------- |  |  | ---- | 
|                                          |  | March 31, 2003 |      | March 31, 2002
|                                          |  |                |      |               
|Risk-free interest rate                   |  |                | 4.78 |                |  |  | 4.92 | 
|Volatility factor                         |  |                | .19  |                |  |  | .19  | 
|Dividend yield                            |  |                |     |                |  |  |     | 
|Weighted average expected life of options |  |                | 5    |                |  |  | 5    | 

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

|                                                       |                                       |  |                |            |                |  |   |          |  
|------------------------------------------------------ | ------------------------------------- |  | -------------- | ---------- | -------------- |  | - | -------- | -
|                                                       |                                       |  | March 31, 2003 |            | March 31, 2002
|                                                       |                                       |  |                |            |               
|Net increase (decrease) in net assets from operations: |                                       |  |                |            |                |  |   |         
|                                                       | As reported                           |  | $              | (3,791,440 | )              |  | $ | (512,852 | )
|                                                       | Fair
value stock compensation expense |  |                | (25,013    | )              |  |   | (32,685  | )
|                                                       |                                       |  |                |           
|                                                       | Pro forma                             |  | $              | (3,816,453 | )              |  | $ | (545,537 | )
|Earnings per share  Basic:                            |                                       |  |                |            |                |  |   |         
|                                                       | As reported                           |  | $              | (.97       | )              |  | $ | (.13     | )
|                                                       | Pro forma                             |  |                | (.99       | )              |  |   | (.14     | )
|Earnings per share  Diluted:                          |                                       |  |                |            |                |  |   |         
|                                                       | As reported                           |  | $              | (.97       | )              |  | $ | (.13     | )
|                                                       | Pro forma                             |  | $              | (.99       | )              |  |   | (.14     | )

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2. Investments

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

3. Commitments and Contingencies

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

4. Valuations

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

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

5. Subsequent Events

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

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

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

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

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|        |  |                                                                                      
|------- |  | -------------------------------------------------------------------------------------
|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

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

Critical Accounting Policies and Estimates

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

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

Revenue Recognition

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

Valuation of Investments

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

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

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

General

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

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

Financial Condition

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

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

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



| |  | One technology transfer valued at approximately $263,000 and nine
strategic alliance agreements and other consulting agreements with earned
revenue of approximately $240,000.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | A loss on sale, net of income tax benefit, of approximately $169,000 as a
result of sales of the Companys investment of $224,000.                                            
| 
| |  | A decrease of approximately
$3,019,000 in the value of the Companys investments.                                                                                             
| 
| |  | The utilization of approximately $371,000 in cash to fund the Companys operations.                                                                                           

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



| |  | Four strategic alliance
agreements and other consulting agreements with earned revenue of
approximately $264,000.
|- |  | -----------------------------------------------------------------------------------------------------------------
| 
| |  | A decline of approximately $214,000 in the value of the Companys investments.                                   
| 
| |  | A loss on sale of approximately
$45,000 as a result of sales of the Companys investment of
$454,000.            
| 
| |  | The utilization of approximately
$567,000 in cash to fund the Companys operations.                              

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

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

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

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

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



| |  |  | During the quarter ended March 31, 2003, the Company completed a
technology transfer transaction with a publicly traded company. The
transaction was completed with Circle Group Holdings, Inc. and added
$262,857 in value. In addition, the Company entered into three new
strategic alliance agreements that generated $192,218 in initial value.
Transactions of this nature result in an increase in the value of thinly
traded public securities.                                                                                                                                                                                                                                                                                                                                                                                                      
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | During the quarter ended March 31, 2003, the Company sold all of its
shares in Centrex, Inc. and a portion of its shares in Sense Holdings,
Inc. As a result of these sales, the value of the thinly traded
public securities decreased by approximately $307,000. Transactions of this
nature result in a decrease in the value of thinly traded public securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  |  | During the quarter ended March 31, 2003, the Company experienced an
overall decrease in the fair market value of its thinly traded
public securities. This decrease is primarily attributable to a decrease in the value of
Stealth MediaLabs, Inc. of approximately $4,250,000 partially offset by
an increase in value of Circle Group Holdings, Inc. of approximately
$1,187,000. The Companys other investments experienced declines in
their fair market value. The Companys investments can decrease due to
factors that are specific to these investments (inability to obtain
additional capital, inability to execute their business model,
termination of their technology licenses, etc.) or to general
marketplace factors. As a result of these
conditions, the value of our publicly traded securities decreased
by approximately $3,300,000.

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

|                                           |  |                |            |                   |  |   |            |  
|------------------------------------------ |  | -------------- | ---------- | ----------------- |  | - | ---------- | -
|                                           |  | March 31, 2003 |            | December 31, 2002
|                                           |  |                |            |                  
|                                           |  | (Unaudited)    |            |                   |  |  
|Investments, at cost                       |  | $              | 9,523,785  |                   |  | $ | 9,541,631  |  
|Unrealized depreciation, before income tax |  |                | (6,809,929 | )                 |  |   | (3,333,541 | )
|                                           |  |                |            |                   |  |   |            |  
|Investments, at fair value                 |  | $              | 2,713,856  |                   |  | $ | 6,208,090  |  
|                                           |  |                |            |                   |  |   |            |  

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

Results of Operations

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

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

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

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

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

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

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

|                                  |  |           |           |          |  |   |          |  
|--------------------------------- |  | --------- | --------- | -------- |  | - | -------- | -
|                                  |  | Number of |           | Realized
|Company Name                      |  | Shares    |           | Loss    
|                                  |  |           |           |         
|Advanced Recycling Sciences, Inc. |  |           | 9,000     |          |  | $ | (3,556   | )
|Centrex, Inc.                     |  |           | 1,343,400 |          |  |   | (160,284 | )
|Sense Holdings, Inc.              |  |           | 166,000   |          |  |   | (4,671   | )
|                                  |  |           |           |          |  |   |          |  
|Total                             |  |           |           |          |  | $ | (168,511 | )
|                                  |  |           |           |          |  |   |          |  

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

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

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

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

Income Taxes

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

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

Liquidity and Capital Resources

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

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

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

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

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

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

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

Risk Factors

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



| |  | the ongoing global economic downturn;                                                                                    
|- |  | -------------------------------------------------------------------------------------------------------------------------
| 
| |  | risk associated with possible disruption in the Companys operations due to terrorism;                                   
| 
| |  | future regulatory actions and conditions in the Companys operating areas; and                                           
| 
| |  | other risks and uncertainties as may be detailed from time to time in the Companys
public announcements and SEC filings.

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

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

Page 21 of 32



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Our quarterly and annual results could fluctuate significantly.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Our business depends on key personnel.

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

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

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

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

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

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

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

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

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

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

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

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

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

ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISKS

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

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.

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

Internal controls

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

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Not Applicable

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Not Applicable

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable

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

Not Applicable

ITEM 5. OTHER INFORMATION

Not Applicable

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

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

|     |  |                                                                                                                                           
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|99.1 |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|     |  |                                                                                                                                           
|99.2 |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.



| |                         
| | ------------------------
| | (b) Reports on Form 8-K.



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

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SIGNATURES

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

|                   |  |  |  |                                                       
|------------------ |  |  |  | ------------------------------------------------------
|                   |  |  |  | UTEK CORPORATION
       (Registrant)                  
|                   |  |  |  |                                                       
|                   |  |  |  |                                                       
|Date: June 6, 2003 |  |  |  | /s/  Clifford
M. Gross                                
|                   |  |  |  |                                                       
|                   |  |  |  | Clifford M. Gross
Chairman and Chief Executive Officer
|                   |  |  |  |                                                       
|                   |  |  |  |                                                       
|Date: June 6, 2003 |  |  |  | /s/  Carole R.
Wright                                 
|                   |  |  |  |                                                       
|                   |  |  |  | Carole R. Wright, CPA
Chief Financial Officer         

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CERTIFICATION OF CHIEF EXECUTIVE OFFICER

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



|1. |  | I have reviewed this quarterly report on Form 10-Q of UTEK Corporation;                                                                                                                                                                                                                                                       
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:                                                                                                        



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



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



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



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

Dated this 6th day of June, 2003

/s/ Clifford M. Gross
Clifford M. Gross

Page 30 of 32



---



##### 



CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Carole R. Wright, 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 officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:                                                                                                        



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



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



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



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

Dated this 6th day of June, 2003

/s/ Carole R. Wright
Carole R. Wright

Page 31 of 32